Q1 2022 Blue Bird Corp Earnings Call
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Speaker 1: Greetings. Welcome to the Bluebird Corporation Fiscal 2022 First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Mark Benfield, Head of Investor Relations. You may begin.
Greetings welcome to the Blue Bird Corporation fiscal 2022 first quarter earnings Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded.
I will now turn the conference over to your host Mark Benfield head of Investor Relations you may begin.
Speaker 2: Thank you and welcome to Bluebird's fiscal 2022 first quarter earnings conference call. The audio for our call is webcast live on Blue-Bird.com under the investor relations tab.
Thank you and welcome to Blue Bird's fiscal 2022 first quarter earnings conference call.
The audio for our call is webcast live on Blue Dasburg Dot com under the Investor Relations tab.
Speaker 2: You can access the supporting slides on our website by clicking on the presentations box on the IR landing page.
You can access the supporting slides on our website by clicking on the presentations box on the IR landing page.
Speaker 2: Our comments today include forward-looking statements that are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters we have noted on the following two slides and in our latest filings with the SEC.
Our comments today include forward looking statements that are subject to risks that could cause actual results to be materially different.
Those risks include among others matters, we have noted on the following two slides and in our latest filings with the SEC.
Speaker 2: Bluebird disclaims any obligation to update the information on this call.
Blue Bird disclaims any obligation to update the information on this call.
Speaker 2: This afternoon, you will hear from Bluebird's President and CEO , Matthew Stevenson, and CFO , Rosvond Regilescu. Then we will take some questions. Let's get started. Matt.
This afternoon, you will hear from Blue Bird's President and CEO , Matthew Stevenson and CFO raws, born and bred Youll ask it.
Then we will take some questions. So let's get started now.
Alright, Thank you Mark and good afternoon, everyone.
Speaker 2: The first quarter of our fiscal year 2022 was filled with a lot of activity centered around strong demand and navigating a sea of supply chain disruption.
First quarter of our fiscal year 2022 was filled with a lot of activity.
Strong demand and navigating a see a supply chain disruption.
Speaker 2: It was also the first quarter that Rosvon and I were in our respective roles, as I assumed the role of CEO on November 1st, and Rosvon became CFO on October 1st.
It was also the first quarter that Roz van and I were in our respective roles.
As I assumed the role of CEO on November one and Roswell and became CFO on October <unk>.
Speaker 3: On slide six, you can see the demand for our products is now at pre-COVID levels. Our order intake for Q1 was up 18% year over year, supporting a record backlog of roughly 500 million. We believe there is a lot of pent-up demand out there, as evidenced by the fact our dealer inventories are down 50% compared to this time last year.
On slide six you can see the demand for our products is now at pre Covid levels. Our order intake for Q1 was up 18% year over year supporting our record backlog of roughly $500 million. We believe there is a lot of pent up demand out there as evidenced by the fact, our dealer inventories are down.
50% compared to this time last year.
Speaker 3: We are making adjustments in our operations for the second half to support higher build levels to maximize all the production our supply base can support.
We are making adjustments in our operations for the second half to support higher build levels to maximize all the production our supply base can support.
Speaker 3: We would have loved to produce more buses in the first quarter, but we had a critical, electrical component, sole source from a supplier that had a limited availability of microprocessor.
We would have loved to produce more buses in the first quarter, but we had a critical electrical component sole sourced from a supplier that had a limited availability of microprocessors.
Speaker 3: Their inability to splice negatively impacted our production rate and booking.
Inability to supply us negatively impacted our production rate in bookings.
Speaker 3: We have since engineered a second source for this critical component, as well as the original supplier has improved its chip allocation.
We have since engineered a second source for this critical component as well as the original supplier has improved its chip allocation.
Speaker 3: We are constantly driving engineering projects to create deviations in resource parts that are limiting production. Late in this quarter, we also saw disruptions in this supply chain driven by the Omni Crown variant of COVID.
We are constantly driving engineering projects to create deviations and resource parts that are limiting production late in this quarter. We also saw disruptions in those books.
Supply chain driven by the omni crown variant of Covid.
Speaker 3: As we discussed during our last earnings call, the first half of the issue's production is primarily comprised of units that it should have been produced in fiscal year 21. If we had access to the volume of components needed to support our production.
As we discussed during our last earnings call. The first half of this year's production is primarily comprised of unit that it should have been produced in fiscal year 'twenty. One if we had access to the volume of components needed to support our production demand.
Speaker 3: Instead, these units have been pushed out into our first half at a cost basis that is now much higher. And with contractual customer pricing, that was agreed to nearly a year ago. Catching little of the recent price increase in putting pressure on first half margin.
Instead these units have been pushed out into our first half at a cost basis that is now much higher than with contractual customer pricing that was agreed to nearly a year ago.
Capturing little the recent price increases and putting pressure on first half margins.
Speaker 3: We continue to monitor the inflationary pressures in the economy and are pricing in line with our expected cost increases. We previously announced total price increases of 11 percent and effective March 1st. We are taking another 4 percent price increase for new orders that will equate to a total 15 percent and less than 12 months. Which is unprecedented for our industry.
We continued to monitor the inflationary pressures in the economy and our pricing in line with our expected cost increases we had previously announced total price increases of 11% and effective March one we are taking another 4% price increase for new orders that will equate to a total of 15% in less than 12 months.
Which is unprecedented for our industry.
Speaker 3: Flight 7 has our financial results in our ongoing business title.
Slide seven has our financial results and our ongoing business highlights.
Speaker 3: In the first quarter we booked 1149 units with sales of 129 million.
In the first quarter, we booked a 149 units with sales of $129 million.
Speaker 3: This was a 106 units less than the fiscal year 21, but only 1 million less than revenue due to an increase in our average selling price by $4,000 and stronger part sales. All right, just.
This was 106 units less in fiscal year, 'twenty, one, but only $1 million less in revenue due.
Due to an increase in our average selling price by $4 and a stronger part sales.
Our adjusted EBITDA was $4 million.
Speaker 3: 2 million less than the first quarter of 21, and our adjusted free cash flow was negative 34 million, driven behind levels of raw and work and process inventory caused by supply chain disruptions. In the quarter, and since our last earnings call,
$2 million less in the first quarter of 'twenty, one and.
And our adjusted free cash flow was negative $34 million driven by high levels of raw and work in process inventory caused by supply chain disruptions.
In the quarter and since our last earnings call.
We have accomplished a number of key items.
Speaker 3: We continue to make progress on our first foundational objective, which is taking care of our employees.
We continue to make progress on our first foundational objective, which is taking care of our employees.
