Nfi Group Inc. · TSX:NFI
Nfi — Q3 2024 Earnings Presentation
37 slides from Nfi's earnings presentation, Nov 7, 2024
Slide 1: NFI Group Inc. Third Quarter Results
NFI Group Inc. Third Quarter Results November 6, 2024
Slide 2: Cautionary Statement
Cautionary Statement Certain statements in this presentation are “forward looking statements,” which reflect the expectations of management regarding the Company's future growth, results of operations, performance and business prospects and opportunities. These forward-looking statements are made as
Slide 3: Key Terms
Key Terms Buses manufactured by New Flyer and One equivalent unit (or “EU”) Alexander Dennis' single and double deck buses represents one production “slot”, being are classified as "transit buses". ARBOC one 30-foot, 35-foot, 40-foot, 45-foot manufactures body on-chassis or “cutaway” and heavy-duty
Slide 4: A global independent bus and coach solution provider
Offer a mix of heavy-duty buses and coaches, and >100,000 Vehicles in Service medium-duty and cutaway buses A global independent Provide battery electric, hydrogen, hybrid, CNG, 12 countries Have an NFI vehicle in service bus and coach solution and diesel propulsion provider that is leading the evol
Slide 5: Our Values and Our Stakeholders Drive Our Decisions
Our Values and Our Stakeholders Drive Our Decisions Safety Quality Integrity The health and wellbeing We strive for We act with honesty, of our team members excellence in our transparency, and integrity, and the safety of our products, services, treating each other with respect products are our top
Slide 6: Leader in Zero-Emission Transportation
Leader in Zero-Emission Transportation 220M+ 4,331 $12B Electric service miles ZEB EUs delivered since Value of total backlog1 driven 2015 (14,590 EUs) 51% 24% 41% of North American of 2024 Q3 deliveries were of total backlog1 is ZEB EUs Public Bid Universe is ZEB EUs (243 EUs) (5,987 EUs) ZEBs 150+
Slide 7: Third Quarter 2024 Results
=< Third Quarter === 2024 Results Leading the ZEvolution”
Slide 8: 2024 Q3 Financial Summary
2024 Q3 Financial Summary Significant 29,015 EUs in North 115% +8% +57% 70% Book-to-Bill2 for Increase in new Increase in new Option Demand Growth American Total LTM 2024 Q3 orders (2024 Q3 orders (LTM 2024 Q3 conversion rate Bid Universe vs. 2023 Q3) vs. LTM 2023 Q3) for 2024 Q3 Financial +11% 12%
Slide 9: 2024 Q3: Deliveries
2024 Q3: Deliveries Heavy-Duty Transit Bus Motorcoach Low-Floor Cutaway + Medium-Duty Bus 799 667 156 168 159 +8% 96 -17% +66% YOY YOY YOY 2023 Q3 2024 Q3 2023 Q3 2024 Q3 2023 Q3 2024 Q3 North American transit Improvement driven by private Highest delivery quarter ever deliveries disrupted by market
Slide 10: NFI High and Moderate Risk Suppliers
NFI High and Moderate Risk Suppliers Currently 2 High Risk Suppliers in NFI top 750 92 Suppliers remain on risk register until on-time delivery is sustained for 90 days and no other 76 75 concerns remain 68 Significant reduction in high and moderate risk 60 58 58 suppliers from 2022 through 2024 50
Slide 11: Seat Disruption Impacts
Seat Disruption Impacts Key Steps in North American Transit Bus Procurement and Manufacturing Process1 Seat Supply touch points Seats specified by Months • Customer prepares and issues request for proposals with customized specification customer here 0 to 6 • NFI works with customer selected supplie
Slide 12: Seat Disruption Impact
Seat Disruption Impact Seat Recovery Action Plan Bus EUs Missing Seats in Inventory1 NFI and competitor resources on site with daily/weekly calls 113 NFI intervention led to engagement of third-party operational consultant to develop and execute recovery plan Supplier engaged third-party labour to a
Slide 13: Quarterly Gross Margins
