Financial Results
Fiscal 2024
March 13, 2025
2
NFI GROUP INC. FISCAL 2024 FINANCIAL RESULTS
Notes to readers
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE 13-WEEKS AND 52-WEEKS ENDED December 29, 2024
Information in this Management’s Discussion and Analysis (“MD&A”) relating to the financial
condition and results of operations of NFI Group Inc. and its subsidiaries (collectively referred
to as “NFI” or the "Company") is supplemental to, and should be read in conjunction with,
NFI’s audited consolidated financial statements (including notes) (the “Financial Statements”)
for the 13-week and 52-week period ended December 29, 2024 and has been prepared as of
March 13, 2025.
This MD&A contains forward-looking statements, which are subject to a variety of factors that
could cause actual results to differ materially from those contemplated by such forward-looking
statements, including, but not limited to, the factors described in the Company's public filings
available on SEDAR+ at www.sedarplus.ca. See “Forward-Looking Statements” in Appendix
A. The Financial Statements have been prepared in accordance with International Financial
Reporting Standards (“IFRS® Accounting Standards”) and, except where otherwise indicated,
are presented in U.S. dollars, which is the functional currency of NFI. Unless otherwise
indicated, the financial information contained in this MD&A has been prepared in accordance
with IFRS and references to “$” or “dollars” mean U.S. dollars, "C$“ means Canadian dollars,
and "GBP" and "£" mean British Pounds Sterling.
QUARTERLY AND ANNUAL REPORTING PERIODS
The quarterly and annual reporting periods for Fiscal 2024 and Fiscal 2023 are as follows:
Period from January 1, 2024 to December 29, 2024
Period from January 2, 2023 to December 31, 2023
(“Fiscal 2024”)
(“Fiscal 2023”)
Period End Date
# of
Calendar
Weeks
Period End Date
# of
Calendar
Weeks
Quarter 1
March 31, 2024
("2024 Q1")
13
Quarter 1
April 2, 2023
("2023 Q1")
13
Quarter 2
June 30, 2024
("2024 Q2")
13
Quarter 2
July 2, 2023
("2023 Q2")
13
Quarter 3
September 29, 2024
("2024 Q3")
13
Quarter 3
October 1, 2023
("2023 Q3")
13
Quarter 4
December 29, 2024
("2024 Q4")
13
Quarter 4
December 31, 2023
("2023 Q4")
13
Fiscal year
December 29, 2024
52
Fiscal year
December 31, 2023
52
Specific references and definitions are used throughout this MD&A that are not defined terms
under IFRS and do not have standard meanings, so may not be a reliable way to compare NFI to
other companies. Non-IFRS measures in this MD&A have been denoted with an "NG". Please see
the “Non-IFRS and Other Financial Measures” section. References to LTM mean last-twelve
months ("LTM"). References to North America mean the United States and Canada.
3
NFI GROUP INC. FISCAL 2024 FINANCIAL RESULTS
The Company has two reportable segments which are the Company’s strategic business units:
Manufacturing Operations and Aftermarket Operations. The strategic business units offer
different products and services, and are managed separately because they require different
technology, marketing strategies, and operations.
The Manufacturing Operations segment derives its revenue from the design, manufacture, service
and support of new transit buses, motor coaches, medium-duty, cutaway buses, the installation
of infrastructure for electric vehicles and the third-party sales of fiberglass reinforced polymer
components. Based on management’s judgment and applying the aggregation criteria in IFRS
8.12, the Company’s bus/coach manufacturing operations and medium-duty/cutaway
manufacturing operations fall under a single reportable segment. Aggregation of these operating
segments is based on the segments having similar economic characteristics with similar long-term
average returns, products and services, production methods, distribution and regulatory
environment.
The Aftermarket Operations segment derives its revenue from the sale of aftermarket
parts for transit buses, coaches and medium-duty/cutaway buses, both for the Company's
and third-party products.
Single and double deck buses manufactured by New Flyer and Alexander Dennis Limited
("Alexander Dennis" or "AD") are classified as "transit buses". ARBOC Specialty Vehicles, LLC
manufactures body on-chassis or low floor “cutaway” and monocoque "medium-duty" buses that
service transit, paratransit, and shuttle applications. Collectively, heavy-duty transit buses,
medium-duty buses and cutaways, are referred to as "buses". A “motor coach” or “coach” is a 35
foot to 45-foot over-the-highway bus typically used for intercity transportation and travel over
longer distances than heavy-duty transit buses and is typically characterized by (i) high deck
floor, (ii) baggage compartment under the floor, (iii) high-backed seats with a coach-style
interior (often including a lavatory), and (iv) no accommodation for standing passengers.
“Product lines” include heavy-duty transit buses, motor coaches, pre-owned coaches, cutaway
and medium-duty buses.
Zero-emission buses ("ZEBs") refers to vehicles that do not have internal combustion engines. In
the case of NFI, ZEBs include trolley-electric, hydrogen fuel cell-electric, and battery-electric
buses and motor coaches. All of the data presented in this MD&A with respect to the number of
transit buses, medium-duty buses, cutaways and motor coaches is measured in, or based on,
“equivalent units” (or "EUs"). One EU represents one production “slot”, being one 30-foot, 35
foot, 40-foot, 45-foot heavy-duty transit bus, one double deck bus, one medium-duty bus, one
cutaway bus or one motor coach, as the case may be, whereas one articulated transit bus
represents two EUs as it takes up two production slots. An articulated transit bus is an extra-long
transit bus (approximately 60-feet in length), composed of two passenger compartments
connected by a joint mechanism. The joint mechanism allows the vehicle to bend when the bus
turns a corner yet have a continuous interior.
A summary of the Company’s order, delivery, and backlogNG information can be found in
Appendix B.
Notes to readers
NFI GROUP INC. FISCAL 2024 FINANCIAL RESULTS
4
Financing
Infrastructure
SolutionsTM
Workforce Development
& Training
Connected Vehicles
& Diagnostics
Parts, Publications
& Service
Buses
& Coaches
NFI’s mobility
solutions
5
NFI GROUP INC. FISCAL 2024 FINANCIAL RESULTS
60+
Models with various
propulsion offerings (battery
electric, hydrogen, hybrid,
CNG, and diesel)
44
Facilities Across the
Group
13
Countries with an NFI
vehicle in service
~9,000
Team Members
Globally
15,135 EUs
of combined firm (5,860)
and option (9,275)
backlogNG
$12.8B
Value of total firm
($4.7B) and option
($8.1B) backlogNG
240M+
Electric Service Miles
Driven
40%
of total backlogNG
is ZEB EUs
570+
EV chargers delivered
via Infrastructure
SolutionsTM since 2018
92+
Megawatts charging
capacity delivered via
Infrastructure
SolutionsTM since 2018
Leaders in Propulsion Agnostic
Mobility Solutions
6
NFI GROUP INC. FISCAL 2024 FINANCIAL RESULTS
Financial Highlights for Fiscal 2024
1.
Represents a non-IFRS measure, meaning it is not a defined term under IFRS and does not have a standard meaning, so it may not be a reliable way to
compare NFI to other companies. See Non-IFRS and Other Financial Measures section.
2.
Represents a supplementary financial measure. See Non-IFRS and Other Financial Measures section.
3.
Without consideration given to the minimum liquidity requirement of $50 million.
4.
Represents a non-IFRS ratio, meaning it is derived from a non-IFRS measure, which does not have a standard meaning, so it may not be a reliable way to
compare NFI to other companies. The ratio is calculated using adjusted net income, which is a non-IFRS measure. See Non-IFRS and Other Financial Measures
section.
$3,122.3M
Total Revenue
$349.4M
Gross Profit
$214.4M
Adjusted EBITDA(1)
($0.03)
Net Loss Per Share
($17.8M)
Free Cash Flow (1)
9,489 EUs
in LTM New Orders
5,860 EUs
In Firm Backlog(2)
($3.3M)
Net loss
$126.8M
Liquidity (2)(3)
7,094 EUs
Active Bids
4,547
EUs Delivered
$15.3M
Cash Flow generated by operating activities
($0.03)
Adjusted Net Loss Per Share(4)
9,275 EUs
In Option Backlog(2)
Transit
63%
Motor Coach
14%
Low-Floor
Cutaway and
Medium-Duty
3%
Aftermarket
20%
North
America
79%
United Kingdom
and Europe
20%
Asia Pacific
1%
Revenue by Geography
Revenue by Product
7
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
Key Performance Indicators
Deliveries (EUs)
Revenue ($ millions)
Net (Loss) Earnings ($ millions)
Adjusted Net (Loss) EarningsNG ($ millions)
Adjusted EBITDANG ($ millions)
Net cash generated by (used in) operating activities ($ millions)
Working Capital DaysNG
Total LiquidityNG ($ millions)
BacklogNG (EUs)
ROICNG
8
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
Financial Results
During the fourth quarter of 2024, NFI continued to see improvements with year-over-year increases in the average sale price of its buses
and coaches, and their associated per unit margin, Adjusted EBITDANG and net income metrics. NFI's fourth quarter Heavy-Duty Transit
(“Transit”) operations in North America were negatively impacted by seat supply disruption that increased raw materials and work-in-
process inventory and delayed planned deliveries into 2025. During the quarter, the Company executed on a detailed action plan with the
affected supplier to improve delivery performance. The Aftermarket business segment ("Aftermarket") experienced another strong period of
performance, with year-over-year growth in revenue and quarterly Adjusted EBITDANG. Fiscal 2024 saw Aftermarket deliver its highest
revenue and Adjusted EBITDA performance in NFI's history.
The Company's end markets remain healthy, with significant order and award activity, a robust public bid environment, and an improved
competitive market in North America.
Full details of the Company’s orders, deliveries, and backlogNG information can be found in Appendix B.
Deliveries (EUs)
2024 Q4
2023 Q4 % Change
Fiscal 2024 Fiscal 2023
% Change
Transit buses
835
923
(9.5 %)
3,258
2,942
10.7 %
Motor coaches
180
202
(10.9 %)
667
635
5.0 %
Medium-duty and cutaway
165
102
61.8 %
622
424
46.7 %
New vehicle deliveries
1,180
1,227
(3.8 %)
4,547
4,001
13.6 %
Pre-owned coach
2
37
(94.6 %)
127
236
(46.2 %)
Zero-emission deliveries
(included in the above totals)
308
236
30.5 %
1,036
878
18.0 %
Zero-emission deliveries as a percentage of total
new vehicle deliveries
26.1 %
19.2 %
35.9 %
22.8 %
21.9 %
3.8 %
Revenue
($ millions)
2024 Q4
2023 Q4 % Change
Fiscal 2024 Fiscal 2023
% Change
Transit buses
513.9
511.2
0.5 %
1,928.5
1,654.4
16.6 %
Motor coaches
122.9
121.7
1.0 %
432.7
390.8
10.7 %
Medium-duty and cutaway
21.7
14.4
50.6 %
77.3
50.7
52.5 %
Total New Vehicle Revenue
658.5
647.3
1.7 %
2,438.5
2,095.9
16.3 %
Pre-owned coach
8.4
5.8
44.0 %
15.9
21.6
(26.3 %)
Infrastructure SolutionsTM
11.6
5.1
126.8 %
26.2
11.0
137.3 %
Fiberglass reinforced polymer components
1.6
2.8
(44.5 %)
10.3
8.9
15.3 %
Manufacturing Revenue
679.9
661.0
2.9 %
2,490.9
2,137.5
16.5 %
Aftermarket
157.1
135.7
15.8 %
631.4
555.0
13.8 %
Total Revenue
837.0
796.7
5.1 %
3,122.3
2,692.5
16.0 %
North America
625.2
610.4
2.4 %
2,452.7
2,119.4
15.7 %
United Kingdom and Europe
193.9
164.2
18.1 %
626.9
523.4
19.8 %
Asia Pacific
17.9
22.1
(19.0 %)
42.7
49.7
(14.1 %)
9
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
Manufacturing revenue for 2024 Q4 increased by $18.9 million, or 2.9 %, compared to 2023 Q4. The increase was mainly due to more
favourable product mix for Transit along with higher medium-duty and low-floor cutaway vehicle deliveries. Notwithstanding the ongoing
seating supply challenge beginning in 2024 Q3, the Company has seen improvement in the performance of its overall supplier base resulting
in improved on-time production over the past year, supporting NFI’s continued efforts to ramp-up vehicle production rates. Overall, NFI saw
significant improvement in deliveries and revenue from the prior year with an increase in annual deliveries and a 16.5 % increase in
Manufacturing segment annual revenue.
In 2024 Q4, Manufacturing deliveries decreased by 47 EUs, or 3.8 % from 2023 Q4. In 2024 Q4, Transit deliveries were the most negatively
impacted by the seat supply issue and lower labour production efficiency. Overall, zero-emission bus and coach deliveries for 2024 Q4
increased by 30.5 % from 2023 Q4. During Fiscal 2024, ZEB deliveries were 1,036 compared to 878 in Fiscal 2023. This represents the highest
annual ZEB deliveries in Company history. ZEBs as a percentage of total new vehicle deliveries increased to 26.1 % in 2024 Q4 from 19.2 % in
2023 Q4. The fourth-quarter performance contributed to NFI achieving 22.8 % of its Fiscal 2024 deliveries being ZEBs. Transit is the primary
driver of ZEB deliveries with fewer electric propulsion deliveries in coach and low-floor cutaways.
Quarterly revenue of the Company's Infrastructure SolutionsTM division was $11.6 million for 2024 Q4, an increase of $6.5 million from 2023
Q4. The increase is primarily due to the timing of delivery and completion of open contracts. Since its inception, Infrastructure SolutionsTM
has been responsible for the delivery of 496 plug-in and 78 overhead charger projects, for 70 different customers. Infrastructure SolutionsTM
has 25 active projects under contract, with 3 new projects added in 2024 Q4.
Aftermarket revenue for 2024 Q4 continued to show strong performance with an increase of $21.4 million, or 15.8 %, compared to 2023 Q4.
The increase is mainly related to increased volume in the North America region, including the sale of parts used in other OEM vehicles, and
improved pricing and procurement savings. The Company also benefited from higher retrofit programs in North America and an expanded
webstore in both North America and the UK for private customers.
Net Earnings (Loss)
($ millions, except per share amounts)
2024 Q4
2023 Q4
% Change
Fiscal 2024 Fiscal 2023
% Change
Manufacturing
15.8
8.9
77.5 %
4.0
(96.5)
104.1 %
Aftermarket
27.2
24.7
10.1 %
119.6
101.7
17.6 %
Corporate
(24.4)
(35.9)
32.0 %
(126.9)
(141.4)
10.3 %
Net Earnings (Loss)
18.6
(2.3)
908.7 %
(3.3)
(136.2)
97.6 %
Adjusted Net Earnings (Loss)NG
13.9
(5.9)
335.6 %
(3.4)
(116.8)
97.1 %
Net Earnings (Loss) per Share
0.16
(0.02)
900.0 %
(0.03)
(1.48)
98.0 %
Adjusted Net Earnings (Loss) per ShareNG
0.12
(0.05)
340.0 %
(0.03)
(1.27)
97.6 %
Adjusted EBITDANG
($ millions)
2024 Q4
2023 Q4 % Change
Fiscal 2024 Fiscal 2023
% Change
Manufacturing
35.2
11.1
217.2 %
84.2
(42.1)
300.0 %
Aftermarket
32.8
29.5
11.1 %
139.5
120.2
16.1 %
Corporate
(0.1)
(2.1)
95.7 %
(9.3)
(8.9)
(4.5 %)
Total Adjusted EBITDANG
67.9
38.5
76.4 %
214.4
69.2
209.8 %
Adjusted EBITDANG as a percentage of revenue
Manufacturing
5.2 %
1.7 %
205.9 %
3.4 %
(2.0 %)
270.0 %
Aftermarket
20.9 %
21.7 %
(3.7 %)
22.1 %
21.7 %
1.8 %
Total
8.1 %
4.8 %
68.8 %
6.9 %
2.6 %
165.4 %
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NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
In 2024 Q4, Manufacturing operations experienced net earnings of $15.8 million compared to net earnings of $8.9 million in 2023 Q4. The
increase in net earnings was driven by a favourable product mix and a reduction in operating costs. Manufacturing operations achieved
Adjusted EBITDANG of $35.2 million, an increase of $24.1 million, or 217.2 %, compared to 2023 Q4 Adjusted EBITDANG of $11.1 million. The
increase in Manufacturing Adjusted EBITDANG from 2023 Q4 to 2024 Q4 was primarily due to greater overall gross margins, favourable sales
mix, and non-recurring labour and overhead costs. The increase in Fiscal 2024 Manufacturing net earnings and the increase in Fiscal 2024
Manufacturing Adjusted EBITDANG is attributable to the same items that impacted quarterly results.
The 2024 Q4 Aftermarket segment net earnings increased by $2.5 million, or 10.1 %, compared to 2023 Q4. The increase was primarily due
to increased sales volume, including the sale of parts used in other OEM vehicles, improved pricing, and procurement savings. In 2024 Q4,
the Aftermarket segment achieved Adjusted EBITDANG of $32.8 million, a $3.3 million, or 11.1 %, year-over-year increase, primarily due to
the same items that impacted Aftermarket net earnings. Increases in Aftermarket net earnings and Adjusted EBITDANG for Fiscal 2024 are
primarily due to the same items that impacted quarterly increases. Aftermarket delivered another record Adjusted EBITDANG performance in
Fiscal 2024, outpacing Fiscal 2023's record by 16.1 %.
The 2024 Q4 Corporate net loss decreased by $11.5 million compared to 2023 Q4 mainly due to decreased interest expenses and financing
costs as well as lower realized foreign exchange losses. Corporate Adjusted EBITDANG increased by $2.0 million compared to 2023 Q4,
primarily due to lower operating expenses in 2024 Q4 as discussed in the results from operations section on page 19. Fiscal 2024 Corporate
net loss decreased due to the same items that impacted quarterly results. The Fiscal 2024 Corporate Adjusted EBITDANG increased due to the
same items that impacted quarterly results.
Net cash generated by (used in) operating activities
and Free Cash FlowNG
($ millions, except per share amounts)
2024 Q4
2023 Q4 % Change
Fiscal 2024 Fiscal 2023
% Change
Net cash generated by (used in) operating activities
17.5
55.1
(68.2 %)
15.3
(63.8)
124.0 %
Free Cash FlowNG
0.6
2.7
(77.8 %)
(17.8)
(101.4)
82.4 %
Free Cash FlowNG (CAD dollars)
0.8
3.6
(77.8 %)
(24.1)
(134.8)
82.1 %
Free Cash Flow per ShareNG (CAD dollars)
0.01
0.03
(66.7 %)
(0.20)
(1.47)
86.4 %
Cash generated by operating activities in 2024 Q4 was $17.5 million, a decrease of $37.6 million or 68.2 %, compared to cash generated by
operating activities in 2023 Q4 of $55.1 million. This increase in cash used was primarily driven by increases in working capital balances,
such as inventory and accounts receivable, offset by increases in accounts payable and deferred revenue balances. The Fiscal 2024 net cash
generated by operating activities increased by 124.0 % compared to Fiscal 2023, primarily due to significant decreases in net losses, and an
increase in cash provided by working capital, partially offset by cash capital expenditures.
Free Cash FlowNG in 2024 Q4 decreased by $2.1 million, or 77.8 %, compared to 2023 Q4, mainly due to a decrease in cash generated by
operating activities, the acquisition of intangible assets during the quarter, and an increase in current income taxes paid as the Company
delivered positive net earnings.
2024 Q4
2024 Q3
2024 Q2
2024 Q1
2023 Q4
Working Capital DaysNG
52
53
52
57
61
Total LiquidityNG ($ million)
$126.8
$145.8
$178.7
$166.4
$188.2
BacklogNG (EUs)
15,135
14,590
14,605
14,783
10,586
ROICNG
6.4 %
5.3 %
3.5 %
1.8 %
0.8 %
11
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
As part of the Company's increased focus on cash generation and leverage reduction, the Company is actively pursuing activities to reduce
Working Capital DaysNG. At the end of 2024 Q4, Working Capital DaysNG were 52, compared to 53 at the end of 2024 Q3, and 61 at the end of
2023 Q4. The year-over-year decrease in Working Capital Days is mainly attributable to the Company's successful efforts in achieving
milestone billings, progress payment contract structures with customers, and extended payment terms with certain suppliers. Offsetting this
positive improvement was higher work-in-progress inventory reflecting the impact of seat supply disruption on North American transit
deliveries. As the Company continues to ramp up production, NFI is continuing to focus efforts on lowering work-in-process inventory by
resolving its supplier challenges and accelerating customer acceptance programs to lower working capital balances and improve Working
Capital DaysNG.
The Company's liquidityNG position, which combines cash on-hand, plus available capacity under its First Lien Secured Facilities, without
consideration given to the minimum banking liquidityNG requirement of $50 million under the Secured Facilities (which has been waived for
December 29, 2024), was $126.8 million at the end of 2024 Q4, a decrease of $19.0 million, or 13.0 % from 2024 Q3. Total liquidityNG position
was negatively impacted by repayments of long-term and unsecured debt, offset by the positive impact of increased milestone billings and
advance payments - reflected in the Company's deferred revenue balances. Overall, NFI increased its draw on its secured facilities lowering
total overall liquidityNG.
At the end of 2024 Q4, the Company's total backlogNG (firm orders and options) was 15,135 EUs, a 3.7 % increase compared to 14,590 EUs at
the end of 2024 Q3. The year-over-year increase was driven primarily by NFI recording its highest annual new orders in Company history in
Fiscal 2024. BacklogNG at the end of 2024 Q4 had a total dollar value of $12.8 billion.
The 2024 Q4 ROICNG increased by 5.6 % to 6.4 % from 2023 Q4, due to the increase in Adjusted EBITDANG offset by an increase in the invested
capital baseNG. The increase in invested capitalNG is primarily due to a gradual increase in long-term debt, higher working capital balances
and a large increase in the fair market value of the embedded derivative relating to NFI’s convertible debentures.
12
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
2024 Q4 Highlights
During the fourth quarter of 2024, NFI continued to see year-over-year improvement in many of the Company’s key operational and financial
metrics, including revenue, Adjusted EBITDANG, and Working Capital DaysNG. The Company recorded positive net earnings of $18.6 million, a
significant improvement from a $2.3 million net loss in 2023 Q4. NFI’s backlog continued to grow, reaching a record of approximately $12.8
billion at the end of 2024 Q4. NFI’s strong backlog of approximately 15,000 EUs of various propulsion types, matches the Company’s
propulsion agnostic approach to provide the widest range of vehicle types for its customers. This backlog provides visibility on the
Company’s expected growth in 2025 and beyond.
NFI experienced supply chain disruptions during the quarter, primarily related to seats for North American transit buses. The Company has
worked with the seat supplier to execute on a recovery plan, including onsite support from NFI’s fabrication team members, which saw
improvement in the supplier’s overall performance towards the end of the quarter. The seat supplier encountered this situation due to
several factors occurring within a similar timeframe: the recovery of production capacity and material availability following the pandemic, a
ramp-up of orders for seats, a move into a new manufacturing facility, and the loss of key management staff, which led to severe disruptions
for their operations and remaining staff. While NFI saw some improvement from the recovery plan, the seat disruption did move certain
planned 2024 deliveries into 2025. At the end of the quarter, NFI had 170 EUs of buses in inventory essentially complete, apart from seats.
This was an increase from the end of 2024 Q3. This number reduced to approximately 103 EUs as of March 9, 2025. The delays have caused
several bus deliveries to be pushed into 2025 while they await parts to be completed. NFI has continued to take numerous actions to support
supply performance improvements, including earlier order placement to suppliers, use of alternative suppliers, an enhanced and dedicated
supplier development team, and carrying higher levels of inventory for certain components. These initiatives have helped improve
consistency of supply of production parts and components, but due to the highly customized nature of North American transit products and
ongoing issues with a few select suppliers, the Company continues to experience supply chain challenges and there continues to be a risk of
supply disruptions going forward.
NFI's Aftermarket segment built upon the momentum it has experienced throughout the year with strong financial results in 2024 Q4.
Revenue and Adjusted EBITDANG increased 15.8% and 11.1% year-over-year, respectively. The factors contributing to the strong results
include an increasing number of vehicles being put into service by transit agencies and private operators, increasing fleet age, customers
rebuilding inventory levels to avoid supply shortages and retrofit programs being carried out by numerous customers in North America and
Asia-Pacific (APAC).
ARBOC, NFI’s medium-duty and cutaway business segment, continued its success in 2024 with 165 EUs delivered in 2024 Q4, a 61.8% year-
over-year increase, representing its highest quarterly deliveries ever, and contributing to ARBOC’s highest ever annual deliveries.
As of the end of 2024 Q4, NFI employed almost 9,000 team members across all of its global locations, down slightly from the 9,100 team
members as of the end of 2024 Q3, reflecting headcount reductions within NFI’s UK operations.
Strong Market Demand and Increasing Procurements
NFI experienced a strong fourth quarter with new orders reaching 1,904 EUs. While orders were down 19.4% year-over-year due to the high
bid universe in 2023, orders were up 81.3% from 2024 Q3, reflecting the strong bid environment in North American markets. Firm orders
made up 60.2% of the quarterly orders.
Forward demand metrics remained strong in 2024 Q4 with 3,657 EUs in Bids Submitted to customers, 3,437 EUs in Bids in Process and 28,891
EUs in the Company’s total North American Bid Universe. NFI's backlogng at the end of 2024 Q4 was 15,135 EUs and remained at record levels
with an approximate value of $12.8 billion, up 6.5% from the previous quarter, and up 61.2% year-over-year, giving the Company its highest
backlog ever. See Appendix B for details.
The Company also had 277 EUs in bid awards pending (where NFI had received notification of award from the customer, but formal purchase
order documentation had not yet been finalized) as at the end of 2024 Q4. The combination of pending awards and active bids is expected
to position NFI for new additions to its backlogNG in 2025.
Quarterly New Wins
During the fourth quarter of 2024, the Company announced a few major milestones and contract awards, including:
•
New Flyer of America Inc. received a new contract award from Washington Metropolitan Area Transit Authority for up to 500 buses.
The award is a mix of ZEBs and hybrid buses, adding to NFI’s robust 2024 Q4 backlog.
•
New Flyer of America Inc. received an order from New York’s Metropolitan Transit Authority for 265 ZEBs to add to its fleet. This
additional options order was part of a 2024 Q1 contract.
13
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
•
Motor Coach Industries (MCI) received a new contract with Houston METRO for the purchase of 100 MCI D45 CRT high-floor
coaches. The initial purchase for the contract included 50 firm orders and 50 options, but during Q4 METRO exercised their option
to convert the remaining 50 EUs to firm.
Offering the Industry’s Broadest Solutions
NFI remained focused on executing its strategy of offering vehicles with the broadest propulsion type and turn-key solutions for the transit
and coach industry. During the quarter, NFI added 473 EUs in ZEBs to its backlog and 1,431 EUs of non-ZEBs. NFI also installed 30 chargers
and has an Infrastructure Solutions™ backlog of 91 chargers.
NFI’s backlog of clean propulsion systems, including compressed natural gas, diesel-electric hybrid and ZEBs represents approximately 60% of
total backlog. The Company’s vehicle offering includes over 60 models with six different propulsion types, matching the needs of the widest
range of customers.
Other Events in and following the Quarter
In early January 2025, NFI announced strategic enhancements to its Board of Directors with the appointment of Chan Galbato to succeed
Wendy Kei as Board Chair, as well as the appointments of Aziz Aghili and Maryse Saint-Laurent. The appointments of independent directors
Mr. Galbato, Mr. Aghili, and Ms. Saint-Laurent further strengthens the Board’s expertise in manufacturing, supply chain management, human
resources, and capital markets.
In November 2024, MCI announced the shipment of the first electric coach out of its Pembina, North Dakota facility. The coach is part of an
order of nine battery-electric coaches and gives the Company great flexibility when it comes to being a leading propulsion-agnostic motor
coach manufacturer.
Subsequent Events
As part of NFI’s overall action plan to improve liquidity and financial flexibility it executed on several transactions subsequent to quarter-
end including:
•
Obtaining a waiver for the $50 million minimum liquidity requirement under its senior secured facilities, effective until March 31,
2025, providing access to those funds, if required
•
Resuming a $75 million receivable financing program with CIBC Capital Markets that enhances NFI’s financial flexibility,
accelerates cash flow from its accounts receivables and lowers interest expense, while maintaining NFI’s strong relationships with
its customers
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NFI GROUP INC. 2024 FINANCIAL RESULTS
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Outlook
Management anticipates improvements to revenue, gross profit, net earnings, Adjusted EBITDANG, Free Cash FlowNG, and ROICNG, in the near-
and longer-term as the Company executes on its backlogNG, increases bus and coach production, delivers a higher number of ZEBs, grows its
aftermarket business and benefits from the growing demand for its buses, coaches and parts, and the services provided by Infrastructure
SolutionsTM.
Management believes market demand for NFI’s products is evident through the Company’s continued new orders and a strong public transit
funding environment in North America. This funding environment drives the Company’s North American Public Bid Universe which currently
has active bids of 7,094 EUs, and a five-year forecasted customer demand of 21,797 EUs. In addition, the Company has seen improved
competitive dynamics within the North American market, leading to the Company recording its highest new awards ever in 2024, with
expectations for further large awards in 2025. NFI has also seen overall increases in market demand within public and private coach and
low-floor cutaway markets driven by increasing ridership, travel and return to work initiatives. NFI’s UK and international business has seen
softer demand when compared to North America, primarily due to increased foreign and domestic competition.
NFI’s strategy to provide the broadest offering of propulsion agnostic buses and coaches has positioned the Company well to realize upon
growing demand as it can support customers diverse fleet plans. This offering includes low and no-emission buses and coaches, alongside its
broader solutions offering of aftermarket parts, training, Infrastructure Solutions™ and financing.