Speaker 3: We made critical upgrades to the facility during the quarter, including improvements to the cafeteria, break rooms, and key engagement areas.
We made critical upgrades to the facility during the quarter, including improvements to the cafeteria break rooms and key engagement areas.
Speaker 3: We're also driving new safety culture initiatives to lower the incident.
We're also driving new safety culture initiatives to lower the incident rates.
Speaker 3: In November , we had the opportunity to meet in person with 92% of the Bluebird dealers at our annual dealer meeting, which had not taken place in a couple of years due to COVID.
In November we had the opportunity to meet in person with 92% of the Bluebird dealers at our annual dealer meeting.
Which had not taken place in a couple of years due to COVID-19 .
Speaker 3: We are very transparent with our dealer partners about the inflationary pressure in the global marketplace. And the resulting need to revise our historic pricing and business practices to improve our collective profitability and a volatile macroeconomic environment.
We are very transparent with our dealer partners about the inflationary pressure in the global marketplace, and the resulting need to revise our historic pricing and business practices to improve our collective profitability and a volatile macroeconomic environment.
Speaker 3: In the EV sector, we are continuing our dominance and saw our EV school bus backlog in Type C and D alone. So it in nearly 300 units.
In the EV sector, we are continuing our dominance and saw our EV school bus backlog in type C and D alone grow to nearly 300 units.
We secured a 30 unit <unk> order for the Modesto City schools.
The largest single order placed by any school district to date.
We were also awarded the EV business of the General services administration or GSA, a longtime customer.
Speaker 3: Our bookings for the quarter reflected an alternative power makes a 56% of 10 points year over year.
Our bookings for the quarter reflected an alternative power mix of 56% up 10 points year over year.
Speaker 3: And our leadership and our alternative power shows no signs of slowing down and extends past EV. With Zoom services awarding us a business for 400 units, including 350 gasoline and 50 CNG units.
And our leadership in alternative power shows no signs of slowing down and extends past EV with zoom services awarding us the business for 400 units, including 350 gasoline and 50 <unk> units.
Speaker 3: Overall, on a difficult quarter, we still drove improvements in our business and focused on streamlining our operations, but we can ramp up volume in the back half of the year.
Overall on a difficult quarter, we still drove improvements in our business and focused on streamlining our operations. So that we can ramp up volume in the back half of the year.
Speaker 3: I will discuss additional progress in our focus areas later in the call. For first, I would like to hand over to Roz Von to walk through our financial results in more detail.
Ill discuss additional progress in our focus areas later in the call. Our first I would like to hand over to Ron to walk through our financial results in more detail.
Roswell.
Speaker 4: Thanks, Matt and good afternoon. It is my pleasure to share with you the financial highlights from Blueboard's fiscal 2022 first quarter results.
Thanks, Matt and good afternoon. It is my pleasure to share with you the financial highlights from our global fiscal 'twenty 'twenty tool first quarter results.
Speaker 4: The quarter end is based on a close date of January 1st, 2022, whereas the prior year was based on a January 2nd, 2021 close date.
<unk> is based on a close date of January one 2022, whereas the prior year was based on a January <unk> 2021 close date.
Speaker 4: We will file the 10Q today February 9 after the market closes. Our 10Q includes additional material and disclosures regarding our business and financial performance. We encourage you to read the 10Q and the important disclosures that it contains.
We will file the 10-Q today February nine after the market closes.
Our 10-Q includes additional material and disclosures regarding our business and financial performance when.
We encourage you to read the 10-Q and the important disclosure that is contained therein.
Speaker 4: The appendix attached to today's presentation includes reconciliation of differences between gap and non- GAAP measures mentioned on this call, as well as important disclaimer.
The appendix attached to today's presentation includes reconciliations of differences between GAAP and non-GAAP measures mentioned on this call as well as important disclaimers.
Speaker 4: Slide 9 is a summary of first quarter results for fiscal 22 and fiscal 21. It was a very tough quarter for Bluebird with a difficult operating environment as a result of supply chain disruptions that have impacted many industries, especially those that use microchips and resin in their products.
Slide nine is a summary of first quarter results for fiscal 2002 in fiscal 'twenty one.
It was a very tough quarter for blue bird with a difficult operating environment as a result of supply chain disruptions that have impacted many industries.
Specialty those that use microchip and raising and better products.
Speaker 4: Further compounding the challenge, raw material prices continue to rise during the entire calendar year 2021, especially still up approximately 300% and aluminum up approximately 150%. The cost of overseas transportation increased nearly 10 falls.
Further compounding the challenge raw material prices continued to rise during the entire calendar year, 2021, especially steel up approximately 300% and aluminum.
Approximately 150%.
Cost of overseas transportation increased nearly tenfold.
Speaker 4: Bloober unit sales volume of 1,149 units was 166 units lower than prior year due to supplier constraints that limited our rate of production.
Global unit sales volume of 1149 units was 106 units lower than prior year due to supplier constraints that limited our rate of production supply issues were experienced multiple components across a number of suppliers.
Speaker 4: Supply issues were experienced or multiple components across a number of suppliers.
Speaker 4: While the disruptions continue to impact our business through the quarter, our team has been working hard to find alternative sources for several critical parts that are constrained.
While the disruptions continue to impact our business for the quarter. Our team has been working hard to find alternative sources for several critical parts per power constrained.
Speaker 4: In addition, Bluebird had a backlog of over 4800 units at quarter-end or 3700 more than at the end of the first quarter of fiscal 21.
In addition, <unk> has a backlog of over 4800, joining third quarter end.
Or 3700 more than at the end of the first quarter of fiscal 'twenty one.
Speaker 4: Our definition of a backlog unit is a firm order which becomes non-cancelable within 14 weeks of the expected production day.
Our definition of a backlog units is a firm order, which becomes noncancelable within 14 weeks on the expected production date.
Speaker 4: But this time, our production capacity, which is constrained for the first half of the year, is filling up quickly with only approximately 2500 slots left open for fiscal 2022. Our ability to complete and deliver all of these units on a timely basis will depend on supply stability of key components.
At this time, our production capacity, which is constrained for the first half of the year is filling up quickly with only approximately 2500 slots left open for fiscal 2022.
Our ability to complete and deliver all of these units on a timely basis will depend on supply stability of key components.
Speaker 4: Consolidated net revenue of 129 million was 1 million lower than prior year due to the lower production capability already mentioned.
Consolidated net revenue of $129 million was $1 million lower than prior year due to the lower production capability already mentioned.
Speaker 4: Of that, but net revenue was 112 million, down by 5 million versus the prior year due to lower volume. In fact, our average bus revenue per unit increased from 94,000 to 98,000, which was largely the result of a higher mix of alternative power buses. 56% of bookings versus 46% last year.
