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1. Company Snapshot

1.a. Company Description

NFI Group Inc., together with its subsidiaries, manufactures and sells buses in North America, the United Kingdom, Europe, the Asia Pacific, and internationally.It operates through two segments, Manufacturing Operations and Aftermarket Operations.The company offers heavy-duty transit buses under the New Flyer name; single and double-deck buses under the Alexander Dennis Limited brand name; motor coaches under Plaxton and MCI brand names; low-floor cutaway and medium-duty buses under the ARBOC brand; and aftermarket parts under the NFI Parts brand name, as well as articulated buses.


It also provides zero-emission vehicles, including battery-electric buses, motor coaches, hydrogen fuel-cell buses, and electric trolleys.In addition, company offers post-sale services, including part distribution, field services, support documentation, training, and special projects.The company was formerly known as New Flyer Industries Inc.


and changed its name to NFI Group Inc.in May 2018.NFI Group Inc.


was founded in 1930 and is headquartered in Winnipeg, Canada.

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1.b. Last Insights on NFI

NFI Group's recent performance was driven by a 2.0% year-over-year revenue growth to $868.2m and improved profitability. The company's second-quarter results showed higher revenue, gross margin, and adjusted EBITDA. A total backlog of $13.5 billion and recent orders, including 124 Xcelsior Charge NG buses from OC Transpo and 46 Xcelsior CNG buses from Las Vegas RTC, demonstrate strong demand. Stifel Canada and National Bank maintained their buy ratings, with raised price targets (Stifel Canada to C$23.00). Additionally, the company released its 2024 Sustainability Report.

1.c. Company Highlights

2. NFI Group's Q3 Earnings: A Mixed Bag

NFI Group reported a 52% year-over-year increase in adjusted EBITDA, driven by a strong backlog and improved unit economics. However, the quarter was marred by a $229.9 million warranty provision related to a battery recall affecting approximately 700 buses and coaches. Revenue growth was robust, with a 14% year-over-year increase in transit deliveries. The company's EPS came in at $0.1393, missing estimates of $0.2915. The adjusted EBITDA margin expansion was a positive note, despite the recall's negative impact. As Brian Dewsnup noted, "We've determined that we need to replace the batteries on these buses, which is expected to take 18 to 24 months, beginning in the first half or early part of 2026."

Publication Date: Nov -30

📋 Highlights
  • Strong Backlog Growth:: Total backlog reached 15,606 equivalent units ($13.2B), driven by 644 new orders and a 108.5% LTM book-to-bill ratio.
  • Profitability Improvement:: Adjusted EBITDA rose 52% YoY to $320–340M range, with $12.8M free cash flow improvement in Q3.
  • Battery Recall Cost:: $229.9M warranty provision booked for 700 affected buses, with replacement expected over 18–24 months starting H1 2026.
  • Deleveraging Progress:: Total leverage reduced to 4.28x (LTM), liquidity up $241M YoY, supporting $3.5–3.7B revenue guidance for 2025.
  • 2026 Outlook Optimistic:: Expectations for record Q4 2025 adjusted EBITDA, 217 low-floor cutaway bus deliveries, and 14% YoY transit delivery growth in 2026.

Financial Performance

The company's financial performance was mixed, with revenue growth and adjusted EBITDA margin expansion offset by the battery recall provision. The EPS miss was significant, and the company's guidance for the remainder of the year includes all tariffs in effect. The expected revenue range for the full year is between $3.5 billion and $3.7 billion, with adjusted EBITDA ranging from $320 million to $340 million.

Valuation Metrics

NFI Group's valuation metrics are mixed, with a P/E Ratio of -7.16 and a P/S Ratio of 0.36. The EV/EBITDA ratio is 33.05, indicating a relatively high valuation. The company's ROE is -24.53%, and the Net Debt / EBITDA ratio is 17.09, highlighting significant leverage. Analysts estimate next year's revenue growth at 18.3%, which may help improve the company's valuation metrics.

