NFYEF - NFI announces fourth quarter and full year 2023 results | Benzinga

All figures quoted in U.S. dollars unless otherwise noted:

• 2023 Q4 revenue of $792 million; 1,227 equivalent units ("EUs") delivered, up 19% from 2022 Q4, with 236 of EUs delivered being battery- and fuel cell-electric buses ("ZEBs"). Full year revenue of $2.7 billion; 4,001 EUs delivered, with 22% ZEBs.
• 2023 Q4 Net loss of $2 million; Net loss per Share of $0.02, and Adjusted Net Loss per Share² of $0.05.
• 2023 Q4 Adjusted EBITDA² of $39 million and full year Adjusted EBITDA² of $69 million. Ending Total Liquidity² position of $188 million.
• Ending total backlog² position (both firm and options) of 10,586 EUs (valued at $7.9 billion), with 3,832 EUs in bid award pending; ZEBs represent 36% of total backlog².
• Aftermarket segment delivers record 2023 performance with $555 million of revenue, and $120 million of Adjusted EBITDA².
• Reiterate financial guidance for Fiscal 2024 as announced on January 17, 2024, including Adjusted EBITDA² range of $240 to $280 million; and 2025 Adjusted EBITDA² target of greater than $350 million.

WINNIPEG, Manitoba, Feb. 29, 2024 (GLOBE NEWSWIRE) -- (TSX:NFI, OTC:NFYEF, TSX:NFI) NFI Group Inc. ("NFI" or the "Company"), a leader in zero-emission electric mobility solutions, today announced its audited consolidated financial results for Fiscal 2023.

Key financial metrics for 2023 Q4 and the Fiscal 2023 are highlighted below:

Footnotes:

1. Results noted herein are for the 13-week period ("2023 Q4") and the 52-week period ("Fiscal 2023") ended December 31, 2023. The comparisons reported in this press release compare 2023 Q4 to the 13-week period ("2022 Q4") and Fiscal 2023 to the 53-week period ("Fiscal 2022") ended January 1, 2023. Comparisons and comments are also made to the 13-week period ("2023 Q3") ended October 1, 2023.
   
2. Adjusted EBITDA, Adjusted Net Loss, and Free Cash Flow represent non-IFRS measures, Adjusted Net Loss per Share and Return on Invested Capital ("ROIC") are non-IFRS ratios, and Total Liquidity and Backlog are supplementary financial measures. Such measures and ratios are not defined terms under IFRS and do not have standard meanings, so they may not be a reliable way to compare NFI to other companies. Adjusted Net Loss per Share is based on the non-IFRS measure Adjusted Net Loss. ROIC is based on net operating profit after tax and average invested capital, both of which are non-IFRS measures. See "Non-IFRS Measures" and detailed reconciliations of IFRS Measures to non-IFRS Measures in the Appendices of this press release. Readers are advised to review the audited condensed consolidated financial statements (including notes) (the "Financial Statements") and the related Management's Discussion and Analysis (the "MD&A").
   
3. The Company retrospectively adopted IFRS 17 - Insurance Contracts on January 2, 2023. Refer to the section, "new standards adopted by the Company" in the Financial Statements for details of the impact of the adoption. NFI's Financial Statements were prepared on a going concern basis in accordance with IFRS. Readers are recommended to read "Note 2.1 Basis of preparation" in the Financial Statements regarding the basis of preparation.

"We saw a strong finish to 2023 resulting in double-digit growth in vehicle deliveries and revenue and backlog, significant improvement in margin performance, and increased vehicle production rates across our business. We are extremely proud of our team for their resilience, hard work and dedication as we continued our operational and financial recovery," said Paul Soubry, President and Chief Executive Officer, NFI.

"Customer demand remains very strong as our total backlog² of 10,586 EUs, split almost equally between firm and option orders, neared $8 billion. We also had over 3,800 EUs of pending awards at year end, many of which are expected to convert to contracted orders in the first quarter of 2024, driving additional backlog growth. The Aftermarket segment was another positive in 2023, delivering its strongest financial performance ever.

"Across NFI, our people remain focused on ramping up production, managing liquidity, and achieving our 2024 and 2025 financial targets. Supply chain performance has continued to improve, but remains a risk to continued production ramp up, alongside labour availability and efficiency. We are also working to finalize and deliver the remaining inflation-impacted legacy contracts in the first half of 2024, which will have some drag on margins in that period.

