Q4 2019 Earnings Call
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Good day, and welcome to Bluebirds fiscal fourth quarter and full year earnings Conference call. Today's conference is being recorded and at this time I turn the conference over to Mr., Mark Bloomfield, except <unk> executive director of profitability and Investor Relations. Please go ahead Sir.
Thank you there.
This is one of the border.
Sure, We 19 earnings conference call.
Oh gosh life on.
Under the Investor Relations.
No worries Y O y.
There's no I'm not exactly.
Got it today.
You mentioned that are subject to risks that could cause actual results to be ginger.
The rest.
Among others.
Where do they not only this earnings release.
The burn disclaims any obligation to update.
Cool.
No no anywhere from universe, President and CEO go walk zero.
Two questions.
No.
All.
Buildings today for a high school.
Earnings call.
Okay.
We've made great progress you're.
Watching from both overall profitability.
We.
Through this year always quarterly ultimately.
Actual results on slide 15.
Oh I watch size.
What you're talking with the highest any more than 10 years.
It's about $3 million.
Notwithstanding those high than a year ago.
Year over year inquiries painfully. This is off six consecutive Walter will probably increased over 20 years, despite higher commodity costs.
[laughter] thinking about five really cool what it was talking about it shouldn't be office.
One thing I'm truly calls.
Oh, I'm, sorry, I, probably driving overall property losses.
From three to get it users.
But then watching that we took in late fiscal 2018 to address the escalation.
He calls.
Moving to increase at an average selling price.
Importantly, we placed recall, we placed price each year to recover economic increases and beautiful again in July this year.
Second cost reductions under accusing you of housemates initiatives, we told consultant and all of this will put into 18.
Right. So the cost savings that we call for fiscal 2009 singing let me turn to do so wonderful.
I'm sorry.
Ladies and girls and alternative fuels.
That makes it also gives people a total losses as opinion tokens.
Peter profit.
On the superior selling price I girls.
The conventional fuel buses.
Moving to the segment continues to upgrade the overall market by a long way.
Lisa.
Oh sure.
She didnt include Oversold Olympus before getting to you called it so when we could go scoping EBITDA margins.
Well Mark what was the result, we probably won't be spikes, how we thought you won't see what bucket in the last year, almost 3000 7.6 unit sales.
Hi.
In the past 10 years.
No one slot and go from a year ago.
Net revenue.
No. It was that's higher than last year.
The increase yields revenue mainly reflects the favorable im talking about what's probably think after that I just mentioned I don't know richer mix at higher price authentic calabasas.
Thanks.
I wouldn't but somebody price is about $500 pyramid.
And then a full quarter last year again strong <unk> percent increase it'll happen but of course.
Yeah, I mean does publicly in mid November the mixed touchy feely guidance, all the three metrics hopefully pool.
Yes.
No, but they usually adult.
On the strong it wasn't Pennsylvania, all 60% higher than a year ago.
No.
Oh.
Oh.
Yes.
Yeah.
Right.
Right.
Second the children.
$90 million was above the midpoint of guidance now wasn't.
Slide and all of it becomes failed.
Well as long as.
He did what normally we sold about 600 fewer buttons disappointed I see.
It was struck.
Oh to reduce losses, so deal of stocks.
No no Bobby Britain's we've laid out here, particularly in the third quarter fiscal 14 team.
As a result.
So in Q3 fewer buttons in business wouldn't be done anything that's children's essentially flat I think wore me personally, but I don't know, whether you're going to all 5% Olympism twist it would seem okay.
Hi, this is being a bus coffee, we want anything along with them.
<unk> sales mix of higher price because if you will probably since its Ross. This is what you're going to team.
Adjusted free cash flow.
Moving dollars was talking to assembly goes above the high end of guidance.
Yeah, I think that he can put a full year $44 million I was just earnings per share those 61 cents well downsizing highly volatile times, respectively for many years ago.
It's important to note however.
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Well the nonrecurring at one time tax benefits in fiscal 2018.
I will provide morcellation mislabeled.
Oh I got on it.
I would have been resolved we remain very upbeat about the business fundamentals.
Almost all the home schooling registrations and preliminary industry.
You know team is holding firm was around 35 minutes I mean I've done for the past couple of years after near record levels over the past Nokia's I compares favorably Alberta only got same period of time, let's go to 1000 school buses.
With a strong I will probably be thousands and corresponding property taxes, which is a major funding source of school buses together with the whole was 90000 school bus is only role today I've been observed at the moment 15 years.
Enrollment is increasing we are confident of industry housing remains run this level.
A couple future.
So it is another record settlements this year for alternative fuel public school buses.
Oh.
Segments of our total units.
