Q1 2020 Earnings Call

[music].

Good day and welcome to the Blue Bird Corporation fiscal 2021st quarter Earnings Conference call. Today's conference is being recorded at this time I'd like to turn the conference over to Mr., Mark Benfield structure Investor Relations. Please go ahead Sir.

[music].

Right 21st quarter earnings Conference call.

Yeah.

Oh and capitalize on passenger itself.

Oh.

Yeah, that's it's a 45.

Fortune.

[noise] are gone.

Forward looking statements are subject to risks that may cause actual results to be materially different.

Oh good include among others.

In our latest earnings release.

<unk>.

[laughter] either disclaims any obligation to update the nation.

This afternoon Bluebird CEO, we're watching.

Hi.

Second question.

Sorry.

[music].

Okay. Thanks Mark.

Not really want to thank you Paul I understand there's probably cool I was called <unk>.

<unk>.

Never made great progress one was strong but overall profitability I'm molecules.

Oh, and what we call through the surety bucolic is called for adults.

Smoking older people all those production results on slide.

Oh.

Next morning School bus industry next 20 seasonal.

It's always difficult for school configured with your children goals.

[laughter] and all before your phone.

[laughter] Osborne front page school points to 23.

Report, despite the functional support them whenever we wouldn't be strong first quarter can underperformance relative to prior years.

Well I can get stuck in Hong Kong.

Only 10 years well the just you could get all right well, we have told us what do I $40000 or let me spend over here.

Importantly, this was off six consecutive quarter what properties increased over the course again, despite higher to market for charges for multiply.

Hi, how are you talking <unk> second quarter last year.

[laughter] go Oh, gosh, I'm, not quite ready to call what.

We all the story.

Based on future on these calls you and your recurring free upholding the probably our overall profit and margin improvement through three three key initiatives.

Volleyball sport gonna be talking white, the critical point degree seeking to address your escalation in towards one come only because we place a twice each year to recover economic increases.

If you will recall, we took pricing again in July 29 team.

Let's see the benefits Troy, Michigan.

Second.

Redemptions and contributing to a consideration when interest rates would be calendars draw. The two years ago I'm, a pretty significant year over year savings in every quarter. Since then nobody is trying to continue to do so going forward.

I'm sorry.

Leadership and opened outside of the fuel.

In personal opinion poll through digital Polyposis, I'm excited about health insurance it just seems difficult for growth we.

We go into superior falling price I don't know small.

I was comparing full bostridge.

I was hoping to support from countries, it's like pretty snowballed walking on a long way you'll feel like.

Well all three of these actions improved already held multiple squawk awash I'm not calling installments over ongoing plan to increase both going probably having seen the dart molecule.

So what are your football fourth quarter results, we're probably talking about the despite falling a hobby before the fuel office and wants to you.

So we actually don't watch during these calls but call it probably won't be done versus year ago philosophy regarding painful.

Requiring additional plamondon farm in October and the gradual production ramp up.

Where are we talking about volume for wage whether you.

So while volumes doesn't it also sounds to me as well.

The next shows revenue bonds, because we really only 1% Hello laski.

Yeah, so rather than do they want reflects a richer mix I probably won't flow to fuel power focuses on the family depart component parts conduction like just mentioned.

In fact, our already booked falling price with almost $5000 higher than in the fourth quarter last year.

Oh, so ultimately substantially.

The front over the past calls the last year I won't call stop is explained by the digital sales, where we had in the first quarter fiscal 2023.

And last year.

So overall, we had a very strong revenue performance.

So you'll see free cash flow of course, not people in almost like a difficult I do know traditionally we're always magnitude underscore.

Well, there's more scrutiny former Gonzales, what's been a year ago, we have losses due to higher Roaring three how does give yourself with one towards your pricing.

Some unique circumstances I phone call described those later suffice to say we want we went through the normal inventory levels, you're progressing aggressive isn't just a timing issue.

Net income of $2 billion adjusted diluted earnings per share seven cents world I sort of bouncing all those I went through trends are suffering from a year ago.

No there was a wide spread for the industry. We're both results we remain talking about the good fundamentals.

We are focusing of industrial REIT talking 4000 school bus in fiscal 2020, which by the same as last year.

For the near record level over the past 30 years I could postpone like wouldn't allergy old about same period of 31000 school buses.

With a strong doctor for property Polys I cars, probably property taxes, we kind of a magnet funding sources to school buses.

Together with the fact, the hunger games I could talk from school uptick on the role today, how but it's a it's a more about 15 years I was going to long enrollment of increasing we have confidence ministry of what remaining that's roughly flat for the foreseeable future.

Oh, what could be much move up its clearly very strong with on taking the only limiting factor.

