Canadian bus maker NFI Group (NFI.TO) says it will take until 2025 before production returns to pre-COVID levels, as the company continues to battle supply challenges.
Winnipeg-based NFI is a leading manufacturer of buses and motor coaches, with facilities in two Canadian provinces and five U.S. states. Its battery-electric and fuel cell-electric vehicles are in more than 140 cities in six countries. However, in 2020, the number of buses on its production lines plunged as the pandemic roiled supply chains. The company’s output has not fully recovered.
“The last 36 months at NFI have been extremely difficult to navigate,” chief executive officer Paul Soubry told analysts on Wednesday, as the company reported second-quarter financial results. “There is no question it will take time for operations and production efficiency to return to pre-pandemic levels.”
However, Soubry says a “significant recovery” was evident in NFI’s latest quarter, with vehicle deliveries and revenue each climbing 66 per cent year-over-year. The company booked a quarter-end backlog of nearly 10,000 orders worth a record US$6.7 billion, with more than a third of those being zero-emissions vehicles.
NFI buses are sold under the New Flyer, MCI, Alexander Dennis, and Arboc brands. Soubry notes orders for vehicles are often highly customized, requiring a vast array of externally-supplied components, from semiconductors, to seats, windows, and cameras.
“As we now see our supply community, most of the systemic global issues of demand have gone away,” Soubry said. “It’s now moved down to specific supplier challenges, either with some of their input materials, or some of their own labour demands.”
NFI aims to ramp up new vehicle production in the second half of 2023. Soubry says the company expects some temporary challenges, but ultimately sees a path to improved margins in 2024 and 2025.
“By the time we get to 2025, we expect [production] line entries to be back around 1,500 units per quarter, similar to the 2019 levels we experienced pre-COVID,” Soubry said.
NFI keeps its books in U.S. dollars. The company boosted its full-year financial guidance on Wednesday, calling for revenue of US$2.6 billion to US$2.8 billion, compared with earlier expectations for between US$2.5 billion and US$2.8 billion. Adjusted earnings before interest, taxes, depreciation and amortization are now expected to be between US$40 million and US$60 million, compared with previous guidance of between US$30 million and US$60 million.
On Wednesday, NFI also announced a private placement with an unnamed asset manager in an effort to raise US$50 million. The company says the funds will be used to pay down debt.
Toronto-listed shares of NFI rose 1.02 per cent to $11.83 as at 12:07 p.m. ET.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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