New Flyer posts $49M net loss, company officials look to stronger 2023
The corporate owner of the New Flyer plant in Jamestown is eyeing bigger things in 2023 as supply chain issues provide a drag on the company’s 2022 finances.
NFI Group officials spoke with investor analysts recently after releasing the company’s second quarter financial results. NFI Group recorded a second quarter adjusted net loss of $49 million compared to earnings of $9 million in the same quarter of 2021. The increase in adjusted net loss was driven by the reduction in deliveries as a result of the global supply chain and logistics challenges, lower aftermarket sales volumes and inflationary impacts to both freight and part costs. In addition, the company did not receive any government wage subsidy grants, as the programs were either discontinued or NFI was no longer eligible. The adjusted net loss was partially offset by $15 million in savings generated by NFI Forward.
Despite the difficulties, the company’s liquidity at the end of the second quarter has increased from the fourth quarter of 2021 to $629 million before dipping slightly to $540 million in July to address module shortages.
New Flyer is now seeing new orders increasing and more bid activity as well as more government funding for environmentally friendly transit.
“We look forward to finishing the second half of 2022 stronger,” said Paul Soubry, NFI Group president and CEO. “2023 looks to be a significant recovery year, as we benefit from the record demand and backlog growth that has given us excellent visibility into our planned deliveries. In fact, in our public transit business, we are now recovering to very close to our original time horizons for preproduction, very encouraging from a supply chain and engineering and an operational perspective. There have been some positive signs that the worst is now over. “
Manufacturing segment revenue for the second quarter decreased by $176 million, or 38%, compared to the second quarter of 2021. The decrease was primarily due to the reduction in deliveries in North America as a result of the global supply chain and logistics challenges. NFI Group officials said the challenges are largely the result of suppliers recovering from impacts of the COVID-19 pandemic, which has created numerous bottlenecks in the supply chain and disruptions to parts availability. Aftermarket segment revenue in the second quarter of 2022 decreased to $114 million. The decrease was driven by reduced volumes in North America, the United Kingdom, and Europe compared to 2021, when NFI Group began a multi-year retrofit program.
In response to a specific microprocessor shortage impacting NFI’s North American manufacturing business, NFI has been building and holding a number of vehicles in inventory. This has grown inventory by $57 million on a temporary basis. NFI continues to have detailed discussions with the microprocessor supplier and fully expects to receive the required modules to meet NFI’s latest guidance. Delivery of these vehicles is expected to occur in the third and fourth quarters of 2022. Some deliveries may, however, occur in the first quarter of 2023 due to the complexity of customer delivery acceptance processes. In addition, NFI continues to work with other suppliers and microprocessor sources to assist in production recovery plans and future sourcing alternatives. Significant progress has been made on a new alternative microprocessor module that will be installed in some vehicles, helping to lower the risk of future supply disruptions.
NFI has received significant new orders over the past 12 months that company officials said will lead to production increases at its manufacturing operations and an increase in jobs in some plants starting in 2023. The new orders, combined with existing backlog, other recent bid activity, and continuing growth in government investments in transportation, are expected to drive significant revenue and earnings growth from 2023 to 2025.
“We’re looking at it again assuming the supply chain holds that in the second half of 2023, we would start getting back to kind of our full run rate is our thought process, right?” Soubry said in response to an investor analyst question. “And our order book today supports us being able to ramp up to that.”
New Flyer is a subsidiary of NFI Group Inc. (NFI), one of the world’s largest bus and coach manufacturers. New Flyer actively supports more than 35,000 heavy-duty transit buses (New Flyer, NABI, and Orion) currently in service, of which 8,600 are powered by electric motors and battery propulsion and 1,900 are zero-emission. New Flyer opened its Jamestown manufacturing facility in January of 2017. Starting with 40 employees in 2017, New Flyer’s Jamestown plant had around 70 workers as of December, according to company officials.