Hi, Thanks, Harlan the last few years that direct cool, 58% sales.
Our <unk> Gulf is motivations behind.
I think Walker blue hazardous.
Very pricey, 55% focus even in sales.
Mr by a long way.
The school buses that's for sure.
As a reminder, alternative fuels, we can't Oliver proclaim compressed natural gas electric and gasoline powered buses as all of these old said, if it's a diesel which limits the stable people.
[laughter] touch several years limited treatments exhibiting real filtered appeals offsetting other just mentioned we feel slowed down this year.
Well to roll so I'd be thrilled performance in more detail a little later.
As I commented earlier, we all she begins after both pricing and structural cost reduction actions evidenced by a strong increase gross profit margin of 1.2 points over the last year.
Overall, I'm very pleased with our fourth quarter full year results, we increased our profit margins from pricing cost reduction on a richer mix alternative fuels.
We expect continued gross margin improvement from these actions.
For fiscal 2000 Swayze.
Always gets translated into the sort of 1.2 posted growth in adjusted EBITDA margin.
So the business, what's important god metrics in more detail later, but I'm pleased to bomb the midpoint rate range for Justin even though.
Let me point will be told to say about fiscal 2000 to go I see no between $25 million.
Importantly, we are all the path to our stated goal for adjusted EBITDA margin going away from at least 10% body edifice appointed way.
When you talk he already there chico's on slide five.
[noise] lyrical another significant achievements in the fourth quarter I'm full year, which makes it more conservative I suppose a profitable growth plans going forward.
Well it sounds to me I just want to stick to increase margins are on track driving improvements in quality cost inefficiencies and capacity. We're seeing those results no evidence by gross profit margin increases in the past five quarters and there was much more difficult.
Our own new alternative trade show is fully operational and everything else without being paid into that facility. The pay it doesn't look great well begin to see defaulting to babysit benefits that we expected.
How do we feel we like the this is a 10th initiative to drive efficiency improvements throughout the play.
Other Philadelphia increase up where you're seeing the selling price significantly by about four times goes a unit.
5% increase Felicia.
Reflected the impact in pricing, we felt like fiscal 2018 and to a lesser extend the people said pricing was an all vehicles adoptions in July 20, dissecting the color escalating commodity costs together with the increase mix of high price.
Buses.
Well it doesn't even know block increased by 1.2 fold for the full year, we achieved higher margins every quarter the focus business when you get thing.
I believe that it's a strong indicator of consisting of the effective strategy can deliver consistent improvement.
As I mentioned it all you wouldn't it simply because you see leaner it'll 30 fuels how school buses.
I think 48% mix appropriate sales in fiscal 2017, but at least 38% in fiscal 2018.
More.
Sales grew by 21% from a year ago.
What do you consider that despite a flat school bus and industry compared with your Nichey, 21% growth in specific secondly would put us in a smooth throughout solutions. There was nothing that creates a friends we have.
Fuels.
GAAP leadership over the momentum in the fastest growing segment for the school bus market.
Hey.
It feels like it feels pretty strongly going into the legacy product, our all names elements and what the public schools, which is powered by a committed electric drive train.
We'll go live at 56 buses in fiscal 2019, I don't feel live phone calls no backlog for some of the 70 Bucks so far.
Fiscal 2020 , we anticipate chicken many more rolling as of yet they going to quote activity we have dealer today.
Just to say, where the why destroyed electric power school lots of other markets today, covering I'd say I see like type de configurations, we're probably talking about this opportunistic.
Finally, we are there any guidance for fiscal 2012, because it reflects continued growth in sales and profits. They can as we could just deploy all three focus initiatives to drive high gross margin, an easy telemarketing, namely I looked like it will cover economics structural cost reduction was an increase mix alternative fuels.
Just wanted to say that they get things across the business on multiple fronts. We are heavily focused on profitable growth.
Take a look although close look rather than a third quarter results on the financial results on slide six.
I think somebody asked me Sinatra results eligible so I will go through and he said later, so just to summarize the fourth quarter.
Sales topsail adjusted EBITDA over a whole all tied in a year ago. The end result, with the highest quarter profit for more than 10 years.
Well the full year basis, but sales are down about 1% pop. So we're up about 7% and adjusted EBITDA was 15% higher than a year ago also represented the highest fully have profit for more than 20 years.
So turning to slide seven once in a closer look at our alternative fuel cost performance.
That's fine.
Before you decide when we sold a record number of also additional public school buses for the year, reflecting a 21% increase for the fiscal 2018, which is also the prior WRECO.
Hi, everybody can really alternative fuel bus sales represented 48% about focal sales in fact, who the second navidea alternative fuel cells past deals says.
4% mix.
