Q4 2022 Blue Bird Corp Earnings Call
Good afternoon, and welcome to the Blue Bird Corporation fiscal 2022 fourth quarter earnings Conference call.
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I would now like to turn the conference over to Mark Benfield head of Investor Relations. Please go ahead.
And welcome to Blue Bird's fiscal 2022 fourth quarter earnings conference call.
The audio for our Call's webcast live on Blue dashboard Dot com under the Investor Relations tab.
Can access the supporting slides on our website by clicking on the presentations box on the IR landing page.
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 filings with the SEC.
Blue Bird disclaims any obligation to update the information in this call.
This afternoon, you will hear from Blue Bird's, President and CEO , Matthew Stevenson, and CFO , Roswell and Roger I'll ask it.
Then we will take some questions. So let's get started Matt.
Thank you Mark and good afternoon, everyone.
Roswell, Ron and I are incredibly excited to share an update on the progress of Bluebird no doubt fiscal year 'twenty, two which closed on October one was a challenging year due to the residual effects of COVID-19 that impacted our business, which included exhaustive supply chain disruptions and unprecedented industrial inflation.
However, I am proud to say through the hard work of the Bluebird team. We have navigated these turbulent seas and have positioned the organization for a significant success in this current fiscal year 2023.
On slide six you can see we did that by executing our plan in several key areas along with the added benefit of strong market fundamentals overall industry demand is robust and is driving a record backlog for bluebird at this time of year.
We also continue to hold a leadership position in alternative fuels and electric buses.
The year, we aggressively increased forward pricing and we partially recover pricing on the backlog the mash inflationary economics. In addition to raising prices, we dramatically drove cost out of the business and not just for the short term.
We reorganized our functional areas to be more efficient and leaner and we eliminated several non value added operations across the business.
Through strong leadership tenacity lean processes and a host of operational changes, we improved parts availability and increased our throughput and quality.
Missing parts is set up or down dramatically compared to previous quarters and the vast majority of our parts are now installed and station, reducing rework costs and improving quality.
This is by far and away the best position that Bluebird has been in since I joined the company 18 months ago.
The financial performance for fiscal year 'twenty two shown on slide seven reflects several headwinds that are now mostly behind us and does not capture the current state of the business.
However, some key financial metrics are showing signs that we have turned a corner bulky.
Bookings at 6822 were up only 2%, but revenue was up 17% to $801 million as our pricing starting to take hold throughout the year. Adjusted EBITDA was negative $15 million, but free cash flow was up $39 million year over year as throughput increase.
In the back half of the year and we drastically reduced inventories.
Even though the financial results were not ideal we still had several key successes as you can see on the right hand side of the slide.
As I mentioned demand is robust in fact industry order intake in fiscal year 'twenty, two was up over 30% compared to the prior year and even up 9% versus 2019.
Bluebird is seeing this increase in demand.
Our backlog is incredibly robust with over 5000 units worth over $600 million of revenue.
Nearly 60% of that backlog is alternative power demonstrating our continued leadership in this space.
Included in that alternative power backlog is around 100 million of firm orders for electric buses and.
And we are only just starting to receive orders from the Epa's Clean School bus program.
The strength in our EV business is evidenced by the fact, our bookings are up 84% year over year and were recently crested over 850 Electric school buses on the road today, including type a C and D.
As we have discussed in previous quarters, we have raised pricing by 25% since July of 'twenty, one which has aided in doubling our standard gross margins in the backlog since the start of our fiscal year.
Part sales were another bright spot for us up 30% year over year.
With such a strong recovery and with our business back on track, we extended our term debt through the end of calendar year 2024.
Now the EV School bus Revolution is just getting warmed up the EPA recently announced the lottery winners for the first $1 billion and funding from the Clean School bus program, which provides 5 billion over five years for clean and cleaner emission school buses Bluebird is poised to generate over 200.
And revenue from just this first round of this fantastic program and this wasn't by chance.
We offer the industry, the leading electric school bus through our powertrain partnership with comments.
We have proven to customers that are electric buses are not a novelty and could perform on the regular routes plus.
Plus the Bluebird energy services launch this year, we successfully assisted many end customers and dealers implying for the lottery program.
