NFI Group (NFI) Q3 2024 earnings summary

Executive summary

• Achieved record $12 billion backlog, up over 50% year-over-year, with 41% zero-emission buses (ZEBs) in backlog and 24% of Q3 deliveries as ZEBs.

• Q3 2024 revenue was $711.3 million, flat year-over-year, with significant gross margin improvement to 12.2% and Adjusted EBITDA up 375% to $53.2 million.

• Net loss narrowed to $15 million, a 62% improvement year-over-year, driven by higher-margin deliveries and improved sales mix.

• Aftermarket segment delivered $153 million in revenue and $34 million in Adjusted EBITDA, up 7–8% year-over-year, providing steady cash flow.

• Supply chain disruption from a key North American seat supplier impacted deliveries and working capital, with recovery plans and alternate suppliers in place for 2025.

Financial highlights

• Manufacturing gross margin improved to 7.5% from under 1% in Q3 2023; total gross margin at 12.2%.

• Adjusted EBITDA increased 375% year-over-year to $53.2 million; free cash flow turned positive at $2 million.

• Net loss for the period was $15 million, a 62% year-over-year improvement; Adjusted Net Loss per Share improved to $0.04.

• ROIC improved to 5.3%, up from -1.0% year-over-year.

• Total liquidity at quarter-end was $145.8 million, down from $169.8 million a year ago, due to higher inventory and supply chain disruptions.

Outlook and guidance

• 2024 Adjusted EBITDA guidance raised to $210–$240 million on $3.1–$3.3 billion revenue, reflecting seat supply disruption; 2025 target remains >$350 million Adjusted EBITDA and ~$4 billion revenue.

• ZEBs expected to comprise 20–25% of 2024 manufacturing sales, rising to ~40% in 2025.

• ROIC target for 2025 maintained at >12%, with continued focus on margin improvement and backlog growth.

• Q4 expected to be strong, but guidance range is wide due to uncertainty in seat supplier recovery pace.

• All delayed North American transit deliveries in 2024 are contractually sold and will be shipped in 2025.