"Our teams also continue to advance discussions with industry leaders and the government of the United States to improve bus manufacturing contract structures. Major progress was made on these initiatives in 2024 as NFI participated in a White House Roundtable and the U.S. Federal Transit Administration (FTA) issued a Dear Colleague letter to transit agencies that receive federal funding for bus purchases. These changes can strengthen NFI and the overall industry by lowering working capital investments, through increased deposits and progress payments, provide opportunities to adjust pricing to reflect inflationary pressures and lower interest expenses by decreasing carrying balances on revolving credit facilities. The progress made has been encouraging, and we will provide further updates as these changes advance.

"We took tremendous strides on our path to operational and financial recovery in 2023, and, while some operational headwinds remain, we expect a strong 2024, where delivery growth, pricing improvements, sales mix, Aftermarket contribution and enhanced operational performance drive our expectations for triple-digit Adjusted EBITDA² growth."

Liquidity²

The Company's Total Liquidity² position, which combines cash on-hand plus available capacity under its credit facilities (without consideration given to the minimum liquidity requirement of $50 million), was $188 million as at the end of 2023 Q4, up 22% from the end of 2023 Q3. The improvement in Total Liquidity² position was primarily driven by increases in cash generated by operating activities which were used to pay down revolving debt balances.

NFI generated $19 million in cash flows from working capital in the fourth quarter as higher vehicle deliveries lowered finished goods and work-in-progress inventory. These reductions were offset by an increase in raw material balances, which remain elevated, reflecting higher input costs for zero-emission bus components and higher carrying balances to support supply health. Working capital was also impacted by a reduction in overall deferred revenue balances, from the recognition of pre-payments on final deliveries and from a reduction in provision balances to cover warranty campaign activities.

Through at least the first half of 2024, NFI expects that its Total Liquidity² position will be lower than at the end of 2023 Q4 as WIP and finished goods inventory balances increase in line with increases in production rates. The Company remains focused on cash and liquidity management, including efforts to accelerate deliveries and customer acceptances, the acceleration of customer payments, through the pursuit of advance payments and deposits, and improvements to supplier payment terms where possible.

Segment Results

Manufacturing segment revenue for 2023 Q4 increased by $87 million, or 15%, compared to 2022 Q4, driven by higher new vehicle deliveries across all NFI product lines, while quarterly deliveries have seen improvement both year-over-year and sequentially for the fourth consecutive quarter. Manufacturing operations were still impacted by supply chain challenges, labour availability and associated production inefficiencies in Fiscal 2023; however, the Company continued to see significant improvement in supplier performance in 2023 Q4.

Manufacturing Adjusted EBITDA² increased by $42 million, or 136%, compared to 2022 Q4 delivering the first quarter of positive Adjusted EBITDA² since 2021. The increase was driven by higher deliveries, favourable sales mix, and a lower number of legacy inflation-impacted contracts. Manufacturing Adjusted EBITDA² as a percentage of revenue showed continued improvement, increasing from (5%) in 2022 Q4 to 2% in 2023 Q4.

At the end of 2023 Q4, the Company's total backlog² (firm and options) of 10,586 EUs (firm and options) increased by 11% from the end of 2023 Q3, and increased by 15% from the end of 2022 Q4. The increase was driven by higher awards in the quarter, offset by higher deliveries and less cancellations/expiries. NFI also had 3,832 EUs of new firm and option orders in bid award 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 2023 Q4. This positions NFI for another period of strong backlog² growth in 2024.

Backlog² for 2023 Q4 has a total dollar value of $7.9 billion, and the average price of an EU in backlog² is now $0.75 million, a 22% increase from 2022 Q4.

Aftermarket segment revenue for 2023 Q4 of $136 million increased by $16 million, or 13%, compared to 2022 Q4, driven by increased volume in North American public and private markets, and the impacts of heightened inflation on parts pricing. In 2023 Q4, Aftermarket Adjusted EBITDA² was $30 million, an increase of $7 million, or 29%, year-over-year, stemming from improved sales volume and favourable product mix. Dynamic pricing, reduced freight costs and improved overhead absorption also contributed to the increase. Aftermarket Adjusted EBITDA² as a percentage of revenue was strong at 22%, compared to 19% for the same period in 2022.

