Nfi Group Inc. · TSX:NFI
Nfi — Investor Day (November 2019)
103 slides from Nfi's investor day presentation, Nov 15, 2019
Slide 1: Investor Day 2019
NOVEMBER 15, 2019 TORONTO, ONTARIO Investor Day 2019
Slide 2: Agenda
AGENDA Toronto | November 15, 2019 9:00 am Introduction Stephen King 9:05 am NFI Group Paul Soubry and Glenn Asham 9:45 am MCI Ian Smart 10:00 am New Flyer & ARBOC Chris Stoddart 10:25 am BREAK: Vehicle Tours 10:55 am ADL Colin Robertson 11:20 am NFI Parts Brian Dewsnup 11:35 am Supply & Fabrication
Slide 3: Financial Terms, Definitions and Conditions
FINANCIAL TERMS, DEFINITIONS AND CONDITIONS References to “Adjusted EBITDA” are to earnings before interest, income taxes, depreciation and amortization after adjusting for the effects of certain non-recurring and/or non- operations related items that do not reflect the current ongoing cash operatio
Slide 4: Forward Looking Statements
FORWARD LOOKING STATEMENTS 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. The words “believes”, “anticipates”, “
Slide 5: Paul Soubry, President & CEO, NFI Group Inc.
PAUL SOUBRY PRESIDENT & CEO NFI GROUP INC.
Slide 6: A leading global independent Bus and Coach manufacturer
A leading global independent Bus and Coach manufacturer. OUR VISION is To enable the future of mobility with innovative and sustainable solutions 6
Slide 7: Our Stakeholder Model
OUR STAKEHOLDER MODEL That guides our focus, priorities and decision making Balance for long term sustainable success 7
Slide 8: Mega Cities Traffic
Mega Traffic Emissions and Cities Congestion Climate Change 8
Slide 9: The Changing Macro Environment Creates Opportunities for NFI
THE CHANGING MACRO ENVIRONMENT CREATES OPPORTUNITIES FOR NFI Regulatory Electrification Infrastructure Global Trade Wars ADAS Alternative Finance 9
Slide 10: Buses & Coaches Move Millions Daily
BUSES & COACHES MOVE MILLIONS DAILY While overall ridership is down slightly, agencies that invest in bus networks have seen ridership increase significantly North American Annual Bus Ridership (millions) 4,993 4,671 A Compelling case for Bus Transportation: • Networks are cheaper and faster to impl
Slide 11: A Bi-Partisan & Long-Term History of U.S. Federal Support for Transportation
A BI-PARTISAN & LONG-TERM HISTORY OF U.S. FEDERAL SUPPORT FOR TRANSPORTATION $16.3BN over $244BN $305BN six years over five years over five years Ten-Year Mass Transit Account re-authorization of of the Highway Trust Safe, Accountable, Urban Mass Fund created through Intermodal Surface Fixing Americ
Slide 12: Family of Blue Chip Bus & Coach Brands
FAMILY OF BLUE CHIP BUS & COACH BRANDS The North American Leader in Heavy-Duty Transit buses Tracing its roots to 1895 with the Dennis, Alexander and Plaxton companies, ADL is a global manufacturer of double deck and single deck buses and motor Started in 1941 in Winnipeg, coaches headquartered in N
Slide 13: Market Positioning in Canada and US
MARKET POSITIONING IN CANADA AND US OTHER SCHOOL BUS HIGH FLOOR LOW-FLOOR MEDIUM-DUTY HEAVY-DUTY TRANSIT HIGH CAPACITY DD MOTOR COACH 13
Slide 14: North America's Broadest Offering
