Mr. Paul Soubry reports

NFI ANNOUNCES FIRST QUARTER 2023 RESULTS

NFI Group Inc. has released its unaudited consolidated financial results for the first quarter of 2023. All figures quoted in U.S. dollars unless otherwise noted.

Performance Highlights:

• 2023 Q1 revenue of $524 million; 792 equivalent units ("EUs") delivered, with 21 per cent from battery- and fuel cell-electric buses ("ZEBs").
• 2023 Q1 Adjusted EBITDA 2 of $7 million; Net Loss per Share of $ 0.60 and Adjusted Net Loss per Share 2 of $ 0.49 .
• Ending liquidity 2 position of $124 million, with a minimum liquidity requirement of $25 million. Continued focus on finalizing an amended multi-year credit agreement prior to June 30, 2023.
• Ending total backlog position (both firm and options) of 10,071 EUs (valued at a record $6.7 billion 2 ); ZEB backlog now 3,661 EUs, or 36 per cent , of total backlog; Active North American public bid universe ended at 11,066 EUs, up 18 per cent year-over-year; ZEBs now represent 52 per cent of the Total Bid Universe.
• Reaffirm financial guidance for Fiscal 2023 and Fiscal 2024, and targets for Fiscal 2025.

Key financial metrics of the quarter and full year are highlighted below:

"During the first quarter of 2023, we saw significant improvements within overall supply chain performance combined with an extremely strong order and bidding environment. Total bus and coach deliveries increased, helping drive revenue growth and improved margin performance; the Aftermarket segment delivered revenue and margin growth that exceeded our expectations; and it was another quarter of record demand for our products and services. While there were many positives, our quarterly results continued to reflect the impacts of supply disruption, associated production inefficiencies, and the delivery of inflation impacted legacy contracts originally bid in 2020 and 2021. As we move throughout 2023, we expect that we will see improvement from updated contract pricing, fewer legacy deliveries, higher new vehicle production rates driving volume leverage, and better on-time supply performance. This view allows us to reaffirm our guidance for the current year, and our longer-term outlook for significant growth and improved financial returns," said Paul Soubry, President and Chief Executive Officer, NFI.

"Our team remains focused on finalizing amendments to our credit agreements, lowering leverage, and improving liquidity. During the quarter, we advanced discussions with our senior banking syndicate partners to put in place an amended multi-year agreement by the end of June. We are also pursuing other opportunities to generate cash flows through the reduction of excess spare parts inventory and delivery of offline work-in-process vehicles, advance payments and deposits from customers, and other capital market activities. We hope to announce additional details on these efforts in the near-term," Soubry concluded.

Liquidity and Credit Agreement Discussions

The Company's liquidity2 position, which combines cash on-hand plus available capacity under its credit facilities, without consideration given to the minimum liquidity requirement of $25 million under the Company's existing senior revolving credit facility and its revolving UK credit facility (collectively the Amended Facilities), was $124 million as at the end of 2023 Q1, down $19 million from the end of 2022 Q4. The decrease in liquidity is primarily due to increased letters of credit being issued to support bus bids and customer prepayments, and increased debt drawings to support heightened inventory balances. These higher inventory balances primarily relate to the timing of completing vehicles that require certain components and from delays in delivering select North American battery-electric buses that require the installation of new drain technology within the battery energy enclosure system. Work on the drains began in the second quarter, and NFI expects that the majority of the vehicles impacted by these issues will commence delivery late in the second quarter and continue to be delivered throughout the rest of 2023.

NFI worked with customers in the second half of 2022 and the first quarter of 2023 to seek commercial relief, and/or milestone payments, in response to rising input costs. As of April 2, 2023, the Company had received $88 million in prepayments and is continuing to work with other customers to help alleviate some of NFI's working capital investments while it navigates through supply chain challenges.

NFI and its banking syndicate partners are focused on developing amended multi-year credit arrangements, and NFI is pursuing agreements that provide appropriate capacity and covenants matched to the Company's anticipated financial performance and recovery through 2025. The Company is targeting completion of these changes prior to June 30, 2023.

Segment Results

Manufacturing segment revenue for 2023 Q1 increased by $59 million, or 18 per cent, compared to 2022 Q1. The increase was driven by higher deliveries within motor coach and medium-duty and low-floor cutaway vehicles. Quarterly and LTM deliveries are down relative to pre-COVID-19 levels due to global supply chain challenges and related production inefficiencies. These challenges are largely the result of suppliers recovering from impacts of the COVID-19 pandemic, which has created bottlenecks in the supply chain and disruptions to certain parts availability.