Net Loss, Adjusted Net Loss², and Return on Invested Capital²

In 2023 Q4, the net loss of $2 million decreased by $150 million from 2022 Q4, improving by 99%, with improvements in vehicle deliveries, revenue, favourable sales mix, and Adjusted EBITDA offset somewhat by higher interest and financing costs on elevated debt levels and higher interest rates. In addition, the Company reported a goodwill impairment related to its Alexander Dennis and ARBOC business units of $104 million in 2022 Q4 that contributed to the loss in that period.

Adjusted Net Loss² for 2023 Q4 of $6 million improved from 2022 Q4 Adjusted Net Loss² of $26 million, driven by the same items that impacted Adjusted EBITDA² and net loss, adjusted for fair market losses and gains related to debt modification resulting from the Company's refinancing plan, which was completed in August 2023, plus other normalization adjustments including non-recurring restructuring and past service and pension costs.

Fiscal 2023 ROIC² increased by 5% from Fiscal 2022, primarily due to the increase in Adjusted EBITDA² and a slight decrease in the invested capital base. The decrease in invested capital² is primarily due to a decrease in long-term debt and cash, as the Company made repayments on its credit facilities. Also contributing is an elimination of the Company's interest rate swap and equity hedge, which were extinguished during the year.

Efforts to Strengthen Bus Manufacturing in the U.S.

In October 2023, the American Public Transportation Association ("APTA") created a Bus Manufacturing Task Force ("Task Force") to recommend immediate actions that can support a more competitive and stable bus manufacturing capacity in the U.S. This Task Force was assembled in response to a reduction in heavy-duty transit bus capacity in the U.S. following the exit of two players and the bankruptcy of another. These changes have led to a capacity decrease in the U.S. and improvements to NFI's overall competitive position. NFI is a member of this Task Force along with several other manufacturers, suppliers, and transit agencies.

Subsequent to the quarter, on February 7, 2024, the White House, in coordination with APTA and the Federal Transit Administration ("FTA") convened a Roundtable on Clean Bus Manufacturing. APTA and other members of the Task Force, including NFI, presented to the White House and provided recommendations on how to improve the financial health of U.S. manufacturers. These recommendations included the ability to complete pricing adjustments to reflect inflationary pressure on contracts bid from 2020 to 2023, the incorporation of progress payments (deposits, advances, and milestone payments), and pricing adjustments to future contracts to reflect price inflation or deflation.

Following the Roundtable, the FTA released a Dear Colleague letter, describing actions the FTA is taking to strengthen the American bus manufacturing industry, reduce vehicle contract costs, and shorten vehicle delivery times to public transit agencies. The proposed changes included within the APTA recommendations, and the FTA Dear Colleague letter may have a positive impact on NFI's financial performance in future periods, especially as it relates to working capital investments, but it is still early in the process and any financial impact will be dependent upon adoption of the APTA Recommendations and FTA proposals by U.S. transit agencies.

Outlook

NFI anticipates continued positive improvements to revenue, gross profit, Adjusted EBITDA² and Free Cash Flow², a shift to net earnings, and improvement in ROIC² over the next 12 to 24 months, as it ramps-up production, delivers on its backlog², and growing demand for its buses, coaches, parts, and Infrastructure Solutions™ services.

Market demand is evident through the high volume of active bus and motor coach procurements in both North America and international markets. As of 2023 Q4, the Company's North American active bids remained high at 8,732 EUs. This bid activity is expected to drive additional backlog² growth throughout 2024, and revenue growth in the medium- and longer-term. The current five-year forecasted demand within the Company's North American bid universe is also strong at 22,098 EUs, and, when combined with active bids, provides a record Total Bid Universe¹ of 30,830 EUs.

In addition to the increased numbers of bids for ZEBs, the number of EUs per bid has increased, as transit agencies are progressing from pilot or trials to more active deployment and operation of ZEB fleets. NFI expects active ZEB bids to remain high through the coming years based on government funding levels supporting state, provincial and municipal ZEB adoption targets.