Battery Recall Impact

The battery recall is expected to have a significant impact on the company's cash flows in 2026 and 2027, with the majority of the $230 million estimated cost related to battery replacement. The company is working with XALT to finalize a definitive agreement, which could lead to a reduction in the provision. As Paul Soubry noted, "We've had productive talks with XALT, and we believe there's a very positive outlook."

Outlook

3. NewsRoom

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City of Ottawa’s OC Transpo Orders 50 New Flyer Xcelsior® Clean-Diesel 60-foot Buses

Nov -13

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NFI Announces Third Quarter Results

Nov -06

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NFI Group (TSX:NFI): Is the Stock Undervalued After Recent Share Price Rebound?

Nov -01

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NFI’s New Flyer Honored as Employer of the Year – Large Business by Alabama Governor’s Committee on Employment of People with Disabilities

Oct -31

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NFI Group and Gillig Jointly Acquire Assets of American Seating

Oct -22

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NFI Group and GILLIG form 50/50 JV to Acquire the Assets of American Seating, Strengthening North American Seat Supply through Historic Industry Partnership

Oct -22

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NFI schedules third quarter 2025 financial results and conference call

Oct -09

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Assessing NFI Group’s (TSX:NFI) Valuation as Investors Reconsider Recovery Prospects

Oct -07

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.32%)

6. Segments

Manufacturing

Expected Growth: 7.92%

NFI Group Inc.'s 7.92% growth in manufacturing is driven by increasing demand for electric buses, expansion into new markets, and strategic acquisitions. Additionally, investments in technology and process improvements have enhanced operational efficiency, leading to higher production volumes and revenue growth.

Aftermarket

Expected Growth: 5.0%

NFI Group Inc.'s aftermarket growth is driven by increasing demand for bus and coach parts, driven by a growing fleet of vehicles in operation, extended vehicle lifecycles, and a shift towards preventive maintenance. Additionally, the company's strategic acquisitions and investments in digital platforms have expanded its customer base and improved operational efficiency.

7. Detailed Products

Heavy-Duty Transit Buses

NFI Group Inc. offers a range of heavy-duty transit buses designed for urban transportation, providing safe and reliable transportation solutions for cities and municipalities.

Medium-Duty Buses

NFI Group Inc. provides medium-duty buses for various applications, including transit, shuttle, and tour operations, offering flexibility and reliability.

Zero-Emission Buses

NFI Group Inc. offers a range of zero-emission buses, including electric and hydrogen fuel cell buses, for environmentally friendly transportation solutions.

Motor Coaches

NFI Group Inc. provides luxury motor coaches for charter, tour, and transit operations, offering comfort and reliability.

Shuttle Buses

NFI Group Inc. offers shuttle buses for various applications, including airport, hotel, and corporate shuttle services.

Parts and Services

NFI Group Inc. provides a range of parts and services, including maintenance, repair, and refurbishment solutions for buses and coaches.

8. NFI Group Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for NFI Group Inc. is medium due to the presence of alternative transportation options, such as ride-hailing services and public transportation.

Bargaining Power Of Customers

The bargaining power of customers for NFI Group Inc. is low due to the company's strong brand reputation and limited alternatives for customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers for NFI Group Inc. is medium due to the presence of multiple suppliers and the company's ability to negotiate prices.

Threat Of New Entrants

The threat of new entrants for NFI Group Inc. is high due to the relatively low barriers to entry in the transportation industry and the increasing trend of new companies entering the market.

Intensity Of Rivalry

The intensity of rivalry for NFI Group Inc. is high due to the competitive nature of the transportation industry and the presence of several established players.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 61.80%
Debt Cost 10.81%
Equity Weight 38.20%
Equity Cost 10.81%
WACC 10.81%
Leverage 161.79%

11. Quality Control: NFI Group Inc. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

13.51$

Current Price

13.51$

Potential

-0.00%

Expected Cash-Flows