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I think EV will make major inroads on municipal service vehicles in particular, e.g. garbage trucks and buses especially, both city and inter-city coach. NFI is a competitive player in this field and fills a hole in my Cdn equity industrial sector and I believe it will remain competitive throughout North America. I don't buy individual stocks ex-Canada so don't have an opinion on other players.

I think NFI should stick to this segment and not try to compete in the intra-city commercial delivery truck business, e.g. UPS, Canada Post, etc. The bigger auto makers have bigger sticks to own this business.

As I mentioned, I see momentum in this sector by the end of 2021. That is perfectly fine with me. I don't invest on a quarterly, or even annual, basis.

Added: Their Investor Day presentation is a challenge to get through https://www.nfigroup.com/site-content/uploads/2021/01/NFI-IR-Day-2021-Presentation-Slides.pdf
 

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I think EV will make major inroads on municipal service vehicles in particular, e.g. garbage trucks and buses especially, both city and inter-city coach. NFI is a competitive player in this field and fills a hole in my Cdn equity industrial sector and I believe it will remain competitive throughout North America. I don't buy individual stocks ex-Canada so don't have an opinion on other players.

I think NFI should stick to this segment and not try to compete in the intra-city commercial delivery truck business, e.g. UPS, Canada Post, etc. The bigger auto makers have bigger sticks to own this business.

As I mentioned, I see momentum in this sector by the end of 2021. That is perfectly fine with me. I don't invest on a quarterly, or even annual, basis.
Oh I agree, stick to the bus niche and excel.

For delivery vehicles I think a Dodge Caravan is a great super cheap vehicle, and there are loads of used ones out there cheap.

Going forward, I think a purpose build vehicle like the Sprinter or the Ford Transit make the most sense.

I can just imagine the future of putting quick chargers at the loading dock for inner city delivery.
 

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I thought NFI would be a good trade especially given their capacity to build electric buses. I nearly bought in at $17-18. I think I'll stay away now, but they have a relatively bright future. It's not a slam dunk by any means as there are challenges for the company and for the customers as well as competition, but it will get there I believe. If something crazy happened like a merger with a SPAC-type company or PE for a big capital injection to boost electric production, the stock could go to the moon.
 

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Discussion Starter · #24 ·

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NFI Group Inc. (NFI) | TSX Stock Price | TMX Money

Stock down 23% bringing it to a price level seen back in January of this year. The company released updated guidance on Friday indicating major supply chain issues. All the price appreciation from general market excitement and the hype around buses switching to EV has been erased.

NFI provides update on supply chain disruptions and 2021 guidance (tmx.com)
The demand is there, they have a good product with customers and plans in the UK/US & Canada.

It's just they're accounting for supply chain disruptions.
Go to Lenovo Canada, legion laptops have "4 month delivery" for some models due to supply chain stuff.
Go try to buy a SUV at your local dealer, it's getting better, but they still have shortages.

It's not like their sales are falling, they're just being adjusted due to supply chain problems, and they're telling us NOW, rather then when they miss their estimates.
 

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I sold this a while ago.
Not a fan of it.

I see the potential, but I rather have my money elsewhere. I agree this could be a decent entry for a longer term play, but I'm already out.

I have looked at it just now again after seeing this thread, I am still not convinced. If it dipped out of the 20's, I may reconsider. I am not a buyer at current prices but maybe in the future if the deal deepens.
 

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Discussion Starter · #31 ·

I wasn't expecting good results this quarter from NFI but was surprised with the poor performance for 2021. Management seems to be securing sales and a lot of the issues are pandemic and supply related. Will have to take a closer look this evening.
 

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Discussion Starter · #33 ·
Toronto's TTC awards contracts for up to 565 buses to NFI (tmx.com)

The company continues to pick up contracts but until these awards result in an increase in earnings the share price will struggle. Share price popped today but a couple of good quarters are needed for the market to take note. I continue to hold and hold off on adding when the share price drops. I think I will wait to average down until the company's efforts show results on the balance sheet.
 

