NFI Group Q4 2025 Earnings Report

NFI Group EPS Results

• Actual EPS: C$0.68
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

NFI Group Revenue Results

• Actual Revenue: $1.33 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

NFI Group Announcement Details

• Quarter: Q4 2025
• Date: 3/11/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, March 12, 2026
• Conference Call Time: 8:30AM ET

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 9,000 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® (motorcoaches), Alexander Dennis Limited (single- and double-deck buses), 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 (referring to propulsion systems that do not utilize internal combustion engines, such as trolley, battery, and fuel cell), natural gas, electric hybrid, and clean diesel.

NFI Group Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record Q4 and FY2025 financial results — revenue rose 22.5% YoY and adjusted EBITDA increased ~79% YoY, with full-year adjusted net earnings of $85.4M, liquidity up to ~$446M and leverage improved to 3.49x.
• Negative Sentiment: Battery recall settlement remains a material charge — the company recorded a net loss related to the battery settlement (company cited a ~$63.9M net loss) and expects an 18–24 month repair campaign with associated cash outlays, even as adjusted metrics exclude the one‑time impact.
• Positive Sentiment: Strong backlog and 2026 guidance — backlog exceeds $13B (≈15,300 EUs), option conversion improved to 83.4%, and management guided 2026 revenue of $3.9–4.2B and adjusted EBITDA of $370–410M while targeting de‑leveraging into its 1.5–2.5x range by ~2027.
• Negative Sentiment: U.K. market weakness and Alexander Dennis charges — lower U.K. deliveries pressured transit volumes, and AD recorded $137M of impairment and restructuring costs, with management flagging slower-than-expected U.K. demand and procurement timing risk.
• Neutral Sentiment: Supply‑chain and operational focus with some supply improvements — management prioritized operational excellence, cost management and aftermarket growth, noted seating JV progress with seating backlog expected to normalize by early Q2, but emphasized remaining supply‑chain and tariff risks that could affect execution.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the NFI Fourth Quarter 2025 Financial Results Conference Call. At this time, all participants are on a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. You may also submit questions via the webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stephen King, Vice President, Strategy and Investor Relations. Please go ahead.

[Stephen King, VP of Strategy and Investor Relations at NFI Group]

Thank you, Shannon. Good morning, everyone, and welcome to our conference call. Joining me today are John Sapp, President and Chief Executive Officer, and Brian Dewsnup, Chief Financial Officer. On today's call, we will give you an update on our annual and quarterly results, highlighting a record year in 2025 for NFI. You'll also hear from John on his first few months as CEO and his top priorities coming into the year. This call is being recorded and a replay will be made available shortly. We will be referring to a presentation that could be found in the financials and filings section of the NFI Group website. As we move through the slides via the webcast link, we will call out the slide number.

[Stephen King, VP of Strategy and Investor Relations at NFI Group]

On slide 2, we provide our cautionary or forward-looking statements and note that certain financial measures referenced today are not recognized earnings measures and do not have standardized meanings prescribed by International Financial Reporting Standards or IFRS. We advise listeners to view our press releases and other public filings on SEDAR for more details. In the appendix of this presentation, we have provided a list of key terms and definitions that will be used on today's call. A reminder that NFI's statements are presented in U.S. dollars, the company's reporting currency, and all amounts referred to are in U.S. dollars unless otherwise noted. Slides 3 and 4 provide a brief overview of our company. NFI is a global independent bus and motor coach manufacturer and total mobility solutions provider.

[Stephen King, VP of Strategy and Investor Relations at NFI Group]

We offer a wide range of buses and coaches on proven platforms, and we hold leading positions in transit and coach markets with the strongest aftermarket network in North America and the U.K.. More detailed information is available on the NFI Group website. Slide 5 provides some brief insight into NFI's product and geographic mix and other milestones. I'll now pass the call over to John.

[John Sapp, President and CEO at NFI Group]

Thanks, Stephen, and good morning everyone, and thank you for joining us today. I'm gonna pick up on slide seven. It's been just over two months since I started with NFI, and in that time, I've had the opportunity to see firsthand what makes this organization a leader in the markets we serve. I visited numerous facilities across our network in the U.S., Canada, and U.K., and I've had the opportunity to work closely with the leadership team to get alignment on our priorities for the year. What drew me to NFI was the critical role that the company plays in driving cities, economic activity, environmental progress and enabling connections. NFI's purpose is to move people, and I've seen our team's commitment to that mission every single day since I've arrived.

[John Sapp, President and CEO at NFI Group]

Whether it's mobilizing actions to support customer deliveries, executing field service activities, providing aftermarket parts, completing complex engineering or fabricating components for buses, the team at NFI remain focused on the end goal of supporting customers to ensure they can keep their passengers and riders moving safely. I'm honored to be following Paul Soubry in this role. The legacy of his outstanding 17-year tenure will forever be a part of the NFI Group. While we wish him all the best in his retirement, I'm also pleased that he will remain available to us and myself as an advisor going forward. As incoming President and CEO, my focus has not changed for the sake of change. While I also want to make it clear that status quo is not the plan.

[John Sapp, President and CEO at NFI Group]

While we are well-positioned for success with a strong $13 billion backlog, a very positive demand outlook and foundational aftermarket business, I also want to bring new perspectives and fresh ideas to the business and our longer term plan. The leadership team and the board have developed a multi-year financial plan that will see NFI continue to grow, and I'm committed to making sure that we deliver and execute to our expectations. I'll now pass it over to Brian to go through the fourth quarter results before we get into a detailed look at our outlook.

[Brian Dewsnup, CFO at NFI Group]

Thanks, John. Turning to slide 8. Q4 was a record quarter for NFI with the largest revenue and adjusted EBITDA in our history. We saw a 22.5% year-over-year increase in revenue and an almost 79% year-over-year increase in adjusted EBITDA. We achieved adjusted net earnings of $59.6 million for the quarter and a 45.7% increase from Q4 2024. Our liquidity increased by $319 million year-over-year, reaching almost $446 million. This reflects a temporary positive increase in the battery settlement. Total leverage inclusive of all debt improved to 3.49x, an improvement of 5.3x from 2024 Q4. We continue to make meaningful progress towards our leverage target of 1.5x-2.5x.

[Brian Dewsnup, CFO at NFI Group]

The overall improvements were largely driven by the continued strength in manufacturing sales mix as we convert our backlog into results with increased unit economics. The quarter was also positively impacted by the battery settlement agreement reached in mid-December, which is detailed on slide 9. For reference, in the third quarter of 2025, NFI recorded a $229.9 million provision as part of the originally announced battery recall. The majority of this provision relates to the expected cost of the recall campaign, while a smaller portion is for potential additional warranty and support costs for other non-recall related battery electric buses in service from the same battery manufacturer. NFI worked throughout the fourth quarter with the impacted supplier and came to the final settlement agreement in December that included the following items. Immediate cash payment received in December.

