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NFI charges ahead on future of zero-emissions buses

Vehicles to comprise 30-35% of deliveries in 2024, up to 40% in 2025, firm reports in Q2 financials

An NFI Group zero-emissions bus. (Courtesy NFI Group Inc.)

NFI Group Inc. (NFI-T), a Winnipeg-based transit bus manufacturer, said demand for zero-emissions buses (ZEBs) drove up business in Q2 2023, with the proportion of sales rapidly increasing and deliveries nearly tripling from the same period last year.

It announced 232 equivalent units (EUs) of buses delivered in Q2 were ZEBs — 25 per cent of deliveries in the quarter — with almost 3,500 ZEBs in its order backlog. The ZEBs comprise 36 per cent of NFI's total order backlog, worth US$6.7 billion.

NFI projects ZEBs will make up a larger percentage of its sales in the future as it recovers from the COVID-19 pandemic’s impact on business and manufacturing.

“As we move into 2024 and 2025, we will be investing in working capital as we increase production rates and increase the amount of zero-emission buses built,” NFI president and CEO Paul Soubry said during the company's Q2 conference call.

The company is one of the largest North American bus manufacturers, owning brands such as New Flyer and Alexander Dennis.

NFI’s rising ZEB sales

ZEBs are battery-electric, hydrogen fuel cell-electric or trolley-electric buses.

The 232 ZEB deliveries in Q2 compare to 166 in Q1 2023, 328 in Q4 2022, 104 in Q3 2022 and 59 in Q2 2022.

Year-over-year deliveries increased 293.2 per cent from Q2 2022, when ZEBs made up 10.5 per cent of the company's new vehicle deliveries.

Q2 2023 ZEB deliveries in the previous 12 months were 830 units, an 11.4 per cent increase over 745 deliveries in Q2 2022.

The ZEB backlog in Q2 2023 was 3,491 units.

Stephen King, NFI’s vice-president of strategy and investor relations, said during the call demand for ZEBs continues to accelerate, with 53.3 per cent of the company's North American public bid universe over the next five years being for ZEBs — an increase of 12.7 per cent year-over-year.

Deliveries of ZEBs rose from eight per cent of total volume in 2020 to 23 per cent in 2022.

Overall deliveries rose 66 per cent year-over-year to a revenue of US$660 million with a gross profit of almost US$48 million, as NFI's end markets continue recovering from the pandemic’s negative effect on supply chains.

Net loss stood at US$48.1 million in Q2 2023 compared to a US$46 million net loss in Q1 2023. Net loss for the past 12 months was US$286 million as of Q2 2023, compared to US$107.9 million for the 12-month period ending in Q2 2022.

NFI’s ZEB future

Soubry said NFI will be investing to increase production of ZEBs toward a goal of reaching working capital levels at a pre-pandemic level.

He cited growing ZEB deliveries as one reason why NFI expects US$3.6 billion in revenue in 2024 and approximately US$4 billion in 2025.

NFI’s guidance for ZEB deliveries in 2023 is 25 per cent to 30 per cent of total deliveries, 30 per cent to 35 per cent in 2024, and approximately 40 per cent in 2025.

Rising investment into public transit and clean transportation numbering in the tens of billions of dollars across Canada, the U.S. and the U.K. supports NFI’s long-term optimism.

In response to an analyst’s question about the risks posed to NFI from competitors, Soubry said market demand for NFI is “better than it's ever been” due to its known order book with solid margins.

“We're not swinging for the fences and making promises,” he continued. “We're being so prudent on costing and pricing, but we're actually being far more aggressive on our own position around the margin that is associated with selling those slots, given the demand.”

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