Q4 2024 NFI Group Inc Earnings Call

March 14, 2025

Indentation there'll be a question and answer session to ask a question during the session need to press star one on your telephone you will then hear an automated message device in your hand is raised to withdraw your question. Please press star. One again. Please be advised today's conference is being recorded I would now like to hand, the conference over to your speaker today, even King Vice President strategy Investor Relations. Please go ahead.

Thank you Kevin Good morning, everyone and welcome to our call. Joining me today are policy will bring our president and Chief Executive Officer, and Brian <unk>, Our Chief Financial Officer.

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Today's call, we will give an update on our quarterly and annual results highlighting year over year improvement across numerous financial metrics the strong demand environment for our products and our record backlog will also provide an update on the operating environment, including our assessment of tariff and funding dynamics and our near and long term outlook.

This call is being recorded and a replay will be made available shortly.

We will be referring to a presentation that can be found in the investors section of our website as we move the slot as we move through the slides via the webcast link we will call out the slide number as we go for those on the phone.

Starting with slide two we provide a cautionary or forward looking statements and we note that certain finance central measures referenced today are not recognized earnings measures and do not have standardized meaning prescribed by international financial reporting standards or IRS, we advise listeners to view our press releases and other public filings on SEDAR for more details.

In the appendix of this presentation. We have provided a list of key terms and definitions that will be used on today's call, including zero emission buses or <unk>, an equivalent units or use a reminder, the <unk> statements are presented in U S dollars, the company's reporting currency and all amounts referred to are in U S dollars unless otherwise noted.

Slides three and four provide a brief overview of our company.

<unk> is a global independent bus and motor coach mobility solutions provider, we offer over 60 bus and coach models with a wide range of propulsion types, including clean diesel natural gas diesel electric hybrid battery electric trolley electric and hydrogen fuel cell electric we hold leading market share positions in North American transit and coach markets and more.

Speaker Change: Statements and we note that certain find central measures referenced today are not recognized earnings measures and do not have standardized meanings prescribed by international financial reporting standards or IRS, we advise listeners to view our press releases and other public filings on SEDAR for more details.

Detailed information is available on our materials.

Speaker Change: In the appendix of this presentation. We have provided a list of key terms and definitions that will be used on today's call, including zero emission buses or is that an.

Slide five provides some brief insight indentified business mix and our leadership position in the transition to zero emission propulsion.

I'll now pass the call over to Paul to provide an overview of <unk> results for the fourth quarter and fiscal 2024. Thank you Steven and good morning, everyone. Thanks for joining us today, so before we get into the details of our.

Units or use.

Reminder, that enterprise statements are presented in U S dollars, the company's reporting currency and all amounts referred to are in U S dollars unless otherwise noted.

Speaker Change: Slide three and four provide a brief overview of our company.

Paul: Our presentation today, reflecting Q4, and our fiscal 2024 results I'd like to reflect on a few key points to set up the stage.

Speaker Change: <unk> is a global independent bus and motor coach mobility solutions provider, we offer over 60 bus and coach models with a wide range of propulsion types, including clean diesel natural gas diesel electric hybrid battery electric trolley electric and hydrogen fuel cell electric we hold leading market share positions in North American transit and coach markets and <unk>.

Paul: During the past year, we generated significant growth across our business and we continue to advance both our operational and financial recovery yes.

Paul: Yes, we faced specific supply related disruption, which impacted our results in the second half of 2024, but.

Speaker Change: More detailed information is available in our materials.

Paul: But we responded with a detailed and aggressive action plan.

Speaker Change: Slide five provides some brief insight indentified business mix and our leadership position in the transition to zero emission propulsion.

Paul: We've experienced performance improvement that alongside other actions and progress we have supply diversification and that supports our forecasted growth for 2025 and beyond.

Speaker Change: I'll now pass the call over to Paul to provide an overview of <unk> results for the fourth quarter and fiscal 2024. Thank you Steven and good morning, everyone. Thanks for joining us today, so before we get into the details of our.

Paul: We achieved several major milestones in fiscal 2024, including our highest annual orders ever.

Paul: The largest backlog in our history and record financial results in our aftermarket segment are.

Speaker Change: Our presentation today, reflecting Q4 and our fiscal 2024, our results I'd like to reflect on a few key points to set up the stage.

Paul: Our strategic decisions to be propulsion agnostic utilized localized production and distribution facilities and to offer customized solutions continues to position us well in a very fluid macro environment.

Speaker Change: During the past year, we generated significant growth across our business and we continue to advance both our operational and financial recovery yes.

Speaker Change: Yes, we faced specific supply related disruption, which impacted our results in the second half of 2024.

Paul: I'd like to acknowledge the efforts dedication ingenuity and hard work of our entire team who helped us deliver in 2024 and will continue to provide industry leading support our customers.

Speaker Change: But we responded with a detailed and aggressive action plan.

Speaker Change: We've experienced performance improvement that alongside other actions and progress we have supply diversification and that supports our forecasted growth for 2025 and beyond.

Paul: Im now on slide seven.

Paul: Slide seven.

Paul: As a summary of our Q4 and fiscal 2024 results starting with demand we had new orders in the quarter of 1904 equivalent units up 81% year over year. This contributed to our highest annual orders ever with a total backlog of 9489 used in 2020.

Speaker Change: We achieved several major milestones in fiscal 2024, including our highest annual orders ever the largest backlog in our history and record financial results in our aftermarket segment are.

Speaker Change: Our strategic decisions to be propulsion agnostic utilized localized production and distribution facilities and to offer customized solutions continues to position us well in a very fluid macro environment.

Paul: <unk>, which is a 55% increase from our 2023 numbers.

Paul: Our backlog comprised of both firm orders and options continues to grow at a very strong pace and hit a record $12 8 billion at the end of 2024 totaling 15000 on 135 equivalent units. This.

Speaker Change: I'd like to acknowledge the efforts dedication ingenuity and hard work of our entire team who helped us deliver in 2024 and will continue to provide industry, leading support for our customers.

Paul: This growth continues to be primarily driven by North American public transit offers with a number of bidders on new Rfps has reduced substantially and in many cases <unk> is the sole bidder or one or two bidders and for some competitions. We are the only provider of certain models and propulsion types.

Speaker Change: I'm now on slide seven.

Speaker Change: Slide seven.

Speaker Change: As a summary of our Q4 and fiscal 2024 results starting with demand we had new orders in the quarter of 1904 equivalent units up 81% year over year. This contributed to our highest annual orders ever with a total backlog of 9489 used in 2020.

Paul: Our full year book to Bill ratio remained strong at 121, 4% primarily driven by these increased orders I. Just described are option backlog conversion rate also showed continued recovery, reaching 76% on an LTM basis.

Speaker Change: For which is a 55% increase from our 2023 numbers.

Speaker Change: Our backlog comprised of both firm orders and options continues to grow at a very strong pace and hit a record $12 8 billion at the end of 2024 totaling 15935 equivalent units.

Paul: Our financial results demonstrated our continued recovery in growth, we achieved a 77% year over year increase in quarterly adjusted EBITDA contributing to $145 2 million improvement on a fiscal year basis.

Paul: We achieved net earnings of.

Speaker Change: This growth continues to be primarily driven by North American public transit operators with a number of bidders on new Rfps has reduced substantially and in many cases <unk> is the sole bidder or one or two bidders and for some competitions. We are the only provider of certain models and propulsion types.

Approximately $19 million, a gain of $21 million year over year.

Paul: For continuous years of cost optimization optimization efforts expansion of our parks basket and focused efforts on alternative part identification. Our aftermarket segment continued to deliver exceptional performance and an exceptional quarter with $157 $1 million in revenue and $32 8 million of adjusted EBITDA up 16%.

Speaker Change: Our full year book to Bill ratio remained strong at 121, 4% primarily driven by these increased orders I just described.

Speaker Change: <unk> backlog conversion rate also showed continued recovery, reaching 76% on an LTM basis.

Paul: At 11% year over year, respectively, contributing to yet another record year.

Reducing working capital enhancing liquidity remains a key focus for us.

Speaker Change: Our financial results demonstrated our continued recovery in growth, we achieved a 77% year over year increase in quarterly adjusted EBITDA contributing to $145 2 million improvement on a fiscal year basis, we achieved net earnings of.

Paul: While we continue to manage through seat supply disruptions at new Flyer, which also affects <unk> parts, which.

Paul: Which elevated our inventory balances, we did see positive impacts from the benefits of public customer improved contracting terms and conditions. This included prepayments and milestone payments incorporated into many bus contracts overall, we saw a small decline in liquidity during the quarter, reflecting the puts and takes of these various items.

Speaker Change: Approximately $19 million, a gain of $21 million year over year.

Speaker Change: After continuous years of cost optimization optimization efforts expansion of our parks basket and focused efforts on alternative part identification. Our aftermarket segment continued to deliver exceptional performance and an exceptional quarter with $157 1 million in revenue and $32 8 million of adjusted EBITDA up 16%.

Paul: On slide eight we show the continued improvement we've managed to recover and overall supply chain health. The chart shows our high end.

Paul: In moderate risk and high impact suppliers as we've moved through the end of 2024 in the first few months of 2025, we continue to see overall improvement there were numerous actions we've taken to drive these improvements, including active supplier development and monitoring programs. We currently have just three companies that are considered high risk high impact.

Speaker Change: And 11% year over year, respectively contributed to yet another record year.

Speaker Change: Reducing working capital enhancing liquidity remains a key focus for us.

Speaker Change: While we continue to manage through seat supply disruptions at new Flyer, which also affects <unk> parts.

Speaker Change: Which elevated our inventory balances, we did see positive impacts from the benefits of public customer improved contracting terms and conditions. This included prepayments and milestone payments incorporated into many bus contracts overall, we saw a small decline in liquidity during the quarter, reflecting the puts and takes of these various items.

Paul: Down from 50 at the peak in 2022 with mediums risk suppliers continuing to drop as well.

On slide nine we detail one of those high risk suppliers and the most disruptive supplier in 2024, our primary North America Transit bus seat provider, let me take a step back and explain how we got here.