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I find they struggle to translate revenue into profits, but its a nice contract win. A better buy at $15-16 than $25-30, as you can be rewarded if they are successful with a higher share price, maybe as much as 100% higher. As opposed to some (unnamed...cough..tech..cough..) companies where they have such a high valuation, that they have to be wildly successful to justify their current share price.
 

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Discussion Starter · #35 ·
I have gone back and forth on averaging down on this one for several months. I have queued up orders in the $14 range a couple of times but not clicked send. It is definitely at a better price point than when I bought previously. At this point it has become a longer turnaround play for me. I am going to try and hold off until the May earnings release and guidance. It may pop back up into the 17-18 range but still a better price than a year ago.

I find they struggle to translate revenue into profits,
This is the part that I can't figure out. They seem to be struggling more than others in the manufacturing space(auto parts, machinery etc) which are still down but not to the same extent on a 1, 3 and 5 year basis. NFI being the big fish in the bus space continue to pick up contracts. Perhaps they are buying contracts while they weather the storm. This is ok in the short term but not great should problems continue. In the meantime I will continue to go back and forth on this position. The good thing about having 40 stocks is a bad pick or two won't blow up your portfolio. The downside is big wins don't have the same effect either. As such you have to have more winners than losers.
 

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NFI just isn't cool. I don't think they'll see a huge stock price increase any time soon.

But I'm okay with that, what they manage to execute they do well, their product seems okay (though a bit quiet).

Maybe the stock will be another Ford, in which case I'm happy to wait.
 

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NFI had bad timing on the UK purchase which has burdened them debt wise and caused them to be in technical violation of their debt covenants. That's a hard place to get out of and especially so when they have significant supply chain issues (hard to compete with the big boys on securing chips for example). I think they are hooped for at least 2022 and perhaps most of 2023 if interest on their debt does not get them first.

I have a partial position I will dump by the end of this year to offset a big cap gain...for whatever the share price is come the Fall. It is my only holding in the entire portfolio in the red.
 

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Discussion Starter · #39 ·
NFI Group

Credit Facility Covenant Relief and Focus on Cash Conservation

NFI continues to advance negotiations with its banking partners and expects to obtain covenant amendments on its credit facilities. Discussions have been supportive, and detailed plans are being evaluated that would see new covenant levels appropriate for NFI’s updated financial projections.

NFI’s liquidity position is currently over $600 million as of April 28, 2022. The need for covenant amendments is primarily being driven by lower trailing Adjusted EBITDA combined with the Company's anticipated financial performance and debt profile making it a calculation issue, rather than a liquidity or cash consumption related challenge.

NFI estimates that its current liquidity is more than adequate to support the Company’s operations as it works through the current supply chain disruption, including planned temporary heightened investments in work-in-process inventory for vehicles being built that are awaiting module installation.

Management believes that, with the anticipated covenant relief, the Company's cash position and capacity under its existing credit facilities, combined with anticipated future cash flows and access to capital markets, will be sufficient to fund operations, meet financial obligations as they come due, and provide the funds necessary for capital expenditures, dividend payments and other operational needs. See “Forward-Looking Statements”.

Down 16% so far this morning. I expect the dividend to be eliminated at the next earnings report in May. NFI is at the mercy of its chip suppliers and creditors. My guess is an announcement this bad this close to their earnings date means even worse news to come.

Overall portfolio now in the red for the year.
 

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NFI Group

Credit Facility Covenant Relief and Focus on Cash Conservation

NFI continues to advance negotiations with its banking partners and expects to obtain covenant amendments on its credit facilities. Discussions have been supportive, and detailed plans are being evaluated that would see new covenant levels appropriate for NFI’s updated financial projections.
Of course NFI is going to say that they've been supportive.
Realistically if the contracts are looking solid I expect lenders will want a bit of a sweetener, but should continue to support them, or they'll get a bailout from a government. It would be bad for an actual EV company, which is selling vehicles to go under right now.

The supply chain is something I hope lenders would be willing to accept as a reasonable excuse.

A coworker of mine jsut got their Buick, ordered in August, and it doesn't have the module (yet) for the heated seats and steering wheel, due to supply chain problems (they don't care, it's summer)
 
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