NORTH AMERICA’S BROADEST OFFERING LF CUTAWAY MEDIUM-DUTY HEAVY-DUTY HIGH CAPACITY COMMUTER MOTOR COACH Low Floor Medium Duty Heavy Duty Heavy Duty Heavy Duty Motor Coach Cutaway Shuttle (27’, 29 Transit (35’, 40’) Transit (60’ articulated) Double Deck (45’) (35”, 45’) (ranging from and 34’) 21’ to 3
Slide 15: A Diverse Business Model
A DIVERSE BUSINESS MODEL Q3 2019 LTM Revenue By Customer(1) Public 75% Private 25% (1) ADL revenue only included for the period of May 28 to September 29, 2019. ADL tends to service private customers in the UK and Hong Kong markets, while servicing public customers in North America, Singapore and Ne
Slide 16: A Diverse Business Model
A DIVERSE BUSINESS MODEL Q3 2019 LTM Revenue By Customer(1) By Segment(1) Public 75% Aftermarket Manufacturing 15% 85% Private 25% (1) ADL revenue only included for the period of May 28 to September 29, 2019. ADL tends to service private customers in the UK and Hong Kong markets, while servicing pub
Slide 17: A Diverse Business Model
A DIVERSE BUSINESS MODEL Q3 2019 LTM Revenue By Customer(1) By Segment(1) By Product(1) Public 75% Motor Coaches Aftermarket Manufacturing Transit 25% 15% 85% Buses 73% Private 25% Medium Duty and Low-Floor Cutaway 2% (1) ADL revenue only included for the period of May 28 to September 29, 2019. ADL
Slide 18: Now a Global Bus & Coach Business
NOW A GLOBAL BUS & COACH BUSINESS Q3 2019 LTM Pro-Forma Revenue by Region(1) • Leadership positions in Canada, United States, UK, New Zealand and Hong Kong UK and • Vehicles in 10 different jurisdictions Europe 15% • 20% of revenue now derived from outside of Canada/US APAC • Diversified business mo
Slide 19: NFI Is a Leader in Technology Development
NFI IS A LEADER IN TECHNOLOGY DEVELOPMENT 19
Slide 20: NFI Is a Leader in Technology Development
NFI IS A LEADER IN TECHNOLOGY DEVELOPMENT Propulsion Agnostic on Proven Platforms 20
Slide 21: Full Range of Propulsion Platforms
FULL RANGE OF PROPULSION PLATFORMS Fuel Cell Battery- Electric Natural Electric Gas Diesel-Electric Hybrid Clean Diesel Supporting customers on their journey to zero-emission vehicles 21
Slide 22: NFI Is a Leader in Technology Development
NFI IS A LEADER IN TECHNOLOGY DEVELOPMENT Propulsion Agnostic on Proven Platforms Leader in ZEBs and Infrastructure 22
Slide 23: Global Transition to Electric Vehicles
GLOBAL TRANSITION TO ELECTRIC VEHICLES An evolution, not a revolution and buses will lead the way Global Long-Term EV and eBus Adoption 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2014 2018 2022 2026 2030 2034 2038 China Europe U.S. India RoW Global E-Bus Source: Bloomberg New Energy Finance 23
Slide 24: A Leader in Reliable Zero Emission Buses (ZEB)
A LEADER IN RELIABLE ZERO EMISSION BUSES (ZEB) 24
Slide 25: Leading Zero Emission Bus Deployment
LEADING ZERO EMISSION BUS DEPLOYMENT 25
Slide 26: NFI Is a Leader in Technology Development
NFI IS A LEADER IN TECHNOLOGY DEVELOPMENT Propulsion Agnostic on Proven Platforms Leader in ZEBs and Infrastructure Telematics and Connected Vehicles 26
Slide 27: Analytics Drive Smarter Performance
ANALYTICS DRIVE SMARTER PERFORMANCE 27
Slide 28: NFI Is a Leader in Technology Development