As previously disclosed, the highly customized nature of NFI's products can result in specific suppliers having a significant impact on the
Company’s operations and new vehicle production, as currently evidenced by the seat supply disruption. The Company anticipates that there
will continue to be challenges in receiving certain components as suppliers recover their operations and as NFI increases production of ZEBs
(where the supply chain is not as experienced as in traditional propulsion systems). NFI has implemented strategies to mitigate overall
supply chain risk and those specifically related to ZEBs, including the utilization of multiple battery suppliers for specific regions, partnering
with larger, more established suppliers, providing increased lead time for component purchases and carrying higher levels of inventory for
certain components. The Company may continue to experience quarterly fluctuations in the delivery of buses and coaches based on supply
availability and customer acceptance.
Overall, NFI has continued to see a significant decline in its moderate and high-risk suppliers, now down to a few suppliers out of the
Company’s top 750 suppliers, driven by a combination of improvements in global supply chain health and actions taken by NFI's supply and
sourcing teams. Based on year-to-date performance in 2025 and actions planned for the first and second quarter, NFI anticipates that it will
see significant improvements in seat supply performance and a reduction in its inventory of buses that are complete, but missing seats,
within its North American transit operations in the second quarter of 2025. As the Company takes steps to bring online a new Buy America
compliant seat supplier in the second half of 2025, it anticipates that NFI and the broader industry will see sustained improvements in seat
supply performance.
Government Investments in Public Transportation
The Company’s bus and coach product lines (New Flyer, ARBOC, MCI and AD) are primarily used for public transit, which remains a critical
method of transportation and an economic enabler for cities around the world. Public transit has also been a significant and focused area of
investment for governments as they seek to improve ridership access, reduce urban congestion, and achieve emissions targets. These public
investments increased NFI's new orders throughout 2022, 2023, and 2024.
The importance of long-term government funding in key markets cannot be understated, as it allows public transit agencies to proceed with
confidence regarding their multi-year fleet replacement plans and capital asset procurements. Ridership level trends in the U.S. remain
strong, with the latest available APTA Ridership Trends Dashboard report (as of 2024 Q4) showing bus ridership growth of 9.2% in 2024 and
7.1% year-over-year. The growing trend in APTA’s Ridership report, with the largest growth in 2024 coming from cities of two million or more,
is attributed to various factors such as, but not limited to, increased services and bus routes, return-to-office mandates, and the continued
growth of non-office jobs. Continued recovery in ridership levels is important to support the operating costs of transit agencies, including
the purchase of aftermarket parts and services.
There are federal funding programs within the U.S., Canada and the U.K. that support the purchase of public transit buses and commuter
coaches. This includes the U.S. Infrastructure Investment and Jobs Act ("IIJA") of 2021, the Canadian Public Transit Fund launched in 2024
and the U.K.’s Zero Admission Bus Regional Areas (ZEBRA) funding programs. Generally, these funding programs provide visibility into order
demand as they are multi-year programs that support firm orders and backlog options. Recent U.S. executive actions may have a significant
adverse effect on IIJA funding as detailed below.
NFI continues to advance discussions and initiatives to improve bus manufacturing contract structures in the United States and Canada, and
has been incorporating milestone billing payment structures into new contracts, which provide payments throughout the build period of a
new vehicle, rather than receiving 100% of the purchase price following final delivery and customer acceptance. These new structures have
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NFI GROUP INC. 2024 FINANCIAL RESULTS
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been introduced into bids and contracts following the FTA’s issuance of the February 2024 “Dear Colleague” letter to transit agencies that
receive federal funding for bus purchases. The Company has also negotiated amendments to implement milestone billing structures into pre-
2024 contracts wherever possible. While it will take time for the benefits of these structures to be fully reflected in NFI’s financial results,
the Company has seen success in increasing advance and progress payments with growth in the Company’s deferred revenue balances.
In response to growing demand from Canadian customers, NFI announced Project “True North”, its subsidiary New Flyer’s all-Canadian build
project, which is expected to increase its Canadian manufacturing capacity by up to 240 EUs by 2027. Not only will this project allow for full
Canadian bus builds, but it is expected that it will also free up U.S. capacity to service more U.S. customers across NFI’s network.
As the market leader in North American transit bus and coach production, management believes NFI is well-positioned for both the near-
and long-term growth based on the Company’s firm and option backlog and the multi-year commitments being made by governments in
these markets.
In the U.K., government support has helped improve demand for buses, especially low- and zero-emission, yet the competitive environment
remains challenging, with foreign manufacturers, that are not required to employ domestic labour, having secured a higher proportion of
government funded contracts from recent contract awards. NFI has seen a desire by government leadership to ensure that funds allocated
to the bus industry provide wider community and social benefit in the U.K, but no local labour requirements have yet been mandated.
Alexander Dennis will continue its efforts to secure additional orders and awards, but has lowered its production rates and associated labour
as it navigates through a more competitive market.
Other Markets
NFI’s North American private customer markets served by MCI and ARBOC continue to see recovery with volumes increasing and pricing more
appropriately reflecting current input costs and inflation. The North American motor coach space has been especially positive with strong
demand in the tour and charter segment.
NFI’s Aftermarket business primarily sells bus and coach parts to public and private customers, and also provides service to private
operators. The Aftermarket business delivered another year of record performance in 2024, with strong contributions from North American
and international markets. NFI anticipates that its Aftermarket segment will continue to generate revenue growth and strong margin
contribution in 2025, although growth rates are not expected to be as high as those seen in 2023 and 2024.
The Company also continues to focus on growing its NFI Infrastructure SolutionsTM business to assist customers in assessing their charging
infrastructure requirements and to manage infrastructure procurement and project installation. Since its inception, Infrastructure
SolutionsTM has been responsible for the delivery of 496 plug-in and 78 overhead charger projects, for a total of 92 megawatts ("MW")
charging capacity, for 70 different customers. Through 2025, Infrastructure SolutionsTM is scheduled to deliver 35 plug-in and 56 overhead
depot chargers, for a total of 18 MW. Infrastructure SolutionsTM has 25 active projects under contract, with three new projects for 2024 Q4.
Financial Guidance
NFI provides the following financial guidance for Fiscal 2025.
Previous 2025 Targets
2025 Guidance
Revenue
~$4 billion
$3.8 to $4.2 billion
ZEBs (electric) as a percentage of
manufacturing sales
~40%
35% - 40%
Adjusted EBITDANG
>$350 million
(with a $400 million annualized run rate by the fourth
quarter)
$320 to $360 million
Cash Capital Expenditures
~$55 million
$50 to $60 million
ROICNG
>12%
9% to 12%
Please refer to NFI’s news release dated November 6, 2024 for information regarding the previously disclosed 2025 targets.
The 2025 guidance ranges for the selected financial metrics provided in the table above take into consideration management’s current
outlook combined with year-to-date performance and are based on the assumptions set out below. NFI’s guidance does not include the
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NFI GROUP INC. 2024 FINANCIAL RESULTS
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impacts of U.S. and Canadian tariffs (see description below). In addition, the guidance does not reflect potential escalated impacts on
supply chains or other factors arising directly or indirectly as a result of ongoing conflicts in Ukraine, Russia or other jurisdictions. The
purpose of the financial guidance is to assist investors and others in understanding management’s current expectations for the Company's
financial performance going forward. The information may not be appropriate for other purposes. Information about guidance, including the
various assumptions underlying it, is forward-looking and should be read in conjunction with the section “Forward-Looking Statements” and
the related disclosure and information about various assumptions, factors, and risks that may cause actual future financial and operating
results to differ from management’s current expectations.
The guidance in the table above is driven by numerous expectations and assumptions, including but not limited to the following:
• Revenue: Anticipated revenue growth in 2025 is based on expected deliveries of at least 5,000 EUs in 2025 resulting from NFI's firm
order backlogNG, current 2025 production schedules, expected backlogNG option order conversion, and anticipated 2025 new vehicle
orders combined with anticipated Aftermarket parts sales. Revenue guidance reflects a higher volume of ZEB sales, higher average
vehicle prices in NFI's backlogNG and anticipated product mix benefits. The guidance range also reflects only limited potential variances
in delivery volumes from supply disruption at current levels, product mix, and slower UK market demand.
• ZEB deliveries as a percentage of total deliveries: These expectations are based on NFI’s firm order and option backlogNG, anticipated
option conversions from backlogNG, active bids, and anticipated future orders in 2025.
• Adjusted EBITDANG: Adjusted EBITDANG performance is driven by anticipated new vehicle deliveries, product mix, including a higher
percentage of ZEB deliveries, Aftermarket segment contributions and anticipated improvements in operating margins due to higher
average vehicle sales prices (as currently reflected in NFI’s backlogNG), improved labour efficiency, and improved overhead absorption
with higher delivery volumes. The range provided also reflects assumptions on improving supply chain performance and the impacts of
slower UK market demand.
• Cash Capital Expenditures: Cash capital expenditures are based on planned investments in maintenance and growth projects. The
guidance reflects the expected acquisition and disposal of property, plant and equipment and the acquisition of intangible assets
relating to such projects, but does not include expected lease payments and are net of any government contributions to support the
Company’s All Canadian Build project (Project “True North”).
• ROICNG: Guidance provided for 2025 is driven by the factors noted above combined with the expectation that there will not be
significant changes in tax rates from current levels.
• Seasonality: The Company anticipates quarterly year-over-year growth in revenue and Adjusted EBITDANG. Sequentially, the Company
anticipates a decrease in Adjusted EBITDANG in the first quarter of 2025 as compared to the fourth quarter of 2024, as the first quarter of
the year is typically the slowest period in private markets, and as it manages through the current seat supply related disruption.
NFI anticipates that its current cash position and capacity under its existing senior first lien credit facilities, cash generated from operating
activities, and anticipated success in obtaining progress payments or milestone payments from customers, alongside access to capital
markets, will be sufficient to fund operations, meet financial obligations as they come due, and provide the funds necessary for capital
expenditures. NFI continues to explore opportunities to improve financial flexibility and liquidity while lowering its total interest expense,
including a specific focus on potential refinancing or extension of its senior first lien credit facility in Fiscal 2025.
Impact of U.S. and Canadian Tariffs and U.S. Policy Developments
NFI is taking numerous actions to alleviate the potential impacts of U.S. and Canadian tariffs, including leveraging the Company’s localized
production facilities, regionalized service and aftermarket parts distribution networks, and contractual terms of its firm orders. However,
there remains a significant amount of imports and exports of parts, components, partially and fully assembled buses that travel across the
U.S. and Canada border. NFI anticipates that a significant portion of increased costs resulting from U.S. and Canadian tariffs impacting its
public transit buses and public motorcoaches can be passed on to end customers through contractual obligations and through general price
increases. This is likely to require negotiation with customers and such contractual protections may not cover all costs or be effective for
extended periods. It may be more difficult to pass on the impacts of increased input costs in private coach markets, as they do not have the
same contractual terms. NFI anticipates that tariffs may lead to a reduction in private coach demand (and associated production) within
North America. In addition, there may also be near-term cash flow implications due to the payment timing of tariffs and there may also be a
decrease in order sizes due to higher prices.
Recent Executive Orders from the U.S. administration have signalled a review and potential pause of federal funding under the
Infrastructure Investment and Jobs Act, including for transit vehicles. Based on discussions with U.S. transit agency customers, the Company
does not expect that these potential funding reductions will impact the Company’s firm order backlogNG, which is comprised of legally
binding purchase contracts. However, this may impact potential new bus and coach orders, and the conversion of bus and coach options into
firm orders, particularly in the case of electric vehicles. As the Company offers a wide range of propulsion agnostic bus and coach models, it
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NFI GROUP INC. 2024 FINANCIAL RESULTS
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expects that any decrease in electric vehicle orders would likely be replaced by orders for other propulsion types, including clean diesel,
compressed natural gas or diesel electric hybrids.
Among other things, NFI's guidance is subject to the risk that U.S. and Canadian Tariffs, and other trade measures and U.S. policy
developments may evolve in unpredictable ways. The impact of tariffs and other trade measures on general economic conditions, supply
chain health, customer demand and the Company’s business is uncertain and could be materially adverse. In addition, the current seat
supply disruptions may be extended and/or exacerbated beyond management’s current expectations, the risk of additional supply or
operational disruptions. See Appendix A Forward Looking Statements for risks and other factors and the Company's filings on SEDAR at
www.sedarplus.ca.
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NFI GROUP INC. 2024 FINANCIAL RESULTS
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Selected Quarterly and Annual Financial and Operating
Information
The following selected consolidated financial and operating information of the Company has been derived from and should be read in
conjunction with the historical and current Financial Statements of the Company.
($ thousands, except per Share figures)
Fiscal Period
Quarter
Revenue1
Earnings (loss)
from operations
Net earnings
(loss)
Adjusted
EBITDANG
Earnings (loss)
per Share
2024
Q4
836,989
36,034
18,564
67,886
0.16
Q3
711,344
25,516
(14,993)
53,205
(0.13)
Q2
851,233
36,362
2,547
59,411
0.02
Q1
722,749
10,651
(9,414)
33,936
(0.08)
Total
3,122,315
108,563
(3,296)
214,438
(0.03)
2023
Q4
796,712
25,555
(2,329)
38,455
(0.02)
Q3
710,343
(13,760)
(39,926)
11,167
(0.42)
Q2
660,292
(11,297)
(48,101)
12,178
(0.62)
Q1
525,134
(21,749)
(45,964)
7,409
(0.60)
Total
2,692,481
(21,251)
(136,164)
69,209
(1.48)
2022
Q4
689,353
(142,144)
(152,405)
(7,094)
(1.98)
Q3
514,047
(41,051)
(40,167)
(13,281)
(0.53)
Q2
397,952
(63,497)
(56,009)
(20,624)
(0.73)
Q1
459,330
(41,481)
(27,795)
(16,660)
(0.36)
Total
2,060,682
(288,173)
(276,376)
(57,659)
(3.58)
Comparison of Fourth Quarter 2024 Results
($ thousands)
2024 Q4
2023 Q41
Fiscal 2024
Fiscal 20231
Statement of Earnings Data
Revenue
North America
499,810
501,191
1,948,005
1,673,734
United Kingdom and Europe
168,836
142,831
527,399
435,919
Asia Pacific
11,234
16,952
15,510
27,875
Manufacturing operations
679,880
660,974
2,490,914
2,137,528
North America
125,345
109,180
504,658
445,657
United Kingdom and Europe
25,079
21,409
99,528
87,512
Asia Pacific
6,685
5,151
27,215
21,784
Aftermarket operations
157,109
135,740
631,401
554,953
Total revenue
$ 836,989
$ 796,714
$ 3,122,315
$
2,692,481
Earnings (loss) from operations
$ 36,034
$
25,555
$
108,563
$
(21,251)
Earnings (loss) before interest and income taxes
$ 46,646
$
22,757
$
124,476
$
(16,828)
Net Earnings (loss)
$ 18,564
$
(2,329)
$
(3,296)
$
(136,164)
Adjusted EBITDANG
$ 67,886
$
38,455
$
214,438
$
69,209
Cash capital expenditures
$
8,522
$
10,122
$
30,314
$
26,714
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NFI GROUP INC. 2024 FINANCIAL RESULTS
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Results of Operations
The discussion below with respect to revenue, operating costs, expenses, and earnings from operations has been divided between the
Manufacturing and Aftermarket operations segments.
Revenue
($ thousands)
2024 Q4
2023 Q41
Fiscal 2024
Fiscal 20231
Manufacturing Revenue
679,880
660,974
2,490,914
2,137,528
Aftermarket Revenue
157,109
135,740
631,401
554,953
Total Revenue
836,989
796,714
3,122,315
2,692,481
Earnings (loss) from Operations
36,034
25,555
108,563
(21,251)
Earnings (loss) before interest and income taxes
46,646
22,757
124,476
(16,828)
Earnings (loss) before income tax expense
18,848
(14,521)
(6,464)
(169,070)
Net Earnings (loss)
18,564
(2,329)
(3,296)
(136,164)
Manufacturing revenue for 2024 Q4 increased by $18.9 million, or 2.9%, compared to 2023 Q4. In 2024 Q4, revenue increased because of an
improved average selling price per unit delivered, which was up approximately 12.8% year-over-year. This reflects the Company's efforts to
improve pricing for inflation and a higher number of ZEBs. Manufacturing revenue for Fiscal 2024 increased by $353.4 million, or 16.5%,
compared to Fiscal 2023. Fiscal 2024 revenue increased as a result of higher deliveries and improved contract pricing within North America.
Aftermarket revenue for 2024 Q4 increased by $21.4 million, or 15.7% compared to 2023 Q4. Aftermarket revenue for Fiscal 2024 increased
by $76.4 million, or 13.8%, compared to Fiscal 2023. Quarterly and full year figures increased due to higher sales volume as the Aftermarket
segment has experienced an increase in demand during the respective periods. Aftermarket sales were higher across each region.
Cost of sales
($ thousands)
2024 Q4
2023 Q41
Fiscal 2024
Fiscal 20231
Manufacturing
Direct cost of sales
541,578
555,166
1,985,459
1,818,740
Depreciation and amortization
16,496
17,255
67,922
71,027
Other overhead
74,151
45,195
272,126
200,663
Manufacturing cost of sales
632,224
617,616
2,325,507
2,090,430
As percent of Manufacturing sales
93.0 %
93.4 %
93.4 %
97.8 %
Aftermarket
Direct cost of sales
109,426
89,730
435,156
371,532
Depreciation and amortization
3,078
2,425
12,209
9,754
Aftermarket cost of sales
112,504
92,155
447,365
381,286
As percent of Aftermarket sales
71.6 %
67.9 %
70.9 %
68.7 %
Total Cost of sales
744,728
709,771
2,772,872
2,471,716
As percent of sales
89.0 %
89.1 %
88.8 %
91.8 %
The consolidated cost of sales for 2024 Q4 increased by $35.0 million, or 4.9 %, compared to 2023 Q4. The consolidated cost of sales for
Fiscal 2024 increased by $301.2 million, or 12.2 %, compared to Fiscal 2023.
Cost of sales from Manufacturing operations in 2024 Q4 was $632.2 million (93.0 % of Manufacturing operations revenue) compared to $617.6
million (93.4 % of Manufacturing operations revenue) in 2023 Q4, an increase of $14.6 million, or 2.4 %. Cost of sales from Manufacturing
operations in Fiscal 2024 was $2,325.5 million (93.4 % of Manufacturing operations revenue) compared to $2,090.4 million (97.8 % of
Manufacturing operations revenue) in Fiscal 2023, an increase of $235.1 million, or 11.2 %. The quarterly and full year increase in cost of
sales was driven by higher percentage of ZEB deliveries and higher overall deliveries, respectively. Cost of sales decreased as a percentage
of revenue in Fiscal 2024, mainly due to an improvement in operational efficiencies that has resulted from improved supply availability. Cost
of sales from Aftermarket operations in 2024 Q4 was $112.5 million (71.6 % of Aftermarket revenue) compared to $92.2 million (67.9 % of
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NFI GROUP INC. 2024 FINANCIAL RESULTS
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Aftermarket revenue) in 2023 Q4, an increase of 17.5%. Cost of sales from Aftermarket operations in Fiscal 2024 was $447.4 million (70.9 %
of Aftermarket revenue) compared to $381.3 million (68.7 % of Aftermarket revenue) in Fiscal 2023, an increase of 16.2%. Cost of sales
increase is primarily due to increased sales and the variability in product mix, including higher aftermarket program revenues.
Gross Margins
($ thousands)
2024 Q4
2023 Q4
Fiscal 2024
Fiscal 2023
Manufacturing
47,656
43,356
165,407
47,098
Aftermarket
44,605
43,585
184,036
173,667
Total Gross Margins
92,261
86,941
349,443
220,765
As a percentage of sales
Manufacturing
7.0 %
6.6 %
6.6 %
2.2 %
Aftermarket
28.4 %
32.1 %
29.1 %
31.3 %
11.0 %
10.9 %
11.2 %
8.2 %
Manufacturing gross margin for 2024 Q4 of $47.7 million (7.0 % of Manufacturing revenue), increased by $4.3 million compared to a gross
margin of $43.4 million (6.6 % of Manufacturing revenue) for 2023 Q4. Manufacturing gross margin for Fiscal 2024 of $165.4 million (6.6 % of
Manufacturing revenue), increased by $118.3 million compared to a gross margin of $47.1 million (2.2 % of Manufacturing revenue) for Fiscal
2023. Manufacturing gross margin as a percentage of revenue increased in Fiscal 2024, mainly due to an improvement in favorable product
mix and the recovery from operational inefficiencies faced in Fiscal 2023 and the completion of all legacy-inflation impacted contracts in
the first half of 2024.
Aftermarket gross margins for 2024 Q4 of $44.6 million (28.4 % of Aftermarket revenue) increased by $1.0 million, or 2.3 %, compared to
2023 Q4 gross margins of $43.6 million (32.1 % of Aftermarket revenue). Aftermarket gross margins for Fiscal 2024 of $184.0 million (29.1 %
of Aftermarket revenue) increased by $10.4 million, or 6.0 %, compared to Fiscal 2023 gross margins of $173.7 million (31.3 % of Aftermarket
revenue). Aftermarket gross margin as a percentage of revenue remained stable in Fiscal 2024 when compared to Fiscal 2023.
Selling, general and administrative costs and other operating expenses (“SG&A”)
($ thousands)
2024 Q4
2023 Q4
Fiscal 2024
Fiscal 2023
Selling expenses
9,007
8,836
33,315
29,539
General and administrative expenses
48,010
54,112
205,802
215,726
Total SG&A
57,017
62,948
239,117
245,265
The consolidated SG&A for 2024 Q4 of $57.0 million (6.8 % of consolidated revenue) decreased by $5.9 million, or 9.4 %, compared to $62.9
million (7.9 % of consolidated revenue) in 2023 Q4. The consolidated SG&A for Fiscal 2024 of $239.1 million (7.7 % of consolidated revenue)
decreased by $6.1 million, or 2.5 %, compared to $245.3 million (9.1 % of consolidated revenue) in Fiscal 2023. Consolidated SG&A remained
relatively consistent between quarters and year-over-year.
Footnotes:
1. Refer to Critical Accounting Estimates and Judgements on page 25.
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Realized foreign exchange gain (loss)
In 2024 Q4, the Company recorded a realized foreign exchange gain of $0.8 million compared to a gain of $1.6 million in 2023 Q4. In Fiscal
2024, the Company recorded a realized foreign exchange loss of $1.8 million compared to a gain of $3.2 million in Fiscal 2023.
The Company uses foreign exchange forward contracts to buy various currencies in which it operates with U.S. dollars, Canadian dollars and
GBP. The purchases of these currencies using foreign exchange forward contracts at unfavorable forward rates compared to the spot rates at
settlement were the primary reason for the losses in the fiscal period.
Earnings (Loss) from operations
Consolidated earnings from operations in 2024 Q4 were $36.0 million (4.3 % of consolidated revenue) compared to earnings of $25.6 million
(3.2 % of consolidated revenue) in 2023 Q4, an improvement of $10.5 million, or 41.0 %. Consolidated earnings from operations in Fiscal
2024 were $108.6 million (3.5 % of consolidated revenue) compared to losses of $21.3 million ((0.8 %) of consolidated revenue) in Fiscal
2023, an improvement of $129.8 million, or 610.9 %. Further explanations for these improvements are provided in the subsequent
paragraphs below.
In 2024 Q4, earnings from operations attributable to the Manufacturing segment were $17.3 million (2.5 % of Manufacturing revenue)
compared to losses of $3.3 million ((0.5 %) of Manufacturing revenue) in 2023 Q4. Earnings from Manufacturing operations in Fiscal 2024
were $2.1 million (0.1 % of Manufacturing revenue) compared to losses of $119.1 million ((5.6 %) of Manufacturing revenue) in Fiscal 2023, a
increase of $121.2 million, or 101.7 %. The improved earnings as a percentage of revenue in both periods is mainly attributable to a
favourable product mix.
Earnings from operations related to Aftermarket operations in 2024 Q4 were $27.2 million (17.3 % of Aftermarket revenue) compared to
$24.7 million (18.2 % of Aftermarket revenue) in 2023 Q4. Earnings from Aftermarket operations in Fiscal 2024 were $119.5 million (18.9 % of
Aftermarket revenue) compared to $101.7 million (18.3 % of Aftermarket revenue) in Fiscal 2023. Earnings from Aftermarket operations
increased in both periods due to favourable sales mix and a reduction of inflationary impacts on the cost of labour, freight, and surcharges.
Unrealized foreign exchange (loss) gain
The Company has recognized a net unrealized foreign exchange (loss) gain consisting of the following:
($ thousands)
2024 Q4
2023 Q4
Fiscal 2024
Fiscal 2023
Unrealized (loss) gain on forward foreign exchanges contracts
(4,232)
1,694
(443)
76
Unrealized gain (loss) on other long-term monetary assets/liabilities
16,318
(2,954)
19,060
(3,772)
12,086
(1,260)
18,617
(3,696)
At December 29, 2024, the Company had $65.9 million of foreign exchange forward contracts to buy currencies in which the Company
operates (U.S. dollars, Canadian dollars, or GBP). These foreign exchange contracts range in expiry dates from January 2025 to June 2025.
The related liability of $1.3 million (December 31, 2023: $1.5 million) is recorded on the statements of financial position as a
current derivative financial instruments liability and the corresponding change in the fair value of the foreign exchange forward
contracts is recorded in the consolidated statements of net loss and total comprehensive earnings (loss).
Earnings (loss) before interest and income taxes (“EBIT”)
In 2024 Q4, the Company recorded EBIT of $46.6 million compared to an EBIT of $22.8 million in 2023 Q4. In Fiscal 2024, the Company
recorded EBIT of $124.5 million compared to a loss before interest and income taxes of $16.8 million in Fiscal 2023. The improvement in
EBIT was driven by higher aftermarket performance and improved gross margins within Manufacturing.
Interest and finance costs
The interest and finance charges for 2024 Q4 of $27.8 million decreased by $9.5 million compared to $37.3 million in 2023 Q4. The decrease
is primarily due to fair market value gain on adjustment to the Company’s prepayment option on second-lien debt. These reductions in
interest and finance costs were offset by an increase in costs due to fair market value loss on adjustment to the Company’s interest rate
swap and cash conversion option. The fair market value gain of the prepayment option related to the Company’s second-lien debt was $1.1
million. The Company’s prepayment option had a fair market value gain of $9.6 million in Fiscal 2024.
The Company had a fair market value loss on its interest rate swap of $0.6 million in 2024 Q4 compared to no fair market value adjustment
in 2023 Q4. The interest rate swap had a fair market value loss of $0.5 million in Fiscal 2024, compared to a loss of $9.4 million in Fiscal
2023. The Company’s cash conversion option had a fair market value gain of $7.7 million in 2024 Q4 compared to a loss of $0.5 million in
2023 Q4. The cash conversion option had a fair market value gain of $6.6 million in Fiscal 2024, compared to a loss of $4.0 million in Fiscal
2023.
22
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
On July 20, 2023, the Company extinguished its interest rate swap contracts (valued at $20.2 million asset at the end of 2023 Q2) for total
proceeds of $18.4 million. NFI's equity hedge (valued at $2.6 million liability at the end of 2023 Q2) was settled and removed from liabilities
on the balance sheet.
On January 26, 2024, NFI entered into an agreement for a new interest rate swap to hedge its exposure to changing interest rates. The
contract has a notional value of $500 million until October 25, 2024, and thereafter a notional value of $450 million until its expiry on April
25, 2025. The swap carries an interest rate of 4.6%. Please see note 25 of the audited consolidated financial statements for disclosure of
financial instruments and risk management.
Earnings (loss) before income taxes (“EBT”)
EBT in 2024 Q4 of $18.8 million improved by $33.4 million compared to a loss before income taxes (“LBT”) of $14.5 million in 2023 Q4. LBT
for Fiscal 2024 of $6.5 million decreased by $162.6 million compared to LBT of $169.1 million in Fiscal 2023. The primary drivers of the
changes of LBT are addressed in the Earnings (loss) from operations and Interest and finance costs sections above.
Income tax expense (recovery)
The income tax expense for 2024 Q4 was $0.3 million compared to a recovery of $12.2 million in 2023 Q4. The increased income tax expense
is primarily due to positive net earnings.
The income tax recovery for Fiscal 2024 is $3.2 million, compared to a recovery of $32.9 million in Fiscal 2023. The decrease in the overall
income tax recovery is primarily due to increased profitability, an increased state tax expense and a reduced foreign tax credit recovery
offset by reduced deferred tax expense related to unrecognized deferred tax assets associated with Canadian loss carry-forwards, and
restricted interest in the UK.
The Effective Tax Rate ("ETR") for 2024 Q4 was 1.5% and the ETR for 2023 Q4 was 84.0%. The ETR for Fiscal 2024 was 49.0% and the ETR for
Fiscal 2023 was 19.5%. The 2023 Q4 ETR was detrimentally impacted by the non-recognition of deferred tax assets associated with Canadian
loss carry-forwards, restricted interest in the UK, and the impact of BEPS Pillar Two.
Income tax expense recognized in the consolidated statement of net loss in Fiscal 2024 includes $1.1 million (Fiscal 2023: not applicable)
related to Pillar Two income taxes.
Net earnings (loss)
The Company reported net earnings of $18.6 million in 2024 Q4, an improvement of $20.9 million, or 896.6 %, compared to net losses of
$2.3 million in 2023 Q4. The Company reported net losses of $3.3 million in Fiscal 2024, a decrease of $132.9 million, or 97.6 %, compared
to net losses of $136.2 million in Fiscal 2023. The decrease in net loss for Fiscal 2024 is primarily due to increases in the Company's earnings
from operations and decreases to interest and finance costs.
Net earnings (loss)
($ millions, except per Share figures)
2024 Q4
2023 Q4
Fiscal 2024
Fiscal 2023
Earnings (loss) from operations
36.0
25.6
108.6
(21.3)
(Gain) loss on disposition of property, plant and equipment
(0.2)
0.1
(0.2)
(0.8)
Impairment loss on intangible assets
(1.3)
-
(2.3)
-
(Loss) gain on debt modification
-
(1.6)
-
8.9
Loss on debt extinguishment
-
-
(0.2)
-
Unrealized foreign exchange gain (loss) on monetary items
12.1
(1.3)
18.6
(3.7)
Interest and finance costs
(27.8)
(37.3)
(130.9)
(152.2)
Income tax (expense) recovery
(0.3)
12.2
3.2
32.9
Net earnings (loss)
18.6
(2.3)
(3.3)
(136.2)
Net earnings (loss) per Share (basic)
0.16
(0.02)
(0.03)
(1.48)
Net earnings (loss) per Share (fully diluted)
0.13
(0.02)
(0.03)
(1.48)
The Company recorded net earnings per Share for 2024 Q4 of $0.16 compared to net loss per Share of $0.02 in 2023 Q4. The Company’s net
loss per Share for Fiscal 2024 was $0.03 compared to a net loss per Share of $1.48 in Fiscal 2023. The per Share net loss improved in Fiscal
2024 because of improved operational performance in both Manufacturing and Aftermarket, lower interest expenses, and an increase in the
outstanding number of Shares.