But net revenue was $112 million down by $5 million versus the prior year due to lower volume.
In fact, our average bus revenue per unit increased from 94 to 98000, which was largely the result of a higher mix of alternative powered buses.
56% of bookings versus 46% last year.
Speaker 4: Due to the outstanding success of the new 7.3 liter engine in our gasoline and propane unit.
Due to the outstanding success of the new seven three liter engine in our gasoline and propane units.
Speaker 4: Supply constraint EV sales were at the level of 40 units or 16 higher than last year.
Supply constrained EV sales were at a level of 40 units or $60 higher than last year.
Speaker 4: Parts revenue for the quarter was $17 million, representing an improvement of 4 million compared to the prior year first quarter.
Product revenue for the quarter was $17 million, representing an improvement of $4 million compared to the prior year first quarter.
Speaker 4: Over the past few quarters, we have seen improvement in past sales, which is an indicator that the normal work for school districts is starting to get back to pre-COVID level.
Over the past few quarters, we have seen improvement in Pos sales, which is an indicator that the normal waterfall School district is starting to get back to pre COVID-19 levels.
Speaker 4: Although there has been some disruption also in our part business due to supplier short.
Although there has been some disruption also in our parts business due to supplier shortages.
Speaker 4: Gross margin for the quarter was 12.5%, or 140 basis points higher than the same period last year. The increase was driven mainly by the higher mix of parts business relative to the bus business, combined with favorable product mix.
Gross margin for the quarter was 12, 5% or 140 basis points higher than the same period last year. The increase was driven mainly by the higher mix of parts business relative to the bus business combined with favorable product mix.
Speaker 4: As we noticed on the first quarter call, we expected to see raw material and component cost pressure increase in the first quarter due to significant increases in steel and other commodities.
As we noted on our fourth quarter call, we expected to see raw material and component cost pressure increased in the first quarter due to significant increases in steel and other commodities.
Speaker 4: as well as a continuation of higher costs that are being experienced in all modes of phrase.
As well as a continuation of higher costs that are being experienced in all modes of freight.
Speaker 4: As Matt mentioned, we have previously implemented the total of 11% pricing increase to help offset these headwinds. However, this will only materialize during the second half of fiscal 22, because we have to work through the current backlog first.
As Matt mentioned, we have previously implemented a total of 11% price increase to help offset these headwinds. However, this will only materialized during the second half of fiscal 'twenty two as we have to work through the current backlog first.
Speaker 4: Wherever possible, however, we took limited pricing in three sections, even on the existing backlog, with the impact expected to come during the remainder of the fiscal year.
Wherever possible. However, we took limited pricing increase actions even on the existing backlog was the impact is expected to come during the remainder of the fiscal year.
Speaker 4: In the first quarter of fiscal 22, Adjusted net income was negative 2 million, or 2 million lower than last year. Adjusted EBDA of approximately 4 million was down compared with prior year also by 2 million. While adjusted EBDA margin was approximately 3%, for a year over year decrease of 1.7 percentage points.
Okay.
In the first quarter of fiscal 'twenty, two adjusted net income was negative $2 million for $2 million lower than last year.
Adjusted EBITDA of approximately $4 million was down compared with prior year also by $2 million, while adjusted EBITDA margin was approximately 3% for a year over year decrease of one seven percentage points.
Speaker 4: A justly diluted earnings per share of negative $0.07 was also slightly down from the prior year.
Adjusted diluted earnings per share of negative seven.
It was also slightly down from the prior year.
Speaker 4: Flight 10 shows the walk from fiscal 21 for squatter adjusted EBDA to the fiscal 22 for squatter results.
Slide 10 shows the walk from fiscal 'twenty, one first quarter adjusted EBITDA for the fiscal 2000, <unk> first quarter results.
Speaker 4: Starting on the left at 5.8, lower bus volume in the period of 1149 units, down 106 units, was offset by higher pass volume of 1.9, resulting in a 0.2 million favorable impact.
Starting on the left at five eight lower bus volume in the period of 11 149 units down 160 units was offset by higher deposit volume or one nine.
0.2 million favorable impact.
Speaker 4: pricing, net of economics, was slightly positive in the quarter, driven by the positive effect of re-valuating the inventory we had on hand at the start of the fiscal year, which was bought at a lower cost and the new standard cost.
Pricing net of economics was slightly positive in the quarter driven by the positive effect of reevaluating. The inventory we had on hand at the start of the fiscal year.
It was bought at a lower cost than the new standard cost.
Speaker 4: and partially offset by higher steel and commodity costs.
And partially offset by higher steel and commodity costs.
Speaker 4: As we look to the balance of the year, you will more clearly see the impact of higher commodity costs. Efficiency were slightly better.
As we look to the balance of the year you had a more clearly see the impact of higher commodity costs.
Efficiencies were slightly better than last year.
Speaker 4: S-GNA and engineering expenses were close to 3 million higher than last year, primarily driven by higher wages.
Yes.
SG&A and engineering expenses were close to $3 million higher than last year, primarily driven by higher wages.
Speaker 4: Recall that during the first quarter of fiscal 21, we had pay cuts and foreloads in place, in response to COVID-19 demand drop, and key engineering projects were postponed. Since then, pay has been restored and also increased due to high inflation, and the central regulatory engineering projects have risen.
During the first quarter of fiscal 'twenty, one we had pay cuts and photos in place in response to COVID-19 demand drop and key engineering projects were postponed.
Since then pay has been restored and also increased due to high inflation and essentially the regulatory engineering projects have resumed.
Speaker 4: In order to align and energize our dealer body, we had our in-person annual dealer meetings in November 2021 in California, which was canceled the year prior.
In order to align and energize our dealer body, we had our in person annual dealer meeting in November 2021, in California, which was canceled a year prior.
Speaker 4: Additionally, in the other category, our joint venture results from micro-BUR were close to 1 million lower versus the prior year, but they have been also affected by supply chain shortages. Predominantly, the micro-tube shortage, which is impacting the chatty allocation from Ford and GM.
Additionally, in the other category our joint venture results from Microbot, we're close to 1 million lower versus the prior year as they have been also affected by supply chain shortages.
Dominantly, the microchip shortage, which is impacting the chassis allocation from Ford and GM.
Speaker 4: Moving on to the balance sheet and liquidity on slide 11, we entered a quarter with cash of 4 million, down 20 million from the same time last year. That was at 165 million or 5.7 million lower than last year. Net debt was 161 million and it was 14 million higher versus...