NFI IS A LEADER IN TECHNOLOGY DEVELOPMENT Propulsion Agnostic on Proven Platforms Leader in ZEBs and Infrastructure Telematics and Connected Vehicles Advanced Driver Assistance Systems 28
Slide 29: Deploying Advanced Driver Assistance and Autonomous Systems (ADAS)
DEPLOYING ADVANCED DRIVER ASSISTANCE AND AUTONOMOUS SYSTEMS (ADAS) 0 1 2 3 4 5 Driver Controlled Partial Conditional No Automation High Automation Full Automation with Assistance Automation Automation Currently offer a range of ADAS features Teamed with US military supplier to develop for Level 4 au
Slide 30: Our Track Record
OUR TRACK RECORD • A trusted business partner with nearly 400 years of combined bus and motor coach design and manufacturing experience • 5 year Revenue CAGR of 13.3% and Adj. EBITDA CAGR of 22.3% • Peer Leading Adj. EBITDA margin • Multi-year backlog • Recently acquired ADL (2014 – 2018 revenue CAG
Slide 31: Our Differentiators
OUR DIFFERENTIATORS 1. Exclusively focused on bus & coach with market leading positions in multiple jurisdictions 2. ~75% of revenue driven by public customers 3. A market technology leader with a track record of innovation offering all types of propulsion options 4. Vertically integrated North Amer
Slide 32: NFI Group Strategic Priorities
NFI GROUP Technology council STRATEGIC Maintain market Apply OpEx and connected across leadership in all key LEAN practices NFI focused on EV, PRIORITIES markets across the business autonomous connected vehicles Deliver on NFI group Technology Leadership Drive market Provide mobility leverage and so
Slide 33: Glenn Asham, EVP & CFO
GLENN ASHAM EVP & CFO NEW FLYER GROUP INC.
Slide 34: Strategic Growth and Diversification
STRATEGIC GROWTH AND DIVERSIFICATION Built to deliver growth, margin enhancement and exceptional vehicles $3,113 $475 $2,519 $2,274 $2,382 $1,451 $1,539 $1,199 $984 $926 $865 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q3 2019 Revenue ($M) LTM 1) Pro-forma combined business for the period October 1
Slide 35: EBITDA and ROIC
EBITDA AND ROIC • Strong EBITDA growth since 2014 • However, product mix and production challenges impacted 2018 and 2019 results • Moving forward expect ROIC and Adjusted EBITDA improvement as benefits from investments and group alignment are realized in future periods 14.3% 15.8% 13.7% 12.3% 10.2%
Slide 36: Strong Free Cash Flow Generation
STRONG FREE CASH FLOW GENERATION Funded significant returns to shareholders, acquisitions and capital investments C$216.3 C$210.5 C$206.9 C$192.6 C$108.3 C$98.7 C$90.3 C$76.1 $76.1 C$65.5 C$54.0 $56.9 $50.8 C$32.5 C$33.8 $27.9 $10.2 $10.5 2014 2015 2016 2017 2018 Q3 2019 LTM Free Cash Flow Dividends
Slide 37: Total Leverage
TOTAL LEVERAGE Leverage inflated following ADL acquisition and WIP build-up, but path to return to target range 3.75x 3.43x 2.70x 2.60x 2.20x 2.00x 1.90x 1.90x 1.90x 1.90x 2.00x 1.70x 1.80x 1.60x 1.60x Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017 2018 2019 Target 2.0x to 2.5x in 18 to 24 m
Slide 38: Returning Capital to Shareholders Through Dividends and NCIB
RETURNING CAPITAL TO SHAREHOLDERS THROUGH DIVIDENDS AND NCIB C$1.70 C$1.50 C$1.30 C$0.95 C$0.70 Q1 16 Q2 16 Q2 17 Q2 18 Q1 19 Q2 18 – Q1 19 Repurchase of 2.39M shares for $97M CDN 38