[Brian Dewsnup, CFO at NFI Group]

An inventory of battery cells from a leading global provider, which NFI plans to use with a new battery manufacturer starting late 2027. Hiring of certain engineering and service employees who will support the recall and provide oversight on NFI's other electric buses. Assumption of software and intellectual property, plus facilities for office and engineering labs and the storage of battery cells. Finally, cash payment in escrow to support transferred employees and the facilities mentioned above. The table on the left showcases the financial statement impacts. On a net basis, we recorded a $63.9 million loss, which is generally viewed as a conservative approach, considering the likelihood that certain warranty claims may or may not come to fruition. We're also focused on managing the cost of the battery recall campaign to lower cash outflows.

[Brian Dewsnup, CFO at NFI Group]

Recognition of the battery recall and settlement impacted numerous financial metrics in 2025. Given the non-recurring nature of this event, we have normalized adjusted EBITDA and adjusted net earnings. To see a full breakdown of the impacts, please see our MD&A and financial statements. Moving to slide 10, we highlight the quarterly and full year deliveries by product lines. Transit bus deliveries were down 6% in the quarter and 7% for the year, primarily due to lower U.K. deliveries, partially offset by higher North American deliveries. Despite these lower deliveries, the average selling price, or ASP, of a heavy-duty transit bus increased by 33% year-over-year, reflecting the conversion of stronger backlog to results. Motor Coach saw a significant increase in the quarter, with deliveries up 48% from 2024.

[Brian Dewsnup, CFO at NFI Group]

This was driven by customer demand, acceptance, and seasonal timing. The ASP for this segment saw a 3% growth year-over-year. The low-floor cutaway and medium-duty segment saw a record full year delivery of 761 units, an increase of 22% year-over-year and a 12% increase in the quarter. The segment also saw a 15% increase in ASPs. Turning to slide 11, aftermarket gross margin percentage was up significantly from Q3 and up from 2024. This reflects sales mix benefits and updated pricing reflecting the impact of tariffs. In the manufacturing segment, gross margin was up to 14.8%, an increase of 780 basis points from Q4 2024 and 460 basis points from the previous quarter after adjusting for the impacts of the battery recall.

[Brian Dewsnup, CFO at NFI Group]

This increase was also driven by conversion of backlog and the positive benefits of geographic mix. Slides 12 and 13 walk through the year-over-year changes in adjusted EBITDA within our reporting segments. I'll just highlight that manufacturing adjusted EBITDA increased by $59 million or 167% in the quarter and increased by almost $150 million on a full year basis. On slide 14, free cash flow for 2025 was positive at $67.8 million, with a year-over-year increase of $86 million, driven by operational performance improvements and lower cash interest costs. When we factor in changes in working capital, there was a significant positive impact on cash flows in 2025.

[Brian Dewsnup, CFO at NFI Group]

This was primarily driven by the battery recall provision, somewhat offset by the increase in inventory from the sales received in the battery settlement and higher AR balances reflecting a busy delivery period in December. Slide 15 showcases a bridge from net loss to adjusted net earnings, with all amounts shown net of taxes. There were some large non-recurring and unusual items driving the adjustments in 2025. These included $25.9 million related to our June 2025 refinancing, $137 million of costs at Alexander Dennis related to impairment and restructuring, a $19 million seat supply adjustment reflecting labor inefficiencies and unproductive overhead, and finally, the net impact of the battery recall and settlement of $39.6 million.

[Brian Dewsnup, CFO at NFI Group]

Adjusted net earnings for 2025 of $85.4 million is an increase of $88.8 million from 2024. Looking at slide 16, we summarize total leverage, liquidity, and ROIC. Total leverage, which includes all debt instruments, continues its downward trend, now under 3.5x. Liquidity was up approximately $333 million year-over-year, and ROIC reached double digits. This reflects our positive cash generation, the impacts from the battery settlement, and debt refinancing. I'll now turn the call back to John to discuss our outlook.

[John Sapp, President and CEO at NFI Group]

Thanks, Brian. We're incredibly excited for the path ahead at NFI. Coming off record results, 2026 is shaping up to be another strong year as we execute on our backlog, increase production, and drive operational initiatives. We'll also need to navigate through some broader macroeconomic conditions that may create headwinds. On slide 18, I want to walk through my key strategic priorities that fall under four pillars. These are the drivers of our performance in 2026. First on this list is operational excellence. As a manufacturer of complex, highly customized vehicles, it is critical that we maintain our focus on performance. To many who have followed NFI, you'll know that recovering supply chains have impacted our operations, so it should be no surprise that supply chain performance is a key priority for our team in 2026 and beyond.

[John Sapp, President and CEO at NFI Group]

In tandem with that, we'll be focusing on our cost management to ensure we create efficiencies. We want to make sure that we invest in the right areas and resources to enable our continued innovation, but need to drive production leverage to increase EBITDA and earnings growth. Market leadership is another focal point for the year. This is where we want to enhance our customer's experience by continuing to meet their customized needs and providing the broadest and highest quality products on the market. We also want to maintain our position as being our industry's employer of choice, where people can successfully expand their careers as this will further drive overall performance for us as a business. These operational and market activities will underpin our profitable growth. A key factor here is ensuring we continue to capitalize on our impressive backlog and convert high-margin units into deliveries.

[John Sapp, President and CEO at NFI Group]

In the aftermarket segment, we want to continue expanding on growth strategies that provide further penetration into bus and coach parts and service. This includes more targeted focus on specific components and increased use of e-commerce and web store platforms. The U.K. order book is a high priority in 2026 as we seek to expand our deliveries and revenue in that region. We are laser-focused on our competitive positioning in the U.K., and while we've been happy to see the continued rollout of our new EV products, overall demand is behind our expectations. We are continuing our work with government partners to highlight the importance of domestic manufacturing for the U.K., and we are hopeful that the output of ongoing discussions will deliver a positive outcome. We've had great support in Scotland, but need to see broader focus on domestic production to drive increased order improvements.