Before it went up a record <unk> spokesman for all publicly held public school buses, surpassing watching is pretty this rental.

An impressive 39% mix about total unit cycles, we didnt luxurious this quarter next by five points.

It's clear that we'd be a mystery by a long way you know sort of you've talked in college and I'm confident you know public school buses.

So with the remote I don't think I don't think I've read on these calls you don't forget these people if we kind of all of our propane compressed natural gas electric I'm definitely prognosis out all of the toll brothers to diesel, which kinda spacing fuel for years.

The last several years, we've been acute and significant growth outside of new people plus files.

As mentioned, we have not slow down this year.

Well, a couple of outperformance mystery or movie sounds a little Washington.

Oh, no I'm personally toughest quarter results when you pretty fibrosis involved in significantly supposed to figure it no or what's your makes false hope you'll be bosses cost reductions on pricing.

That was a fourth consecutive quarter gross margin rose and as a team that one of her prudent healthy EBITDA margin.

Our continued gross margin improvement from these actions.

Uhhuh falling through the fiscal year.

We are maintaining fiscal year 2020 guidance for all talking about certain onetime rental.

They are going to bring for just the baby doll.

The sense about fiscal 2019 $92.5 million.

Importantly, when you're on the path to watch they could go for adjusted EBITDA hockey wrong right about at least 10% by the end of fiscal 2020.

So let me now review with you I feel pretty good shipments on slide five.

Let me call the youngest appeared to be the treatments in the fourth quarter and these will make us more concise and I suppose how profitable growth plans going forward.

Hi, how somebody that's pretty crease margins are on track driving improved quality cost I think pretty even says I'm capacity.

She will result in.

In spite of gross profit margin increased 1.6 points and the first quarter over the last year.

Much more.

Oh Gosh, we plan on top and October November are all you all to make is putting help is fully operational every policy therapy and paid enough facility.

Right.

Right well do you see the policies.

The benefits we expected.

I will show your Lisa this is an important initiatives to drive efficiency improvements throughout the play.

That's a couple days earlier, we increased our school bus selling price significantly by about 5000 got wasn't unit, representing a 6% increase again.

The increase mix towards higher price all present to fuel Palin posters and I'll make some pricing actions.

With the favorable impact is higher option take stuff in the face of selected flexible features.

So while adjusted EBITDA margin increased by six tenths of a point in the first quarter fiscal once in 24 lots here, which I think right result.

No wonder to getting harder margins in every single quarter of physical twice your 19.

I'm only talking to your strong indicator of how consistent effective strategy combined with a continuous improvement.

I'm not sure now.

It's a baby under scrutiny leader and alternative fuel power school buses with impressive 46% of all told from year to name just sales from order backlog.

Why don't they actually 4.0, the same time watched here.

Furthermore, the total number alternative fuel buses. So I can tell backlogs are up 5% I'm familiar with.

Strong performances and an overall slump school bus industry, but typically when you consider the major sale season is ahead of us.

Oh, that's leadership, our real momentum in the fastest growing segments of the school bus market.

Moving on talking about 70 fuels, we continued to see strong and growing interest you know like this problem How's your orders from electric powered school bus, which is part of Collins.

<unk> drive 20.

It's one small losses in the first quarter fiscal 2020 on altogether, we have and all that none of your boss is deliberate although not from all the backlog so far this fiscal year.

We anticipate Monday August when they are based on the call affected but if we offering.

He was such that I went to watch range of electric public school bus and on the market today coming probably say type C. I haven't talked P. configurations, we're really talking about this opportunity.

And finally, we already have thought in guidance of fiscal 2020 and that reflects continued growth in sales and profits.

Deploy all three focusing your ships to drive higher gross and EBITDA margins, namely I know Parsons cover economics structural cost reductions have increased make some alternative fuel.

It's obviously I'm confident about five minutes on multiple fronts, and we are focused entirely on profitable growth.

Let's take a closer look I've, a third quarter financial results on slide space.

I took somebody of these results earlier, Tom will run through the details license. So let me just so how is the status quo.

Well so the total net sales were down 3% alongside proprietary perspective, which is significantly less.

Slide 9% volume decline.

She was 6% higher average selling price plus.

Okay. So somebody depends on a year ago, Although back wrote was due to the extra sales week in the first of all this year compared to last year.

Nevertheless, we don't 40 48 cents all kind of golf, we achieved in the first quarter. When it comes from a box figure drove a 7% in Washington, that's really impressive performance by the sales to.

Adjusted EBITDA was 800000 hours or 11% probably never go get resolved with the second I suppose called the profit for more than 10 years out of a sixth consecutive quarter, we have health until Friday.

What about the slide seven which is supposed to look for alternative fuel cell phones.