Slide 39: Peer Leading Performance Metrics
PEER LEADING PERFORMANCE METRICS Estimated EBITDA Margin % - 2019E and 2020E(1) 11.0% 10.9% 10.2%10.3% 9.1% 9.6% 10.1% 8.2% 8.0% 8.2% 4.5% 5.3% 5.0% 5.7% NFI Group Oshkosh REV Group Blue Bird Spartan Motors Winnebago Thor Industries 2019E 2020E Dividend Yield(2) Free Cash Flow Yield 2019 (3) 10.6% 1
Slide 40: Ian Smart, President, MCI
IAN SMART PRESIDENT MCI
Slide 41: North America's Motor Coach Leader
NORTH AMERICA’S MOTOR COACH LEADER Founded in 1930 Over 1,600 team members Two facilities / Seven service centers 783,000+ sq. ft. of production space More than 20,000 vehicles in service Highest selling public and private motor coach in North America 41
Slide 42: Market Has Changed Significantly from 2007
MARKET HAS CHANGED SIGNIFICANTLY FROM 2007 Less fixed-route, more employee shuttle and limo/executive shuttle NA Coach Market Segments 2007 NA Coach Market Segments 2018 Employee Limo 2% 6% Employee Public 9% Public Limo 21% 20% 10% Tour and Charter Tour and Fixed Fixed Route 41% Route Charter 34% 2
Slide 43: MCI's Coach Portfolio
MCI’S COACH PORTFOLIO Transition to common line manufacturing Pre-Acqusition 2019 Additions 2020 and Forward D4500 (1992) D45 CRT / D4520 D45 CRT LE ISTV (2005) Battery Electric Variants J4500 (2006) J3500 43
Slide 44: Market Leading Position with the Largest Fleet
MARKET LEADING POSITION WITH THE LARGEST FLEET North American Market Share 2018 North American Fleet Share 6% 2% 19% 24% 24% 45% 30% 51% Equivalent Units Estimated Motor Coaches In Service: Delivered in 2018: 55,000 coaches 2,305 EU’s Source: American Bus Association and Management Database 44
Slide 45: Some Market Slow Down in 2018/2019
SOME MARKET SLOW DOWN IN 2018/2019 Creates opportunities to grow share Softer market with Market Decline Market recovery post- significant impact post 9/11 Recovery following great great recession and rise recession of employee shuttle 3,001 2,819 2,470 2,385 2,357 2,324 2,305 2,274 2,092 2,048 1,91
Slide 46: MCI Strategic Priorities
MCI Continued rollout of Grow share in North new models (J3500, STRATEGIC American private D45 CRT LE, EV motor coach PRIORITIES Coach) Technology Leadership Apply New Flyer Revenue Growth OpEx and LEAN Prepare for common learnings to MCI line production Profit Enhancement production Cash Generation
Slide 47: Chris Stoddart, President, New Flyer
CHRIS STODDART PRESIDENT NEW FLYER
Slide 48: North America's Heavy Duty Transit Bus Leader
NORTH AMERICA’S HEAVY DUTY TRANSIT BUS LEADER Founded in 1930 More than 3,600 team members Eight facilities 1,500,000 sq. ft. of production space More than 36,000 vehicles in service 48
Slide 49: Every Day Millions of Riders Rely On
EVERY DAY MILLIONS OF RIDERS RELY ON Market Leading Position Largest Installed Base 17% 9% 8% 19% 20% 43% 29% 53% Equivalent Units Delivered in 2018: Estimated Transit Buses In Service: 6,305 EU’s 80,000 buses Source: Metro Magazine, American Public Transportation Association and Management Database
Slide 50: Preparing for the Emergence of Smart Cities