23
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
Cash Flow
The cash flows of the Company are summarized as follows:
($ thousands)
2024 Q4
2023 Q4
Fiscal 2024
Fiscal 2023
Cash generated by operating activities before non-cash working capital
items and interest and income taxes paid
56,365
46,658
193,384
61,234
Interest paid
(30,183)
(19,110)
(121,107)
(109,389)
Income taxes (paid) recovered
(1,796)
8,407
(2,060)
29,304
Cash flow (invested in) provided by working capital
(6,894)
19,171
(54,877)
(44,962)
Net cash generated by (used in) operating activities
17,492
55,126
15,340
(63,813)
Net cash (used in) generated by financing activities
(24,093)
(65,072)
20,751
117,836
Net cash used in investing activities
(3,435)
(12,431)
(34,632)
(53,342)
Cash flow from operating activities
The 2024 Q4 net cash generated by operating activities of $17.5 million was mainly comprised of $24.4 million of net cash earnings offset by
$6.9 million of cash invested in working capital. The 2023 Q4 net cash generated by operating activities of $55.1 million was comprised of
$36.0 million of net cash earnings and $19.2 million of cash provided by working capital.
The Fiscal 2024 net cash generated by operating activities of $15.3 million was mainly comprised of $70.2 million of net cash earnings and
$54.9 million of cash invested in working capital. The Fiscal 2023 net cash used in operating activities of $63.8 million was comprised of
$18.9 million of net cash loss and $45.0 million of cash invested in working capital.
Cash flow from financing activities
The cash used in financing activities of $24.1 million during 2024 Q4 was comprised mainly of repayments to the Company’s Secured
Facilities1, totaling $11.2 million and by repayments of obligations under leases of $8 million, and repayment of senior unsecured debt of $5
million. Net cash used by financing activities decreased by $41.0 million from 2023 Q4.
Cash generated by financing activities of $20.8 million during Fiscal 2024 is due to proceeds received from the Company's Secured Facilities1,
totaling $50.1 million, offset by repayments made to obligations under leases of $24.4 million. The improvement in Fiscal 2024 compared to
Fiscal 2023 is primarily due to the large repayment of long-term debt that occurred in 2023 Q3.
Cash flow from investing activities
($ thousands)
2024 Q4
2023 Q4
Fiscal 2024
Fiscal 2023
Acquisition of intangible assets
(7,269)
(2,828)
(17,597)
(10,274)
Proceeds from disposition of property, plant and equipment
40
519
963
1,769
Investments in Long-term restricted deposits
5,379
-
5,379
(18,123)
Acquisition of property, plant and equipment
(8,522)
(10,122)
(30,314)
(26,714)
Proceeds from government grants
6,937
-
6,937
-
Cash used in investing activities
(3,435)
(12,431)
(34,632)
(53,342)
Cash used in investing activities increased in 2024 Q4, primarily due to increased investments in intangible assets alongside a decrease in
proceeds received on property, plant and equipment. Cash used in investing activities was lower in Fiscal 2024, primarily due to decreased
investment in long-term restricted deposits, partially offset by the increased investments in property, plant and equipment, and intangible
assets. Long-term restricted deposits are collateral for a certain amount of the Company's letters of credit.
24
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
Credit risk
Financial instruments which potentially subject the Company to credit risk and concentrations of credit risk consist principally of cash,
accounts receivable and derivatives. Management believes that the credit risk associated with accounts receivable is mitigated by the
significant proportion of counterparties that are well established public transit authorities. Additionally, the U.S. federal government funds a
substantial portion of U.S. public sector customer payments - up to 80% of the capital cost of new transit buses, coaches or cutaways - while
the remaining 20% comes from state and municipal sources. There are a few U.S. public sector customers that obtain 100% of their funding
from state and municipal sources. Canadian customers have similar funding sources in Canada. The maximum exposure to the risk of credit
for accounts receivables corresponds to their book value. Historically, the Company has experienced nominal bad debts as a result of the
customer base being principally comprised of municipal and other local transit authorities.
The purchase of new coaches, transit buses or cutaways by private fleet operators is paid from the operators' own capital budgets and
funded by their own cash flow or third party financing. A significant portion of private fleet operators choose to finance new coach
purchases with lending organizations. In some cases, MCI assists in arranging this financing. The Company has experienced a nominal amount
of bad debts with its private sales customers as most transactions require payment on delivery. Management has not observed, and does not
anticipate significant changes to credit risk.
The carrying amount of accounts receivable is reduced through the use of an allowance account and the amount of the loss is recognized in
the earnings statement within SG&A. When a receivable balance is considered uncollectible, it is written off against the allowance for
doubtful accounts. Subsequent recoveries of amounts previously written off are credited against SG&A in the audited consolidated
statements of net loss and total comprehensive earnings (loss).
The following table details the aging of the Company’s receivables and related allowance for doubtful accounts:
$ thousands
December 29, 2024
December 31, 2023
Current, including holdbacks
$
444,869
$
438,165
Past due amounts but not impaired
1 – 60 days
28,531
20,123
Greater than 60 days
17,366
8,669
Less: allowance for doubtful accounts
(1,035)
(604)
Total accounts receivables, net
$
489,731
$
466,353
The counterparties to the Company's derivatives are chartered Canadian banks and international financial institutions. The Company could
be exposed to loss in the event of non-performance by the counterparty. However, credit ratings and concentration of risk of the financial
institutions are monitored on a regular basis.
Commitments and Contractual Obligations
The following table describes the Company’s maturity analysis of the undiscounted cash flows of leases and accrued benefit liabilities as at
December 29, 2024:
$ thousands
Total
2025
2026
2027
2028
2029
Post 2029
Leases
$ 212,435
25,585
21,786
19,726
13,138
10,702
121,496
Accrued benefit liability
2,800
2,800
$ 215,235
28,385
21,786
19,726
13,138
10,702
121,496
As at December 29, 2024, outstanding surety bonds guaranteed by the Company totaled $307.4 million (December 31, 2023: $312.7 million).
The estimated maturity dates of the surety bonds outstanding at December 29, 2024 range from February 2025 to December 2039.
Management believes that adequate facilities exist to meet projected surety requirements.
The Company has not recorded a liability under these guarantees as management believes that no material events of default exist under any
applicable contracts with customers.
Under the North American Secured Facility1, the Company has established a letter of credit sub-facility of $150.0 million (December 31,
2023: $150.0 million). As at December 29, 2024, letters of credit totaling $80.5 million (December 31, 2023: $96.6 million) remain
outstanding as security for contractual obligations of the Company under the North American Secured Facility1. This decrease is primarily
driven by collateral requirements provided to support bonds associated with new contracts and the Company utilizing its additional capacity
under the EDC facility to support bonding requirements.
25
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
The EDC facility includes two credit facilities of up to $165 million, to support supply chain financing ("supply chain financing facility") for
$20 million and surety and performance bonding requirements for new contracts ("Guarantee Facility") for up to $145 million. The
Guarantee Facility is made up of an Account Performance Security Guarantee (“PSG”) up to $90 million and Surety Reinsurance Support up
to $55 million.
The PSG program is in place to cover a standby letter of credit or letter of guarantee (in each case an “LOC”), required as part of a
collateral package provided to support a surety facility where the new bonding capacity is a minimum of at least twice the face value of the
LC. The underlying surety facility must only be supporting surety bonds required under contracts entered into by NFI, and where such Surety
Bonds are bid bonds, performance bonds, regulatory bonds, license and permit bonds.
As at December 29, 2024, there was $134.7 million (December 31, 2023: $74.2 million) outstanding under the Guarantee Facility.
As at December 29, 2024, letters of credit in the UK totaling $7.5 million remained outstanding as security for contractual obligations of the
Company outside of the UK facility (December 31, 2023: $18.7 million). Additionally, there were $38.0 million (December 31, 2023: $45.8
million) of letters of credit outstanding outside of the Secured Facilities1.
Management believes that the Company was in compliance in all material respects with all applicable contractual obligations as at
December 29, 2024. The Company has not provided for any costs associated with these letters of credit.
The Company does not have any off-balance sheet arrangements or any material capital asset commitments at December 29, 2024.
Through the normal course of operations, the Company has guaranteed payments and residual values to third party lenders on behalf of
customers. As at December 29, 2024, the Company had guaranteed $2.1 million (December 31, 2023: $2.4 million) of these arrangements.
The Company has not provided for any of these costs, as it does not believe it will have to pay out on any of these arrangements.
Share Option Plan
The Board adopted a Share Option Plan (the “2013 Option Plan”) for NFI on March 21, 2013, under which certain employees of NFI and
certain of its affiliates may receive grants of options to acquire Shares. The 2013 Option Plan was amended and restated on December 8,
2015, December 31, 2018 and August 5, 2020. Directors who are not employed with NFI are not eligible to participate in the 2013 Option
Plan. A maximum of 3,600,000 Shares are reserved for issuance under the 2013 Option Plan. The options vest one-quarter on the first grant
date anniversary and an additional one-quarter on the second, third and fourth anniversary of the grant date. The 2013 Option Plan expired
on March 21, 2023, after which no new options were granted under the 2013 Option Plan.
The Board adopted a new share option plan on March 12, 2020 (the "2020 Option Plan"), which was approved by shareholders on May 7,
2020, and amended on August 5, 2020, under which certain employees of NFI and certain of its affiliates may receive grants of options to
acquire Shares. Directors who are not employed with NFI are not eligible to participate in the 2020 Option Plan. A maximum of 3,200,000
Shares are reserved for issuance under the 2020 Option Plan. The options vest one-quarter on the first grant date anniversary and an
additional one-quarter on the second, third and fourth anniversary of the grant date.
The following reconciles the Share options outstanding:
Fiscal 2024
Fiscal 2023
Number
Weighted average
exercise price
Number
Weighted average
exercise price
Balance at beginning of period
2,018,117
C$26.00
1,910,057
C$27.41
Granted during the period
325,925
C$13.57
374,448
C$10.46
Expired during the period
(369,115)
C$24.64
(266,388)
C$14.32
Exercised during the period
(1,369)
C$10.46
—
C$0.00
Balance at end of period
1,973,558
C$24.25
2,018,117
C$26.00
Footnotes:
1. As described in the Capital Allocation section on page 26.
26
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
Restricted Share Unit Plan for Non-Employee Directors
Pursuant to the Company’s Restricted Share Unit Plan for Non-Employee Directors, a maximum of 500,000 Shares are reserved for issuance
to non-employee directors. The Company issued 13,292 director restricted share units (“Director RSUs”), with a total value of $0.2 million,
in 2024 Q4. Approximately $0.1 million of the issued Director RSUs were exercised and exchanged for 5,479 Shares.
Critical accounting estimates and judgments
The Company's critical accounting estimates and judgments can be found within note 2 of the audited consolidated financial statements.
Provisions
In the current year, management identified that certain warranties were incorrectly classified and accounted for as service-type rather than
assurance-type. The correction of this error resulted in an immaterial prior period adjustment between Deferred Revenue and Warranty
Provision amounting to $17.4 million and increase to revenue and cost of sales of $7.3 million.
This change had no effect on net loss, total equities, cash flows, or EPS.
New and amended standards adopted by the Company
IAS 1 – Presentation of Financial Statements
Classification of Liabilities as Current or Non-current, which amends IAS 1, was issued January 2020 and October 2022, effective
for annual reporting periods beginning on or after January 1, 2024. This clarified a criterion in IAS 1 for classifying a liability as noncurrent:
the requirement for an entity to have the right to defer settlement of the liability for at least 12 months after the reporting period.
Management assessed that this standard does not have a material impact on the audited consolidated financial statements and that the
Company is in compliance with the required disclosure.
IAS 7 & IFRS 7 – Supplier financing arrangements - disclosures
The Company has adopted the disclosure requirements under IAS 7 and IFRS 7, effective for the fiscal period ending December
29, 2024. The required disclosures, including details on supplier finance arrangements, terms, payment due dates, liquidity risk,
and liability breakdowns, are included in note 9 of the audited consolidated financial statements.
Standards Issued but not adopted
IFRS 18 – Presentation and Disclosure in Financial Statements
IFRS 18 sets out requirements for the presentation and disclosure of information in the consolidated financial statements to help ensure
they provide relevant information that faithfully represents the Company’s assets, liabilities, equity, income and expenses. IFRS
18 replaces IAS 1 - Presentation of Financial Statements once effective. Initial adoption of the requirements under IFRS 18 will
be obligatory for annual reporting periods on or after January 1, 2027.
IFRS 7 and 9 - Amendments to the Classification and Measurement of Financial Instruments
The changes set criteria for derecognition of a financial liability settled through electronic transfer and include amendments for
the classification of financial assets involving contractual terms that are consistent with a basic lending arrangement, assets with
non-recourse features, and contractually linked instruments. Disclosure requirements change for investments in equity instruments
designated at fair value through other comprehensive income and include a new requirement for disclosure of contractual terms that could
change the timing or amount of contractual cash flows based on a contingent event that does not relate directly to changes in basic lending
risks and costs.
IFRS 7 and 9 – Amendments for contracts referencing nature-dependent electricity related to hedge accounting
The changes relate to designation of contracts relating to nature-dependent electricity as hedging instruments and their
disclosure requirements. Under the amendments an entity is permitted to designate as the hedged item a variable nominal
amount of forecast electricity transactions that is aligned with the variable amount of nature-dependent electricity expected to
be delivered by the generation facility as referenced in the hedging instrument.
Initial adoption of the amendments under IFRS 7 and 9 will be obligatory for annual reporting periods on or after January 1,
2026. Management is currently assessing the impact of these standards on its consolidated financial statements.
27
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
Capital Allocation Policy
The Company has a capital allocation policy based on an operating model intended to provide consistent and predictable cash flow and
maintain a strong balance sheet. This policy has established guidelines that are reviewed by the Board on a quarterly basis and provides
targets for maintaining financial flexibility, business investment, and return of capital to shareholders.
Maintaining Financial Flexibility
The Company plans to prudently use leverage to manage liquidityNG risk. LiquidityNG risk arises from the Company’s financial obligations and
from the management of its assets, liabilities, and capital structure. This risk is managed by regularly evaluating the liquid financial
resources to fund current and long-term obligations, and to meet the Company’s capital commitments in a cost-effective manner.
The main factors that affect liquidityNG include sales volume and mix, production levels, cash production costs, working capital
requirements, capital expenditure requirements, scheduled repayments of debt obligations, interest costs, funding requirements of the
Company’s pension plans, income taxes, credit capacity, letters of credit for surety bonds, expected future debt and equity capital market
conditions.
The Company’s liquidityNG requirements are met through a variety of sources, including cash on hand, cash generated from operations, First
Lien Secured Facilities (see below), leases, and debt and equity capital markets. The Company believes that its cash position and capacity
under its First Lien Secured Facilities, combined with anticipated future cash flows and access to capital markets, will be sufficient to fund
operations, meet financial obligations as they come due, and provide the funds necessary for capital expenditures, and other operational
needs. It is possible that unexpected events could significantly impair the Company’s liquidityNG and there can be no assurance that the
Company would be able to obtain additional liquidityNG when required in such circumstances. Please refer to Appendix A of this MD&A for
identified liquidity risks.
At December 29, 2024, the Company has convertible debentures outstanding of C$338 million ("Debentures"). The Debentures may be
converted in whole or in part from time to time at the holder’s option into 30.1659 Shares for each C$1,000 principal amount of Debentures,
representing a conversion price of approximately C$33.15 per Share and total potential conversion of 10,196,074 shares.
The details of the covenants under the Secured Facilities are as follows:
Total Leverage RatioNG
Interest Coverage
RatioNG
Minimum Banking
LiquidityNG
Senior Secured
Net Leverage
RatioNG
2024 Q4
<4.75x
>1.25x
Waived1
<3.50x
2025 Q1
<4.75x
>1.75x
$50,000
<3.50x
2025 Q2
<4.25x
>2.00x
$50,000
<3.25x
2025 Q3
<4.25x
>2.25x
$50,000
<3.25x
2025 Q4 and after
<3.75x
>2.50x
$50,000
<3.00x
$ thousands
December 29, 2024
December 31, 2023
Banking LiquidityNG Position
$
126,800
$
170,131
Total Leverage RatioNG (must be less than 4.75 [2023: waived])
4.37
Waived
Senior Secured Net Leverage RatioNG (must be less than 3.50 [2023: waived])
3.09
Waived
Interest Coverage RatioNG (must be greater than 1.25 [2023: waived])
1.51
Waived
As of December 29, 2024, NFI's banking covenant liquidityNG was $126.8 million, without consideration given to the minimum banking
liquidityNG requirement of $50 million under the Secured Facilities, which was waived for 2024 Q4. As part of the Company's efforts to
improve working capital and liquidityNG, the Company has secured milestone payments and deposits from certain customers. The Company
remains focused on cash and liquidity management, including efforts to accelerate deliveries and customer acceptances, accelerating
customer payments through the pursuit of advance payments and deposits wherever possible, and improving supplier payment terms. As of
December 29, 2024, the Company has $199.7 million in deferred revenue related to customer advanced payments and is continuing to work
with other customers to obtain milestone payments to offset the working capital required to support the transition to ZEB and increased
production levels.
Footnotes:
1.
Refer to Outlook Financial Guidance and Liquidity on page 14.
28
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
The Company remains focused on deleveraging its balance sheet and returning to its targeted leverage levels of 1.5x to 2.5x total debt to
Adjusted EBITDANG. Management believes it will achieve its longer-term leverage targets as the Company delivers on its backlogNG, and
benefits from record government investments in public transportation, and growing demand for its buses, coaches, parts and services
provided by Infrastructure SolutionsTM services and Aftermarket sales. The reduction in leverage will also be driven by increased production
rates, the anticipated stabilization of parts and components supply, and the active focus on reducing working capital.
The Company has entered into an agreement to amend the Interest Coverage Ratio requirement for 2024 Q3 and 2024 Q4. Although, NFI met
the original covenant requirement, the Company proactively engaged with its banking partners to ensure continued compliance throughout
2024.
Compliance with financial covenants is reviewed monthly by management and reported to the Board. Other than the requirements imposed
by borrowing agreements, the Company is not subject to any externally imposed capital requirements. Capital management objectives are
reviewed on a quarterly basis or when strategic capital transactions arise.
The Company continuously evaluates its capital structure to match liquidity and capital needs with a desire to lower overall interest
expenses. As the First Lien Secured Facilities mature in April 2026, and would become a current liability in April 2025, the Company has
continued to advance its plans to extend or refinance them with a goal of obtaining a longer-term flexible capital structure that increases
liquidity and lowers total interest expenses. The Company will continue to work on these initiatives in 2025.
Business Investment
The Company plans to invest in the current business for future growth and will continue to invest in common systems and LEAN
manufacturing operations to improve quality and cost effectiveness, while also investing to expand the Company's expertise in ZEBs,
Infrastructure SolutionsTM, and workforce development. The Company has made significant investments in its production facilities to achieve
its strategy of offering the broadest range of vehicle offerings in Heavy-Duty transit, coach and low-floor cutaways. These investments have
ensured that New Flyer has the ability to manufacture clean diesel, CNG, diesel electric hybrid and ZEBs across its network. Alexander
Dennis has the ability to produce ZEBs and diesel buses at all of its facilities and MCI has invested in its production facilities to improve
common line production for public and private markets, and combustion engine and ZEBs.
In November 2022, Alexander Dennis announced that several of its vehicles will now offer its next-generation electric chassis, driveline and
battery system. Alexander Dennis has secured orders in the UK using this new technology, and, in 2023 Q2, Alexander Dennis delivered its
first battery-electric buses to key customers in Hong Kong.
Alexander Dennis continues to advance its integrated aftermarket solution, AD24, which provides fleet telematics data, access to
personalized online parts and technical publications plus connections to field support, service, training and invoice management. AD24 is
one element of NFI’s numerous investments into telematics solutions to assist customers to track detailed performance and maintenance
metrics associated with their vehicles.
In October 2024, NFI announced that in response to growing demand for its products in Canada, the Company is expanding its Canadian
manufacturing capabilities through its All Canadian Build project. NFI is co-investing in the project alongside government partners to support
facility upgrades, zero-emission bus testing for Canadian customers, working capital, project administration, and other capital and
operational costs. Construction activities began in October and the first bus builds are planned for the fourth quarter of 2025, with a
continued ramp-up through 2026.
The Company's capital allocation priorities are currently focused on product development, deleveraging, strengthening its balance sheet and
supporting the recovery of operations. While the Company will consider business acquisitions and partnerships that will further grow and
diversify the business and contribute to long-term competitiveness, its current focus remains on deleveraging efforts. In addition, there are
covenants under the Secured Facilities that limit the Company's ability to make acquisitions, pay dividends and make capital expenditures.
Investment decisions are based on several criteria, including but not limited to: investment required to maintain or enhance operations;
enhancement of cost effectiveness through vertical integration of critical supply and sub-assembly in-sourcing; and acquisitions in current or
adjacent markets that are considered accretive to the business.
Return of Capital to Shareholders
The Company maintains a Share dividend policy that is consistent with the Company's financial performance and the desire to retain certain
cash flows to support the ongoing requirements of the business and to provide the financial flexibility to pursue revenue diversification and
growth opportunities. Under the terms of the Secured Facilities, the Company is not permitted to declare or pay dividends, until certain
financial conditions exist. Currently dividends have been suspended and future decisions on the resumption of dividend payments will be
dependent on financial performance and compliance with Secured Facilities covenants.
The Company's 2024 Q4 Free Cash FlowNG was C$0.8 million, with no dividends declared during this period. For 2023 Q4, Free Cash FlowNG
was C$3.6 million and no dividends were declared during the period.
29
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
Non-IFRS and Other Financial Measures
This MD&A is based on reported earnings in accordance with IFRS Accounting Standards and on the following non-IFRS and other financial
measures:
Adjusted EBITDANG and Net Operating Profit after TaxesNG
Management believes that Adjusted EBITDANG, and Net Operating Profit After Taxes ("NOPAT")NG are important measures in evaluating the
historical operating performance of the Company. However, Adjusted EBITDANG and NOPATNG are not recognized earnings measures under IFRS
Accounting Standards and do not have standardized meanings prescribed by IFRS. Accordingly, Adjusted EBITDANG and NOPATNG may not be
comparable to similar measures presented by other issuers. Readers of this MD&A are cautioned that Adjusted EBITDANG should not be
construed as an alternative to net earnings or loss determined in accordance with IFRS Accounting Standards and NOPATNG should not be
construed as an alternative to earnings (loss) from operations determined in accordance with IFRS Accounting Standards as an indicator of
the Company's performance.
The Company defines Adjusted EBITDANG as earnings before interest, income tax, depreciation and amortization after adjusting for the
effects of certain non-recurring, non-operating, and items occurring outside of normal operations that do not reflect the current ongoing
cash operations of the Company. These adjustments are provided in the following table reconciling net earnings or losses to Adjusted
EBITDANG based on the historical financial statements of the Company for the periods indicated.
The Company defines NOPATNG as Adjusted EBITDANG less depreciation of plant and equipment, depreciation of right-of-use assets and
income taxes at a rate of 31%.
($ thousands)
2024 Q4
2023 Q4
Fiscal 2024
Fiscal 2023
Net earnings (loss)
18,564
(2,329)
(3,296)
(136,164)
Addback
Income taxes
284
(12,192)
(3,167)
(32,906)
Interest expense10
27,798
37,278
130,940
152,242
Amortization
19,574
19,678
80,130
80,780
Loss (gain) on disposition of property, plant and equipment and
right of use assets
224
(62)
192
789
Loss (Gain) on debt modification13
-
1,600
-
(8,908)
Loss on debt extinguishment14
-
-
234
-
Unrealized foreign exchange (gain) loss on non-current monetary
items and forward foreign exchange contracts
(12,086)
1,260
(18,617)
3,696
Past service costs and other pension costs7
-
(7,000)
-
(2,236)
Equity settled stock-based compensation
42
700
2,233
2,618
Unrecoverable insurance costs and other8
-
893
116
893
Expenses incurred outside of normal operations11
11,057
132
11,057
2,166
Prior year sales tax provision9
-
41
-
101
Impairment loss on intangible assets12
1,250
-
2,278
-
Restructuring costs6
1,179
(1,544)
12,339
6,139
Adjusted EBITDANG
67,886
38,455
214,438
69,209
Depreciation of property, plant and equipment and right of use
assets
(11,505)
(11,848)
(47,781)
(49,370)
Tax at 31%
(17,478)
(8,248)
(51,664)
(6,150)
NOPATNG
38,903
18,359
114,993
13,689
Adjusted EBITDANG is comprised of:
Manufacturing
35,206
11,094
84,189
(42,073)
Aftermarket
32,770
29,480
139,541
120,187
Corporate
(90)
(2,119)
(9,292)
(8,905)
(Footnotes on page 30)
30
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
Free Cash FlowNG and Free Cash Flow per ShareNG
Management uses Free Cash FlowNG and Free Cash Flow per ShareNG as non-IFRS measures to evaluate the Company’s operating performance
and liquidityNG, to assess the Company’s ability to pay dividends on the Shares, service debt, pay interest on the Debentures and meet other
payment obligations. However, Free Cash FlowNG and Free Cash Flow per ShareNG are not recognized earnings measures under IFRS
Accounting Standards and do not have standardized meanings prescribed by IFRS. Accordingly, Free Cash FlowNG and the associated per Share
figure may not be comparable to similar measures presented by other issuers. Readers of this MD&A are cautioned that Free Cash FlowNG
should not be construed as an alternative to cash flows from operating activities determined in accordance with IFRS Accounting Standards
as a measure of liquidityNG and cash flow. The Company defines Free Cash FlowNG as net cash generated by or used in operating activities
adjusted for changes in non-cash working capital items and adjusted for items as shown in the reconciliation of net cash generated by
operating activities (an IFRS Accounting Standards measure) to Free Cash FlowNG based on the Company’s historical financial statements.
The Company generates its Free Cash FlowNG from operations and management expects this will continue to be the case for the foreseeable
future. Net cash flows generated from operating activities are significantly impacted by changes in non-cash working capital. The Company
uses its Secured Facilities to finance working capital and therefore has excluded the impact of working capital in calculating Free Cash
FlowNG.
The Company defines Free Cash Flow per ShareNG as Free Cash FlowNG divided by the average number of Shares outstanding.
($ thousands, except per Share figures)
2024 Q4
2023 Q4
Fiscal 2024
Fiscal 2023
Net cash generated by (used in) operating activities
17,492
55,126
15,340
(63,813)
Changes in non-cash working capital items2
6,894
(19,171)
54,877
44,962
Interest paid2
30,183
19,110
121,107
109,389
Interest expense2
(30,633)
(31,906)
(124,631)
(125,642)
Income taxes paid (recovered)2
1,796
(8,407)
2,060
(29,304)
Current income tax (expense) recovery2
(12,950)
15,873
(36,311)
11,941
Repayment of obligations under lease
(7,982)
(7,305)
(24,360)
(21,712)
Cash capital expenditures
(8,522)
(10,122)
(30,314)
(26,714)
Acquisition of intangible assets
(7,269)
(2,828)
(17,597)
(10,274)
Proceeds from disposition of property, plant and
equipment
40
519
963
1,769
Defined benefit funding3
355
918
2,830
3,185
Defined benefit expense3
(942)
(694)
(3,771)
(2,779)
Past service costs and other pension costs7
-
(7,000)
-
(7,000)
Expenses incurred outside of normal operations11
11,057
132
11,057
2,166
Equity hedge
-
-
-
3,765
Unrecoverable insurance costs and other8
-
893
116
893
Prior year sales tax provision9
-
41
-
101
Restructuring costs6
1,179
1,011
12,339
8,691
Foreign exchange gain (loss) on cash held in foreign
currency4
(128)
(3,506)
(1,517)
(1,053)
Free Cash FlowNG
570
2,684
(17,812)
(101,429)
U.S. exchange rate1
1.4416
1.3246
1.3507
1.3293
Free Cash Flow (C$)NG
822
3,555
(24,058)
(134,827)
Free Cash Flow per Share (C$)NG, 5
0.0069
0.0299
(0.2022)
(1.4676)
31
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
1.
U.S. exchange rate (C$ per US$) is the average exchange rate for the period.
2.
Changes in non-cash working capital are excluded from the calculation of Free Cash FlowNG as these temporary fluctuations are
managed through the Secured Facilities which are available to fund general corporate requirements, including working capital
requirements, subject to borrowing capacity restrictions. Changes in non-cash working capital are presented on the audited
consolidated statements of cash flows net of interest and income taxes paid.
3.
The cash effect of the difference between the defined benefit expense and funding is included in the determination of cash from
operating activities. This cash effect is excluded in the determination of Free Cash FlowNG as management believes that the defined
benefit expense amount provides a more appropriate measure, as the defined benefit funding can be impacted by special payments to
reduce the unfunded pension liability.
4.
Foreign exchange gain (loss) on cash held in foreign currency is excluded in the determination of cash from operating activities under
IFRS Accounting Standards; however, because it is a cash item, management believes it should be included in the calculation of Free
Cash FlowNG.
5.
Per Share calculations for Free Cash FlowNG (C$) are determined by dividing Free Cash FlowNG by the total number of all issued and
outstanding Shares using the weighted average over the period. The weighted average number of Shares outstanding for 2024 Q4 was
119,034,893 and 118,961,396 for 2023 Q4. The weighted average number of Shares outstanding for Fiscal 2024 and Fiscal 2023 was
119,008,308 and 91,866,613, respectively.
6.
