Q2 2024 Blue Bird Corp Earnings Call
Press at $30 million improvement compared with the same quarter last year.
Overall, we had exceptional second quarter financial results.
Transformational gains from last year, we are on a great trajectory.
On the right hand side of the slide you can see some of the operating highlights for the business.
As I mentioned earlier demand continues to be exceptionally strong with a firm order backlog at the end of the second quarter with about $850 million in revenue, reflecting a backlog of over 5900 buses.
Importantly, that's almost 30% higher than the backlog we had at the end of the first quarter.
Now as an indication of the strength of the industry and the strength of our brand we mentioned the ratio of incoming orders against our units sold for the quarter.
This year's second quarter was a great quarter for us with our incoming orders exceeding units sold by 60%.
And that compares with 20% at the same time last year.
That's great confirmation of the strength of our order pipeline and again illustrates our confidence in the continuing order and settlement and what we're experiencing.
We raised prices considerably over the past two years and the average second quarter selling price per bust in fiscal 'twenty floor was an outstanding 19% higher than a year ago, that's worth about $22000 per bus.
POS sales totaled $28 million in Q2, representing a strong 6% growth over last year and were up 7% through the first half.
Turning to alternative powered buses represented about 55% of unit sales in the second quarter and we're running at a very strong 60% of sales mix through the first six months of the fiscal year.
We continue to be the clear leader in this space No. Other school bus manufacturer comes close to these numbers.
EV buses are part of that alternative power mix and in Q2, <unk> bookings increased by 56% over last year as we sold a quarterly record of 210 Electric school buses.
That represents a very strong mix at 9% of our total sales compared with 6% in last year's second quarter.
Additionally, we left the second quarter this year with almost 500 firm orders in our backlog, which is around an 8% share of our total backlog.
That's worth approximately $155 million in revenue and 17% higher than a year ago incidentally.
Incidentally. It is also 50% higher than the end of the first quarter.
Clearly, we're benefiting substantially from the first year of funding from the EPA is $5 billion Clean School bus program.
A couple of late to the status of the second year of this program, which comprises of two rounds.
We also have some very exciting news regarding additional funding from the inflation reduction act, which will significantly benefit <unk> adoption in the school bus industry.
Continuing with our clean school bus successes I am proud to report that during the second quarter. We received the second largest single order ever a propane powered school buses, that's 255 units for Omaha public schools.
We will build and deliver these in time for the start of the New school year later this summer.
Incidentally the largest propane order ever was also for Omaha public schools, where we delivered 440 propane buses back in 2013.
It's great to see a repeat business of this magnitude and this also on importantly, a great endorsement of the performance over time of our propane powered buses.
Staying with propane.
I am also very pleased to announce that in Q2, we renewed our exclusive engine contracts with both forward from Roche until 2030.
By that time, we will have partnered exclusively for almost 20 years, providing us with our industry, leading propane and gasoline engines.
Bluebird introduce these products to the school bus market and throughout that time, we have been the undisputed market leader, we are fast approaching 40000 propane and gasoline powered school buses deployed which is a testament to our exceptionally successful partnership.
And finally on the back of our second quarter results. We are once again raising full year guidance.
Net revenue adjusted EBITDA and adjusted free cash flow this will be the fifth quarter in succession that we have beaten and raise our guidance.
Importantly, too we have raised our longer term margin outlook from 12% plus to more than 14% as we continued to solidify and build on our recent operating and financial performance.
With an all time record profit for the second quarter, reflecting a 13% adjusted EBITDA margin I am very proud of our team's accomplishments.
Speaker Change: I would now like to hand, it over to <unk> to walk through our fiscal 'twenty four second quarter financial results and updated guidance in more detail obviously restaurant.
Speaker Change: Thanks, Phil and good afternoon.
Speaker Change: My pleasure to share with you the financial highlights from our global fiscal 2024 second quarter record results.
Speaker Change: Quarter end is based on the close date of March 30 of 2024, whereas the prior year was based on a close date of April one 2023.
Speaker Change: We will file the 10-Q today may eight after market close our 10-Q includes additional material and disclosure regarding our business and financial performance.
Speaker Change: We encourage you to read the 10-Q and the important disclosures that it contains.
Speaker Change: The appendix attached to today's presentation includes reconciliations of differences between GAAP and non-GAAP measures mentioned on this call as well as other important disclaimers.