Moving on to the balance sheet and liquidity on slide 11, we ended the quarter with cash of $4 million down $20 million from the same time last year that was a $165 million or $5 7 million lower than last year net debt was $161 million.
And it was $14 million higher versus the prior year.
Speaker 4: It is worth noting that we were in compliance with all covenants at the end of the fort.
It is worth noting that we were in compliance with all covenants at the end of the quarter.
Speaker 4: There were two active financial covenants in our credit agreements for the period. First, the trailing 12 months Ibi Dah.
There are two active financial covenant in our credit agreement for the period first the trailing 12 months EBITDA.
Speaker 4: As defined under the credit agreement was 28 million versus the minimum requirement of 14.5 million.
As defined under the credit agreement was $28 million versus the minimum requirement for $14 5 million.
Speaker 4: Second, liquidity as defined under the credit agreement was 93 million at quarter end versus the minimum covenant of 10 million. Therefore, we remain in compliance with our credit agreement covenant.
Second liquidity as defined under the credit agreement was $93 million, a quarter and versus a minimum covenant of $10 million net forward. We remained in compliance with our credit agreement covenants.
Speaker 4: Moving on to slide 12, we have already covered the cache and depth on the previous slide. The deterioration in operating cache flow and adjusted free cache flow was primarily driven by higher working capital and secondarily by lower profit due to lower volume.
Moving on to slide 12, we have already covered the cash and debt on the previous slide.
Deterioration in operating cash flow and adjusted free cash flow was primarily driven by higher working capital and secondarily by lower profits due to lower volume.
Speaker 4: On slide 13, going into fiscal 22, our margins were and still are under pressure.
On slide 13 going into fiscal 'twenty, two our margins were and still are under pressure.
Speaker 4: We are facing increased costs for raw materials, freight, labor and generally supplied driven disruptions.
We are facing increased cost for raw materials freight labor and generally supplier driven disruption.
Speaker 4: And while we have a substantial backlog, many of the buses will not benefit yet from the pricing actions we took in July and October of 2021. These effects, combined with current low throughput due to supply chain constraints,
And while we have a substantial backlog many of the buses will not benefit yet from the pricing actions. We took in July and October of 2021.
These effects combined with current low throughput due to supply chain constraints.
Speaker 4: will create a very low first half of 2022 profitability, even by historical seasonally adjusted comparison.
We create the very low first half of 'twenty to profitability, even by historical seasonality adjusted comparisons.
Speaker 4: We are taking actions as outlined on this slide in order to improve our posting stability over the medium term.
We are taking actions as outlined on this slide in order to improve our posting stability over the medium term.
Speaker 4: and reduce our pricing exposure going forward. Those actions will start to show results in Q3 of 22 and become fully effective in Q4 of 22 due to the time lag, especially on the pricing side given the current backlog.
And reduced our pricing exposure going forward.
Those actions will start to show results in Q3 of 'twenty, two and become fully effective in Q4 of 'twenty two due to the time lag, especially on the pricing side given the current backlog.
Speaker 4: On the posting site we have increased our still hedging program and are working to extend it to our key suppliers.
On the costing side, we have increased our steel hedging program and are working to extend it to our key suppliers.
Speaker 4: We have engineered second source suppliers for key components in order to increase plant throughput and our resource in components where needed. We are also selectively exploring vertical integration options by our maker by analysis.
We have engineered second source suppliers for key components in order to increase plant throughput and our resourcing components where needed.
Also selectively exploring vertical integration options make or buy analysis.
Speaker 4: On the pricing side, we implemented 11% price increase to recover known cost increase.
On the pricing side, we implemented 11% price increase to recover known cost increases.
Speaker 4: so far the response has been positive and we will continue to monitor our win-lose rate in the marketplace.
The response has been positive and we will continue to monitor.
Our win lose right in the marketplace.
Speaker 4: To reduce our exposure, we already reduced our code guarantee from 90 to 60 days.
To reduce our exposure, we already reduced our code guarantee from 90 to 60 days.
Speaker 4: Additionally, due to still higher raw material price and price development, we have announced an additional 4% price increase effective March 1st of 22 for new orders.
Additionally, due to steel higher raw material prices and freight development, we have announced an additional 4% price increase effective March one of 'twenty two for new orders.
Speaker 4: However, this will only minimally impact fiscal 22 units all.
However, this will only minimally impact fiscal 'twenty two units sold.
Speaker 4: Another important change was the introduction in December of a variable price infrastructure for our dealers and customers while maintaining a higher fixed price option is desired. While it is still early, the initial response is also favorable on this.
Another important change was the introduction in December of a variable pricing structure for our dealers and customers, while maintaining a higher fixed price option if desired.
It is still early the initial response is also favorable on this one.
On slide 14, looking at the balance of fiscal 'twenty two.
Speaker 4: On slide 14, looking at the balance of fiscal 22, as previously discussed, we are expecting a difficult first half due to supply constraints and margin pressure. With the majority of the cost increases becoming effective on January 1st, based on our supply contract.
Obviously discussed we are expecting a difficult first half due to supply constraints and margin pressure was the majority of the cost increases becoming effective on January one based on our supply contracts.
Speaker 4: We still expect to see gradual relief beginning in Q3, the supply chain constraints are resolved due to new suppliers coming onboard, and the 11% price increase begins to take effect.
We still expect to see gradual relief beginning in Q3, the supply chain constraints are resolved due to new suppliers coming onboard and the 11% price increase begins to take effect.
Speaker 4: In Q4, we expect to be at higher production levels and with normalized margins. The full 11% price increase goes into effect and an additional minimal impact from the recently announced 4% price increase becomes also effect.
In Q4, we expect to be at higher production levels and was normalized margin of the full 11% price increase goes into effect and then additional minimal impact from the recently announced 4% price increase becomes also affected.
Speaker 4: Therefore, we are maintaining our guidance for fiscal 22 previously released during our fiscal 21 year end call. With that, I will now turn the discussion back to Matt, who will watch you through an update on our business.
Therefore, we are maintaining our guidance for fiscal 'twenty. Two previously released during our fiscal 'twenty one year end call with that I will now turn the discussion back to Matt who will walk you through an update on our business.
Yes.
Thank you Roslyn.
Speaker 3: I would now like to walk through progress on our key focus areas for fiscal 22.
I would now like to walk through progress on our key focus areas for fiscal 'twenty two.
Speaker 3: This is a reminder on slide 16. You can see our three foundational objectives. The first.
Just as a reminder, on slide 16, you can see our three foundational objectives.
The first is to take care of our employees.
Speaker 3: Second, this is a lighter customers and dealers. And the third is the deliverable growth.