Speaker Change: On slide eight we show the continued improvement we've managed to recover and overall supply chain health The chart shows our Hyde.

Paul: This is a long time supplier that has been a valued partner for us for over 20 years and consistently performed during that time like.

Speaker Change: Moderate risk and high impact suppliers as we've moved through the end of 2024 in the first few months of 2025, we continue to see overall improvement there were numerous actions we've taken to drive these improvements, including active supplier development and monitoring programs. We currently have just three companies that are considered high risk high impact.

Paul: Like their entire industry. The supplier had a decreased production during the pandemic and the supply chain health that continued from that as markets recovered in 2023, they increased production to match horizon demand for buses.

Paul: This happened in the same time as they are in the process of moving to a new upgraded facility and they also saw horizon turnover of key staff. These factors led to their operations falling far behind schedule, resulting in significant missed deliveries to a variety of bus Oems in the third quarter of 2024.

Speaker Change: Down from 50 at the peak in 2022 with mediums risk suppliers continuing to drop as well.

Speaker Change: On slide nine we detail one of these high risk suppliers and the most disruptive supplier in 2024, our primary North America Transit bus seat provider.

Paul: Since then <unk> has worked with the seat supplier and in coordination with other impacted customers of them. We created an advisory council and assisted in the development execution of recovery plan. This includes dedicated onsite support from NFS fabrication team the engagement of external consultants and adjustments to our production.

Speaker Change: Let me take a step back and explain how we got here.

Speaker Change: This is a long time supplier that has been a valued partner for us for over 20 years and consistently performed during that time.

Speaker Change: Like their entire industry. This supplier had the decreased production during the pandemic and the supply chain health that continued from that as markets recovered in 2023, the increased production to match rising demand for buses. This happened in the same time as they are in the process of moving to a new upgraded facility and they also saw horizon.

Paul: Scheduled to lower demand in the period to allow the supplier to recover we've also onboard as another buy American compliant seat supplier, who starts delivering seats early in the second half of 2025 to diversify our supply base.

Speaker Change: Turnover of key staff. These factors led to their operations falling far behind schedule, resulting in significant missed deliveries to variety of bus Oems in the third quarter of 2024.

Paul: It is important to note that changing suppliers. Once a bus has been engineered is on the production line or semi completed off the line, it's not an option on each bus order.

Paul: To change suppliers.

Speaker Change: Since then <unk> has worked with the seat supplier and in coordination with other impacted customers of them. We created an advisory council and assisted in the development execution of recovery plan. This includes dedicated onsite support from EFI fabrication team the engagement of external consultants and adjustments to our production.

Paul: The graph on the right shows the improvement in the number of offline new flyer buses missing seats in our inventory.

This peaked at the end of November and has since come down to levels, just below where we were at our third quarter earnings call.

Paul: Based on year to date performance and the ongoing action plan, we anticipate sustained improvement at seed supply performance as they are projected to be delivering seeds to the production lines on schedule at the end of the second quarter. While we're also committed to lowering the inventory of the buses that are missing seats.

Speaker Change: Scheduled to lower demand in the period to allow the supplier to recover we've also onboard as another buy American compliant seat supplier, who starts delivering seats early in the second half of 2025 to diversify our supply base.

Paul: Now turning to slide 10, we review our fourth quarter deliveries, we had another record quarter of low floor cutaway bus deliveries up 62%.

Speaker Change: It is important to note that changing suppliers. Once a bus has been engineered is on the production line or semi completed off the line, it's not an option on each bus order.

Paul: And while transit bus and coach deliveries were both slightly down in the quarter trended deliveries reflect the impact of the seat supply disruption with planned deliveries in 2020 for Q4 pushed into 2025 in total the seat supply disruption led to a loss of approximately 100 equivalent units.

Speaker Change: To change suppliers.

Speaker Change: The graph on the right shows the improvement in the number of offline new flyer buses missing seats in our inventory.

Speaker Change: This peaked at the end of November and has since come down to levels, just below where we were at our third quarter earnings call.

Paul: Planned fourth quarter deliveries.

Paul: <unk> production rates were also lower as we managed our.

Speaker Change: Based on year to date performance and the ongoing action plan, we anticipate sustained improvement at seed supply performance as they are projecting to be delivering seats to the production lines on schedule at the end of the second quarter. While we're also committed to lowering the inventory of the buses that are missing seats.

Paul: Our finishing activities on buses that were missing seats.

Paul: Coach salaries reflect a reduction in the fourth quarter public and private sales with a carryover inventory expected to be sold in 2025.

Paul: Offsetting this decline in deliveries with an 11% year over year, increasing the average selling price of heavy duty transit buses and a 25% year over year, increasing the average price of a motor coach. This also coincide with the improved manufacturing gross margins.

Speaker Change: Now turning to slide 10, we review our fourth quarter deliveries, we had another record quarter of low floor cutaway bus deliveries up 62%.

Speaker Change: And while transit bus and coach deliveries were both slightly down in the quarter trends in <unk> reflect the impact of the seat supply disruption with planned deliveries in 2020 for Q4 pushed into 2025 in total the seat supply disruption led to a loss of approximately 100 equivalent units.

I'll now turn it over to Brian to discuss our results in more detail Brian.

Brian: Thanks, Paul just picking up on slide 11 aftermarket saw another strong quarter with gross margins of 28, 4% down slightly year over year, reflecting sales mix and the impact of some larger retrofit programs in North America and.

Speaker Change: Planned fourth quarter deliveries.

Speaker Change: Accordingly production rates were also lower as we managed our.

Speaker Change: Finishing activities on buses that were missing seats.

Brian: In the manufacturing segment gross margins declined slightly year over year from the previous quarter. This decrease in margin was primarily due to higher depreciation and amortization costs plus lower overhead absorption absorption linked to the lower bus and coach deliveries, primarily primarily linked to the seat supply disruption.

Speaker Change: Coach salaries reflect a reduction in the fourth quarter public and private sales with a carryover inventory expected to be sold in 2025.

Offsetting this decline in deliveries with an 11% year over year, increasing the average selling price of heavy duty transit buses and a 25% year over increase in the average price of a motor coach. This also coincide with the improved manufacturing gross margins I will now turn it over to Brian to discuss our results in more detail Brian.

Brian: Slide 12 walks through year over year changes in adjusted EBITDA within our reporting segments manufacturing EBITDA was up by $24 $1 million, even with these lower deliveries.

Brian: Thanks, Paul.

Brian: The increase reflects favorable sales mix and improved pricing plus an $11 million normalizing adjustment to reflect the nonrecurring impact of disruption and associated production and labor inefficiencies.

Brian: Up on slide 11 aftermarket saw another strong quarter with gross margins of 28, 4% down slightly year over year, reflecting sales mix and the impact of some larger retrofit programs in North America.

Brian: Our aftermarket segment continued to deliver healthy EBITDA growth driven by sales volume, including sales for other bus manufacturers products pricing adjustments and favorable product mix.

Brian: Corporate adjusted EBITDA improved due to the positive impacts of foreign exchange and lower incentive compensation accruals.

Turning to slide 13, you can see annual or LTM adjusted EBITDA for both manufacturing and aftermarket segments from 2020 to 2024.

Brian: Slide 12 walks through year over year changes in adjusted EBITDA within our reporting segments manufacturing EBITDA was up by $24 $1 million, even with these lower deliveries.

Brian: Both segments have seen strong improvements aftermarket adjusted EBITDA achieved a record of $139 5 million in 2024 and manufacturing is seeing strong recovery from the lows of 2022 with $126 million year over year improvement in 2024, and further growth projected in 2025.

Brian: The increase reflects favorable sales mix and improved pricing plus an $11 million normalizing adjustment to reflect the nonrecurring impact of seat disruption and associated production and labor inefficiencies.

Brian: Moving to slide 14, the chart depicts the company's quarterly adjusted EBITDA since 2012 in Q3 the.

Brian: Corporate adjusted EBITDA improved due to the positive impacts of foreign exchange and lower incentive compensation accruals.

Brian: The dark blue bars on the chart tell the story of NFA as manufacturing experience over the past few years. This includes the impacts of the pandemic related supply chain challenges rapid inflation and the subsequent recovery in growth trajectory that we saw in 2024.

Brian: Turning to slide 13, you can see annual or LTM adjusted EBITDA for both manufacturing and aftermarket segments from 2020 to 2024.

Brian: Our aftermarket segment has remained steady throughout this period displaying the businesses consistency and its ability to dynamically adjust pricing in response to changing market factors.

Brian: Both segments have seen strong improvements aftermarket adjusted EBITDA achieved a record of $139 5 million in 2024 and manufacturing has seen strong recovery from the lows of 2022 with $126 million year over year improvement in 2024, and further growth projected in 2025.

On Slide 15, the company reported net earnings for the period of $18 6 million a $21 million improvement from the same time last year representing earnings per share of <unk> 16.

Brian: Moving to slide 14, the chart depicts the company's quarterly adjusted EBITDA since 2020 Q3 the.

Brian: On a full year basis, we saw an improvement of 97, 6%.

Brian: We've also provided a chart on this page that reconciles net earnings to adjusted net earnings. This includes normalization adjustments, including the $11 million 11 million for Unrecovered labor and overhead costs related to seats disruption, which is shown as other.

Brian: A full reconciliation of these adjustments is available in our MD&A and press release on Slide 16 quarterly free cash flow was positive with a slight decrease year over year, driven by taxes and the acquisition of intangible assets. We did however.

Brian: On Slide 15, the company reported net earnings for the period of $18 6 million a $21 million improvement from the same time last year representing earnings per share of <unk> 16.

Brian: We did have a $6 $8 million investment.

Brian: And working capital, reflecting the impacts of higher working capital balances and the unwind of some advanced payments in our deferred revenue.

Brian: On a full year basis, we saw an improvement of 97, 6%.

Slide 17 outlines inventory and production rates in the quarter, we saw a decrease in raw material balances while work in process and finished goods were flat.

Brian: <unk>, we would see a more pronounced decline in fourth quarter inventory as it is our seasonally busiest delivery quarter, but levels remained elevated primarily due to see disruption line.