Speaker Change: Slide nine is a summary of the fiscal 2000 and for second quarter and first half prior quarterly results.
Speaker Change: It was another outstanding operating quarter for global with somewhat limited and well managed supply chain challenges and with high margin units driving both our topline and our bottom line results.
Speaker Change: We significantly beat the adjusted EBITDA generative guidance provided in the last earnings call and in fact, we delivered the best second quarter ever for Blue Bird with 13% adjusted EBITDA margin and second best several porticoed only after fiscal 2000 for Q1.
Speaker Change: The team continued to push hard and did again, a fantastic job and generated 2254 unit sales volume, which was just shy of priority Q2 volumes.
Speaker Change: With more complex type D and EV buses.
Speaker Change: All time record consolidated net revenue of $346 million was $46 million or 15% higher than prior year, driven by a higher number of units.
Speaker Change: Parts sales improved mix of type D in electric buses and pricing actions that materialized in this quarter as expected.
Speaker Change: Adjusted EBITDA for the quarter was a Q2 record of $46 million.
Speaker Change: Everyone by higher margins increased pass sales and margins, partially offset by increased labor and material costs.
Speaker Change: Expected and mentioned in our previous earnings call.
Speaker Change: The adjusted free cash flow was very strong at $54 million and $30 million higher than the prior year's second quarter.
Speaker Change: The result was due to increased profitability and improved working capital.
Speaker Change: Our liquidity position at the end of this quarter was also a record level with $236 million and almost zero debt.
Speaker Change: This performance was outstanding for both the top line and the bottom line.
Speaker Change: All time record for quarterly revenue of $346 million, all time record for quarterly sales with 210 units a record Q2, adjusted EBITDA of $46 million or 13%.
Speaker Change: On a year to date basis in only six months, we already exceeded the entire adjusted EBITDA of last year, which was the best year ever and we've delivered significant steps forward on our profitable growth path.
Speaker Change: Safely say, we had a great start for this fiscal year.
Speaker Change: But more on this later on today in our updated mid and longer term outlook.
Speaker Change: Moving onto slide 10 as mentioned before by Phil our backlog at the end of Q2 has grown and continues to be very strong at over 5900 units and $850 million, including 8% easy.
Speaker Change: Breaking down our record Q2 or $346 million in revenue into our two business segments. The bus net revenue was $318 million up by $45 million versus prior year.
Speaker Change: Our average bus revenue per unit increased from 119 to 141000 or 19%.
Speaker Change: Which was largely the result of pricing actions taken over the past first bank in months as well as the higher mix of <unk> and electric buses.
Speaker Change: <unk> sales in Q2 are also at a record level of 210 units or 75 more than last year of 55% increase year over year.
Speaker Change: Wed like to remind you that we have announced in this fiscal year two price increases for new orders one in last October and one for the end of March of $2500 net per box each in order to cover inflationary cost factors and significant long term strategic investments there.
Speaker Change: These price increases will start to materialize, mainly in fiscal 2025, given the timing of orders received and our current production backlog.
Speaker Change: Product revenue for the quarter was $28 million, representing a growth of $2 million or plus 6% compared to the already very strong prior year levels.
Speaker Change: This great performance was in part due to increased demand for our part of the fleet is still aging as all our supply chain driven pricing actions and throughput improvement.
Speaker Change: Gross margin for the quarter was a very strong 18, 4% or six five percentage points higher than last year due to our sustained operational performance and our pricing overtaking in the last three quarters, they experienced inflationary costs.
Speaker Change: In fiscal 2000 and for Q2, adjusted net income was $29 million or $21 million higher than last year.
Speaker Change: Adjusted EBITDA of approximately $46 million or 13% was up compared with prior year by 25 million and six percentage points.
Speaker Change: Adjusted Diluting earnings per share of 89 was up 60% versus the prior year.
Speaker Change: Slide 11 shows the walk from fiscal 2003 Q2, adjusted EBITDA for the fiscal 2004 to two results.
Speaker Change: Starting on the left of $21 1 million the impact of the bus segment gross profit in total was $26 5 million split between volume and pricing effects net of material cost increases of $33 1 million offset by labor cost increases of negative $6 6 million.
Speaker Change: The favorable development in the power segment gross profit was $1 5 million driven by higher sales and improved margins as mentioned earlier in the call.
