Robust Backlog of $675M+ and 5,300+ Units

950+ EVs on the Road

Net Sales of $236M and GAAP Net Loss of $11M

Adjusted EBITDA of $(4)M with 1,957 Buses Sold

FY2023 Guidance Increased to Adj. EBITDA of ~$43M

MACON, Ga.–(BUSINESS WIRE)– Blue Bird Corporation (“Blue Bird”) (Nasdaq: BLBD), the leader in electric and low-emission school buses, announced today its fiscal 2023 first quarter results.

Highlights

(in millions except Unit Sales and EPS data)Three Months Ended
December 31, 2022
 B/(W) 2022 
Unit Sales 1,957   808  
GAAP Measures:    
Revenue$235.7  $106.5  
Net Loss$(11.3) $(7.2) 
Diluted Loss per Share$(0.35) $(0.20) 
Non-GAAP Measures 1:    
Adjusted EBITDA$(4.2) $(7.8) 
Adjusted Net Loss$(9.8) $(7.8) 
Adjusted Diluted Loss per Share$(0.30) $(0.23) 
Reconciliation to relevant GAAP metrics shown below

“We made remarkable progress in the first quarter, as the overall operating environment continued to improve in line with our plan. During the quarter we worked through the majority of the legacy-priced units in the backlog that have caused margin compression over the past several quarters. The Blue Bird team continued executing a rigorous plan to improve operations, reduce fixed costs, and recover economics through pricing. Therefore, we are well positioned for a significant recovery over the next several quarters,” said Matthew Stevenson, President and CEO of Blue Bird Corporation. “Demand for Blue Bird’s best-in-class school buses remains strong and we have expanded our leadership position in zero-emission school buses, realizing exceptional growth in both electric school bus bookings, up 130%, and firm order backlog, at more than 385 electric school buses as we ended the first quarter. Our order backlog will grow considerably over the next several months as orders are placed tied to the EPA’s 2022 Clean School Bus Rebate Program, which will greatly accelerate the adoption of zero-emission student transportation across all 50 U.S. states. The EPA awarded nearly $1 billion in funding to almost 400 school districts in the first year of the Clean School Bus Rebate Program. This funding alone will generate additional orders for an estimated 500-700 Blue Bird electric buses translating into a minimum of $200 million of additional revenue.”

FY2023 Guidance Increased

“We are very excited with the FY2023-Q1 results, above our guidance for both Revenues and EBITDA,” said Razvan Radulescu, CFO of Blue Bird Corporation. “Our turnaround is working and we expect to return to historical profitability during FY23, with increasing levels of revenues and performance each quarter, as shown in the forecast shared during the earnings call. We are raising full year fiscal 2023 guidance to Net Revenue of just over $1 Billion, Adj. EBITDA of $40-46 million and Adj. Free Cash Flow of $5-11 million. Additionally, we are reconfirming our long-term outlook of profitable growth towards $2 billion in revenues and Adjusted EBITDA margins of 12%, or $250 million.”

Fiscal 2023 First Quarter Results

Net Sales

Net sales were $235.7 million for the first quarter of fiscal 2023, an increase of $106.5 million, or 82.4%, from prior year period. Bus sales increased $100.8 million, reflecting a 11.4% increase in average sales price per unit, resulting from pricing actions taken by management to partially offset increases in inventory purchase costs as well as product and customer mix change, and a 70.3% increase in units booked. In the first quarter of fiscal 2023, 1,957 units were booked compared to 1,149 units booked for the same period in fiscal 2022. Additionally, Parts sales increased $5.7 million for the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022. This increase is primarily attributed to pricing actions taken by management to offset increases in purchased parts costs and increased inventory availability as supply chain constraints continued to improve during the first quarter of FY2023 relative to the first quarter of FY2022.