[John Sapp, President and CEO at NFI Group]

Lastly, NFI is driven to be a long-term business generating value for all our stakeholders. In 2025, we strengthened our balance sheet through our inaugural U.S. bond issuance, and we continued progression towards our target leverage range. It is a critical point for us to continue our de-deleveraging journey while completing the execution of the battery recall campaign and focusing on continued development and succession of our leadership team. With those priorities forming the background and foundation for 2026, we also wanted to provide forward-looking guidance for the year. We anticipate a revenue range of $3.9 billion-$4.2 billion with adjusted EBITDA between $370 million-$410 million and cash CapEx between $50 million-$60 million. In the box below, you'll see a few of our capital allocation priorities for the year.

[John Sapp, President and CEO at NFI Group]

The top of those being continued progress on our target total leverage. We expect we'll likely achieve our target in 2027. As we progress towards that goal, we want to make sure that we continue to invest in the existing business growth and maintenance CapEx. I'll now walk quickly through a few drivers of our guidance expectations. On slide 19, you can see the makeup of our backlog of over 15,300 EUs. 41% are firm orders and 59% are options. Our backlog continues to provide significant visibility for our production schedule and has helped us fill our 2026 North American public market production slots, and we are now selling well into 2027. The options offer runway and visibility for our production schedules over the medium and longer term.

[John Sapp, President and CEO at NFI Group]

The black line represents the total value of the backlog, which is now over $13 billion, having grown by $7.3 billion over three years. Slide 20 demonstrates the improvement in ASP per EU for firm and option orders. Heavy-duty transit ASPs in dark blue have decreased slightly with changes in propulsion mix. Motor coaches in light blue have seen a significant increase in ASP, driven primarily by public market demand. The ASP for heavy-duty buses is up by almost 55% since Q4 2021, and motor coaches are up 55% over that same time period. Incoming demand for our buses remains strong in North America, and this is shown in our bid universe on Slide 21. We ended the quarter with active bids of 7,120 EUs.

[John Sapp, President and CEO at NFI Group]

This includes roughly 4,200 EUs or 4,100 EUs in bids submitted, which is up 12.6% year-over-year. We believe this increasing demand is driven by the funding environment, fleet age, and replacement activities happening in several major cities. The black line on the chart shows new awards, firm, and options. The chart illustrates the typical correlation between bids submitted in light blue and contract awards in black with a lag of a few quarters from submission to award. The gray section of the chart shows our five-year expected public bid universe, which is compiled from customer fleet replacement plans and currently sits at roughly 25,000 EUs. This is an 8.9% increase from the third quarter and a 14.7% increase year-over-year.

[John Sapp, President and CEO at NFI Group]

We feel this sustained demand is reflective of a longer-term replacement cycle happening in North America as older buses are taken out of service and replaced by newer units. Slide 22 shows our book-to-bill and option conversion ratios, another important metric for incoming orders. Our option conversion ratio reached 83.4% in 2025, an improvement from 76.3% in 2024. This reflects increased order activity, a higher number of exercise options, and the improved competitive landscape. Slide 23 highlights our quarterly production rates and deliveries from 2022 to 2025. We continued to experience sustained production rate increases through 2025 in North America, but these were offset by lower U.K. production, matching lower incoming order demand. Production was also impacted by certain supply chain disruption.

[John Sapp, President and CEO at NFI Group]

We expect to see line entries continue to increase in 2026, driven by our All-Canadian Build facility, North American double-deck ramp-up, and medium-duty and motor coach contributions. Slide 24 shows our aftermarket segment's overall performance and important contribution to the NFI Group economic engine. From 2019 to 2025, the business saw a 6.8% CAGR in revenue and an 8.9% CAGR in adjusted EBITDA. While there was some decline in 2025, this is primarily due to a lower large-scale program revenue, somewhat offset by parts sales growth. We continue to prioritize growth initiatives within the aftermarket and feel that while 2026 will likely be in the low single-digit growth range, longer term, that business has the potential for stronger growth. On slide 25, we recap the guidance ranges for key metrics in 2026.

[John Sapp, President and CEO at NFI Group]

The factors underpinning this guidance are higher production and delivery expectations, continued conversion of our strong backlog into results, improving supply chain performance and readiness, helping to drive improved labor efficiency, all supported by contributions from the aftermarket segment. In terms of seasonality, typically the first quarter is our slowest period, while the fourth quarter is our busiest period. We expect 2026 will follow that same pattern and anticipate year-over-year quarterly growth as reflected in our guidance ranges. There are various headwinds impacting the business, including propulsion sales mix, the speed of supply chain improvements, Alexander Dennis U.K. market demand, and delays in the timing of U.K. procurements with increased domestic focus. Finally, we also have to work through macroeconomic factors such as tariffs and trade relationships that we expect will have some impact on results and potential demand within private coach.

[John Sapp, President and CEO at NFI Group]

For clarity, our guidance includes the current known impacts of tariffs as of March 11, 2026. It does not reflect any material changes that the tariff environment could have on demand, pricing, or cost in the future. On slide 26, we provide our latest views on the macro tariff environment and how they impact NFI today. In each of the boxes, we have identified the major tariffs that are present and applicable to our industry. You'll notice specific color-coded bars that imply the impact to NFI for those tariffs, with red being the most significant impact and green being the lowest. The two highest impact areas are Section 232 truck and bus, originally launched in November 2025, and the steel and derivative tariffs. We are continuing to work with our partners to ensure we mitigate these costs wherever possible.

[John Sapp, President and CEO at NFI Group]

As of now, we see tariffs having more of an overall impact on private coach market demand as opposed to the public market. This is largely due to the established manufacturing facilities within the U.S. for public market demand. We continue to view tariffs as largely a pass-through cost to customers through contractual obligations and through general price increases. This does require discussions with customers, and we may not be able to cover all costs, but we've generally had success in being able to find solutions. Longer term, we will continue to assess our geographic production schedules while considering tariff exposure. In 2025, we made significant investments in our U.S. operations, increasing staffing in the country by 7%, opened our new Las Vegas pre-production facility, opened a new service center in California, and acquired a Michigan-based supplier.

[John Sapp, President and CEO at NFI Group]

We also invested in the Canadian capabilities culminating with the recent ribbon cutting of our All-Canadian Build facility. We continue to monitor the trade landscape and adjust where necessary to ensure we are as competitive as possible. Wrapping up on slide 27, just a few final comments. The fourth quarter of 2025 was a record period that helped contribute to NFI's strong fiscal year. We saw increased revenue, converted backlog into results, and had solid cash generation supporting debt repayment and deleveraging. Our total backlog of $13 billion, combined with option conversion rate and book-to-bill ratios, reinforces our confidence in our near and long-term outlook. Our guidance numbers are rooted on our manufacturing operational increases alongside the stable contributions from our aftermarket segment.