Speaker Change: He has great improvements were slightly offset by increases in our other expenses and fixed cost mainly engineering and personnel related of negative $3 3 million as discussed in the last earnings call and with more to come in the second half of fiscal 'twenty four.
Speaker Change: The pharma all the above mentioned developments drives our record fiscal 2000 for Q2, we reported adjusted EBITDA result of $45 8 million or 13%.
Speaker Change: Moving on to Slide 12, we have extremely positive development year over year also on the balance sheet.
Speaker Change: We ended the quarter was $93 million in cash and reduced our debt significantly by $42 million over the last four quarters.
Speaker Change: In fact, our net debt position was close to zero at the end of this quarter.
Speaker Change: Our liquidity is very strong with a record of $236 million at the end of fiscal 2000 for Q2 of $135 million increased compared to a year ago.
Speaker Change: We also paid down the revolver balance to zero during this quarter following our capital allocation strategy outlined in our previous earnings call.
Speaker Change: The operating cash flow was very strong at $55 million in this quarter driven by an improvement in operations and margins and an improvement in our working capital of $22 million.
Speaker Change: Slide 13 shows the sustainability results achieved by our team over the last four quarters generating almost $165 million and adjusted EBITDA or 13%.
Speaker Change: Our revenues have been growing every quarter, partially due to pricing utilization combined with a quarter by quarter increase in <unk> sales.
Speaker Change: We have beaten raise our conservative guidance for the last five quarters in a row due to the outstanding execution of our plans by our teams and despite the still difficult supply chain environment with select suppliers.
Speaker Change: The last four quarters have been in the 10% to 15% adjusted EBITDA range demonstrating that we are now delivering consistently double digit performance.
Speaker Change: Finally, it is important to note that our pricing curve has been ahead of our cost incurred in the last three quarters preparing us for the significant investments lined up for 2024 and the contractual inflation factors expected ahead of what some of which already impacted our margins in fiscal 2000 for Q2 as expected.
Speaker Change: Before I talk about the updated guidance for fiscal 'twenty, four and our updated mid and long term outlook on slide 14, we wanted to remind you about some significant investments that they have started in fiscal 'twenty four to ensure that our profitable growth strategy is successful.
Speaker Change: Our updated engineering expenses planned for fiscal 'twenty, four or approximately one five times the level of fiscal 'twenty three.
Speaker Change: Them now to be at the level of approximately $20 million in fiscal 'twenty four.
Speaker Change: They began the integration work for the next generation of guests.
Speaker Change: Gas and propane engines for the next level of emission regulations.
Speaker Change: We also expanded our exclusive partnership with Ford and Roush through 2030 as announced last week.
Speaker Change: We're also continuing to evolve our <unk> offering and planned new product safety enhancement features across our product lines stay tuned for exciting news this summer.
Speaker Change: We will continue to ramp up our investment in bringing to market. The commercial EV chassis by the end of calendar 2024.
Speaker Change: We are also expecting now to more than double year over year, our capital investments into capacity expansion production facility upgrade quality improvements and our supply chain capability and tooling towards our target of $50 per day or 12000 buses per year.
Speaker Change: Expected Capex is now approximately $20 million for this year.
Speaker Change: On the people side, we experienced inflationary pressures both externally from our supply base and internally and will continue to provide very competitive benefits to our employees.
Speaker Change: We're also launching in June our complexity reduction initiative and have begun the upgrade of our ERP system as well as modernization of our business intelligence and financial planning and analysis tools all.
Speaker Change: All this cost combined can add up to 3% of our revenue on a run rate basis later in fiscal 2004 and beyond.
Speaker Change: On slide 15, we wanted to share with you our updated fiscal 2000 and for guidance.
Speaker Change: As a reminder, we are continuing to take a transparent and conservative approach also this year.
Speaker Change: It is still somewhat uncertain supply chain environment, we're facing.
Speaker Change: Looking forward our fiscal 'twenty four we're increasing our revenue to approximately $1 3 billion and we are significantly increasing our adjusted EBITDA to $155 million or 12% with a range of $145 million to $165 million.
Speaker Change: This is an increase of 75% of over the prior year record results.
Speaker Change: Due to supply chain volatility at this point, we are only providing general quarterly ranges with every remaining fiscal 'twenty fourth quarter are expected now to have higher revenue between $300 million to $350 million and maintained adjusted EBITDA in the range of 25% to $35 million or 9% to 11%.
Speaker Change: We will provide further updates in the beginning of August after we close the fiscal Q3.
