NFI president taking medical leave

NFI Inc. continues to suffer through significant supply challenges, recording a 20 per cent decline in revenue to $459 million for the first quarter of the year.

The company disclosed that delivery of a key electronics component will continue to be undersupplied until August and last week the company was forced to lower its financial guidance for the year.

<p>SUPPLIED PHOTO</p><p>Brian Dewsnup will be acting president and CEO until Soubry’s return.</p>


Brian Dewsnup will be acting president and CEO until Soubry’s return.

And on Thursday it announced that long-time president and CEO Paul Soubry will be taking an immediate medical leave of absence after being diagnosed with an aortic aneurysm that requires treatment.

Soubry took part in the regular analysts call on Thursday and said that he would be off for a few months.

The board of directors has named Brian Dewsnup as acting president and CEO until Soubry’s return.

Dewsnup has been president of NFI Parts since 2017.

Brian Tobin, chairman of the board of NFI Inc. said, “We support Paul in his request to take a leave and wish him the very best as he focuses on his health at this time. The board has complete confidence in the strong management team that Paul has built which includes stand alone leadership of each business unit. Brian Dewsnup and the entire management team are well positioned to continue to implement the business strategy and run the day-to-day operations while Paul takes a leave.”

As the company faces supply-chain issues and now a medical issue for its CEO, it is also in the midst of negotiations with its banking syndicate for covenant relief. Soubry and company officials told analysts that it was confident that an agreement will be reached.

But company officials also took pains to ensure that when the parts supply issues are resolved all the other market conditions are favorable for NFI to continue to maintain its leadership role in the industry, with a very strong order book and with plenty of demand from transit authorities.

As well, the portion of higher-cost, more profitable zero-emission bus orders continues to rise and government funding for public transit in the U.S., Canada and the U.S. are at historic highs.

Soubry said, “The future remains very bright, as demand for our vehicles has never been higher and the first rollouts of record government investments in public transit are starting to reach our customers. Our multi-year backlog, market leading products and positions and deep customer relationships leave us extremely well positioned for recovery as supply chains normalize and parts availability recovers.”

NFI’s stock has taken a beating this year falling from the $20 range at the beginning of the year to close at $11.75 on Thursday, up 27 cents from the opening.

Analysts have been lowering their target prices on NFI for some time.

Last week Cameron Doerksen of National Bank of Canada Financial Markets reduced his 12-month target price from $19 to $14.

After the release of the first quarter results on Thursday, Doerksen’s note to his clients was, “We believe the company will receive additional covenant relief and supply chain problems will eventually ease, but see limited upside for the stock in the near-to-mid-term until there is more visibility on resolving these challenges.”

Jonathan Lamers of BMO Capital Markets reduced his target from $15.50 to $13.00 last week.

Company officials were adamant on the analyst call and during the virtual annual general meeting on Thursday that the company continues to be confident it will be able to take advantage of the market opportunities.

Although the company recorded a net loss of $28 million for the quarter and negative $17 million in EBITDA (earnings before interest, taxes, depreciation and amortization) the company said increased volumes of high margin zero-emission bus sales, the re-opening of private tour operations and significant cost savings from an extensive company-wide efficiency program will mean it will be able to generate EBITDA of between $400 million and $450 million by 2025.

And whereas revenue over the last 12 months was $2.2 billion, the company’s target for 2025 is in the $3.9 billion-to-$4.1 billion range.

Martin Cash

Martin Cash

Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.

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