NFI Group (TSE:NFI) reported a robust financial recovery in the second quarter, posting $1.03 billion in revenue and a net profit of $17.4 million, fueled by accelerated production, improved backlog conversion, and record-setting aftermarket performance. Following these results, the bus and motor coach manufacturer raised its fiscal 2026 guidance for revenue and adjusted EBITDA while executing strategic financing moves to optimize its debt profile.
Operational Efficiency Drives Growth
“The second quarter represented another important step forward for NFI and showcased the strength of our backlog and aftermarket business,” President and CEO John Sapp stated during the earnings call. The company delivered 1,232 equivalent units, a 14.5% increase year-over-year. Adjusted EBITDA surged 47% to $104 million, marking a significant turnaround from the $160.8 million net loss reported in the same period last year.
Transit bus deliveries led the charge, climbing 22% to 911 units, primarily due to heightened North American production. While motor coach deliveries rose 7.6% to 142 units, medium-duty and low-floor cutaway deliveries dipped 9.1% to 179 units, following a stretch of sustained high activity.
Margin Expansion and Supply Chain Stability
Manufacturing gross margins improved to 11.5% of revenue, up from 10.6% a year ago. CFO Brian Dewsnup attributed this gain to a superior sales mix and better fixed-cost absorption. Operational stability has also been a key theme; management confirmed that previous challenges, including specific seating-related inventory issues, have been resolved, allowing for smoother production flows.
Aftermarket Performance and Future Outlook
The aftermarket segment remained a standout performer, with gross margins rising to 31.4% and adjusted EBITDA climbing 38.6% to $42.3 million. While some demand was bolstered by FIFA World Cup-related activity, NFI expects the core business to remain strong as aging transit fleets continue to require service, parts, and maintenance.
Cash flow also saw a massive improvement, with $159.1 million in operating cash flow generated during the quarter. To strengthen its balance sheet, NFI extended its first-lien facility to 2030 and completed a C$350 million private placement of senior unsecured notes. These actions are part of a broader plan to reach a targeted leverage ratio of 1.5-times to 2.5-times by 2027.
Raising the Bar for Fiscal 2026
Reflecting confidence in its operational trajectory, NFI updated its fiscal 2026 outlook, now projecting revenue between $4 billion and $4.2 billion, with adjusted EBITDA expected in the range of $385 million to $415 million. Although the third quarter is expected to see a seasonal slowdown due to summer manufacturing shutdowns, the company anticipates a strong finish to the year in the fourth quarter.
NFI’s total backlog remains substantial at 14,483 equivalent units, valued at approximately $12.5 billion. With 6,195 units in the active North American public bid pipeline—a 6% increase from the previous year—management remains optimistic about sustained demand, noting that they have not observed a meaningful pause in transit agency activity despite broader economic uncertainties.