[John Sapp, President and CEO at NFI Group]

Despite various headwinds in 2026, we have not changed our overall view that NFI is on a strong trajectory that should see improvements across operating and financial metrics. We are confident in the strength in our markets and our product offerings and in our team's ability to deliver excellence in 2026. I'm excited for what's ahead. This is a great team, anxious to continue and build on NFI's strong forward trajectory, poised for great growth and success in 2026 and beyond. With that, I will now open the line for questions. Shannon, please provide instructions to our callers.

[Operator]

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. You may also submit questions via the webcast. Please stand by while we compile the Q&A roster. Our first question comes from the line of Chris Murray with ATB Capital Markets. Your line is now open.

[Chris Murray, Managing Director of Institutional Equity Research at ATB Capital Markets]

Yeah. Thanks, folks, and good morning. I guess the first question is maybe turning to the guidance a little bit and trying to understand, you know, maybe unpacking this a little bit. I think you made the comment that you have expectations that for the most part, most of the slot is sold out for 2026. Just looking at kind of where the numbers end up, let's assume, as you said, aftermarket's relatively flat year-over-year. Can you just kind of walk us through your thoughts around how many shipments you think you're gonna see in the year? Just going back to kind of the embedded margin, it just feels like, you know, maybe we're missing something in terms of what's there, if there's any particular issues or if there's any buses that are still kind of impaired or anything like that.

[John Sapp, President and CEO at NFI Group]

Yeah. Thanks, Chris. I appreciate the question and we'll look forward to connecting with you here further certainly. Overall for us, certainly we feel really good about what it is that we have in front of us here in terms of 2026. We've got a significant amount of growth that we need to certainly go deliver on. I think we don't share the specifics in terms of EU, you know, numbers that we anticipate, but certainly the growth that we're showing here will have a strong and demonstrated improvement or increase relative to the number of EUs that we expect to see.

[John Sapp, President and CEO at NFI Group]

When you factor in certainly the growth trajectory that we've been on over the past few years, you know, I think what we're demonstrating here in terms of our growth and based on the guidance, you know, certainly is one that we feel good about. At the same time, we recognize that there are some potential headwinds that could emerge here over the course of the year. There's gonna be key factors that we expect, you know, over this next year that are gonna drive the improvements that we need to deliver on, right? We've got the necessary pieces in place from an operational growth standpoint that include, you know, the All-Canadian Build project.

[John Sapp, President and CEO at NFI Group]

We need to see a larger contribution in terms of some of our Alexander Dennis U.K. business as well as the work out of our North American double-deck. Those are gonna be key enablers for us in terms of delivering on the guidance numbers that we've shared. We do expect continued growth as well within our low-floor cutaway business. The pieces are all in place for us to be able to go deliver on what we've shared. Again, we don't share the number of EUs that are gonna be a part of it, but we have high confidence, certainly in terms of what we see. We need to be careful in terms of some of the headwinds that could emerge. I'm gonna also ask Brian to share a few thoughts on this as well.

[Brian Dewsnup, CFO at NFI Group]

Yeah, I'd just like to add. Thanks, John. Good response there. I'd just like to add there, you know, you did mention that we have a lot of slots sold for 2026. While that's true in some of our businesses, we still have some, you know, a fair amount of volume to win, particularly in the private coach business and in the U.K.. You know, we take that as a balance when we've developed our models and our guidance.

[Chris Murray, Managing Director of Institutional Equity Research at ATB Capital Markets]

Okay, fair. Maybe for John, you know, you've had just a few days on the ground and getting a chance to see the organization. You know, is there anything that you're thinking about in terms of what you've seen so far and kind of initial thoughts? You also made the comment about, you know, investing some growth CapEx, just trying to, you know, maybe understand what that might look like. Any initial thoughts on sort of where you're at as you take over the CEO role? You know, any thoughts around the strategic direction of the company over the next little while?

[John Sapp, President and CEO at NFI Group]

Yeah. Thanks, Chris. Again, a great question, and I appreciate the chance to share some thoughts on it. You know, first off, it's been two months since I've been, and I have been incredibly impressed with this company and what we have and really excited about what we have in front of us. You know, that's based on a number of factors that I would expect that many of you all see as well. First off, an incredible backlog. We've got to go deliver on that. I'll talk more on that here in a moment. We've got a very experienced and motivated team.

[John Sapp, President and CEO at NFI Group]

Now, this is a team that is really geared around the mission that we have of connecting people and doing it and ensuring we connect folks safely. That's an incredible mission that inspires this team and so certainly inspires myself. We've got an established brand and reputation that's built on decades in every one of our business units and how they've touched the market. We really have, I think, an excellent multiyear plan in terms of how we're gonna be able to drive growth in manufacturing, which speaks a bit to your CapEx question there. You know, I shared a little bit in terms of what my priorities are going to be. The operational excellence piece, I can't emphasize that one enough.

[John Sapp, President and CEO at NFI Group]

The first question that you shared, right, around us delivering on this growth, you know, we got a high confidence in terms of what we're gonna be able to go do and deliver here, certainly within 2026 and beyond. Our customers need that from us. That operational excellence piece isn't just around our own internal manufacturing, but also ensuring the supply chain readiness and that we bring our suppliers along the way. We'll be very focused on that as a key priority for myself. That is an area that I've emphasized in the first two months to answer your question. We also need to ensure that we're driving profitable growth. As we see our volumes increase, ensuring that we're being very effective in terms of our cost management.

[John Sapp, President and CEO at NFI Group]

We also need to ensure that from a growth standpoint, that where we see these very strong areas of high growth, that we're able to drive the necessary growth across all of our business units as well to be able to support the long-term growth expectations for us as a business. Then the final point is just around driving the, you know, continuing to drive the focus on customer centricity. That certainly has jumped out to me as being so critically important for the people that are part of this business. It's one that we're gonna continue to double down on. As, you know, our customers, our end use customers and their customers rely on the on our services every single day and the products that we provide.

[John Sapp, President and CEO at NFI Group]

We're gonna continue to ensure that's key for us. You know, on the CapEx front, we've made a number of investments to include the, what we shared recently around the All-Canadian Build. We're gonna continue to make the right CapEx decisions that ensure we've got the footprint in place to be able to, you know, deliver on the long-term projections. For 2026, we feel good about everything that we've done relative to CapEx that enables us in terms of this year. But we're gonna continue to make the right decisions around where that CapEx investment goes and how we're building for the future. Thanks for the question there, Chris.

[Chris Murray, Managing Director of Institutional Equity Research at ATB Capital Markets]

All right. Thanks. I'll pass along.