Gross Profit

First quarter gross profit of $7.5 million represented a decrease of $8.7 million from the first quarter of last year. The decrease was primarily driven by only partial price increases on old backlog units, which were more than offset by increases in manufacturing costs attributable to a) increased raw materials costs resulting from ongoing inflationary pressures and b) ongoing supply chain disruptions that resulted in higher purchase costs for components and freight.

Net Loss

Net loss was $11.3 million for the first quarter of fiscal 2023, which was a $7.2 million increase compared to the same period last year. The increase in net loss was primarily driven by the $8.7 million decrease in gross profit, discussed above. Partially offsetting this was a decrease of $1.4 million in SG&A, largely due to several cost cutting and operational transformation initiatives.

Adjusted Net Loss

Adjusted Net Loss was $9.8 million, representing an increase of $7.8 million compared with the same period last year. This is primarily due to the $7.2 million increase in net loss, discussed above.

Adjusted EBITDA

Adjusted EBITDA was $(4.2) million, which was a decrease of $7.8 million compared with the first quarter last year. This decrease primarily results from the $7.2 million increase in net loss, discussed above.

Conference Call Details

Blue Bird will discuss its first quarter 2023 results in a conference call at 4:30 PM ET today. Participants may listen to the audio portion of the conference call either through a live audio webcast on the Company’s website or by telephone. The slide presentation and webcast can be accessed via the Investor Relations portion of Blue Bird’s website at www.blue-bird.com.

A replay of the webcast will be available approximately two hours after the call concludes via the same link on Blue Bird’s website.

About Blue Bird Corporation

Blue Bird (NASDAQ: BLBD) is recognized as a technology leader and innovator of school buses since its founding in 1927. Our dedicated team members design, engineer and manufacture school buses with a singular focus on safety, reliability, and durability. Blue Bird buses carry the most precious cargo in the world – the majority of 25 million children twice a day – making us the most trusted brand in the industry. The company is the proven leader in low- and zero-emission school buses with more than 20,000 propane, natural gas, and electric powered buses in operation today. Blue Bird is transforming the student transportation industry through cleaner energy solutions. For more information on Blue Bird’s complete product and service portfolio, visit www.blue-bird.com.

Key Non-GAAP Financial Measures We Use to Evaluate Our Performance

This press release includes the following non-GAAP financial measures “Adjusted EBITDA,” “Adjusted EBITDA Margin,” “Adjusted Net Income,” “Adjusted Diluted Earnings per Share,” “Free Cash Flow” and “Adjusted Free Cash Flow”. Adjusted EBITDA and Free Cash Flow are financial metrics that are utilized by management and the board of directors to determine (a) the annual cash bonus payouts, if any, to be made to certain members of management based upon the terms of the Company’s Management Incentive Plan, and (b) whether the performance criteria have been met for the vesting of certain equity awards granted annually to certain members of management based upon the terms of the Company’s Omnibus Equity Incentive Plan. Additionally, consolidated EBITDA, which is an adjusted EBITDA metric defined by our Amended Credit Agreement that could differ from Adjusted EBITDA discussed above as the adjustments to the calculations are not uniform, is used to determine the Company’s ongoing compliance with several financial covenant requirements, including being utilized in the denominator of the calculation of the Total Net Leverage Ratio. Accordingly, management views these non-GAAP financial metrics as key for the above purposes and as a useful way to evaluate the performance of our operations as discussed further below.