Manufacturing Adjusted EBITDA2 increased by $16 million, or 42 per cent, compared to 2022 Q1.The increase was driven by higher overall deliveries, favourable sales mix, and a lower number of legacy inflation impacted contracts.

Aftermarket segment revenue for 2023 Q1 of $139 million increased by $6 million, or 5 per cent compared to 2022 Q1, driven by increased volume in the North America region. The Company continues to benefit from a multi-year retrofit program in the Asia-Pacific region, which continued throughout 2023 Q1, but at a lower run rate. 2023 Q1 Aftermarket Adjusted EBITDA2 was $29 million, a $7 million, or 29 per cent, year-over-year increase, stemming from improved sales volume and product mix. Economic conditions, combined with NFI's pricing actions, also helped mitigate the impact of freight and part costs, and freight surcharges.

Net Earnings, Adjusted Net Earnings and Return on Invested Capital

2023 Q1 net loss of $46 million increased by $18 million from 2022 Q1, primarily due to increased interest costs and financing costs, stemming from higher interest expense on long-term debt as a result of elevated debt levels and higher interest rates on components of the Company's debt. In addition, NFI reported a fair market value loss on the adjustment to the Company's interest rate swaps and a lower gain on the adjustment to the Company's cash conversion option related to its convertible debt. The loss was somewhat offset by favourable fair value adjustment to the Company's convertible debenture cash conversion option.

2023 Q1 Adjusted Net Loss2 of $38 million compared to 2022 Q1 Adjusted Net Loss of $41 million. The increase in Adjusted Net Loss2 was driven by the same items that impacted Adjusted EBITDA2 and net loss. Adjusted Net Loss2 was normalized for the fair value adjustments mentioned above.

LTM 2023 Q1 ROIC2 increased by 1 per cent from LTM 2023 Q4, due to the increase in Adjusted EBITDA and by a lower average invested capital base. The increase in invested capital is primarily due to an increase in senior unsecured debt partially offset by a decrease in shareholders' equity.

Outlook

Since March 2020, NFI's global operations have been dramatically impacted by the COVID-19 pandemic and resulting macro trends including supply disruption that created production inefficiencies, heightened and rapid inflation on parts, raw materials and labour rates, higher interest rates, and volatile foreign exchange movements. NFI continues to recover from these impacts and has seen signs of significant improvement within supply chains and contract pricing. These developments, combined with record market demand, drive NFI's outlook for positive improvements to revenue, gross profit, Adjusted EBITDA2, Free Cash Flow2, Net Earnings and ROIC2.

NFI's positive outlook is based on its multi-year backlog, growing demand for its buses, coaches, parts and Infrastructure SolutionsTM services, and government funding reaching record high levels in core markets. In 2023 Q1, NFI received new firm and option orders for 1,873 EUs, an increase of 33 per cent from 2022 Q1. These new orders included 1,091 EUs of ZEBs, which equates to 58 per cent of all new firm and option orders for the quarter, an increase from 43 per cent in 2022 Q4. NFI's closing backlog (firm and options) for 2023 Q1 was 10,071 EUs with a record value of $6.7 billion.

A high volume of active bus and motor coach procurements continue in both North America and international markets. As of 2023 Q1, the Company's North American active bids were at a record 11,066 EUs, an increase of 99 per cent year-over-year. This bid activity is expected to drive additional backlog growth, and revenue growth in the medium- and longer-term. The current five-year demand within the Company's North American bid universe is strong at 20,103 EUs, and, when combined with active bids, provides a record total bid universe of 31,169 EUs.

While supply chain challenges continue and have caused dislocation to NFI's operating and financial performance, the Company has seen significant signs of improvement in 2023. The number of moderate and high risk suppliers within NFI's supply base has decreased, and, through the Company's actions, it has improved on-time supplier delivery performance supporting higher production volumes.

NFI is maintaining its plan to increase new bus production rates in the second half of 2023, subject to continued and sustained supply performance. The Company anticipates it will hire an additional 150 to 200 direct labour team members before the end of 2023, to support higher production rates and deliveries. This will be a phased approach, with gradual headcount additions throughout the second half of the year.