PREPARING FOR THE EMERGENCE OF SMART CITIES • Zero-Emission Multi-Modal Transit • Scalable, Interoperable Charging Solutions • Connected Vehicle Technologies • Automated Driving Features & Safety Enhancements • Financing options to bridge the infrastructure investment gap 50
Slide 51: Robust Heavy-Duty Transit Demand Interrupted by Technology
ROBUST HEAVY-DUTY TRANSIT DEMAND INTERRUPTED BY TECHNOLOGY 5-Year Bid Universe (Equivalent Units) 30,000 Lull in multi-year procurements as 25,000 customers redesign routes and plan fleet electrification. 20,000 15,000 • Highest overall 5-year demand on record 10,000 • 32% zero-emission vehicles 5,0
Slide 52: Evolving Vehicles and Services for a Changing Mobility Landscape
EVOLVING VEHICLES AND SERVICES FOR A CHANGING MOBILITY LANDSCAPE 35’ & 40’ 60’ Single Deck Articulated Clean Diesel ✓ ✓ Natural Gas ✓ ✓ Diesel Hybrid Trolley-Electric Battery-Electric Fuel Cell-Electric 52
Slide 53: A Leader in Zero Emission Buses
A LEADER IN ZERO EMISSION BUSES 53
Slide 54: Longest Range ZEB in North America
LONGEST RANGE ZEB IN NORTH AMERICA Equal range as diesel vehicle 560 KM range Highlights fuel cell role in ZEB
Slide 55: New Flyer Strategic Priorities
NEW FLYER Defend North Capture highest share American market STRATEGIC of emerging market – position – traditional ZEB Propulsion PRIORITIES propulsion Technology Leadership Xcelsior Charge – Leverage collective Revenue Growth Focused effort on synergies of the continuous Profit Enhancement Group im
Slide 56: North America's Leader in Low-Floor Cutaway Buses
NORTH AMERICA’S LEADER IN LOW-FLOOR CUTAWAY BUSES Founded in 2008 Disruptive Low Floor Cutaway Bus Growing Medium-duty Shuttle More than 150 team members Headquartered in Middlebury, IN 114,000+ sq. ft. of production space More than 3,000 vehicles in service 56
Slide 57: Game Changing Product
GAME CHANGING PRODUCT Monocoque medium-duty Leverage NFI HD production expertise Diesel and CNG. EV under development 57
Slide 58: Accessible Mobility Solution for Every Market
ACCESSIBLE MOBILITY SOLUTION FOR EVERY MARKET Spirit of Independence Spirit of Freedom Spirit of Mobility Spirit of Liberty Spirit of Equess™ 58
Slide 59: ARBOC Strategic Priorities
ARBOC STRATEGIC Increase share of Double cutaway medium-duty market vehicle deliveries PRIORITIES Technology Leadership Revenue Growth Apply New Flyer OpEx and LEAN Electrification of Profit Enhancement manufacturing medium-duty product expertise Cash Generation Customer Satisfaction 59
Slide 60: Break and Vehicle Tours
NOVEMBER 15, 2019 Investor Day 2019 Break and Vehicle Tours
Slide 61: Colin Robertson, CEO ADL, President NFI International
COLIN ROBERTSON CEO ADL PRESIDENT NFI INTERNATIONAL
Slide 62: World's Largest Producer of Double Deck Buses
WORLD’S LARGEST PRODUCER OF DOUBLE DECK BUSES AND A UK LEADER IN THE PROVISION OF BUSES, COACHES AND SERVICES Founded in 1895 More than 2,500 team members Eight facilities More than 31,000 vehicles in service 62
Slide 63: ADL Strategic Priorities