Normalized to exclude non-operating restructuring costs. Costs primarily relate to severance costs, inefficient labour costs, increased
medical costs and right-of-use asset impairments and inventory impairments associated with restructuring initiatives. Free Cash FlowNG
reconciling amounts are net of right-of-use asset and property, plant and equipment impairments.
7.
Costs and recoveries associated with amendments to, and closures of, the Company's pension plans. 2022 Q2 includes $7.0 million for
the liability related to the closure of MCI’s Pembina facility and withdrawal from the multi-employer pension plan. In 2023 Q4, the
Company made the decision to continue operations of the Pembina facility indefinitely, thereby reversing the above adjustments made
in 2022 Q2. Also included in Adjusted EBITDANG is $4.8 million of pension past service costs incurred during 2023 Q1.
8.
Normalized to exclude non-operating costs related to an insurance event that are not recoverable, or are related to the deductible.
9.
Provision for sales taxes as a result of a previous state sales tax review.
10. Includes fair market value adjustments to interest rate swaps, cash conversion option on the Debentures, and to the prepayment
option on the Company’s second lien debt. 2024 Q4 includes a loss of $0.6 million compared to no loss in 2023 Q4 for the interest rate
swaps. 2024 Q4 includes a loss of $7.7 million and 2023 Q4 includes a loss of $0.5 million on the cash conversion option. The
prepayment option had a gain of $1.1 million in 2024 Q4 and a gain of $1.1 million in 2023 Q4.
11. Includes adjustments made related to items that occurred outside of normal operations. This includes specified items purchased in
broker markets at a premium and associated broker fees, which the Company provided to suppliers, and does not normally directly
purchase. Also, included is the additional $11.1 million in labour and overhead costs incurred as a result of the seat supply disruption.
12. In 2024 Q1, the Company recognized an impairment loss on a New Product Development (“NPD”) project for $1.0 million, as well as an
impairment loss on an internally developed intangible asset that was discontinued for $1.3 million in 2024 Q4.
13. As a result of the Company's Refinancing, the Company had recognized an accounting gain in 2023 Q3 stemming from the modification
made to its Secured Facilities. In 2023 Q4, an accounting loss was recorded to adjust the gain on debt modification.
14. In 2024 Q2, the Company recognized an accounting loss for the debt extinguishment related to the amendments made to the MDC
senior unsecured facility.
32
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
Adjusted Net Earnings (Loss)NG and Adjusted Net Earnings (Loss) per ShareNG
Management believes that Adjusted Net Earnings (Loss)NG and the associated per Share figure are important measures in evaluating the
historical operating performance of the Company. Adjusted Net Earnings (Loss)NG and Adjusted Net Earnings (Loss) per ShareNG are not
recognized measures under IFRS Accounting Standards and do not have standardized meanings prescribed by IFRS. Accordingly, Adjusted Net
Earnings (Loss)NG and Adjusted Net Earnings (Loss) per ShareNG may not be comparable to similar measures presented by other issuers.
Readers of this MD&A are cautioned that Adjusted Net Earnings (Loss)NG and Adjusted Net Earnings (Loss) per ShareNG should not be construed
as an alternative to net loss, or net loss per share, determined in accordance with IFRS Accounting Standards as indicators of the Company's
performance.
The Company defines Adjusted Net Earnings (Loss)NG as net earnings (loss) after adjusting for the after tax effects of certain non-recurring,
non-operating and items occurring outside of normal operation, that do not reflect the current ongoing cash operations of the Company.
These adjustments are provided in the following reconciliation of net earnings (loss) to Adjusted Net Earnings (Loss)NG based on the historical
financial statements of the Company for the periods indicated.
The Company defines Adjusted Net Earnings (Loss)NG per share as Adjusted Net Earnings (Loss)NG divided by the average number of Shares
outstanding.
($ thousands, except per Share figures)
2024 Q4
2023 Q4
Fiscal 2024
Fiscal 2023
Net earnings (loss)
18,564
(2,329)
(3,296)
(136,164)
Adjustments, net of tax1, 2
Unrealized foreign exchange (gain) loss
(8,339)
869
(12,845)
2,550
Unrealized (gain) loss on interest rate swap
(443)
-
351
6,505
Unrealized (gain) loss on cash conversion option
(5,344)
355
(4,565)
2,730
Unrealized gain on prepayment option of second lien
debt3
(740)
(769)
(6,611)
(442)
Accretion in carrying value of long-term debt
associated with debt modification4
-
-
-
1,014
Gain on debt modification5
-
1,104
-
(6,147)
Accretion associated to gain on debt modification
(690)
(451)
(1,698)
(451)
Loss on debt extinguishment6
-
-
161
-
Equity swap settlement fee7
-
-
-
2,428
Equity settled stock-based compensation
29
483
1,540
1,806
Loss (gain) on disposition of property, plant and
equipment
155
(43)
133
545
Past service costs and other pension costs8
-
(4,830)
-
(1,543)
Unrecoverable insurance costs and other9
-
616
80
616
Expenses incurred outside of normal operations10
7,629
(1,191)
7,629
213
Accretion in carrying value of convertible debt and
cash conversion option
1,440
1,337
5,614
5,213
Prior year sales tax provision11
-
28
-
71
Impairment loss on intangible assets12
863
-
1,572
-
Restructuring costs13
814
(1,065)
8,514
4,236
Adjusted Net Earnings (Loss)NG
13,938
(5,886)
(3,421)
(116,820)
Earnings (Loss) per Share (basic)
0.16
(0.02)
(0.03)
(1.48)
Earnings (Loss) per Share (fully diluted)
0.13
(0.02)
(0.03)
(1.48)
Adjusted Net Earnings (Loss) per Share (basic)NG
0.12
(0.05)
(0.03)
(1.27)
Adjusted Net Earnings (Loss) per Share (fully diluted)NG
0.11
(0.05)
(0.03)
(1.27)
33
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
1.
Addback items are derived from the historical financial statements of the Company.
2.
The Company has utilized a rate of 31.0% to tax effect the adjustments for the periods above.
3.
The unrealized gain on the prepayment option is related to the Company's second lien debt instrument. The gain is the result of an
increase in the options fair value between September 29, 2024 and December 29, 2024.
4.
Normalized to exclude the over accretion of transaction costs relating to the Company's Secured Facilities.
5.
As a result of the Company's Refinancing, the Company has recognized an accounting gain stemming from the modification made to its
Secured Facilities.
6.
In 2024 Q2, the Company recognized an accounting loss for the debt extinguishment related to the amendments made to the MDC
senior unsecured facility.
7.
In Fiscal 2023, the Company settled its equity swaps which were used to hedge the exposure associated with changes in value of its
Shares with respect to outstanding management restricted units ("Management RSUs") and a portion of the outstanding performance
share units ("PSUs"), and deferred share units ("DSUs").
8.
Costs and recoveries associated with amendments to, and closures of, the Company's pension plans. In 2022 Q2, $7.0 million liability
was recorded related to the anticipated closure of MCI’s Pembina facility and withdrawal from the multi-employer pension plan. In
2023 Q4, the Company made the decision to continue operations of the Pembina facility indefinitely, thereby reversing the above
adjustments made in 2022 Q2. Also included is $4.8 million of pension past service costs incurred during 2023 Q1.
9.
Normalized to exclude non-operating costs related to an insurance event that are not recoverable, or are related to the deductible.
10. Includes adjustments made related to items that occurred outside of normal operations. This includes specified items purchased in
broker markets at a premium and associated broker fees, which the Company provided to suppliers, and does not normally directly
purchase. Also included is the additional labour costs associated with the shortage of the specified item.
11. Provision for sales taxes as a result of a previous state sales tax review.
12. In 2024 Q1, the Company recognized an impairment loss on an NPD project for $1.0 million, as well as an impairment loss on an
internally developed intangible asset that was discontinued for $1.3 million in 2024 Q4.
13. Normalized to exclude non-operating restructuring costs. Costs primarily relate to severance costs, inefficient labour costs, increased
medical costs and right-of-use asset impairments and inventory impairments associated with other restructuring initiatives. Free Cash
FlowNG reconciling amounts are net of right-of-use asset and property, plant and equipment impairments.
34
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
Reconciliation of Shareholders' Equity to Invested CapitalNG
($ thousands)
2024 Q4
2024 Q3
2024 Q2
2024 Q1
Shareholders' Equity
707,754
699,717
704,031
697,580
Addback
Long term debt
610,237
610,624
576,145
562,324
Second lien debt
173,741
173,309
172,910
172,568
Obligation under lease
129,511
130,020
131,382
135,959
Convertible debentures
218,020
230,453
225,628
225,972
Senior unsecured debt
50,040
56,210
54,997
61,081
Derivatives
(10,497)
2,327
(2,740)
(1,783)
Cash
(49,557)
(59,720)
(77,445)
(68,491)
Invested CapitalNG
1,829,249
1,842,940
1,784,908 1,785,210
Average of invested capitalNG over the quarter
1,807,077
1,813,922
1,785,059 1,791,868
2023 Q4
2023 Q3
2023 Q2
2023 Q1
Shareholders' Equity
702,913
706,177
495,140
533,756
Addback
Long term debt
536,037
583,948
935,605
911,203
Second lien debt
172,396
172,975
-
-
Obligation under lease
138,003
130,102
124,405
127,247
Convertible debentures
228,985
221,427
225,081
218,719
Senior unsecured debt
61,796
60,838
87,363
86,431
Derivatives
8,010
6,814
(9,422)
(17,164)
Cash
(49,615)
(75,498)
(57,488)
(59,375)
Invested CapitalNG
1,798,525
1,806,783
1,800,684 1,800,817
Average of invested capitalNG over the quarter
1,802,654
1,803,734
1,800,751 1,776,276
35
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
Invested CapitalNG
Invested CapitalNG is not a recognized measure under IFRS Accounting Standards and does not have a standardized meaning prescribed by
IFRS. Management believes that Invested CapitalNG is an important measure in evaluating the Company’s financial position. The Company
defines Invested CapitalNG as total interest-bearing debt plus derivative liabilities plus equity less cash on hand.
ROICNG
ROICNG is not a recognized measure under IFRS Accounting Standards and its components do not have standardized meanings prescribed by
IFRS. Management believes that ROICNG is an important measure in evaluating the historical performance of the Company. The Company
defines ROICNG as NOPATNG divided by average invested capital for the last 12-month period.
Total LiquidityNG
Total LiquidityNG is not a recognized measure under IFRS Accounting Standards and does not have a standardized meaning prescribed by IFRS.
The Company defines total liquidityNG as cash on-hand plus available capacity under its North American and UK Secured Facilities, without
consideration given to the minimum banking liquidity requirement under the Secured Facilities.
Banking LiquidityNG
Banking LiquidityNG is not a recognized measure under IFRS Accounting Standards and does not have a standardized meaning prescribed by
IFRS. The Company defines banking liquidityNG as cash on-hand plus available capacity under its North American Secured Facilities, without
consideration given to the minimum banking liquidity requirement under the Secured Facilities.
Working Capital DaysNG
Working Capital DaysNG is not a recognized measure under IFRS Accounting Standards and does not have a standardized meaning prescribed
by IFRS. The Company defines Working Capital DaysNG as the calculated number of days to convert working capital to cash. It is calculated by
the number of days in the last twelve months (Fiscal 2024 - 364 days) divided by the working capital turnover ratio (total sales for the last
twelve months divided by average working capital for the last thirteen months).
Working Capital DaysNG is calculated based on the following line items on the audited consolidated statement of financial position: Accounts
Receivable and Inventories less Accounts Payables and Accrued Liabilities, Deferred Revenue and Provisions.
Book-to-Bill RatioNG
Book-to-bill ratioNG is not a recognized measure under IFRS Accounting Standards and does not have a standardized meaning prescribed by
IFRS. The Company defines book-to-bill ratioNG as new firm orders and exercised options divided by new deliveries.
BacklogNG
BacklogNG value is not a recognized measure under IFRS Accounting Standards and does not have a standardized meaning prescribed by IFRS.
The Company defines backlogNG as the number of EUs in the backlog multiplied by their expected selling price.
Total Leverage RatioNG
Total Leverage RatioNG is not a recognized measure under IFRS Accounting Standards and does not have a standardized meaning prescribed
by IFRS. TLRNG is calculated as aggregate indebtedness of the Company, not including the Company’s Debentures and certain non-financial
products, but including any senior unsecured or second lien indebtedness, less unrestricted cash and cash equivalents up to a maximum of
$50 million, divided by Adjusted EBITDANG (calculated on a trailing twelve-month basis). The TLRNG was reintroduced in 2024 Q3.
Interest Coverage RatioNG
Interest Coverage RatioNG is not a recognized measure under IFRS Accounting Standards and does not have a standardized meaning
prescribed by IFRS. ICRNG is calculated as the same trailing twelve month Adjusted EBITDANG as the Total Leverage RatioNG divided by trailing
twelve-month interest expense on the Secured Facilities, the Debentures, any senior unsecured or second lien indebtedness and other
interest and bank charges.
Total Net Debt to CapitalizationNG
Total Net Debt to CapitalizationNG is not a recognized measure under IFRS Accounting Standards and does not have a standardized meaning
prescribed by IFRS. TNDCNG is calculated as borrowings on the Secured Facilities and any senior unsecured or second lien indebtedness, less
unrestricted cash and cash equivalents up to a maximum of $50 million, divided by shareholders’ equity, as shown on the Company’s balance
36
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
sheet, plus borrowings on the Secured Facilities. The TNDCNG covenant excludes the impact of any actual goodwill write-downs up to a
maximum of $100 million.
Minimum Adjusted EBITDANG
The Minimum Adjusted EBITDANG is not a recognized measure under IFRS Accounting Standards and does not have a standardized meaning
prescribed by IFRS. The Minimum Adjusted EBITDANG covenant was first tested with the month ending September 30, 2023, but included
results from the period May 1, 2023 to September 30, 2023. The covenant continued on a cumulative basis until April 30, 2024, at which
point it became a trailing-twelve month test for the second quarter of 2024. The Minimum Adjusted EBITDANG tests were based on calendar
month-end dates from September 2023 to June 2024.
Senior Secured Net LeverageNG
Senior Secured Net LeverageNG includes the Secured Facilities and is calculated as indebtedness on those facilities, less unrestricted cash
and cash equivalents up to a maximum of $50 million, divided by Adjusted EBITDANG (calculated on a trailing twelve-month basis). The
Senior Secured Net LeverageNG was reintroduced in 2024 Q3.
37
NFI GROUP INC. 2024 FINANCIAL RESULTS
NFIGROUP.COM
Controls and Procedures
Internal Controls over Financial Reporting
Management is responsible for establishing and maintaining internal controls over financial reporting (“ICFR”), as defined under rules
adopted by the Canadian Securities Administrators. ICFR were designed under the supervision of, and with the participation of, the
President and Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”). The Company’s ICFR are designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of Financial Statements for external purposes in
accordance with IFRS Accounting Standards.
Management adheres to the “Internal Control – Integrated Framework 2013” (“COSO 2013”) from the Committee of Sponsoring Organizations
of the Treadway Commission.
Management, under the supervision of the CEO and CFO, evaluated the design and operational effectiveness of the Company’s ICFR as of
December 29, 2024 in accordance with the criteria established in COSO 2013, and concluded that the Company’s ICFR are effective.
There have been no changes in our internal controls over financial reporting that occurred during 2024 that have materially affected or are
reasonably likely to materially affect, our internal control over financial reporting.
ICFR, no matter how well designed, have inherent limitations. Therefore, ICFR can provide only reasonable assurance with respect to
financial statement preparation and may not prevent or detect all misstatements.
Disclosure Controls
Management is responsible for establishing and maintaining disclosure controls and procedures in order to provide reasonable assurance that
material information relating to the Company is made known to them in a timely manner and that information required to be disclosed is
reported within time periods prescribed by applicable securities legislation. There are inherent limitations to the effectiveness of any
system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls
and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their
control objectives. The Company’s CEO and CFO have concluded that disclosure controls and procedures as at December 29, 2024 were
effective.
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Appendix A
Meaning of Certain References
References in this MD&A to the “Company” are to NFI and all of its direct or indirect subsidiaries, including New Flyer Industries Canada ULC
(“NFI ULC”), New Flyer of America Inc. (“NFAI”), The Aftermarket Parts Company, LLC (“TAPC”), KMG Fabrication, Inc. ("KMG"), Carfair
Composites Inc. (“CCI”) and Carfair Composites USA, Inc. (“CCUI”, and together with "CCI", "Carfair"), The Reliable Insurance Company
Limited, ARBOC Specialty Vehicles, LLC ("ARBOC"), New MCI Holdings, Inc. and its affiliated entities (collectively, "MCI”), NFI Holdings
Luxembourg s.a.r.l., and Alexander Dennis Limited and its affiliated entities (collectively, "AD"). References to “New Flyer” generally refer
to NFI ULC, NFAI, TAPC, KMG, CCI, and CCUI. References in this MD&A to “management” are to senior management of NFI and the Company.
The Shares trade on the Toronto Stock Exchange (“TSX”) under the symbol NFI, and the Convertible Debentures trade on the TSX under the
symbol NFI.DB. As at December 29, 2024, 119,021,723 Shares were issued and outstanding. Additional information about NFI and the
Company, including NFI’s Annual Information Form and information circular, is available on SEDAR+ at http://www.sedarplus.ca.
References to NFI's geographic regions for the purpose of reporting global revenues are as follows: "North America" refers to Canada, United
States, and Mexico; United Kingdom and Europe refer to the United Kingdom and Europe; and "Asia Pacific" or "APAC" refers to Hong Kong,
Malaysia, Singapore, Australia, and New Zealand.
Forward-Looking Statements
This MD&A contains “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian securities
laws, which reflect the expectations of management regarding the Company’s future growth, financial performance and liquidity and the
Company’s strategic initiatives, plans, business prospects and opportunities, including the impact of and recovery from supply chain
disruptions and plans to address them, the steps the Company plans to take to improve liquidity and the impact of tariffs, other trade
measures and U.S. policy developments regarding federal vehicle funding. The words “believes”, “views”, “anticipates”, “plans”,
“expects”, “intends”, “projects”, “forecasts”, “estimates”, “guidance”, “goals”, “objectives”, “targets” and similar words or expressions
of future events or conditional verbs such as “may”, “will”, “should”, “could”, “would” are intended to identify forward-looking
statements. These forward-looking statements reflect management’s current expectations regarding future events and the Company’s
financial and operating performance and speak only as of the date of this MD&A. By their very nature, forward-looking statements require
management to make assumptions and involve significant risks and uncertainties, should not be read as guarantees of future events,
performance or results, and give rise to the possibility that management’s predictions, forecasts, projections, expectations or conclusions
will not prove to be accurate, that the assumptions may not be correct and that the Company’s future growth, financial condition, ability to
generate sufficient cash flow, maintain adequate liquidity and manage supply chain disruptions and the Company’s strategic initiatives,
objectives, plans, business prospects and opportunities, will not occur or be achieved.
The Company continues to experience various global and regional supply chain and logistics challenges, inflationary price increases for
parts, components and other inputs used in the manufacturing processes, as well as labour shortages. The Company has taken various steps
to mitigate these issues (including the current North American seat supply issue), but they continue to have a significant negative impact on
the Company’s business, operating results, financial condition and liquidity. These issues may continue and/or worsen, including as the
Company continues to ramp up production levels. While NFI has experienced significant improvement in overall supplier performance, the
supply of certain parts and components continues to be challenged and may deteriorate, including with respect to other parts and
components. There can be no assurance as to if or when production operations will return to pre-pandemic production rates or deliveries.
Supply chain issues could also potentially expose the Company to liquidated damages penalties under certain transit bus and motor coach
purchase contracts if it is unable to meet the applicable delivery deadlines under such contacts. While the Company is closely managing its
liquidity, it is possible that various events (such as delayed deliveries and customer acceptances, delayed customer payments, supply chain
issues, product recalls and warranty claims) could significantly impair the Company’s liquidity and there can be no assurance that the
Company would be able to obtain additional liquidity when required in such circumstances. In addition, as the Company is in the process of
ramping up production levels and an increasing percentage of the Company’s orders are ZEBs that have a higher manufacturing cost, the
Company’s working capital requirements have increased compared to prior years. There can be no assurance that the Company will be able
to maintain sufficient liquidity for an extended period or have access to additional capital when required in such circumstances and the
Company’s financial performance and condition, obligations, cash flow and liquidity and its ability to maintain compliance with the
covenants under its credit facilities may be impaired.
The level, type, coverage and duration of tariffs and other trade measures imposed by the US and Canada is fluidly evolving and may
continue to change and evolve in unpredictable ways. The impact of tariffs and other trade measures on general economic conditions,
customer demand and on the Company’s business is uncertain and may be significant. Such impacts may include general inflationary
pressures as well as new and exacerbated supply chain disruptions leading to production inefficiencies, delivery delays and additional
liquidity deterioration. It is impossible to predict the full impact on the Company of tariffs or other trade actions, and if they are in place
for an extended period they may have a material adverse effect on the Company’s business, operating results, financial condition and
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NFI GROUP INC. 2024 FINANCIAL RESULTS
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liquidity and may result in the Company not achieving the guidance provided above. In addition, U.S. federal funding for transit buses and
coaches, including electric vehicles, could potentially be significantly reduced as a result of the U.S. administration’s recent executive
orders and potential policy changes. This could significantly impact the ability of U.S. transit agencies to purchase vehicles from the
Company, which would likely have the most significant impact on purchases of electric vehicles. There can be no assurance as to the
continuation or future amount of U.S. federal funding for transit bus and coach purchases.
Specific reference is made to the factors described above in this MD&A and in the section entitled “Risk Factors” in the Company’s Annual
Information Form for a discussion of the factors that may affect forward-looking statements and information. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described
in forward-looking statements and information. Although the Company has attempted to identify important factors that could cause actual
actions, events or results to differ materially from those described in forward-looking statements and information, there may be other
factors that could cause actions, events or results not to be as anticipated, estimated or intended or to occur or be achieved at all. The
forward-looking statements and information contained herein are made as of the date of this MD&A (or as otherwise indicated) and, except
as required by law, the Company does not undertake to update any forward-looking statement or information, whether written or oral, that
may be made from time to time by the Company or on its behalf. The Company provides no assurance that forward-looking statements and
information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.
Accordingly, readers and investors should not place undue reliance on forward-looking statements and information.
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NFI GROUP INC. 2024 FINANCIAL RESULTS
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Appendix B - 2024 Fourth Quarter Bid Universe and
Order Activity
Demand for Transit Buses and Motor Coaches
The Company’s "Total Bid Universe" metric tracks known active public competitions in Canada and the United States and attempts to provide
an overall indication of anticipated heavy-duty transit bus and motor coach public sector market demand. It is a point-in-time snapshot of:
(i) EUs in active competitions, defined as all requests for proposals received by the Company and in process of review plus bids submitted by
the Company and awaiting customer action (what NFI considers to be active bids), and (ii) management’s forecast, based on data provided
by operators for their fleet replacement plans, of expected EUs to be placed out for competition over the next five years.
In 2024 Q4, active bids of 7,094 EUs were down 18.8% year-over-year, and down 19.0% from 2024 Q3. The year-over-year decline was
primarily driven by the Total Bid Universe reaching an all-time high in 2023 resulting in NFI recording its highest quarterly new awards ever
at 5,421 EUs in 2024 Q1. The Company ended 2024 Q4 with 3,437 bids in process, and another 3,657 bids submitted, which is expected to
drive further new orders in 2025.
The forecasted five-year North American industry procurement remains strong at 21,797 EUs. As of 2024 Q4, the Total Bid Universe was
28,891 EUs, down from its all-time high of 31,682 EUs in 2023 Q3, with the decrease driven by new orders received in 2024. The Company
expects that the forecasted five-year North American industry procurement will remain high in 2025 as transit agencies continue to
formalize their short- and long-term procurement plans linked to the multi-billion funding programs announced and/or launched by
governments in Canada and the U.S.
As at 2024 Q4, 15,218 EUs, or 52.7%, of the Total Bid Universe are ZEBs.
The Total Bid Universe EUs fluctuate significantly from quarter-to-quarter based on public tender activity procurement and award processes.
Bids in Process (EUs)
Bids Submitted (EUs)
Active EUs
Forecasted Industry
Procurement over 5
Years (EUs)1
Total Bid Universe
(EUs)
2023 Q4
1,101
7,631
8,732
22,098
30,830
2024 Q1
1,470
3,940
5,410
21,350
26,760
2024 Q2
3,609
3,153
6,762
21,415
28,177
2024 Q3
5,533
3,226
8,759
20,690
29,449
2024 Q4
3,437
3,657
7,094
21,797
28,891
1. Management’s estimate of anticipated future industry procurement over the next five years is based on direct discussions with select U.S. and Canadian
transit authorities. This estimate includes potential public customers activity for New Flyer and MCI vehicles, but it excludes potential ARBOC and Alexander
Dennis sales in Canada and the U.S.
Procurement of heavy-duty transit buses and motor coaches by the U.S. and Canadian public sector is typically accomplished through formal
multi-year contracts and purchasing schedules (state and national contracts, agency purchasing contracts), while procurement by the
private sector in North America, the UK and Europe and Asia Pacific is typically made on a transactional basis. As a result, the Company does
not maintain a Total Bid Universe for private sector buses and coaches.
The sale of cutaway and medium-duty buses manufactured by ARBOC is accomplished on a transactional purchase order basis through non-
exclusive third-party dealers who hold contracts directly with the customers. Bids are submitted by and agreements are held with a network
of dealers. Cutaway and medium-duty bus activity is therefore not included in the Total Bid Universe metric.
Due to the transactional nature of the procurement process in the UK, European and Asia Pacific markets, Alexander Dennis does not have a
Total Bid Universe metric like the one seen in North American public markets. Alexander Dennis does, however, maintain a current sales
pipeline, which continued to see improvement throughout 2024. The increase in industry market demand was on display as UK and Ireland
total market delivery volumes grew by 48% year-to-date in 2024 Q4 and continue to be driven by customers’ fleet recovery and replacement
plans. Alexander Dennis has continued to voice concerns to UK and Scottish governments regarding the uneven playing field that exists for
UK bus manufacturers, who support higher wages and better domestic employment rights, while combating lower-cost foreign importers
who have no investment requirement in the UK. The Company will continue to advance those discussions with a focus on increasing domestic
content requirements or increased tariffs to improve the playing field for domestic players.
In Asia Pacific, the Hong Kong market is highly cyclical, and, following busier periods in 2015 through 2018, the market declined as
anticipated. Alexander Dennis remains the market leader for double-deck buses in the Hong Kong market and expects to see stable annual
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NFI GROUP INC. 2024 FINANCIAL RESULTS
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deliveries and slow recovery, reflecting typical market cyclicality, in 2025. In 2023 Q2, Alexander Dennis delivered its first battery-electric
buses to key customers in Hong Kong and secured additional ZEB orders in this market in 2023 Q4. New Zealand and Singapore remain highly
cyclical markets with more predictable purchasing expectations based on vehicle age; Alexander Dennis continues to see significant
opportunities in both markets and is also pursuing additional expansion programs in South Africa and the Middle-East region.
Order activity
New orders (firm and options) during 2024 Q4 totaled 1,904 EUs, a 19.4% decrease from 2023 Q4. New firm and option orders for Fiscal 2024
were 9,489 EUs, an increase of 55.0% from Fiscal 2023. This increase reflects several major awards that NFI received during the year from
the New York City Transit Authority (for up to 2,090 EUs), New Jersey Transit (for up to 1,300 EUs) and Stagecoach UK (244 EUs). The timing
of new orders can vary based on transit agency procurement processes, with the fourth quarter typically being a busier period tied to
agency and operator approval meetings.
2024 Q4 was an average period for option conversion, which can vary from quarter-to-quarter, with 437 EUs converted. These 437 EUs
contributed to 865 EUs converted in Fiscal 2024, representing a conversion ratio of 76%. Further details on options are provided below
under the "Options" section.
In 2024 Q4, the Company received orders for 473 EUs of battery-electric, zero-emission vehicles, a decrease from the 988 EUs of ZEB orders
in 2023 Q4 and an increase from 227 EUs of ZEB orders in 2024 Q3. These 473 EUs of ZEBs equate to 24.8% of all new firm and option orders
for the quarter.
277 EUs of new firm and option orders were pending from customers at the end of 2024 Q4, where approval of the award to the Company
had been made by the customer’s board, council, or commission, as applicable, but purchase documentation had not yet been received by
the Company and therefore not yet included in the backlogNG.
New Orders
in Quarter
(Firm and
Option EUs)
LTM New Orders
(Firm and
Option EUs)
Option
Conversions in
Quarter (EUs)
LTM Option
Conversions (EUs)
2023 Q4
2,361
6,121
54
404
2024 Q1
5,421
9,669
131
491
2024 Q2
1,114
9,866
129
331
2024 Q3
1,050
9,946
168
482
2024 Q4
1,904
9,489
437
865
Options
In 2024 Q4, 119 options expired, as compared to 45 options that expired in 2024 Q3, and 55 options that expired in 2023 Q4. Option expiries
can vary significantly quarter-to-quarter. From 2021 to 2023, certain agencies allowed a portion of older options to expire as they re-
evaluated their longer-term fleet planning decisions with an increased focus on the procurement of ZEBs rather than traditional internal
combustion engine propulsion. NFI has replenished a significant number of expired options through new orders, with its option backlogng
growing by approximately 93% from the end of 2021 to 2024 Q4. In Fiscal 2024 the option conversion rate improved to 76.3%. The Company's
conversion rate can vary significantly from quarter-to-quarter and should be looked at on an annual or LTM basis.
A significant number of public transit and public coach contracts in the U.S. and Canada have a term of three to five years. In addition,
some contracts in the UK and APAC also have multi-year terms. The table below shows the number of option EUs that have either expired or
have been exercised annually over the past five years, as well as the current backlogNG of options that will expire each year if not exercised.