Through the other facets of Bluebird energy services, we are now helping these customers plan and secure their electric infrastructure.
Slide eight shows the focus areas, we laid out nearly a year ago.
We center everything we do on care delight and deliver.
In fiscal year 'twenty two that included four main focus areas are people lean transferred transformation.
Expanding our total addressable market and scaling EV.
Now on slide nine I want to highlight the progress of each of those focus areas.
When it came to our teammates we focused on several crucial elements, we laid out a clear vision to be the clean school bus transportation leader, we hired at nearly all new leadership team to take this company to a higher level performance, we implemented numerous communications channels in our organization everything from town halls to them.
Mobile app to drive more engagement with our employees.
That employee engagement included new opportunities for employees to provide feedback.
Interact more regularly with senior management and share their ideas.
We have also improved the competitiveness of our wage and benefit structure to reward employees compensate for inflation and reduced turnover in.
In addition, we have improved our employee onboarding span of control and talent review processes.
The second focus area lean transformation.
We rolled out numerous initiatives across the plant focused on safety material placement teamwork accountability and reducing waste.
For example, we are in the process of completing our rollout of cell production teams. These teams are accountable for a specific portion of the manufacturing process include a dedicated leader for production quality materials and manufacturing engineering.
These teams work to deliver the best output at the lowest cost and focus on immediate problem resolution accountability training and coaching.
They have already made a significant impact on our business performance.
Lean method methodologies have also improved the layouts of our areas of the plant to make them safer and more efficient.
An example of this is our final finished area are pictured in the top right, where we increase our output by over 30%.
We also made progress on our plan to increase EV School bus production from 4% to 12 per day by the end of the first half of calendar year 'twenty three.
And a <unk> 20 per day by the end of calendar year 'twenty three.
We are renovating an existing 40000 square foot building on our campus for final EV chassis Assembly and commissioning and we expect it to be complete by the end of March.
We also started down the path of expanding our total addressable market with a focus on the strip chassis market for last mile delivery vehicles.
There is incredible demand for an additional OEM EV provider in this space and the prototype strip chassis. We debuted in May at the Act Expo garnered much attention.
We continue to progress on this product with the goal of having units in customers' hands by the end of calendar year 'twenty three.
Overall, I am very proud of the accomplishments of the Bluebird team in a challenging external environment, our progress in fiscal year 'twenty. Two has set us up for an incredibly successful fiscal year 2023, even in a relatively supply chain constrained market.
I'll touch more on our fiscal year 'twenty three outlook in a few minutes, but in the interim I would like to hand, it over to Raj wanted to walk through our fiscal year 'twenty two financials in more detail as well as our fiscal year 'twenty three guidance.
Thanks, Matt and good afternoon, it's my pleasure to share with you the financial highlights from global fiscal 2022, and fourth quarter results the quarter and is based on a close date of October one 2022, whereas the prior year was based on a close date of October 2nd 2021.
We will file the 10-K today December 12 after the market closes our 10-K includes additional material and disclosures regarding our business and financial performance.
We encourage you to read the 10-K and the important disclosures that it contains.
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.
Slide 11 is a summary of fourth quarter and full year results for fiscal 'twenty two.
I will start with our fourth quarter results summary, and I'll focus on the full year results for fiscal 'twenty, two and guidance for fiscal 2003 for the remaining of the presentation.
It was another challenging quarter for Blue bird with some persistent supply chain disruptions limiting our throughput and impacting our efficiency and overtime of the plan and delay the inflationary cost pressures that became effective on July one.
We also had extremely high working process at the beginning of the quarter and we work through still a large number of Blackhawk low margin units with all of our pricing.
Despite all these challenges the team has done a fantastic job and generated 2016 unit sales volume, which was 105 units or 6% higher than prior year.
Holiday <unk> net revenue of $258 million was $6 6 million or 34% higher than prior year, driven primarily by a higher mix of electric buses and pricing actions that are starting to take hold.
The adjusted free cash flow was $30 million positive.
70 million higher than the prior year fourth quarter. This outstanding performance was driven by the reduction in inventory back to normal levels during the quarter and support our great liquidity position at the end of fiscal 'twenty two.