NFI is working closely with its suppliers to monitor performance, and, due to the Company's strong backlog², has been able to provide longer-term visibility to its supply base for 2024 production. As part of NFI's supplier development program, the Company provides a risk rating to all its key suppliers based upon their on-time delivery performance and other factors. NFI completes detailed monitoring of moderate and high-risk suppliers, who can have severe impacts on production operations. NFI has seen the number of these moderate and high-risk suppliers decrease from a combination of overall improvements to supply chain health and from actions taken by NFI's supply and sourcing teams, including keeping higher material inventory on hand. The Company also appointed a dedicated Vice President of Supplier Development, and, combined with these improvements, support expected increases to 2024 production volumes.

In 2023 Q4, NFI continued increasing new vehicle production rates and hiring new team members to support this increase. While there has been positive improvement, the labour market within the United States and the UK remains challenging. NFI expects to continue to ramp-up production and add personnel on a phased approach in 2024 with gradual headcount additions ensuring that the ramp-up is matched to consistent supply and labour availability.

Gross margins and other profitability metrics are expected to improve in line with increases in production rates, increases to bus and coach deliveries, the reduction of work-in-progress vehicle inventory, and the completion of the remaining inflation-impacted legacy contracts. NFI anticipates that the remaining legacy inflation-impacted contracts will be delivered during the first half of 2024 ("H1 2024") and will represent approximately 10% of first half deliveries. The Company has also experienced signs of commodities and material costs easing and anticipates that newer contracts in NFI's backlog² now reflect appropriate, inflation-adjusted costing and pricing.

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¹ The Company's "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, 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.

Financial Guidance and Targets

NFI reiterates its previously provided financial guidance for Fiscal 2024 and targets for Fiscal 2025. Full details are provided in the table below.

The 2024 guidance ranges and the 2025 targets for selected financial metrics provided in the table above take into consideration management's current outlook combined with Fiscal 2023 and 2024 year-to-date results and are based on the assumptions set out below. The purpose of the financial guidance and targets are to assist investors, shareholders, and others in understanding management's expectations for the Company's financial performance going forward. The information may not be appropriate for other purposes. Information about guidance and targets, 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 and targets in the table above are driven by numerous expectations and assumptions, including but not limited to the following:

• Revenue: Anticipated revenue growth in 2024 and 2025 is based on NFI's firm order backlog², current 2024 and 2025 production schedules, expected backlog² option order conversion, and anticipated 2024 and 2025 new vehicle orders and Aftermarket parts sales. Revenue guidance and targets reflect higher volume of ZEB sales, higher average vehicle prices in NFI's backlog² and anticipated product mix benefits, plus expected international sales expansion. The guidance ranges also reflect potential variances in delivery volumes from supply disruption, product mix and expected timing of production recovery. NFI expects to deliver approximately 5,000 EUs in Fiscal 2024.
• ZEB deliveries as a percentage of total deliveries: NFI has updated its ZEB targets to now be ZEB deliveries as a percentage of total deliveries rather than as a percentage of manufacturing sales dollars, to better match to internal compensation targets and external reporting metrics. These expectations are based on NFI's firm and option backlog², anticipated option conversions from backlog², active bids and anticipated future orders in 2024 and 2025, and customers ZEB transition plans.
• Adjusted EBITDA²: Adjusted EBITDA² performance is driven by anticipated new vehicle deliveries in 2024 and 2025, product mix, including a higher percentage of ZEB deliveries, Aftermarket segment contributions and anticipated improvements in operating margins due to recovery in supply chain health, improved labour efficiency, higher average vehicle sales prices (as currently reflected in NFI's backlog²), expected additions to backlog², and impacts from the relaunch of double deck production in North America. There will be some impact to margins in the first half of 2024 from legacy inflation-impacted contracts (expected to make up approximately 10% of first half deliveries), contracts secured in the second half of 2022 and Fiscal 2023 reflect updated pricing and improved margins.
• Cash Capital Expenditures: Cash capital expenditures are based on investments made in 2023 and expected future maintenance and growth projects planned for 2024 and 2025. The numbers above include the expected acquisition and disposal of property, plant and equipment and the acquisition of intangible assets, but do not include expected lease payments.
• ROIC: Targets provided for 2025 are driven by the factors noted above combined with the expectation that there will not be significant changes in tax rates from current levels.
  