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Total
A) Options Expired (EUs)
1,202
819 1,920
575
268
4,784
B) Options Exercised (EUs)
953 1,110
638
404
865
3,970
C) Current Options by year of expiry (EUs)
975
1,388
1,388
1,531
3,993
9,275
D) Conversion rate % = B / (A+B)
44 %
58 %
25 %
41 %
76 %
In addition to contracts for identified public customers, the Company has increased its focus on purchasing schedules (state and national
contracts, and cooperative agency purchasing agreements) with the objective of having multiple available schedules, from which customers
within a prescribed region or from defined list, can purchase. The Company is currently named on over 41 of these purchasing schedules,
either directly or through its dealers. These schedules are not recorded in backlogNG as they do not have defined quantities allocated to the
Company or any other original equipment manufacturer. Once a customer makes an order under one of these agreements, the purchase is
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NFI GROUP INC. 2024 FINANCIAL RESULTS
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recorded as a firm order. The Company has received more than 2,500 vehicle awards from these schedules since the start of 2018, reflecting
their growing use by North American transit agencies as a procurement alternative.
The Company's 2024 Q4 Book-to-BillNG ratio (defined as new firm orders and exercised options divided by new deliveries) was 134.2%, an
increase from 111.2% in 2023 Q4. This increase was driven by a decrease in deliveries and the timing of customer awards. Fiscal 2024 Book-
to-BillNG was 121.4%, an increase from 113.0% for Fiscal 2023, primarily driven by increased deliveries and the timing of customer awards.
BacklogNG
The Company's total backlogNG consists of buses sold primarily to U.S. and Canadian public transit and coach customers and private operators
in the UK, US and internationally. The majority of the backlogNG relates to New Flyer transit buses for public customers with some of the
backlogNG consisting of units from MCI, AD, and ARBOC. Options for ARBOC vehicles are held by dealers, rather than the manufacturer, and
are not included as options in the NFI backlogNG, but are reflected to firm backlogNG when the vehicles are ordered by the dealer.
Transit buses and motor coaches incorporating clean propulsion systems, including compressed natural gas, diesel-electric hybrid, and ZEBs,
which consist of trolley-electric, fuel cell-electric, and battery-electric buses, represent approximately 60.0% of the total backlogNG as of
the end of 2024 Q4, relatively flat from 59.6% as of the end of 2024 Q3. As at the end of 2024 Q4, there were 6,101 EUs of ZEBs in the
backlogNG, representing 40.3% of the total backlogNG, relatively flat from 41.0% as at the end of 2024 Q3, and up from 35.7% as at the end of
2023 Q4.
2024 Q4
2024 Q3
2023 Q4
Firm
Orders Options
Total
Firm
Orders
Options
Total
Firm
Orders
Options
Total
Beginning of period
5,516
9,074
14,590
5,370
9,235 14,605
4,863
4,693
9,556
New orders
1,147
757
1,904
998
52
1,050
1,371
990
2,361
Options exercised
437
(437)
—
168
(168)
—
54
(54)
—
Shipments1
(1,180)
—
(1,180)
(994)
—
(994)
(1,227)
—
(1,227)
Cancelled/expired
(60)
(119)
(179)
(26)
(45)
(71)
(49)
(55)
(104)
End of period
5,860
9,275 15,135
5,516
9,074 14,590
5,012
5,574
10,586
Consisting of:
Heavy-duty transit buses
4,816
8,744
13,560
4,573
8,758 13,331
4,146
5,265
9,411
Motor coaches
349
531
880
282
316
598
246
309
555
Cutaway and medium-duty buses
695
695
661
661
620
—
620
Total BacklogNG
5,860
9,275 15,135
5,516
9,074 14,590
5,012
5,574
10,586
1. Shipments do not include delivery of pre-owned coaches as these coaches are not included in the backlogNG.
At the end of 2024 Q4, the Company's total backlogNG of 15,135 EUs (firm and options) increased by 3.7% from the end of 2024 Q3, and
increased by 43.0% from the end of 2023 Q4. The increase was driven by record awards in 2024 Q1, offset by higher deliveries and fewer
cancellations/expiries on a LTM basis. BacklogNG for 2024 Q4 has a total dollar value of $12.8 billion, a 6.5% increase from 2024 Q3 and a
61.2% increase from 2023 Q4.
The average price of an EU in total backlogNG is now $0.84 million, a 12.8% increase from 2023 Q4. This increase was driven by the impacts
of improved pricing, increased ZEB orders and general improvements in contract margins.
The summary of the values is provided below.
2024 Q4
2024 Q3
2023 Q4
EUs
EUs
EUs
Total firm orders
$4,713.8
5,860
$4,168.8
5,516
$3,249.8
5,012
Total options
$8,066.4
9,275
$7,830.5
9,074
$4,677.6
5,574
Total backlogNG
$12,780.2
15,135
$11,999.3
14,590
$7,927.4
10,586
NFI is a leading provider of propulsion agnostic bus
and coach mobility solutions. Offering a wide range of
bus models and propulsion types, alongside
aftermarket parts, service, training, Infrastructure
Solutions and financing. NFI meets today’s urban
demands for scalable smart mobility solutions.
Together, NFI is enabling more livable cities through
connected, clean, and sustainable transportation.
NFI has almost 9,000 team members in ten countries
and offers the widest range of sustainable drive
systems available, including zero-emission electric
(trolley, battery, and fuel cell), natural gas, electric
hybrid, and clean diesel.
In total, NFI supports its installed base of over
100,000 buses and coaches around the world.
NFI’s common shares trade on the TSX under the
symbol NFI and its convertible debentures trade on
the TSX under the symbol NFI.DB.
NFI Group Inc.
711 Kernaghan Avenue
Winnipeg, Manitoba
R2C 3T4
www.nfigroup.com
Consolidated Financial Statements of
NFI GROUP INC.
December 29, 2024
TABLE OF CONTENTS
Page
Consolidated Statements of Net Loss and Total Comprehensive Earnings (Loss)
7
Consolidated Statements of Financial Position
8
Consolidated Statements of Changes in Equity
9
Consolidated Statements of Cash Flows
10
Notes to the Consolidated Financial Statements
11-46
Deloitte LLP
360 Main Street
Suite 2300
Winnipeg, MB. R3C C3Z
Canada
Tel: 1-204-942-0051
Fax: 204-947-9390
www.deloitte.ca
Independent Auditor's Report
To the Shareholders and Board of Directors of NFI Group Inc.
Opinion
We have audited the consolidated financial statements of NFI Group Inc. (the “Company”), which
comprise the consolidated statements of financial position as at December 29, 2024 and December 31,
2023, and the consolidated statements of net loss and total comprehensive earnings (loss), changes in
equity and cash flows for the years then ended, and notes to the consolidated financial statements,
including material accounting policy information (collectively referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of the Company as at December 29, 2024 and December 31, 2023, and its financial performance
and its cash flows for the years then ended in accordance with International Financial Reporting
Standards (“IFRS Accounting Standards”).
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards ("Canadian
GAAS"). Our responsibilities under those standards are further described in the Auditor’s Responsibilities
for the Audit of the Financial Statements section of our report. We are independent of the Company in
accordance with the ethical requirements that are relevant to our audit of the financial statements in
Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matter
A key audit matter is a matter that, in our professional judgment, was of most significance in our audit of
the consolidated financial statements for the year ended December 29, 2024. This matter was addressed
in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on this matter.
Goodwill – ADL Manufacturing – Refer to Notes 2 and 7 of the financial statements
Key Audit Matter Description
Annually, the Company’s evaluation of goodwill for impairment involves the comparison of the
recoverable amount of each of its cash generating units (“CGUs”), which is the higher of its fair value less
costs of disposal and its value in use, to their carrying amount. The Company determined the recoverable
amount of the ADL Manufacturing CGUs (“identified CGU”) to be the value in use, which was estimated
using a discounted cash flow model. This required management to make significant estimates and
assumptions including those related to future cash inflows and outflows, growth rate and discount rate.
At the annual evaluation date, the recoverable amount of the CGU exceeded its carrying amount and no
impairment was recognized.
While there are several key assumptions that are required to estimate the recoverable amount of the
identified CGU, the assumptions with the highest degree of subjectivity and impact on the recoverable
amounts are related to the determination of forecast of future revenues, operating margins and discount
rate. This required significant auditor attention as these estimates are subject to estimation uncertainty.
Auditing these estimates and assumptions required a high degree of subjectivity in applying audit
procedures and in evaluating the results of those procedures. This resulted in an increased extent of audit
effort including the involvement of fair value specialists.
How the Key Audit Matter was Addressed in the Audit
Our audit procedures related to the determination of the forecasts of future revenues, operating margins
and discount rate used to estimate the recoverable amount of the identified CGU included the following,
among others:
•
Evaluated management’s ability to accurately forecast future revenues and operating margins by
comparing actual results to management’s historical forecasts.
•
Evaluated the reasonableness of the forecast of future revenues and operating margins by
comparing the forecasts to:
o Historical revenues and operating margins
o Known changes in the Company’s operations and its industry
o Internal reports including production and backlog supported by contracts
o Internal communications to management and the Board of Directors
o Macroeconomic and market specific information
•
With the assistance of fair value specialists, evaluated the reasonableness of the discount rate by
testing the source information underlying the determination of the discount rate, developing a
range of independent estimates and comparing those to the discount rate selected by
management.
Other Information
Management is responsible for the other information. The other information comprises:
• Management's Discussion and Analysis
• The information, other than the financial statements and our auditor’s report thereon, in the Annual
Report.
Our opinion on the financial statements does not cover the other information and we do not and will not
express any form of assurance conclusion thereon. In connection with our audit of the financial
statements, our responsibility is to read the other information identified above and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated.
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on
the work we have performed on this other information, we conclude that there is a material
misstatement of this other information, we are required to report that fact in this auditor’s report. We
have nothing to report in this regard.
The Annual Report is expected to be made available to us after the date of the auditor's report. If, based
on the work we will perform on this other information, we conclude that there is a material misstatement
of this other information, we are required to report that fact to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the
Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with IFRS Accounting Standards, and for such internal control as management determines is
necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Company or to
cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with Canadian GAAS will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Company to cease to continue
as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business units within the Company as a basis for forming an
opinion on the financial statements. We are responsible for the direction, supervision and review of
the audit work performed for purposes of the group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
The engagement partner on the audit resulting in this independent auditor’s report is Paul Stauch.
/s/ Deloitte LLP
Chartered Professional Accountants
Winnipeg, Manitoba
March 13, 2025
7
NFI GROUP INC 2024 ANNUAL REPORT
NFI GROUP INC.
CONSOLIDATED STATEMENTS OF NET LOSS AND TOTAL COMPREHENSIVE EARNINGS (LOSS)
52-weeks ended December 29, 2024 ("Fiscal 2024”) and 52-weeks ended December 31, 2023 ("Fiscal 2023”)
(in thousands of U.S. dollars except per share figures)
Fiscal 2024
Fiscal 2023
Restated (note 2.16)
Revenue (note 26)
$ 3,122,315)
$ 2,692,481)
Cost of sales (note 4)
2,772,872)
2,471,716)
Gross Profit
349,443)
220,765)
Sales, general and administration costs and other operating expenses
239,117)
245,265)
Foreign exchange loss (gain)
1,763)
(3,249)
Earnings (loss) from operations
108,563)
(21,251)
Loss on disposition of property, plant and equipment and right-of-use asset
(192)
(789)
Gain on debt modification
—
8,908)
Impairment loss on intangible assets
(2,278)
—
Loss on debt extinguishment
(234)
—
Unrealized foreign exchange gain (loss) on monetary items
18,617)
(3,696)
Earnings (loss) before interest and income taxes
124,476)
(16,828)
Interest and finance costs
Interest on long-term debt
88,168)
86,456)
Interest on convertible debt
12,382)
12,519)
Interest on senior unsecured debt (note 17)
5,581)
10,514)
Accretion in carrying value of long-term debt (note 18)
9,841)
4,415)
Accretion in carrying value of convertible debt (note 20)
8,136)
7,554)
Accretion in carrying value of senior unsecured debt (note 17)
321)
474)
Interest expense on lease liability
9,816)
8,084)
Other interest and bank charges
12,382)
5,964)
Fair market value gain on prepayment option of second lien debt
(note 19)
(9,580)
(640)
Equity swap settlement fee
—
3,519)
Fair market value loss on interest rate swap (note 25b)
510)
9,427)
Fair market value (gain) loss on cash conversion option (note 20)
(6,617)
3,956)
130,940)
152,242)
Loss before income tax expense
(6,464)
(169,070)
Income tax expense (recovery) (note 16)
Current income tax expense (recovery)
36,311)
(11,941)
Deferred income tax recovery
(39,479)
(20,965)
(3,168)
(32,906)
Net loss for the period
$ (3,296)
$ (136,164)
Other comprehensive earnings (loss)
Actuarial gain (loss) on defined benefit pension plan - this item will not be
reclassified subsequently to profit or loss
6,261)
(4,754)
Unrealized foreign exchange gain on translation of foreign
operations - this item will not be reclassified subsequently to profit
66)
12,137)
Total comprehensive earnings (loss) for the period
3,031)
(128,781)
Net loss per share (basic) (note 22)
$ (0.03)
$ (1.48)
Net loss per share (diluted) (note 22)
$ (0.03)
$ (1.48)
The accompanying notes are an integral part of the consolidated financial statements.
8
NFI GROUP INC 2024 ANNUAL REPORT
NFI GROUP INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at December 29, 2024
(in thousands of U.S. dollars)
December 29, 2024
December 31, 2023
Restated (note 2.16)
Assets
Current
Cash
$ 49,557)
$ 49,615)
Accounts receivable (note 3, 25e)
489,731)
466,353)
Inventories (note 4)
959,633)
762,581)
Income tax receivable
1,980)
26,314)
Other current asset (note 8, 25a)
6,937)
-
Prepaid expenses and deposits
25,342)
18,988)
1,533,180)
1,323,851)
Property, plant and equipment (note 5)
192,670)
194,474)
Right-of-use asset (note 6)
108,092)
114,437)
Derivative financial instruments (note 19, 25a, b)
12,347)
2,767)
Goodwill and intangible assets (note 7)
956,954)
976,377)
Accrued benefit asset (note 11)
9,299)
4,337)
Other long-term assets (note 8, 25a)
43,670)
50,676)
Deferred tax assets (note 16)
57,920)
33,041)
$ 2,914,132) $ 2,699,960)
Liabilities
Current
Accounts payable and accrued liabilities (note 9)
627,536)
547,626)
Income tax payable
4,640)
—
Derivative financial instruments (note 25a, b)
1,340)
1,481)
Current portion of long-term liabilities (note 10)
290,413)
186,893)
Senior unsecured debt (note 17)
19,609)
—
943,538)
736,000)
Accrued benefit liability (note 11)
2,511)
3,035)
Obligations under leases
112,699)
120,044)
Deferred compensation obligation (note 12)
1,671)
3,198)
Deferred revenue (note 14)
29,323)
14,246)
Provisions (note 15)
48,037)
65,258)
Deferred tax liabilities (note 16)
33,315)
46,756)
Derivative financial instruments (note 20, 25a, b)
2,855)
9,296)
Senior unsecured debt (note 17)
30,431)
61,796)
Long-term debt (note 18)
610,237)
536,037)
Second lien debt (note 19)
173,741)
172,396)
Convertible debentures (note 20)
218,020)
228,985)
$ 2,206,378) $ 1,997,047)
Commitments and contingencies (note 18)
Shareholders' equity
Share capital (note 21)
1,241,397)
1,240,163)
Stock option and restricted share unit reserve (note 13)
14,249)
13,673)
Accumulated other comprehensive income
10,736)
4,409)
Deficit
(558,628)
(555,332)
$ 707,754) $ 702,913)
$ 2,914,132) $ 2,699,960)
The accompanying notes are an integral part of the consolidated financial statements.
9
NFI GROUP INC 2024 ANNUAL REPORT
NFI GROUP INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the period ended December 29, 2024
(in thousands of U.S. dollars)
Share Capital
Stock Option
and Restricted
Share Unit
Reserve
Accumulated
Other
Comprehensive
(Loss) Income
Deficit
Total
Shareholders’
Equity
Balance, January 1, 2023 (restated)
$
988,218 $
11,285 $ (2,979) $
(419,168) $
577,356
Net loss
—
—
—
(136,164)
(136,164)
Other comprehensive gain
—
—
7,388
—
7,388
Equity transaction cost
(10,476)
—
—
—
(10,476)
Share-based compensation, net of deferred income taxes
—
2,756
—
—
2,756
Shares issued – private placement
170,458
—
—
—
170,458
Shares issued
91,963
(368)
—
—
91,595
Balance, December 31, 2023
$ 1,240,163 $
13,673 $
4,409 $
(555,332) $ 702,913
Net loss
—
—
—
(3,296)
(3,296)
Other comprehensive gain
—
—
6,327
—
6,327
Equity transaction cost
7
—
—
—
7
Share-based compensation, net of deferred income taxes
—
1,753
—
—
1,753
Shares issued (note 21)
1,227
(1,177)
—
—
50
Balance, December 29, 2024
$ 1,241,397 $
14,249 $
10,736 $
(558,628) $
707,754
The accompanying notes are an integral part of the consolidated financial statements.
10
NFI GROUP INC 2024 ANNUAL REPORT
NFI GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
52-Weeks ended December 29, 2024 ("Fiscal 2024”) and 52-weeks ended December 31, 2023 ("Fiscal 2023)
(in thousands of U.S. dollars)
2
0
2
4
2
0
2
3
Fiscal 2024
Fiscal 2023
Operating activities
Net loss for the period
$
(
$
(
$ (3,296)
$ (136,164)
Income tax recovery
3
(
(3,168)
(32,906)
Depreciation of property, plant and equipment
1
0
1
3
47,782
49,370
Amortization of intangible assets
7
32,348
31,410
Impairment loss on intangible assets
—
—
2,278
—
Share-based compensation
2
6
7
2,233
2,618
Interest and finance costs recognized in profit or loss
3
8
4
0
147,137
148,926
Gain on fair value adjustment for total return swap
—
(
2
—
(3,765)
Unrealized foreign exchange (gain) loss on monetary items
1
(
1
(18,617)
3,696
Foreign exchange loss on cash held in foreign currency
4
0
1
3
1,517
1,053
(Gain) loss on fair value adjustment for cash conversion option
5
1
(6,617)
3,315
Gain on fair value adjustment for prepayment option
(
5
4
7
(9,580)
—
Loss on disposition of property, plant and equipment
1
1
(
1
192
789
Impairment recovery on property, plant and equipment
— —
—
(2,558)
Gain on debt modification
—
(
1
—
(8,908)
Loss on debt extinguishment
—
—
234
—
Past service costs
—
—
—
4,764
Defined benefit expense
1
6
9
3,771
2,779
Defined benefit funding
(
9
(
9
(2,830)
(3,185)
Cash generated by operating activities before non-cash working capital items and
interest and income taxes paid
4
5
193,384
61,234
Changes in non-cash working capital items (note 23)
(
3
(
1
(54,877)
(44,962)
Cash generated by operating activities before interest and income taxes paid
1
0
(
5
138,507
16,272
Interest paid
(
4
(
3
(121,107)
(109,389)
Income taxes (paid) recovered
(
9
2
1
(2,060)
29,304
Net cash generated by (used in) operating activities
(
4
(
3
15,340
(63,813)
Financing activities
Repayment of obligations under lease
(
3
(
4
(24,360)
(21,712)
Proceeds (repayment) from revolving credit facilities
4
2
(
1
50,054
(192,401)
Share issuance
1
3
2
6
50
262,055
Share issuance recovery (cost)
—
(
1
7
(10,476)
Proceeds on other long-term liabilities
—
1
8
—
18,374
(Repayment) proceeds from senior unsecured debt
—
(
2
(5,000)
61,996
Net cash generated by financing activities
3
8
6
7
20,751
117,836
Investing activities
Acquisition of intangible assets
(
3
(
3
(17,597)
(10,274)
Proceeds from disposition of property, plant and equipment
6
6
1
963
1,769
Disposition of (investment in) long-term restricted deposits
—
(
9
5,379
(18,123)
Acquisition of property, plant and equipment (note 26)
(
7
(
8
(30,314)
(26,714)
Proceeds from government grants used to acquire assets
6,937
—
Net cash used in investing activities
(
1
(
1
(34,632)
(53,342)
Effect of foreign exchange rate on cash
(
4
(
1
(1,517)
(1,053)
Decrease in cash
(
1
1
8
(58)
(372)
Cash — beginning of period
7
7
5
7
49,615
49,987
Cash — end of period
$
59 $
$
49,557
$
49,615
The accompanying notes are an integral part of the consolidated financial statements.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
11
NFI GROUP INC 2024 ANNUAL REPORT
1.
CORPORATE INFORMATION
1.1
Corporate information
NFI Group Inc. (“NFI”) was incorporated on June 16, 2005 under the laws of the Province of Ontario (NFI and its subsidiaries collectively
referred to as the “Company”). The Company is a leading independent global bus manufacturer providing a comprehensive suite of
mass transportation solutions under brands: New Flyer® (heavy-duty transit buses), Alexander Dennis ("AD") (single and double-deck
buses), Plaxton (motor coaches), MCI® (motor coaches), ARBOC® (low-floor cutaway and medium-duty buses) and NFI Parts™
(aftermarket parts sales). NFI’s common shares (the “Shares”) are listed on the Toronto Stock Exchange (“TSX”) under the symbol
“NFI”. NFI's convertible debentures are listed on the TSX under the symbol "NFI.DB".
These audited consolidated financial statements (the "Statements") were approved by NFI's board of directors (the "Board") on March
13, 2025.
2.
SUMMARY OF MATERIAL ACCOUNTING POLICIES
The material accounting policies applied in the preparation of these Statements are set out below. These policies have been
consistently applied to all periods presented, unless otherwise stated.
2.1
Basis of preparation
The Statements were prepared on a going concern basis in accordance with International Financial Reporting Standards (IFRS®) (“IFRS
Accounting Standards”) which require management to make judgments, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, revenue and expenses.
2.2
Principles of consolidation
The Statements include the accounts of the Company's subsidiaries.
Subsidiaries are entities over which NFI has control, where control is achieved when NFI: has power over the investee; is exposed, or
has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns. NFI
holds 100% of the voting rights in, and therefore controls, all of its subsidiaries.
The effects of potential voting rights that are currently exercisable are considered when assessing whether control exists. Subsidiaries
are fully consolidated from the date control is transferred to NFI, and are de-consolidated from the date control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries as follows:
•
cost is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of
exchange, and business acquisition related expenses are expensed as incurred;
•
identifiable assets acquired and liabilities assumed are measured at their fair values at the acquisition date;
•
the excess of acquisition cost over the fair value of the identifiable net assets acquired is recorded as goodwill; and
•
if the acquisition cost is less than the fair value of the net assets acquired, the fair value of the net assets is reassessed and any
remaining difference is recognized directly in the consolidated statements of net loss and total comprehensive earnings (loss).
Inter-company transactions between subsidiaries are eliminated on consolidation.
2.3
Reportable Segments
The Company’s reportable segments are organized around the markets it serves and are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker (“CODM”). The President and Chief Executive Officer of NFI has
authority for resource allocation and assessment of the Company’s performance and therefore acts as the CODM.
2.4
Foreign currency
The Company operates with multiple functional currencies. The Statements are presented in U.S. dollars as this presentation is most
meaningful to financial statement users. References to “$” are to U.S. dollars, references to “C$” are to Canadian dollars, references
to "£" are to British pounds sterling. For those subsidiaries with different functional currencies, exchange rate differences arising from
the translation of items that form part of the net investment in the foreign operation are recorded in unrealized foreign exchange gain
(loss) on translation of foreign operations in other comprehensive earnings (loss).
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
12
NFI GROUP INC 2024 ANNUAL REPORT
2.
SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
Monetary balances denominated in a currency other than U.S. dollars are translated at the rates of exchange existing at the end of the
period, and the results of the operations are translated at average rates of exchange over the period. Non-monetary balances are
translated at the exchange rate prevailing at the date of the transaction.
Foreign exchange gains and losses that relate to borrowings, non-current monetary items and non-current forward foreign exchange
contracts are presented in the consolidated statements of net loss and comprehensive earnings (loss) within “unrealized foreign
exchange gain (loss) on non-current monetary items”.
All other foreign exchange gains and losses are presented in the consolidated statements of net loss and total comprehensive earnings
(loss) within “foreign exchange loss (gain) ”.
2.5
Revenue recognition
Manufacturing Operations
Persuasive evidence of an arrangement exists in the form of a written contract. A process is in place that initiates a pre-shipment
acceptance by the customer at the Company’s plant. This acceptance prior to shipment mitigates the likelihood of customer’s
dissatisfaction with the final product upon delivery to the customer. Revenue is recorded when the vehicle is delivered, shipped, or
picked up by the customer. The customer does not have a legal right to return the delivered products after the acceptance period, or
deviate from the agreed upon price. The Company’s contract clearly identifies a fixed and determinable price.
In connection with its sales of new coaches, the Company at times agrees to accept a pre-owned coach in exchange and gives the buyer
a credit equal to the pre-owned coach's then-current fair value. Any credit provided to the customer in excess of the fair value of the
pre-owned coach is deducted from the selling price of the new coach.
When a single sale transaction requires the delivery of more than one product or service (multiple performance obligations), the
revenue recognition criteria are applied to the separately identifiable performance obligations. A performance obligation is considered
to be separately identifiable if the product or service delivered has stand-alone value to that customer and the fair value associated
with the product or service can be measured reliably. The amount recognized as revenue for each performance obligation is its fair
value in relation to the fair value of the contract as a whole. Management has determined that the standard base warranty included in
the bus or coach purchase is not a separate performance obligation and therefore recognized upon delivery of the vehicle.
The Company sells extended warranty contracts that provide coverage in addition to the basic coverage. Proceeds from the sale of
these contracts are deferred and amortized into revenue over the extended warranty period commencing at the end of the basic
warranty period.
The Company also receives proceeds from the sale of extended warranties relating to major subsystems such as engines, transmissions,
axles, batteries, fuel cells, and air conditioning that are purchased for the customer from the original equipment manufacturer
(“OEM”). Revenue is not recognized on these proceeds, as the Company is an agent to the transaction.
The Company, from time-to-time, may enter into arrangements with customers where the customer has requested that the Company
defer shipping a vehicle and instead hold it for a specified period until the customer is able to take possession. The Company
recognizes revenue for bill and hold arrangements when the arrangement is substantive, the product is identified separately as
belonging to the customer and ready for physical transfer to the customer, and the Company cannot use the product or allocate it to
another customer. The Company does not recognize revenue on any bus or coach firm or option orders that have not yet been delivered
except on bill and hold arrangements. The Infrastructure SolutionsTM business sources, installs and commissions electric vehicle
chargers, and constructs the related charging infrastructure. Revenues related to the supply, installation and commissioning of electric
vehicle chargers are recognized upon delivery. Revenues related to construction of charging infrastructure are recognized over time
using the cost-to-cost input method. The cost-to-cost method measures the Company's progress toward completion based on the total
costs incurred relative to the total estimated contract costs.
Operating lease revenue is recorded on a straight-line basis in the period earned over the life of the contract and is recognized in
revenue in the consolidated statements of net loss and total comprehensive earnings (loss) due to its operating nature.
Aftermarket Operations
Persuasive evidence of an arrangement exists in the form of an authorized sales order. The customer is invoiced, and revenue is
recorded at the time the part is delivered using a commercial shipper. For parts not kept in stock, the parts required by the customer
and shipment details are provided to the supplier and the parts are shipped from the supplier directly to the customer's location, these
transactions are recorded on a gross basis as the Company is the principal in the arrangement.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
13
NFI GROUP INC 2024 ANNUAL REPORT
2.
SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
The price list for parts clearly identifies a fixed and determinable price, while also describing that the Company has no legal obligation
to accept the return of goods other than on defective and/or warrantable parts product. Aftermarket parts revenue does not contain
any revenue related to the bus or coach warranty.
2.6
Employee benefits
For defined benefit pension plans and other post-employment benefits, the net periodic pension expense is actuarially determined by
independent actuaries using the projected unit credit method. Actuarial remeasurement is comprised of actuarial gains and losses, the
effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), and is reflected immediately
in the consolidated statements of financial position with a charge or credit recognized in other comprehensive income in the period in
which they occur. Remeasurement recognized in other comprehensive income (loss) is reflected immediately in accumulated other
comprehensive income and will not be reclassified to profit or loss. Past service cost is recognized in profit or loss in the period of a
plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit
liability or asset. Defined benefit costs are comprised of service costs (including current service cost, past service cost gains on
curtailments and settlements), net interest expense or income and remeasurement.
The asset or liability recognized in the consolidated statements of financial position is the present value of the defined benefit
obligation at the end of the reporting period less the fair value of plan assets, together with adjustments for past service costs. The
present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of
high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity
approximating the terms of the related pension liability. For funded plans, surpluses are recognized only to the extent that the surplus
is considered recoverable. Recoverability is primarily based on the extent to which the Company can unilaterally reduce future
contributions to the plan.
Payments to defined contribution plans are expensed as incurred, which is as the related employee service is rendered.
2.7
Share-based compensation plans
The Company operates cash-settled and equity-settled share-based compensation plans under which it receives services from executive
management and non-employee members of the Board.
For the cash-settled plans (note 13), the expense is determined based on the fair value of the liability at the end of the reporting
period until the awards are settled. Certain share-based compensation plans include non-market performance conditions. The
Company`s accounting policy is to recognize the impact of non-market performance conditions by adjusting the number of awards that
are expected to vest. At the end of each reporting period, the Company re-assesses its estimates of the number of awards that are
expected to vest and recognizes the impact of the revisions on compensation expense (note 27) in the consolidated statements of net
loss and total comprehensive earnings (loss).
For the equity-settled plans (note 13), share-based payments to executive management are measured at the fair value of the equity
instruments at the grant date. The fair value is measured at grant date and each tranche is recognized on a graded-vesting basis over
the period in which the options vest. The offset to the recorded cost is the stock option reserve. Consideration received on the exercise
of stock options is recorded as share capital and the related stock option reserve is transferred to share capital. Upon expiry, the
recorded value is transferred to retained earnings. At the end of each reporting period, the Company revises its estimate of the number
of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in the consolidated
statements of net loss and total comprehensive earnings (loss) such that the cumulative expense reflects the revised estimate, with a
corresponding adjustment to the stock option reserve. Where the terms and conditions of options are modified, the increase in the fair
value of the options, measured immediately before and after the modification, is also charged to the consolidated statements of net
loss and total comprehensive earnings (loss).