And again as I mentioned previously I think was at 55% makes in the fourth quarter.
The highest went to the Edwards cheaply and equal in the segment as a basis.
That is driving force behind significant world class, leading propane powered approach appropriate come school bus will you get sales grew by very substantial 41% fiscal 2018.
I think even more impressive when considering this is the eighth year. We offered this propane product would you exclusively cognizant for logically SEC.
So is that we hold more than 80% market share in this girl segment with all the 16000 Bucks is a loan.
So it's clear we also point out of the second at the beginning history.
No what was funny softer comes close to alternative fuel sales mix or market share.
The personnel that just three years ago, and 2016 alternative fuel cells, which was 26%. So double this maintenance level and just a three year period.
So back to this year multi 150, new customers are taking delivery of the first ever alternative fuel panels. The blue both wells. This is a slight adults over exclusive alternative. So if you will doses that we provide the global right I mean since the dealer network.
I previously some of the spot we know how does that affect electric bus only because the delivery fiscal 2020 points that moved to follow with all the customer interest we are seeing when he was sufficient for alternative fuel alive.
Thank you for the vast majority it'll be the litigation funding is still ahead of us and should support a strong industry over the next three years or so with many states you unlocking specific oppose the school bus practices. We are really the success. We have had so far off to the funds that have been issued.
In addition, all that our electric powered buses are pulling thought to participate in California Energy Commission run unfolding, we should enable school districts approach for a truly pits children.
Doses over the next two years, we're well positioned to deal with that opportunity.
In the way slip a little centrifugal powered buses the most most live goods in the industry, which exclusive one but through all don't wish it was for the rest where you think I'm going to <unk>, which the low Nox emissions, we don't want to capitalize on the PW funding and other growth opportunities going forward.
In fact, we shouldn't be recognized a reduction in notes gases. If the major criteria is pointing to the VW settlement. So this is Paul our also loan else propane Buffy certified won't change other nox emissions output there other manufacturers buses.
Sadly plus our propane buses wasn't recognize that's probably the lowest operating cost at any of the school bus.
So the good with cropping you can open to all the oldest operating costs are the lowest nox emissions and any internal combustion engine is going to school bus.
Going to overcome some of the start of the standards and that you saw sales are up.
We also see continued strong growth about gasoline powered buses in fiscal 2019, it's rather you understood by technicians. The mechanics, you appreciate maybe some simplicity from Cowen style capability for the children system product appropriate because those are the low points. Both in diesel so really what for those customers were acquisition price is a key.
Because.
In summary, we are proud about showing that hit the heat alternative fuels and the significant growth and market share that were acutely than I was less than 60% of specifics having purchased an alternative fuel public school bus we have plenty of runway ahead, but continued growth.
Let's take a force looks that way driving cost reduction struggling.
Turning to slide eight.
This is at least one of your show it to illustrate the progression of our transformational initiatives over the past two years I fiscal 2020.
Hopefully you can see this is a cumulative approach where additional profitably tools upbeat outlook as we strive to drive down total costs.
Especially when you see our initial focus on reducing pushed material costs out services through a combination of initiatives, including new commercial green for supplies and Resourcing with minimal product design change. We look excludes extensively with alternative Acceleron I also have experts.
Sure best practices and processes were applied our delivered results.
You might recall that recall a savings of over $20 million. So this initiative in fiscal 2018.
That would continue to pursue pictures in fiscal 2019 and against about design changes to our process to reduce cost without compromise quality.
The second phase, we also focused heavily on the build launch testing and validation of our all new revolving credit facility, which also necessitate declines arrangements to optimize our process.
I wasn't sure you later with a significant you didnt achieve further significant savings in fiscal plan design team from these actions.
Let me highlight the fiscal 2020.
It's really not a supplement signal we processes by driving down the cost of production.
But we don't person revolving credit facility.
Focus plant productivity initiatives.
Most of its pencil it provides the opportunity to reduce three what would increase first time rung capability to reduce labor and material cost or Baltic application of paid to achieve saving the warranty expense.
Hi, just straight starting capacity.
[noise] informally with the deepest paint facility. It's how should we expect about cousin to steadily building, we have freedom spread to than the plan to a lot more special library arrays with a capsule stations.
Just a central station was for more efficient operations improved quality control.
We have deployed additional engineering resources to optimize beam station work flow in the order rates production line, they're applying necessarily salt is a focus on design for manufacturing capability top either reducing production costs.
And Paul if you agree work.
Hi, guys have achieved significant efficiencies identified many more efficiency after the plan over the next few years in this area.
[laughter] damage that fueling approach to driving down costs over multiple years.
To achieving high gross profit on the EBITDA margins will continue to share our results with you quarterly earnings calls.
