Shares of NFI Group are rising after the Winnipeg-based bus manufacturer reported stronger-than-expected fourth-quarter profit, supported by higher margins and improving vehicle deliveries.
BNN Bloomberg spoke with Jonathan Goldman, analyst for diversified industrials equity research at Scotiabank, who said the results point to improving execution as the company works through supply chain disruptions and converts a large order backlog into production.
Key Takeaways
- Strong fourth-quarter margins and profit beat expectations, reflecting improving operational execution.
- Rising bus deliveries suggest the company is moving past earlier supply chain disruptions.
- A backlog valued at roughly $13 billion provides several years of production visibility.
- North America remains the core market, where the company benefits from limited competition and stable demand.
- Demand for electric buses remains meaningful but has stabilized as some transit agencies slow adoption plans.
Read the full transcript below:
ANDREW: Shares in NFI Group are higher today. The company posted better-than-expected profit in its latest three months. We’re joined by Jonathan Goldman, analyst for diversified industrials equity research at Scotiabank. Jonathan, thanks very much for joining us.
JONATHAN: Yes, good morning. Thanks for having me.
ANDREW: You note that the stock had been slightly weak going into this report, so that may be exaggerating the rally today.
JONATHAN: It isn’t. It isn’t. I think that’s a fair comment. I think the shares were down 15 per cent over the past month. Maybe people were concerned about the deliveries into the quarter, and we didn’t see a catch-up today. It has come off a bit, but the results really demonstrate that the company is continuing to improve and deliveries are improving, and the turnaround is actually taking hold. So there may be some profit-taking today. It was a really nice bump when the market opened, but I would not be surprised to see shares rally in the near term and actually move higher, back to where they were pre-quarter.
ANDREW: Maybe we’ll put up a five-year chart, because I think I’m right in saying they were plagued for a while by a lack of spare parts.
JONATHAN: I think “plagued” is a generous way of describing it. There was a series of supply chain issues. We all remember the time when there were no shipping containers and no semiconductors, and for sure, NFI was not immune. So we went through this period between 2022, 2023 and 2024 where they just lacked parts. The other issue is that since there are limited manufacturing slots and limited supply, they generally go to the larger customers, like the John Deeres and the Caterpillars of the world, to the expense of NFI. Then a couple of things happened recently — maybe they were self-inflicted — including an issue with their seat supplier and a battery recall. Based on the results we saw last night and this morning, it looks like they’ve kind of put that stuff behind them and we’re really seeing traction now, and they’re getting the supply chain in order.
ANDREW: Are they truly a global company? It sounds North American, I know, but are they big in Europe and Asia, for example?
JONATHAN: It’s a good question. Most of the business is in the U.S. They do well in Canada as well. They do have a business in the U.K. under the name Alexander Dennis, and they do public transit buses there, but it’s been smaller and getting smaller over time. It’s a more competitive market that doesn’t have the same sort of “Buy American” support you have in the North American market. So that business is actually getting a bit smaller, and the U.S. is actually growing.
ANDREW: Do they have any kind of foothold in Asia?
JONATHAN: No, they don’t in Asia. It’s mostly a U.S.- and Canada-centric business, which is actually what investors prefer. It’s a little more stable market. People understand the competitive dynamics there. You’ve seen a lot of competitors actually exit. NFI and its main competitor, Gillig, are effectively a duopoly in this market. So it’s really attractive from that perspective, and I think investors would probably prefer them to concentrate even more there.
ANDREW: Sorry, who is that main competitor again?
JONATHAN: It’s Gillig. Between them and NFI, they almost have a 50-50 split in the market. It’s kind of a testament to execution, because it’s a pretty competitive environment and a lot of competitors have actually left since 2019.
ANDREW: That’s interesting. They’ve got a public bus business, but they also have private coaches and these low-floor cutaways. Is that just as we all get older, that helps us get on the bus?
JONATHAN: I guess we’ve got a while to go there. But yes, those are also for accessibility issues as well. They run the whole gamut. It’s the public transit buses you see in your city, the motor coach buses you might take for long-distance trips, and the low-floor cutaway buses. So they really are a do-it-all sort of manufacturer with expertise in buses overall.
ANDREW: Can you give us an idea roughly — are electric buses a big part of their sales at this stage?
JONATHAN: It’s a really good question. I believe it fluctuates, but I would say we’re probably in the 30 per cent range. The thing with electric buses is they do tend to cost more and they’re higher margin, but the flip side is they’re also harder to manufacture and you have lower volume, which can be a drag on margins. What you’ve seen recently, with all the news about EVs and dialing back some adoption plans, is that orders for electric buses — or ZEBs — are still coming in but at a lower level. You’re seeing a bit of migration back to ICE or diesel buses, which is actually a tailwind for them in terms of margin, throughput and the volume they can get out. So we’re still hovering in the 25-to-30-per-cent range. I would say that could stay roughly flat or maybe come down a bit.
ANDREW: Manufacturing sales jumped about 28 per cent quarter over quarter. Would you see that kind of growth rate being sustainable?
JONATHAN: I think that’s the key here. I don’t know if that growth rate is sustainable, but we should definitely see high growth rates. This has been a story about supply chain execution. It’s a turnaround. What we really need to see is deliveries accelerate and take hold. If you look at NFI, what’s great about this business is the backlog provides enormous revenue visibility. It stands at about $13 billion today. It’s near a record. That’s about four-plus years of buses and revenue visibility. So as long as they can execute and get buses out the door, you should see elevated growth rates at least through 2026, probably to 2027 and beyond.
ANDREW: We’d better leave it there. Jonathan, thank you very much indeed. Jonathan Goldman, analyst for diversified industrials equity research at Scotiabank.
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This BNN Bloomberg summary and transcript of the March 12, 2026 interview with Jonathan Goldman are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