Adjusted EBITDA for the quarter was negative $16 million and it includes a noncash inventory charge of negative $9 million, which we took at the end of the year. Excluding this charge. The adjusted EBITDA would have been negative $7 million due to supply chain driven operational inefficiencies that's already incurred in working down the <unk>.
Inventory at.
Additionally, we experienced in this quarter increased material costs and still a relatively large amount of oil backlog units.
Looking back at the total year fiscal 'twenty, if it was an incredibly difficult year for Bluebird. We started in Q1 with a supplier allocation desktop our volumes approximately half followed by unprecedented inflation in steel prices that almost tripled by Q2.
We had fixed pricing on oil backlog during the entire first half and an unsuccessful production increase in Q3 and the respective inventory accumulation. However, the current trends are encouraging with all the operational metrics starting to improve during Q3 and continuing in Q4.
As a result, we sold 6822 boxes in the year 143 units higher than prior year, so slightly above fiscal 'twenty one consolidated.
Consolidated net revenue of $801 million was 117 million or 17% higher than prior year.
Given by pricing actions that started to take hold especially in the second half of fiscal 'twenty two.
The adjusted free cash flow was negative $23 million and still $39 million higher than the prior year driven by a reduction in inventory back to normal levels by the end of Q4.
Adjusted EBITDA was negative $15 million or 49 million below prior year. This includes a yearend 9 million noncash inventory charge, excluding that the adjusted EBITDA for the year would have been negative $6 million.
Moving on to slide 12, as mentioned before by Matt Our backlog at the end of the year continues to be extremely strong at over 5000 unit with the vast majority of these units at much higher price levels compared to the fiscal 2002 built Union moron.
More on this later on.
Breaking down to $801 million in revenues into our two business segments. The Boston net revenue was $724 million up by almost $100 million versus prior year.
Our average bus revenue per unit increased from 94000 to 106000, which was largely as a result of pricing actions taken over the past 12 months as well as a higher mix of electric buses eight 9% versus two 2%.
Supply constrained EV sales were at a level of 269 units or 123 more than last year and 84% increase.
<unk> revenue for the year was $77 million, representing an improvement of $18 million or 30% compared to the prior year.
Over the past few quarters, we have seen improvement in part sales, which is an indicator that the normal work for school districts is getting back to pre COVID-19 levels.
Gross margin for the year was four 6% or 590 basis points lower than last year due to the old backlog fixed pricing increased material cost and supply driven operational inefficiencies.
In fiscal 'twenty, two adjusted net income was negative $36 million or $45 million lower than last year.
Justice EBITDA of approximately negative $15 million was down compared with prior year by $49 million.
Adjusted diluted earnings per share of negative $1 15.
It was down $1 46 from the prior year.
Slide 13 shows the walk from fiscal 'twenty, one adjusted EBITDA for the fiscal 'twenty to result.
On the left of $34 million slightly higher <unk> volume of 143 units and increased parts margins generated a positive $8 million improvement year over year.
The next three buyers need to be analyzed together pricing improvements of approximately 10% lifted our standard gross margin by $80 million. However, the material cost, including steel increased by $72 million year over year and supply chain disruptions and higher freighting cost generated operating inefficiencies of <unk>.
$61 million.
Bottom line due to the old backlog on fixed pricing, we're able to cover only two thirds of the extra costs incurred during the year.
SG&A and engineering expenses, excluding restructuring expenses were <unk> 4 million higher than last year due to labor cost increases versus extraordinary COVID-19 related costs in prior year and Bluebird reinvesting in engineering projects to ensure our future growth in EV and chassis and to Maine.
Our leading product competitiveness.
Additionally, our JV results from micro, but we're close to $5 million lower versus prior year as they have been also affected by supply chain shortages predominantly the microchip shortage, which is impacting the chassis allocation from Ford and GM.
As of today, the chassis supply has been improving and we expect the JV to return to profitability in fiscal year 'twenty three.
Looking at the total year results, if you add back the operational inefficiencies driven by the supply chain of $51 million and the year end non cash inventory charge of $9 million. Our result would have been $45 million or $11 million improvement versus the prior year.
Moving on to Slide 14, we have all across the board positive development year over year on the balance sheet. We ended the year revenue was $10 million in cash and reduced our debt by almost $40 million.
