NFI – Good Stock Performance but the Finances Need Attention

NFI is a leading independent global bus and motorcoach manufacturer offering a comprehensive range of mass transportation solutions. NFI buses are available in clean diesel, natural gas, diesel-electric hybrid, and zero-emission electric cars.

The company has a large global fleet and delivered more than 1,370 Zero-Emission Buses (ZEBs) since 2015 and has an annual production capacity of 8,000 ZEBs. NFI Group’s brands are New Flyer (heavy-duty transit buses), Alexander Dennis Limited (single and double-deck buses), Plaxton (motor coaches), MCI (motor coaches), ARBOC (low-floor cutaway and medium-duty buses), and NFI Parts.

Manufacturing accounts for 83% of total revenues and aftermath services constitute the remaining 17%. By products, transit buses constitute the majority of manufacturing revenues (nearly 67%), followed by aftermath (17%), motorcoaches (14%), and medium-duty and low-floor cutaway (~2%). 

It operates more than 50 facilities across 13 countries and has more than 105K vehicles in service. By geography, North America accounts for 81% of total revenues, followed by the U.K. and Europe (14%), and APAC (5%). The company enjoys market-leading positions in the US, Canada, UK, Hong Kong, and New Zealand. It has strong portfolios in Singapore, Malaysia, and Mexico and a growing presence in Switzerland and Germany.

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Key Investment Data


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Revenue Growth & Market Exposure

NFI Group is a trusted global partner with more than three centuries of combined bus and motorcoach design and manufacturing expertise. The company has over five decades of electric bus experience and caters to 11 countries with its electric buses. Its vertically integrated North American fabrication processes and proven propulsion agnostic bus platforms act as strong differentiators.

The company regularly invests in technology and innovation and has a solid history of successful innovations like electric trolleys, low-floor transit buses, CNG propulsion, battery-electric, low-entry motor coach, double-deck buses, etc.

Most NFI brands are leaders in their core businesses. For instance, New Flyer is North America’s largest heavy-duty public transit bus manufacturer while MCI is the North American market leader in motor coaches. NFI Parts is North America’s most comprehensive parts organization, providing replacement parts, training, service, and support.

NFI Group enjoys a 43% market share in the North American heavy-duty transit bus. NFI group is all set to gain from the electrical transition of vehicles. The company has designed its manufacturing process to support various propulsion formats on common platforms and suppliers. Electric buses represented 10% of deliveries in the latest quarter.

NFI Group enjoys diversified revenues with a global upside. The group’s revenues are classified by geographies, products, customers, and services. It has been building itself for the future undertaking North American market rationalization in 2010-2014 and diversification and vertical integration during the period 2015-2019.

About 80% of NFI’s revenues are driven by public customers. They are generally government-funded and thus increase the reliability of secure cash flows. NFI is targeting 8%+ CAGR revenue growth in the next five-year period.


NFI Group has an impressive history of sustainable dividends. It has paid consistent dividends every year since its IPO in 2005. The company has registered over 6% annual CAGR in dividends in the last five years and sports an annual yield of 3.4% but a high payout ratio. Effective Q1 2020, quarterly dividends were reduced by 50% in response to the COVID-19 pandemic. Though the dividend payment was reduced, the company continued to pay them regularly.

The company has a solid track record of acquisitions and a proven ability of successfully integrating these businesses. Its acquisition of ADL has further enhanced its product portfolio and technical competencies on lightweight chassis and bodies. The acquisition of ADL partially offset the COVID-19 related revenue decline.

NFI Group’s focus on growing share in North America through new products should also start bearing fruit in the future. It stands in a good position to leverage its leading position as a global bus manufacturer and benefit from the continued development of electric coaches for U.S. and Canadian markets.

The company is North America’s largest bus and coach parts distributor and is expanding NFI parts’ North American offering and exploring strategic opportunities to leverage NFI and ADL parts. The company is also well-positioned to lead the electrical transition of buses and coaches.

NFI is targeting 16%+ CAGR EBITDA growth in the next five-year period. It should benefit from innovative products, strong pipelines, and accretive acquisitions and should continue its dividend streak in the future.

NFI Group Historical Yield
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NFI Group competes with the likes of Volvo, Gillig, Proterra, BYD, Optare, Wright Bus, Scania, and MAN in the heavy-duty transit bus segment and Van Hool, Daimler, Irizar, and TEMSA in the motorcoach segment. Forest River, REV Group, Grande West are its biggest competitors in the medium-duty and low floor cutaway vehicles.

The company is well-positioned to lead technology developments. It is also leading the way in zero-emission buses and infrastructure. NFI enjoys a 74% share in the North American motorcoach market and a 75% share in the UK bus and coach market.

Bottom Line

The COVID-19 pandemic will continue to impact end markets but government stimulus and vaccines should assist recovery. The company is in a good position to gain from the growing target markets in the US and UK and the continued development of electric coaches for North American markets.

NFI’s transition from manufacturer to solutions provider and having the first-mover advantage in the automated bus technology positions it favorably for the future. NFI should also benefit from its potential to capture both revenue and cost synergies as a result of the ADL acquisition.

NFI vs TSX vs SP500 2021
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NFI Group Historical PE
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