Let me now so they don't have built it will take us through the financials another directly to the government fiscal 2020 outlook and guidance on to use it.
Well, thank you bill or good afternoon, everyone.
The next few slides or a summary of financial performance for the fourth quarter and the full year 2019.
The net material we discuss each day is based on the Qualys on September 28, 2019 2019 in September 29 of 2019.
Good day told material will be provided in that 10 pipe that will be filed tomorrow well. We encourage all of you to read the take tidy up the important disclosures sort of come times.
In addition, the appendix attached to today's presentation deals with reconciliations between GAAP and non-GAAP measures mentioned business review as well as important disclaimers that mock been tool this already talk too.
Similar to a third quarter.
Review, we have nine new accounting pronouncements adopted in the fourth quarter will likewise, we have previously mentioned, we did adopt a number of new standards in the first quarter and they are discussed in detail on not true in the 10-K, which as I've said will be available tomorrow.
They were minor changes just what you will not on the changes to some of the risk factors from the previously published 10 times.
Those are really just trying to keep.
The risk factors our guide.
Lightest conditions.
Finally, I would suggest that we.
We had a very important all this fiscal year bond team will switch suppose Tom what we do not.
Fully integrated the border controls fights.
And we had come through with an unqualified audit. So this was an important achievement globally with its first controlled by its fully Nicola doing it.
Well that's me if we move to.
To to slide number 10, this a little summary, all.
The fourth quarter on you can see fourth quarter fiscal 19 in fiscal 18 in a better or worse.
Some of this much of this fills already touched upon so I'll try to skip through that.
Getting into too much reputation but.
You didn't say, though the volume so talk about it so.
Second cost, resulting in 10 years.
I would point out that now average volume I wouldn't say uses of that just on the 3000 units. So the fiscal 19 volume was actually 24% higher than the 10 year average.
This is an important.
Back to keep in mind.
The the high level Oh level of ball, we get in fourth quarter as.
Net revenue.
Again off by 11.9 million or about 3.6% and there's still a previously the breakout between us and pop school bus boss and Pops contributing to the improvement.
In.
In the fourth quarter.
Interestingly the bus revenue per unit, so below that is well up.
Bye bye.
Slide $4500 or just out of the Cork ascent and so I really when you look at the increase net revenue.
The high a box where the nuclear units.
Why is the major wall in the mountains, achieving that increase because as we pointed out our volumes were down by about 30 minutes swaps to [noise].
Again that revenue per unit is hardly the pricing actions taken in 2019 92 off the offset the impact of inflation.
Include commodity costs. Its also up because of a higher mix of alternative fuel vehicles and so Phil has mentioned that and also I would suggest that a very successful program that will be implemented.
To improve the whereas a view that we saw that we'd like on each bus. So on this within the focus of a lot of attention over the last two as buyers. So the team [noise].
Gross margin I sort of <unk>, 0.6%, it's about 70 basis points better on a year ago.
This is really the results of parts the higher average revenue and the impact of the cost reductions trimas transformational cost initiative.
Talk a little bit of but more about that when you get to the courage.
In the fourth quarter I'll point out that we had a net income up 11.6 million that was about 3.3 million wawa.
That's probably a year and this was driven largely by.
Well I bought higher interest expenses and part of Texas.
On an adjusted basis and net income came in at 20 million, which was about equal to the prior year.
We've already touched on the.
Adjusted EBITDA at 73.4 million is up almost 15 cents.
We'll go through done on a bridge.
Slot after next.
EBITDA margin.
Turning to 9.7% for the fourth quarter doses I call, 9% last year and improved.
94 basis points, we'd have improved margin in each quarter in the last year and also on a quarter by quarter by system.
The.
The dilutive earnings per share was down as a result of below net income adjusted diluted earnings per share at 74 cents. A was [noise] was about four cents higher than the same period last year.
Finally, I would point out that cash ended at 71 million popping up by almost 11 million compared to last year end of vessels quota is traditionally at the high point of that cash.
It's very much to do the seasonality of that business.
A little either I just didn't track toward pool you yeah.
The 326 million of net revenue that we achieved full quota.
About 90% of the total net revenue we achieved in the first top the again this is a very soon.
Seasonal business I finally debt was 193 million Oh that was up about 41 million and that was almost old due to.
Was it was more than June all due to the.
The debt that we raised in October 2019 to Sun the tender offer.
So we moved out to.
Slide number 11. This is this is the Oh. This is a look at this time metrics signed layout metrics for.
For the full year versus buy one which was called quota.
I can say that volumes were down about.
600 also units.