Double the size of ADL Be the undisputed our North leader in the UK STRATEGIC market American business PRIORITIES Innovate and Grow our APAC deliver best in Technology Leadership business beyond class products and Hong Kong Revenue Growth service Profit Enhancement Deliver a quarter Cash Generation
Slide 64: Moving from UK Focus to a Global Bus Business
MOVING FROM UK FOCUS TO A GLOBAL BUS BUSINESS Continued investment in c.£350m in sales, US, taking full control of business enters NZ which Nappanee operations; we now hold a market delivery of 90 vehicles into leading position Mexico City 2007 2014/15 2018/19 2011 2016/17 c.£200m in sales; UK-centr
Slide 65: Delivered Strong Growth by Retaining Existing Customers, Taking Market Share
DELIVERED STRONG GROWTH BY RETAINING EXISTING CUSTOMERS, TAKING MARKET SHARE AND ACCESSING NEW MARKETS Sales Evolution £631m £602m £601m £576m £541m £481m £494m £197m £266m EBITDA Evolution £266m £221m £44m 7.5% £230m £357m £165m £178m £42m 6.9% 6.9% £50m 7.0% £283m £40m £53m 6.5% £44m £38m 6.5% £40
Slide 66: Diversifying Our Business Selectively
DIVERSIFYING OUR BUSINESS SELECTIVELY TO DELIVER MORE ROBUST FINANCIAL PERFORMANCE United Kingdom Larbert · Falkirk · Guildford · Scarborough Skelmersdale · Anston · Harlow China Zhuhai Canada Germany Toronto · Ottawa Berlin USA Nappanee, IN Canyon Lake, CA Henderson, NV Hong Kong Mexico Singapore M
Slide 67: Diversifying Our Business Selectively
DIVERSIFYING OUR BUSINESS SELECTIVELY TO DELIVER MORE ROBUST FINANCIAL PERFORMANCE APAC EMEA NA 67
Slide 68: Challenging Macro Landscape – Playing the Hand
CHALLENGING MACRO LANDSCAPE – PLAYING THE HAND WE HAVE BEEN DEALT Geopolitical Regulatory Technological Brexit Clean Air/ Emissions EV Trade Tensions Diesel Hydrogen FX Safety Autonomy 68
Slide 69: Clear Market Leader in the UK
WE ARE THE CLEAR MARKET LEADER IN THE UK WITH STRONG RELATIONSHIPS WITH ALL MAJOR BUYERS UK Bus Market - Volumes ADL Market Share: 48% 52% 53% 49% 52% 48% 57% 52% 66% 68% • The UK bus market has contracted 3,005 2,961 year-on-year since 2015, driven by: 2,728 2,724 2,567 2,540 2,485 • Reduction in g
Slide 70: Optimistic in the UK, Factors Supporting Market Recovery
WE REMAIN OPTIMISTIC IN THE UK, WITH A NUMBER OF FACTORS EXPECTED TO SUPPORT MARKET RECOVERY ADL Market Share Other 4% Other 7% 10% 5% • Despite a challenging backdrop, the business has remained resilient, taking market share and growing our top line. We are 21% better placed than ever to capitalise
Slide 71: Case Study: Lothian Buses, a Conquest Customer
CASE STUDY: LOTHIAN BUSES A CONQUEST CUSTOMER Growing market share Changing competitive landscape Retain, grow share and evolve
Slide 72: Case Study: Berlin BVG
CASE STUDY: BERLIN BVG – COMPETING SUCCESSFULLY AGAINST DOMESTIC MANUFACTURERS AND OPENING THE DOOR TO EUROPE Flagship contract Growth driver Gateway to Europe 72
Slide 73: Plaxton Is a Strong UK Brand
PLAXTON IS A STRONG UK BRAND, WITH INNOVATIVE NICHE MOTOR COACH OFFERING • UK’s largest coach builder and an innovator since 1907 • Niche coach offering boasts unrivalled passenger comfort, reliability, configurability & accessibility • Primarily UK-focussed with selected sales into Europe and New Z
Slide 74: ADL/BYD Market Leading ZEB Collaboration in the UK