Speaker Change: And gathered further insight into our supply chain capabilities to support our strong backlog and increasing <unk>.
Speaker Change: Moving to slide 16 in summary, we are forecasting a significant improvement year over year with revenue up 15% to approximately $1 3 billion adjusted EBITDA in the range of $145 to $165 million and adjusted free cash flow of $70 million to $80 million in line with our tip.
Speaker Change: <unk> target of approximately 50% of adjusted EBITDA.
Speaker Change: The timing update.
Speaker Change: Based on public flow test that is required to be performed as of the end of Q2 will move from accelerated filer to a large accelerated filer status at the end of fiscal year, 2024, which reduced our Form 10-K filing requirement from 75 to 60 days.
Speaker Change: As a result, we plan to file our 10-K and hold our fiscal yearend earnings call on Monday November 25th 2024.
Speaker Change: On Slide 17, we wanted to also update you on our significantly raised long term outlook and our expected path to get there.
Speaker Change: First of all we updated the slide layout as they believe the recent sustained performance and profitable growth demonstrated in the last several quarters is more relevant for the type of company. We are today and as a baseline from where we are planning to go forward.
Speaker Change: Second through hard work from all of our teams and great execution of our strategy. We have already delivered way ahead of schedule that 12% adjusted EBITDA margin. We have previously highlighted as our long term aspiration.
Speaker Change: Therefore today, we are significantly raising the bar for our outlook as follows.
Speaker Change: 12, 5% adjusted EBITDA margin is now in our updated short term outlook and while the supply chain further normalizes, we expect to sell approximately 9500 unit, including 1500 units Evs and generate $180 million adjusted EBITDA on $1 45.
Speaker Change: And revenue.
Speaker Change: Looking to the medium term, our EV growth and operational improvements on one shift can support volumes of up to 10000 units, including the events of 2500 units generating revenues of $1 6 billion and with adjusted EBITDA of $210 million or 13%.
Speaker Change: Our long term target demand to drive profitable growth now to even higher levels towards the $1 $85 billion to $2 billion in revenue comprising of 11 to 12000 units of which 4000 to 5000, <unk> and generate EBITDA of 250 to 280 plus million or 13.
Speaker Change: 5% to 14% plus.
Speaker Change: We're incredibly excited about <unk> future and I'll turn it back over to Phil.
Phil: Thank you Ross van as always thought was a great explanation of our Q2 results and our financial outlook, let's now move on to slide 19.
Phil: A couple of these slotted a prior two earnings calls so I won't spend much time on it today as our priorities and our strategy are unchanged as they should be.
Phil: The chart on the left illustrates the three priorities of continuing to drive as everyday taking care of our employees delighting, our customers and dealers and delivering profitable growth.
Phil: The chart on the right provides more texture around the specific strategies that we are pursuing that both align with our priorities and drive our full year growth plans.
Phil: At the center is our ultimate objective to drive sustained profitable growth.
Phil: As you recall the accomplishments in fiscal 'twenty, three we transformed the business from losses to record profitability, achieving our full year profit margin of 8% for fiscal 'twenty. Four we just increased our full year earnings guidance at midpoint of range to a 12% adjusted EBITDA margin, that's a full <unk> 4%.
Phil: These points higher than last year, and then over the next couple of years, we plan to grow the margin of 13% and then to 14% and beyond in the longer term.
Phil: Our specific strategy is focused on delivering these financial goals on a spell out in this chart, namely leadership and safety both in the workplace and with our products is paramount to us and we are investing in both engineering and Capex in these areas in fiscal 'twenty four.
Phil: Best products and features.
Phil: As always we seek to differentiate ourselves providing more value to our customers as a reminder, our books as a purpose built from the ground up transporting children's safely with many unique features.
Phil: Another derivative of truck chassis, a lot most of our competitors and our customers understand the value of this.
Phil: That's why we were the first to move on propane gasoline and EV power among our major competitors, we focus 100% on school buses, we saw the need and the school bus market for them and we delivered them.
Phil: Leading in quality durability and alternative power is the cornerstone of our product planning and development and we will continue to differentiate.
Phil: Having competitive cost through lean manufacturing and efficient throughput strong supply relationships and smart product design are essential to compete in a business where competitive bids are required.
Phil: And after the sale, we have to provide great service and ensure vehicle uptime throughout the 15 years or more that are buses need to run.