Versus the prior year, although again the results for the full year was about the third highest cost 10 years and again substantially higher than the average for the 10 10 years around I think percentile.
Our net revenue was down by about 6 million I'm old Sixtym took a sense net revenue from Boston total when it was down by 10.5, maybe my 1.1% ball Pos was up by 4.4 million or 7.1 cents I should stop here and make.
Jim Pops, Diane consistently improving rather than one a year over year basis.
And I took a look at that since.
Since 2016 crosses increased revenue by 20%.
Well and we see a further opportunities ahead with some of the new products.
Juice.
One revenue per unit a tool box you can say was up quite well nice $4000, a guy and that's the sign conditions that drugs and the high revenues in the fourth quarter, although 2019, the but the mix all crop pricing to offset.
Inflation in commodities as.
Well, let's find mix of alternative fuels and a very solid sustainable revenue generation on all the deals.
Gross margin at starting 0.1% or it was about 120 basis points better on a year ago and and again for the same reason tire resins and dotcom very successful transformation cost initiatives.
Net income of 24.3 million, which a deterioration of 6.5 this is probably yet.
And that is what that is a lot.
More than they accounted for by Oh by Texas, right, you might recall that in 2019.
In fact, I think it was in the third quarter 2019.
We have a a large tax credit due to the release of our provision and sort of taxes more than that council the reduction in the.
In the net income year out here as we had nice such a large credits in 2019.
I will point out all saw that on an adjusted basis net income was up 43 corn processing.
Adjusted EBITDA will talk about when we get to the bridge, Oh, and Oh, but but I do want poor night was very strong performance include the and particularly pleasing given the fact that.
We've had a lower volumes, but not quite yet.
The margins improved by 120 basis points again.
A solid performance probably for fiscal year non team earnings per share were down again, I really as a result in before you all drop the change in tax in fiscal balancing the budget.
When you read through the 10-K L effective tax rate I was I believe about 26%. So so you say, we pipe pretty much normal Texas in fiscal year, 19, then I mean, I like credit and ER.
Pitch for lighting.
Adjusted diluted earnings per share to sell 61 compared to $1.77 last year cash and debt obviously out of the sign numbers come out from a full quota.
We move to slide 13, which is which is the full quota bridge.
Some type of wise that you can see the impact all ballpark, yeah, the pricing actions and the transformational initiatives.
Adding $8 million with pockets in the fourth quarter.
Pricing actions, a 5 million is actually met coal economics.
And tariff changes that we felt we received thing.
And could squeeze on today, so that's coming out on Iraq, causing us a profit contribution or was it was a good achievement.
And of course $3 for the transformational initiatives for the new new activities in the fourth quarter, a walk ones very powerful.
We have a negative bad for 3.3 million, it's cold manufacturing launch Opex here, it's really a combination of of manufacturing inefficiencies and some supplier issues that we we but we are HM.
Struggled with all the manufacturing inefficiencies was largely due to somebody inefficiencies we priced in the planes as we were down through the launch of Hi, Chuck.
There was fairly significant.
No changes to the claims going on.
We're also doing I'm, a number of I was thinking plant down that will improve our ongoing efficiencies, but they coal stocks the to work a lot about of the timing has had some level of inefficiency.
In the fourth quarter.
Also we because of the seasonality a number that supplies in putting some of the new ones that we go the number that transformational initiatives program really struggled with the ramp up in the volume and full quota we were forced to do some emergency sourcing to pay production going on and we were forced into some.
Pardon me in the freight costs so that contributed.
I think it's important not that.
We will we will get out of that that talk of spending that as now the pain shops on boarding and progressively in 20. The the other initiatives in the plant will tight called I'm, assuming that by the poor corridor.
Fiscal year 20, we don't have that sort of back activity. That's that's an additional point of margin.
But you would see there.
Then during that total revenues as he.
300 million dollar range.
Well move on to a slide 14, which he will change the but time will.
The bridge for the full year.
And so again I think.
Some some T P type hawaiis premise flawed.
The up.
The.
The two big numbers that contributed to the so to the incremental incremental profits were again crossing the net of economics of $9 million.
Very good result for Us Oh.
I will remind.
I will remind you, particularly many of you who have been following this for some time that the.
But the [noise].
Yes, the general consensus in the school bus industry wants to E com price or anything other than I do regulatory changes.
I think we'd have found that I'm working with idealism, where customers I understand that costs go up and so therefore crosses coopcana I'm not saying this is a this is a.
A positive step cold fill us in 19 acknowledges that improving margins going forward [noise].
The transformational initiatives of $18 million again. This was this was a good result for US Oh, I think Phil mentioned that we might $20 million tradition.
