Q2 2020 Earnings Presentation AUGUST 6, 2020
CAUTIONARY STATEMENT Certain statements in this presentation are “forward looking statements”, which reflect the expectations of management regarding the Company's future growth, results of operations, performance and business prospects and opportunities. These forward-looking statements are made as of the date of this presentation and NFI assumes no obligation to update or revise them to reflect new events or circumstances, except as required by applicable securities laws. See the Appendix to this presentation for more details about the forward looking statements. In addition, certain financial measures used in this presentation are not recognized earnings measures and do not have standardized meanings prescribed by International Financial Reporting Standards (“IFRS”) . Therefore, they may not be comparable to similar measures presented by other issuers. See the Appendix to this presentation and the Company’s related Management Discussion & Analysis (“MD&A”) for more information and detailed reconciliation to the applicable IFRS measures. All figures in U.S. dollars unless otherwise noted. 2
A DIFFICULT Q2-20: EXECUTIVE SUMMARY Dramatic impact from Significant actions taken Launched NFI Forward COVID-19 Pandemic • Immediate reduction of cost • Implementation of strategic base (variable and admin) to plan initiatives approved pre- • Topline revenue down 50% due help mitigate volume impact COVID-19 to idled production and market uncertainty • Driving change to a leaner, • EBITDA impacted from volume • Balanced actions with long- organization with fewer drop and lower overhead cost term resource requirements to business units and less absorption on fewer deliveries maintain leadership position footprint, and centralized back- office admin to support front- • One-time costs of $12.1 line • Prioritized liquidity and cash • million related to COVID-19 flow management impacting earnings and EPS • Expected to generate $75 million in annualized savings by 2022 Visibility Improving – Reintroducing Fiscal 2020 Adjusted EBITDA Guidance at $145 million to $155 million 3
COVID-19 MARKET UPDATE • North American public markets have seen mixed results – limited Manufacturing cancellations, deferrals of production from 2020 to 2021, while some options expired • New public transit orders have been minimal since March 2020, yet active bids remain high and five-year total Bid Universe remains at record levels. Fewer new awards during Q2 with small orders • North American private coach market has essentially stopped due to COVID- 19. Expect slow recovery with potential bankruptcies in the near-term putting pressure on orders for new and pre-owned coaches • Cutaway and medium-duty market remains healthy with ARBOC operations recovering well following 2-month production idling • UK private operators (of public transit routes) have had significant decline in ridership and farebox revenue. Recovery will take time without government support • Both NFI Parts and ADL parts businesses remained open throughout the Aftermarket pandemic to support customers • Private operators (which represent approximately 30% of Aftermarket revenue) in both North America and the UK have decreased order activity • NFI Parts launch of ‘Clean and Protect’ products have been well received in helping support safety of bus operators and transit ridership Market Uncertainty Exists but need for Fleet Replacement does not Change 4
Q2 NEW DELIVERIES & TOTAL BACKLOG MEDIUM-DUTY / HEAVY-DUTY TRANSIT MOTOR COACH LOW-FLOOR CUTAWAY Q2-20 EUs Delivered 839 241 95 73 420 52 -23% 50% YOY YOY -78% YOY Q2 '19 Q2 '20 Q2 '19 Q2 '20 Q2 '19 Q2 '20 TOTAL BACKLOG: FIRM & OPTION BACKLOG TIMING BACKLOG BY PRODUCT Options by year of expiry Medium- Firm Options Duty and Low-Floor 12,157 Cutaway 10,833 10,742 10,004 4% 7,971 6,518 7,184 5,604 Motor Coach 13% 4,400 4,186 4,224 3,649 HD Transit 83% 2017 2018 2019 Q2 '20 (2) Options for ARBOC vehicles are held by dealers, rather than the operator, and are (1) ADL backlog added in Q2 2019. ADL backlog not included in historic 2017 and 2018 figures not included as an option in the NFI backlog. Q2-20 Deliveries dropped, with Backlog reduced slightly 5