The improvements in operating cash flow and adjusted free cash flow were primarily driven by trade working capital hits, our inventory reduction in the last quarter I will discuss this more on the next slide.
As a subsequent event at the end of November we entered into the sixth amendment to our credit facility.
Pending the maturity date through December 31, 2020 for the sixth Amendment provides for revised covenant modifications to our revolving credit facility and a new pricing grid.
The amended covenants and extended maturity of our loan provides bluebird with both flexibility and stability of our business continues to recover from the COVID-19, pandemic and associated global supply chain disruption.
On slide 15, Youll see the fantastic progress down by our operations teams to reduce.
All material inventories in working process returning to a normal level by the end of the quarter as indicated in our last earnings call.
As a reminder, our end of Q3 inventory levels were elevated due to the our successful steep production ramp up we kicked off before the order in Ukraine, and China Lockdowns happen earlier in the year.
As mentioned before in the presentation at the end of Q4, that's a robust segment inventory had been approximately $8 8 million cumulative cost in excess of net realizable value.
Recognized as a loss in fiscal 2002 with no similar activity in fiscal 'twenty one.
We are also continuing our strategic pre buy of major components fourth engines and components to ensure smooth production levels in fiscal 'twenty three.
We are very happy to report that the positive inventory reduction trend continued through October and November in fiscal 'twenty through Q1.
And our liquidity sits at approximately $100 million as of December 1st with a revolver balance is zero. So our balance sheet is in great shape for fiscal 'twenty three.
And the next two slides, we will share with you why we are very confident that the worst is behind us. Our turnaround is working and we are on track to return Bluebird to historical profitability during fiscal 'twenty three.
On slide 16, Youll see how after the steel spot prices sharp pick up 300 to $500 per ton in March and April that Bob will reverse itself by July .
The favorable trend continued through December 1st and this is a very good development for our future results, especially for second half of fiscal 'twenty, three and into fiscal 'twenty four.
One is to take into account that we are also entering into future locked contracts for steel prices with certain tonnage is up to 12 months forward.
Therefore, the favorable impact will be a stair step function of planting locked tonnages with period spot prices. However, this is an upside at this point for our fiscal 2000 <unk> results.
Assuming the spot prices remained relatively low in the future.
On slide 17, we are showing a simplified production versus backlog agent pricing structure as an update of how we are working through the backlog we saw pricing.
You can see that the first half of fiscal 'twenty towards comprised entirely of all backlog units.
By Q3 and into Q4, we started to build some better priced unit, but still with a gap versus the current economics. This explains a large portion of our losses during fiscal 'twenty two.
Together with our dealer partners. We also were able to increase partially the prices for backlog units beginning with may production and recovered about half of the missing pricing for each respective price level.
However, during fiscal 'twenty three Q1, we still have approximately one third of our production with very old units and some of the worst margins.
We estimate this headwind to be approximately $10 million for fiscal 2003, Q1 or 5% on approximately $200 million in revenues.
Nevertheless, starting with fiscal 'twenty six between January we will have put the vast majority of the all backlog units behind us and have locked in pricing and backlog units at increasingly better margins.
In fact, our production schedule is almost full through the end of fiscal 'twenty three Q3 with some production slots left $12 four EPA easy orders.
While on some models type D. For example, we are sold out for the entire year. Currently we are filling the remaining slots open for fiscal 'twenty three Q4 for type C. Ltvs at very good margins.
On slide 18, looking at fiscal year 'twenty, three we want to share with you our forecast by quarter, which serves as the basis for our fiscal 2003 total year guidance.
We are taking a more transparent and conservative approach this year as it will still be somewhat uncertain year from a supply chain perspective, yes. We are confident that we have course corrected all of the other business levers that we could address.
Looking at fiscal 'twenty, three Q1, our normal years historical results at around $5 million because this quarter has the lower number of production days and sometimes seasonally labor related higher expenses related to calendar year end.
Going into account the headwinds of $10 million from missing pricing, we expect to end fiscal 2000, <unk> around negative $5 million.
All of our quarterly forecast are plus or minus $2 5 million. So the range you expect this negative seven five to negative $2 5 million adjusted EBITDA for this quarter.