Quarterly Gross Margins NFI Segment Quarterly Gross Margins (includes Depreciation and Amortization) 1 30.0% 30.4% 30.4% 30.0% 30.3% 31.9% 31.9% 31.3% 31.5% 32.1% 30.1% 29.5% 26.9% 30.0% 28.6% 30.2% 28.5% 29.6% 26.3% 25.5% Aftermarket GM% 22.5% 11.2% Manufacturing GM% 9.7% 8.0% 7.0% 6.6% 3.7% 12.8%
Slide 14: Adj. EBITDA Year-over-Year
Adj. EBITDA1 Year-over-Year Manufacturing Aftermarket Corporate $32 $34 $17 +8% YOY $2 +222% YOY 2023 Q3 2024 Q3 +124% YOY ($14) 2023 Q3 2024 Q3 ($6) 2023 Q3 2024 Q3 Significant improvement driven Higher sales volumes and Positive impacts of realized foreign by improved gross margins with improved g
Slide 15: LTM Adjusted EBITDA
LTM Adjusted EBITDA NFI Segment LTM Adjusted EBITDA1 $M Manufacturing Aftermarket $136 $133 $114 $114 $91 $88 $68 $60 +$42M +$144M Manufacturing Manufacturing improvement improvement ($84) ($126) 2020 Q3 2021 Q3 2022 Q3 2023 Q3 2024 Q3 Note: Corporate segment results are not included in the above. C
Slide 16: Q3 2024 Net Loss and Adjusted Net Loss
Q3 2024 Net Loss and Adjusted Net Loss Net Loss ($M) Adjusted Net Loss ($M)1 2023 Q3 ($39.9) ($0.42) per share 2023 Q3 ($38.3) ($0.41) per share 2024 Q3 ($15.0) ($0.13) per share 2024 Q3 ($4.8) ($0.04) per share LTM Q3 2023 ($286.4) ($3.52) per share LTM Q3 2023 ($136.8) ($1.68) per share LTM Q3 202
Slide 17: Quarterly Free Cash Flow
Quarterly Free Cash Flow NFI Free Cash Flow and Free Cash Flow Plus the Change in Working Capital (2020 Q1 – 2024 Q3) $M Free Cash Flow $121 Free Cash Flow with Change in Working Capital $79 $77 $36 $27 $29 $15 $22 $15 $12 $13 $10 $3 $1 $2 ($19) ($12) ($24) ($21) ($21) ($33) ($30) ($29) ($31) ($40)
Slide 18: Increasing Production Rates yet managing Working Capital
Increasing Production Rates yet managing Working Capital Total NFI Inventory US$M (Raw Materials, WIP and Finished Goods $M) vs Quarterly Vehicle Line Entries1 1,637 1,547 1,528 1,456 1,444 1,238 1,207 1,234 1,080 1,123 1,053 1,054 1,017 990 962 929 819 813 858 832 796 $88 589 714 $80 $84 $77 $103 $
Slide 19: Leverage and Debt Maturities
Leverage and Debt Maturities Total Leverage Ratio and Forward Covenant1 Debt Maturities 2025 – 2028 ($M) – total capacity and current borrowings 14.10x $861 5.17x 4.75x 4.75x 4.25x 4.25x $250 3.75x $180 $0 $0 2023 Q3 2024 Q3 2024 Q4 2025 Q1 2025 Q2 2025 Q3 2025 Q4 2024 2025 2026 2027 2028 Actual Fut
Slide 20: Poised for Recovery
Poised for Recovery Leading the ZEvolution”
Slide 21: Canadian/US Public Market Bid Universe remain Strong
Canadian/US Public Market Bid Universe remain Strong Avg. timeline from bid release to production = 12 to 18 months Bids in Process Bids Submitted 5 Year Forecast New Awards (RHS) 35,000 6,000 30,000 5,000 25,000 4,000 20,000 3,000 15,000 2,000 10,000 1,000 5,000 - - 2018 2018 2018 2018 2019 2019 20
Slide 22: 2024 Q3 Market Updates
2024 Q3 Market Updates Government Funding Announcements $1.1B 2024 Low or No Emission (Low -No) Grant Awards Announced– NFI was named partner on over $338M of Low-No grants in 2024; part of the $108 billion being invested in U.S. public transit through the Infrastructure Investment and Jobs Act C$30
Slide 23: Reiterate Forward Guidance and Targets
Reiterate Forward Guidance and Targets Revenue ($M) and Units Delivered (EUs)2 Adjusted EBITDA1,2 ($M) and Adjusted EBITDA as % of Revenue1,2 $400M annualized 4,313 6,186 4,371 3,783 3,039 4,001 ~4,800 12.9% 10.4% 6.5% 7.0% (2.8%) 2.6% run rate by 2025 Q4 ~$4,000 >$350 $3,300 $326 $331 $3,172 $240 $
Slide 24: Fiscal 2024 Seasonality and Margin Enhancement
Fiscal 2024 Seasonality and Margin Enhancement Adjusted EBITDA1 by Quarter 2024 Gross Profit (excl. D&A) per EU Manufacturing $ $94 Actuals Estimated $57,551 $59 $53 $64 $34 $22,584 ($4,949) 2024 Q1 2024 Q2 2024 Q3 2024 Q4 2022 Q3 2023 Q3 2024 Q3 2025 Actual Guidance Actual Future Estimate ZEB sales
Slide 25: Average Backlog Price Continues to Increase
