Mr. Paul Soubry reports

NFI ANNOUNCES BATTERY RECALL AGREEMENT WITH XALT

NFI Group Inc. has signed a master settlement agreement (MSA or the settlement) with XALT Energy LLC and its subsidiaries regarding costs related to the recall on Generation 3 batteries and estimated future costs associated with supporting buses operating with other types of XALT batteries described in NFI's third quarter earnings release on Nov. 6, 2025.

The settlement comprises cash payments, the transfer of certain personnel and the contribution of relevant assets including battery cells, systems, equipment and intellectual property, that in aggregate provide approximately 75-per-cent to 80-per-cent recovery against NFI's original $229-million provision. The settlement fully resolves all disputes between NFI and XALT with no admission of fault, wrongdoing or liability by either party.

The settlement assists in offsetting costs associated with the recall, ensures a smooth transition for implementation of the remedy program, and provides increased visibility for NFI's battery supply chain and continuing support of batteries in service following XALT's decision to wind down operations.

"This collaborative settlement is positive for NFI and our customers," said Paul Soubry, president and chief executive officer, NFI. "It delivers immediate cash payments to commence the battery recall, while also securing critical assets, systems, people and facilities to expand our zero-emission platform, improving customer support for electric buses in service and positioning us to accelerate the introduction of a second battery supplier in 2027."

Under the terms of the MSA, NFI will receive the following:

• A cash payment, which represents the majority of the recovery, to be received by Dec. 31, 2025. This payment provides an immediate contribution to working capital to initiate the recall and on a pro forma basis would increase NFI's third quarter 2025 total liquidity of $386-million by approximately 26 per cent.
• Additional cash payments held in escrow for certain 2026 costs associated with the transfer of people and facilities.
• Transfer of XALT's inventory of new battery cells from a leading global cell manufacturer. XALT had originally purchased these cells, used by numerous vehicle manufacturers, for a planned next-generation battery offering that is no longer proceeding. NFI plans to have a United States-based battery supplier package the cells for a new electric-bus battery offering in 2027, supporting NFI's significant electric bus backlog.
• XALT's battery management software and associated intellectual property, strengthening NFI's technology portfolio and customer support capabilities for battery and fuel cell-electric buses.
• Hiring of 21 Michigan-based software, engineering and service team members from XALT to support the recall, and provide active oversight of other NFI electric buses.
• Assignment of a lease for a Michigan-based office and engineering lab currently used by XALT, and a storage contract for the assumed battery cells.

During the third quarter of 2025, NFI recorded a warranty provision expense of $229-million, reflecting the estimated costs for full battery replacement on approximately 700 vehicles impacted by the recall plus estimated future costs associated with supporting vehicles in service that have other non-recall-related XALT batteries. The replacement of batteries is planned to be performed at NFI's North American-based service centres and will have no impact on new vehicle production.

NFI will finalize accounting treatment related to the settlement and record the full transaction, including the final valuation of the battery cell inventory and the transferred assets, within its fourth quarter financial results. The settlement will improve quarterly net earnings and total liquidty, NFI will include adjustments to adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and adjusted net earnings to normalize for the non-recurring, unusual recovery of costs related to the recall under the MSA.

NFI expects that cash outflows directly related to the replacement of batteries under the recall will be incurred over 18 to 24 months commencing in Q2 2026, with 35 per cent to 45 per cent of the cash expenses (approximately $70-million to $90-million) in 2026 and the remainder in 2027. All of the 2026 cash expenses and a portion of the 2027 outflows will be fully financed by cash proceeds of the settlement.

NFI will provide further details on the settlement within its fourth quarter financial results.

About NFI Group Inc.

Leveraging 450 years of combined experience, NFI offers a wide range of propulsion agnostic bus and coach platforms, including market leading electric models. Through its low- and 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 over 9,000 team members in ten countries, NFI is a leading global bus manufacturer of mass mobility solutions under the brands New Flyer (heavy-duty transit buses), MCI (motorcoaches), Alexander Dennis Ltd. (single- and double-deck buses), ARBOC (low-floor cutaway and medium-duty buses) and NFI Parts. NFI currently offers the widest range of sustainable drive systems available, including zero-emission electric (referring to propulsion systems that do not utilize internal combustion engines, such as trolley, battery and fuel cell), natural gas, electric hybrid and clean diesel. In total, NFI supports its installed base of over 100,000 buses and coaches around the world. NFI's common shares trade on the Toronto Stock Exchange (TSX) under the symbol NFI and its convertible unsecured debentures trade on the TSX under the symbol NFI.DB.

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