I took about 74 units a book sales outlook today alternative fuel boxes, it's 5% high them a year ago, having importantly, our record for this type of my here.

As I mentioned earlier alternative fuel bus sales [laughter], 46% <unk> total sales, which is up with young for the previous record of 42% that we've gotten a year ago at the same itself.

Significantly to hunker, one customers how poetry, so all aplenty fuel power, but its promise.

Tom I don't this year.

<unk>, coupled with 400 customers, who taught all sort of if you're walking plus you get a first time.

I'm also compelling Fox.

I will drive customer loyalty and conquest business.

On a blended adults and leverage our sports I will tell us if youre buses the blue brand name and our franchise exclusive feeling that one.

So I think it's pretty haven't done we don't slowing down in this segment of the industry. Knowing the school bus markets not to comes close to alternative fuel cells and makes all of our market share.

I'm, sorry, just a couple of $500 either sold or hot for a moment in time for more than 90 electric bus orders and deliveries in fiscal 2020.

We expect more to follow with all the customer interest we're seeing the newest addition to our alternative fuel alignment.

Looking forward, but that's what youre going to be doubling in the today and you still ahead of us I can't support the stronger immaterial for the next three years of so many states do your market specific problems for school bus purposes.

I was asking about soap often the funds that have been issue.

With the watch Reginald trying to get people Powerbases, most molybdenum proven engine, we industry, which exclusively through our partnership with both for Hi, crush going today, I know leadership position in low Nox emissions, we are well positioned to capitalize on the VW funding and other growth opportunities going forward.

In fact reduction not status.

Basic criteria and funding through the VW settlement.

At this point, our view of the loan Ultipro brake master cylinders pod, how long type of enough to make sure I probably other manufacturers policies.

We expanded.

Wallace our propane policy is widely recognized as having the lowest operating cost of any of the school bus on them off.

And we've been very successful turnaround and utilizing feed into your funds for propane bus customers.

So with one of our propane as one simple message you could have it all although it's not finding cost out of the lowest helps to mention any internal combustion engine and schools.

A growing number of customers on the standards as you play we say cells are up again I want to choose because I could levels of settle so far this year.

We also continued strong growth about gasoline powered thus in fiscal 2020.

I must advise technicians and mechanics.

Really appreciate emission simplicity and cold weather stop capability, having shows it propane.

It also has a lower price point than diesel so really what are those customers rapidly price gets at Ti concern.

In summary.

Probably about strongly <unk> leadership position that alternative fuels I've a significant growth on market share we were cheating.

I want to less than 50% of school, but still I mean poachers an alternative fuel public school bus we got plenty of runway ahead 10, new girl.

But I think a closer look at how we are driving cost reduction struggle, a little but how does the slide eight.

So you don't get me slug, it out last earnings call illustrates the progression about conservation relationships over the past two years and it's a physical twentytwenty.

Importantly, you can see this is a cumulative approach where people processes and tools, helping out it as we strive to drive down not total cost.

It's critical 0.83, our initial focus was on reducing post material cost and services through a combination of initiatives, including new commercial agreements with suppliers every so often with minimal product design change involved.

Well, we will extend to what extent automotive experts to ensure bretts practices and processes work side I don't think delivered results.

You might recall that we recorded savings of over $20 million fiscal point of view anything provocative nicely initiatives.

Okay, [laughter] fiscal 29 thing I'm thinking to walk design changes to our process to reduce costs without compromising quality.

In the second phase second if I could drop but we also focused heavily on the build long testing and validation of our new robotic paint facility, which also necessitating plunk rearrangements to optimize our process.

Additional savings of $18 million in fiscal 2015, I stole the show. Your later, we continue to drive significant savings.

2025 these actions.

Uh-huh 2025 straight out supplements the only get process is by dropping down the cost of production.

Fully operational white paper facility from focused on part of significant actions.

Oh, no I'm supposed to be popular feature we use real look what increased much time, rather capability to reduce labor materials for robotics, complicates things and to achieve shrink largest.

Absolutely the highest straight time capacity.

Importantly, we did you find facility attached next year of all sounds like building, we freed up space in the plan to a lot more efficient why we already touched him stations.

[laughter] off several stations for more efficient operations have been pretty policy control. All these actions are designed to improve efficiencies and drive down costs.

We have deployed industrial engineering resources optimized in space are wonderful flow and then you'll be arrange production line.

We are planning engineering resources to focus on design for manufacturing capability hogs, reducing production costs, improving quality of rework and we are confident of achieving significant efficiencies and we have plenty more actions planned over the next few years.

Systemic acuity approach drawing down total costs over multiple years, it's key to deliver in other girls profit and EBITDA margins I look if you need to show. These results when do you any help in the quarterly on these calls.