Brian: <unk> also remained flat from the previous quarter, primarily due to consciously slowing down production as we aim to improve seed supply performance and with the seasonal timing of holidays.

Brian: On slide 18, we recap our total leverage ratio covenants you can see the significant decline in our leverage ratio on the chart from over $14. One times at the end of the fourth quarter of 2023 to 437 times.

Brian: We did have a $6 $8 million investment.

Brian: And working capital, reflecting the impacts of higher working capital balances and the unwind of some advanced payments in our deferred revenue.

Brian: Slide 17 outlines inventory and production rates in the quarter, we saw a decrease in raw material balances while work in process and finished goods were flat.

Brian: At the end of 2024, we continue to expect to recover to our target total leverage ratio in the range of two to two five times by the end of 2025.

Brian: Typically we would see a more pronounced decline in fourth quarter inventory as it is our seasonally busiest delivery quarter, but levels remained elevated primarily due to see disruption.

Well within our bank covenants, which are shown on the chart.

Brian: As a reminder, this calculation excludes our convertible debentures.

Brian: Liquidity and cash management remain a top priority as we navigated through the seating headwinds and continue our production ramp up. These efforts include the pursuit of customer prepayments and deposits and managing payment terms with suppliers. We proactively obtained another temporary waiver from our credit syndicate partners that allowed us to access the additional $50 million under our.

Brian: On slide 18, we recap our total leverage ratio and covenants you can see the significant decline in our leverage ratio on the chart from over $14. One times at the end of the fourth quarter of 2023 to 437 times.

Brian: Secured facilities should we need it.

Brian: This is in place until March 31, 2025, we did this out of an abundance of caution as we expect that our current liquidity combined with additional customer payments will be sufficient to fund operations.

Brian: At the end of 2024, we continue to expect to recover to our target total leverage ratio in the range of two to two five times by the end of 2025.

Subsequent to quarter end, we resumed to $75 million receivable financing program with CIBC capital markets.

Brian: Within our bank covenants, which are shown on the chart.

Brian: As a reminder, this calculation excludes our convertible debentures.

Brian: This enhances <unk> financial flexibility accelerating cash flow from receivables supports total liquidity and lowers interest expense.

Brian: Our senior credit facility matures in April 2026, becoming current in April 2025, we continue to actively work on a broader capital structuring plan with the goal to address our credit facility's timing improve our overall liquidity and lower total interest expense.

Brian: Secured facilities should we need it.

Brian: That is a primary focus for us in the first half of 2025.

Brian: This is in place until March 31, 2025.

Brian: As we've seen our overall results improve.

Brian: Did this out of an abundance of caution as we expect that our current liquidity combined with additional customer payments will be sufficient to fund operations.

Brian: We believe we have multiple we have multiple options available to us in the debt markets and are very encouraged by the discussions we've had thus far I will now turn the call back to Paul to discuss our outlook.

Subsequent to quarter end, we resumed to $75 million receivable financing program with CIBC capital markets.

Paul: Thanks, Brian.

Paul: As we look to 2025 and beyond we believe that <unk> is poised for a strong recovery with growth in revenue adjusted EBITDA free cash flow ROIC and net earnings over the next few slides I'll walk through the key factors underpinning. This continued recovery our expected growth and comment on a few of the key risk factors and <unk>.

Brian: This enhances <unk> financial flexibility accelerates cash flow from receivables supports total liquidity and lower interest expense.

Brian: Our senior credit facility matures in April 2026, becoming current in April 2025, we continue to actively work on our broader capital structuring plan with the goal to address our credit facility's timing improve our overall liquidity and lower total interest expense.

Paul: Dynamics in our current operating environment.

Paul: On slide 20, we look at our record orders in 2024 of 9489 equivalent units in the fourth quarter, we remain maintain our momentum with several new flyer wins, including an order from Washington, DC Metro for up to 500 buses with initial firm order of 100 this order to display the strength.

Brian: That is a primary focus for us in the first half of 2025 as we've seen our overall results improve.

Paul: We believe we have multiple we have multiple options available to us in the debt markets and are very encouraged by the discussions we've had thus far I will now turn the call back to Paul to discuss our outlook.

Paul: Our propulsion agnostic offering as an example, as it included both diesel electric hybrid and battery electric buses.

Paul: Thanks, Brian.

Paul: Mci had a major win in the fourth quarter with a five year contract from Ontario's Metro links that included 80 firm orders for clean diesel motor coaches and options for potential future orders.

Paul: During the quarter. We also shipped our very first electric motor coach from our Permian North Dakota facility, a major achievement for that plant.

Paul: Dynamics in our current operating environment.

Paul: On slide 20, we look at our record orders in 2024 of 9489 equivalent units in the fourth quarter, we remain maintain our momentum with several new flyer wins, including an order from Washington D. C Metro for up to 500 buses with initial firm order of 100 this order to display the strength.

Paul: On Slide 21, you can see the culmination of these orders driving our backlog at the end of the year to record heights of over 15000 equivalent units valued at over $12 8 billion were essentially sold out in our North American public markets for 2025, and we're selling well into 2026 holding option.

Paul: Our propulsion agnostic offering as an example, as it included both diesel electric hybrid and battery electric buses.

There's that now extend all the way out to 2030.

Paul: And if I continues to retain a strong order book that will help propel recovery and growth further into 2025 and beyond.

Paul: This view was partially driven by data on slide 2022, which highlights the increase in average sales price our ASP per equivalent unit in our total backlog, including both firm and option orders.

Paul: During the quarter. We also shipped our very first electric motor coach from our Permian North Dakota facility, a major achievement for that plant.

Paul: BSP has increased for both heavy duty buses the dark Blue line and motor coaches the light Blue line.

Paul: On Slide 21, you can see the culmination of these orders driving our backlog at the end of the year to record heights of over 15000 equivalent units valued at over $12 8 billion.

Year over year ASP for heavy duty buses was up 11% and up 71% since 2021.

Paul: ASP for motor coaches was up 25% in the year and 51% over that same time period back to 2021.

Paul: We're essentially sold out in our North American public markets for 2025, and we're selling well into 2026 holding option orders that now extend all the way out to 2030.

Paul: These average sale price increases were driven by a combination of a higher CEB orders.

Paul: And if I continues to retain a strong order book that will help propel recovery in growth further into 2025 and beyond.

Paul: <unk> inflation adjusted pricing.

Paul: And significantly improve bid margins, reflecting the much improved competitive environment for us these higher selling prices will translate onto our income statement as we move through 2025, 2026 and future year deliveries are.

Paul: This view was partially driven by data on slide 2022, which highlights the increase in average sales price our ASP per equivalent unit and our total backlog, including both firm and option orders DSP has increased for both heavy duty buses the dark Blue line and motor coaches the light Blue line.

Paul: Our backlog has shown tremendous growth and we expect demand to continue as we show key demand metrics for North American public markets on slide 23.

Paul: Year over year ASP for heavy duty buses was up 11% and up 71% since 2021.

Paul: We ended the quarter with a total active bid universe of 7094 equivalent units, including 3657 in bids submitted and another 3437 of us and bids in process. The block on the chart overlays the timing awards versus active bids at that time, you can see that.

Paul: Asps for motor coaches was up 25% in the year and 51% over that same time period back to 2021.

Paul: These average sale price increases were driven by a combination of a higher CEB orders.

Paul: <unk> inflation, adjusted pricing and significantly improve bid margins, reflecting the much improved competitive environment for us these higher selling prices will translate onto our income statement as we move through 2025, 2026 and future year deliveries.

Paul: Correlation between the bid submitted in the light Blue and the contract awards.

Paul: Typically with a lag of a couple of quarters from submission to award.

Paul: We anticipate current bidding activity will continue to help further grow our already record backlog.

Paul: Our five year expected public bid universe, which is compiled from the customer fleet replacement plans remains very strong at 21797 equivalent units.

Paul: Our backlog has shown tremendous growth and we expect demand to continue as we show key demand metrics for North American public markets on slide 23.

Paul: Slide 24 provides insights into our book to Bill and option conversion ratios are option conversion ratio has improved significantly since the low in 2022 and now hit 76, 3% in 2024, our book to Bill ratio continues to remain well above 100% driven by increasing order.

We ended the quarter with a total active bid universe of 7094 equivalent units, including 3657 in bids submitted and another 3437, if you use and bids in process. The block on the chart overlays the timing of awards versus active bids at that time you can see.

Paul: And exercised options, we anticipate both ratios to remain strong through 2025 and beyond.

Paul: The correlation between the bid submitted in the light Blue and the contract awards typically with a lag of a couple of quarters from submission to award. We anticipate current bidding activity will continue to help further grow our already record backlog.

Paul: I'm now on slide 25, before I get to our detailed guidance ranges for 2025 I wanted to provide some key factors that drive our expectations.

Paul: Our five year expected public bid universe, which is compiled from the customer fleet replacement plans remains very strong at 21797 equivalent units.

I just walked through the strength of our backlog and order book not only have we effectively sold out 2025, North American public volumes.

Paul: We also expect improvement in the per unit economics, as we have seen better average selling prices and resulting margins as the competitive environment has improved for us.

Paul: Our strong aftermarket business gives us a solid foundation for performance in 2025.

Paul: And exercised options, we anticipate both ratios to remain strong through 2025 and beyond.

Paul: We do anticipate improvement in 2012, 2025 production, but levels will remain somewhat muted.

Paul: I'm now on slide 25, before I get to our detailed guidance ranges for 2025 I wanted to provide some key factors that drive our expectations.

Paul: As we take a conservative approach on production ramp up we do this to ensure that we do not cause additional supplier production and efficiencies that will result in more offline unfinished buses.

Paul: I just walked through the strength of our backlog and order books not only have we effectively sold out 2025, North American public volumes.

Paul: As you've heard from us on previous calls the UK market demand for Alexander Dennis has not developed as we had hoped leading expectations that we will see lower than planned deliveries.

Paul: We also expect improvement in the per unit economics, as we have seen better average selling prices and resulting margins as the competitive environment has improved for us.

Paul: In the market in 2025.