Phil: This means partnering with our exclusive dealer network that covers every corner of the United States and Canada with our dealers have an average tenure with us up over 30 years.
Phil: As we have said many times in both these earnings calls and at various conferences you cannot make it in the school bus business with a fully capable and experienced dealer network that can reach more than 10000 school districts operate their own bus fleets and 3400 independent owner operators of school buses.
Phil: Following these core strategies has been key to our transformation and we will continue to drive our quality of plans.
Phil: Let's now turn to slide 20, and look at the latest status of federal funding that clean school buses, which is so important in helping to accelerate the adoption of electric and propane vehicles in fiscal 2024 and beyond.
Phil: As a reminder, we are just starting the second year of this five year program, which provides $5 billion of funding of electric and propane powered school buses.
Phil: Still over $4 billion available after the first year of funding.
Phil: The second year, which is referred to by the EPA as a 2023 program provides for two rounds of funding totaling at least $1 5 billion.
Phil: That's about $500 million more than was anticipated and appears to be an acceleration by the EPA to deploy with $5 billion in total funding.
Phil: As the left chart shows run two awards for 2023 Grand program, where increased from 400 million to $965 million due to the high level of grant applications submitted.
Phil: A total of 2737 electric and propane buses were awarded grants early this year and the wiggle have until December 'twenty five to purchase their buses using these awards.
Phil: We expect Bluebird buses to represent around 30% of the ultimate orders amounted to approximately 800 electric and propane school buses.
Phil: Looking at the Middle chart immediately after announcing the ramp to award results. The <unk> ran three rebate program, which is also part of the 2023 program Colgate leased $500 million and potentially much higher based on a number of applications.
Phil: Award with is should be notified later this month and we will have until April 26 to purchase the buses and close after award.
Phil: Our win rate holds at about 30%.
Phil: <unk> should expect to receive at least 450 electric and propane school bus orders from this third round.
Phil: Together both of these funding around should generate all this through 2025 for at least 4300 electric and propane school buses and associated infrastructure, which is great for the industry and particularly for Blue bird with about 1200 50 orders anticipated.
Phil: With the deadline for bus purchases from these two rounds being as late as April 2026.
Phil: All of this and corresponding deliveries could be pushed back later in 'twenty five as end customers deal first with finalizing the charging and utility infrastructure requirements prior to ordering.
Phil: Now, let me turn to the exciting new news shown on the right hand chart.
Phil: On April 24th this year, the EPA announced the all new 2024 clean heavy duty vehicles program, which is being funded by the inflation reduction Act.
Phil: Finally, the class six and seven electric vehicles is up $1 billion and the outstanding use is at 70% of that funding has been allocated to school buses.
Phil: That's up to $700 million of additional funding to accelerate the adoption of EV School buses, which goes beyond the $5 billion from the Epa's Clean School bus program.
Phil: Applications have been accepted through July 26 of this year and awards are expected to be announced in February 25, following two years to purchase the buses.
Phil: The EPA has focus on school bus is a great news for our industry, our customers and our schoolchildren with school bus recognized as having the perfect duty cycle for EV adoption.
Phil: So let me now wrap up the earnings call and our outlook for the business on slide 21.
Phil: Rosemont is through the raise guidance fiscal 'twenty, four and I am showing some of those key metrics at the midpoint of guidance here.
Phil: We are being prudent in our bookings outlook, we're all increasing volume by 3% over fiscal 'twenty three at this time.
Phil: As I mentioned earlier, we're still dealing with two specific suppliers of constrained chassis components that are impacted the broader truck and bus industry.
Phil: But we did manage them very well in the first half of this year and we have line of sight to additional capacity from them. Later this year and if we can build more in fiscal 'twenty. Four we will just as we did last year.
Phil: Net revenue $1 $3 billion will be a new record for Bluebird up 15% from fiscal 'twenty three.
Phil: Adjusted EBITDA guidance of $155 million is a 75% increase from last year's then record $88 million.
Phil: Importantly, we're planning on a 12% EBITDA margin in fiscal 'twenty four up four percentage points from fiscal 'twenty, three which is at least a couple of years ahead of the plan we have been sharing with you.
Phil: We have confidence in achieving this margin after recording an impressive 14% adjusted EBITDA margin in the first half of this year.
Phil: It should be noted the first half did benefit from exceptional mix of bvs at 9% of unit sales within our strong total mix of alternative fuel vehicles are 60% of sales.
