NFI Group Inc.

Good day, and thank you for standing by. Welcome to the NFI 2021 Q3 Financial Results Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require assistance during the conference, please press star zero. I would now like to hand the conference over to your first speaker today, Mr. Stephen Kings, Group Director, Corporate Development and Investor Relations. Sir, the floor is yours.

Thank you, Hazel. Good morning, everyone, and welcome to NFI Group's third quarter 2021 results conference call. This is Stephen King speaking. Joining me today are Paul Subri, President and Chief Executive Officer, and Papasu Soni, Chief Financial Officer. On this morning's call, we will be walking through a results presentation that can be found in the investor section of our website. While we will be moving the slides via the webcast, we will also call out the slide numbers as we go through the deck for participants on the phone. Starting with slide two, I'd like to remind all participants and others that certain information provided on today's call may be forward-looking and based on assumptions and anticipated results that are subject to uncertainties. Should any one or more of these uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may vary significantly from what is expected. you are advised to review the risk factors found in NFI's press releases and other public filings on CDAR for more details. We also want to remind listeners that NFI's financial statements are presented in U.S. dollars, the company's functional currency, and all amounts referred to are in U.S. dollars unless otherwise noted. On slide three, we have included some key terms and definitions referred to in this presentation. Of note, zero emission buses, or ZEBs, consists of battery electric, hydrogen fuel cell electric, and trolley electric buses. Equivalent units, or EUs, is a term we use for production levels and delivery statistics. The majority of our vehicles represent one equivalent unit, while an articulated 60-foot transit bus takes two production slots and therefore is equal to two equivalent units. On slide four, for those of you new to the NFI story, We are a leading independent global provider of sustainable bus and motor coach solutions. We operate with a four-pillar approach focused on vehicles, infrastructure, aftermarket support, and workforce development. Turning to slide five, our purpose and mission is simple. We exist to move people. In other words, our products move precious cargo. We are focused on designing, building, and delivering exceptional turnkey mobility solutions. On this slide, we've also included our stakeholder matrix that drives our strategic decisions and the core operating principles that govern our behavior. I'll now pass it over to Paul to recap the quarter.

Thanks, Stephen, and good morning, everyone. I'll begin on slide number six, titled Executive Summary. Similar to other global manufacturers, NFI's third quarter results and operations were impacted by supply chain disruptions that caused a rapid deterioration in availability of critical parts, components, and chassis, and negatively impacted our production. We responded quickly to these issues through the prudent, albeit difficult, decision to temporarily reduce new vehicle input rates, and by idling some of our facilities and by adjusting production levels in others. We anticipate that these actions will assist us in controlling costs, lowering our working capital investments and preserving cash until supply availability and the reliability of delivery improves. Our customers have been very accommodating in working with us as we adjust production and delivery schedules in response to these near-term disruptions. In addition, our banking partners or credit syndicate have been very supportive in assisting us in focusing on our long-term business objectives while managing near-term challenges. We're currently in ongoing discussions regarding additional financial and covenant flexibility for 2022 as we work through these most recent supply chain disruptions and the impacts of the other realities of the COVID-19 pandemic. There were numerous positives in the quarter with the NFI forward optimization efforts realizing several key milestones that have permanently reduced our fixed cost base. With the expectations of a $67 million savings in 2023, NFI Forward will drive margin improvement and increase returns on invested capital as our volumes recover. Even in the face of the pandemic and the supply chain-related challenges, our aftermarket segment saw significant year-over-year growth, with a record adjusted EBITDA for the second consecutive quarter. There are a number of key forward-looking metrics that we track that have also increased in the quarter. First, our active bids are up 11% from the same time last year. Right now, it is the highest number of units that we've submitted for bids since 2017 quarter two, at 6,307 submitted equivalent units under bid. And our five-year total bid universe is up 7%, with over 38% of that universe being zero emission buses. We anticipate that this strong demand and growth in procurements will continue, driven by robust levels of government support in all of our core markets. This bid activity is anticipated to generate revenue and backlog growth. We've also seen increases in public transit ridership data and a sooner than expected return in the private market for leisure travel. NFI is playing a leadership role in the evolution of zero emission transportation, and we saw several major milestones this quarter. Zero emission buses are now 21% of our total backlog, up from 16% just last quarter. Our battery and fuel cell electric vehicles have traveled now over 50 million electric zero emission miles. We were also awarded some very large EBA awards in California, Virginia, New York, Nevada, England, and Ireland. And we announced entry into the Australian market via strategic partnership with a local player. NFI zero emission buses are operating or on order in 15 of the top 25 transit agencies in North America and and are used by 10 of the top 15 transit operators in the United Kingdom. So far this year, we've completed zero-emission charging infrastructure solutions projects in nine cities, with projects in progress in a further 19 cities currently. And we remain on track for approximately 20% of our annual deliveries this year to be from zero-emission buses. Very exciting for us this week is with Alexander Dennis double-deck bucket buses, and the UK's best-selling electric bus are on display at the United Nations 26th Climate Change Conference of the Parties, or COP26, in Glasgow, Scotland. Our vehicles are also providing zero-emission transportation to world leaders during this event, and we're really proud to have worked with our customer partners, both National Express and Stagecoach, at the event, highlighting our product and their commitment to a zero-emission future. Next, we'll have 100% zero emission bus offering on display next week with all of our companies showcasing their vehicles at the American Public Transit Association Expo, or the industry association called APTA, which is North America's largest public transit event. More than 8,000 in-person attendees have signed up, which is a massive amount given what we've gone through the last two years. And all will be able to see our lineup of electric and fuel cell electric buses and coaches, all equipped with NFI Parts proactive air and service purification systems to continue to battle the COVID pandemic. Recognizing the need to deal with global warming, which demands significant reduction of greenhouse gas emissions over the next decade, countries around the world have made landmark commitments to GHG reductions. There's never been more urgency on the design and delivery of mobility solutions that are clean, safe, accessible, efficient, and most importantly, reliable. This is NFI's core business, and we look forward to assisting governments and our customers achieve their operating targets. I'll now turn it over to our CFO, Papasu Soni, to review NFI's third quarter financial results, and I'll be back shortly to give you an update on our outlook.