Paul: Our strong aftermarket business gives us a solid foundation for performance in 2025.

Paul: While this is a challenge the UK generally offers lower margins than our north American business and thankfully the aftermarket business in the UK and international market that continues to perform very well. It's important to note that our 2025 guidance range does not include the potential impacts from U S or Canadian counter tariffs I'll discuss that again in a few slot.

Paul: And while our overall supply chain health has been improving we unfortunately continue to manage our way through the seat supply disruption that has impacted deliveries for the last six months, we do anticipate improvement in 2012, 2025 production, but levels will remain somewhat muted.

Paul: Yeah.

Paul: Slide 26 provides some additional context on seasonality and profitability. The graph is our fiscal year 2020 for adjusted EBITDA by quarter, we saw 56% of our full year EBITDA.

Paul: As you've heard from us on previous calls the UK market demand for Alexander Dennis has not developed as we had hoped leading expectations that we will see lower than planned deliveries.

Paul: And second half of 2024, and we would expect a similar type of profile in 2025.

Paul: Our first quarter is typically the slowest quarter, although we expect significant year over year improvement sequentially, we expect the potential for a slight decrease from the fourth quarter of last year.

Paul: In the market in 2025.

Paul: While this is a challenge the UK generally offers lower margins than our north American business and thankfully the aftermarket business in the U K and international market that continues to perform very well. It's important to note that our 2025 guidance range does not include the potential impacts from U S or Canadian counter tariffs I'll discuss that again in a few slides.

On the right hand chart, we show our improving margin profile, our gross margin per equivalent unit, which includes cutaway medium duty motor coach and heavy duty transit buses for both North America and international markets saw some small improvement year over year, but it was impacted by the seat disruption and delivery timing in the fourth quarter.

Paul: Slide 26 provides some additional context on seasonality and profitability. The graph is our fiscal year 2020 for adjusted EBITDA by quarter, we saw a 56% of our full year EBITDA.

We project this metric will show strong growth in 2025.

Paul: Slide 27 summarizes are now provided guidance ranges for 2025, we expect to generate adjusted EBITDA between 320 $360 million from revenues of three eight to $4 2 billion with 35% to 40% of our manufacturing revenues coming from zero emission buses.

Paul: In second half of 2024, and we would expect a similar type of profile in 2025, our first quarter is typically the slowest quarter, although we expect significant year over year improvement sequentially. We expect the potential for a slight decrease from the fourth quarter of last year.

Paul: We expect capital expenditures of between 50 and $60 million.

Paul: On the right hand chart, we show our improving margin profile, our gross margin per equivalent unit, which includes cutaway medium duty motor coach and heavy duty transit buses for both North America and international markets saw some small improvement year over year, but it was impacted by the seat disruption and delivery timing in the fourth quarter.

Paul: And our return on invested capital between 9% and 12%.

Paul: The 2025 guidance ranges for the selected financial metrics provided take into consideration the year to date performance.

Supplier recovery, which I'll admit has taken longer than we expected our current outlook combined with the assumptions that I just walked you through.

Paul: On slide 28, I want to touch on the broader macro environment, especially the fluid and dynamic tariff situation.

Paul: We project this metric will show strong growth in 2025.

Paul: Slide 27 summarizes are now provided guidance ranges for 2025, we expect to generate adjusted EBITDA between 320 $360 million from revenues of $3 eight to $4 2 billion with 35% to 40% of our manufacturing revenues coming from zero emission buses.

Paul: While still developing the potential for 25 tariffs on imports into the U S and Canadian counter tariffs of 25% on imports from the U S into Canada remain a real possibility as.

Paul: As we know there are now 25% tariffs in place on steel and aluminum imports.

Paul: We expect capital expenditures of between 50, and $60 million and our return on invested capital between 9% and 12%.

Paul: Into the United States.

Paul: We are taking numerous actions to prepare and respond to these tariffs by adjusting supply sources, where possible leveraging our localized production facilities on both sides of the borders and regionalized aftermarket parts distribution networks and continue to work on contractual terms of our firm orders.

Paul: The 2025 guidance ranges for the selected financial metrics provided take into consideration the year to date performance seat supplier recovery, which I'll admit has taken longer than we expected our current outlook combined with the assumptions that I just walked you through.

Paul: On slide 28, I want to touch on the broader macro environment, especially the fluid and dynamic tariff situation.

Paul: We have just also moved as much.

Paul: <unk> finished goods inventory as possible to the appropriate jurisdictions. This will help any lower near term impact of tariffs.

Paul: While it's still developing that potential for 25 tariffs on imports into the U S and Canadian counter tariffs of 25% on imports from the U S into Canada remain a real possibility.

Paul: So what's the potential exposure identify for tariffs.

Paul: Within the new Flyer business approximately two thirds of our production is already 100% completed in the United States for American customers.

Paul: As we know there are now 25% tariffs in place on steel and aluminum imports.

Paul: They therefore have lower tariff exposure on the outset.

Paul: For the other one third that is started in Canada in terms of building a shell approximately half of those buses are finished for U S. In the U S for American customers, while the other half come back to Canada for our Canadian customers. These buses would obviously have larger tariffs exposure.

Paul: Into the United States.

Paul: As we announced last year. We are now actively working on are all Canadian bus build plan.

Allow us to build full buses in Canada. This project is on track and on budget and its plan to start manufacturing full Canadian build buses in the fourth quarter of this year and we will build that capacity through 2026. This.

Paul: We have just also moved as much.

Paul: Finished goods inventory as possible to the appropriate jurisdictions. This will help any lower near term impact of tariffs.

Paul: So what's the potential exposure identifier for tariffs.

Paul: Within the new Flyer business approximately two thirds of our production is already 100% completed in the United States for American customers.

Paul: This too will help lower tariff exposure for Canadian imports.

Paul: Through the enhanced clauses and provisions of our public agency contracts. We currently anticipate passing on the tariff impact to those pubs.

Paul: We therefore have lower tariff exposure on the outset.

Paul: For the other one third that is started in Canada in terms of building a shell approximately half of those buses are finished for use in the U S for American customers, while the other half come back to Canada for our Canadian customers. These buses would obviously have larger tariffs exposure.

Paul: Customers.

Paul: Public coach is just like transit bus market. However, there are no domestic U S producers of motor coaches.

Paul: NCI is the only supplier Butler coaches for biomarker contracts, which we started in Canada to build a shell and finished in the United States.

As we announced last year. We are now actively working on are all Canadian bus build plan.

Paul: And the private coach market, we built completely in Canada similar to our main competitor located in Quebec.

Paul: Allow us to build full buses in Canada. This project is on track and on budget and its plan to start manufacturing full Canadian build buses in the fourth quarter of this year and we will build that capacity through 2026. This.

Paul: Other motor coach Oems building important buses from Europe.

Paul: We anticipate it will be difficult to pass on any increased costs, resulting from tariffs to a very price sensitive private customer and we do not have the same contractual protections in the private market as we do in the public markets.

Paul: This too will help lower tariff exposure for Canadian imports.

Paul: Through the enhanced causes and provisions of our public agency contracts. We currently anticipate passing on the tariff impact to those public.

Paul: In addition, importers from Europe may see pricing benefit compared to the Canadian importers unless there is a corresponding increase in tariffs applied by the U S government on European imports of which there are strong strong signals that may happen.

Paul: Customers.

Paul: Public coach is just like transit bus market. However, there are no domestic U S producers of motor coaches.

Paul: NCI is the only supplier Butler coaches for buy America contracts, which we started in Canada to build a shell and finished in the United States.

Paul: It is difficult to projected exact financial impact of tariffs. We are monitoring this closely and working with industry groups and our lobbyist to determine the best path forward as mentioned in the short term. We have moved most of our private market coach inventory to the United States in advance of any potential tariffs being impacted.

Paul: And the private coach market, we built completely in Canada similar to our main competitor located in Quebec, while other motor coach Oems build an important buses from Europe.

Paul: We will continue to collaborate with our customers our suppliers our industry partners and government partners on the tariff front to do as much as we can to alleviate the risks and we will provide updates as things develop and how it relates to NOI.

Paul: We are also working very actively with the Canadian government on what they call. The road mission process, where effectively exemptions of tariffs for U S materials and finished goods that we import into Canada.

Paul: We are working the same process for our bucket Alexander Dennis buses that we make in the United States, an important to Canadian customers, where no domestic Canadian provider exists.

Paul: It is difficult to projected exact financial impact of tariffs. We are monitoring this closely and working with industry groups and our lobbyists to determine the best path forward as mentioned in the short term. We have moved most of our private market coach inventory to the United States in advance of any potential tariffs being impacted.

Paul: Finally, there has also been questions regarding U S funding for transit based on language and recent executive orders from the United States overall, we anticipate that all appropriate funds from the U S government.

We're committed orders will be honored for the most part this covers our firm backlog and recall that only we only add in order to firm backlog. Once we have received a purchase order.

Paul: Theres been no question increased scrutiny on electric bus funding at the U S. Federal level and this is something we are monitoring closely with the FDA and our industry groups. While this may result in a change to the models of our incoming orders are propulsion agnostic approach of offering multiple propulsion helps offset those concerns.

Paul: We are also working very actively with the Canadian government on what they called a rogue mission process, where effectively exemptions of tariffs for U S materials and finished goods that we import into Canada.

Paul: We are working the same process for our bucket Alexander Dennis buses that we make in the United States, an important to Canadian customers, where no domestic Canadian provider exists.

Paul: We can provide whatever products makes sense for each of our customers generally ice production historically and currently has been less demanding and less complex to build the zero emissions, which provides an opportunity to increase throughput should we see a significant shift in model demand.

Paul: We're committed orders will be honored for the most part this covers our firm backlog and recall that only we only add in order to firm backlog. Once we have received a purchase order.

Paul: I will mention that should tariffs being implemented over a long period of time, our funding profile has changed there is potential for decrease in total order sizes.

Paul: This situation may develop it but prices increased to a level where customers may not have the appropriate funding required to purchase to purchase buses per their original plan.

Due to expected higher average selling prices. Therefore, we may see less busses per order.

