Owner Of New Flyer Plant In City Projects Future Growth, Profits

Aug 24, 2023

Aug 28, 2023

Pictured is the 1,500th electric bus produced as part of a partnership between the NFI Group, which owns the New Flyer plant on Fluvanna Avenue, Jamestown, and BYD-Alexander Dennis. The bus is being used in London.

The owner of the New Flyer manufacturing plant in Jamestown has announced a net second quarter loss of $48 million while it works its way through a refinancing plan to increase its cash liquidity.

NFI Group earned revenue of $660 million in the second quarter, delivering 931 units, of which 25% were battery- and fuel cell electric buses. The company’s adjusted earnings before interest, taxes, depreciation and amortization, a measure of a company’s financial health and ability to generate cash, was $12 million with quarter-ending liquidity of $82 million. New Flyer’s minimum liquidity requirement is currently $25 million and will return to $50 million as the restructuring plan proceeds

“Adjusted EBITDA exceeded expectations at $12.2 million, a significant increase from this time last year, and free cash flow, while still negative, primarily due to higher interest expenses, improved by 37% year-over-year,” said Pipasu Soni, NFI Group chief financial officer. “Liquidity ended at $81.5 million, down from the $124.1 million at the end of the first quarter. The decrease was driven by higher borrowings on our credit facilities, which supported increased working capital levels from spare parts inventory, off-line buses and higher accounts receivable balances tied to the timing of deliveries. AR was especially impacted by the late delivery of electric buses where new drain technology was installed. We are confident of our refinancing plan will improve liquidity by over $135 million.”

The good news is that NFI Group ended the quarter with an order backlog of 9,803 equivalent units, with the zero-emission bus backlog totaling 3,491 units, or 36% of the total backlog. The company has also put in bids to produce more than 10,000 buses in North America, an increase of 33% from 2022, with 53% of those units being zero-emissions buses.

Updated financial guidance for the rest of 2023 projects year-ending revenue of between $2.6 and $2.8 billion and adjusted EBITDA of $40 to $60 million. Net losses are also $8 million less than the second quarter of 2022 primarily due to increased deliveries.

The second quarter saw the delivery of a new type of electric private motor coach to Universal Coach in Canada as well as the launch of the Enviro500 electric double-deck bus to an operator in Hong Kong. NFI’s Infrastructure Solutions business has installed 376 plug-in and 35 on-route charging projects for 59 customers, with 11 projects under contract through 2025.

“Our 2025 targets for units have us back to about 2019 delivery levels of approximately 6,000 total equivalent units,” said Paul Soubry, NFI Group president and CEO. To meet these expectations, we will ramp up production, which is primarily a function of a stable supply chain and the addition of labor to existing facilities rather than requiring major investment capital of new facilities. We plan to exit 2023 at a higher production levels, and we’ll continue to increase that in 2024, driving volume and overhead absorption leverage that will deliver on our approved adjusted EBITDA and our operating profits and cash flow.”

Soubry told investor analysts that the past 36 months have been difficult for NFI Group, but Soubry and company officials say the company’s results in the first half of the year should be proof the company’s recovery is fully underway. Completing the financing plan with both new debt and equity is a key step, Soubry said.

“As we move into 2024 and 2025, we will be investing in working capital as we increase production rates and increase the amount of zero-emission buses built,” Soubry said. “We expect this heightened level of bids to translate into steady orders and to support our backlog throughout the remainder of 2023, and into 2024 and 2025. We also saw significant improvement in supply chain performance and associated production efficiencies. There’s no question it will take time for our operations and production efficiency to get back to pre-pandemic levels, but 2023 Q2 showed promising signs of significant recovery, supporting our line entry ramp up and hiring efforts that we’ve embarked on.”

New Flyer, a subsidiary of NFI Group, opened its Jamestown plant in 2017 as part of the START-UP NY program. New Flyer signed an original five-year lease for space in the former Quality Markets and Tops location on Fluvanna Avenue with an option to extend the lease to 15 years.

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