Financial Guidance and Targets

NFI reaffirms its financial guidance for Fiscal 2023 and Fiscal 2024, and its 2025 targets, as presented on March 1, 2023:

Please review the Company's March 1, 2023 press release and the 2022 Q4 and Fiscal Year MD&A for details on the assumptions that drive Fiscal 2023 and Fiscal 2024 guidance, and 2025 targets, as well as certain applicable risks. Management's expectations regarding financial guidance and targets above are also subject to the risks and other factors referred to in Appendix B.

Board Update

After 17 years and upon the completion of the Company's Annual and Special Meeting of Shareholders on Thursday, May 4, 2023 (the "Shareholders' Meeting"), the Honourable Brian Tobin, O.C. P.C. will retire as Chair of NFI's Board. Mr. Tobin had originally reached the Director term limit under the Company's Board Mandate in 2021 but remained as Chair of the Board for two one-year extensions at the request of his fellow Directors to maintain the continuity of Board representation and leadership as NFI navigated through the COVID-19 pandemic and the associated supply chain disruptions.

NFI's Board and management would like to thank Mr. Tobin for his outstanding contribution to NFI and wish him all the best in future endeavours.

Ms. Wendy Kei who joined NFI's Board in 2022, will replace Mr. Tobin as Chair of the Board once elected at the Shareholders' Meeting. In addition, Ms. Jannet Walker-Ford has been nominated to serve as a new independent Director on NFI's Board. Ms. Walker-Ford has more than two decades of diverse public and private sector experience across multiple industries and is a tireless advocate for equity in transportation and the power of public transit to transform communities.

Environmental, Social & Governance

NFI's Environmental Social Governance Report for 2022 will be released on the Company's website in May 2023.

First Quarter 2023 Results Conference Call and Filing

NFI intends to release its first quarter 2023 financial results on Thursday, May 4, 2023, prior to market open. A conference call for analysts and interested listeners will be held on May 4, 2023, from 8:30 a.m. Eastern Time (ET) until approximately 9:30 a.m. ET. An accompanying results presentation will be available prior to market open on May 4, 2023 at www.nfigroup.com.

For attendees who wish to join by webcast, registration is not required; the event can be accessed at https://edge.media-server.com/mmc/p/ez3pf99w . NFI encourages attendees to join via webcast as the results presentation will be presented and users can also submit questions to management through the platform.

Attendees who wish to join by phone must visit the following link and pre-register: https://register.vevent.com/register/BIc80e16a943fa486687e2a2c5bbf2f44a . An email will be sent to the user's registered email address, which will provide the call-in details. Due to the possibility of emails being held up in spam filters, we highly recommend that attendees wishing to join via phone register ahead of time to ensure receipt of their access details.

A replay of the call will be accessible from about 12:00 p.m. ET on May 4, 2023, until 11:59 p.m. ET on May 3, 2024, at https://edge.media-server.com/mmc/p/ez3pf99w . The replay will also be available on NFI's website at: www.nfigroup.com.

Annual and Special Meeting of Shareholders

NFI's Shareholders' Meeting will be held at 11:00 a.m. EST on Thursday, May 4, 2023, in Toronto, Ontario at First Canadian Place, 100 King Street West, 24th Floor. A listen-only webcast link is available at www.nfigroup.com for interested parties.

About NFI Group

Leveraging 450 years of combined experience, NFI is leading the electrification of mass mobility around the world. With zero-emission buses and coaches, infrastructure, and technology, NFI meets today's urban demands for scalable smart mobility solutions. Together, NFI is enabling more livable cities through connected, clean, and sustainable transportation.

With 7,700 team members in nine countries, NFI is a leading global bus manufacturer of mass mobility solutions under the brands New Flyer(TM) (heavy-duty transit buses), MCI(TM) (motor coaches), Alexander Dennis Limited (single and double-deck buses), Plaxton (motor coaches), ARBOC(TM) (low-floor cutaway and medium-duty buses), and NFI Parts(TM). NFI currently offers the widest range of sustainable drive systems available, including zero-emission electric (trolley, battery, and fuel cell), natural gas, electric hybrid, and clean diesel. In total, NFI supports its installed base of over 105,000 buses and coaches around the world. NFI's common shares ("Shares") trade on the Toronto Stock Exchange ("TSX") under the symbol NFI and its Debentures trade on the TSX under the symbol NFI.DB. News and information is available at www.nfigroup.com, www.newflyer.com, www.mcicoach.com, www.nfi.parts, www.alexander-dennis.com, www.arbocsv.com, and www.carfaircomposites.com.

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