Paul: In closing on Slide 29, let me provide a few comments to recap and then we'll open the call to question and answers.

Paul: We can provide whatever products makes sense for each of our customers generally ice production historically and currently has been less demanding and less complex to build and zero emissions, which provides an opportunity to increase throughput should we see a significant shift in model demand.

Paul: With a very strong finish in 2024 with significant improvements in overall adjusted EBITDA and net earnings even as we navigated a.

Paul: Very unfortunate and significant supply chain disruption.

Paul: In our seed supply are.

Paul: Our total backlog of $12 $8 billion is the largest in our history and we have very strong firm orders for 2025, and 26 and a very active bid pipeline.

Paul: I will mention that should tariffs being implemented over a long period of time, our funding profile has changed there is potential for decrease in total order sizes.

Paul: This situation may develop it but prices increased to a level where customers may not have the appropriate funding required to purchase to purchase buses per their original plan.

Paul: Our competitive positioning in North America remains strong and supports our improving project product margin profile aftermarket continues to shine, providing steady recurring revenue and a solid foundation for 2025 and future cash flow generation.

Paul: Due to expected higher average selling prices. Therefore, we may see less busses per order.

Paul: In closing on Slide 29, let me provide a few comments to recap and then we'll open the call to question and answers.

Paul: In the U K the competitive dynamics have changed as I described we've introduced a completely new and refreshed lineup of bus models and we are aggressively actioning initiatives to lower our costs. We continue to advance efforts to improve our competitive position, but we do not we do anticipate anticipate lower deliveries in 2025 from the <unk>.

Paul: With a very strong finish in 2024 with significant improvements in overall adjusted EBITDA and net earnings even as we navigated a very unfortunate and significant supply chain disruption.

Paul: In our seed supply or.

Paul: Our total backlog of $12 $8 billion is the largest in our history and we have very strong firm orders for 2025, and 26 and a very active bid pipeline.

Okay part of our business.

Paul: The political environment as we all know is fluid with changing dynamics and will continue to take all actions possible ensure appropriate response.

Paul: We look forward to 2025, and where we anticipate growth in revenues adjusted EBITDA earnings and return on invested capital and we're off.

Paul: After a very good start in the first 72 days of this year Kevin. Please open the line now for questions and provide instructions to our callers to ask questions. Thank you. Thank you ladies and gentlemen, if you have a question or a comment at this time. Please press star one on your telephone. If your question has been answered or you wish to move yourself from the queue. Please press star one again, we will pass through.

In the U K the competitive dynamics have changed as I described we've introduced a completely new and refreshed lineup of bus models and we are aggressively actioning initiatives to lower our costs. We continue advanced efforts to improve our competitive position, but we do not we do anticipate anticipate lower deliveries in 2025 from the <unk>.

Paul: For a moment, while we compile the Q&A roster.

Paul: Okay part of our business.

Paul: Our first question comes from Chris Murray with ATB capital markets. Your line is open.

Paul: The political environment as we all know is fluid with changing dynamics and will continue to take all actions possible ensure appropriate response.

Chris Murray: Yes, good morning, gentlemen.

Speaker Change: Hi, Chris first question good morning.

Paul: We look forward to 2025.

Speaker Change: Thinking about Paul you made some comments about.

Paul: We anticipate growth in revenues adjusted EBITDA earnings and return on invested capital and we're off to a very good start in the first 72 days of this year.

Speaker Change: The cadence in 2025 and sort of the recovery plan. So I was wondering if we can talk a little bit more in detail.

Paul: Kevin Please open the line now for questions and provide instructions to our callers to ask questions. Thank you. Thank you ladies and gentlemen, if you have a question or a comment at this time. Please press star one on your telephone. If your question has been answered or you wish to move yourself from the queue. Please press star one again, we will pause for a moment, while we compile the Q&A roster.

Speaker Change: You've mentioned there is.

Speaker Change: The seat supplier seems to be getting itself addressed you did mentioned there is a new battery supplier that could be potentially an issue.

So I'm just wondering a couple of things one if we can walk through kind of the details of the cadence on how you think.

Speaker Change: This will evolve over the year absent other other other factors, but then more importantly, what I'm trying to figure out is what would your exit rate look like as we get to 2025, and we start looking at what I would hope to be a more normal operating environment as we go into 'twenty six 'twenty seven.

Chris Murray: Our first question comes from Chris Murray with ATB capital markets. Your line is open.

Chris Murray: Yes, good morning, gentlemen.

Chris Murray: That's the first question is just good morning.

Speaker Change: So thinking about Paul you made some comments about.

Speaker Change: Well I think you've actually nailed it in your question Chris.

Chris Murray: The cadence in 2025 and <unk>.

Speaker Change: When we had done our planned in the fourth quarter of last year as we headed into 2025, we expected a certain ramp up across each parts of our business as I've described the U K has come off a little bit so we've downgraded that.

Chris Murray: And sort of the recovery plan. So I was wondering if we can talk a little bit more in detail.

Chris Murray: You've mentioned there is the <unk>.

<unk> suppliers seems to be getting itself addressed you did mentioned there is a battery supplier that could be potentially an issue.

Speaker Change: New flyer, we'd expected a certain run rate in a certain zero emission volume the seat supply, which really hit us hard in the fourth quarter of last year and continues through the first quarter. We've muted some of the production increases that we had originally planned because as I described I think Brian described the last thing we want is more often.

Chris Murray: So I'm just wondering a couple of things one if we can walk through kind of the details of the cadence on how you think.

Chris Murray: This will evolve over the year absent other in other and other factors, but then more importantly, what I'm trying to figure out is what would your exit rate look like as we get to 2025, and we start looking at what I would hope to be a more normal operating environment as we go into 'twenty six 'twenty seven.

Speaker Change: <unk> buses.

Speaker Change: Adding seats, which sucks up working capital is also very disruptive to operations.

Speaker Change: So from a new flyer perspective of the years effectively sold out with every slot with a firm order and so by delaying a little bit we've changed the curve of our production ramp up MTI has a good balance between public and private customers as I said the <unk>.

Chris Murray: Well I think you've actually nailed it in your question Chris.

Chris Murray: When we had done our planned in the fourth quarter of last year as we headed into 2025.

Chris Murray: We expected a certain ramp up across each parts of our business as I've described the U K has come off a little bit so we've downgraded that.

Speaker Change: Risk there is depending on how the tariffs play out may change that mix may change somewhat slow down potentially some of the private motor coach work. The parts business is not really seasonally continues to be very solid quarter.

Chris Murray: New flyer, we'd expected a certain run rate in a certain zero emission volume the seat supply, which really hit us hard in the fourth quarter of last year and continues through the first quarter. We've muted some of the production increases that we had originally planned because as I described I think Brian described the last thing we want is more.

Speaker Change: Quarter by quarter, and we've seen increases there and the <unk> business continues to do really well they ramped up their production volumes significantly last year and we have further growth planned for this year and it too is effectively all sold out.

Chris Murray: <unk> offline buses waiting seats, which sucks up working capital and I was also very disruptive to operations.

Speaker Change: When you say exit rate.

Speaker Change: What do you mean in terms of production volumes it will be higher in the fourth quarter than it is in the first quarter for sure is that what you're referring to.

Chris Murray: So from a new flyer perspective, as the year is effectively sold out with every slot with a firm order and so by delaying.

Speaker Change: Yes, so if I think if you were to normalize as you kind of get up to a color line entry rate or whatever.

Chris Murray: But we've changed the curve of our production ramp up Mci has a good balance between public and private customers as I said the the risk there is depending on how the tariffs play out may change that mix and may change somewhat slow down potentially some of the private motor coach work. The parts business is not really seasonally continues to be.

Speaker Change: If you are talking about 5000 buses for 25 roughly.

Would that be kind of the run rate, we'd enter 2006 that for the full year 'twenty six or would would be above that I guess is what I'm trying to understand.

Speaker Change: Yes, that's a good point, so let's take it more because mix has a big issue in here and depending on what happens to kind of zero emission demand in 2006 relative to both funding <unk> the tariff impact.

Chris Murray: Very solid.

Chris Murray: By quarter, and we've seen increases there and the <unk> business continues to do really well they ramped up their production volumes significantly last year and we have further growth plan for this year and into is effectively all sold out.

Speaker Change: We expect with the guidance now of $3 20 to $3 60 for 2025, we expect a run rate, leaving 2025 somewhere around $400 million adjusted EBITDA and so our fourth quarter potential EBITDA somewhere in the range of $100 million.

Chris Murray: So when you say exit rate.

Chris Murray: Do you mean in terms of production volumes it will be higher in the fourth quarter than it is in the first quarter and for sure is that what you're referring to.

Chris Murray: So, but I think if you were to normalize as you kind of get up to a color line entry rate or whatever.

There is no question, we have lower volume than what we originally expected a couple of years ago, but the margins are significantly better given the competitive dynamics.

Chris Murray: If you are talking about 5000 buses for 25, roughly would that be kind of the run rate we'd enter 26 at for the full year 'twenty six or would would be above that I guess is what I'm trying to understand.

Speaker Change: Okay. That's helpful. Thank you.

Speaker Change: And then I don't know if you or Brian will take us one, but Brian you did allude to the fact that.

Chris Murray: Yes, that's a good point, so let's take it more because mix has a big issue in here and depending on what happens to kind of zero emission demand in 2006 relative to both funding <unk> the tariff impact.

Speaker Change: Leverage should get down that two to two five times by year end, which I thought was pretty impressive considering where you're coming from.

Speaker Change: Can you walk us through a little bit of what Youre thinking about because you did mention some refinancing opportunities.

Chris Murray: We expect with the guidance now of $3 20 to $3 60 for 2025, we expect a run rate, leaving 2025 somewhere around $400 million adjusted EBITDA and so our fourth quarter potential EBITDA somewhere in the range of $100 million Theres. No question, we have lower volume than what we originally.

Speaker Change: Sure.

Speaker Change: And I know I get this question all the time, so I'll just ask it again.

Speaker Change: About equity.

Speaker Change: If you could talk about kind of a debt restructuring and any need for equity that would be great.

