NFI Group ( OTCPK:NFYEF ) has published preliminary Q3 results with an adjusted EBITDA of -$15M to -$17M, hurt by inflation and "unreliable supplier performance for certain critical parts and components." NFI expects $500M-$520M in revenues for Q3.
"The third quarter was another very challenging period as we saw strong demand for our products and services, offset by continuing supply disruption resulting in production inefficiencies and the inability to complete and deliver contractually committed buses. In addition, we continued to experience short-term margin pressure from higher inflation and surcharge driven input costs," NFI CEO Paul Soubry said.
The bus and coach manufacturer has lowered its Q4 vehicle delivery projection citing continuing critical part supply delays, and lowered its fiscal 2022 adjusted EBITDA guidance to -$40M to -$60M. Revenue is estimated to be $2B to $2.2B (lowered from $2.3B to $2.6B).
NFI saw a disruption in its supply chain for certain critical parts, leading to an inventory of over 400 nearly completed vehicles at the close of Q3. It expects these disruptions to continue in the near-term but has initiated an action plan for a strong production recovery as supply challenges ease.
The firm is halting select new vehicle production lines to focus on completion of vehicles in process and working with banking and government partners on credit relief measures for the remainder of 2022.
NFI expects a recovery in 2023 with the help of its firm backlog of over 4,150 units, record bid activity, improved contract pricing, and a pickup in production thanks to anticipated supply improvements. It continues to target $400M to $450M in adjusted EBITDA for 2025.
Soubry said: "We have worked diligently with our customers, suppliers, and sub-tier suppliers to mitigate these challenges, and our actions have generated numerous positives, including customer price adjustments, the introduction of many alternative parts and components, and a consistent supply of control modules (which were previously impacting vehicle completion)."
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NFI cuts full-year guidance, delays Q4 production