Adjusted EBITDA is defined as net income or loss prior to interest income; interest expense including the component of operating lease expense (which is presented as a single operating expense in selling, general and administrative expenses in our U.S. GAAP financial statements) that represents interest expense on lease liabilities; income taxes; and depreciation and amortization including the component of operating lease expense (which is presented as a single operating expense in selling, general and administrative expenses in our U.S. GAAP financial statements) that represents amortization charges on right-of-use lease assets; as adjusted for certain non-cash charges or credits that we may record on a recurring basis such as share-based compensation expense and unrealized gains or losses on certain derivative financial instruments; net gains or losses on the disposal of assets as well as certain charges such as (i) significant product design changes; (ii) transaction related costs; (iii) discrete expenses related to major cost cutting and/or operational transformation initiatives; or (iv) costs directly attributed to the COVID-19 pandemic. While certain of the charges that are added back in the Adjusted EBITDA calculation, such as transaction related costs and operational transformation and major product redesign initiatives, represent operating expenses that may be recorded in more than one annual period, the significant project or transaction giving rise to such expenses is not considered to be indicative of the Company’s normal operations. Accordingly, we believe that these, as well as the other credits and charges that comprise the amounts utilized in the determination of Adjusted EBITDA described above, should not be used in evaluating the Company’s ongoing annual operating performance.

We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of net sales. Adjusted EBITDA and Adjusted EBITDA Margin are not measures of performance defined in accordance with U.S. GAAP. The measures are used as a supplement to U.S. GAAP results in evaluating certain aspects of our business, as described below.

We believe that Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Diluted Earnings per Share are useful to investors in evaluating our performance because the measures consider the performance of our ongoing operations, excluding decisions made with respect to capital investment, financing, and certain other significant initiatives or transactions as outlined in the preceding paragraph. We believe the non-GAAP measures offer additional financial metrics that, when coupled with the GAAP results and the reconciliation to GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business.

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income and Adjusted Diluted Earnings per Share should not be considered as alternatives to net income or GAAP earnings per share as an indicator of our performance or as alternatives to any other measure prescribed by GAAP as there are limitations to using such non-GAAP measures. Although we believe the non-GAAP measures may enhance an evaluation of our operating performance based on recent revenue generation and product/overhead cost control because they exclude the impact of prior decisions made about capital investment, financing, and other expenses, (i) other companies in Blue Bird’s industry may define Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Diluted Earnings per Share differently than we do and, as a result, they may not be comparable to similarly titled measures used by other companies in Blue Bird’s industry, and (ii) Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Diluted Earnings per Share exclude certain financial information that some may consider important in evaluating our performance.

We compensate for these limitations by providing disclosure of the differences between Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Diluted Earnings per Share and GAAP results, including providing a reconciliation to GAAP results, to enable investors to perform their own analysis of our operating results.

Our measures of “Free Cash Flow” and “Adjusted Free Cash Flow” are used in addition to and in conjunction with results presented in accordance with GAAP and free cash flow and adjusted free cash flow should not be relied upon to the exclusion of GAAP financial measures. Free cash flow and adjusted free cash flow reflect an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. We strongly encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

We define Free Cash Flow as total cash provided by/used in operating activities as adjusted for net cash paid for the acquisition of fixed assets and intangible assets. We use Free Cash Flow, and ratios based on Free Cash Flow, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe it is a more conservative measure of cash flow since purchases of fixed assets and intangible assets are a necessary component of ongoing operations.

Forward Looking Statements

This press release includes forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for our business. Specifically, forward-looking statements include statements in this press release regarding guidance, seasonality, product mix and gross profits and may include statements relating to:

These forward-looking statements are based on information available as of the date of this press release, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. The factors described above, as well as risk factors described in reports filed with the SEC by us (available at www.sec.gov), could cause our actual results to differ materially from estimates or expectations reflected in such forward-looking statements.