In 2018 side. So in two years with contributed four or close to $40 million truly transformational initiatives and this is an ongoing program. We're very excited about where it's going to take us in the future I wouldn't commit to get the same level upsizing, but I'll be will continue to get positive sizing stone cold.
And it has reduced our cost structure in total which is very closing.
You'll see the full year cost of the inefficiencies and some of the some of the seasonal costs that I mentioned on the prior page we had about 10 million in total.
Again, I'm very important number to look at it's it's the challenge is in front of the blue good team to make this callaway.
It will add at least the divide a 0.2 at bottom line margin and that's that's a very important factor in us moving towards.
The in the margin that we've been talking about a 10 plus percent are going forward.
We live we move onto the next slide which is the free cash flow.
Again 45.5 million of adjusted free cash flow not fiscal 19. This was about 4.7 Lola and then.
Then a 2018 at significantly higher than the midpoint of the guidance that we issued the 2019 I believe it's about 10.
Point [noise].
The improved result is more of them accounted for by [noise].
By.
I'm sorry, the result is more than accounted for by higher trade working capital.
That was up a bit in full year versus production last year, why higher capex, which we have been talking about we expect it as we were continuing to build paint shop.
And by.
And by higher cash taxes.
And by combine to offset the improvement, resulting from higher EBITDA pockets I'd point out that free cash flow was 20 million and this was full even better than the prior year.
I think I you know importantly, it is a good result first to get the adjusted free cash flow 30 caused a when we were going through the period of.
Of building launching sequential so that was on placing result trust.
Finally, a my last slide is is on a net debt leverage and liquidity.
And you can say I bet and out on a year in cash our net debt was 112 million and net leverage ratio was 2.1, I still compared very favorably to our covenant of 3.75.
And our liquidity at year end with 164 million, which was a very strong results for a pull the company. So with that I'll turn you back so wholl walk who will talk more about the outlooks and 2020 and out position on guidance or where do you feel.
Okay. Thanks, Phil So now, let's turn to slide seven figures that go close it off 2020 hours.
As a headline sites our outlook reflects a continuation of our margin growth plan.
Let me go the last couple of years.
I, just think about things you're running at about 34000 modestly year over the past few years when John I should remind you got a 30 year highs. We do anticipate noticed from here in fiscal 2020 with industry just around the same level.
I'll just consistently stated our plants, because you're probably girls, both receiving significant gross margin EBITDA margin improvement injury free areas first you will cost recovery pricing.
Actually late fiscal 2018, I think ending July 29, feeling it took a 2% price increase.
All vehicles adoptions.
Hey, I'm, a little revenue impact in fiscal 2020, I won't go through favor.
Second continued conservation cost reductions I find it only the various areas. We're addressing events family dollar processors tools bullish we saw a significant payroll profit impact is all fiscal points. He knows there's still plenty 90.
Significant benefits again, if there's no point its way beyond.
I thought you admit histories and quality improvements will be a key area of focus in 2020 and beyond.
Oh.
As we have been doing for several years well what do we were looking to pursue growth to be turned on a leadership position in alternative fuels, which put another superior margins.
Customer loyalty, which is always good for business.
Oh, no top 2020, although I talk to walk out previously communicated EBITDA margin goal, although the rate at least 10 per se.
Fiscal 2012.
But the second half a point way to be around that level, Ohio.
So let.
You mean for 2020 guidance, so there's a slight anything.
Net sales Guy and he said between the only going from 22 million into a building a 50 million, which would be $2 million high [laughter]. Once you know anything.
Just to reinforce the point to point in Thailand based on growing volume.
[laughter] modules focused approach to drive higher profits and cash flow.
Adjusted EBITDA I mean, she's not between 19 $95 million significant anchor $30 million or now that doesn't 80% decrease full official 29 feet.
As a reminder, when if ever ticket holders. This is Phil mentioned generally.
Sales occurring in the second how's the fiscal year.
We expect this was one just wanted to follow a similar.
You know it's inappropriate.
Proven old fiscal 2019 being early in the second half of the year.
Adjusted free cash flow between $75 million. It continues to be a strong feature of our business model or maybe slightly down throughout fiscal 2019 result. This is more that swayed by unique spending to support plant upgrades that look if you need to do.
Hi changes.
Hi, productivity and 29 team.
20, dropping no we had a strong.
So long as both operationally and financially and achieved or exceeded guidance all metrics I wish we report.
I.
Turning to reflect significant profit anymore to grow a little bit feel quite nicely and they supported by the continuing.
I'll just try to do you know plans, we're putting in place over the past two years.
That concludes.
Sure.
So I'm wondering if it's nice to begin liquid eggs.