INCOME STATEMENT AND BALANCE SHEET Q2 Performance Q2 Cash Flow & Liquidity CASH FLOW ($MM) Sales $683M $333M Q2 ‘19 Q2 ‘20 $81 (7.3%) ADJ Adjusted EBITDA $81.1 ($24.2) ROS 11.9% Interest Expense ($12.1) ($14.8) EBITDA ROS $(24) Current Income Tax ($13.8) $4.5 Cash Capital Expenditures plus Lease ($13.8) ($8.5) Q2 '19 Q2 '20 Proceeds from disposition of property - - Other - - Free Cash Flow (USD) $41.4 ($43.1) FX Rate 1.309 1.3688 Free Cash Flow (CAD) $54.2 ($59.0) Revenue ADJ EBITDA Dividends (CAD) $26.5 $13.3 Manufacturing $248.6M ($32.4M) Payout Ratio 48.9% (22.5%) Aftermarket $84.7M $12.1M Liquidity Corporate ($3.9M) Q1 ‘20 Q2 ‘20 Liquidity $146.6 $436.3 Q2-20 Margin Drop Driven by loss of Two Months of Production 6
NET EARNINGS AND ADJUSTED NET EARNINGS NET EARNINGS ($M) ADJUSTED NET EARNINGS ($M) Q2 '19 Q2 '19¹ $26 $9 $0.42 per share $0.14 per share ($0.97) per share Q2 '20 -$61 Q2 '20¹ -$74 ($1.08) per share $1.94 per share $1.69 per share LTM Q2 '19 LTM Q2 '19 $105 $137 ($1.22) per share ($2.81) per share LTM Q2 '20 -$15 LTM Q2 '20 -$108 Net Earnings to Adjusted Net Earnings Reconciliation (1) ($0.97) ($1.08) Per Share Per Share Net earnings Strategic Costs FX Loss (Gain) Employment, COVID 19 Tax Adjustments, Adjusted Net FY 2020 and Acquisition Compensation and Derivatives and Earnings FY Related Restructuring Other 2020 Accounting (ADL) MCI Write- Down of POC’s and Goodwill in H1 Based on Market View (1) Fiscal 2019 figures are not adjusted for impact of IFRS 16 – see slide 4 for details. Detailed quarterly reconciliations for Fiscal 2019 and Fiscal 2018 provided in the Appendix 7
NFI FORWARD: TRANSFORMATION TO AN INTEGRATED OPERATING COMPANY “NFI Forward” launched, a transformative group-wide program to reduce business units, consolidate facilities, remove overhead costs and create a more efficient, integrated company. STRATEGIC IMPERATIVES KEY INITIATIVES Fewer business units Growth (Combine NF and MCI) with Optimized global supply chain associated reduction in leveraging buying power overhead Cost Optimization Increased back-office and NFI administrative shared One North American FORWARD services supporting sales and Aftermarket Parts business manufacturing Innovation and Technology Optimized North American Reduced UK manufacturing Customer footprint – reduction of facilities and lower overhead and production and aftermarket Employee and SG&A at ADL facilities Satisfaction Strategy presented to NFI Board Pre-Covid, now Accelerating 8
NEW ORGANIZATIONAL STRUCTURE Business Transformation Office. Leader = Ian Smart Bus & Coach Segment Aftermarket Parts Segment International North America International North America Parts ADL Parts Bus & Coach Bus & Coach New Flyer + MCI NFI Parts ADL 3 2 a ADI North America ADP Fabrication ARBOC ADI 3 Reduce Footprint Reduce Footprint Rationalize PDC’s 5 6 b Efficient Structure with Central services and Supply Chain Optimization 4 1 Organization Defined. Initiatives Announced. Teams Launched. 9
NFI FORWARD FINANCIAL IMPACT BY END OF 2022 ~$75M Total ~$10M Leases, Banking Processes Cash Flow Cash Flow International ~$20M Over $2B in Material Spend Sourcing EBITDA Plant and Distribution Center Manufacturing ~$20M 8-10% 20 Reductions in NA and UK EBITDA Reduction Overhead Functional Transformation Improve Organizational Structure, Efficiency ~$25M 8-10% SG&A Savings EBITDA Reduction and Back-office Processes All Teams Aligned on Optimizing NFI through NFI FORWARD 10
TRANSIT RIDERSHIP STARTING TO RECOVER APPLE MOBILITY TRENDS (2) MOOVIT TRANSIT APP USAGE DECLINE (1) JANUARY TO JULY 2020 APRIL 13 VS JULY 13 140% -55% Miami 120% -74% 100% -55% Los Angeles -71% 80% 60% -51% NYC -75% 40% 20% -60% Chicago -71% 0% -69% San Francisco -78% 13-Jul Canada United Kingdom United States 13-Apr Historic ridership lows seen from March through April UK strongest recovery at 60% of pre-COVID-19 levels now recovering, but ridership still down 50% or more Canada and US still at ~50% of pre-COVID-19 levels from pre-COVID-19 levels (2) Source: Apple – Data calculated from Apple Maps mobility trends data from January 13 th to July 28, 2020 (1) Source: Moovit Public Transit Index – calculated as app usage for previous 7-day period compared to January 15 th data) Ridership Starting to Improve, but still at 50% of Pre-COVID-19 Levels Vaccine will be Important to Ridership Recovery 11
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