2.8
Cash
Cash and cash equivalents comprise cash on hand, demand deposits and investments with an original maturity at the date of purchase
of three months or less.
2.9
Accounts receivables
Accounts receivables are amounts due from customers from the rendering of services or sale of goods in the ordinary course of
business. Accounts receivables are classified as current assets if payment is due within one year or less. Accounts receivables are
recognized initially at fair value and subsequently measured at amortized cost, less impairment, if any.
The Company maintains an allowance for doubtful accounts and sales adjustments to provide for impairment of trade receivables. The
expense relating to doubtful accounts is included within “Sales, general and administration costs and other operating expenses” in the
consolidated statements of net loss and total comprehensive earnings (loss).
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
14
NFI GROUP INC 2024 ANNUAL REPORT
2.
SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
2.10
Inventories
Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the first-in first-out
principle, and includes expenditures incurred in acquiring the inventories, production or conversion costs and other costs incurred in
bringing inventories to their existing location and condition. In the case of finished goods inventories and work in progress, cost
includes an appropriate share of production overheads based on normal operating capacity. Net realizable value is the estimated selling
price in the ordinary course of business, less the estimated costs of completion and selling expenses.
2.11
Property, plant and equipment
Property, plant and equipment are recorded at cost reduced by applicable investment tax credits, less accumulated depreciation and
impairment losses. Depreciation is calculated at the following annual rates:
Building and building improvements
4% declining-balance basis
Machinery and equipment
25% declining-balance basis
Demo buses and coaches
20% - 50% straight-line basis
Computer hardware and software
30% declining-balance basis
Office equipment
20% declining-balance basis
Buses and coaches available for lease
20% - 50% straight-line basis
Property, plant and equipment are tested for impairment as described under “Impairment of non-financial assets” in note 2.15.
2.12
Right-of-use assets
At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the contract conveys a
right to control the use of an identified asset for a period of time in exchange for consideration.
The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially
measured based on the initial amount of the lease liability adjusted for any lease payments made at or before the commencement
date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the
underlying asset or the site on which it is located, less any lease incentives received. The assets are depreciated based on the lease
term of the asset using the straight-line method. The lease term includes periods covered by an option to extend if the Company is
reasonably certain to exercise that option. Lease terms are as follows:
Land, building and building improvements
4 - 35 years
Machinery and equipment
15 months - 5 years
Automobiles
13 months - 3 years
Office equipment
14 months - 5 years
The lease liability is initially measured at the present value of the lease payments that are not paid at commencement date,
discounted using the interest rate implicit in the lease or, if the rate cannot be determined, the Company uses its incremental
borrowing rate. The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a
change in the future lease payments arising from a change in an index or rate or if the Company changes its assessment of whether it
will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset,
or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Company has elected to apply the practical expedient not to recognize right-of-use assets and lease liabilities for short-term leases
that have a lease term of 12 months or less and leases of low-value assets. The lease payments associated with these leases are
recognized as an expense on a straight-line basis over the lease term.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
15
NFI GROUP INC 2024 ANNUAL REPORT
2.
SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
2.13
Intangible assets
Identifiable intangible assets are initially recorded at cost. Based on management’s forecasts and business plans and the going concern
of the Company, the trade names intangible asset (note 7) has been deemed to have an indefinite life, except for the "NABI Parts"
tradename which is amortized over its useful life of 12 years. For purposes of impairment testing, the fair value of trade names is
determined using an income approach.
Intangible assets that have a finite life are amortized using the straight-line method over the estimated useful lives of the assets as
follows:
Patents and Licenses
5-12 years
Backlog of sales orders
1-2 years
Customer relationships
21 years
Internally developed intellectual property
5-7 years
Identifiable intangible assets with finite and indefinite lives are tested for impairment as described under “Impairment of non-financial
assets” in note 2.15.
2.14
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Company’s share of the net identifiable assets of
the acquired business at the date of acquisition. Separately recognized goodwill is tested at the end of every reporting period for
possible impairment when there are events or changes in circumstances that indicate that their carrying amounts may not be
recoverable and also tested annually for impairment. Goodwill is carried at cost less accumulated impairment losses. Gains and losses
on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
2.15
Impairment of non-financial assets
Non-financial assets with finite lives are tested at the end of every reporting period for possible impairment when there are events or
changes in circumstances that indicate that their carrying amounts may not be recoverable. In addition, non-financial assets that are
not amortized are subject to an annual impairment assessment. The carrying values of identifiable intangible assets with indefinite
lives are tested annually for impairment because they are not amortized. Impairment is determined by comparing the recoverable
amount of such assets with their carrying amounts. Any impairment loss is recognized for the amount by which the asset’s carrying
amount exceeds its recoverable amount within earnings of continuing or discontinued operations, as appropriate.
The recoverable amount is the higher of an asset’s fair value less cost to sell or its value in use. For the purpose of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows or cash generating units
(“CGUs”). The Company evaluates impairment losses for potential reversals, other than goodwill impairment, when events or changes
in circumstances warrant such consideration.
2.16 Provisions
Provisions represent liabilities to the Company for which the amount or timing is uncertain. Provisions are recognized when the
Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be
required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses,
unless the losses relate to an onerous contract.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a discount rate
that reflects current market assessments of the time value of money and the risks specific to the obligation. Provisions are re-measured
as at each consolidated statements of financial position date using the then current discount rate. The increase in the provision due to
passage of time is recognized as interest expense.
At the time of sale, a provision for warranty claims relating to the base warranty on the entire bus or motor coach and a corrosion
warranty on the related structure, is recorded and charged against operations. This warranty provision is based upon management's
best estimate of expected future warranty costs utilizing past claims experience. Actual warranty expenditures are charged against the
provision as incurred.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
16
NFI GROUP INC 2024 ANNUAL REPORT
2.
SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are lower
than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of
the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is
established, the Company recognizes any impairment loss on the assets associated with that contract.
In the current year, management identified that certain warranties were incorrectly classified and accounted for as service-type rather
than assurance-type. The correction of this error resulted in an immaterial prior period adjustment between Deferred Revenue and
Warranty Provision amounting to $17.4 million and increase to revenue and cost of sales of $7.3 million. This change had no effect on
net loss, total equities, cash flows, or EPS.
2.17
Long-term debt and second lien debt
Long-term debt and second lien debt are recognized initially at fair value, net of transaction costs incurred. Debt is subsequently
stated at amortized cost with any difference between the proceeds and the amortized cost recognized in the consolidated statements
of net loss and total comprehensive earnings (loss) over the term of the debt using the effective interest method.
Debt is classified as a current liability unless the Company has an unconditional right to defer settlement for at least 12 months after
the date of the consolidated statements of financial position.
2.18
Convertible debentures
Convertible debentures issued by NFI are convertible unsecured debentures that can be converted to share capital at the option of the
holder. Upon conversion, NFI has the option to pay the holder in share capital or cash, this creates a derivative liability. The host
liability component of the financial instrument is recognized initially at fair value of a similar liability that does not have a conversion
option, net of transaction costs incurred, and is subsequently stated at amortized cost with any difference between the proceeds and
the amortized cost recognized in the consolidated statements of net loss and total comprehensive earnings (loss).
The cash conversion option, net of transaction costs is treated as an embedded derivative which is recognized at fair value through
profit and loss.
2.19
Financial instruments
Financial assets
Purchases and sales of financial assets are recognized on the settlement date, which is the date on which the asset is delivered to or by
the Company. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or were
transferred and the Company has transferred substantially all risks and rewards of ownership. Financial assets are classified in the
following categories at the time of initial recognition based on the purpose for which the financial assets were acquired:
Financial assets at fair value through profit or loss
Classification
Financial assets at fair value through profit or loss are financial assets held for trading or designated as fair value through profit or loss.
A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term or if so designated by
management. Assets in this category include derivative financial instruments and are classified as short or long term assets in the
consolidated statements of financial position.
Recognition and measurement
Financial assets are initially recognized at fair value and subsequently carried at fair value through profit and loss, with changes
recognized in the consolidated statements of net loss and total comprehensive earnings (loss). Transaction costs are expensed as
incurred.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
17
NFI GROUP INC 2024 ANNUAL REPORT
2.
SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
Financial assets carried at amortized cost
Classification
Financial assets classified as amortized cost are non-derivative financial assets that the Company intends to hold in order to collect the
contractual cash flows and have fixed or determinable payments that are not quoted in an active market. They are included in current
assets, except for those with maturities greater than 12 months after the date of the consolidated statements of financial position,
which are classified as non-current assets. Assets in this category include accounts receivables, income tax receivables, deposits and
cash and are classified as current assets in the consolidated statements of financial position.
Recognition and measurement
Financial assets carried at amortized cost are initially recognized at fair value plus transaction costs and subsequently carried at
amortized cost using the effective interest method.
Financial liabilities carried at amortized cost
Financial liabilities primarily consist of accounts payable and accrued liabilities, derivative financial instruments, convertible debt,
other long-term liabilities and long-term debt. Financial liabilities are initially measured at fair value and subsequently measured at
amortized cost unless classified as fair value through profit or loss.
Hedge accounting and derivative instruments
The Company enters into foreign currency, interest rate, and share forward contract derivatives to manage the associated risks.
Derivatives are initially recognized at fair value on the date a contract is entered into and are subsequently re-measured at their fair
value. Changes in the fair value of derivative instruments are recognized in the consolidated statements of net loss and total
comprehensive earnings (loss), except for effective changes for designated derivatives under hedge accounting.
Cash Conversion Option
An embedded derivative is a derivative component attached to a non-derivative contract. The Company has an embedded derivative,
the cash conversion option of NFI’s convertible debentures (note 20). The cash conversion option meets separation criteria outlined in
IFRS 9.4.3.3, and is recognized and measured separately from convertible debentures. This embedded derivative is measured in
accordance with IFRS Accounting Standards, measured initially at fair value, with changes in fair values recognized within the
consolidated statements of net loss and total comprehensive earnings (loss).
Prepayment option on second lien debt
An embedded derivative is a derivative component attached to a non-derivative contract. The Company has an embedded derivative,
the prepayment option of the Company’s second lien debt (note 19). The prepayment option meets separation criteria outlined in IFRS
9.4.3.3, and is recognized and measured separately from second lien debt. This embedded derivative is measured in accordance with
IFRS Accounting Standards, measured initially at fair value, with changes in fair values recognized within the consolidated statements
of net loss and total comprehensive earnings (loss).
2.20
Taxation
Tax expense comprises current and deferred tax. Tax is recognized in the consolidated statements of net loss and total comprehensive
earnings (loss) except to the extent it relates to items recognized directly in equity, in which case the related tax is recognized in
equity.
Current tax expense is based on the results for the period as adjusted for items that are not taxable or not deductible. Current tax is
calculated using the tax rates under the laws that were enacted or substantively enacted at the date of the consolidated statements of
financial position.
Deferred tax is accounted for using the liability approach and is the tax expected to be payable or recoverable on temporary
differences between the carrying amount of assets and liabilities in the consolidated statements of financial position and the
corresponding tax base used in the computation of taxable profit. Deferred tax is calculated based on the expected manner of
realization or settlement of the carrying amount of assets and liabilities, using tax rates that are expected to apply to the year of
realization or settlement based on tax rates and laws enacted or substantively enacted at the date of the consolidated statements of
financial position.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
18
NFI GROUP INC 2024 ANNUAL REPORT
2.
SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
Deferred tax assets are recognized to the extent it is probable that taxable profits will be available against which the deductible
temporary differences can be utilized, unless the deferred tax asset arises from the initial recognition of an asset or liability in a
transaction that is not a business combination, and at the time of the transaction, affects neither accounting profit nor taxable profit
or loss. The carrying amount of deferred tax assets is reviewed as at the date of each consolidated statements of financial position and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax liabilities are generally recognized for all taxable temporary differences except to the extent that the deferred tax
liability arises from: the initial recognition of goodwill; or the initial recognition of an asset or liability in a transaction which is not a
business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). As well,
deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries except where the
reversal of the temporary difference can be controlled and it is probable that the difference will not reverse in the foreseeable future.
International Tax Reform - Pillar two model rules
In May 2023, the IASB amended IAS 12, Income taxes, for International tax reform - Pillar two Model Rules. The amendments to IAS 12
have been introduced in response to the Organization for Economic Co-operation and Development’s BEPS Pillar Two rules and include a
mandatory temporary exception to the recognition and disclosure of deferred taxes arising from the jurisdictional implementation of
the Pillar Two model rules and disclosure requirements for affected entities. The Company has adopted the mandatory temporary
exception relating to deferred income taxes related to Pillar Two. In June 2024, Canada enacted its Pillar Two legislation which is
effective for annual reporting periods beginning on or after January 1, 2024. The Pillar Two legislation did not have a material impact
on the Statements.
2.21
Investment tax credits
The Company has earned investment tax credits (“ITCs”) relating to a percentage of eligible current and capital research and
development expenditures incurred in each taxation year. ITCs are recognized when there is reasonable assurance that the Company
will comply with the associated conditions and the grants will be received. The ITCs are recognized either as a reduction in cost of
sales on the consolidated statements of net loss and total comprehensive earnings (loss), or as a reduction in intangibles, or property,
plant and equipment, depending on where the original costs which gave rise to the credits were recorded.
2.22
Vendor Rebates
The Company records certain consideration received from a vendor, which is probable and can be reasonably estimated, as a reduction
of the cost of purchases during the period.
2.23
Critical accounting estimates and judgments
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
Management makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom
equal the actual results. Estimates are reviewed on a regular basis and, as adjustments become necessary, they are reported in the
consolidated statements of net loss and total comprehensive earnings (loss) in the periods in which they become known. The assets and
liabilities which require management to make significant estimates and assumptions in determining carrying values include inventories,
property, plant and equipment, intangible assets, goodwill, provisions, accrued benefit liability, deferred compensation obligation, and
deferred income taxes.
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment are
addressed below.
Inventories
The value associated with inventory require management to make estimates associated with allocating labour and overhead costs to
inventory in the period. Determining the net realizable values of inventory also requires management to make significant estimates.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
19
NFI GROUP INC 2024 ANNUAL REPORT
2.
SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
Property, plant and equipment
The value associated with property, plant and equipment is dependent on the estimated useful lives and the residual value of the
assets. Actual results will vary from these estimates.
Intangible assets and goodwill
The values associated with the initial recognition and impairment tests of the intangible assets and goodwill involve significant
estimates and assumptions, including those with respect to future cash inflows and outflows, discount rates and asset lives.
These significant estimates are subject to the Company’s future results. These determinations will affect the amount of amortization
expense on intangible assets recognized in future periods.
Management assesses impairment by comparing the recoverable amount of an intangible asset or goodwill with its carrying value. The
determination of the recoverable amount involves significant estimation by management.
Management has determined that for purposes of this evaluation the Company has five CGUs: North American bus/coach
manufacturing, ARBOC, AD manufacturing, AD aftermarket parts operations, and NFI Parts – North American aftermarket parts
operations.
Goodwill is allocated to the Company’s five CGUs for the purpose of impairment testing. The Company performs its annual test for
impairment of goodwill in the fourth quarter of each year and also when indicators of impairment exist.
Insurance provisions
Estimated provision around the Company’s insurance risk retention involves significant estimates. Management estimates the related
provision based on historical information, as well as any available information on actual claims. Management engages an actuary to
assist with these calculations, but future experience could vary significantly from historical information.
Accrued benefit liability
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest
rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to
maturity approximating the terms of the related pension liability. Determination of benefit expense requires assumptions such as the
discount rate to measure obligations and return on assets, the projected age of employees upon retirement, life expectancy and the
expected rate of future compensation changes.
Actual results will differ from results which are estimated based on assumptions. See note 2.6 for certain assumptions made with
respect to employee benefits.
Deferred compensation obligation
The deferred compensation obligation is based on estimated future results of the Company. These results could vary significantly from
actual future results. This would result in a significant change to the future compensation expense.
Income taxes
Estimation of income taxes includes evaluating the recoverability of deferred tax assets based on an assessment of the Company’s
ability to utilize the underlying future tax deductions against future taxable income before they expire. Management’s assessment is
based upon existing tax laws and estimates of future taxable income. If the assessment of the Company’s ability to utilize the
underlying future tax deductions changes, the Company would be required to recognize more or fewer of the tax deductions as assets,
which would decrease or increase the income tax expense in the period in which this is determined.
The Company is subject to taxation in multiple jurisdictions. Significant judgment is required in determining the worldwide provision
for taxation. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary
course of business. The Company maintains provisions for uncertain tax positions that it believes appropriately reflect its risk with
respect to tax matters under active discussion, audit, dispute or appeal with tax authorities, or which are otherwise considered to
involve uncertainty. These provisions for uncertain tax positions are made using management’s best estimate of the amount expected
to be paid based on a qualitative assessment of all relevant factors. Management reviews the adequacy of these provisions as at the
date of each consolidated statements of financial position. However, it is possible that at some future date an additional liability could
result from audits by taxing authorities. Where the final tax outcome of these matters is different from the amounts that were initially
recorded, such differences will affect the tax provisions in the period in which such determination is made.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
20
NFI GROUP INC 2024 ANNUAL REPORT
2.
SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
Provision for warranty and campaign costs
The Company offers warranties on the buses and coaches it sells. Management estimates the related provision for future warranty
claims and campaigns based on historical warranty claim information, as well as recent trends that might suggest that past cost
information may differ from future claims. Factors that could impact the estimated claim information include quality initiatives, as
well as parts and labour costs.
Critical judgments in applying accounting policies
The following critical judgments that were made by management have the most significant effect on the amounts recognized in the
Statements.
Revenue recognition
As described in note 2.5, management assessed the criteria for the recognition of revenue related to arrangements that have multiple
components as set out in IFRS 15. Also, judgment is necessary to determine when components can be recognized separately and the
allocation of the related consideration allocated to each component.
Also as described in note 2.5, management assessed the criteria for the recognition of revenue in an agency relationship related to the
sale of extended warranties that are purchased for the customer from the OEM as set out in IFRS 15.
Functional currency
Management assessed the criteria for the determination of functional currency as set out in IAS 21. An entity is required to place the
greatest weight on the currency that influences the pricing of the transactions or the primary economic environment in which the
entity operates, rather than focusing on the currency in which the transactions are denominated in. Items included in the financial
statements of each consolidated entity of the Company are measured using the functional currency. The Statements are presented in
the U.S. dollar, which is the Company's functional and presentation currency.
The financial statements of entities that have a functional currency different from that of the Company's (“foreign operations”) are
translated into U.S. dollars. All resulting changes are recognized in other comprehensive income as cumulative translation adjustments.
Goodwill
Judgment is required in the selection of CGUs and the allocation of assets and liabilities to these CGUs, which is necessary to assess the
impairment of long-term assets, goodwill and intangible assets.
2.24
New standards adopted
IAS 1 – Presentation of Financial Statements
Classification of Liabilities as Current or Non-current, which amends IAS 1, was issued January 2020 and October 2022, effective for
annual reporting periods beginning on or after January 1, 2024. This clarified a criterion in IAS 1 for classifying a liability as noncurrent:
the requirement for an entity to have the right to defer settlement of the liability for at least 12 months after the reporting period.
Management assessed that this standard does not have a material impact on the audited consolidated financial statements and that the
Company is in compliance with the required disclosure.
IAS 7 & IFRS 7 – Supplier financing arrangements - disclosures
The Company has adopted the disclosure requirements under IAS 7 and IFRS 7, effective for the fiscal period ending December 29,
2024. The Company has elected not to present select comparative information as permitted upon first time adoption of the standard.
The required disclosures, including details on supplier finance arrangements, terms, payment due dates, liquidity risk, and liability
breakdowns, are included in note 9.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
21
NFI GROUP INC 2024 ANNUAL REPORT
2.
SUMMARY OF MATERIAL ACCOUNTING POLICIES (Continued)
2.25
Standards issued but not yet adopted
IFRS 18 – Presentation and Disclosure in Financial Statements
IFRS 18 sets out requirements for the presentation and disclosure of information in the consolidated financial statements to help ensure
they provide relevant information that faithfully represents the Company’s assets, liabilities, equity, income and expenses. IFRS 18
replaces IAS 1 - Presentation of Financial Statements once effective. Initial adoption of the requirements under IFRS 18 will be
obligatory for annual reporting periods on or after January 1, 2027. Management is currently assessing the impact of these standards on
the Statements.
IFRS 7 and 9 - Amendments to the Classification and Measurement of Financial Instruments
The changes set criteria for derecognition of a financial liability settled through electronic transfer and include amendments for the
classification of financial assets involving contractual terms that are consistent with a basic lending arrangement, assets with non-
recourse features, and contractually linked instruments. Disclosure requirements change for investments in equity instruments
designated at fair value through other comprehensive income and include a new requirement for disclosure of contractual terms that
could change the timing or amount of contractual cash flows based on a contingent event that does not relate directly to changes in
basic lending risks and costs.
IFRS 7 and 9 – Amendments for contracts referencing nature-dependent electricity related to hedge accounting
The changes relate to designation of contracts relating to nature-dependent electricity as hedging instruments and their disclosure
requirements. Under the amendments an entity is permitted to designate as the hedged item a variable nominal amount of forecast
electricity transactions that is aligned with the variable amount of nature-dependent electricity expected to be delivered by the
generation facility as referenced in the hedging instrument.
Initial adoption of the amendments under IFRS 7 and 9 will be obligatory for annual reporting periods on or after January 1, 2026.
Management is currently assessing the impact of these standards on the Statements.
3.
ACCOUNTS RECEIVABLE
December 29, 2024
December 31, 2023
Trade, net of allowance for doubtful accounts (note 25e)
$
449,081 $
430,261
Other
40,650
36,092
$
489,731 $
466,353
4.
INVENTORIES
December 29, 2024
December 31, 2023
Raw materials
$
394,521 $
360,575
Work in process
477,398
331,119
Finished goods
87,714
70,887
$
959,633 $
762,581
2
0
2
0
Fiscal 2024
Fiscal 2023
Cost of inventories recognized as expense and included in cost of sales
$
$
$
2,647,729
$
2,363,585
Write-down of inventory to net realizable value in cost of sales
1
,
2
3
7
3
4,413
2,331
Reversals of a previous write-down in inventory
—
9
1
—
225
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
22
NFI GROUP INC 2024 ANNUAL REPORT
5.
PROPERTY, PLANT AND EQUIPMENT
Land, building
and building
improvements
Machinery
and
equipment
Computer
hardware
and
software
Office
equipment
Demo
buses
and
coaches
Buses and
coaches
available
for lease
Total
Cost
$
119,053 $
230,017 $
58,741 $
8,059 $ 53,283 $
24,915 494,068
Accumulated depreciation
26,522
155,130
43,750
6,098
43,973
22,812 298,285
January 1, 2023 net book value
92,531
74,887
14,991
1,961
9,310
2,103 195,783
Additions
9,140
13,482
1,856
15
2,171
50
26,714
Transfer (to) from inventory
—
(57)
—
—
897
(1,752)
(912)
Disposals
(2,306)
(143)
—
—
—
—
(2,449)
Depreciation charge
(4,183)
(16,622)
(4,240)
(363) (4,268)
(257) (29,933)
Reversal of impairment
2,558
—
—
—
—
—
2,558
Cumulative translation adjustment
534
1,918
103
1
157
—
2,713
December 31, 2023 net book value
98,274
73,465
12,710
1,614
8,267
144 194,474
Additions
6,800
17,923
2,220
(66)
703
2,734
30,314
Transfer (to) from inventory
(3,168)
514
(163)
—
(58)
(1,885)
(4,760)
Disposals
(212)
(293)
(3)
—
(15)
—
(523)
Depreciation charge
(4,027)
(16,524)
(3,625)
(164) (4,193)
(625) (29,158)
Cumulative translation adjustment
(208)
2,685
(10)
(5)
(139)
—
2,323
December 29, 2024 net book value
$
97,459 $
77,770 $
11,129 $
1,379 $ 4,565 $
368 $ 192,670
Land, building
and building
improvements
Machinery
and
equipment
Computer
hardware
and
software
Office
equipment
Demo
buses
and
coaches
Buses and
coaches
available
for lease
Total
Recorded as:
Cost
$
128,979 $ 245,217 $
60,700 $
8,075 $ 56,508 $
23,213 $522,692
Accumulated depreciation
30,705
171,752
47,990
6,461
48,241
23,069 328,218
December 31, 2023 net book value
$
98,274 $
73,465 $
12,710 $
1,614 $ 8,267 $
144 $ 194,474
Cost
$
132,191 $ 266,046 $
62,744 $
8,004 $ 56,999 $
24,062 $ 550,046
Accumulated depreciation
34,732
188,276
51,615
6,625
52,434
23,694 357,376
December 29, 2024 net book value
$
97,459 $
77,770 $
11,129 $
1,379 $
4,565 $ 368 $ 192,670
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
23
NFI GROUP INC 2024 ANNUAL REPORT
6.
RIGHT-OF-USE ASSETS
Land, building
and building
improvements
Machinery
and
equipment
Computer
hardware
and software
Total
Cost
$
151,036 $
50,402 $
15,191 $
216,629
Accumulated Depreciation
53,257
42,063
13,678
108,998
January 1, 2023 net book value
97,779
8,339
1,513
107,631
Additions
21,421
4,867
1,610
27,898
Disposals
(1,976)
(70)
—
(2,046)
Depreciation charge
(13,249)
(5,403)
(785)
(19,437)
Cumulative translation adjustment
385
6
—
391
December 31, 2023 net book value
104,360
7,739
2,338
114,437
Additions
9,069
4,372
1,212
14,653
Modification
(1,742)
—
—
(1,742)
Disposals
(593)
(39)
—
(632)
Depreciation charge
(13,328)
(4,337)
(960)
(18,625)
Cumulative translation adjustment
117
(116)
—
1
December 29, 2024 net book value
$
97,883 $
7,619 $
2,590 $
108,092
Land, building
and building
improvements
Machinery
and
equipment
Computer
hardware
and software
Total
Recorded as:
Cost
170,866
55,205
16,801
242,872
Accumulated Depreciation
66,506
47,466
14,463
128,435
December 31, 2023 net book value
104,360
7,739
2,338
114,437
Cost
177,717
59,422
18,013
255,152
Accumulated Depreciation
79,834
51,803
15,423
147,060
December 29, 2024 net book value
$
97,883 $
7,619 $
2,590 $
108,092
Total cash outflows for payments on lease liabilities was $32.8 million for the period ended December 29, 2024 (2023: $29.8 million) of
which $22.7 million (2023: $21.7 million) was for principal repayments.
The Company assessed the extension periods embedded within each lease for inclusion in the lease liabilities on a lease-by-lease basis.
When it determined it was reasonably certain to exercise the extension option within the lease, the Company has included those
extension periods in the initial recognition of the right-of-use asset and lease liability. Significant leases where assumptions have been
made are long-term building leases.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
24
NFI GROUP INC 2024 ANNUAL REPORT
7.
GOODWILL AND INTANGIBLE ASSETS
Goodwill
Trade
names
Patents
and
Licenses
Customer
relationships
Internally
developed
intellectual
property
Total
Cost
$ 409,703 $ 265,497 $ 154,448 $
516,642
$
11,338
$ 1,357,628
Accumulated amortization
—
2,338
147,567
220,553
749
371,207
January 1, 2023 net book value
409,703
263,159
6,881
296,089
10,589
986,421
Additions
—
—
33
—
10,241
10,274
Amortization charge
—
(275)
(6,454)
(23,878)
(803)
(31,410)
Cumulative translation adjustment
3,468
2,262
231
5,572
(441)
11,092
December 31, 2023 net book value
413,171
265,146
691
277,783
19,586
976,377
Additions
—
—
37
—
17,560
17,597
Amortization charge
—
(275)
(724)
(28,888)
(2,461)
(32,348)
Impairment loss
—
—
—
—
(2,278)
(2,278)
Cumulative translation adjustment
(656)
(563)
13
(426)
(762)
(2,394)
December 29, 2024 net book value
$ 412,515 $ 264,308 $
17 $
248,469
$
31,645
$
956,954
Recorded as:
Cost
$ 413,171 $ 267,759 $ 154,712 $
522,214
$
21,138
1,400,732
Accumulated amortization
—
2,613
154,021
244,431
1,552
424,355
December 31, 2023 net book value
413,171
265,146
691
277,783
19,586
976,377
Cost
412,515
267,196
154,485
520,712
35,658
1,412,304
Accumulated amortization
—
2,888
154,468
272,243
4,013
455,350
December 29, 2024 net book value
$ 412,515 $ 264,308 $
17 $
248,469
$
31,645
$
956,954
In 2024 Q1, the Company recognized an impairment loss on a New Product Development (“NPD”) project for $1.0 million. As well as an
impairment loss on an internally developed intangible asset that is discontinued for $1.3 million in 2024 Q4.
The Company performed its annual impairment test on goodwill and indefinite-life intangible assets for all CGUs. The recoverable
amount of the Company’s CGUs is determined based on the greater of value-in-use calculations and fair value less costs to sell. Value-
in-use calculations, which was determined to be the recoverable amount, use estimated cash flow projections based on adjusted
financial plans approved by the Board covering five-year periods and discount rates based on weighted average cost of capital of similar
businesses.
The discount rates used in the estimation of the recoverable amount for all CGUs are set out below.
CGUs
2024
2023
North America Bus and Coach manufacturing
14.0 to 15.0%
14.5 to 15.5%
ARBOC
14.8 to 15.8%
15.0 to 16.3%
AD manufacturing
13.8 to 14.8%
13.5 to 14.8%
AD parts
14.0 to 15.0%
13.5 to 14.8%
NFI Parts
13.3 to 14.3%
14.3 to 15.5%
Cash flows beyond this period are extrapolated using a steady estimated growth rate based on the long-term average annual growth
rate of 3% for each industry in which the CGUs operate. Management has determined planned cash flows based on a projected
production schedule, past performance and expectations of market development. The discount rates used reflect specific risks relating
to the relevant CGUs.
Sensitivity testing is conducted as part of the annual impairment tests. Management believes that any reasonable change in the key
assumptions used to determine the recoverable amounts would not result in an impairment at the North American bus/coach
manufacturing CGU, ARBOC CGU, AD parts CGU or NFI Parts CGU.