Average Backlog Price Continues to Increase Increasing transit sale prices driven by pricing improvements, increased number of ZEBs and competitive factors; expected to drive higher $$/EU contribution Average Sales Price per EU of NFI Backlog $860.0 $844.3 $831.7 $793.4 $755.6 $721.1 $731.1 $707.3 $
Slide 26: Recap
Recap Financial recovery continues with sale price and margin growth Backlog of $12B, represents almost 3 years of production Competitive dynamics in North America significantly improved Aftermarket underpins recurring revenue and financial strength UK competition increased, responding with cost red
Slide 27: Appendix
Appendix Leading the ZEvolution’
Slide 28: Non-IFRS Reconciliation: 2024 Q3
Non-IFRS Reconciliation: 2024 Q3 Reconciliation of IFRS to non-IFRS As of September 29, 2024 39-Weeks Ended In '000 First Quarter Second Quarter Third Quarter Sept. 29, 2024 Net Sales $ 722,749 $ 851,233 $ 711,344 $ 2,285,326 Net Earnings (Loss) $ (9,414) $ 2,547 $ (14,993) $ (21,859) % of net sales
Slide 29: Non-IFRS Reconciliation: 2023 Q3
Non-IFRS Reconciliation: 2023 Q3 Reconciliation of IFRS to non-IFRS As of October 1, 2023 39-Weeks Ended In '000 First Quarter Second Quarter Third Quarter Oct. 1, 2023 Net Sales $ 525,134 $ 660,292 $ 710,343 $ 1,895,769 Net Loss $ (45,808) $ (48,101) $ (39,926) $ (133,835) % of net sales -8.7% -7.3
Slide 30: Quarterly Backlog: 2019 Q1 to 2024 Q3
Quarterly Backlog: 2019 Q1 to 2024 Q3 NFI Quarterly Backlog1 in EUs (2019 Q1 – 2024 Q3) Firm Option 9,190 9,235 9,074 7,281 6,518 6,497 5,604 5,161 4,714 4,693 5,574 7,011 5,308 4,610 6,691 5,220 4,851 4,352 5,264 5,279 4,646 4,757 4,813 5,593 5,370 5,516 4,400 3,662 4,366 4,153 4,576 4,910 5,089 4,
Slide 31: Quarterly Adjusted EBITDA
Quarterly Adjusted EBITDA NFI Segment Quarterly Adjusted EBITDA1 $M $54 Manufacturing Aftermarket $45 $36 $38 $32 $34$35 $34 $30 $30 $30 $25 $26 $25 $23 $21 $23 $22 $23 $17 $17 $18 $17 $11 $2 ($2) ($8) ($16) ($14) ($23) ($31) ($40) ($37) ($42) 2020 Q3 2020 Q4 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2022 Q1
Slide 32: Book-to-Bill Recovery Continues Above 100%
Book-to-Bill Recovery Continues Above 100% Book-to-Bill1 and Option Conversion1 (2014 – 2023, + LTM 2024 Q3) 2018-2019: Declines driven by ZEB order timing/trials 133.9% 128.2% Bid volume driving order increase 2020-2021 FAST Act expiry and impact of the pandemic 111.4% 115.1% 113.0% 115.4% 105.6% B
Slide 33: Transition to ZE Accelerating
Transition to ZE Accelerating Increasing demand for electric vehicles (battery- and fuel cell-electric) in NFI’s core markets, driven by government funding and the drive to zero-emission 2024 Q3: 24% of total deliveries ZEBs as % Annual Deliveries were ZEB EUs ZEB as % of Backlog1 50% High end of gu
Slide 34: 2024 Q3: Income Statement, Cash Flow, Liquidity
2024 Q3: Income Statement, Cash Flow, Liquidity 2024 Q3 Performance 2024 Q3 Free Cash Flow 1 & Liquidity1 2024 Q3 2023 Q3 Free Cash Flow1 ($M) Sales $711.3M $710.3M 2024 Q3 2023 Q3 7.5% 1.6% Adjusted EBITDA1 $53.2 $11.2 ROS ROS Interest Expense ($30.8) ($36.4) $53.2 Current Income Tax ($6.2) ($3.0)
Slide 35: Forward-Looking Statements Notes to Readers
Forward-Looking Statements Certain statements in this presentation are “forward-looking statements”, which reflect the expectations of management regarding the Company’s future growth, financial performance, and liquidity and objectives and the Company’s strategic initiatives, plans, business prospe
Slide 36: Key Financial Definitions
Key Financial Definitions Non-IFRS Measures – see NON-IFRS AND OTHER FINANCIAL MEASURES section of the MD&A Dated May 2, 2024 Adjusted EBITDANG: Earnings before interest, income tax, depreciation and amortization after adjusting for the effects of certain non-recurring, non-operating, and items occu
Slide 37: Slide 37