NFI Group Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to NFI Group First Quarter 2024 Financial Results Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automatic message advising your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Stephen King, Vice President of Strategy and Investor Relations. Please go ahead.

Thank you, Olivia. Good morning, everyone. This is Stephen King speaking. Joining me today are Paul Subri, President and Chief Executive Officer, and Brian Dusnip, our Executive Vice President of Finance and Chief Financial Officer. On today's call, Paul and Brian will provide an update on our financial results, the operating environment, market demand, and our outlook. This call is being recorded, and a replay will be made available shortly. We will be using a presentation that can be found in the investor section of our website. While we will be moving the slides via the webcast link, we will also call out the slide number as we move through the presentation. Starting with slide two, I would 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 those expected. In addition, certain financial measures we referenced today are not recognized earnings measures and do not have standardized meanings prescribed by International Financial Reporting Standards, or IFRS. We advise listeners to review the risk factors, financial definitions, and non-IFRS measure statements found in our 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 reporting currency, and all amounts referred to are in U.S. dollars unless otherwise noted. On slide three, we've included some key terms and definitions referred to in this presentation. Of note, zero emission buses, or ZEBs, consist of battery electric, hydrogen fuel cell electric, and trolley electric buses. Equivalent units, or EUs, is a term we use for both production slots and delivery statistics. Slides four, five, and six provide a brief overview of our company, For those interested in a more in-depth introduction to our business, including our mission, vision, and ESG-related materials, please visit the investor section of our website. In short, NFI Group is a global independent bus and motor coach solution provider that is leading the evolution to zero-emission mobility. We are purpose-driven and exist to build vehicles that move the world's most precious cargo. We move people. Slide 7 provides NFI's latest zero-emission statistics. Since 2015, NFI has delivered over 3,800 EUs of ZEVs that have completed over 180 million electric service miles in more than 150 cities in six countries. Our infrastructure solutions team has also delivered over 475 chargers, totaling 75 megawatts of charging capacity since 2018. Demand for ZEVs continues to accelerate. With a record 39% of our backlog being ZEBs, and based on our analysis, more than 50% of anticipated North American transit customer purchases over the next five years will be electric vehicles. We continue to project that at least 40% of our 2025 deliveries will be ZEBs. I'll now pass it over to Paul to walk us through an overview of results for 2024 Q1.

Thanks, David, and good morning, everyone. Thanks for joining us today, and I'm really pleased to report we're very happy with our Q1 performance and, in fact, exceeded our internal plan. On slide nine, we provide a summary of our first quarter for 2024. Our financial results show continued positive improvement in our seasonally slowest quarter with double-digit growth in vehicle deliveries and revenue, significant improvement in margin performance, and a record total backlog with a value now at nearly 12 billion U.S. dollars. Well, as expected, certain legacy inflation-impacted deliveries had a negative impact on our quarterly results. We knew this would happen. We have completed the majority of all those remaining contracts, which will help drive further margin improvement and growth as we move through the year of 2024 and into 2025. On the demand front, we saw record orders in the first quarter with 5,421 equivalent units added to our backlog. This resulted in a year-over-year increase of new orders of 189% and a trailing 12-month book-to-bill ratio of 117%. Our option backlog conversion rate also showed as expected recovery, now reaching 49% for the first quarter of 2024. Year-over-year, bus and coach deliveries were up 42%. Quarterly revenue was up 38% and adjusted EBITDA was up 360%. Gross margins within the manufacturing segment were up 520 basis points, reflecting an improvement in vehicle manufacturing efficiency and line entry rates while still being impacted as what I described earlier as our legacy impacted contracts. Our aftermarket segment delivered yet another quarter of record performance with 160 million in revenue, up 15% year-over-year, and 38 million of adjusted EBITDA, up 27% year-over-year. These results were primarily driven by increased volume in North America, by pricing improvements, and by enhancing our product mix. As mentioned, NFI's backlog has now reached a record $11.7 billion, consisting of over 14,750 equivalent units. The average selling price for our vehicles in the backlog also increased by 19% year-over-year, reflecting a higher portion of zero-emission vehicles and the pricing actions we've taken in contracts from mid-2022 onwards to reflect the impacts of inflation and preferential product mix. We added several major orders during the quarter, including the largest combined order ever at our company, up 3,090 equivalent units or 2,090 buses through two contracts with the City of New York and the New York Transit Authority. Our focus on working capital management was another bright spot, with improvements in working capital days both year over year and sequentially from the fourth quarter of 2023. This helped us maintain a strong quarter end liquidity position, even as we increased inventory balances to improve production efficiencies and with increased production rates. On slide 10, we show our quarterly inventory balances compared to the line entry rates. Line entry rates saw an increase of 19% from the fourth quarter of 2023, reflecting our ongoing production ramp up to meet our customer contracts. We project line entries will continue to show increases in 2024 as we ramp up to meet our production demand and improve production efficiencies. The ramp up will be phased approach, as we always said, matching consistent supplier performance with labor availability and our customers' ability to inspect and accept vehicles. We are being measured as we ramp up to ensure that we do not build up offline buses as they generate significant rectification and interest costs and require significant investments in work and process inventory. Inventory balances were up $25 million with work and process and finished goods increasing slightly, reflecting higher vehicle input costs. We also saw some customer acceptance delays impacting certain deliveries that were planned for the end of the quarter, pushing them into the second quarter. That happens nearly every quarter. Our raw material inventory balances came down in the quarter, but remain elevated driven by higher input costs for electric vehicle components and from the carrying of safety stocks reflected in our supply chain performance, and we'll continue to do so as it improves. As our supply chain health improves and we continue to reduce high-risk suppliers, we anticipate we'll be able to lower safety stock levels back to pre-COVID performance levels. We are very pleased with our performance across the business of the first quarter, and we deliver to our targets, which sets up well for the rest of this year. I'll now ask Brian Dusnam to walk us through the highlights of our first quarter results and provide some insights into our outlook. Thanks, Paul.