Thank you, Sir and ladies and gentlemen, if he'd like to ask a question at this time. Please signaled by pressing star one on your telephone keypad and if you're using a speaker phone. Please make sure immune function is turned off driver signal to reach our equipment. Once again that is star one on your telephone keypad to signal for question.
We will first go to just unclear with Roth Capital Partners. Please go ahead.
Everyone. Thanks for taking my question.
But just.
Well first off I guess I wanted to ask you about your expectations for unit sales and then revenue per unit in in fiscal 20.
You know based on the guidance it looks like we could see modest growth in both so was wondering if I can just get a little bit more detailed there are you expecting I guess, a smaller price increase in 2020 than what we saw in 2019.
You know personal we don't we don't actually issued guidance metrics have always been addressed a little bit ever get to the three things eventually sales we get crawfish nobody is a list of free cash flow.
Well I think when we look at Lucky you know, we're going to look at what rate inflation afraid well economics in general various indices are being run about the same timeframe, but with your lifetime. We look at so it should either it wasn't 20 on pricing double dip all depending on what the economic fish. So sitting out there in industry will make it into for banks, especially later looked at this.
You know whenever I talk before about the growth isn't.
Hey shale you can see it go for filling more room now looking to probably about 3% over a.
So a physical value chain and I think I mentioned that would probably just tell you that we don't fighting for the brick bolus or if it could even still feel good we're going to go after them, but we are we all.
We want to keep working those variables higher revenue for your that drives better knowledge, reducing costs drive better margins find ways to be pretty difficult fuels, which also pretty better launches I should remind you that we've come a long way you know business over the last several years when we have roughly about a third of the market that's held off.
Trucking, so whatever position, but if you alternatives, we're going to take that.
Okay great.
And then I see you mentioned the alternative fuel mix I can you talk a bit more about that and how you see it evolving in.
2020, you know Q4 was the highest level give her a reached for the company can you see the alternative fuel mix continue to increase next year.
No I think it shouldn't actually because like we're going to momentum going right. Now we got to VW funds ahead of us that a remarkable growth appropriate I'm very pleased with that I think we've got a film products to the domestic little bested the market by law that's why.
Recognized for the Big if you look at a cost of ownership.
For the best of luck.
It was an electric vehicles to that we're the only one other that your money factors, but two off without vehicle. So yeah. I guess, we look we know ready for a mix number I'm not I mean, I don't think you asked me a year ago will be a girlfriend points to mix there Doug as the CFO list.
Loan rich, but that's a laptop or the yeah, we're almost 50% not for the first time ever.
If you will also be easily sale. So you know what we're pretty bullish on the outlook. What I mean, just no I would want to put a number on that right.
Okay.
Could you speak a.
A little bit about where you are seeing strength within your different alternative fuel offerings from gasoline the propane electric vehicles, where you're seeing more demand or greater growth in demand for one area versus another.
You know actually I'd say, what's really going into annually.
I see we saw tremendous sort of propane, but we still saw I think you're pretty close to total sales of gasoline appropriate very similar.
You have to recognize the be nobody litigation so that are available.
Let me congratulate you feel pretty clean diesel.
Liquid propane Sanjay with electric well guess, what he doesn't really get to look I can benefit from those phones.
Your next slide a little bit why we got a significant search and 29. So you don't know so it's probably 150 million goes into effect for the millennial reallocation from school into school bus industry trying to think would you still expect to see propane doing very well, but I wouldn't just kind of gasoline.
Why isn't easy path for the someone who's a word about new technology.
With that their respective propane is a new technology.
Okay and trade it isn't demo bucket.
Finally, there wasn't really easy solution right and will drive gasoline costs technology simple, it's a comedian by the fuel.
Yes, It would love it so I think I.
I just want somebody would I think we'll see continued growth in both really going forward I mean, I think there's a there's a recognition those products are just beginning to appeal, but then the true now electric vehicles I wouldn't discount on our that I think it's all of them. It takes electric vehicle, where the price of them, it's whether its ramps available Kelly on your pace.
It's been obviously the leader and stay principle.
That being able to mitigation funds provide again.
Thanks for that but of course, you can buy a lot more pro football season. They can buy electric buses, we said unless it like so.
Let's see if people are trying electric because we're a phone is available.
She broke and all of that and honestly, it's what a good position through a to be there they capitalize on that.
Okay, great. Thank you I will pass it on.
Thank you.
Thank you ladies and gentlemen, as reminder, that is star one to signal for question at this time.
Well next move to Eric Stine with Craig Hallum. Please go ahead.
Yes, Hello, it's Aaron Spychalla on for here, Thanks for taking the questions.
Aaron.
Maybe first for US you know on that Volkswagen funding you know it sounds like we're still early in that process and that that's an important part or as you kind of go after some of these conquest accounts.