Moving to fiscal 'twenty, three Q2, and Q3, we have higher prices, taking hold higher revenues small improvements from lower material costs, partially offset by increased labor cost due to cost of living adjustment.
Therefore, we forecast to $120 million to $240 million in revenue and $10 million and adjusted EBITDA for Q2.
And 230 to 260 million in revenues and 15 million in adjusted EBITDA for Q3, each with a margin of plus minus $2 5 million.
Finally in fiscal 'twenty, three Q4 with higher volume increased EV mix best pricing and lower material costs, we expect to generate 250 to 280 million in revenues with adjusted EBITDA of $20 million plus minus $2 5 million.
Putting it all together for the total year, we expect revenues in the range of $900 million to 1 billion and adjusted EBITDA of approximately $40 million with a range of $35 million to $45 million.
Moving to slide 19, we expect in summary of significant improvement year over year in all aspects.
Revenues up approximately 20% for $900 million to 1 billion adjusted EBITDA of $35 million to $45 million and positive free cash flow of zero to $10 million.
However, if you look at the second half expected results from the prior page. It shows a full year run rate of $70 million of adjusted EBITDA. Our revenues just above $1 billion, which is back to the pre COVID-19 top level of performance and set us up for taking it to the next level in fiscal year 'twenty four and beyond.
Moving on to Slide 20, we want to provide you with a refreshed look at our outlook beyond 2023.
Once the supply chain further normalizes, we expect to sell approximately 9500 units, including 500 units evs and generate $100 million or 8% adjusted EBITDA and $1. Two 5 billion in revenues. This could be as early as fiscal year 'twenty four if the business environment is.
<unk> by then.
Looking beyond that in the medium term, our EV growth and operational improvements can support volumes of 10500 to 11000 units, including Evs in the range of 2500 to 3500 units generating revenues of one five to $1 75 billion with adjusted EBITDA of 150 to 200.
Million or 10% to 11%.
Our long term target remains to drive profitable growth towards $2 billion in revenues comprising of 12000 units of which 5000, rovs and generate EBITDA of $250 million or 12%. We're incredibly excited about <unk> future and now I will turn it over back to Matt to further expand.
On this.
Okay. Thank you Raj one.
On to slide 22.
As detailed in the fiscal year 'twenty three guidance at Roswell and walk through we still have another quarter before we start firing on all cylinders as we navigate through some older priced units in the first quarter.
Still we are forecasting fiscal year 2000, <unk> results that are dramatically better than fiscal year 'twenty two.
We plan on booking at least 8000 units, a 17% increase over fiscal year, 'twenty, two and driving a topline of nearly $1 billion, a 19% increase year over year.
Parts revenue will continue to be a bright spot and we see line of sight to at least $84 million in revenue up 10%.
The EBITDA performance, we expect to be up over 350% compared to fiscal year, 'twenty, two and to be approximately $40 million.
EV bookings will be a significant component of those results and we plan to double our EV bookings over 500.
On the right hand side of the slide you can see the acte retail sales forecast for fiscal year 'twenty three.
It continues to be supply chain constrained across the industry.
And our targeted bookings will put us right, where we want to be around that 30% market share.
What is the extremely exciting is the demand in front of us with many other industry slowing down school buses are a great place to be retail sales have been off from their average of 32000 units per year for three years in a row now and the National School bus fleet is aging.
The market was first constrained by Covid and school closures and has been held up more recently by the supply chain. These buses must be replaced and we expect substantially robust years ahead of us to address pent up demand.
ADT is forecasting a compound annual growth rate of 10% from our fiscal year 2003 to 27.
The last two years have been challenging, but our business is back on track and we look forward to the robust market ahead.
On Slide 23, you can see another critical component of our outlook, which is the Epa's clean school bus rebate program.
As we've discussed this program allocates 5 billion over five years for clean and cleaner emission school buses.
We applaud the Epa's execution of this program as it went off without a hitch.
It was straightforward to apply and the timeline from inception to identification of the lottery winners was extremely quick.
Applications were taken from May through August and the winners were announced at the end of October .
The demand was so strong that the EPA allocated nearly $1 billion in this first round.
Most all of this funding went to electric buses and 99% of this funding wintered priority districts.