BLUE BIRD CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited) 
(in thousands of dollars, except for share data)December 31, 2022 October 1, 2022
Assets   
Current assets   
Cash and cash equivalents$5,664  $10,479 
Accounts receivable, net 9,125   12,534 
Inventories 129,120   142,977 
Other current assets 14,048   8,486 
Total current assets$157,957  $174,476 
Restricted Cash$236  $ 
Property, plant and equipment, net 99,110   100,608 
Goodwill 18,825   18,825 
Intangible assets, net 46,931   47,433 
Equity investment in affiliate 10,727   10,659 
Deferred tax assets 13,892   10,907 
Finance lease right-of-use assets 1,560   1,736 
Other assets 2,367   1,482 
Total assets$351,605  $366,126 
Liabilities and Stockholders’ (Deficit) Equity   
Current liabilities   
Accounts payable$124,789  $107,937 
Warranty 6,525   6,685 
Accrued expenses 18,713   16,386 
Deferred warranty income 7,238   7,205 
Finance lease obligations 571   566 
Other current liabilities 6,681   6,195 
Current portion of long-term debt 19,800   19,800 
Total current liabilities$184,317  $164,774 
Long-term liabilities   
Revolving credit facility$5,000  $20,000 
Long-term debt 124,341   130,390 
Warranty 9,055   9,285 
Deferred warranty income 12,052   11,590 
Deferred tax liabilities 72    
Finance lease obligations 1,428   1,574 
Other liabilities 8,633   11,107 
Pension 15,903   16,024 
Total long-term liabilities$176,484  $199,970 
Stockholders’ (deficit) equity   
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 0 shares outstanding at December 31, 2022 and October 1, 2022$  $ 
Common stock, $0.0001 par value, 100,000,000 shares authorized, 32,032,067 and 32,024,911 shares outstanding at December 31, 2022 and October 1, 2022, respectively 3   3 
Additional paid-in capital 173,592   173,103 
Accumulated deficit (90,806)  (79,512)
Accumulated other comprehensive loss (41,703)  (41,930)
Treasury stock, at cost, 1,782,568 shares at December 31, 2022 and October 1, 2022 (50,282)  (50,282)
Total stockholders’ (deficit) equity$(9,196) $1,382 
Total liabilities and stockholders’ (deficit) equity$351,605  $366,126 
BLUE BIRD CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) 
 Three Months Ended
(in thousands of dollars except for share data)December 31, 2022 January 1, 2022
Net sales$235,732  $129,223 
Cost of goods sold 228,275   113,026 
Gross profit$7,457  $16,197 
Operating expenses   
Selling, general and administrative expenses 16,832   18,233 
Operating loss$(9,375) $(2,036)
Interest expense (4,196)  (3,082)
Other (expense) income, net (236)  736 
Loss on debt modification (537)  (561)
Loss before income taxes$(14,344) $(4,943)
Income tax benefit 2,981   1,762 
Equity in net income (loss) of non-consolidated affiliate 69   (901)
Net loss$(11,294) $(4,082)
    
