NFI Group’s Earnings Call Highlights Record Backlog and Optimism

NFI Group ((TSE:NFI)) has held its Q1 earnings call. Read on for the main highlights of the call.

NFI Group’s recent earnings call painted a generally positive picture for the company, highlighting significant achievements in backlog and demand, alongside improved financial metrics. The introduction of a new credit agreement was also a strategic move. However, the company faces challenges, including ongoing supplier disruptions, market conditions in the UK, and tariff uncertainties. Despite these hurdles, the overall sentiment remains optimistic, driven by strong demand and record backlogs.

Record Backlog

NFI Group announced a record total backlog of $13.7 billion, encompassing 16,527 equivalent units. This impressive figure is primarily fueled by North American public transit agencies, showcasing the company’s strong market position and demand for its products.

Strong Demand and New Orders

The company recorded new orders for 2,523 equivalent units in the first quarter, achieving a book-to-bill ratio of 139.3%. Additionally, the option backlog conversion rate stood at a steady 76%, reflecting robust demand and efficient order fulfillment.

Significant Year-over-Year Improvement

NFI reported an 84% year-over-year increase in quarterly adjusted EBITDA, alongside a $141 million improvement in the Manufacturing segment on a last twelve months basis. These figures underscore the company’s operational efficiency and financial health.

Improved Credit Facility

NFI entered into a new $845 million senior secured credit agreement, which offers improved covenants, increased liquidity, greater financial flexibility, and reduced interest costs. This strategic financial maneuver is expected to enhance the company’s financial stability.

Highest Zero Emission Deliveries

In a significant milestone, NFI delivered its highest-ever number of zero-emission buses in the first quarter of 2025. This achievement highlights the company’s ongoing commitment and capabilities in the sustainable transportation sector.

Net Loss in Q1

Despite reporting a net loss of $6.5 million in the first quarter of 2025, this represents a year-over-year improvement of $2.9 million. The reduction in net loss indicates progress in the company’s financial performance.

Challenges with Seat Supplier

NFI continues to face disruptions from its largest North American transit bus seat supplier, which has led to lower line entry rates and affected the production schedule. This remains a significant challenge for the company.

Weak UK Market Conditions

The UK market experienced challenging conditions with very few new awards in the quarter, impacting transit deliveries and contributing to lower margins. This highlights the regional market difficulties faced by NFI.

Uncertainty with Tariffs

NFI is exposed to potential cost increases due to steel and aluminum tariffs, which impact the bill of materials. This requires ongoing negotiations with customers to manage costs effectively.

Forward-Looking Guidance

During the earnings call, NFI provided an optimistic outlook despite current challenges. The company reaffirmed its 2025 guidance, projecting revenues of $3.8 billion to $4.2 billion and adjusted EBITDA of $320 million to $360 million. With a strong backlog and improved market conditions, NFI remains confident in its growth trajectory.

In summary, NFI Group’s earnings call reflected a positive sentiment, driven by record backlogs and strong demand. While challenges such as supplier disruptions and market conditions persist, the company’s strategic financial moves and optimistic guidance suggest a promising future. Investors and stakeholders will be keenly watching how NFI navigates these challenges to capitalize on its growth opportunities.