The second is to delight, our customers and dealers and the third is to deliver profitable growth.
Speaker 3: Around each of those, you can see the key metrics we track in the business.
And each of those you can see the key metrics, we track in the business.
Speaker 3: With those foundational objectives in mind, we are focused on four key areas for fiscal-
But those foundational objectives in mind, we are focused on four key areas for.
For fiscal year 'twenty two.
Speaker 3: The first area is our people making Bluebird a premier place to work, better engaging our workforce and creating an inviting environment where all our employees look forward to the opportunity to share their passion and ideas.
First area is our people, making bluebird a premier place to work better engaging our workforce and creating an inviting environment, where all our employees look forward to the opportunity to share their passion and ideas.
Speaker 3: The ultimate goals are to improve our cost and quality and reduce absenteeism and nutrition.
The ultimate goals are to improve our cost and quality and reduce absenteeism and nutrition.
Speaker 3: Second major focus area is on lead transformation.
The second major focus area is on lean transformation.
Speaker 3: Taking the production of Bluebird School buses to the next level.
Taking the production of Blue Bird school buses to the next level.
Speaker 3: Building the foundation to implement a world-class operating system that drives out cost, improves quality, increases throughput, and improves a working environment for our keymates. The third area is to expand our total-
Building the foundation to implement a world class operating system that drives our cost improves quality increases throughput and improves the working environment for our teammates.
The third area.
To expand our total addressable market.
Now school buses will always be core.
Speaker 3: get there are some markets that take a chassis so similar to our school bus that i would call them an extension of a court competency of building great chassis rather than market adjacent
Yet there are some markets that take a chassis. So similar to our school bus that I would call them an extension of our core competency of building great chassis.
Other than a market adjacency.
Speaker 3: We have excess chassis capacity, and these additional segments can help us orb overhead, offset the seasonality of the school bus business, and assist us in retaining a more consistent workforce. Our final...
We have excess chassis capacity in these additional segments can help absorb overhead offset the seasonality of the school bus business and assist us in retaining a more consistent workforce.
Our final major focus area is scaling at BV.
Speaker 3: As we discussed extensively during our last earnings call, the EV market demand is heating up.
As we discussed extensively during our last earnings call. The EV market demand is heating up.
Speaker 3: and we have yet to even see the impact of the five billion dollars in incentives recently approved in the infrastructure spending bill that will pardon the pun supercharge the increased demand for battery electric school bus
And we have yet to even see the impact of the $5 billion in incentives recently approved and the infrastructure spending bill that will pardon the pun.
<unk> charged the increased demand for battery Electric school buses. This increased EV demand impacts everything from our sales strategies sourcing production transportation and infrastructure.
Speaker 3: This increased EV demand impacts everything from our sales strategy, sourcing, production, transportation and infrastructure.
Speaker 3: We have a dedicated cross-functional team that meets daily, that is focused on preparing blooper for this bright future and electrification and strengthening our leadership.
We have a dedicated cross functional team that meets daily that is focused on preparing bluebird for this bright future in electrification and strengthening our leadership position.
Speaker 3: Now let's take a look at some of our progress on slide 17.
Now, let's take a look at some of our progress on slide 17.
Speaker 3: On the people front, we upgrade the teammate facilities, including the calf, exterior, break rooms, the main walkway.
On the people front, we upgrade the teammate facilities, including the cafeteria break rooms that main walkways.
Speaker 3: We also recently launched an employee app where teammates can get real-time information on schedule changes, daily production rates, and other key topics.
We also recently launched our employee App for teammates can get real time information on schedule changes daily production rates and other key topics.
Speaker 3: We have also put in place safety and employee councils to list the teammate feedback on how we collectively improve.
We have also put in place safety and employee Council listed teammate feedback on how we collectively improve.
Speaker 3: We have a passionate, tenured based employees that have a great idea for how to take boober to the next level. Now the lead transformation is just getting started with some of the basics.
We have a passionate tenured base of employees that have great ideas for how to say bluebird to the next level.
Now the lean transformation is just getting started with some of the basic.
Including aspects of visual management and <unk>.
Speaker 3: We're also improving performance, transparency, and our facility with daily stand-up meetings on safety, quality costs, delivery, and people.
We're also improving performance transparency in our facility with daily standup meetings on safety quality cost delivery and people.
Speaker 3: or SQCDP with stations visible for reviews with the productions team.
Our SKU CDP with station and visible for reviews with the production teams.
We are also targeting non value added work in our facility and Steve clear path by 2025 to reduce our labor hours by 30% per bus.
Speaker 3: We are also targeting non-value-added work in our facility. It's the clear path by 2025 to reduce our labor hours by 30% per bus.
Speaker 3: We're already working on an issue to start to impact those numbers.
We're already working on initiatives to start to impact those numbers.
Speaker 3: The next slide focuses on our progress on expanding our total addressable market and scaling EV.
The next slide focuses on our progress on expanding our total addressable market and scaling EV.
Speaker 3: The target segments we will focus on to expand our chatty business, our motor homes, and last mile, class five and six delivery view.
The target segments, we will focus on to expand our chassis business, our motor homes and last mile class five and six delivery vehicles.
Speaker 3: There is a clear need in this space with only two main competitors. The total addressable market for all motor homes in the last mile chassis is roughly 30,000 units. Effectively doubling the addressable
<unk> is a clear need in this space with only two main competitors. The total addressable market for all motor homes and last mile chassis is roughly 30000 units.
Secondly, doubling the addressable market for Bluebird.
Speaker 3: We want to concentrate on offering a chassis for the higher end motor home statement in the EV powered last mile delivery.
We want to concentrate on offering a chassis for the higher end motor home segment, and the EV powered last mile delivery vehicles.
Speaker 3: As I mentioned, I would even call these adjacencies. There are more, I don't know, expansion of our two-of-recore competencies, and that is chassis design and assembly.
As I mentioned I would even call. These adjacencies there are more in the <unk>.
Expansion of our two of our core competencies and that is chassis design and assembly.
Speaker 3: These segments only really need minimal engineering from existing school bus chassis.
These segments only really need minimal engineering from existing school bus chassis design.
Speaker 3: We are progressing on the engineering and we are in the final selection process for the EV power training for the last mile delivery jet.
We are progressing on the engineering and we are in the final selection process for the EV powertrain for the last mile delivery Jesse.
Speaker 3: The discussions with potential customers are also progressing. Reinforcing.
The discussions with potential customers are also progressing reinforcing.
Speaker 3: our belief in the market for a need for an OEM engineered chassis solution backed by the aftermarket support of a proven company with a great deal of net.