Approximately 2500 buses will be funded with an average rebate of $375000 per bus.
Customers will have until the end of April to place their orders.
Blue Bird and our dealer partners put on a full core press to help customers apply for this lottery program.
Through our collective efforts, we assisted indirectly securing approximately 300 buses and we have identified loyal bluebird customers, who applied for funding themselves, who will account for at least another 200 buses.
Therefore, we expect the impact on bluebird to be at least $200 million of revenue based on securing 500 to 700 additional <unk> orders.
The long term impact of this program will be well over $1 billion in revenue to our organization the.
The next round of the Epa's Clean School bus program is expected to start in early 2023, as a competitive grant program and we'll be right there with our customers supporting their applications.
Please keep in mind, though that this is not the only program out their funding the purchase of EV School buses.
<unk>, New York, New Jersey, and Colorado collectively have billions allocated to this purpose.
There are so many exciting things in front of Bluebird, let's turn to slide 24 to summarize our strong outlook ahead.
First is the market demand for Blue Bird School buses.
With our record backlog for this time of year, we are a great counter cyclical play that many companies in the industry is being affected by the slowdown in consumer spending.
Plus not only are the fundamentals of our industry is strong its just starting to heat up with a 10% compound annual growth rate expected over the next five years.
Second there is commitment from the highest level of government to electrify this country's school bus fleet.
Not only will this reduce greenhouse gases it'll help reduce particulates are found to be a contributor to childhood asthma.
Electrifying School buses is a mission that makes sense to everyone.
And Bluebird will be a direct beneficiary of this as we have more electric school buses on the road today than anyone.
We have a proven reputation as a leader in alternative powered school buses for over a decade as evidenced by the 20000 plus propane powered blue birds that are on the road today.
Our partnership with Cummins on EV offer something no other electric school bus manufacturer provides.
That is a powertrain partner with over 100 years of experience and who knows the school bus industry inside and out.
Roswell and walk through our long term forecast and as impressive as the outlook is it does not even factor in our efforts to expand our total addressable market the.
The commercial strip chassis offering could add thousands of units per year to the long term forecast.
Also we implemented measures to reduce cost in the short term and we restructured the organization to be leaner.
Moving non value added processes, and reducing standard production hours per bus.
And the work never stops as we are constantly looking for ways to take out cost and in the same time increase quality.
As we touched on today, we've not only align pricing to the economic inflation in the market, but we have also revised our pricing model to be more nimble and reduced risk in an inflationary environment.
All of these factors will provide us with a 10% plus adjusted EBITDA margin and a mid term normalized operating environment.
As you saw in the guidance, we provided for the second half of fiscal year 'twenty three will get back to historic levels of 7% adjusted EBITDA on supply constrained volume proved.
Proving that in a normalized operating environment double digit adjusted EBITDA will be in our reach.
As I mentioned at the beginning of this call. We were extremely excited to update you on our progress at Bluebird and I Hope you now understand why.
Our team has worked incredibly hard to get the business back on track and prepare for a bright future.
I would like to thank all of our teammates for their efforts this past year.
We would now like to open up the line for questions. Thank you.
We will now begin the question and answer session to.
To ask a question you May press Star then one on your telephone keypad.
If you were using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question is from Eric Stine with Craig Hallum. Please go ahead.
I'm all restaurants.
Hey, Eric how are you doing.
Alright.
So thanks for all the details, especially per quarter very helpful. I'm curious.
Just on the EV side first I just wanted to confirm did you say that you are you are pretty much sold out or your production slots are full for fiscal 'twenty three so I guess that would be first.
Then secondly, I mean is your goal that you would.
You would satisfy that you ran.
And another one.
For the 600 units that you may get in terms of awards as part of the EPA program and then fiscal 'twenty four that's when you'd be able to.
Be more timely in terms of satisfying order flow.
Yeah, Eric This is Matt I'll take that so in terms of the EV.
<unk>, so we're actually reserving slots.
Through the back half of our fiscal year.
For these orders that will be coming in from this clean School Bus Act program. So as of right now we're reserving slots, we have about 350 evs in the backlog right now, but as we stated in our prepared remarks, our goal is to book well north of 500 to that.
For the fiscal year, and then regarding the clean School bus program. Our estimates are we will get an additional 500 to 700.