In 2024, NFI anticipates seasonality based on expected production ramp up, the timing of certain zero-emission bus deliveries, impacts of legacy inflation-impacted contracts, and sales mix. The Company expects to deliver approximately 35% of annual Adjusted EBITDA in the first half of 2024, with approximately 65% of annual Adjusted EBITDA expected to be delivered in the second half of the year. Sequentially, the Company anticipates a decrease in Adjusted EBITDA in the first quarter of 2024 as compared to the fourth quarter of 2023, as the first quarter of the year is typically the slowest period in private markets.

Based on expected revenue growth and associated investments in working capital, Adjusted EBITDA² guidance, cash capital expenditures, lease payments and cash taxes, NFI anticipates that its current and expected liquidity² will be sufficient to fund operations (including working capital), capital investments, and bonding requirements in 2024 and the longer-term. In 2024, NFI expects to lower its overall debt leverage ratios from Adjusted EBITDA² growth rather than significant debt repayments. NFI's guidance does not include the potential impacts of proposed changes to payment structures on U.S. FTA-funded heavy-duty transit contracts, as it is still early in the process and their financial impact will be dependent on adoption of the American Public Transportation Association recommendations and FTA proposals by U.S. transit agencies.

Guidance and targets above are conditional on several factors and expectations, including the supply chain performance, consistent availability and training of labour, a higher percentage of ZEB sales (which provide a higher revenue and dollar margin benefit), the mitigation of inflationary pressures, end markets recovering in-line with management expectations, growth in international markets, aftermarket parts sales, and continuous improvement initiatives.

NFI's guidance and targets are subject to the risk of extended duration of the current supply disruptions and the risk of additional supply disruptions affecting particular key parts or components. In addition, the guidance and targets do not reflect potential escalated impact on supply chains or other factors arising directly or indirectly as a result of ongoing conflicts in Ukraine, Russia, Israel and Palestine. Although NFI does not have direct suppliers in these regions, additional supply delays, possible shortages of critical components or increases in raw material costs may arise as the conflicts progress and if certain suppliers' operations and/or subcomponent supply from affected countries are disrupted further. In addition, there may also be further general industry-wide price increases for components and raw materials used in vehicle production as well as further increases in the cost of labour and potential difficulties in sourcing an increase in the supply of labour. See Appendix B Forward Looking Statements for risks and other factors and the Company's filings on SEDAR at www.sedarplus.ca.

Annual General Meeting of Shareholders, and Board of Directors Update

NFI's Annual General Meeting of Shareholders (the "Shareholders' Meeting") will be held virtually on Friday, May 3, 2024, at 11:00 a.m. (EST).

After 9 years and upon the completion of the Company's Shareholders' Meeting, Phyllis Cochran will retire as a member of the Board of Directors and Chair of the Audit Committee of NFI. The Board of Directors extends its sincere thank you to Phyllis for her contributions, dedication, and leadership as a Director, Audit Chair, and partner to NFI.

Ms. Anne Marie O'Donovan, FCPA, FCA, ICD, will be nominated as a new independent Director on NFI's Board. Ms. O'Donovan served as the Executive Vice President and Chief Administrative Officer, Global Banking and Markets at Scotiabank from 2009 to 2014, and the Senior Vice President and Chief Auditor of Scotiabank from 2005 to 2009. Ms. O'Donovan is also a former partner at Ernst & Young LLP. She is the chair of the board of Aviva Canada Inc., chair of the audit committee of Cadillac Fairview Corp. and serves on the board and chairs the investment committee of CMA Impact Inc., a subsidiary of the Canadian Medical Association. She is a past director, chair of the audit committee and chair of the compensation committee of Indigo Books & Music, Inc. and director and chair of the audit committee of MDC Partners Inc. If Ms. O'Donovan is elected to the Board, she will also become the Chair of the Audit Committee of NFI.

The materials for the Shareholders' Meeting and voting instructions will be sent to shareholders in advance of the meeting and will also be available on NFI's website at: www.nfigroup.com. A listen-only webcast link will be also available at www.nfigroup.com for interested parties.