[Operator]

Thank you. Our next question comes from the line of Ty Collin with CIBC. Your line is now open.

[Ty Collin, Director of Institutional Equity Research at CIBC World Markets]

Hey, good morning, everyone. Thanks for taking my question. John, great to hear from you on the call this morning. Maybe just for my first one on the seating supply situation, maybe I missed it in the published materials, but have you made progress clearing out that backlog of complete buses waiting for seating? Is the expectation still that the overall seating issue is gonna largely be normalized, you know, sometime after Q1?

[John Sapp, President and CEO at NFI Group]

Yeah. Thanks. Thanks, Ty. It's a great question. Let me share a little bit around seating and certainly what we're doing in terms of our overall supply chain here as we drive growth. We're very pleased with where we're at relative to the progress that the team has made since the end of last year around, you know, seating. Obviously, it's well known in terms of what we've done to really secure that. I think the JV partnership that we've established, one is one that we feel, or not just feel, but we've been really pleased with the results that our collective team has been able to generate.

[John Sapp, President and CEO at NFI Group]

That has been focused on, you know, driving the necessary governance within the supplier, establishing the processes around, you know, material planning, bringing the facilities where they need to be to ensure that they can meet our, and prepare for our long-term growth. Our partners have been with us certainly along the way. We have seen the needed changes, and been next to the team there within that, the JV supplier to ensure that it's progressing in the way that we would expect. What we've seen in terms of the improvements, we haven't published those for just because we are seeing the progress, frankly, that we need to. We're gonna see it continue to linger a little bit into Q2.

[John Sapp, President and CEO at NFI Group]

What I would say is, overall, the improvement has been remarkable in terms of the number of, you know, buses awaiting seats, et cetera. We do anticipate that in the early Q2 timeframe that we will see this fully resolved and that we will be positioned relative to the JV for long-term success in terms of the seating.

[Ty Collin, Director of Institutional Equity Research at CIBC World Markets]

Okay. That's great color. Thanks. I'm wondering if I could just get your thoughts on potential impacts of the current and unfolding Middle East conflict here. You know, are there any sorta red lights blinking within your supply chain? Which aspects of the supply chain would you consider to be most vulnerable? Are you taking any sort of proactive action at this point in response to rapidly unfolding events?

[John Sapp, President and CEO at NFI Group]

Yeah. Thanks, Ty. Of course, we're watching these events very closely. What I would say for us is that generally, you know, our supply chain is not affected by the region. We have a couple of suppliers that we watch, but a very minimal in terms of the amount of material that we see come, you know, in and through that region. We are watching it closely. We are ensuring that, one, obviously, our first and foremost is concern for anyone that may be affected. Second is ensuring that where necessary, if we need to have alternative plans, that we very quickly work through. You know, the good news for us is we've got a very broad supply chain.

[John Sapp, President and CEO at NFI Group]

We can draw on our supply base from all over the globe, and we have, you know, certainly so many redundancies that exist out there for us or suppliers, right, that can create that resiliency and redundancy where we need it. Overall, we generally, from a supply standpoint, feel good about where we're at to be able to navigate the, you know, the current geopolitical environment there in the Middle East.

[Ty Collin, Director of Institutional Equity Research at CIBC World Markets]

Okay, thanks. I'll pass the line.

[Operator]

Thank you. Our next question comes from the line of Cameron Doerksen with National Bank Financial. Your line is now open.

[Cameron Doerksen, Managing Director and Senior Equity Analyst at National Bank Financial]

Yeah, thanks very much. Good morning. Wanted to ask about average selling price. The way obviously you reported it's heavily impacted by, I guess, the mix of bus types. I'm just wondering if we could sort of look at the like-for-like pricing, you know, like a diesel versus a diesel last year. You know, are you still seeing your selling price increases as you're coming in with new orders? Just trying to understand the margin impact of still positive pricing.

[John Sapp, President and CEO at NFI Group]

Yeah. Thanks, Cameron. A great question. Yeah, well, I'll say at a very high level is that we continue to see, you know, the benefit of pricing that has played through. Obviously, there's been some impact in terms of, you know, over the several years going back, right, that has taken time for some of the pricing benefits to play through, and we have been, you know, certainly seeing that here over the past 12-24 months. Generally speaking, yes, we see that positivity relative to the pricing piece, but I'm gonna ask Brian to expand on that a little bit.

[Brian Dewsnup, CFO at NFI Group]

Yeah. Thanks, John. Yeah, this is, you know, we've seen and we've talked about this over the past couple of years where we've, you know, won, you know, a lot of backlog, and you're seeing that backlog migrate from backlog into the actuals, and so, you know, pushing up our ASPs. Additionally, in 2025, we've had some tariff impact come into that as well as we've sought to, you know, pass those through on kind of like a cost neutral basis, but it has improved or driven up the ASPs. Then, of course, the geographical mix has also had an effect where buses, generally speaking in North America, are a little bit more expensive than in the U.K., so that mix effect is in there as well.

[Cameron Doerksen, Managing Director and Senior Equity Analyst at National Bank Financial]

Okay. That's helpful. Just on the motor coach market, obviously very strong number of deliveries in the fourth quarter. You sound pretty positive, I guess, on the public market demand for motor coaches, but a little bit of uncertainty perhaps given the tariff impact here on the private market. I'm just wondering, you know, what you're seeing maybe so far in the private motor coach market. Are you seeing an impact on demand? Just trying to sort of gauge, you know, overall in motor coaches, if we should expect that, you know, continue to have a strong delivery number in 2026 like we saw in 2025?

[John Sapp, President and CEO at NFI Group]

Yeah. I think the underlying demand for motor coaches is still there in the kind of fundamental aspects of kind of North American travel and the economy and whatnot. You know, the demand is still there. The recent kind of November increase in tariff, that's beginning to flow through the cost base of all of the OEMs. There's no, you know, domestic manufacturer of motor coaches.

[John Sapp, President and CEO at NFI Group]

Today's order for the private market. What we're really seeing is the beginning of, you know, those tariffs in the private market and how that's gonna play out in terms of how much of that is shared with the customer base. You know, we're bullish on the market. You know, all the fundamentals, you know, from a demand side are still there. It's really just a matter of, you know, how do we manage through the tariffs and how much we perhaps absorb there versus how much we share with our customers.

[Brian Dewsnup, CFO at NFI Group]

Yeah. Cameron, the only thing I'd add, you know, we continue to be the only Buy America compliant manufacturer of coaches for the public market. That continues to be kind of, you know, a good positive for us as we look at that market going forward.