He is kinda talk a little bit about you know how you see that are rolling out.
Fiscal 20 in the next couple of years, and then I did see on the fly to it kind of talked about 600 million and I found in the past that was maybe closer to 3 billion. Just maybe can you give us some some color there.
Yeah, well with regulators only the 2.9 to Gulf Coast, We had higher Gambit of transportation. So you're into transit buses you ever into school buses you it to pull so it's all relative here, it's a fault lift trucks here into everything.
No when we sit there and millions dollars one of them.
Specifically called out the school buses, that's a guarantee that's where a lot of activity within the bounds definitely called that for anything yet so little bit shouted out with a specific about the school buses is six are doing adult I think this is a good sign I don't think any other industry as I recall, what ended up 2.9 billion.
Well no that actually have such a big calva.
So it's still so what could if side worries that money going to go exactly 150 ability to sort of thinking about 18 months I'd say to get there I think that takes a pickup but it's a thing is without that moving our and you've got 10 to 10 media suspended at a minimum three years to actually spending so so it's really.
He is that something a little less.
I think we may have seen a quick service one of only became available something similar when they happen next year not tell a little bit, but I think we're not worried a pretty go perfect I will say.
Yeah, we did not want to 50 million that went so far we've got to what I'm really not a share of it without propane products.
Sure.
Okay, the blue Bloods products.
Alright, thanks for the colored and then maybe on the free cash flow guidance, a you know down a little bit year over year at the midpoint can you just kinda talk about some of the moving parts. There you know.
Capex you know are you targeting like a similar amount here in fiscal 20 and is there any kind of working capital items. There and then maybe just your broad thoughts on capital allocation. Since it is obviously, a there's still a really strong free cash flow number.
Yeah.
Again, we don't give details where they will give you. An example, no on the capital expenditures are largely relate to what we call design changes to try and drive productivity in Brazil in your internal five new tools modifying tools the less expensive that does take cash it takes money, but then going into the plant.
Well it did a lot of the station modification rearrangements, that's real hog investment money you Gotta spend now what do Adelphi well. This is like a like a paint shop spending that we get over the last couple of years, it's a little bit of residual money left on that but it's a 20 or 2020 as well as we commissioned the commission that plan only in.
2021 way and we got through a piece of work on that so.
So I think you know when looking at overall the reason we're spending a little less cash flows because we are investing in and then this system will drive profitability.
Making sure that what we spend increased profitability go full floors so going.
Alright, and then maybe last for a you know I know you obviously don't guide by the corridor, but just sense, where you're almost through the first quarter, you know understand seasonality, there, but but I mean are you kind of looking.
For for an increase year over year from a volume or revenue standpoint.
And.
Would assume if somebody's initiatives as we kinda give you mentioned the paint job being at full production here I mean would you expect slightly better profitability year over year.
[noise] well for the full year, absolutely, but when you look at the first quarter, we launch that we actually launched that late October .
It's obviously been extended shutdown in October .
To be able to do not really want to find them. All the mother, we took a do not show that appear as if we did a lot of kind of country arrangements as such we actually delayed coming back into production because a year ago. So you know when you're looking at that first quarter, which furthers our proposition, but you've got Thanksgiving holidays, you got extended plant shutdown.
And put on a Christmas holidays or should that again, there. There's a limited number of looked at what I'm, telling you is that while we feel very good about the full year, we'd obviously, probably gonna guidance out there I think it's fair to say some of that little bit less volume to part of the first quarter. Because we took an extended shelf Dan Swisher that went up page count went up.
Nothing wrong. It it was running day long enough painting buses, so that a little less capacity available for us in the first quarter. So we have last year.
Well, obviously, we'll catch set up no promises to be lost sales, we catch all that up back in the second and third and fourth quarters.
Right. Okay understood. Thanks for all the good color and then congrats on the quarter.
Thanks, Eric Thank you.
Thank you we have no additional questions in the queue at this time, but as a reminder, that star one well cost for a brief moment for additional questions.
Thank you and it does appear we have no further questions at this time I'd like to turn the conference back over to Mr. fill horlock for any additional for closing remarks.
Okay. Thanks, Eric and I saw it is joining us on the call today. We do appreciate you everything is interesting little bit and I hope you can see beilfuss looks like you're not able to results and outlook for next year. So we are entirely focused on total profit drilled the multi girls and we intend to deliver on our commitment well loved Pembroke today.
In the future.
So please [laughter] profitability and Investor relations about benfield shouldn't have any Paul's questions.
Thanks, again for a moment here only been held or anything.
Thank you and once again that does conclude today's call again, we thank you for your participation you may now disconnect.
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