ADL/BYD MARKET LEADING ZEB COLLABORATION IN THE UK • Since 2016, ADL and BYD have worked in partnership to develop an EV solution for the UK market • Partnership has proven highly successful with over 500 vehicles on order or delivered in the UK. Over 70% market share • E200EV single deck launched i
Slide 75: ADL Strategic Priorities
ADL Double the size of Be the undisputed our North leader in the UK STRATEGIC market American business PRIORITIES Innovate and Grow our APAC deliver best in Technology Leadership business beyond class products and Hong Kong Revenue Growth service Profit Enhancement Deliver a quarter Cash Generation
Slide 76: Brian Dewsnup, President, NFI Parts
BRIAN DEWSNUP PRESIDENT NFI PARTS
Slide 77: North America's Largest Provider of Spare Parts
NORTH AMERICA’S LARGEST PROVIDER OF SPARE PARTS. Created by the combination of New Flyer (NABI and Orion) and MCI parts businesses. Added ARBOC in 2019 Over 400 team members at 17 locations 700,000+ sq. ft. of production space Supporting an in service fleet of over 64,000 vehicles 77
Slide 78: Expanding & Transforming Parts Business
EXPANDING & TRANSFORMING PARTS BUSINESS • $400 million+ of revenue(1) Growth opportunities • Expanding product offering and • Strong EBITDA margin profile filling market gaps • More value added relationships (Kitting/VMI) • Robust customer relationships • Expansion into cutaway market with ARBOC • B
Slide 79: North America's Most Comprehensive Parts Network
NORTH AMERICA’S MOST COMPREHENSIVE PARTS NETWORK Edmonton, AB NFI Parts – Winnipeg, MB Brampton, ON Montreal, QC AB SK MB QC East Brunswick, NJ ON WA ND Hayward, CA MN Blackwood, NJ NY WI PA NJ ` Delaware, OH Fresno, CA CA IL IN OH WV KY NFI Parts – Louisville, KY Los Alamitos, CA AL Nashville, TN T
Slide 80: Multi-Tier Product Offering
MULTI-TIER PRODUCT OFFERING DESIGNED TO MEET CUSTOMERS NEEDS WITH TIERED PRICING OEM Parts OE Approved/Value Parts Expansion of value offerings to address more customers 80
Slide 81: Serving Public and Private Customers
SERVING PUBLIC AND PRIVATE CUSTOMERS Public Private 470 customers 3,000 customers 95,000 Annual Orders 110,000 Annual orders ~42,500 Vehicles ~22,500 Vehicles 75% pallet shipments 75% parcel shipments 81
Slide 82: Enhancing the Value Proposition
ENHANCING THE VALUE PROPOSITION Inventory Vendor Transactional Kits and mid- Dedicated Replenish Managed Parts sales life programs Stocking programs Inventory 82
Slide 83: What Differentiates NFI Parts?
Bus and Coach WHAT focused with deep market DIFFERENTIATES knowledge Warehouse NFI PARTS? ~6x bigger network that than closest allows for one competitor day touchpoint Appropriate World class inventory customer levels to meet experience customer tools requirements 83
Slide 84: NFI Parts Strategic Priorities
NFI PARTS Operational Partner – Ease of doing STRATEGIC business - Kits, VMI High fill rates, low lead times, low cost PRIORITIES solutions, webtools alternatives Technology Leadership Enter new markets – Revenue Growth Support OEM vehicle Cutaway, value parts, sales & market share ‘all-makes’ cross
Slide 85: David White, EVP Supply, NFI Group Inc.
DAVID WHITE EVP SUPPLY NFI GROUP INC.