Our belief in the market for a need for an OEM engineered chassis solution backed by the after market support of our proven company with a great deal of Nib.
On the EV side.
Speaker 3: We have made plans to scale up our production from our current capacity of four units per day to 12 per day by the end of this year, with a goal of an annual of output of 4,000 units by 2024.
We have made plans to scale up our production from our current capacity of four units per day.
<unk> 12 per day by the end of this year with a goal of an annual output of 4000 units by 2024.
Speaker 3: Beyond that, our goal would be to add an additional 2000 units of capacity, which would support our volume for the long-term outlook.
Beyond that our goal will be to add an additional 2000 units of capacity, which would support our volume for the long term outlook.
Speaker 3: To enable our ramp up in EV, we are repurposing an existing facility on the campus for dedicated EV chassis final assembly.
To enable our ramp up in EV, we are repurposing, an existing facility on our campus for dedicated EV chassis final Assembly.
Speaker 3: We're also putting in the necessary infrastructure to accommodate DC fast chargers to provide charging of all the units and process. Now moving on to slide 19.
We're also putting in the necessary infrastructure to accommodate DC fast Chargers to provide charging of all the units in process.
Now moving on to slide 19.
In summary, the outlook for Bluebird is incredibly positive.
Speaker 3: In the second half of the year, the pricing starts to catch up with production. And although we expect the supply chain disruptions to continue, there's been some material improvement.
In the second half of the year, the pricing starts to catch up with production and although we expect the supply chain disruptions to continue there has been some material improvement.
Speaker 3: Also our lean transformation activities have enabled us to break some of the bottlenecks in manufacturing and deliver a more consistent daily production volume even with the ups and downs of parts availability.
Also our lean transformation activities have enabled us to break some of the bottlenecks in manufacturing and deliver a more consistent daily production volume, even with the ups and downs of parts availability.
Speaker 3: We continue to be the alternative power leader with our success in EV and other non-decel power train solutions and we haven't even seen the impact of the $5 billion in incentives for EV and cleaner emission school buses from the infrastructure spending bill.
We continue to be the alternative power leader with our success in EV and other non diesel powertrain solutions and we haven't even seen the impact yet of the $5 billion in a status for EV and cleaner emission school buses from the infrastructure spending bill.
Speaker 3: We anticipate the EPA roll out the program by the end of March, and that we'll start seeing orders in the second half of calendar year 2022.
We anticipate the EPA rollout program by the end of March and that we will start seeing orders in the second half of calendar year 2022.
Speaker 3: And although the build backs better bill seems to be unice, there are elements of the program like increased funding for EV school buses that may still pass.
And although the build back better bill seems to be on ice. There are elements of the program like increased funding for school buses that may still path.
Speaker 3: Also, let's not forget the EV progress in Canada, which is an incredibly important market.
So, let's not forget the EV progress in Canada, which is an incredibly important market for us the province of Quebec will only purchase electric school buses going forward and we are one of only two players authorized to sell electric buses there.
Speaker 3: The province will only purchase electric school buses going forward, and we are one of only two players authorized to sell electric buses.
Speaker 3: As we just saw, we were making progress on our expanding our total addressable market. Yet that impact is not included in the long-term outlook like we shared on the last earnings call.
As we just saw we're making progress and are expanding our total addressable market yet that impact is not included in the long term outlook.
We shared on the last earnings call.
Speaker 3: Bluebird will be ready to take advantage of the opportunities with a market normalizes with respect to supply chain disruptions.
Bluebird will be ready to take advantage of the opportunities when the market normalizes with respect to supply chain disruptions.
In the meantime.
Speaker 3: We continue to move the business forward and state laser focus on our priorities and deliver them.
We continue to move the business forward and stay laser focused on our priorities and deliverables.
Speaker 3: We look forward to continuing to update you in our progress and development. We would now like to open.
We look forward to continuing to update you on our progress and development.
We would now like to open up the line for questions.
<unk>.
Speaker 1: At this time we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you...
At this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.
Speaker 1: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start keys. One moment...
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Speaker 1: Our first question is from Craig Irwin with Roth Capital Partners. Please proceed with your question. Hi, good evening, Jeff.
Our first question is from Craig Irwin with Roth Capital Partners. Please proceed with your question.
Hi, good evening gentlemen, thanks for taking my questions.
Speaker 5: So, hey, I'm great. I'm great. Some margins were actually pretty impressive given the headwind out there. You know, what? 575 basis points sequentially.
Hey, Craig.
Good morning.
Im great I'm baked some margins were actually pretty impressive given the headwinds out there.
What.
175 basis points sequentially.
Can you maybe talk us through a little bit more about.
Speaker 5: Can you maybe talk us through a little bit more about what allowed you to get those margins in the quarter? I know total prices now, 11 plus four, so that's a pretty good amount of prices to put through.
What allowed you to get those margins in the quarter.
Total prices now 11, plus four so.
That's a pretty good amount of price to put through.
<unk>.
Speaker 5: But what were the items that allowed you to see the short-term benefit? I mean, that's a big step up sequentially, and it was even a step up versus last year.
But what were the items that allows you to see this short term benefit I mean, that's a that's a big step up sequentially and it was even a step up versus last year.
Speaker 4: Yes, Greg. Thank you for the question. So on the margin side, we have a couple of elements going on. First of all, we have a higher mix of parts, business relative to the bus business in this quarter versus a year ago. And as you know, the margin on the part side is higher than on the bus. So that mix is a favorable effect.
Yes, Greg. Thank you for the question so on the margin side.
Have a couple of elements going on first of all we have a higher mix of parts business relative to the bus business in this quarter versus a year ago.
And.
As you know the margin on the parts side. This is higher than on the baas types. So that mix has a favorable effect.
Speaker 4: Secondly, we managed to postpone some of the increases from our suppliers into the second half of this fiscal year. So we were able to be a little bit more favorable on that front as well.
Secondly, we.
<unk> managed to postpone some of the increases from our suppliers into the second half of this fiscal year. So we were able to be a little bit more favorable on that front as well.
Speaker 4: Third, we have a favorable mix from our alternative power buses that have relatively favorable margins compared to diesel as well. And we also start to see more and more EV vehicles into the mix.
Third we have a favorable mix from our alternative powered buses that have relatively favorable margins compared to diesel as well and we also start to see more and more EV.
When he goes into the mix. So between all of these factors I think that is.
Speaker 4: So between all these factors, I think that is...
Speaker 4: why our margins have been gone up. But as I mentioned, in our it is mentioned in our 10Q, we have one additional effect on the inventory evaluation. And it was also in the presentation earlier on. So we did get a one time positive benefit from the inventory reveal. We updated the standards cost at the beginning of October and it gives us a one time bump reducing the unfavorable variance.