Speaker Change: Yes, so good question and I think from my previous comments.

Speaker Change: We have we're keeping a very close eye on this of course, and we have a number of options debt options available to us and we think we'll be able to satisfy and liquidity needs.

We expected a couple of years ago, but the margins are significantly better given the competitive dynamics.

Speaker Change: Okay. That's helpful. Thank you.

And then I don't know if you or Brian will take us one, but Brian you did allude to the fact that.

Speaker Change: And taken care of any refinancing work through those debt options.

Speaker Change: Leverage should get down to that two to two five times by year end, which I thought was pretty impressive considering where you're coming from.

Speaker Change: Just kind of reiterate from Q3, but at this point, we don't see the need for any additional equity Chris Let me add some color to Brian.

Speaker Change: Can you walk us through a little bit of what you are thinking about because you did mentioned some refinancing opportunities near term.

Speaker Change: As we slowed down production and changed schedules based on seats.

Speaker Change: And I know I get this question all the time, so I'll just ask it again.

Speaker Change: The effected seat supplier is somewhere it was somewhere in the neighborhood of 60% of our supplies. So we have.

Speaker Change: About equity.

Speaker Change: But if you could talk about kind of a debt restructuring and any need for equity that would be great.

Speaker Change: Other seed suppliers for the rest of our production range. So as we slowed that down and when you when you slow it down in a relatively short window, you'll end up with material on its way in to that original production schedule. So we still have bloated spare parts before they start to hit the production line and we have bloated.

Speaker Change: Yes, so good question and I think from my previous comments.

Speaker Change: We have we're keeping a very close eye on this of course, and we have a number of options debt options available to us and we think we'll be able to satisfy.

Liquidity needs are.

Speaker Change: May 100 units sitting at the fence waiting the finalization of those seats. So in addition to the increase in volume through the year. The better margins, we have a natural burn down if you will of excess working capital that sits in our business those two things and when you overlay the strong cash from parts of our business like new.

Speaker Change: <unk> taken care of any refinancing work through those debt options.

Speaker Change: Just kind of reiterate from Q3, but at this point, we don't see the need for any additional equity Chris Let me add some color to Brian.

Speaker Change: As we slowed down production and changed schedules based on seats.

The effected seat supplier is somewhere it was somewhere in the neighborhood of 60% of our supplies. So we have.

Speaker Change: <unk> parts are assai part story and Orbach there is a significant delevering potential that's happened and as Brian said.

Mr <unk>.

Speaker Change: Honest to tell you that we're not actively looking at all kinds of different scenarios relative to our current financing.

Speaker Change: Okay. Thanks, I'll leave it there thank you.

So we still have bloated spare parts before they start to hit the production line and we have bloated approximately 100 units sitting at the fence waiting the finalization of those seats. So in addition to the increase in volume through the year the better margins, we have a natural burn down if you will of excess working.

Speaker Change: Thanks, Chris one moment for our next question.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Christopher <unk> with CIBC. Your line is open.

Speaker Change: Hi, Thanks for taking my question.

Speaker Change: Okay.

Speaker Change: Got it and then on the.

Speaker Change: Inquire here so.

Speaker Change: Capital that sits in our business those two things and when you overlay the strong cash from parts of our business like new flyer parts or anti part story and <unk>. There is a significant delevering potential that's happened and as Brian said.

Speaker Change: So we've got I know.

Speaker Change: Additional things coming online.

Speaker Change: And <unk> can.

Speaker Change: Can you walk us.

Speaker Change: That ramp up will look like for that supplier and.

Speaker Change: When would you expect to kind of reach.

Speaker Change: We'd be remiss to B b.

Speaker Change: Honestly tell you that we're not actively looking at all kinds of different scenarios relative to our current financing.

Speaker Change: Our normalized level of risk.

Speaker Change: Thanks.

Speaker Change: All of your buyers now.

Okay. Thanks, I'll leave it there thank you.

Speaker Change: Thanks, Chris It's a good question and.

Speaker Change: Thanks, Chris one moment for our next question.

Speaker Change: It's hard to imagine one supplier.

Speaker Change: That's a dramatic impact on our business, but the context is highly customized buses with specified seats that just who it's from the style how they're mounted into the bus and so on and so forth and as we've talked about many times. Once you start the design of our bus based on the stack from the customer once you start the sourcing of.

Speaker Change: Yeah.

Our next question comes from Christopher <unk> with CIBC. Your line is open.

Speaker Change: Hi, Thanks for taking my question.

Speaker Change: Okay.

Speaker Change: Got it and then on the seating supplier here.

Speaker Change: I mean additional things coming online.

Speaker Change: At the beginning of H two.

Speaker Change: Once you start the building you cant change suppliers midstream.

Speaker Change: Can you walk us through.

Speaker Change: Thinking that ramp up will look like for that supplier and.

Speaker Change: So in addition to this very active effort.

Speaker Change: With NII as well as quite frankly, and honestly a really good cooperation from our friends over at Gilead, who are also affected by this.

Speaker Change: When would you expect to kind of reach.

Speaker Change: A normalized level.

Speaker Change: Thanks.

Speaker Change: We have we have think we have resolved the the core problems and we will start to see this supplier deliver.

Speaker Change: All of you for suppliers now.

Speaker Change: Thanks, Chris that's a good question and it's.

Speaker Change: They have been delivering better but to be fully caught up they tell us by the end of April we've handicapped to say probably by the end of the second quarter now the new supply that is brought on not only has setup capability, but also has to get specced into buses and as you know from bid to award to building those buses can be 12 to 18.

Speaker Change: Hard to imagine one supplier. This is such a dramatic impact on our business, but the the context is.

Speaker Change: Highly customized buses with specified seats that just who it's from but the style how they're mounted into the bus and so on and so forth.

Speaker Change: And as we've talked about many times once you start the design of a bus based on the stack from a customer once you start the sourcing of it once you start the building of it you can't change suppliers midstream.

Months, so its not like we can flip a switch very quickly.

Speaker Change: Try to level load and of course, it's a decision the customer has to make who those things come from.

Speaker Change: So in addition to this very active effort.

Speaker Change: So our current projections is that by the end of the second quarter. We are back to this troubled supplier plus the other two supplier delivering to point of entry or point of installation on the line by the end of the second quarter. It is way better than it was is unfortunately, not as fast as we would like.

Speaker Change: With <unk> as well as quite frankly, and honestly a really good cooperation from our friends over at Gilead, who are also affected by this.

Speaker Change: We have we have think we have resolved the the core problems and we will start to see this supplier deliver.

Speaker Change: They are they have been delivering better but to be fully caught up they tell us by the end of April we've handicapped at to say probably by the end of the second quarter now the new supplier that has brought on not only have setup capability, but also has to get specced into buses and as you know from bid to award to building those buses can be 12 to 18.

Okay great.

Speaker Change: Maybe just on the liquidity.

Speaker Change: It seems that.

Speaker Change: Managed quite successfully through the worst of the seating issue.

Speaker Change: Q4 in terms of liquidity.

Speaker Change: I haven't seen recorded 100 and hosted and Maryann I think.

Speaker Change: Months, so its not like we can flip a switch very quickly.

Speaker Change: What caused you or what are you seeing that caused you to.

Speaker Change: We have tried to level load and of course, it's a decision the customer has to make who those seats come from.

Speaker Change: An extension on that labor for Q1.

Speaker Change: Well I'll start off with that Brian add some color. Please remember in the fourth quarter, you don't really know how deep or how bad the problem is until you get into it. So we had certain expectations in the fourth quarter of seed supply and then we ended up with significant buses offline and therefore unplanned capital tied up now overlay on that.

Speaker Change: The process that started over a year ago when the White House administration was really disappointed in the FTA and our industry around the way contracting work.

Speaker Change: Okay great.

Maybe just on the liquidity front.

Speaker Change: It seems that that.

Speaker Change: I managed quite successfully through the worst of the seating issue.

Speaker Change: And how more expensive buses, we're having to be funded working capital funded by all the Oems, which then had a ripple effect on the supply chain.

Speaker Change: Q4 in terms of liquidity.

Speaker Change: I haven't seen recorded $127 million I think what caused you or what are you seeing that caused you to.

That task force that was set up by App that I have to tally is the most effective task force at ever been involved with huge engagement and sponsorship by the FTA active environment by roughly the 25 largest transit agency Ceos and then the supply community and so if we sat here and did a diagnostic on our current contracts.

Speaker Change: An extension on that waiver for Q1.

Speaker Change: Well I'll start off with that Brian add some color. Please remember in the fourth quarter, you don't really know how deep how bad the problem is until you get into it. So we had certain expectations for the fourth quarter of seed supply and then we ended up with significant buses offline and therefore unplanned capital tied up now overlay on that.

Speaker Change: We didn't have any milestone payments before or advanced payment bullets on contract award type things and so forth that is now a major change to our industry that will pay dividends for us as an OEM community going forward.

Speaker Change: The process that started over a year ago when the White House administration was really disappointed in the FTA and our industry around the way contracting work and how more expensive buses, we're having to be funded working capital funded by all the Oems, which then had a ripple effect on the supply chain.

Speaker Change: The second thing is we made some conscious decisions not to keep the line entry rate at what we originally thought for this year and therefore slowed down the incoming material where we could.

Speaker Change: So those two things transpire to mitigate some of the damage quite significantly had we not had those we would have way more bloated inventory and working capital so Brian if you'd add any color to that as well, yes just to address.

Speaker Change: That task force that was set up by after I have to tell you is the most effective task force ever been involved with huge engagement sponsorship by the FTA active environment by roughly the 25 largest transit agency Ceos and then the supply community and so if we sat here and did a diagnostic on our current contracts.

Speaker Change: The question regarding the waiver.

Paul: Paul mentioned that our inventory going <unk>.

We didn't have any milestone payments before or advanced payment bullets on contract award type things and so forth that is now a major change to our industry that will pay dividends for us as an OEM community going forward.

Bridging over the year and was higher than we would've expected or were normal.

Paul: And we just felt it was prudent to go in and pull a bunch of different levers in case the.