Well I think I took it over time will take you through the financial smells and I thought waste a couple of the fiscal 2020 outlook I reaffirmed our full year guidance.

While the seasonal.

Thank you. So good afternoon, everyone or the next few slides are suddenly about financial performance this quarter 2020.

Material discussing is based on the close it generally poor couldn't twin equal quarterly wouldn't.

In December 20, nearly two dozen between that's cool too. Thanks.

A detailed material will be available you didn't change Kate and that will be filed tomorrow.

We'll take.

We carried through the great take or pay is not important disclosures that page.

There was also the picnics attached to today's presentation students with reconciliations between GAAP and <unk>.

That's why would somebody is going to certain bitchy ballpark.

With respect to accounting pronouncement, so it's not significant adopted it since quarter end, which grew 20.

We'd like to adopt I used to that really take 12, which simplifies the proceeds for Pennsylvania.

You too.

Income taxes, and the accounting some deferred tax liabilities upon.

Yes.

There was no material impact blew the.

<unk>.

Well it took a look at the a summary of key results for the coast quota on slide 10.

So I think you can see commission fills already mentioned the lot of it but.

We had been quickly versus prior year.

On a number be on them so gross margin percent without.

Net loss was down adjusted net income was up adjusted EBITDA was up.

The adjusted EBITDA margin was up and the.

Diluted earnings per share not improved but three cents from a loss of cost.

And the adjusted diluted book by about two cents.

So we've already talked about the fact that volume was down.

It was down about sounded a little more detail on the net revenue once we get to the bridge. So you can perhaps has a better understand that.

We will spend a little bit torrent talking about ton.

That cash.

So when we get to the free cash that's one.

But.

I think that revenue.

Probably talk about the 1.7 billion.

Dan that's about 1%.

Hello bus volumes Hum coal units.

Well it wont be.

Oh, so, but you got us revenues were up $5 the higher revenues I'm actually drives about I mean no.

[laughter] offset to the lessened the while you did of course pot screws up about 2.7 billion or 70% its ability to reach and so we we basically offset.

A large chunk of the.

At the.

On the volume was down through a lot of goodwill and why.

On the team not elsewhere in the view and on box.

Again, the bus revenue because you know.

The increase of 6%.

Due to a number of practice one was the process.

Taking a fiscal year I tend to boot to walk so quite heavy crude steel in commodity prices.

Well of course as.

Try and make sure alternative fuels and and also.

Our sales team has been working diligently trying to identify the best revenue would you get on every sale.

Restart.

Gross margin that at 13.9% was up 160 basis points versus year ago.

Gross profit was 11%, which was up 130 basis points compared to a year ago.

The mix of pop so which include criminal 11, who treat the San Antonio could 12%.

At an average margin of about almost 34%.

Net loss, obviously were reduced.

Oh.

So to that.

Portends, so that was an improved demand for.

How many times balls lottery tickets cost improved other income and JV topic, Lovett, Texas Garcia.

On an adjusted basis net income to be positive.

I lost you.

Adjusted EBITDA was already mentioned this up.

Sure, let say when you talk more about that bridge.

You have done not Biogen is thought to said conference call.

By <unk> point surprise me on this is the fifth consecutive quarter with positive year over year not to be could.

Diluted earnings per share, we've covered and we will talk a little more about the impact of protection, but.

I think that typically catch was.

Slide 11 is great.

And then and walks from first quarter fiscal 19 to.

Thank you.

Take away saw volume and product mix improved by $600000. So we know that volume was down but we did have on favorable product mix that is food.

We sold more of the buses.

Higher margins than we did in prior years.

Much cost and due to Oh totally field trials.

And also pop science.

Total was off which contributed to the positive news for.

Caught up.

Crashing native economics with about a million or the hopped on favorable and this was largely due to higher material costs.

The higher material cost net of thoughts and favorable moves that we're density steel.

And also highest tariffs you will recall were tariffs that were implemented.

No.

No and of course top all tell him to burn team.

And so we we're still seeing some some flow through those tariffs on me two out fiscal year 22.

Transformational cost initiatives I did not change.

Which was largely a round about continued.

The the solid cost and.

Reducing supply costs.

Fishing cheese work sizeable and this was despite the fact that we are working.

Launch of potential near Msos.

Not pull so those quota.

There were a lot of a lot of cost involved in getting the pretty tough up running.

Sorry, just a spot.

Despite all that.

We will I do the break even some type of litigation efficiencies.

Including.

And we'll be easy warranties as well as manufacturing.

Operating expenses and other with.

I'm sizeable and that was largely due to both in terms of a temporary rebate program one of the major suppliers guidance first quarter fiscal knowledge and that they don't carry forward could squeeze a 22 engines.