Why our margins have been gone up but as I mentioned in our.
It does it is mentioned in our 10-Q, we have one additional effect on the inventory revaluation and if those also in the presentation earlier on so we did get the onetime positive benefit from the inventory re Val <unk>.
Outdated the standup cost at the beginning of October and then it gives us a onetime bump reducing the unfavorable variances.
Speaker 3: It just that Craig you mentioned the 11% in pricing. We won't see that in the units in the first half of our year. That starts to come in at the back half.
And just just to add to that Greg you had mentioned the 11% in pricing we won't see that in the units in the first half of our year that starts to come in in the back half.
Speaker 5: Understood, understood. So then you guys obviously did a really good job on expense control as well, but if we flatten out the impact of accelerated investing for executives that left, right? You're up about 2.5 million year-over-year.
Understood understood. So then you guys, obviously did a really good job on expense control as well.
If we flatten out the impact of accelerated vesting for executives that left right.
You are up about $2 $5 million year over year.
Speaker 5: Can you maybe talk about what's going on with S&A? You did mention a couple times things you're doing for the employees.
Can you maybe talk about what's going on with SG&A. You did mentioned couple of times since youre doing for the employees.
Speaker 5: and retention. But is there anything that's gonna sort of structurally move this over the next couple quarters?
And retention, but is there anything thats going to sort of structurally movement over the next couple of quarters.
Speaker 4: Yes, I will take that question as well. Thank you. The baseline comparison to one year ago is extraordinarily low. If you remember, at that point in time, we had four loads and we had pay cuts.
Yes, I'll take that question as well thank you.
The baseline the comparison to what in the one year ago.
Extraordinarily low if you remember at that point in time, we had furloughs pay cuts and this is not a sustainable level for our auto business. So you have a couple of effects. Once we have restored the pay to the normal levels.
Speaker 4: And this is not a sustainable level for our business. So you have a couple of effects once we had to restore the pay to the normal levels. And in addition, we had to increase our pay for all the employees due to the inflation experience in the economy and going forward to ensure we are competitive in the marketplace and retain our talent. So these are the...
And in addition, we had to increase our pay for all of the employees due to the inflation experienced in the economy and going forward to ensure we are competitive in the marketplace and pay and our talent. So these are the two main items I would say in addition, we had the dealer meeting which was canceled the two years prior.
Speaker 4: Two main items I would say, in addition, we had the dealer meeting, which was canceled two years prior, and we had to take the opportunity to engage with our dealer network and align them and get them excited about the future.
And we had to take the opportunity to engage with our dealer network and.
Align them and get them excited about the future.
Speaker 5: So then if we could talk just a little bit about gross margins looking forward, I know you're careful about potentially giving guidance, but if we flatten the inventory revaluation impact, the benefit in the quarter, would you expect margins to continue to see a little bit of sequential pressure given the deliveries book? Or do you expect the deliveries to be incrementally favorable over the next few months?
Understood understood. So then if we could talk just a little bit about gross margins looking forward I know youre careful about potentially giving guidance right now.
If we flattened.
Inventory revaluation impact the benefit in the quarter.
Would you expect margins to continue to see a little bit of sequential pressure give.
Given the deliveries.
Or do you expect to see.
The deliveries to be incrementally favorable over the next few months.
Speaker 4: So definitely for the second quarter we expect increased margin pressure because as you mentioned in the presentation early on, we have many price increases from our suppliers becoming effective January 1st of 22.
So definitely for the second quarter, we expect increased margin pressure because as I mentioned in the presentation. Early on we have many price increases from our suppliers, becoming effective January one of 'twenty two and we are still working through many units in the backlog that have prices six to 12 months ago.
Speaker 4: And we are still working through many units in the backlog that have prices set 6 to 12 months ago.
Speaker 4: So the pressure will be higher on the Q2 margins and the expected gradual improvement.
So the pressure will be higher on the Q2 margins and they expect gradual improvement into Q3 and more favorable margins into Q4 fiscal 'twenty two.
Speaker 4: into Q3 and more favorable margins into Q4, Q520.
Speaker 5: Great, thanks. I'll hop back into Q and take my questions offline. Thank you.
Great. Thanks, I'll hop back into queue and taking my questions offline. Thank you.
Alright, Thank you Craig.
Speaker 1: As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone to indicate your line is in the question queue. You may press star 2 if you-
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.
Speaker 1: Our next question is from Eric Stein with Craig Hollum. Please proceed with your question.
Our next question is from Eric Stine with Craig Hallum. Please proceed with your question.
Hi, everyone.
Hey, Eric good afternoon.
Speaker 6: Thanks, good afternoon. So I believe last quarter you specifically called out approximately, I think 25 parts, kind of on average per bus that we're causing you issues. And you know, great to hear that you've got the one you called out one primary, where you've got a second supplier, but you know, curious.
Thanks, Good afternoon, So I believe last quarter, you specifically called out approximately I think 25 parts.
Kind of on average for Boston that were causing you issues.
And.
Great to hear that you've got the one you called out one primary where you've got a second supplier, but curious.
Speaker 6: kind of you think about those other main components progress you're making and your presentation you did call out um... you know that you are in the process of qualifying second suppliers and if needed third suppliers but would love to just your details beyond the primary one that you called out early in the call
And then as you think about those those other main components progress you're making in your presentation you did call out.
That you are in the process of qualifying second suppliers.
Third suppliers, but would love to just your details beyond.
The primary one that you called out earlier in the call.
Speaker 3: Yeah, absolutely. So just in general to the point you're brought up, like the previous quarter we were averaging, you know, 25 plus parts a day missing. And so...
Yeah, absolutely so just and just in general.
The point you brought up like the previous quarter, we are averaging 25, plus parts a day missing and so as I mentioned in my remarks, you see had seen some material improvement out of that we're about I'd say 15 on average per production day, but it only takes one long pole in the tent.
Speaker 3: long poll in the tent to prevent us from setting up that chassis. So it is, you know, it continues to be a David game of whack-a-mole, but we are seeing improvements and we're starting to extend further up in the supply chain to kind of look around corners, so to speak, to catch issues before they become impactful to our production. And in regards to that one component that I mentioned specifically on the call, that a thousand electrical component relative to our anti-lock braking system, and that supply...
Prevent us from setting up that chassis. So it is.
<unk> to be a daily game of whack, a mole, but we are seeing improvements in or starting to extend further up into the supply chain to kind of look around corners, so to speak to cash issues before they become.
