NFI Group Inc (NFYEF) Q2 2025 Earnings Call Highlights: Strong Demand and Financial Performance ...
Total Backlog: 16,198 EUs worth USD 13.5 billion.
Book-to-Bill Ratio: 119.9% on a last twelve months (LTM) basis.
Option Backlog Conversion Rate: 74.9% on an LTM basis.
Adjusted EBITDA: 19% year-over-year increase.
Adjusted Net Earnings: $7.6 million improvement.
Return on Invested Capital: 7.9% increase.
Total Liquidity: $326.7 million.
Net Loss: $160.8 million with a loss per share of $1.35.
Adjusted Net Earnings: $10.7 million or $0.09 per share.
Transit Deliveries: Down due to lower UK deliveries and seat supply disruption.
Coach Deliveries: Down due to timing, with expectations of a strong second half.
Average Selling Price (ASP) for Transit Buses: 27% year-over-year increase.
Average Selling Price (ASP) for Coaches: 20% year-over-year increase.
Low-Floor Cutaway Bus Deliveries: 197 EUs, up 30% year-over-year.
Aftermarket Gross Margin: 26.4%, down year-over-year.
Manufacturing Gross Margin: Increased from 8% to 10.6% year-over-year.
Free Cash Flow: Positive with a strong increase.
Revenue Guidance for 2025: $3.8 billion to $4.2 billion.
Adjusted EBITDA Guidance for 2025: $320 million to $360 million.
Warning! GuruFocus has detected 10 Warning Signs with NFYEF.
Release Date: August 01, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
NFI Group Inc (NFYEF) reported a 19% year-over-year increase in quarterly adjusted EBITDA, indicating strong financial performance.
The company successfully completed the refinancing of its first and second lien debt, enhancing its financial stability.
NFI Group Inc (NFYEF) recorded new orders of 822 equivalent units (EUs), with 95% being firm orders, showcasing strong demand.
The total backlog now stands at 16,198 equivalent units worth USD 13.5 billion, providing significant future revenue visibility.
The company has improved its supply chain health, reducing high-risk suppliers from 50 in 2022 to just one currently, enhancing operational efficiency.
Negative Points
NFI Group Inc (NFYEF) reported a quarterly net loss of $160.8 million, highlighting ongoing financial challenges.
The company faced non-recurring and unusual expenses, including a $10.2 million restructuring provision and a $10 million non-cash goodwill impairment related to its UK operations.
The UK market remains challenging due to competitive pressures from non-UK-based bus OEMs, impacting Alexander Dennis' performance.
The company is still dealing with seat supply disruptions, which have affected production and delivery schedules.
NFI Group Inc (NFYEF) faces potential cash flow timing impacts due to tariffs, as there may be delays in customer reimbursements for tariffs paid.
Q & A Highlights
Q: Can you provide more details on the supply chain, particularly regarding the seat supplier issues and overall supply chain health? A: Paul Soubry, President and CEO, explained that the seat supplier, which previously provided 60% of seats, now accounts for 30-35% due to diversification efforts. Overall supply chain health has improved significantly, with parts availability back to pre-COVID levels at 99.5-99.6%. The company has strengthened its sourcing and procurement teams to maintain this stability.
Q: What are the expectations for leverage by year-end? A: Brian Dewsnup, CFO, stated that the current leverage is at 4.9%, including convertible debt. The company aims to reduce leverage to a target range of 1.5% to 2.5%, but this is expected to be achieved by 2026 rather than by the end of the current year.
Q: How is the company addressing the tariff impacts, and what is the potential financial impact? A: Paul Soubry noted that tariffs, particularly indirect ones, are being managed by invoicing customers separately for tariff costs. The company is working with an accounting firm to ensure accurate calculations. The annualized tariff exposure is estimated at $40-60 million, with a potential short-term impact of $10-15 million, which is manageable given the company's liquidity.
Q: What is the long-term vision for the UK market given the competitive landscape? A: Paul Soubry emphasized the importance of the UK market despite challenges. The company is undergoing a consultation process to rationalize facilities and improve competitiveness. The Scottish government is supportive, and future procurements may focus more on local job creation and economic benefits.
Q: Can you elaborate on the guidance range for 2025 and what factors could influence the high and low ends of this range? A: Brian Dewsnup explained that the guidance range of $320 million to $360 million in adjusted EBITDA reflects uncertainties, particularly around the pace of seat supplier recovery and delivery schedules. The range accounts for potential variability in deliveries, especially in the fourth quarter, which is typically strong for private market orders.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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