Paul: The recovery of the seating supplier in the shipment of the buses was delayed.

Paul: And so you saw a couple of things we mentioned one was the waiver through the end of the first quarter. We just thought it was prudent to go ahead and do that in our syndicate has been very supportive of us. So that was something that that was relatively easy for us to do you would have also seen the.

Paul: Subsequent to the end of the year, we restarted the AAR program, which brought some additional liquidity into the business.

Brian: The question regarding the waiver.

Paul mentioned, our inventory going <unk>.

Paul: And then we've mentioned kind of over the past while that we've been aggressively pursuing milestone payments and we've been working with our supply base and so what you're really seeing there was.

Brian: Bridging over the year and was higher than we would've expected or were normal.

Speaker Change: And we just felt it was prudent to go in and pull a bunch of different levers in case the.

Paul: In an uncertain world you need to make sure you have as many tools as you can to provide as much liquidity as you can and so we worked on kind of all of those fronts simultaneously just to make sure that we had enough in the business that we could orderly go out and address the long term liquidity and the long term refinancing and so we wanted to make sure that.

Speaker Change: The recovery of the seating supplier in the shipment of the buses was delayed.

Speaker Change: And so you saw a couple of things we mentioned one was the waiver through the end of the first quarter. We just thought it was prudent to go ahead and do that in our syndicate has been very supportive of us so that was something that.

Paul: We did that and so it was.

Speaker Change: That was relatively easy for us to do you would have also seen the.

Paul: An abundance of caution to go out and work with the banks on that.

Paul: Okay. Thank you and just one last one.

Subsequent to the end of the year, we restarted the AAR program, which brought some additional liquidity into the business and then we've mentioned kind of over the past while that we've been aggressively pursuing.

Paul: Got it.

Paul: Just to confirm.

All of your products right now whether the motor coach or are the trends that they are compliant.

Paul: MCA right now so they wouldn't be part of the waiver until April.

Speaker Change: Milestone payments and we've been working with our supply base and so what you're really seeing there was.

Kristen: That's correct Kristen.

Speaker Change: In an uncertain world you need to make sure you have as many tools as you can to provide as much liquidity as you can and so we worked on kind of all of those fronts simultaneously just to make sure that we had enough in the business that we could orderly go out and address the long term liquidity and the long term refinancing and so we wanted to make sure that.

Alright, Thank you I'll jump back in the queue.

Kristen: Thank you.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from Kamran Dixon with.

Speaker Change: National Bank financial your line is open.

Kamran Dixon: Hey, Thanks, good morning.

Speaker Change: We did that and so it was.

Speaker Change: I wanted to ask a question about I guess the funding environment in the U S.

Speaker Change: An abundance of caution to go out and work with the banks on that.

Speaker Change: So you're a fair bit of uncertainty here now with the new administration.

Speaker Change: Okay. Thank you.

Speaker Change: And just one last one if I could.

Speaker Change: Just to confirm.

Speaker Change: You mentioned that your expectation is that all of the firm orders that you've got.

All of your product right now whether the motor coach or are the transit bus they are compliant.

Speaker Change: With U S transit agencies would be pretty safe as those are allocated funds how are the options treated.

Speaker Change: I'm seeing right now so they would be part of the waiver until April 2nd.

Speaker Change: My understanding was that.

The options over the next number of years would also be kind of funded.

Speaker Change: That's correct.

Speaker Change: Out of the current the current funding Bill So maybe just sort of discussion around how those options might be impacted by any changes in funding decisions by the U S administration.

Speaker Change: Okay. Thank you I'll jump back in the queue.

Speaker Change: Thank you.

Speaker Change: One moment for our next question.

Speaker Change: Yes, thanks, Kevin So if you think of and there's different buckets and different colors of money. So, let's kind of stay out of which funding vehicle Athens that at the highest level of customer and wants to put out an RFP and they work their methodology of local financing the match.

Kamran: Our next question comes from Kamran direction with North National Bank Financial Your line is open.

Yes, thanks, good morning.

Speaker Change: I wanted to ask a question about I guess the funding environment in the U S.

Speaker Change: 20%, and which program, whether its formula funds or low no or whatever the federal program is and the growth and get that money allocated.

Kamran: So you're a fair bit of uncertainty here now with the new administration.

Speaker Change: You mentioned that your expectation is that all the firm orders that you've got.

With U S transit agencies would be pretty safe as those are allocated funds how are the options treated I mean I'm sort of.

Speaker Change: Once it's allocated then to put in the contract that needs to be appropriated the money that's appropriate it's specific to those contracts is one the FERC portion of it.

Speaker Change: My understanding was that the.

Speaker Change: The options over the next number of years would also be kind of funded out.

Speaker Change: The challenge then becomes now depending what the administration does relative to let's say zero emissions or whatever dynamic both the quantum of funding, but also funding for certain types of products.

Speaker Change: The current the current funding bill so maybe just sort of discussion around how those options might be impacted by any changes in funding decisions by the U S administration.

Speaker Change: Yes, thanks, Kevin So if you think of at the end there is different buckets and different colors of money. So, let's kind of stay out of which funding vehicle happens, but at the highest level of customer and wants to put out an RFP and they work their methodology of local financing the match of roughly 20% and which program whether its formula funds or low <unk>.

Speaker Change: The debate that it comes through as we move through 2005, and 26, a very high percentage of firm contracts, where money is already appropriated what we don't yet know is what's going to happen to the the money thats allocated but not yet appropriate and can be imprudent to even try and opined on that I mean, we're all watching delusion.

Speaker Change: Or whatever the federal program is and the growth and get that money allocated.

Speaker Change: And other initiatives in the U S to re look at the size of government to re look at where the money is being spent there's clearly a different tone from the administration on zero emission vehicles relative to ice vehicles.

Speaker Change: Once it's allocated them to put in the contract that needs to be appropriated the money that's appropriate it's specific to those contracts is one the FERC portion of it.

Speaker Change: And so the.

Speaker Change: The challenge then becomes now depending on what the administration does relative to let's say zero emissions or whatever dynamic that's all quantum of funding, but also funding for certain types of products.

Speaker Change: Good news is we have time, because we have a very very strong firm order book over the last couple of years. The other good news to US is that the funding changes from let's say zero emission focus too who knows hybrid or even back straight to peer ice.

Speaker Change: The debate that it comes through as we move through 2005, and 26, a very high percentage of firm contracts, where money is already appropriated what we don't yet know is what's going to happen to the the money that's allocated but not yet appropriate and it would be.

Speaker Change: Also offer that and Theres a lot of products, where we are the only provider for a certain model given the changing competitive dynamics. So as I handicap theres going to be a change based on all the stuff that's going on in Washington, The short term lets call. It $25 26, there really shouldnt be that much impact on our planned production schedules at least.

Speaker Change: It would be imprudent to even try and opined on that I mean, we're all watching delusion and other initiatives in the U S to re look at the size of government to re look at where the money is being spent there's clearly a different tone from the administration on zero emission vehicles relative to ice vehicles.

Speaker Change: Public customers could we see the size the total size over the mix of our option backlog change, probably but no idea yet or no indication of what that might mean.

Speaker Change: And so the.

Speaker Change: Okay. That's helpful.

Speaker Change: You sort of mentioned the yield.

The competitive environment.

Speaker Change: <unk> been asked this in the past about the potential for the new competitor coming into the U S market and North American markets broadly.

Speaker Change: Also offer that and Theres a lot of products, where we are the only provider for a certain model given the changing competitive dynamics. So as I handicap, I say theres going to be a change based on all of the stuff that's going on in Washington, The short term lets call. It $25 26, there really shouldnt be that much impact on our planned production schedules at least for.

Speaker Change: It seems like there is still a number of years away, but we've had a recent I guess order success from from a new competitor in the Vancouver market I presume that maybe you guys are bidding on that as well so any updated thoughts there on the prospects of new competition coming into the North American market in the next few years.

Speaker Change: Let's break the business up so on the small buses. The <unk> buses, we really are the only low floor provider and at this point, we don't really have any insight knowledge or awareness of any inbound or new startups, if you will getting into the low fours.

Speaker Change: Public customers could we see the size the total size or the mix of our option backlog change, probably but no idea yet or no indication of what that might mean.

Speaker Change: Okay. That's helpful.

Speaker Change: You sort of mentioned.

Speaker Change: The medium class vehicle market has changed quite dramatically because two of the main providers in that space, where Eldorado and infinity and Infinity is a 100% gone Eldorado basically was shut down and is trying to be revived if we handicap that we think the probability of that is fairly low. So the medium class vehicle again, we think we're in a great place.

Speaker Change: The competitive environment.

Speaker Change: We've been asked this in the past about the potential for the new competitor coming into the into the U S market in North American market broadly.

Speaker Change: It seems like Thats still a number of years away, but we've had a recent I guess order success from from a new competitor in the Vancouver market I presume that maybe you guys are bidding on that as well so any updated thoughts there on the prospects of new competition coming into the North American market in the next few years.

Speaker Change: <unk>.

Speaker Change: While the motor coach market remember there are no U S. Domestic manufacturers, so theres preamble in Canada, and US and then there's importers like.

Speaker Change: <unk> made some in Turkey, as does Tencent and that whole Mesa in Macedonia. So the tariff dynamic will have I think we'll play prominently in the private motor coach market in the buy America public market. We are the only ones with U S. Domestic completion capability. So then the big issue becomes new flatter.

Speaker Change: Let's break the business up so on the small buses. They are blockbusters, we really are the only low floor provider at this point, we don't really have any insight knowledge or awareness of any inbound or new startups, if you will getting into the low fours.

Speaker Change: The medium class vehicle market has changed quite dramatically because two of the main providers in that space, where Eldorado and Vince <unk> and vicinity is a 100% on El Dorado basically was shut down and is trying to be revived.

Speaker Change: And as you know, Canada as you've covered us for a long time, we went through.

Speaker Change: Bobby was around and became part of US Orion went away.

Speaker Change: <unk> showed up in that kind of sits in the funding apparently box.

Speaker Change: Handicap that we think the probability that is fairly low so the medium class vehicle again, we think we're in a great place.