Impairment of the AD manufacturing CGU may result if a combination of the following changes occurs:
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
25
NFI GROUP INC 2024 ANNUAL REPORT
7.
GOODWILL AND INTANGIBLE ASSETS (Continued)
•
The discount rate is higher by at least 1.0%
•
The long-term growth rate is lower by 1.0%
8.
OTHER LONG-TERM ASSETS
December 29, 2024
December 31, 2023
Restricted deposit(s) (note 25b)
$
46,999 $
45,441
Long-term accounts receivable
3,608
5,235
Less: Current portion of restricted deposits(s)
(6,937)
—
$
43,670 $
50,676
Long-term restricted deposit(s) is collateral for certain of the Company's letters of credit.
On March 22, 2024, the Company entered into a contribution agreement with Manitoba Development Corporation (“MDC”), in which the
Company received CAD$10 million on December 6, 2024 for the purpose of improving its production capabilities for zero-emission
buses. In accordance with IAS 7.48, the Company is required to disclose restricted cash and cash equivalent balances relating to the
agreement. At December 29, 2024, the funds received and restricted for use as outlined in the agreement totaled $7.0 million and are
disclosed in the current portion of restricted deposit(s) line item above.
9.
SUPPLIER FINANCING ARRANGEMENTS
On August 11, 2014, the Company entered into an agreement with Santander UK PLC (“SANUK”) pursuant to which SANUK may elect to
purchase underlying receivables from suppliers of the Company in advance of their corresponding invoices’ maturity dates. The
Company is required to submit these invoices to SANUK for payment and must reimburse SANUK the full value of these invoices by their
maturity dates. This arrangement is considered a supplier finance arrangement under IFRS 7 and IAS 7. Financing provided by SANUK
under this arrangement is subject to a total limit of £20 million. Invoices submitted to SANUK must have a maturity date greater than 3
business days and must not exceed 121 calendar days to qualify for financing. Carrying amounts of liabilities arising from supplier
finance arrangements are presented below:
December 29, 2024
December 31, 2023
Amounts for which
suppliers have
received payment
Total
Total
Accounts payable and accrued liabilities
$
11,920 $
18,814 $ 17,918
$ 11,920 $
18,814 $ 17,918
Range of payment due dates
December 29, 2024
Liabilities that are part of supplier finance arrangements
90 days following the end of month invoice
was raised
Comparable trade payables that are not part of a supplier finance arrangement
90 days following the end of month invoice
was raised
Non-cash changes
There were no non-cash transfers arising from supplier finance arrangements during either fiscal 2023 or 2024.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
26
NFI GROUP INC 2024 ANNUAL REPORT
10. CURRENT PORTION OF LONG-TERM LIABILITIES
December 29, 2024
December 31, 2023
Restated (Note 2.16)
Deferred revenue (note 14)
$
220,601 $
136,965
Provisions (note 15)
49,062
30,761
Deferred compensation obligation (note 12)
3,939
1,208
Obligations under leases
16,811
17,959
$
290,413 $
186,893
11. ACCRUED BENEFIT ASSET
Defined benefit plan
Certain of the Company's subsidiaries have defined benefit plans which cover certain employees in Canada and the United States.
Actuarial valuations for the Company's subsidiaries were last performed as at December 31, 2023.
Information in respect of the Company's defined benefit plans is as follows:
December 29, 2024
December 31, 2023
Change in plan assets
Plan assets at fair value — beginning of period
$ 92,313
$ 85,062
Interest income
4,108
4,183
Remeasurement gains - return on plan assets (excluding amounts in net interest)
7,815
2,797
Administrative (expenses) income
(393)
1,509
Employer’s contributions
2,982
3,240
Benefits paid
(4,577)
(6,454)
Foreign exchange (loss) gain
(8,122)
1,976
Plan assets at fair value — end of period
94,126
92,313
Change in defined benefit obligation
Defined benefit obligation — beginning of period
91,011
73,244
Current service cost
3,800
3,199
Interest cost
4,036
3,814
Benefits paid
(4,577)
(6,454)
Foreign exchange (gain) loss
(7,654)
1,917
Past service costs
—
4,764
Actuarial loss arising from changes in financial assumptions
722
10,527
Defined benefit obligation — end of period
87,338
91,011
Accrued benefit asset - present value of unfunded obligations
$ 6,788
$
1,302
The actual return on the plan assets for Fiscal 2024 was $11,923 (Fiscal 2023: $6,980).
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
27
NFI GROUP INC 2024 ANNUAL REPORT
11. ACCRUED BENEFIT ASSET (Continued)
The significant actuarial assumptions adopted in measuring the Company’s accrued benefit obligation and net pension plan expenses
are as follows:
Fiscal 2024
Fiscal 2023
Country
Mortality Table
Discount Rate
Canada
CPM2014 Private sector with Scale MI-2017 with size adjustment
4.60 %
4.60 %
Canada
CPM2014 Private combined with the MI-2017 improvement scale
3.96% - 4.74% 4.57% - 4.95%
US
Private-2012 MP2021
4.75 %
4.95%
Discount rate - sensitivity
Life expectancy - sensitivity
1% increase
1% decrease one year increase one year decrease
Country
Last valuation date Next valuation date
Then obligation
would decrease
by:
Then obligation
would increase
by:
Then obligation
would increase
by:
Then obligation
would decrease
by:
Canada
Dec. 31, 2023
Dec. 31, 2025
12.9 %
16.1 %
1.1 %
1.1 %
Canada
Dec. 31, 2023
Dec. 31, 2025
12.1 %
15.3 %
11.8 %
11.8 %
The defined benefit plans typically exposes the Company to actuarial risks such as: investment risk, interest rate risk and longevity
risk.
Investment risk
The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to high quality
corporate bond yields; if the return on plan assets is below this rate, it will create a plan deficit. Management believes the plans
currently have a relatively balanced investment in equity securities and debt instruments. Due to the long-term nature of the plan
liabilities, the Company's pension committee considers it appropriate that a reasonable portion of the plan assets should be invested in
equity securities to leverage the return generated by the fund.
Interest rate risk
A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on
the plan’s debt investments.
Longevity risk
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan
participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s
liability.
The Company’s defined benefit plans are a fixed benefit plan and, as a result, the rate of compensation increases does not have any
impact on the actuarially determined accrued benefit liability. Future expected contributions to the defined benefit plan for the 52-
week period ending December 29, 2024 are $2,912.
The Company's defined benefit pension plan expense, included in cost of sales and sales, general and administration costs and other
operating expenses is as follows:
Fiscal 2024
Fiscal 2023
Current service costs
$
3,800 $
3,199
Past service costs
—
4,764
Net interest income
(72)
(369)
Administrative expenses (income)
393
(1,509)
Foreign exchange gain
(350)
(48)
Components of defined benefit costs recognized in net loss
$
3,771 $
6,037
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
28
NFI GROUP INC 2024 ANNUAL REPORT
11. ACCRUED BENEFIT ASSET (Continued)
Fiscal 2024
Fiscal 2023
Remeasurement gains - return on plan assets (excluding amounts in net interest)
$ 7,815
$
2,797
Actuarial loss arising from changes in financial assumptions
(722)
(10,527)
Foreign exchange gain
169
29
7,262
(7,701)
Deferred income taxes recorded through other comprehensive earnings (loss)
(1,001)
2,947
Net actuarial gains (losses) recognized in other comprehensive earnings (loss)
$
6,261 $
(4,754)
An analysis of the assets of the plans by investment category is provided as follows:
December 29, 2024
December 31, 2023
Asset category
Cash and cash equivalents
0.6%
0.8%
Canadian equities
6.6%
9.1%
Foreign equities
37.0%
44.1%
Real estate
14.3%
0.0%
Bonds
41.5%
46.0%
100.0 %
100.0 %
12. DEFERRED COMPENSATION OBLIGATION
December 29, 2024
December 31, 2023
Performance share units under the PRSU Plan (officers and senior management)
1,671
708
Restricted share units under PRSU Plan (officers and executive management)
1,413
1,208
Deferred share units under DSU Plan (non-employee board of directors)
2,526
2,490
5,610
4,406
Less: current portion (note 10)
3,939
1,208
$
1,671 $
3,198
Effective December 17, 2012, the Board approved the Performance and Restricted Share Unit Plan (the “PRSU Plan”) and it was
amended on December 16, 2013, December 18, 2018 and August 5, 2020. The terms of the amended PRSU Plan govern awards made on
or after the 2014 plan year, 2018 plan year and August 2020, respectively.
The purposes of the PRSU Plan are to attract, retain and motivate key personnel, reward officers and executive management and to
align their interests with those of shareholders by making a significant portion of their incentive compensation directly dependent on
achieving key strategic, financial and operational objectives that are crucial to the ongoing growth and profitability of the Company.
Under the terms of the PRSU Plan, the Human Resources, Compensation and Corporate Governance Committee of the Board may grant
eligible participants performance share units (“PSUs”) or restricted share units (“RSUs”), which give the holders thereof the right to
receive, upon vesting and redemption of a unit, a cash payment equal to the fair market value of a Share at the time of redemption.
When dividends are paid on a Share, additional units equivalent to the amount of the dividends multiplied by the number of PSUs and
RSUs held (and determined based on the then fair market value of the Shares) are credited to a participant’s account. The actual value
of a PSU on the settlement date is contingent on the Share price and the Company’s actual performance over a three-year period
relative to the established objectives.
The actual value of an RSU on the settlement date is contingent on the Share price only and RSUs generally vest and settle as to one-
third on each of the first, second and third anniversaries of the grant date. PSUs and RSUs also immediately vest upon a participant's
termination without cause or resignation for good reason within a specified period of time following the closing of a transaction
resulting in certain change of control events and upon certain terminations of employment.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
29
NFI GROUP INC 2024 ANNUAL REPORT
12. DEFERRED COMPENSATION OBLIGATION (Continued)
RSUs and PSUs granted in Fiscal 2024 were determined based on the volume weighted average trading price of a Share for the last five
trading days of 2023 and the desired compensation value.
As well, the Board adopted NFI’s Deferred Share Unit Plan for Non-Employee Directors (the "DSU Plan") on November 7, 2011 and it was
amended and restated on December 8, 2015, December 18, 2015, March 14, 2019 and September 14, 2020. Pursuant to the plan, non-
employee directors may elect once each calendar year to receive all or a portion of their annual retainer and meeting fees in the form
of deferred share units (“DSUs”) and RSUs instead of cash. A DSU is the right to receive a cash payment based on the value of a Share
credited by means of a bookkeeping entry to an account in the name of the non-employee director. DSUs are credited to the director’s
account on the first day of each calendar quarter, the number of which is determined by dividing the amount of the applicable portion
of the director’s elected amount by the volume weighted average trading price of a Share for the last five trading days.
When dividends are paid on a Share, additional DSUs equivalent to the amount of the dividend multiplied by the number of DSUs held
(and determined based on the then fair market value of the Shares) will be credited to the director’s account. At the end of the
director’s tenure as a member of the Board, the director will be entitled to receive a cash redemption payment equal to the fair
market value of a share multiplied by the number of DSUs held.
PSUs
RSUs
DSUs
Total
Units outstanding at January 1, 2023
—
74,127
220,858
294,985
Units granted
313,302
156,652
76,368
546,322
Units expired
(5,508)
(3,153)
—
(8,661)
Units redeemed
—
(27,450)
(40,352)
(67,802)
Vested and reclassified as current liability
—
(70,991)
—
(70,991)
Units outstanding at December 31, 2023
307,794
129,185
256,874
693,853
Units granted
286,748
143,374
58,443
488,565
Units expired
(39,045)
(20,964)
—
(60,009)
Units redeemed
—
(98,250)
(37,174)
(135,424)
Vested and reclassified as current liability
—
(20,601)
—
(20,601)
Units outstanding at December 29, 2024
555,497
132,744
278,143
966,384
Vested units
—
—
278,143
278,143
Unvested units
555,497
132,744
—
688,241
13. SHARE-BASED COMPENSATION - EQUITY SETTLED
The Board adopted a Share Option Plan (the “2013 Option Plan”) for NFI on March 21, 2013, under which employees of NFI and certain
of its affiliates may receive grants of options for shares. The 2013 Option Plan was amended and restated on December 8, 2015,
December 31, 2018 and August 5, 2020. A maximum of 3,600,000 Shares are reserved for issuance under the 2013 Option Plan. The
options vest one-quarter on the first grant date anniversary and an additional one-quarter on the second, third and fourth anniversary
of the grant date. The 2013 Option Plan expired on March 21, 2023, after which point no new options can be granted under the 2013
Option Plan.
The Board adopted a new share option plan on March 12, 2020 (the "2020 Option Plan"), which was approved by shareholders on May 7,
2020 and amended on August 5, 2020, under which employees of NFI and certain of its affiliates may receive grants of options for
shares. A maximum of 3,200,000 Shares are reserved for issuance under the 2020 Option Plan. The options become vested as to one-
quarter on the first grant date anniversary and an additional one-quarter on the second, third and fourth anniversary of the grant date.
Directors who are not employed with NFI are not eligible to participate in the 2013 Option Plan and the 2020 Option Plan.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
30
NFI GROUP INC 2024 ANNUAL REPORT
13. SHARE-BASED COMPENSATION - EQUITY SETTLED (Continued)
Option Grant
dates
Number
Exercised
Expired
Vested
Unvested
Expiry date
Exercise
price
Fair Value
at grant
date
September 8, 2016
2,171
—
(2,171)
—
— September 8, 2024
C$42.83
C$8.06
January 3, 2017
151,419
(1,610)
(11,888)
(137,921)
—
January 3, 2025
C$40.84
C$7.74
January 2, 2018
152,883
—
(30,942)
(121,941)
—
January 2, 2026
C$54.00
C$9.53
January 2, 2019
284,674
—
(62,446)
(222,228)
—
January 2, 2027
C$33.43
C$5.01
July 15, 2019
2,835
—
—
(2,835)
—
July 15, 2027
C$35.98
C$4.90
December 31, 2019
519,916
—
(141,495)
(378,421)
— December 31, 2027
C$26.81
C$3.36
December 28, 2020
255,956
—
(57,026)
(198,930)
—
December 28, 2028
C$24.70
C$6.28
February 10, 2021
1,894
—
(1,894)
—
— December 28, 2028
C$28.74
C$6.28
August 16, 2021
601
—
—
(451)
150
August 16, 2029
C$30.79
C$6.28
January 3, 2022
311,892
—
(48,974)
(131,468)
131,450
January 3, 2030
C$20.26
C$6.10
April 1, 2022
1,728
—
—
(864)
864
April 3, 2030
C$16.25
C$6.51
January 9, 2023
374,448
(1,369)
(19,683)
(87,326)
266,070
January 9, 2031
C$10.46
C$5.28
January 2, 2024
314,835
—
(33,286)
—
281,549
January 2, 2032
C$13.54
C$7.12
March 5, 2024
2,894
—
—
—
2,894
March 5, 2032
C$11.76
C$6.24
June 3, 2024
8,196
—
—
—
8,196
January 2, 2032
C$15.38
C$8.22
2,386,342
(2,979)
(409,805) (1,282,385)
691,173
C$24.25
The following reconciles the share options outstanding:
Fiscal 2024
Fiscal 2023
Number
Weighted average
exercise price
Number
Weighted average
exercise price
Balance at beginning of period
2,018,117
C$26.00
1,910,057
C$27.41
Granted during the period
325,925
C$13.57
374,448
C$10.46
Expired during the period
(369,115)
C$24.64
(266,388)
C$14.32
Exercised during the period
(1,369)
C$10.46
—
—
Balance at end of period
1,973,558
C$24.25
2,018,117
C$26.00
Fair values were measured based on the Black-Scholes formula. Expected volatility is estimated by considering historic average share
price volatility. The inputs used in the measurement of the fair values of the share-based payment plans granted in Fiscal 2024 and
Fiscal 2023 are the following:
Options grant date
January 2, 2024
January 9, 2023
Fair value at grant date (C$)
$7.12
$5.28
Share price (C$)
$13.54
$10.46
Exercise price (C$)
$13.54
$10.46
Expected volatility
54.90%
51.77%
Option life (expected weighted average life)
5.5 years
5.5 years
Expected dividends
0.00%
0.00%
Risk-free interest rate (based on government bonds)
3.18%
3.28%
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
31
NFI GROUP INC 2024 ANNUAL REPORT
13. SHARE-BASED COMPENSATION - EQUITY SETTLED (Continued)
On May 8, 2014, shareholders’ approved the Company’s Restricted Share Unit Plan for Non-Employee Directors (the “Director RSU
Plan”). The Director RSU Plan was amended and restated on December 8, 2015, December 31, 2017, March 14, 2019 and September 14,
2020. A maximum of 500,000 Shares are reserved for issuance under the Director RSU Plan. Pursuant to the Director RSU Plan, non-
employee directors are permitted to elect, once each calendar year, to receive all or a portion of their annual retainer in the form of
restricted share units ("Director RSUs") and/or DSUs instead of cash. A Director RSU is a right to acquire a fully-paid and non-assessable
Share credited by means of a bookkeeping entry to an account in the name of the non-employee director.
Pursuant to the plan, non-employee directors may elect once each calendar year to receive all or a portion of their annual retainer and
meeting fees in the form of deferred share units (“DSUs”) and restricted share units instead of cash. The Board, in its sole discretion,
may award additional Director RSUs, subject to an annual aggregate value of $150 per director. The number of Director RSUs to be
awarded to a director is determined by dividing the amount of the applicable portion of the director’s annual retainer by the applicable
fair market value of a Share on that date. When dividends are paid on a Share, additional Director RSUs equivalent to the aggregate
number of Director RSUs held by a director on the dividend record date multiplied by the amount of dividend paid by NFI on each
Share, and then divided by the fair market value of the Shares on the dividend payment date, will automatically be credited to the
director’s account. Under the Director RSU Plan, Director RSUs vest immediately as at each applicable award date. A director (other
than a U.S. director) will be permitted to exercise the Director RSUs credited to his or her account at any time prior to December 15 of
the year following the year in which the director ceases to be a non-employee director of NFI or one of its affiliates. A U.S. director will
be required to specify the exercise date in the annual election form in accordance with Section 409A of the U.S. Internal Revenue
Code.
Number of Director RSUs
Balance – January 1, 2023
110,141
Director RSUs issued
103,231
Director RSUs exercised
(48,260)
Balance – December 31, 2023
165,112
Director RSUs issued
64,769
Director RSUs exercised
(112,158)
Balance – December 29, 2024
117,723
14. DEFERRED REVENUE
December 29, 2024
December 31, 2023
Restated (Note 2.16)
Extended warranties
$
13,252 $
12,677
Progress payments
224,227
138,534
Deferred government grants
12,445
—
249,924
151,211
Less: current portion of deferred revenue (note 10)
(220,601)
(136,965)
$
29,323 $
14,246
Deferred revenue is comprised of deferred government grants, progress payments that have not yet qualified for recognition as revenue
under the Company’s revenue recognition policies, and deferred revenue from the sale of extended warranty contracts which are
amortized over the extended warranty period commencing at the end of the basic warranty period.
15. PROVISIONS
The Company's insurance risk retention provision is based on insurance risk which the Company has not mitigated with third party
insurance.
The Company generally provides its customers with a base warranty on the entire vehicle, a corrosion warranty on the related structure
and in some situations a defect warranty on batteries, beyond what is provided by the battery original equipment manufacturer.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
32
NFI GROUP INC 2024 ANNUAL REPORT
15. PROVISIONS (Continued)
The other category includes the restructuring provision consisting of costs associated with the closure and termination of the lease in
respect of the Guildford, UK facility operated by AD, which is expected to be terminated in May 2025. It also includes a provision for
the costs in relation to the announced redundancy of up to 160 jobs at the Scottish facilities and onerous contracts when the
unavoidable costs of meeting the contract are greater than the economic benefits expected to be received under it.
Insurance Risk
Retention
Warranty
Other
Total
January 1, 2023 restated (Note 2.16)
$
22,527 $
74,111 $
8,786 $ 105,424
Additions
20,010
53,800
3,184
76,994
Amounts used/realized
(11,556)
(65,677)
(1,412)
(78,645)
Unused provision
(551)
1,172
(8,243)
(7,622)
Unwinding of discount and effect of changes in the discount rate
—
15
—
15
Exchange rate differences
(1)
(263)
117
(147)
December 31, 2023 restated (Note 2.16)
$
30,429 $
63,158 $
2,432 $
96,019
Additions
15,014
69,607
7,757
92,378
Amounts used/realized
(12,956)
(68,949)
(7,344)
(89,249)
Unused provision
80
—
(1,167)
(1,087)
Unwinding of discount and effect of changes in the discount rate
—
(138)
—
(138)
Exchange rate differences
10
(816)
(18)
(824)
32,577
62,862
1,660
97,099
Less current portion (note 10)
2,335
45,067
1,660
49,062
December 29, 2024
$
30,242 $
17,795 $ —
$
48,037
16. DEFERRED TAXES AND INCOME TAX EXPENSE
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation
authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. The
offset amounts by tax jurisdiction presented on the consolidated statements of financial position are as follows:
December 29, 2024
December 31, 2023
As presented on the consolidated statements of financial position:
Deferred tax assets
$
57,920 $
33,041
Deferred tax liabilities
(33,315)
(46,756)
$
24,605 $
(13,715)
The gross movement on the deferred income tax account is as follows:
Fiscal 2024
Fiscal 2023
Beginning of period
$
(13,715) $
(39,249)
Exchange rate differences
(1,382)
163
Tax recorded through net loss
39,479
20,965
Tax recorded through other comprehensive loss
(910)
2,947
Investment tax credits
1,133
1,768
Tax recorded through equity
—
(309)
End of period
$
24,605 $
(13,715)
The movement in deferred income tax assets and liabilities during the period, without taking into consideration the offsetting of
balances within the same tax jurisdiction, is as follows:
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
33
NFI GROUP INC 2024 ANNUAL REPORT
16. DEFERRED TAXES AND INCOME TAX EXPENSE (Continued)
Deferred tax liabilities
Property
Plant and
Equipment
Goodwill and
Intangibles
Right of Use
Assets
Other
Total
January 1, 2023
(9,101)
(142,377)
(24,109)
(16,815) $
(192,402)
Tax recorded through net loss
(534)
5,170
(120)
6,600
11,116
Cumulative translation adjustment
—
(309)
—
—
(309)
December 31, 2023
(9,635)
(137,516)
(24,229)
(10,215)
(181,595)
Tax recorded through net loss
3,294
9,102
1,934
(2,863)
11,467
Cumulative translation adjustment
—
(91)
—
—
(91)
December 29, 2024
$ (6,341) $
(128,505) $
(22,295) $
(13,078) $
(170,219)
Deferred tax assets
Property,
Plant, and
Equipment
Reserves
and accruals
not
currently
deductible
Provisions
Right of Use
Assets
Loss carry
forward
Pension
Deferred
Financing
Costs and
Interest
Other
Total
January 1, 2023
$ — $
12,045 $
21,629 $
27,237 $
54,793 $
— $ 27,625 $ 9,824 $
153,153
Tax recorded through net
loss
3,228
2,358
(3,673)
634
(7,932)
(1,979)
17,151
62
9,849
Tax recorded through
other comprehensive
earnings (loss)
—
—
—
—
—
2,947
—
—
2,947
Investment tax credits
—
—
—
—
—
—
—
1,768
1,768
Exchange rate differences
—
9
17
21
87
—
22
7
163
December 31, 2023
$ 3,228 $
14,412 $
17,973 $
27,892 $
46,948 $ 968 $
44,798 $
11,661 $
167,880
Tax recorded through net
loss
1,827
(4,666)
14,130
(1,003)
3,011
735
15,757
(1,779)
28,012
Tax recorded through
other comprehensive
earnings (loss)
—
—
—
—
—
(910)
—
—
(910)
Investment tax credits
—
—
—
—
—
—
—
1,133
1,133
Exchange rate differences
(25)
(111)
(141)
(218)
(368)
(8)
(354)
(66)
(1,291)
December 29, 2024
$ 5,030
$
9,635 $
31,962 $
26,671 $
49,591 $ 785 $
60,201 $ 10,949 $
194,824
Deferred income tax assets are recognized to the extent it is probable that sufficient future taxable income will be available to allow a
deferred tax asset to be utilized. At December 29, 2024, the Company has recognized all of its deferred income tax assets with the
exception of: loss carry forwards in Canada and the UK in the amount of $26,231 and $2,174 respectively, equity issuance costs in
Canada of $2,186 and restricted interest in the UK of $17,989.
At December 29, 2024 the Company has the following tax credit and loss pools expiring as follows:
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
34
NFI GROUP INC 2024 ANNUAL REPORT
16. DEFERRED TAXES AND INCOME TAX EXPENSE (Continued)
United States
Canada
Other
Tax Credits
Tax Losses
Tax Credits
Tax Losses
Tax Credits
Tax Losses
2025-2029
—
481
—
—
—
—
2030
—
68
127
—
—
—
2031
—
—
492
—
—
—
2032
—
—
—
—
—
—
2033-2034
—
—
107
—
—
—
2038
—
—
—
306
—
—
2039
—
—
—
22,734
—
—
2040
—
—
552
27,000
—
—
2041
—
—
81
9,579
—
—
2042
—
—
269
47,337
—
—
2043
—
—
221
56,253
—
—
2044
—
—
202
24,037
—
—
No expiry
—
—
—
—
2,116
149,871
The reconciliation of income tax computed at the U.S. statutory rate, to income tax expense is as follows:
Fiscal 2024
Fiscal 2023
Loss before income tax expense
$
(6,464) $
(169,070)
Tax calculated using a 21% U.S. tax rate
(1,357)
(35,504)
Tax effect of:
Withholding and other taxes
1,372
592
Non-deductible expense (non-taxable income)
782
(1,144)
Derecognition of previously recognized deferred tax assets
(2,148)
20,705
Revision of tax estimates
(597)
851
Foreign exchange impact
(410)
794
State taxes
1,398
(2,930)
Foreign tax credit pools and base erosion and anti-abuse tax
851
(14,313)
Rate differential on income taxed at other than U.S. statutory rate
(2,007)
(2,056)
Impact of change in tax legislation
—
(1,440)
Other
(1,052)
1,539
Income tax recovery
$
(3,168) $
(32,906)
Current income tax expense (recovery)
$
36,311 $
(11,941)
Deferred income tax recovery
(39,479)
(20,965)
Income tax recovery for the period
$
(3,168) $
(32,906)
Income tax recovery recognized in the consolidated statement of net earnings in Fiscal 2024 includes $1.1 million current tax expense
(Fiscal 2023: not applicable) related to Pillar Two income taxes.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
35
NFI GROUP INC 2024 ANNUAL REPORT
17. SENIOR UNSECURED DEBT
On January 20, 2023, the Company finalized agreements with MDC for a C$50 million debt facility, for general corporate purposes, and
with Export Development Canada (“EDC”) for two credit facilities of up to $150 million, to support supply chain financing ("supply chain
financing facility") for $50 million and surety and performance bonding requirements for new contracts ("Guarantee Facility") for up to
$100 million.
In August 2023, as part of the Company’s refinancing plan (“Refinancing Plan”), both the MDC facility and EDC supply chain financing
facility were extended to April 30, 2026. The EDC bonding support facility (note 28c) has a one-year term for each new contract,
subject to annual renewals. Additionally, $25 million was repaid to EDC on the supply chain financing facility as a permanent reduction.
On January 10, 2024, the Company amended its agreement with EDC to increase the size of the Guarantee Facility to $125 million. The
amended Guarantee Facility was made up of an Account Performance Security Guarantee (“PSG”) up to $50 million and Surety
Reinsurance Support up to $75 million.
In April 2024, MDC and the Company entered into an amended agreement on its existing Senior Unsecured Debt Facility reducing the
fixed interest rate to 0% per annum (December 31, 2023: Secured Overnight Financing Rate “SOFR” plus applicable margin).
On July 17, 2024, NFI entered into an amended agreement with EDC to increase the size of its Guarantee Facility from $125 million to
$145 million. The amended Guarantee Facility is made up of a PSG of up to $90 million and Surety Reinsurance Support up to $55
million.
The EDC agreement bears interest at a rate equal to adjusted term SOFR plus an applicable margin to that rate.
On November 29, 2024, a $5 million mandatory repayment was made on the EDC facility in accordance with the terms of the
agreement.
Face Value Unamortized
Transaction
Costs
Net Book Value
December 29,
2024
Net Book Value
December 31,
2023
MDC
$
34,683
$
— $
34,683
$ 37,480
Unamortized interest benefit
(4,252)
—
(4,252)
—
EDC
20,000
391
19,609
24,316
Less: current portion of senior unsecured debt
(20,000)
(391)
(19,609)
—
$
30,431
$
— $
30,431
$ 61,796
18. LONG-TERM DEBT
Face Value
Unamortized
Transaction
Costs
Net Book Value
December 29,
2024
Net Book Value
December 31,
2023
First lien North America (“NA”) revolving credit facility, Secured
(“NA Revolving Facility”)
$ 180,000
$ 7,608
$ 172,392
$ 113,297
First lien NA term loan, Secured (“NA Non-Revolving Facility”)
400,000
—
400,000
400,000
First lien UK revolving credit facility, Secured ("UK Revolving
Facility")
17,802
466
17,336
—
First lien UK term loan, Secured (“UK Non-Revolving Facility”)
20,516
—
20,516
19,913
Gain on debt modification
(5,795)
—
(5,795)
—
Government of Canada Loan
6,937
1,149
5,788
2,827
$ 619,460
$ 9,222
$ 610,237
$ 536,037
The NA Revolving Facility and the NA Non-Revolving Facility (together referred to as the "North American Facility") have a total
borrowing limit of $761 million, which includes a $150 million letter-of-credit facility.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
36
NFI GROUP INC 2024 ANNUAL REPORT
18. LONG-TERM DEBT (Continued)
There was $80.5 million of outstanding letters-of-credit drawn against the North American Facility at December 29, 2024. The North
American Facility bears interest at a rate equal to the SOFR or a U.S. base rate for loans denominated in U.S. dollars and a Canadian
prime rate or bankers' acceptance rate for loans denominated in Canadian dollars, plus an applicable margin to those rates, and
matures on April 30, 2026.