Oh large caught in the.

Jerry Rice, you put that.

Overall, I think profits up by 11% in this quarter was good result for US I was just side if not fictitious we either right now.

That said.

We continue to work on improving both the per unit revenue and the cost structure glue that it's paying Ivan T. I notice for achieving their long term objectives.

We talked about bus revenue.

Gross margin, we grew up to two the push on gross margin I would say that this could have been higher since it's called up except that we didn't put some costs for the punch approach so that got pushed back but yeah, we see good traction smart.

And finally, the transformation initiatives I know you look at $900000. So let wasn't very much but it is our lowest quota to volume and most of these savings are driven by.

Sales so.

<unk>.

Important <unk> inducing the cost of each possibly sell so if you put in perspective that 900000 was with about $600 honestly Boston sold in this quarter.

Yes that will flow through to the buses we sell in the rest of the yet and [laughter] provide uh huh.

Improving profitability as volumes grow through.

The next slide Slide 12 is the free cash flow.

Have you can say she is that the free cash flow.

So all or a brand that 34 million.

That's going to the duct free cash flow on similar on the food free cash flow.

Big the big issue or is this clearly trade working capital everything else is pretty stable.

The year over year, increasing trade working capital and Uh Huh.

He is.

Fundamentally old temporary audience and they will be on but I did.

Not in the second quarter at least the balance of the.

I'm still a full principal areas first is we've had a number of we've had a number of stockpiling actually might you powertrains composites.

To that some supply capacity constraints.

We had stockpile that number.

Engines and that stop call will run down as well as we go out of this fiscal year.

He called buying need to screen.

We also had a work that changed since 2000 to Bluetooth.

Quota.

Typically we bring be totally school.

Adoption me.

In the second quota.

Last week as that corridor, which.

We'll get confused to bed count within that basically the first week of second quarter was just stop <unk> shop.

We tend to bring any big Unfortunately, due to the timing and.

On the production pet and basically 20, we would need had degree a lot of inventory to support [noise].

To support our current production.

No let up column.

So and that that who's been squatters on not only down edible.

This quarter against that will sort itself that and as we go to some quota.

Blizzard has been order biotrue programs to consolidate all of that tool to one simple major there has to improve life to the plant I'm going to improve efficiency.

Oh Gee.

We.

We believe we did all of that HM.

Basically the.

First quarter, all fiscal twinkie, So we did build up the totally to ensure that.

We will predict project protected against.

Good to says we are moving parts from a number of were asked us to central warehouse. So we took a fairly conservative approach to protect production during the Chinese ahead of the whole and I think that.

Well, there's a starting that cash is certainly pay dividends.

Production.

And finally, we did have a number of buses still not working prices at the quota.

In other words I will obviously, that's still big finished they use where the the more complex buses that we build or the federal government.

And and some buses that weve been put some major fleets that were well more like a transit buses in school buses and.

Require a lot of incremental work so as I does buses will become the.

Before.

Quota.

We will get well, we'll get the majority of that.

Stockpiling or inventory out of the way. So again I'd say that begins in stockpiling will probably run that yeah body.

We'll run that probably into the fiscal year everything else on what patent challenge.

Protection Begets, the Iwear smooth.

And with the buses at ASCO in production will be cleaned up.

Several months.

Final slide slide 13 looks at our net debt leverage and liquidity and get it to a two [laughter] piston believe moved up about 6 million.

Given color you.

Due to.

Lets they've been going on another involve hi, Paul you at that time and that was really doing to fund some of that try to capital.

Net leverage ratio Tango 2.5, again, well below the threshold.

3.7, Claude and we believe that liquidity at 62 three its.

Good for this told media and particularly.

Gives us some kind of some fairly solid and then of course, it well, we're carrying hard to acquire the normal inventories and we would expect to see that.

As we've gone back to others.

Well, that's a great summary for you and I'll now turn back the discussion back to fill Wholl walk who described the outlook for fiscal year 2026.

I would do you feel.

Thank you Phil so, let's not focused on the fiscal 2020 at work as Phil said enough for your guidance I'm. Please turn to slide 15.

Well, that's a lot on this slide site, we don't.

All the plan, we laid out to grow margins.

Just two years ago, and we're well on track along the way with it.

Good morning, he felt about just a quick commodity kinda about the industry three years now remind it's about 34000 units.

But really 30, a highs that was saying Oh, the great thing and I look at the out looking at for coffee I mentioned before healthy volumes, how many to know about my wife, if you could help farms to first Oh.

Some decisions that are making the only or the final it does give us real confidence we say in the foreseeable future point at this level I should point also to know as I mentioned previously 190000 positives.

500000, sleek across North America, He's almost 15 years of age.