Speaker Change: El Dorado went away.

Speaker Change: Sorry, so all of those dynamics.

Speaker Change: While the motor coach market remember there are no U S. Domestic manufacturers. So there is <unk> in Canada, and US and then there's importers like.

Speaker Change: The Solaris did win a couple of <unk>.

Speaker Change: Trial contracts in the United States, where those buses one I think in New York and one in Seattle those trial contracts of five buses with options are going to be made in Poland. There is no indication at this point in time that Soliris has set up and the Yulia <unk>, Canada, we know and expect that to happen.

Speaker Change: Daimler made some in Turkey as does tensor an event, who makes them in Macedonia. So the tariff dynamic will have.

Speaker Change: Think will play prominently in the private motor coach market in the buy America public market. We are the only ones with U S. Domestic completion capability. So then the big issue becomes new flatter and as you know Canada as you've covered us for a long time, we went through.

Speaker Change: Solaris did win an RFP put out by Translink in Vancouver for a series of trolley buses. Some firms some options are understanding and we haven't yet had a full debrief. Our understanding is that they are priced maiden Poland was notably different than ours like I don't mean, a little bit but a lot.

Speaker Change: Bobby was around and became part of US Orion went away.

Speaker Change: <unk> showed up in that kind of sits in the funding penalty box.

Speaker Change: El Dorado went away.

Speaker Change: Sorry, so all of those dynamics.

Speaker Change: There is a dynamic of a Canadian domestic competitor us competing against the Polish import there are no by Canada content rules in that RFP.

Speaker Change: The Soliris did win a couple of <unk>.

Trial contracts in the United States, where those buses one I think in New York and one in Seattle those trial contracts of five buses with auctions are going to be made in Poland. There is no indication at this point in time that Soliris has set up in the U S yet or in Canada, we know and expect that to happen.

Speaker Change: And so that's the only one we know of any size, where where there's been an impact to us. We do expect them to show up in North America, and this goes back to us improving our products, our service and our relationship with customers.

Speaker Change: We won't have competition.

Speaker Change: Going forward it would be nave, so they're common.

Speaker Change: Soliris did win an RFP put out by translate can Vancouver for a series of trolley buses. Some firms. Some options are understanding and we haven't yet had a full debrief. Our understanding is that they are priced maiden Poland was notably different than ours like I don't mean, a little bit but a lot.

Speaker Change: Which they'll actually enter the market and could the U S government's initiatives around mix and so forth change the game for them who knows.

Speaker Change: Okay. No that's very helpful. I appreciate the time thanks.

Thanks, Timur one moment for our next question.

Speaker Change: There is a dynamic of a Canadian domestic competitor us competing against the Polish import there are no by Canada content rules in that RFP.

Speaker Change: Our next question comes from Daryl Young with Stifel. Your line is open.

Daryl Young: Hey, good morning, everyone.

Daryl Young: Just a quick question around the new seat supplier can you remind us what percentage of the back half of the year production Theyre going to represent and then are they producing today.

Speaker Change: And so that's the only one we know of the of any size, where where there's been an impact for us. We do expect them to show up in North America, and this goes back to us improving our products, our service and our relationship with customers.

Daryl Young: The city is going to be coming from our new facility.

We won't have competition going forward it would be nave so they're common.

Daryl Young: Any details you can give us there around maybe any teething pains or risks to them delivering the seats in the back half of the year.

Speaker Change: Pace at which they'll actually enter the market and could the U S government's initiatives around mix and so forth change the game for them who knows.

Daryl Young: Bye.

Daryl Young: Physician thought is that based on our supply team.

Speaker Change: His name is keel. He was a very very prominent government supplier of seats to bus and rail and motor coach in Europe. In fact, <unk> is a supplier to NCI today.

Okay. No that's very helpful. I appreciate the time thanks.

Speaker Change: Thanks, Patrick one moment for our next question.

Speaker Change: <unk> has facilities in the United States to be buy American compliant their designs are for the most part proven and we know them and we've worked with them a lot we have of course.

Moderator: Our next question comes from Daryl Young with Stifel. Your line is open.

Daryl Young: Hey, good morning, everyone.

Speaker Change: Choice of seats is largely the customers. So the customers have had to be comfortable that <unk> can provide.

Daryl Young: She is going to be coming from our new facility.

We.

Speaker Change: Historically have kind of had $55, 60% from our current troubled supplier and 40% from the other suppliers other major supplier.

Any details you can give us there around maybe any teething pains or risks to them delivering the seats in the back half of the year.

Speaker Change: So we have worked hard with our customers and of course with our current suppliers about adjusting that mix.

Speaker Change: My position thought is that based on our supply team. The suppliers' names keel. He was a very very prominent virulent supplier of seats to bus and rail and motor coach in Europe. In fact, <unk> is a supplier to NCI today.

Speaker Change: A portion of our back half of 2025 seats that will come from steel is still less than maybe 10% of our business. It is not a massive but it just as future competitive tension to the seat suppliers to perform.

Speaker Change: <unk> has set up facilities in the United States to be buy American compliant their designs are for the most part proven and we know them and we've worked with them a lot we have of course.

Speaker Change: Got it okay.

Speaker Change: And then secondly, this is a bit more of a hypothetical question, but if we did see a wide scale cancellation of the <unk> in orders rebid to ice.

Speaker Change: Choice of seats is largely the customers. So the customers have had to be comfortable that <unk> can provide.

Speaker Change: How do you feel about the ability to deliver 350 to 400 million of EBITDA, just given a big part of.

Speaker Change: We.

Historically have kind of had 50, 560% from our current troubled supplier and 40% from the other supplier the other major supplier.

Speaker Change: The narrative has been higher price points for <unk> and higher EBITDA per year.

Speaker Change: So we have worked hard with our customers and of course with our current suppliers about adjusting that mix.

Speaker Change: It's a great question, but for 2025 those contracts are funded locked and loaded. So I don't believe that any change in funding dynamics or mix will have an impact on our current year could impact 2006, and therefore auction conversion of new wins and so forth absolutely.

Speaker Change: A portion of our back half of 2025 seats that will come from steel is still less than maybe 10% of our business. It is not a massive but it just adds future competitive tension to the seat suppliers to perform.

Speaker Change: The margins on diesel or natural gas or hybrid or less than we see on zero emission, but they are easier to build through a production line. So that trade off may be lower margin per unit higher volume through the facility.

Speaker Change: Got it okay.

Speaker Change: And then secondly, this is a bit more of a hypothetical question, but if we did see a wide scale cancellation of the <unk> in order to rebid to ice.

How do you feel about the ability to deliver $350 million to $400 million of EBITDA, just just given a big part of the narrative has been higher price points for <unk> and higher EBITDA for you.

Speaker Change: So if you just look at the sheer size of the backlog or even the bid universe. Both active unexpected if the game changes on mix net net I don't see a massive change on volume you still have fleets throughout North America that are trying to renew their fleets and when there is a large component of the federally funded and the low.

Speaker Change: Cooperators pay 100% of operating a fuel costs, they're motivated to continue upgrading and changing their fleets.

Speaker Change: So maybe part of it is good planning and good strategy and part of it is good luck, but our belief that having production lines that are agnostic and product portfolio that we can sell the same bus whether it's diesel natural gas electric battery fuel cell whatever.

That will prove very promise we have had many suppliers show up during this back days that were just zero emission and couldn't sustain production lines and we have one competitor that has pulled out of the U S. By American market and has already made public statements that there are only going to do <unk> going forward.

Speaker Change: And so if you just look at the sheer size of the backlog or even the bid universe. Both active unexpected if the game changes on mix net net I don't see a massive change on volume you still have fleets throughout North America that are trying to renew their fleets.

Speaker Change: So I'll go back to my statement mix May change margin per unit is different but volume has the potential to increase.

Speaker Change: And when there is a large component of that being federally funded and the local operators pay 100% of operating and fuel costs, they're motivated to continue upgrading and changing their fleets.

It has really no impact on our aftermarket business either because that is about supporting an installed fleet that's already there.

Speaker Change: So maybe part of it is good planning and good strategy and part of it's good luck, but our belief that having production lines that are agnostic and product portfolio that we can sell the same bus whether it's diesel natural gas electric battery fuel cell whatever.

Speaker Change: Got it that's helpful. Thanks and.

Speaker Change: Thanks for the comprehensive presentation, guys I'll jump back in the queue.

Thanks, Joe.

And I'm not showing any further questions. So I'd like to turn the call back over to Steven for any closing remarks.

Speaker Change: That will prove very promise we have had many suppliers show up during this back days that were just zero emission and couldn't sustain production lines and we have one competitor that has pulled out of the U S. By American market and has already made public statements that they are only going to do <unk> going forward.

Steven: Alright, Thank you, Kevin and thanks, everyone for joining the call today as always reach out to us with any time with questions and please do check out all the materials on our Investor section of our website and you'll hear from US soon again to start thinking about the AGM in may thanks.

Speaker Change: Thanks, everyone and have a great day.

Speaker Change: So I'll go back to my statement mix May change margin per unit is different but volume has the potential to increase it.

Speaker Change: Ladies and gentlemen. This does conclude this does conclude today's presentation. You may now disconnect and have a wonderful day.

Speaker Change: It has really no impact on our aftermarket business either because that is about supporting an installed fleet that's already there.

Speaker Change: Got it that's helpful. Thanks and.

Speaker Change: Thanks for the comprehensive presentation, guys I'll jump back in the queue.

Joe: Thanks, Joe.

Joe: I'm not showing any further questions. So I'd like to turn the call back over to Steve for any closing remarks.

Joe: Alright, Thank you, Kevin and thanks, everyone for joining the call today as always reach out to us with any time with questions and please do check out all the materials on our Investor section of our website and you'll hear from US soon again to start thinking about the AGM in may thanks.

Joe: Thanks, everyone and have a great day.

Joe: Ladies and gentlemen. This does conclude this does conclude today's presentation. You may now disconnect and have a wonderful day.

Joe: Yeah.

Joe: [music].

Q4 2024 NFI Group Inc Earnings Call

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