NFI Group Updates on Q3 2025 Progress and Challenges
NFI Group Provides Insight into Third Quarter Progress
WINNIPEG, Manitoba — NFI Group Inc. (TSX: NFI, OTC: NFYEF, TSX: NFI.DB), a prominent leader in propulsion-agnostic bus and coach solutions, has recently shared an update concerning its deliveries and overall operations for the third quarter of a challenging year. This update includes crucial information regarding a battery recall that has been communicated to the National Highway Traffic Safety Administration and Transport Canada. All figures in this report are presented in U.S. dollars, unless otherwise specified.
Operational and Supply Chain Developments
Vehicle Deliveries: NFI has experienced a change in its estimated vehicle deliveries for the third quarter, with several planned deliveries now expected to occur in the following quarter. This shift primarily involves vehicles from NFI’s robust backlog, which are nearing readiness for customer delivery. The delays have stemmed from factors related to the recently announced battery recall, as well as scheduling challenges linked to their zero-emission buses and other private coach deliveries.
Expected Performance in Q4: The company anticipates that the fourth quarter will significantly bolster the overall financial performance for 2025, showcasing marked improvements in delivery volumes and financial metrics in contrast to the previous year. NFI intends to deliver approximately 60% of its annual Adjusted EBITDA targets of $320 million to $360 million in this latter half of the year, remaining consistent with previously outlined guidance.
Strong Backlog Levels: NFI continues to hold a near-record backlog valued at $13.5 billion, as of June 30, 2025, along with healthy market demand for its range of vehicles and services. Historically, the third quarter has been a slower period for securing new awards within North America, but the company remains optimistic about a busier fourth quarter. With ongoing bids in various markets, NFI has noted increased demand within the UK market, which is expected to enhance backlog growth leading into 2026.
Challenges in Seat Supply: NFI is diligently collaborating with its seat supplier, who has faced significant challenges, to ensure recovery. The company is diversifying the sourcing of bus seats from alternative suppliers, which is expected to represent a more substantial share of total bus seats in the approaching fourth quarter.
Important Battery Recall: NFI’s subsidiaries, New Flyer and MCI, have initiated a recall affecting certain vehicles equipped with battery modules supplied by a partner. Approximately 680 buses and a few motor coaches are impacted, with minimal disruption anticipated for vehicles currently being produced for delivery in 2025.
Warranty Provision Expectations: The battery recall is expected to necessitate a substantial warranty provision recorded in NFI’s Q3 results. This estimate is currently being finalized, as the company collaborates closely with the supplier and independent specialists to formulate a permanent solution along with a cost recovery plan for the associated warranty measures.
Management Insights on Delivery Delays
“Following a robust first half of the year, where we successfully leveraged our backlog to improve our margins, we have faced unexpected delivery delays during the third quarter,” stated Paul Soubry, President and Chief Executive Officer of NFI. “However, we are optimistic that most of these nearly complete vehicles will be delivered by the fourth quarter, contributing to significant volume growth and enhanced margins as we close out the year.”
“The recent recall of several zero-emission bus models due to potential battery issues was a necessary precaution to ensure the safety of our customers and their passengers. We have promptly provided our customers with guidelines on interim safety measures to alleviate battery stress and improve monitoring, while we collaborate with our supplier and independent experts on a permanent solution,” added Soubry.
NFI is preparing to log a warranty provision for Q3 of 2025, to account for future costs associated with the recall. The company is confident that its solid Total Liquidity position exceeding $370 million will aid in navigating through this critical situation. Adjustments to Adjusted EBITDA and Adjusted Net Earnings will help normalize this unusual warranty provision.
Looking Ahead: Financial Updates
The impending recall predominantly affects operational buses and will not significantly influence NFI’s other bus and coach deliveries for the year, nor will it impact the company’s present financial expectations.
Upcoming Financial Disclosures: NFI is set to provide a comprehensive overview concerning vehicle deliveries and warranty charges in its Q3 2025 financial results, scheduled for release on November 6, 2025, after market close. A conference call will follow on November 7, 2025, at 8:30 a.m. (ET), to discuss the results in detail.
About NFI Group
With over 450 years of cumulative industry experience, NFI balances innovation and sustainability by offering a diverse array of propulsion-agnostic bus and coach platforms, which includes leading electric models. Through their commitment to low- and zero-emission solutions, NFI meets the growing urban demand for efficient smart mobility options, contributing to the development of cleaner, more connected cities.
Employing nearly 9,000 individuals across ten countries, NFI ranks as a leading global bus manufacturer of mass mobility solutions. Their brands include New Flyer, MCI, Alexander Dennis Limited, Plaxton, ARBOC, and NFI Parts. NFI takes pride in offering the broadest selection of sustainable drive systems, including electric, natural gas, hybrid, and clean diesel technologies. The company supports over 100,000 buses and coaches worldwide.
Frequently Asked Questions
What is the main highlight of NFI's Q3 2025 update?
NFI's main focus is on the impact of vehicle delivery delays due to a battery recall, while still projecting strong financial results for the fourth quarter.
What specific challenges is NFI currently facing?
The company is dealing with delivery delays associated with a battery recall and challenges related to seat supply.
How does the battery recall affect NFI's operations?
The recall involves approximately 680 buses and is expected to necessitate warranty provisions, but the overall impact on 2025 deliveries is minimal.
What is NFI's strategy moving forward?
NFI plans to enhance its liquidity position to manage the recall effectively and expects significant customer deliveries in the fourth quarter.
When will NFI release its detailed financial results?
NFI will announce its Q3 2025 financial results on November 6, 2025, and will discuss them in a conference call the following day.
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