NFI is a leading independent global bus and coach manufacturer offering a comprehensive range of mass transit solutions. NFI buses are available in clean diesel, natural gas, diesel-electric hybrid, and zero-emission electric cars.

The company has a large global fleet and has delivered more than 1,370 zero-emission buses (ZEBs) since 2015 and has an annual production capacity of 8,000 ZEBs. The NFI Group’s brands are New Flyer (heavy-duty local buses), Alexander Dennis Limited (single and double-decker buses), Plaxton (coaches), MCI (coaches), ARBOC (low-floor cutaway and medium-weight buses), and NFI parts.

Manufacturing makes up 83% of total sales, and downstream services make up the remaining 17%. By product, transit buses make up the bulk of production revenue (almost 67%), followed by aftermath (17%), coaches (14%), and medium and low-floor cutaway (~ 2%).

The company operates more than 50 facilities in 13 countries and has more than 105,000 vehicles in service. Geographically, North America accounts for 81% of total sales, followed by the UK and Europe (14%) and APAC (5%). The company has market leading positions in the US, Canada, UK, Hong Kong and New Zealand. It has strong portfolios in Singapore, Malaysia and Mexico and a growing presence in Switzerland and Germany.

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Plant data

Sales growth and market presence

NFI Group is a trusted global partner with more than three centuries of combined experience designing and manufacturing buses and coaches. The company has more than five decades of experience with electric buses and serves 11 countries with its electric buses. Its vertically integrated North American manufacturing processes and the proven drive-independent bus platforms are a strong differentiator.

The company regularly invests in technology and innovation and has a solid history of successful innovations such as electric vehicles, low-floor buses, CNG drives, battery-electric buses, low-entry buses, double-decker buses, etc.

Most NFI brands are leaders in their core businesses. For example, New Flyer is North America’s largest manufacturer of heavy-duty buses for local public transport, while MCI is the North American market leader in touring buses. NFI Parts is North America’s most comprehensive parts organization providing parts, training, service and support.

The NFI Group has a market share of 43% in the North American heavy-duty bus. The NFI group is expected to benefit from the electric transition of vehicles. The company has designed its manufacturing process to support different drive formats on common platforms and suppliers. Electric buses accounted for 10% of deliveries in the last quarter.

The NFI Group has diversified sales with a global upward trend. The Group’s sales are classified according to regions, products, customers and services. It is built for the future venture of rationalizing the North American market in 2010-2014 and diversifying and vertical integration in 2015-2019.

Around 80% of NFI’s income comes from public customers. They are usually funded by the government, increasing the reliability of secure cash flows. NFI aims to achieve annual sales growth of more than 8% over the next five years.

Dividends

NFI Group has an impressive history of sustainable dividends. It has paid constant dividends every year since it went public in 2005. The company has posted an annual CAGR of over 6% in dividends for the past five years and has an annual return of 3.4% but a high payout ratio. Starting in the first quarter of 2020, quarterly dividends have been reduced by 50% in response to the COVID-19 pandemic. Although the dividend payment was reduced, the company continued to pay it on a regular basis.

The company has a solid track record of acquisitions and a proven ability to successfully integrate these businesses. With the takeover of ADL, the product portfolio and technical competencies in the field of lightweight chassis and bodywork were further expanded. The acquisition of ADL partially offset the decline in sales related to COVID-19.

The NFI Group’s focus on a growing share in North America through new products should continue to bear fruit in the future. It is well positioned to leverage its leading position as a global bus manufacturer and benefit from the advancement of electric buses for the US and Canadian markets.

The company is North America’s largest distributor of bus and coach parts and is expanding NFI Parts’s North American offering and exploring strategic opportunities to leverage NFI and ADL parts. The company is also well positioned to lead the electric transition of buses and coaches.

NFI aims to grow EBITDA by 16% + CAGR over the next five years. It should benefit from innovative products, strong pipelines and value-adding acquisitions and continue its dividend streak in the future.

Historic returns of the NFI group
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competition

The NFI Group competes with Volvo, Gillig, Proterra, BYD, Optare, Wright Bus, Scania and MAN in the heavy-duty bus segment and Van Hool, Daimler, Irizar and TEMSA in the coach segment. Forest River, REV Group, Grande West are their main competitors in medium and low-floor cutaway vehicles.

The company is well positioned to drive technological developments. It is also a leader in zero-emission buses and infrastructure. NFI has a 74% share of the North American coach market and a 75% share of the UK bus market.

Bottom line

The COVID-19 pandemic will continue to affect end markets, but government incentives and vaccines should support the recovery. The company is well positioned to benefit from the growing target markets in the USA and Great Britain and the further development of electric buses for the North American markets.

The change from manufacturer to solution provider and the first mover advantage in automated bus technology positions NFI favorably for the future. NFI should also benefit from its potential to generate both revenue and cost synergies through the ADL acquisition.

NFI vs. TSX vs. SP500 2021
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Historical PE. of the NFI group
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