Loss per share:   
Basic weighted average shares outstanding 32,026,311   28,118,450 
Diluted weighted average shares outstanding 32,026,311   28,118,450 
Basic loss per share$(0.35) $(0.15)
Diluted loss per share$(0.35) $(0.15)
BLUE BIRD CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) 
 Three Months Ended
(in thousands of dollars)December 31, 2022 January 1, 2022
Cash flows from operating activities   
Net loss$(11,294) $(4,082)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:   
Depreciation and amortization expense 3,361   3,288 
Non-cash interest expense 417   1,143 
Share-based compensation expense 589   1,673 
Equity in net (income) loss of non-consolidated affiliate (69)  901 
Loss on disposal of fixed assets    9 
Deferred income tax benefit (2,986)  (1,704)
Amortization of deferred actuarial pension losses 299   291 
Loss on debt modification 537   561 
Changes in assets and liabilities:   
Accounts receivable 3,409   3,827 
Inventories 13,857   (16,747)
Other assets (5,227)  (2,554)
Accounts payable 16,572   (11,115)
Accrued expenses, pension and other liabilities 461   (8,568)
Total adjustments$31,220  $(28,995)
Total cash provided by (used in) operating activities$19,926  $(33,077)
Cash flows from investing activities   
Cash paid for fixed assets$(1,146) $(1,570)
Total cash used in investing activities$(1,146) $(1,570)
Cash flows from financing activities   
Revolving credit facility borrowings$5,000  $35,000 
Revolving credit facility repayments (20,000)  (75,000)
Term loan repayments (4,950)  (3,713)
Principal payments on finance leases (141)  (328)
Cash paid for debt costs (3,211)  (2,468)
Sale of common stock    75,000 
Repurchase of common stock in connection with stock award exercises (57)  (1,484)
Total cash (used in) provided by financing activities$(23,359) $27,007 
Change in cash, cash equivalents, and restricted cash (4,579)  (7,640)
Cash, cash equivalents, and restricted cash at beginning of period 10,479   11,709 
Cash, cash equivalents, and restricted cash at end of period$5,900  $4,069 
 Reconciliation of Net Loss to Adjusted EBITDA 
 Three Months Ended
(in thousands of dollars)December 31, 2022 January 1, 2022
Net loss$(11,294) $(4,082)
Adjustments:   
Interest expense, net (1) 4,289   3,157 
Income tax benefit (2,981)  (1,762)
Depreciation, amortization, and disposals (2) 3,815   3,523 
Operational transformation initiatives 800   1 
Share-based compensation expense 589   1,673 
Product redesign initiatives    253 
Restructuring charges    246 
Costs directly attributed to the COVID-19 pandemic (3)    29 
Loss on debt modification 537   561 
Adjusted EBITDA$(4,245) $3,599 
Adjusted EBITDA Margin (percentage of net sales) (1.8)%  2.8%
__________________
(1) Includes $0.1 million for both fiscal periods, representing interest expense on operating lease liabilities, which are a component of lease expense and presented as a single operating expense in selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.
(2) Includes $0.4 million and $0.2 million for the three months ended December 31, 2022 and January 1, 2022, respectively, representing amortization charges on right-of-use lease assets, which are a component of lease expense and presented as a single operating expense in selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.
(3) Primarily represents costs incurred for third party cleaning services and personal protective equipment for our employees in response to the COVID-19 pandemic.
 Reconciliation of Free Cash Flow to Adjusted Free Cash Flow 
 Three Months Ended
(in thousands of dollars)December 31, 2022 January 1, 2022
Net cash provided by (used in) operating activities$19,926  $(33,077)
Cash paid for fixed assets (1,146)  (1,570)
Free cash flow$18,780  $(34,647)
Cash paid for product redesign initiatives    253 
Cash paid for operational transformation initiatives / Other 800   1 
Cash paid for restructuring charges    246 
Cash paid for costs directly attributed to COVID-19    29 
Adjusted free cash flow 19,580   (34,118)
 Reconciliation of Net Loss to Adjusted Net (Loss) Income 
 Three Months Ended
(in thousands of dollars)December 31, 2022 January 1, 2022
Net loss$(11,294) $(4,082)
Adjustments, net of tax benefit or expense (1)   
Operational transformation initiatives 632   1 
Product redesign initiatives    190 
Share-based compensation expense 465   1,255 
Restructuring charges    185 
Costs directly attributed to the COVID-19 pandemic (2)    22 
Loss on debt modification 424   421 
Adjusted net (loss) income, non-GAAP$(9,772) $(2,010)
__________________
(1) Amounts are net of estimated tax rates of 21% for the three months ended December 31, 2022, and 25% for the three months ended January 1, 2021.
(2) Primarily costs incurred for third party cleaning services and personal protective equipment for our employees in response to the COVID-19 pandemic.
 Reconciliation of Diluted EPS to Adjusted Diluted EPS 
 Three Months Ended
 December 31, 2022 January 1, 2022
Diluted loss per share$(0.35) $(0.15)
One-time charge adjustments, net of tax benefit or expense 0.05   0.08 
Adjusted diluted (loss) earnings per share, non-GAAP$(0.30) $(0.07)
Adjusted weighted average dilutive shares outstanding 32,243,213   28,395,912 

Mark Benfield
Investor Relations
(478) 822-2315
Mark.Benfield@blue-bird.comSource: Blue Bird Corporation