Slide 86: Strategic Sourcing – NFI Group Strategy
STRATEGIC SOURCING – NFI GROUP STRATEGY Product Optimization Each business has focused Strategic Sourcing and CI Engineering teams 86
Slide 87: Strategic Sourcing – NFI Group Strategy
STRATEGIC SOURCING – NFI GROUP STRATEGY Product Optimization Each business has focused Strategic Sourcing and CI Engineering teams • Product design and NFI Group NFI Group • Share initiatives innovation sharing, • Optimize performance • Group technology Technology Supply • Manage risk decisions Coun
Slide 88: Supply Chain as a Competitive Advantage
SUPPLY CHAIN AS A COMPETITIVE ADVANTAGE Maximizing Value to Customers Supplier Performance Program • Customization & Innovation • Delivery Performance • Price / total cost of ownership • Quality Performance • Quality / reliability • Cost Performance • Service / warranty • Support of vehicle over its
Slide 89: Sourcing Globally Today
SOURCING GLOBALLY TODAY WITH OVER US $2.1BN IN GLOBAL PURCHASES(1) Canada 12% UK 16% Engines, Axles, Metal Fab, Composites, metal Fab, HVAC, PLC, Destination signs windows hoses, flooring EU 11% China 2% USA 57% Transmissions, axles, artic 3rd party manufacturing Engines, transmissions, axles, eng c
Slide 90: North American Supply Strategy
NORTH AMERICAN SUPPLY STRATEGY INSOURCING TO ENHANCE MARGINS 2018 North American Insource vs External Supply Bus and Coach Cost Structure(1) 22% 12% 69% 7% 3% 78% 2% Labour Overheads Materials Other direct Warranty External Supply Internal Supply 1) Does not include ADL’s North American operations 9
Slide 91: North American Strategy
NORTH AMERICAN STRATEGY FOCUS ON STRATEGIC INSOURCING TO ENHANCE AND DEFEND MARGINS Make Criteria • Core competency • At NFI Assembly Plants • Metal Fabrication (Bus • Scale/volume exists structure) • Component assemblies • Engineer/own the design • Carfair • Risk Mitigation / supply performance • K
Slide 92: Carfair
CARFAIR $62 million of FRP fabrication for the NFI Group Why CARFAIR? • Buy America requirements • Control source and quality of supply • Bring margins in-house • Strong ROI Capabilities • 6 plants, 700 staff • Full service fibre-reinforced polymer capabilities 92
Slide 93: KMG
KMG $45 million of centralized internal supply for the NFI Group Why KMG? • Buy America requirements • Control source and quality of supply • Bring margins in-house Capabilities • 300,000 sq. ft. and 355 staff • Flooring • Interior Lighting • Stanchions / Mod Panels • Power cables • Electrical panel
Slide 94: Sourcing Strategic Priorities
SOURCING Drive global Ensure STRATEGIC procurement eBus Supply PRIORITIES synergies Optimization Technology Leadership Revenue Growth Supplier performance ROI on insourcing Profit Enhancement and risk management investments Cash Generation Customer Satisfaction 94
Slide 95: Investor Day 2019 Lunch and Outlook
NOVEMBER 15, 2019 Investor Day 2019 Lunch and Outlook
Slide 96: Paul Soubry, President & CEO, NFI Group Inc.
PAUL SOUBRY PRESIDENT & CEO NFI GROUP INC.
Slide 97: Focus for the Next 180 Days
FOCUS FOR THE NEXT 180 DAYS 1. Finalize CFO succession and develop transition plan 2. Expect to deliver 2,020 vehicles in Q4-2019 or 36.8% of 2019. Execute on NF and MCI WIP reduction 3. Pay down debt and reduce Leverage 4. With KMG now stabilized, commence ramp-up back to management investment case
Slide 98: NFI Group Strategic Priorities
NFI GROUP Technology council STRATEGIC Maintain market leadership in all key Apply OpEx and LEAN practices connected across NFI focused on EV, PRIORITIES markets across the business autonomous connected vehicles Deliver on NFI group Technology Leadership Drive Market Provide mobility leverage and so
Slide 99: Outlook 2020
OUTLOOK 2020 • Management expects Revenue, Adj EBITDA and ROIC growth driven by addition of ADL, reduction of WIP, delivery of backlog and conversion of options • Headwinds from U.S. and Canadian public transit agencies demo/trial of ZEBs on smaller vehicle awards. But this creates longer-term tailw
Slide 100: Striving For: A Better Product, Workplace, World
STRIVING FOR: A BETTER PRODUCT A BETTER WORKPLACE A BETTER WORLD 100
Slide 101: Investor Day 2019 Q&A
NOVEMBER 15, 2019 Investor Day 2019 Q&A
Slide 102: The Honourable Brian Tobin, Board Chair
THE HONOURABLE BRIAN TOBIN, P.C., O.C. BOARD CHAIR NFI GROUP INC.
Slide 103: Investor Day 2019
NOVEMBER 15, 2019 TORONTO, ONTARIO Investor Day 2019