Tremendous demand to buying your buses.

Well just industry has not slowing down because of lack of demand.

I think as we've stated all Fysixteen your profit growth focused on achieving significant gross margin on EBITDA margin improvement than three key areas.

The repeat myself, because I think is providing a south Africa is pretty straightforward.

I'm, we're executing firstly I legal cost recovery pricing.

You know pricing than anything surcharges of steel mill, the commodity a promising increases and in late fiscal 14, IP, we talked before that 2% price increase on all vehicles and options and that will have a significant namely effect in fiscal 2020 interest you know for it that way you could actually bought in fiscal <unk>.

Thank you.

Second our continued transformation cost reductions I explained the only the processes. We are talking now in various areas going into all but across all its public saying what originally acquired it's in the manufacturing situations.

Hi.

Flooring every possible obviously.

Well probably them so far in non 18, and 19, we drilled people get cost savings of $38 million being over those two years.

Hi, significant benefits again in fiscal 2020 feet and beyond.

I think efficiency by policy, what we got here in the focus is to get it out in future years.

Okay.

I've been doing for several years now well continue to grow to maintain our leadership position in alternative fuels, which combined to superior margin and highest customer loyalty.

In a record year to date mix of 46% hopefully help if I'm wrong about flung I'm going to make affecting all holiday season still ahead of US all subject fuel leadership of if you look and feel it took me a significant boasts the selling price no smoking.

Well, that's a problem for fiscal 2020, onek quite possible as previously communicated you can call margin goal.

All right about where we tend to spend.

End of this fiscal year.

Well you know what would always means a fiscal 2020 guidance.

Slide 16.

But no change at all from Chicago, So we'd have to the Samarasinghe scope.

Sales guidance of between.

20 million footprint like a 50 million, which is which would be between $2 million to $2 million high.

29.

I want to stress it does not apply entirely based on high upholding, but rather approving molecule based approach to drive higher profits and revenue.

Adjusted EBITDA guidance, how between $95 million I significant $8 million to $13 million or 11% to 16% increase all the physical twice 19 and by the way that 30% higher attachment points about guidance.

I will remind we aren't very seasonal basis would typically cost sales occurring in the second half of fiscal year.

We expect fiscal 2020 to pull it somewhat pot without the joke about properties have any political in fiscal 2019 the.

Yeah, I realize that high volume.

Adjusted free cash flow between voting for $35 million I continues to be a strong feature properties as.

Well this is slightly down from our fiscal 2019 years old. This is more than I explained by unique standing support I felt right I'm design changes that drive higher productivity.

So we dropping go we had a very strong first quarter results. It was helped this quarter over here.

Operationally and financially.

Importantly, all of our production slots so for the puts off a lot here and we're not fully slots in the second half of the so visible as to how pricing margins at pockets for the second quarter.

Hi, guys for fiscal 2020 to reflect significant profit margin growth over fiscal 2019 and supported by the continuing to try to do some planned we put in place I don't know executing on the past two years.

Well I conclude helpful presentation, I'm, having a pocket bahar underwrite <unk> session.

If you'd like to ask a question. Please signaled by pressing star one on your telephone keypad. If you are using speakerphone. Please make sure that your mute function is turned off so I like your signal to reach our equipment.

Well first go with Justin Clare from Roth Capital Partners. Please go ahead.

Hi, everyone. Thanks for taking my question.

Hi, Justin.

So first off I guess, a unit sales for Q1 word down 9% year over year was wondering if you could just give us a sense for how much of that decline was due to the extended shutdown that you took a to ramp up the paint facility versus you know potentially a lower level of orders for that quarter.

Her or are you being maybe more selective with customers.

It wasn't tied on what you're going to paint show.

We took all the all today, we just tying them out so I expect it's fair to say you published we don't pass it back in the second quarter.

All the pain show no. We're building 50 to 60 posted today you can imagine.

When you're ramping up all you don't know falling for the six start point you're building 15 that twice you then 30 so [laughter].

Justin.

The second quarter.

[noise], Okay, great. That's that's helpful.

And then gross margins and the adjusted EBITDA margin, both improved year over year, you know despite the lower volumes that you saw so as volumes ramp up through the year here.

Can we anticipate a you know margins moving higher.

Through Ah through the end of here.

Well, Yeah, I think you may want to give you do the math about guidance you've seen our topic. So I do I mean, we as we've seen much more volume coming through and we hope to pricing we put in place and we keep held since it makes it.

It doesn't feel much knowing where they need debate that we do see a improving margins throughout the year.

Both the girls are there.

Okay and then it serves the inventory you know you talked about stockpiling engines can you talk about what type of engines were in <unk> in a shortage and a you know what the Cogs words.