[Cameron Doerksen, Managing Director and Senior Equity Analyst at National Bank Financial]

Right. Okay. That's helpful. Thanks very much.

[Operator]

Thank you. Our next question comes from the line of Daryl Young with Stifel. Your line is now open.

[Daryl Young, Managing Director at Stifel]

Hey, good morning, everyone. Wanted to just get some thoughts around preliminary budgets or expectations for transit funding come the expiration of the IIJA. Is there any details or any kind of inner workings that you can share with us around maybe what the magnitude of the next funding cycle might look like?

[John Sapp, President and CEO at NFI Group]

Yeah. Thanks very much, Daryl. Great question. We're obviously watching this closely. We're very engaged where we can be in terms of ensuring that you know, our voice is you know, certainly being heard, and at the same time, you know, making sure that we're you know, really getting a good feel in terms of where the sentiments are. I would say generally speaking, we've been encouraged by some of the commentary that's out there in terms of where the funding bill looks to be. We've had a lot of discussion on this. I think there's you know, good reason for continued optimism on it. You know, to be honest, right, the fleets are, it's clear, right?

[John Sapp, President and CEO at NFI Group]

There's a lot of recapitalization effort that the you know, bus operators are needing. Their voice is certainly being heard. As a result, I would expect that will continue to play through and as this next funding cycle and the authorization cycle gets set up. I would say that the other note I would make is that, you know, those decisions that are being made now, of course, are gonna continue to build off the current year appropriation. You know, we are in good shape in terms of the amount of backlog, right, that will continue to carry forward, you know, this year into 2027 and, you know, and beyond as different transit authorities take advantage of the current funding sources that are there.

[Brian Dewsnup, CFO at NFI Group]

Yeah. The only thing I'll add, Daryl, is, yeah, I think, you know, we saw a strong option conversion in 2025. To John's point, I think that's folks trying to get the last of the IIJA in 2026. To John's comment, you know, that spending, while it, you know, matures in 2026, the act, it can be spent in 2027, 2028, 2029, so that'll, you know, drive deliveries during that period as well.

[Daryl Young, Managing Director at Stifel]

Got it. Okay. Just to go back to the supply chain, you spoke to so obviously steel and aluminum and price pass-through, and that's great. I'm just curious if you're seeing any availability issues of steel in the U.S. and maybe how many weeks of production you might have in terms of your steel inventory today.

[John Sapp, President and CEO at NFI Group]

Well, we haven't. Overall, from a steel standpoint, we feel good about where we're at from a supply chain standpoint. We haven't focused on the weeks in production for that reason. We're generally good. What I will say is that from a supply chain readiness standpoint, we're very focused on, from a growth standpoint, ensuring that whether or not it's steel or anything else that's a part of our growth story from a supply chain, that we really are ensuring that we are looking far enough ahead, right, to ensure that we've got the readiness to be able to support that growth.

[John Sapp, President and CEO at NFI Group]

There's been a significant amount of effort here in the first two months of the year to really ensure from a readiness standpoint that all of our suppliers are coming along to be able to meet that growth with us. The team's made an incredible amount of progress in that regard. I've been very pleased with what I've seen here to date on it. We've got some continued work certainly to do. But what that helps us to do is identify where there are potentials for us to be able to go in and support those suppliers much earlier than it being in a reactive mode, right? We're being extremely proactive around ensuring our supply base. Specific to the steel piece, we generally feel good about that. We don't have any emerging issues.

[Daryl Young, Managing Director at Stifel]

Okay, great. I'll jump back in the queue. Congrats on the quarter, guys.

[Operator]

Thank you. Our next question comes from the line of Abe Landa with Bank of America. Your line is now open.

[Shaun Maher, High Yield Credit Research Analyst at Bank of America]

Hi, good morning. It's Shaun for Abe. Thank you for taking my question. The first one I wanted to ask was, can you outline the 2026 free cash flow bridge, including cash interest, cash taxes, working capital, and clarify which items sit below EBITDA versus within EBITDA cash costs or add backs?

[Brian Dewsnup, CFO at NFI Group]

Yeah, that you know we've obviously put our guidance out for the first time. We've not gotten to that level of guidance. I would say, just generally speaking, that we would expect kinda cash interest to be more in line in 2026, you know, than in 2025. Cash interest and interest expense to be more in line there. We had some timing differences because of the new high-yield in 2025. Regarding working capital and some of the other aspects there, we would, you know, we came into the year a little heavy from a working capital standpoint with some of the seating-affected buses. We would expect that to normalize in 2026 and to be mostly offset with additional volume growth.

[Brian Dewsnup, CFO at NFI Group]

We wouldn't expect to see a significant, you know, up or down number from a working capital standpoint. We'll get more efficient, and we'll burn through some of those vehicles and some of that work in process, but we also have volume increases to offset that. I think those are kind of the primary comments. We did give guidance on CapEx. We expect most of that to be cash-based CapEx. The leases year-over-year, we would expect to be relatively flat. You know, I hope that helps in terms of putting together the model, but we really haven't given any more kind of guidance around that for 2026.

[Shaun Maher, High Yield Credit Research Analyst at Bank of America]

Thank you. I appreciate that. Can you outline the expected uses of the free cash flow?

[Brian Dewsnup, CFO at NFI Group]

Yeah. I think we've talked earlier that we're pretty singularly focused on reducing our leverage ratio. We do expect to get down into that 1.5-2.5 range, you know, near the end of the year. Probably be even more closer to the upper end of that range. We'll begin to have productive conversations internally about, you know, capital allocation and things like that. We're really focused on debt pay down at this point, and I think you'll see that as a recurring theme throughout 2026. As we turn towards 2027 and beyond, you know, we'll start opening up the aperture on other uses there.

[Shaun Maher, High Yield Credit Research Analyst at Bank of America]

I mean, given the $267 million drawn in the revolver and the $338 million of Convertible Debentures due January 2027 and bonds callable in 2027 and 2028, are there debt instruments that you're prioritizing for repayment, and how do you plan to address the remainder over the near to medium term?

[Brian Dewsnup, CFO at NFI Group]

Yeah. Yeah. You outlined the debt stack fairly well there. I think as we look at that, we do have the Convertible Debentures that come due in January 2027, so that's kind of top of mind in terms of, you know, how do we deal with that. That's something that we'll look at. You know, we're looking at now, and we'll come up with a plan in the next few months on that. You know, beyond that, in terms of debt pay down, the revolver would be our first priority. That's the easiest one to do. There are some prepayment penalties, if you will, with the high-yield, and so we're not really looking at that one at, you know, at that point in time.