Orders out of the awards.
Better yet to come in and the customers have until the end of April to get those orders in.
Okay and it was good to see me award that you put out last week I mean as I would think then.
And do you think its kind of weighted backend towards April when the deadline comes or do you think there's kind of a steady tick up between now and then.
I think with the holidays coming up it would be a little slower we've already gotten some in but we expect really the crush of these to come in after the new year.
Got it and then.
Maybe last one for me you just mentioned the steel prices that have come down pretty substantially in <unk>.
You're almost I guess, one more cargo before you really start to feel the positive impact of the price increases.
<unk> pulled out longer term, how do you feel about being able to hold price senior customers can see the same thing that steel prices have come down and I know you've taken a lot of steps on the pricing side. So maybe how you think that push and pull plays out.
Yes. Thanks for the question I'll take that one this is <unk> so pricing is obviously.
A competitive aspect of our position in the market. So we are always watching our competitiveness and we will adjust accordingly going forward.
On the other hand as mentioned in our prepared remarks, we have taken steps to limit our exposure on the forward quotes and.
Sales that we have so we are now much more flexible than in the past as it relates to steel there is a time lag until the time when we can benefit from these reductions because of the forward looking that we put in place. So we'll have to take into account. All these three factors and then monitor our competitiveness and our order input.
But overall, we feel very positive that our margins are very strong in the backlog and we are collecting orders today for Q4 fiscal 2003 also had very good margins.
Yes.
Okay. Thank you.
Alright, Thank you Eric.
The next slide pardon me again, if you have a question. Please press Star then one the next question is from Mike <unk> with D. A Davidson. Please go ahead.
Hi, Darren this is David Johnson on for Mike.
Just a couple of questions you discussed in expansion plan for your EV manufacturing, putting it in a dedicated space in the last call, but since then the EPA doubled the subsidies for this tranche essentially accelerating the pace of its grants will bluebird be able to keep up with all of this can you accelerate your capacity.
Expansion, if you need to.
Yes.
Hi, David This is Matt Stevenson and so we had line of sight in terms of the funding and the subsequent buses that it would eventually.
Provide over.
Time periods. So this is what we took into consideration when we developed our ramp up plan. So you think of that <unk> 12 per day puts us roughly around that 2500 units a year and then we're also expanding to 20 per day by the end of calendar year 2003, So we'll have plenty of capacity.
They're based on the needs of this program.
Great.
And then one more for me can you provide an update on your non bus program through Lightning Motors, how has that been going and do you have an updated timeline through development and product launch.
Yeah. Thanks, David So I think you're referring to the strip chassis targeted at those last mile Lightbox delivery vans, and we're continuing to progress with lightning and our goal is to have a demonstration units in customers' hands by the end of calendar year 'twenty three.
Great.
Maybe if I can just slip one more in there can you confirm whatever EV buses youre getting from the EPA program Theyre going to take an order away from your diesel business in other words. The net delinquency do you expect to make in fiscal 'twenty three is unchanged.
David This is Ron I'll take that question at this point our.
Throughput is constrained by the supply chain, primarily so indeed uneven you order it takes out on all diesel bus of growth.
Doesn't necessarily mean that it's a one for one stop on our total volume or total volume currently is constrained by the supply chain.
Great. Thanks, a lot I'll pass it along.
Thank you David.
This concludes our question and answer session I would like to turn the conference back over to Matthew Stevenson for any closing remarks.
Alright, Thank you Gary and thank you to all those joining us on the call today.
As you heard during our prepared remarks, the fundamentals of our market are strong and our demand is robust.
And our business is back on track and by Q2, we start firing on all cylinders.
Plus we remain the leader in electric school buses with more on the road than anyone else.
We have also driven costs out of our business increased parts availability throughput and quality the.
The business has turned the corner in our bookings in the first quarter. We are currently in will be the highest in over 10 years.
We are very confident and excited about where the company is headed and we look forward to updating you again on our progress next quarter.
Do you have any follow up questions. Please do not hesitate to contact our head of Investor Relations Mark Benfield. Thank.
Thank you again for your time and we.
Here at Bluebird, we want to wish you, a very happy and safe holiday season.
All the best.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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