Environmental, Social & Governance Update

We remain committed to our goal of delivering a better product, a better workplace, and a better world through our environmental, social and governance ("ESG") initiatives. This included continuing to innovate and grow our broad portfolio of comprehensive mobility solutions to support our customers at various stages in their zero-emission journeys; maintaining our focus on safety; completing our third submission to CDP and second submission to the S&P Global Corporate Sustainability Assessment; continued focus on talent acquisition, recruitment and talent pipeline and workforce developments efforts to meet higher production levels; a company-wide Employee Pulse Check survey; successful negotiation of two new collective bargaining agreements; an expanded supplier base and instating a Conflict and Critical Minerals Policy; and establishing a Sustainability Council, to give strategic leadership to NFI's ESG and sustainability programs. NFI also modified its performance share unit ("PSU") performance metric for the long-term incentive plan ("LTIP") in the Executive Compensation Program from being based solely on a ROIC target to a combination of performance against ROIC, an ESG target, and a strategic target.

NFI was proud to have ranked among Corporate Knights' Best 50 Corporate Citizens in Canada for the second year in a row in 2023 and we are focused on driving and delivering long-term sustainable value for all our stakeholders.

As of the end of 2023 Q4, NFI had 8,566 team members across all of its global locations.

Fourth Quarter 2023 Results Conference Call and Filing

A conference call for analysts and interested listeners will be held on February 29, 2024, at 8:30 a.m. Eastern Time (ET). An accompanying results presentation will be available prior to market open on February 29, 2024, at www.nfigroup.com.

For attendees who wish to join by webcast, registration is not required; the event can be accessed at https://edge.media-server.com/mmc/p/rkdhw7si. NFI encourages attendees to join via webcast as the results presentation will be presented and users can also submit questions to management through the platform.

Attendees who wish to join by phone must visit the following link and pre-register: https://register.vevent.com/register/BIcd32517711db4b2abae4f8a9432c887b. An email will be sent to the user's registered email address, which will provide the call-in details. Due to the possibility of emails being held up in spam filters, we highly recommend that attendees wishing to join via phone register ahead of time to ensure receipt of their access details.

A replay of the call will be accessible from about 12:00 p.m. ET on February 29, 2024, until 11:59 p.m. ET on February 28, 2025, at https://edge.media-server.com/mmc/p/rkdhw7si. The replay will also be available on NFI's website at: www.nfigroup.com.

About NFI Group

Leveraging 450 years of combined experience, NFI is leading the electrification of mass mobility around the world. With zero-emission buses and coaches, infrastructure, and technology, NFI meets today's urban demands for scalable smart mobility solutions. Together, NFI is enabling more livable cities through connected, clean, and sustainable transportation.

With over 8,500 team members in ten countries, NFI is a leading global bus manufacturer of mass mobility solutions under the brands New Flyer® (heavy-duty transit buses), MCI® (motor coaches), Alexander Dennis Limited (single and double-deck buses), Plaxton (motor coaches), ARBOC® (low-floor cutaway and medium-duty buses), and NFI Parts™. NFI currently 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 ("Shares") trade on the Toronto Stock Exchange ("TSX") under the symbol NFI and its convertible unsecured debentures ("Debentures") trade on the TSX under the symbol NFI.DB. News and information is available at www.nfigroup.com, www.newflyer.com, www.mcicoach.com, nfi.parts, www.alexander-dennis.com, arbocsv.com, and carfaircomposites.com.

For investor inquiries, please contact:
Stephen King
P: 204.224.6382
Stephen.King@nfigroup.com

Appendix A - Reconciliation Tables

Reconciliation of Net Loss to Adjusted EBITDA and Net Operating Profit after Taxes

Management believes that Adjusted EBITDA², and net operating profit after taxes² ("NOPAT") are important measures in evaluating the historical operating performance of the Company. However, Adjusted EBITDA² and NOPAT² are not recognized earnings measures under International Financial Reporting Standards ("IFRS") and do not have standardized meanings prescribed by IFRS. Accordingly, Adjusted EBITDA² and NOPAT² may not be comparable to similar measures presented by other issuers. Readers of this press release are cautioned that Adjusted EBITDA² should not be construed as an alternative to net earnings or loss determined in accordance with IFRS as an indicator of the Company's performance and NOPAT² should not be construed as an alternative to earnings or loss from operations determined in accordance with IFRS as an indicator of the Company's performance. See "Non-IFRS Measures" for the definition of Adjusted EBITDA². The following table reconciles net loss to Adjusted EBITDA² based on the historical financial statements of the Company for the periods indicated. The Company defines NOPAT² as Adjusted EBITDA² less depreciation of plant and equipment, depreciation of right-of-use assets and income taxes at a rate of 31%.

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