And then you know how does how does the shortage been resolved at this point or is this a an issue that's ongoing.

Yeah, you know I wouldn't call at the strongest shortage of engines protecting for this was just making sure we're ready for the second quarter a.

Stopping.

You mentioned no wonder about the stackable like bucking fiscal 19 Hill and try to write a full swing with a shutdown, we still holiday week actually fiscal 2020, I'm trying to work.

What the production only 20 brought some engines are though here and we can find it but that's no. There's no shortage of any such would just be improving.

Okay. So so that I guess related to that I'm guessing that you didnt have to pay a higher prices like prices have not gone up four engines are the result of any you know shortage.

So we shouldn't expect any margin impact there because I don't think of it.

That's correct way, yes, there's no there's no large an impact on that mill.

Okay, Great I will pass it on.

Next question.

We'll next go with Eric's time from Craig Hallum. Please go ahead.

[noise] rone.

Oh, Hey, what's as I always kind of focus on I'm, just would love to chat a little bit about 111, new old fuel customers added just curious how that breaks down between existing bluebird customers, who are going that direction for the first time and I guess.

Conquest customers as you call them and then maybe if you could just talk about kind of the competitive environment, given you've got a big lead and just you know what are some of the other players you know whether it be different technologies product launches what are you seeing from them.

Well first of all your first question you guys are very good for US we are very good and get that acquisition went up 211, new customers coming in I think typically over the time, we've been we've been about 50 50 between.

Conquest customers, obviously people you don't want you to volatility musical Bluebird Brad.

New to the Blue Bird brand, we talked about in the last five years they've come to us.

Oh I thought it previously obviously, but let me talk alternative fuels are we talking about specifically.

I'm new to anything gas propane or nitric also got Jade what's interesting for us actually know what I've got two is geibel gosling before now.

So let me try some propane, we don't actually cabinets and new customer that you'd already in the family. So I think they do a very conservative people up there. So I mean look good but we love getting people, it's alternative fuels because I find the loyalty of that customer base is somebody into law, because they loved the product under snow or else you combine for when you call bye.

That powertrain for propane for gasoline that the CNG anyone public but in fact, you can drive up by an electric drivetrain. We're just talking about companies product how much rotring from anyone else football into it so we like being locked in that position it's good for us.

Yeah, that's a good segue to electric.

I mean, obviously another strong quarter that was one of the big drivers of ASP.

The increase there I mean, it seems like in the past. This has been more of a niche product. It's been more based on incentives in key markets. I mean do you feel like it is kind of moving beyond that I mean, I know, it's a slow process, but moving beyond that and he is becoming more of the mainstream outside of those specific.

Exactly yes.

Well I, let's put it this way.

In a situation where.

What's sort of significant rents available.

That's what kind of pulled to buy electric public school bus you know its anyway.

Three to four times the price of a traditional luscan exercising.

So, but what do you are speaking is a lot of state, saying, let me try some funds to all of this let me try it well they know what school district will be so out of pocket I don't know the Doctor technology is going away from its going to come down in Frac I see all about data right. There a lot of intrigue, Iran vehicle to break.

Well its goal and fast charge and all these things.

So I think what I'd tell you is that it's no I would think mainstream although probably to California, because they are the so you know zero emission Kelly falling to put a lot address behind this.

No you need they always happen in this space that fuel efficient for them is mainstream.

The.

Incredible growing interest and fascination a trying this.

Across the country and.

Well it seems like I said before funds are available if he told me phones in many cases in most cases I would say that's all I know element portion to like a bi fuel electric buses. So I didn't yeah. It's it's picking up whenever we want to either obviously and capitalize on.

Opportunities.

Yep.

Okay, and then last one for me it just on the parts business I mean that was Oh, another strong quarter.

Also a big driver of the margin improvement maybe just the discussion on that I know you had the launch of the exports.

You know that offering I believe it was last fiscal year and so maybe just you know outlook in the parts business and how that's played out versus your original expectations.

No I think you can look at last year, 7% growth was a nice growth in any sort of what I call. It was flat right. So that was good we grew only continuing the first quarter would you pick up the extra sales. We got every convention, it's still a stronger.

8% to 9% for the growth level, we go and not this quarter. So really nice picked up I think they know the ex Pops program was talking about every month, when you skews, but for a new pops and let us feeling.

It up well know wouldn't here I've got to declare victory yet there's a long runway ahead, what he's got a lot of interest I would definitely picking up new business because of it I can tell you that.

I think also the second point here is that.

You know we've been up this business with the full products since 2012, so all the same out affordable units coming off warranty and now we're going to get into the service more replacing costs and we were weren't able to do that unlike other power trains out there and the market, where a wow falls because their right to get better.

