NFI Group rolls on, keeps eye on tariff potholes

Orders inked at North America’s largest bus maker, headquartered in Winnipeg, have broken company records.

The full impact of tariffs on NFI Group’s operations are yet unclear; for now, business will keep moving, investors heard earlier this week.

“(There’s) definitely a risk and a potential challenge,” Stephen King, NFI vice-president of strategy and investor relations, said in an interview. “But our view is that if we do see tariffs, we don’t have a ton of exposure.”

The manufacturer released its fourth-quarter and year-end results, along with its financial guidance for 2025. It’s ballparking revenue between $3.8 billion and $4.2 billion this year, up from the $3.12 billion netted in 2024.

The reason: NFI has broken its record for backlogged orders. Nearly $13 billion worth of buses and motorcoaches are pending production.

King pointed to relatively new government programs targeting transit, including the Canada Public Transit Fund.

The fund, announced last year, allots $3 billion annually for local public transit starting in 2026-27.

“(There’s) a desire to decrease congestion in cities and improve public transit systems … across North America,” King said.

As it stands, NFI Group is projecting higher revenues and earnings before interest, taxes, depreciation and amortization (EBITDA) in 2025. It’s predicting an adjusted EBITDA range of $320 million to $360 million, up from $214 million in 2024.

However, tariffs and American policy changes bring uncertainty.

Increased costs passed to customers, a reduction in private coach demand and decreased order sizes may come down the pipe, NFI’s report warns.

Roughly 80 per cent of NFI’s business stays in North America; 20 per cent is international. Within North America, 80 per cent of sales come from the United States, while the latter 20 per cent are in Canada, King said.

A majority of bus making should be largely unaffected by tariffs, he added. Two-thirds of the company’s production happens and stays in the U.S.

One-third of production begins in Canada and travels south to NFI’s American facilities, King said. From there, it’s a 50-50 split on whether a bus will remain in America or return to Canada for use.

Depending on the situation, a bus may be hit with tariffs once or twice. Those costs will likely be passed to customers, King said.

“We’re definitely focused on conversations with the Canadian government and the U.S. government about what can be done.”

Paul Soubry, NFI Group chief executive, is a member of Manitoba’s U.S. Trade Council.

NFI moved as much inventory as it could to the “right jurisdiction” ahead of tariff imposition, King said.

Meanwhile, the company is continuing a $75-million expansion of its Transcona facility with the intent of creating entire buses in Winnipeg. Economic uncertainty hasn’t paused construction, King said.

The manufacturer announced its plans in October, flanked by provincial and federal politicians highlighting their governments’ financial support (through loans and a $10 million grant).

“The timing is working out because, obviously, with tariff implications, it’s better to have localized production,” King said.

Still, the expansion has been years in the making, spurred by “significant” increased demand from Canadians, he added.

Buses made in Canada will largely stay in Canada. By the current timeline, the facility will begin operations at the end of this year; however, full production won’t begin until 2027.

NFI employs about 3,000 Canadians; it has 4,000 staff in the United States and another 2,000 abroad.

The National Bank of Canada has a “positive view” of NFI Group’s stock rating. It considers NFI’s $12.8 billion backlog “largely secure from changing U.S. budget priorities,” a Friday report reads. NFI’s backlog consists of legally-binding purchase contracts.

More favourable competitive conditions in the U.S., changes in transit agency contracting and higher cash flows are among the reasons also cited by the National Bank.

“Elevated leverage and potential downside from upcoming tariffs remain concerns,” a BMO note on NFI reads.

Given the political climate, any decrease in electric vehicle orders will likely be replaced by orders of other propulsion types, NFI’s year-end report outlines.

The company recently signed a contract to supply 121 New Flyer clean-diesel buses to York Region Transit in Ontario, adding to the region’s 2023 purchase of 75 battery electric buses.

gabrielle.piche@winnipegfreepress.com