NFI shares fall on debt repayment risks, cut to dividend

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By Adriano Marchese


Shares of NFI Group Inc. fell Thursday morning after the company said a number of headwinds had hampered the company’s ability to meet certain financial covenants and that it would cut its dividend.

As of 10 a.m. ET, shares are down 18% at C$15.89.

President and CEO Paul Soubry noted that the pandemic and a difficult and escalating global supply chain environment continue to put pressure on the company’s operations and financial performance.

As a result, the company has reduced its production rate in the first half of 2022 to limit the build-up of work-in-progress inventory and focus on cost reduction.

The company also noted that a contractor to its main North American battery supplier suffered a fire, affecting its higher dollar-margin products.

NFI said it now expects the company’s expected debt profile to affect its ability to meet certain financial covenants under its senior credit facilities, including the short-term interest coverage ratio. and the full leverage clause from the second half of 2022.

Management is currently in discussions with banking partners to secure some relief on this front.

Following the challenges, the company said it lowered its quarterly dividend to 5.31 cents Canadian, the equivalent of 4 cents US.

In the fourth quarter, the company reported an adjusted loss of 21 cents per share, while analysts had expected a loss of 15 cents.

Revenue fell 2% to $695 million.

Adjusted earnings before interest, taxes, depreciation and amortization fell 60% to $26 million.


Write to Adriano Marchese at adriano.marchese@wsj.com

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