They can penetrate on all of those costs, but they fall into the engine engine I tried, especially on that's also held for sale. So I guess, that's in a way, but more access to the tune into market, but we've got a bigger skew banks now that have out before I wouldn't think that's pretty important to grow this business.

And.

So yeah, I think it's going well and I think its except the fact Gulf into first quarter toughest for for the year is pretty good coming outside of school style.

Okay. Thanks, a lot.

But I'm sorry.

Thank you we'll next go with.

Singular research. Please go ahead.

Oh hi, everyone.

Or something but I'm somewhat new that maybe their name.

When its asked about.

I know you're doing better in Myanmar.

Margin.

We did you say that you reach profitability.

In the next mass coming year, no one could you give the Tonight yeah.

It took a kind of got responsibility and they want to know what do you want.

Just come back a little bit Chris Okay.

You know it it seems like things are improving so what did you give an idea about.

Well, maybe about what quarter you could reach profitability.

[laughter].

I think well I can we kind of deltic, if we don't give guidance by quarter, we gave guidance for full year.

Suddenly said that by the end of this year.

They expect to be the wrong right you got to our 10% plus margin object, that's where you want to break. So that's all are they played out there right now in that it would take is harder time see I would go on to delivering quarter by quarter and every volume you know so far were up nicely. This year in both those spot and EBITDA margin I'm going to internally.

Okay great.

One other thing I know you mentioned about Paris.

Do you see those improving this coming year and will it makes a big.

Well what else was called the president he wasn't what blend the told me with pull at home.

No I mean, I think what's happened is.

We're not planning you know guidance when we give it a towers coming off right.

So what they do it off topic, but I'd like to think that older coal. So time will see Congress coming down.

But we have no guidance Oh dollar check this I'm putting out there do not reflect that so I think it's going to wait to see what happens. It's also worth bearing in mind.

No we won't be many of our supply is.

But what they're looking for reprice. It if they look at what's happened to them in the last anywhere from six to 12 months.

So for example, we don't want on major suppliers last year put on terrorists.

In the early on I guess itself the second quarter basically 19, because look back on what we would feel it happens at them and that's the way they would like to the last several months Nicholas surcharge on so that actually.

Who caucus nothing 90, nothing political thing.

What we saw them like a bottom line I think.

The bottom line is I think.

We don't we don't want on reducing Paris, I think we'd like it because opportunity I guess down the road.

What sort of impacted the parents out on your earnings per share.

Oh.

Yeah, that's it.

Why don't you.

That's why we not to get back.

Well, if it wasn't major but.

Certainly had an impact probably description.

And I guess, maybe you'd have to look at it over the year corridor, because it would be.

I'm sorry.

Again I mean.

I think.

That is not a window, we're clearly going to tell who know what it does come off.

Clearly did improve the demand.

Okay.

Great well, thanks for taking my question.

Thanks gratitude.

Thank you for a question and just to remind everyone. If you'd like to ask a question. Please signal by pressing star one on your telephone keypad. We'll next go with that was small Sir from my section investments.

Yes.

I was wondering about the announcement you made the bloopers yesterday afternoon.

Again early this morning about a shareholder that is certainly an 11 million shares.

Talk about that.

Yeah.

The public now that I've tried to her on the left on it I decided to.

And for you registration or not yesterday Register 11 million shares. We first registered those shares back in 2015 or whatever so those shares subsequent to that that those were sold on day private transaction to American security.

We simply registering those shares they almost chairs there'll be no proceed to the company.

Registrational, if you get for three years.

Okay. So it's a over a period of time.

Yeah, I'll always always wonder if I got good housekeeping right and just related to this yes, that's right.

Selling it.

Okay.

Thank you.

Thanks Louis.

Thank you for a question once again to remind everyone to ask a question. Please take note by pressing star one on your telephone keypad, we'll keep a few seconds.

Well well take a little waiting this is full time I need to make one clarification I believe is going on because you can drill sergeants moved to partly due to the team Kt Tomorrow, It's actually 10-Q.

So I don't want anybody to be confused.

We like.

With my mistake, it's the taken King Kong Tomorrow. Thank you.

This concludes today's question and answer session I'd like to give back the floor back to them wondering others. Thank you.

Okay. Thank you had I told him joining our call today. We appreciate your interest in Blue Bird and [laughter] <unk> first quarter results and your outlook. We are focused on total profit growth and margin growth and we intend to believe or not commitments.

I believe we're well positioned for growth today and in the future.

So please don't hesitate to talk about head of profitability and Investor relations molecules to navigate follow up questions I forget hauling from all of them together one.

To break anything.

This concludes today's call think trial for your participation you May now go ahead and disconnect.

[noise] and.

[music].