The UK Revolving Facility and the UK Non-Revolving Facility (together referred to as the "UK Facility") have a total borrowing limit of
£30.4 million to support AD's operations in the UK. Amounts drawn under the UK Facility bear interest at a rate equal to Sterling
Overnight Index Average ("SONIA") plus an applicable margin. The UK Facility matures on April 30, 2026.
On August 25, 2023, the Company completed a comprehensive refinancing plan which included amendments to both UK and NA
revolving credit facilities. A net gain of $8.9 million on debt modification is being accreted over the terms of the respective facilities.
The Company entered into an agreement for up to C$10 million in interest-free financing through the Government of Canada to support
the MCI Winnipeg facility enhancements and zero-emission product development and growth. The financing matures on March 1, 2030.
19. SECOND LIEN DEBT
Face Value Unamortized
Transaction
Costs
Net Book Value
December 29,
2024
Net Book Value
December 31,
2023
Second Lien Debt
$ 182,539
$ 8,798
$
173,741
$ 172,396
Prepayment Option (note 25b)
(12,347)
—
(12,347)
(2,767)
$ 170,192 $ 8,798
$ 161,394
$ 169,629
The second lien debt financing is secured against all of the Company's assets, and bears interest at an annual coupon of 14.5%, payable
semi-annually on January 2 and July 2 of every year commencing on January 2, 2024. The second lien debt facility matures on August 1,
2028.
Prior to the second anniversary of the debt facility, the Company can exercise an option to prepay a portion of the remaining principal
at 106% of the face value (note 25). Prior to the third anniversary, the Company can exercise its option to prepay a portion of the
remaining principal at 103% of the face value. An option to prepay the remaining principal at par is available from the third anniversary
onwards.
At inception, the prepayment option was recognized as a derivative asset with a fair value of $2.1 million. At December 29, 2024, the
asset was revalued at $12.3 million. A fair market value gain of $9.6 million was recorded on the Company's consolidated statement of
net loss and total comprehensive earnings (loss).
The second lien debt is financed by funds and accounts managed by Coliseum Capital Management LLC.
20. CONVERTIBLE DEBENTURES
On December 2, 2021, NFI completed a public offering of C$300 million aggregate principal of convertible debentures (the
"Debentures") and an additional C$38 million aggregate principal of Debentures were issued on December 14, 2021, pursuant to the
partial exercise of the over-allotment option, bearing interest at a rate of 5% per annum, payable semi-annually on January 15 and July
15 commencing on July 15, 2022. The Debentures will mature on January 15, 2027 (the "Maturity Date").
The Debentures may be converted in whole or in part from time to time at the holder’s option into 30.1659 Shares for each C$1,000
principal amount of Debentures (“Conversion Price”), representing a Conversion Price of approximately C$33.15 per Share, prior to
maturity and subject to adjustment in certain circumstances.
NFI has the option to settle the conversion in either Shares or cash (the "Cash Conversion Option"), with the Cash Conversion Option
determined to be a financial liability. The fair value of the Debentures and Cash Conversion Option are classified as separate liabilities.
The Debenture component will accrete to its final redemption amount of C$338 million less all conversions, at the Maturity Date at an
effective interest rate over the five–year term of the Debentures.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
37
NFI GROUP INC 2024 ANNUAL REPORT
20. CONVERTIBLE DEBENTURES (Continued)
Face Value Unamortized
Transaction
Costs
Net Book Value
December 29,
2024
Net Book Value
December 31,
2023
Convertible Debt
$ 222,038 $ 4,018
$ 218,020
$ 228,985
Cash Conversion Option (note 25b)
2,345
—
2,345
9,296
$ 224,383 $ 4,018
$ 220,365
$ 238,281
21. SHARE CAPITAL
December 29, 2024
December 31, 2023
Authorized - Unlimited
Issued – 119,035,071 Common Shares (December 31, 2023: 118,961,932)
$
1,241,397 $
1,240,163
The following is a summary of changes to the issued and outstanding Shares during the period:
Shares
Number
(000s)
Net Book Value
Balance – December 31, 2023
118,962 $
1,240,163
Stock options exercised
1
18
Director Restricted Share Units (“Director RSU”) exercised
72
1,209
Equity Transaction Cost
—
7
Balance – December 29, 2024
119,035 $
1,241,397
22. LOSS PER SHARE
2
0
2
0
Fiscal 2024
Fiscal 2023
Net loss attributable to equity holders
$
$
$
(3,296)
$ (136,164)
Weighted average number of Shares in issue
1
1
9
4
119,008,308
91,866,613
Weighted average number of Shares for diluted earnings per Share
1
1
9
9
4
119,008,308
91,866,613
Net loss per Share (basic)
$
(
$
(
$
(0.0277)
$
(1.4822)
Net loss per Share (diluted)
$
(
$
(
$
(0.0277)
$
(1.4822)
Basic loss per Share is calculated by dividing the net loss attributable to equity holders of the Company by the weighted average
number of Shares outstanding during the period.
Diluted loss per Share is calculated using the same method as basic loss per Share except that the average number of Shares
outstanding includes the potential dilutive effect of convertible bonds, outstanding stock options, and Director RSUs granted by the
Company, as determined by the treasury stock method.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
38
NFI GROUP INC 2024 ANNUAL REPORT
23. SUPPLEMENTAL CASH FLOW INFORMATION
Changes in non-cash working capital items
Cash inflow (outflow)
2024 Q3
2023 Q3
Fiscal 2024
Fiscal 2023
Accounts receivable
$
29,806
$
14,103
$
(23,377)
$
(111,527)
Income tax receivable
112
127
(9,917)
(4,170)
Inventories
(131,294)
3,437
(192,301)
(29,573)
Prepaid expenses and deposits
5,777
5,003
(6,354)
4,464
Accounts payable and accrued liabilities
12,638
(5,608)
79,911
93,832
Income tax payable
(2,333)
—
4,640
—
Deferred revenue
47,470
(26,305)
84,840
8,757
Provisions
(4,781)
(782)
1,079
765
Other
7,160
(1,080)
6,602
(7,510)
$
(35,445)
$
(11,105)
$
(54,877)
$
(44,962)
24. DEFINED CONTRIBUTION PENSION PLANS
Certain of the Company's subsidiaries maintains a defined contribution plan for certain salaried employees. The net pension expense for
the Company's defined contribution plans is as follows:
Fiscal 2024
Fiscal 2023
Defined contribution pension expense
$
13,820 $
12,321
Cash payments contributed by the Company during Fiscal 2024 for its defined benefit plans and defined contribution pension plans
amounted to $16.8 million (2023: $15.6 million).
25. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
(a) Fair value measurement of financial instruments
The Company has made the following classifications:
Cash
Fair value through profit or loss
Restricted deposit
Fair value through profit or loss
Receivables
Amortized cost
Deposits
Amortized cost
Accounts payables and accrued liabilities
Amortized cost
Convertible Debt
Amortized cost
Other long-term liabilities
Amortized cost
Long-term debt
Amortized cost
Second lien debt
Amortized cost
Derivative financial instruments
Fair value through profit or loss
(b) Fair value measurement of financial instruments
The Company categorizes its fair value measurements of financial instruments recorded at fair value according to a three-level
hierarchy. The hierarchy prioritizes the inputs used by the Company’s valuation techniques. A level is assigned to each fair value
measurement based on the lowest level input significant to the fair value measurement in its entirety. The three levels of the fair value
hierarchy are defined as follows:
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
39
NFI GROUP INC 2024 ANNUAL REPORT
25. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Continued)
Level 1 - fair value measurements that reflect unadjusted, quoted prices in active markets for identical assets and liabilities that the
Company has the ability to access at the measurement date.
Level 2 - fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly. These include quoted prices for similar assets and liabilities in active markets, quoted prices for
identical or similar assets and liabilities in inactive markets, inputs that are observable that are not prices (such as interest rates and
credit risks) and inputs that are derived from or corroborated by observable market data.
Level 3 - fair value measurements using significant non-market observable inputs. These include valuations for assets and liabilities that
are derived using data, some or all of which is not market observable data, including assumptions about risk.
The following table presents the carrying amounts and fair values of financial liabilities and financial assets, including their levels in
the fair value hierarchy. The table excludes fair value information for financial assets and financial liabilities not measured at fair
value if the carrying amount is a reasonable approximation of fair value.
December 29, 2024
Fair value
level
Carrying
amount
Fair value
Financial assets recorded at fair value
Cash
Level 1 $
49,557 $
49,557
Restricted deposit(s) (note 8)
Level 1
46,999
46,999
D
i
ti
fi
i l i
t
t
t
t
$
0
$
0
Prepayment Option (note 19)
Level 2
12,347
12,347
Derivative financial instrument assets - long term
$
12,347 $
12,347
Financial liabilities recorded at fair value
Foreign exchange forward contracts
Level 2
1,340
1,340
Derivative financial instrument liabilities - current
$
1,340 $
1,340
Interest Rate Swap
Level 2 510
510
Cash Conversion Option (note 20)
Level 2
2,345
2,345
Derivative financial instrument liabilities - long term
$
2,855 $
2,855
December 31, 2023
Fair value
level
Carrying
amount
Fair value
Financial assets recorded at fair value
Cash
Level 1 $
49,615 $
49,615
Restricted deposit(s) (note 8)
Level 1
45,441
45,441
Prepayment Option (note 19)
Level 2
2,767
2,767
Derivative financial instrument assets – long term
$
2,767 $
2,767
Financial liabilities recorded at fair value
Foreign exchange forward contracts
Level 2
1,481
1,481
Derivative financial instrument liabilities - current
$
1,481 $
1,481
Cash Conversion Option (note 20)
Level 2
9,296
9,296
Derivative financial instrument liabilities - long term
$
9,296 $
9,296
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
40
NFI GROUP INC 2024 ANNUAL REPORT
25. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Continued)
(c) Risk Management
The Company uses derivative financial instruments including interest rate swaps, total return swaps and forward foreign exchange
contracts. These instruments are financial contracts whose value depends on interest rates, share price and foreign currency prices.
The use of derivatives allows the transfer, modification and reduction of current and expected risks, including interest rate, share
price, foreign exchange and other market risks. The Company uses derivative financial instruments to manage interest rate, share price
and foreign exchange risks in accordance with its risk management policies. Certain derivative instruments, while providing effective
economic hedges, are not designated as hedges for accounting purposes. Changes in the fair value of any derivatives that are not
designated as hedges for accounting purposes are recognized within “interest and finance costs” or “unrealized foreign exchange loss
(gain) on non-current monetary items” in the consolidated statements of net loss and total comprehensive earnings (loss) consistent
with the underlying nature and purpose of the derivative instruments.
Market risk (interest rate risk and foreign currency risk)
Market risk incorporates a range of risks. Movements in risk factors, such as interest rate risk, equity price risk and foreign currency
risk, affect the fair values of financial assets and liabilities. The Company uses derivative financial instruments including interest rate
swaps, foreign exchange options and forwards foreign exchange contracts to manage its risks associated with potentially adverse
changes in interest rates and foreign exchange rates. These instruments are financial contracts whose values depends on interest rates
and foreign currency prices.
The use of derivatives allows the transfer, modification and reduction of current and expected risks, including interest rate, foreign
exchange and other market risks. The Company uses derivative financial instruments to manage interest rate and foreign exchange risks
in accordance with its risk management policies.
The Company does not hold financial instruments for speculative or trading purposes.
Interest rate risk
The Company's borrowing under the credit facilities are at variable rates of interest and expose the Company to interest rate risk. The
Company attempts to mitigate this risk through interest rate swaps that could become materially more expensive if interest rates
increase or become more volatile. If the cost of mitigating interest rate increases, the Company's debt service obligations on its
variable rate indebtedness would increase even though the amount borrowed remained the same, and the Company's net earnings and
cash available for servicing its other indebtedness would decrease.
The interest rate swap is subject to interest rate risk. As an illustration, if the interest rates as at the date of the consolidated
statements of financial position had been 100 basis points lower, with all other variables held constant, net loss and comprehensive
earnings (loss) for Fiscal 2024 would have been higher by $1.1 million (Fiscal 2023: $6.8 million), arising mainly as a result of the
related fair value adjustment recorded due to lower interest rate. If interest rates had been 100 basis points higher, with all other
variables held constant, net loss and comprehensive earnings (loss) for Fiscal 2024 would have been lower by $1.1 million (Fiscal 2023:
$6.8 million), arising mainly as a result of the related fair value adjustment recorded due to higher interest rate. The fair value
adjustments have a greater impact than the interest charged, as the Company is over hedged as it relates to the swap position.
On January 26, 2024, the Company entered into an agreement for a new interest rate swap to hedge its exposure to changing interest
rates. The contract has a notional value of $500 million until October 25, 2024, and thereafter a notional value of $450 million until its
expiry on April 25, 2025. The swap carries an interest rate of 4.6%.
Foreign currency risk
The U.S. dollar is the Company's functional currency. Fluctuations in the exchange rate between the U.S. dollar, Canadian dollar and
GBP will affect the Company's reported results. However, the impact of changes in foreign exchange rates on the Company's reported
results differ over time depending on whether the Company is generating a net cash inflow or outflow of Canadian dollars and GBP.
This is largely dependent on the Company's revenue mix by currency as operating costs denominated in Canadian dollars and GBP have
been historically relatively stable.
During Fiscal 2024, the Company generated a net outflow of Canadian dollars. As a matter of policy, the Company enters into foreign
exchange forward contracts to protect the expected net Canadian dollar exposure from exchange fluctuation. The Company recorded a
net realized foreign exchange loss of $1.8 million during Fiscal 2024 (Fiscal 2023: $3.2 million gain). This was comprised of a $0.2
million gain on settlement of foreign exchange contracts and a $2 million foreign currency loss on translation of Canadian dollar
denominated working capital.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
41
NFI GROUP INC 2024 ANNUAL REPORT
25. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Continued)
At December 29, 2024, the Company had $65.9 million of foreign exchange forward contracts to buy currencies in which the Company
operates (U.S. dollars, Canadian dollars, or GBP). These foreign exchange contracts range in expiry dates from January 2025 to June
2025. The related liability of $1.3 million (December 31, 2023: $1.5 million) is recorded on the consolidated statements of financial
position as a current derivative financial instruments liability and the corresponding change in the fair value of the foreign exchange
forward contracts is recorded in the consolidated statements of net loss and comprehensive earnings (loss).
Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign
exchange rates. The Company is exposed to currency risk, primarily Canadian dollar balances. As an illustration, at December 29, 2024
if the Canadian dollar had weakened 10 percent against the U.S. dollar, with all variables held constant, net loss for Fiscal 2024 would
have been lower by $10.5 million (Fiscal 2023: $9.1 million). Conversely, if the Canadian dollar had strengthened 10 percent against the
U.S. dollar, with all other variables held constant, net loss would have been higher by $12.9 million for Fiscal 2024 (Fiscal 2023: $10.6
million).
(d) Liquidity Management
The Company's principal sources of funds are cash generated from its operating activities, share and other issuances and borrowing
capacity remaining under the North American Facility and UK Facility (collectively the “Secured Facilities”).
The Company’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet
liabilities when due. At December 29, 2024, the Company had a cash balance of $49.6 million (December 31, 2023: $49.6 million), $581
million drawn under the North American Facility due in 2026 (December 31, 2023: $526 million), and $80.5 million of outstanding
letters of credit (December 31, 2023: $96.6 million). As at December 29, 2024 the Company had $38.2 million drawn under the UK
Facility (December 31, 2023: $21.0 million). The total liquidity position as at December 29, 2024 is $126.8 million. In addition, as at
December 29, 2024 the Company had $45.5 million of the letters of credit outstanding outside of the North American Facility. The
North American Facility has a total borrowing limit of $761 million, which includes a $150 million letter-of-credit facility. The UK
Facility has a total borrowing limit of £30.4 million.
The Company participates in a supplier finance arrangement (note 9) with the principal purpose of facilitating efficient payment
processing of supplier invoices. The supplier finance arrangement allows the Company to centralize payments of trade payables to the
bank rather than paying each supplier individually. While the supplier finance arrangement does not significantly extend payment terms
beyond the normal terms agreed with other suppliers that are not participating, the program assists in making cash outflows more
predictable.
The details of the covenants under the Secured Facilities are as follows:
Total Leverage Ratio1
Interest Coverage
Ratio2
Minimum Banking
Liquidity
Senior Secured Net
Leverage Ratio3
2024 Q4
<4.75x
>1.25x
Waived4
<3.50x
2025 Q1
<4.75x
>1.75x
$50,000
<3.50x
2025 Q2
<4.25x
>2.00x
$50,000
<3.25x
2025 Q3
<4.25x
>2.25x
$50,000
<3.25x
2025 Q4 and after
<3.75x
>2.50x
$50,000
<3.00x
1.
Total Leverage Ratio ("TLR") is calculated as aggregate indebtedness of the Company not including the Company’s 5.0% convertible
debentures and certain non-financial products, but including any senior unsecured or second lien indebtedness, less unrestricted
cash and cash equivalents up to a maximum of $50 million, divided by Adjusted EBITDA (calculated on a trailing twelve-month
basis).
2.
Interest Coverage Ratio ("ICR") is calculated as the same trailing twelve month Adjusted EBITDA as the TLR divided by trailing
twelve-month interest expense on the Secured Facilities, the Debentures, any senior unsecured or second lien indebtedness and
other interest and bank charges.
3.
Senior Secured Net Leverage will include the Secured Facilities and is calculated as indebtedness with respect to those facilities,
less unrestricted cash and cash equivalents up to a maximum of $50 million, divided by Adjusted EBITDA (calculated on a trailing
twelve-month basis).
4.
The Company obtained a waiver for the $50 million liquidity requirement under its senior secured facility providing access to those
funds if required.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
42
NFI GROUP INC 2024 ANNUAL REPORT
25. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Continued)
The calculation of the banking liquidity position, without consideration given to the minimum banking liquidity requirements under the
Secured Facilities at December 29, 2024 is provided below.
December 29, 2024
December 31, 2023
Banking Liquidity Position
$
126,800
$
170,131
Total Leverage Ratio (must be less than 4.75 [2023: waived])
4.37
Waived
Senior Secured Net Leverage Ratio (must be less than 3.50 [2023: waived])
3.09
Waived
Interest Coverage Ratio (must be greater than 1.25 [2023: waived])
1.51
Waived
Compliance with financial covenants under the Secured Facilities is reported quarterly to the Board. Other than the requirements
imposed by letters of credit collateral (note 8) and borrowing agreements, the Company is not subject to any externally imposed
capital requirements. Capital management objectives are reviewed on an annual basis or when strategic capital transactions arise. As
at December 29, 2024, the Company was in compliance with all covenant requirements.
Under the terms of the Secured Facilities, the Company is not permitted to declare or pay dividends, until certain financial conditions
exist. Currently dividends have been suspended and future decisions on the resumption of dividend payments will be dependent on
financial performance and compliance with Secured Facilities covenants.
The following table outlines the maturity analysis of the undiscounted cash flows of certain non-financial liability and committed leases
as at December 29, 2024:
Total
2025
2026
2027
2028
2029 Post 2029
Leases
$ 212,435 $ 25,585 $ 21,786 $ 19,726 $ 13,138 $ 10,702 $ 121,496
Accrued benefit liability
2,800
2,800
$ 215,235 $
28,385 $ 21,786 $ 19,726 $ 13,138 $ 10,702 $ 121,496
(e) Credit risk
Financial instruments in an asset position, which potentially subject the Company to credit risk and concentrations of credit risk,
consist principally of cash, accounts receivable and derivative financial instruments. Management has assessed that the credit risk
associated with accounts receivable is mitigated by the significant proportion for which the counterparties are well-established transit
authorities, which are government entities in North America.
December 29, 2024 December 31, 2023
Current, including holdbacks
$
444,869 $
438,165
Past due amounts but not impaired
1 – 60 days
28,531
20,123
Greater than 60 days
17,366
8,669
Less: Allowance for doubtful accounts
(1,035)
(604)
Total accounts receivables, net
$
489,731 $
466,353
As at December 29, 2024, there was no amount that would otherwise be past due or impaired whose terms have been renegotiated.
(f) Capital management
The Company's objectives in managing capital are to deploy capital to provide an appropriate return to shareholders and to maintain a
capital structure that provides the flexibility to take advantage of growth and development opportunities, maintain existing assets,
meet financial obligations and enhance the value for the shareholders. The capital structure of the Company consists of cash, long-
term debt, other long-term liabilities and shareholders' equity. The Company manages capital to ensure an appropriate balance
between debt and equity. In order to maintain or adjust its capital structure, the Company may from time to time raise additional
capital from various sources, including capital markets.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
43
NFI GROUP INC 2024 ANNUAL REPORT
26. SEGMENT INFORMATION
The Company has two reportable segments which are the Company’s strategic business units: Manufacturing Operations and
Aftermarket Operations. The strategic business units offer different products and services, and are managed separately because they
require different technology, marketing strategies, and operations. For each of the strategic business units, the Company’s President
and CEO reviews internal management reports on a monthly basis.
The Manufacturing Operations segment derives its revenue from the design, manufacture, service and support of new transit buses,
motor coaches, medium-duty, cutaway buses, and installation of infrastructure for electric vehicles and the sales of fiberglass
reinforced polymer components. Based on management’s judgment and applying the aggregation criteria in IFRS 8.12 – Operating
segments, the Company’s bus/coach manufacturing operations and medium-duty/cutaway manufacturing operations fall under a single
reportable segment. Aggregation of these operating segments is based on the segments having similar economic characteristics with
similar long-term average returns, products and services, production methods, distribution and regulatory environment.
The Aftermarket Operations segment derives its revenue from the sale of aftermarket parts for transit buses, coaches and medium-
duty/cutaway buses, both for the Company's and third party products.
There is no inter‑segment revenue. Intercompany revenues do occur but are eliminated on consolidation and thus, are not presented in
the Statements. Unallocated items in the consolidated earnings before income taxes primarily include unrealized foreign exchange
gains or losses, interest and finance costs and corporate overhead costs.
The unallocated total assets of the Company primarily include cash, certain intangible assets, and derivative financial instruments.
Corporate assets that are shared by both operating segments are allocated fully to the Manufacturing Operations segment.
Segment information about loss (earnings) and assets is as follows:
Fiscal 2024
Manufacturing
Operations
Aftermarket
Operations
Unallocated
Total
Revenue from external customers
$
2,490,914 $
631,401
— $
3,122,315
Operating costs and expenses
2,490,079
511,837
126,863
3,128,779
(Loss) earnings before income tax recovery
835
119,564
(126,863)
(6,464)
Total assets
2,239,046
407,165
267,921
2,914,132
Addition of capital expenditures
29,743
571
—
30,314
Addition of intangibles assets
17,597
—
—
17,597
Indefinite-life intangible assets
245,379
18,512
—
263,891
Goodwill
223,407
189,107
—
412,514
Fiscal 2023
Manufacturing
Operations
Aftermarket
Operations
Unallocated
Total
Revenue from external customers
$ 2,137,529 $
554,952
— $
2,692,481
Operating costs and expenses
2,266,915
453,267
141,369
2,861,551
(Loss) earnings before income tax recovery
(129,386)
101,685
(141,369)
(169,070)
Total assets
1,914,171
504,319
281,470
2,699,960
Addition of capital expenditures
26,082
632
—
26,714
Addition of intangibles assets
10,274
—
—
10,274
Indefinite-life intangible assets
244,265
18,334
—
262,599
Goodwill
223,607
189,564
—
413,171
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
44
NFI GROUP INC 2024 ANNUAL REPORT
26. SEGMENT INFORMATION (Continued)
The Company's revenue by geography is summarized below:
2
0
2
0
Fiscal 2024
Fiscal 2023
North America
$
$
$
2,452,663
$
2,119,391
UK and Europe
1
3
1
2
626,927
523,431
Asia Pacific
6
1
1
42,725
49,659
Total
$
$
$
3,122,315
$
2,692,481
The Company's disaggregated manufacturing revenue by major product type is provided below. The Aftermarket operations revenue
does not have similarly disaggregated categories.
2
0
2
0
Fiscal 2024
Fiscal 2023
Transit buses
$
$
$
1,928,525
$
1,654,406
Motor coaches
1
0
9
6
432,682
390,836
Medium-duty and cutaway buses
1
8
1
2
77,311
50,727
Pre-owned coach
2
4
15,943
21,586
Infrastructure solutions™
7
1
26,201
11,040
Fiberglass reinforced polymer components
3
1
10,251
8,934
Manufacturing revenue
$
$
$
2,490,914
$
2,137,529
27. RELATED PARTY TRANSACTIONS
Compensation of key management
Key management includes members of the Board of Directors, President and CEO, the CFO, presidents of each business unit, executive
vice presidents and vice presidents. The compensation expense for key management for employee services is shown below:
Fiscal 2024
Fiscal 2023
Salaries and short-term employee benefits
$
15,955 $
16,659
Post-employment benefits
683
600
Share-based payment benefits
4,888
5,478
$
21,526 $
22,737
Share-based payment benefits shown above represent the PSU, RSU, Director RSU, DSU and stock option expense that was recorded in
the period.
See note 19 for details on second lien debt financed by funds and accounts managed by Coliseum Capital Management LLC.
28. COMMITMENTS AND CONTINGENCIES
(a) In the normal course of business, the Company receives notice of potential legal proceedings or is named as a defendant in legal
proceedings, including those that may be related to negligence, product liability, wrongful dismissal and other employment-
related matters, contractual disputes or personal injury. Many claims are covered by the Company's insurance policies.
Management does not currently expect any of the current claims to have a material adverse effect on the Company’s financial
position, results of operations or cash flows.
(b) Through the normal course of operations, the Company has indemnified the surety companies providing surety bonds ("surety
bond") required under various contracts with customers. In the event that the Company fails to perform under a contract and the
surety companies incur a cost on a surety bond, the Company is obligated to repay the costs incurred in relation to the claim up to
the value of the bond.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
45
NFI GROUP INC 2024 ANNUAL REPORT
The Company's guarantee under each bond issued by the surety companies expires on completion of obligations under the
customer contract to which the bond relates. The estimated maturity dates of the surety bonds outstanding at December 29, 2024
range from February 2025 to December 2039.
28. COMMITMENTS AND CONTINGENCIES (Continued)
At December 29, 2024, outstanding surety bonds guaranteed by the Company totaled $307.4 million (December 31, 2023: $312.7
million). The Company has not recorded any liability under these guarantees, as management believes that no material events of
default exist under any contracts with customers.
(c) The Company has a letter of credit sub-facility of $150.0 million as part of the North American Facility (December 31, 2023:
$150.0 million). As at December 29, 2024, letters of credit totaling $80.5 million (December 31, 2023: $96.6 million) remain
outstanding as security for contractual obligations of the Company under the North American Facility.
The EDC surety facility in the amount of $145 million consists of the PSG up to $90 million and the Surety Reinsurance Support up
to $55 million.
The PSG program under the EDC facility is in place to cover a standby letter of credit or letter of guarantee (in each case an
“LC”), required as part of a collateral package provided to support a surety facility where the new bonding capacity is a minimum
of at least twice the face value of the LC. The PSG and Surety Reinsurance Support programs must only be used to support surety
bonds required under contracts entered into by the Company, and where such surety bonds are bid bonds, performance bonds,
regulatory bonds, license and permit bonds.
The Surety Reinsurance Support program is in place to cover surety bond(s) issued on behalf of the Company, provided that such
surety bond is a bid bond, performance bond, regulatory bond, license and permit bond. Surety reinsurance support is not to
exceed 75% of the surety bond amount.
As at December 29, 2024, there was $134.7 million (December 31, 2023: $74.2 million) outstanding under the Guarantee Facility.
As at December 29, 2024, letters of credit in the UK totaling $7.5 million were outstanding as security obligations of the Company
outside of the UK Facility (December 31, 2023: $18.7 million). Additionally, there are $38.0 million (December 31, 2023: $45.8
million) of letters of credit outstanding outside of the UK Facility.
As at December 29, 2024, management believes that the Company was in compliance in all material respects with all applicable
contractual obligations and the Company has not provided for any costs associated with these letters of credit.
(d) Through the normal course of operations, the Company has guaranteed payments and residual values to third-party lenders on
behalf of customers. As at December 29, 2024, the Company had guaranteed $2.1 million (December 31, 2023: $2.4 million) of
these arrangements. The Company has not provided for any of these costs, as it does not believe they will have to pay out on any
of these arrangements.
29. GUARANTEES
The Company indemnifies its directors and officers against claims and damages that may be incurred in the performance of their
services to the Company. Liability insurance has been purchased with respect to the Company’s directors and officers.
30. SUPPLEMENTARY EXPENSE INFORMATION
Fiscal 2024
Fiscal 2023
Employee salary and benefit expenses
$
548,132 $
395,836
Depreciation of plant and equipment
47,782
49,370
Amortization of intangible assets
32,348
31,410
The expenses listed above are included in cost of sales and sales, general and administration costs and other operating expenses.
NFI GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at December 29, 2024
(in thousands of U.S. dollars except per share figures)
46
NFI GROUP INC 2024 ANNUAL REPORT
31. SUBSEQUENT EVENTS
To support the Company's overall liquidity position, subsequent to quarter-end, NFI received approval under the Secured Facilities to
temporarily waive the minimum liquidity requirement of $50 million, effective as of January 1, 2025 to March 31, 2025. Post this waiver
period, the minimum liquidity requirement under the Secured Facilities will return to $50 million.
On February 1, 2025, the United States imposed new across the board 25% tariffs on most imports from Canada. Most of these tariffs
have been temporarily paused. The Government of Canada and certain provinces have implemented certain retaliatory measures,
including counter tariffs. On March 12, 2025, the United States imposed additional 25% tariffs on imports of steel and aluminum
products from all countries, including Canada. The United States has also imposed separate tariffs on Mexico and China and has also
proposed to implement reciprocal tariffs applicable to all of its trading partners. The situation with respect to these matters is
extremely fluid and subject to rapid and unexpected changes. The impact of tariffs and other trade measures on general economic
conditions, customer demand and the Company’s business is uncertain, thus estimating financial impact is not possible at this time.