Impactful to our production in regards to that one component that I mentioned, specifically on the call that that was an electrical component relative to our anti lock braking system and that supplier has improved their microprocessor allocation now where they're meeting our daily demand and also.
Speaker 3: And in regards to that one component that I mentioned specifically on the call, that was an electrical component relative to our anti lock braking system. And that supplier has improved their microprocessor allocation. Now where they're meeting our daily demand. And also we have a plan B should be needed that we have another supplier ready to go to, so that way we're not gonna lose production.
We have a plan b should be needed that we have another supplier ready to go.
So that way, we're not going to lose production slots.
Speaker 4: And if I may add on the inventory side, we are also taking actions to pre-by certain key components to ensure we have a little bit of safety stock or buffer so that we can react faster in case some of the shortages happen unexpectedly.
And if I may add on the inventory side. We are also taking actions to pay by certain key components to ensure we have a little bit of safety cohort buffer so that we can.
React faster in case some of the shortages happened unexpectedly.
Speaker 6: Gosh, no, that makes sense. Maybe just to clarify, so it sounds like, as you think about the cadence of the quarters here in the fiscal year, that really it's going to be very weighted to the fourth quarter and maybe I...
Gotcha.
That makes sense.
Okay.
Just to clarify so it sounds like.
As you think about the cadence of the quarters here in the fiscal year.
Really it's going to be very weighted to the fourth quarter and maybe.
Speaker 6: maybe I imagine this from the last quarter, but it did seem like last quarter, you thought it would be more of a three-cute 4Q event. I mean, is it fair to say that you're trying to be a little bit more cautious?
Maybe I imagine this from the last quarter, but it did seem like last quarter you thought it would be more of a <unk> event. I mean is it fair to say that you are trying to be a little bit more cautious.
Speaker 6: on that because while you're making progress there are still issues or would you kind of view that that view of recovery in that it's really time for the fourth quarter is basically unchange for the last
On that because while you are making progress there are still issues.
Or would you kind of view that is that view.
And then it's really time to the fourth quarter is basically unchanged versus last quarter.
Speaker 3: Yeah, Eric, if you're talking with regards to supply chain, I think we're just being cautiously optimistic, right? We've seen as a mentioned material improvement from 25 to 15 parts per day.
Yes, Eric you were talking in regards to supply chain I think we're just being cautiously optimistic we've seen scene.
There's some material improvement from 25% to 15 parts per day, and if youre talking relative to pricing.
Speaker 3: And if you're talking relative to pricing, you know, we have this first half of the year where we don't have really any of that impact of 11%, and we gradually start to pick that off through the third quarter, and then of course in the fourth, we start to fully realize that. And then we'll pick up, you know, some units, but it'll be marginal relative to that additional 4%, we just announce.
This first half of the year, where we don't have really any of that impact is 11% and we gradually start to pick that up through the third quarter and then of course in the fourth we start to fully realize that and then we'll pick up some units.
But it will be marginal relative to that additional 4%, we just announced.
Okay.
Speaker 6: Okay, all right, no that makes sense.
Okay got it.
Alright that makes sense.
Speaker 6: Maybe you could segue to the pricing. I know you did last quarter kind of unveiled the variable price model, but I know you're also obviously increasing prices. You know, for the fixed price option, you know, just curious kind of what you're hearing from your dealers, what's going into that decision, given all the moving parts.
Maybe a good segue to the pricing I know you did last quarter kind of unveiled the variable pricing model.
But I know you're also obviously increasing prices.
For the fixed price option, just curious kind of what youre hearing from your dealers, what's going into that decision given all the moving parts.
Speaker 4: Yes, thank you for the questions. So we introduced the concept of the variable pricing at the dealer network at the end of last year and we put it in effect early this year. The initial reaction is positive. So some dealer appreciate the opportunity to have a locked fixed price. And some appreciate the opportunity to have a bit more flexibility into the future.
Yes. Thank you for the question. So we introduced the concept of the variable pricing.
<unk> network at the end of last year and they put it in effect.
This year the.
Initial reaction is positive both our dealer I appreciate the opportunity to have locked fixed price.
And Simon appreciate it.
Opportunity to have a bit more flexibility into the future.
Speaker 4: It's a bit early to call it, so I think we need a couple more months to have a more statistical relevant base, let's say. But overall, I would say the message was clearly understood by our dealer network and it's something that we absolutely have to do in order to...
A bit early to call. It. So I think we need a couple more months to have a more statistically relevant base, let's say, but overall I would say the message was clearly understood by our dealer network and it's something that we absolutely have to do in order to.
Speaker 4: align the equation on the pricing and costing given the current inflation or environment.
Align the equation on the pricing and costing defend the current inflationary environment.
Okay I'll take the rest offline.
Alright, Thank you Eric.
Speaker 1: We have reached the end of the question and answer session and I will now turn the call over to Matthew Stevenson for closing remarks.
We have reached the end of the question and answer session and I will now turn the call over to Matthew Stevenson for closing remarks.
Alright, Thank you Kyle and thank you to all those joining us on the call today.
Speaker 3: All right, thank you, Kyle, and thank you to all those joining us on the call today. As you heard during our prepared remarks, in kind of mean orders for our school buses continue to trend at pre-COVID levels and our backlogs that are record 500 million. And we are continuing our dominance and alternative power buses.
As you heard during our prepared remarks, and ketamine orders for our school buses continued trend of pre COVID-19 levels and our backlogs at a record $500 million.
And we are continuing our dominance in alternative power buses plus.
Speaker 3: Plus we're making progress in our key focus areas, improving the workplace for our teammates, transforming our processes, scaling operations for the growth in EV, and expanding our total adjustable market.
Plus we are making progress on our key focus areas improving the workplace for our teammates transforming our processes scaling operations for the growth in EV and expanding our total addressable market.
Speaker 3: The supply chain disruptions we have seen over the last few quarters appear to be moderating. We expect recovery to support ramping up production significantly in the second half of this fiscal year.
The supply chain disruptions, we have seen over the last few quarters appear to be moderating, we expect recovery to support ramping up production significantly in the second half of this fiscal year.
Speaker 3: We look forward to updating you again on our progress next quarter and appreciate your continued interest in Bluebird. Should you have any follow-up questions please don't hesitate to contact our head of profitability and investor relations Mark Benfield. And thank you again from all of us here at Bluebird.
We look forward to updating you again on our progress next quarter and appreciate your continued interest in Blue bird.
Should you have any follow up questions. Please don't hesitate to contact our head of profitability and Investor Relations Mark Benfield and thank you again from all of US here at Blue Bird.
Speaker 1: This concludes today's conference and you may disconnect your lines at this time. Thank you for your...
This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
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