[Brian Dewsnup, CFO at NFI Group]

At least right now we've got the revolver to be able to pay down, and of course, we've got the Convertible Debentures to deal with as well. Those are the two components we'll probably focus on more.

[Shaun Maher, High Yield Credit Research Analyst at Bank of America]

Can you update us on tariffs and aluminum inflation exposure, including pass-through pricing, mechanics, customer discussions, aluminum as a percentage of sales, direct, indirect, and any potential margin impact?

[Brian Dewsnup, CFO at NFI Group]

Yeah. I think the question. Like, I didn't get the whole thing. I think it was around tariffs. Can you just repeat that, please?

[Shaun Maher, High Yield Credit Research Analyst at Bank of America]

Yeah. We're just curious about tariff and aluminum inflation exposure, like whether or not that's pricing that's passed through, customer discussion, aluminum as a percentage of sales, like margin impact.

[John Sapp, President and CEO at NFI Group]

Yeah. Okay. Thanks, Shaun. Overall for us in terms of tariff, we have a really good execution plan that we continue to leverage from 2025. We'll continue carrying that forward in terms of 2026. You know, it's a very holistic approach in terms of how we manage and execute through tariffs. All of that, of course, is factored into the guidance that we've shared and that we're gonna be able to continue to execute on that. You know, what's out there and available, certainly we have contractual protections from a tariff standpoint that ensure our ability to collect.

[John Sapp, President and CEO at NFI Group]

We have additional things we can do from a pricing standpoint and others that ensure that where we see those cost increases that we're able to manage through it and obviously commit to the guidance that we've provided based on the tariffs that we know will appear as of March 11th.

[Shaun Maher, High Yield Credit Research Analyst at Bank of America]

Last one. Sorry.

[John Sapp, President and CEO at NFI Group]

Yeah.

[Stephen King, VP of Strategy and Investor Relations at NFI Group]

Shaun, I think we're just gonna have to go to the next.

[Shaun Maher, High Yield Credit Research Analyst at Bank of America]

Thank you.

[Brian Dewsnup, CFO at NFI Group]

Caller if we can. Yeah.

[Shaun Maher, High Yield Credit Research Analyst at Bank of America]

Okay.

[Brian Dewsnup, CFO at NFI Group]

Just got a bunch of others.

[Shaun Maher, High Yield Credit Research Analyst at Bank of America]

Thanks.

[Operator]

Our next question comes from the line of Tim James with TD Cowen. Your line is now open.

[Tim James, Managing Director and Senior Equity Analyst at TD Cowen]

Great. Thanks very much for the time this morning. My first question is looking at the U.K. market and Alexander Dennis. I'm just wondering if you could talk a little bit about, I know it's been a challenging market there, a lot of competition. You've had some new product launches. How do you see the products that you've got in that market now aligned with what customers are actually ordering? And I'm wondering maybe about some of the orders that have gone away from you. Any sense you can provide for, you know, what is maybe the key point there why those orders are going away?

[John Sapp, President and CEO at NFI Group]

Yeah. Thanks, Tim. It's a great question. Let me talk first about our products. I had the chance to go visit the team over there, see the products firsthand, and have been extremely impressed with what it is our Alexander Dennis team does every single day to deliver a great product to the customer. That includes some of these new releases that you've seen. I've been really, you know, certainly impressed with also, you know, how those releases are continuing to be accepted or recognized by the customer in terms of what they've done. It certainly is a competitive environment, as you know, and that's something that we've highlighted here previously.

[John Sapp, President and CEO at NFI Group]

Different than what we experience in terms of the of North America, which has certainly requirements around localization, et cetera. The U.K. is still evolving in that sense or developing potential new pathways for that. You know, we're gonna we're very engaged with the appropriate folks in the U.K.. We've had great support in terms of that engagement, certainly from you know, from Scottish authorities to be able to support the conversations there. We'll continue to ensure that we stay you know, very focused with it. It is, as noted, a competitive environment.

[John Sapp, President and CEO at NFI Group]

What I would also say is that team is doing a terrific job in terms of really ensuring that it you know manages the situation you know appropriately and watches very closely. We are seeing, you know, the wins. We see ourselves being able to compete from an AD standpoint, but it is more competitive, and that forces the business to really you know push hard to ensure that we're getting the EU volumes that we would expect. As noted, competitive environment, a lot of tailwinds certainly that we have from a product standpoint, but a high area of focus for us here in 2026.

[Tim James, Managing Director and Senior Equity Analyst at TD Cowen]

Okay, great. Thank you. My second question, just looking at the receivables increase in the fourth quarter, you noted it was quite significant. I believe there was a reference to sort of volume that you know went out in December. Was this a particularly sort of December-heavy delivery fourth quarter? Is that why it increased so significantly? Is there any other kind of color you can provide around the receivables and the increase in the fourth quarter?

[John Sapp, President and CEO at NFI Group]

Yeah, I highlight the note earlier that we shared around, you know, some of the seasonality, if you will, around how our deliveries occur. Certainly Q4, I think historically has been that way. Certainly was in 2025, so that did create that receivable impact. I'll ask Brian to expand a little further on that.

[Brian Dewsnup, CFO at NFI Group]

Yeah. Good question. Certainly something that we're, you know, that we noted as well. We did have a little bit heavier kind of December in 2025 than we would've in 2024. Then of course, the increase in ASP also drove higher receivables as well. Both of those things contributed. We are pleased with the collection of that, you know, as we've started, you know, through Q1 as well. You know, we think that'll normalize, you know, as we get into the first quarter and we're happy with how that's gone.

[Tim James, Managing Director and Senior Equity Analyst at TD Cowen]

Okay. That's great. Thank you very much.

[Operator]

Thank you.

[Brian Dewsnup, CFO at NFI Group]

Thanks, Tim.

[Operator]

Our next question comes from the line of Jonathan Goldman with Scotiabank. Your line is now open.

[Jonathan Goldman, Equity Research Analyst at Scotiabank]

Hey, good morning, team, and thanks for taking my questions. Maybe we can just circle back on the pricing conversation. A lot of puts and takes there. You talked about mix and tariffs potentially being headwinds, but do you expect net pricing to be accretive to EBITDA margin in 2026?

[Brian Dewsnup, CFO at NFI Group]

Great question, and if you've kind of followed the discussion from kind of the hyperinflation days of kind of 2023, 2024, you'd know we've, you know, been talking a lot about the pricing and margins in the backlog, and, you know, we've seen that come in 2024 and in 2025. We would expect that we will see some continued improvement in 2026. However, I would say the volume story is becoming a bigger story relative to our guidance than pricing is at this point.

