NFI Group's Strategic Turnaround and Strong Backlog Position It for Long-Term Growth

In the ever-evolving landscape of global infrastructure and mobility, few companies have navigated the crossroads of financial discipline, operational reinvention, and strategic foresight as effectively as NFI Group Inc. (NFI). The Canadian manufacturer of buses and coaches, long a staple of North American public transit, is now emerging as a pivotal player in the electric bus revolution—and its Q2 2025 results offer a compelling case for its long-term investment potential.

Financial Strength: Refinancing and Liquidity as a Foundation

NFI's recent financial maneuvers have laid the groundwork for a more stable and scalable future. The company's 2025 refinancing activities—securing a $700 million revolving credit facility and issuing $600 million in second lien secured notes—have bolstered its liquidity to $326.7 million, up from $127.9 million in Q1 2025. This newfound flexibility is critical in a sector where capital intensity and long lead times are the norm.

The results of these efforts are evident in NFI's Q2 performance. Despite a reported net loss of $160.8 million, driven by non-recurring items, adjusted net earnings of $10.7 million (or $0.09 per share) underscore the company's operational resilience. Adjusted EBITDA surged 19.2% year-over-year to $70.8 million, while ROIC improved to 7.9% from 3.5% in Q2 2024. These metrics suggest that NFI is not only surviving but thriving in a market where many peers struggle with debt and supply chain volatility.

Operational Improvements: Scaling Production and Supply Chain Resilience

NFI's operational turnaround is equally impressive. The company delivered 1,076 equivalent units (EUs) in Q2 2025, with 30.9% being zero-emission buses (ZEBs). Revenue hit $868.2 million, a 2% year-over-year increase, driven by improved pricing on heavy-duty transit and coach deliveries and a stronger product mix.

The manufacturing segment, while reporting a net loss of $88.9 million, saw Adjusted EBITDA improve by $18.7 million from the prior year. This was fueled by better gross margins in North American heavy-duty transit and coach deliveries. NFI's CEO, Paul Soubry, has emphasized targeted cost reductions in the UK and a strengthened seat supply chain, including a new supplier that came online ahead of schedule. These operational fixes are critical in a sector where production bottlenecks can derail even the most promising growth strategies.

A Robust Order Backlog: Visibility and Scalability

NFI's order backlog is a masterclass in strategic positioning. As of Q2 2025, the company reported a total backlog of $13.5 billion—14.4% higher year-over-year—comprising 6,082 firm EUs and 10,116 options EUs. Notably, 35.3% of the backlog is in ZEBs, a figure that aligns with the growing demand for sustainable transit solutions. The average price per EU in the backlog has also increased by 3.2% year-over-year, signaling pricing power in a market where cost overruns have historically plagued buyers.

This backlog is not just a number—it's a pipeline of contracts with major U.S. transit agencies, including the Metropolitan Transportation Authority (MTA) and Orange County Transportation Authority (OCTA). For instance, the MTA's recent order for 265 ZEBs (bringing its total to 468 under the 2024 contract) and OCTA's 50-unit order of hydrogen and battery-electric buses highlight NFI's ability to secure recurring revenue from institutional clients. These contracts are also supported by federal and local funding, reducing the risk of budget shortfalls.

Electric Bus Transition: Innovation and Partnerships

NFI's propulsion-agnostic approach is a strategic differentiator. The company's Xcelsior CHARGE NG™ and Xcelsior CHARGE FC™ models—battery-electric and hydrogen fuel cell buses, respectively—represent cutting-edge solutions for cities at different stages of electrification. The Xcelsior CHARGE NG™, with its high-energy batteries and 90% energy recovery system, addresses immediate emission reduction needs, while the hydrogen-powered variant caters to regions with existing hydrogen infrastructure, such as California's OCTA.

NFI's partnerships with transit agencies like the MTA and RTC (Regional Transportation Commission of Southern Nevada) underscore its credibility. The MTA's 2040 goal to fully electrify its fleet—a $5,800 bus undertaking—positions NFI as a long-term partner in a market where trust is as valuable as technology. Meanwhile, the RTC's 30-year relationship with NFI, now expanded to include CNG and ZEBs, illustrates the company's ability to adapt to regional needs.

Infrastructure Solutions: Expanding the Revenue Model

Beyond vehicles, NFI's Infrastructure Solutions™ business is a game-changer. By offering charging and hydrogen refueling systems, the company is monetizing the broader electrification ecosystem. For example, OCTA's construction of the U.S.'s largest hydrogen fueling station for transit buses—powered by NFI's hydrogen fuel cell-electric buses—creates a recurring revenue stream through infrastructure-as-a-service models. These solutions not only diversify NFI's income but also insulate it from the cyclical risks of pure-play vehicle manufacturers.

Investment Thesis: A Compelling Long-Term Opportunity

NFI's 2025 financial guidance—revenue of $3.8–$4.2 billion, with ZEBs accounting for 35–40% of manufacturing sales—provides a clear roadmap. The company's ROIC target of 9–12% and Adjusted EBITDA guidance of $320–$360 million further reinforce its commitment to capital efficiency. With a $13.5 billion backlog and a propulsion-agnostic product portfolio, NFI is uniquely positioned to capitalize on the $13 billion in FTA funding under the Bipartisan Infrastructure Law and the broader U.S. push for electrification.

However, investors must remain cognizant of risks, including production scalability and policy shifts. NFI's reliance on federal grants, while beneficial, introduces exposure to budgetary uncertainties. That said, the bipartisan nature of infrastructure spending and the urgency of climate action mitigate these risks.

Conclusion: A Green Transition with Legs

NFI Group's strategic turnaround—marked by financial discipline, operational improvements, and a robust backlog—positions it as a leader in the electric bus transition. Its propulsion-agnostic approach, coupled with infrastructure solutions, creates a durable competitive advantage in a market where sustainability is no longer optional but imperative. For investors seeking exposure to the green transition, NFI offers a well-rounded, long-term opportunity with clear catalysts on the horizon. The question is not whether NFI can grow, but how quickly it can scale to meet the demands of a world racing to decarbonize its transportation networks.