[Jonathan Goldman, Equity Research Analyst at Scotiabank]

Okay. Fair enough. That's good color. You know, I know it's early days, John, but have you seen any opportunities to maybe rationalize the number of SKUs and more broadly to optimize the portfolio of the entire business?

[John Sapp, President and CEO at NFI Group]

Yeah. Thanks, Jonathan. It's a great question. It's certainly our focus right now and mine in the first couple months has been really around, you know, delivering on what's in front of us here in terms of 2026 and certainly with the, you know, what we have in terms of this, you know, excellent portfolio of products. You know, your question I think really goes towards some of the strategic conversations that my focus will shift towards here in the coming months.

[John Sapp, President and CEO at NFI Group]

I don't have a view in terms of your question yet, but certainly we'll always be thinking as a leadership team around, you know, what do we do in terms of managing and ensuring that we have a portfolio for the long term that's really built for, you know, long-term success. That's just a normal course of, you know, us as a leadership team and the responsibilities we got there. Yeah, Jon, not a great answer yet to your question then, Jonathan, but, you know, certainly what I will just share is overall that I will always, as I sit in this seat, be thinking about how we ensure for the long term that we've, that we're adjusting and managing our portfolio appropriately.

[Jonathan Goldman, Equity Research Analyst at Scotiabank]

No, fair enough, and I appreciate it's still early days. Maybe just one more housekeeping one for me. The timeline for deleveraging to get back to the 1.5x-2x or 2.5x range, did you say that was a 2027 event or an exit rate for 2026?

[John Sapp, President and CEO at NFI Group]

Yeah. We think it has end of 2026, early 2027 timeframe. We're not nailing down exactly when that will occur. Certainly, we expect that here in the next 12-24 months.

[Jonathan Goldman, Equity Research Analyst at Scotiabank]

Okay. Thanks for taking my questions. I'll get back in queue.

[Operator]

Thank you.

[John Sapp, President and CEO at NFI Group]

Thanks, Jonathan.

[Operator]

Our next question comes from the line of Abe Landa with Bank of America. Your line is now open.

[Shaun Maher, High Yield Credit Research Analyst at Bank of America]

Hi, it's Shaun Maher again on for Abe. Thank you for letting me ask an additional question. We had just two more quick ones. Is there any further updates that you can provide on the integration of the American Seating business, like performance-wise?

[John Sapp, President and CEO at NFI Group]

Sorry, the last part? Just having a little trouble hearing you there, Shaun. How the integration's going relative to the AmSeCo business?

[Shaun Maher, High Yield Credit Research Analyst at Bank of America]

We're just curious for the integration into the business.

[John Sapp, President and CEO at NFI Group]

Yeah. Like, overall, I shared a little bit earlier, right? Relative to AmSeCo, I'd say we're very pleased with the progress that the JV has made. It has been an excellent partnership with us and our JV partners. We're very aligned in terms of where it needs to go and very, you know, proactively working through to ensure the process improvements, the, you know, the material execution, all of that, and getting the, you know, the future of that business set up and established. What I would say is, you know, currently we feel really good about it, the trajectory it's on in terms of the very, you know, near term recovery and frankly, being able to support us in the long term.

[John Sapp, President and CEO at NFI Group]

I think that's, you know, where things are at really with the AmSeCo business right now.

[Brian Dewsnup, CFO at NFI Group]

Yeah. The only thing I'd add, Shaun, is, yeah, we definitely view it as an investment. We're actually not integrating it, you know, into our operations. As John mentioned, you know, we've got this joint venture structure that oversees AmSeCo and their production. Our focus is on getting that business stable, getting it healthy. Then, you know, obviously then we'll look at what the longer term future is for AmSeCo. We definitely, you know, look at it that as an investment. That's why we treat it that way on our financials. As John mentioned, very pleased with what we've seen so far and very pleased with how the JV has been working.

[Shaun Maher, High Yield Credit Research Analyst at Bank of America]

Okay. Thank you. The last one, can you give us an update on the expected timing of battery recall cash outlays across 2026, 2027 and beyond?

[Brian Dewsnup, CFO at NFI Group]

Yeah. I think in the Q3, I don't think we included in the deck, but in the Q3 deck, we included a timeline of expected cash expenditures, and nothing's materially changed from that. Obviously, we have, you know, as disclosed in the financials, we've received some cash in. We are on the timeline to have the buses repaired in that 18-24 month period that we had originally said. Then, of course, the battery cell usage would be a little bit trailing after that. The development that's required in order for us to incorporate those battery cells into future vehicles, that timeline is preserved as well. We don't really have an update to what we disclosed in Q3. We are on that plan.

[John Sapp, President and CEO at NFI Group]

Shaun, one thing I would add is, we feel really good about where the campaign is set. You know, coming in with fresh eyes myself and evaluating, you know, the program and the plan for execution, this obviously has been several months that the team has been working through to have us, you know, positioned to be able to go execute on this. It's been well communicated with the customers, well understood there. Frankly, I am really pleased with the leadership and the team that we've got in place to go execute the plan overall and within the timeline that Brian just described.

[Shaun Maher, High Yield Credit Research Analyst at Bank of America]

Okay, thank you very much. I appreciate all the questions being answered. Good luck.

[John Sapp, President and CEO at NFI Group]

Thanks, Shaun.

[Operator]

Thank you. I'm currently showing no further questions at this time. I'd now like to hand the call back over to Stephen King for closing remarks.

[Stephen King, VP of Strategy and Investor Relations at NFI Group]

Yeah. Thanks, everyone. Thanks, Shannon, and thanks everybody for joining this morning. Thanks for all the questions. We really appreciate it. You know, as always, if you need materials on our, they're all on our investor section of our website, and we'll look forward to talking with everybody again in early May.

[John Sapp, President and CEO at NFI Group]

Yeah. Thanks.

[Operator]

This concludes today's conference. Thank you for your participation. You may now disconnect.

Participants

Executives

• Brian Dewsnup, CFO
• John Sapp, President and CEO
• Stephen King, VP of Strategy and Investor Relations

Analysts

• Cameron Doerksen, Managing Director and Senior Equity Analyst at National Bank Financial
• Chris Murray, Managing Director of Institutional Equity Research at ATB Capital Markets
• Daryl Young, Managing Director at Stifel
• Jonathan Goldman, Equity Research Analyst at Scotiabank
• Shaun Maher, High Yield Credit Research Analyst at Bank of America
• Tim James, Managing Director and Senior Equity Analyst at TD Cowen
• Ty Collin, Director of Institutional Equity Research at CIBC World Markets