Phil: This mix may not repeat through all quarters, especially with the extended time granted by the EPA for customers to complete their purchase and deployment of the new EV funding awards re you'll recall that as late as April 2026.
Phil: Further as Ron pointed out we had nearly doubling our engineering work in fiscal 'twenty, four and support of many new product programs, which is contained within our 12% margin outlook for fiscal 'twenty four full year, along with the potential economic impact of our very first collective bargain agreement with the United Steelworkers later.
Phil: In the year.
Phil: Finally, as I mentioned earlier, we are looking to grow EEP unit sales to 800 buses in fiscal 'twenty four that's a 47% increase over fiscal 'twenty three sales similar to the growth we saw in Q2.
Phil: As you can see on the right chart. There is a lot of pent up demand following the low industry sales in 2020, 'twenty, one and 'twenty two and the bus fleet has aged by a couple of years.
Phil: <unk> is forecasting a compound annual industry growth rate of 7% from the end of fiscal 'twenty three through to fiscal 'twenty seven.
Phil: That's great news for our business and Great news for our profit outlook.
Phil: With residual supply chain challenges still impacting the auto industry today, the ability to build all these units near term is not a given.
Phil: But importantly, the demand for school buses is clearly there.
Phil: After executing a substantial transformation across our business. The company is performing exceptionally well will begin to improve operating performance and look forward to sustained profitable growth and a robust market ahead.
Phil: The future's incredibly bright for Bluebird and we are confident in achieving this year would have been a longer term goal of 12% EBITDA margin.
Phil: Consequently, we have updated our longer term outlook to reflect an EBITDA margin at least 2% points higher with a minimum of 14%.
Phil: I want to thank our nearly 2000 employees for all the hard work and dedication and delivering a record profit for second quarter of Bluebird on top of an all time record profit we delivered in the first quarter.
Phil: I also want to recognize our outstanding dealer partners, who are critical to our success.
Speaker Change: That concludes our formal presentation today and I'd now like to hand, it back to our moderator for the Q&A session.
Speaker Change: Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad now.
Speaker Change: Have you changed your mind, Please press star followed by K.
Speaker Change: When preparing to ask your question, Jason So youll unrated play today.
Speaker Change: We'll take our first question is from Eric Stine of Craig Hallum Alright. Your line is now open. Please go ahead.
Eric Andrew Stine: Hi, everyone. Thanks for taking the questions.
Eric Andrew Stine: So.
Eric Andrew Stine: Hey, so last quarter you talked about.
Eric Andrew Stine: Pricing being ahead of materials prices and that you thought you might have a step down sequentially in EBITA, which did not come to fruition.
Eric Andrew Stine: Curious did you see that on that one.
Eric Andrew Stine: Offset by as you said high mix of Evs and pipe Deschool buttons or is it something that for whatever reason thats more of a second half rather than the second quarter.
Eric Andrew Stine: Mike.
Speaker Change: Thank you for the question. This is <unk>, so definitely as I mentioned, we have been much more proactive in our pricing actions in the last several quarters than we were in the past we started to see some inflation factors into our costs. Both in the cost of goods sold from the material cost as well.
Eric Andrew Stine: As in our SG&A through labor inflation.
Eric Andrew Stine: Currently we expect more increases in the second half of this year. So overall, yes, we sold <unk> margin compression in the end.
Eric Andrew Stine: But in the end the bulk of it is still to come in the second half of fiscal 2000.
Eric Andrew Stine: Got it and you're not necessarily.
Eric Andrew Stine: Implying a lower or a noticeably lower mix of EV, you're just guiding in that way.
Eric Andrew Stine: Being conservative given some of the uncertainties that are still out there our supply chain and others.
Eric Andrew Stine: Yes, so we are maintaining our guidance of approximately 800 DVS for this year, but in any given quarter the mix can vary a little bit but overall.
Eric Andrew Stine: Yes, we are confident in our guidance continues to remain conservative.
Eric Andrew Stine: Okay.
Eric Andrew Stine: Great.
Eric Andrew Stine: Maybe just turning to the federal funding.
Eric Andrew Stine: Deadlines have been pushed out versus.
Eric Andrew Stine: Clean school bus round one.
Eric Andrew Stine: Curious you talked about some pretty strong <unk>.
Eric Andrew Stine: Order trends.
Speaker Change: I know, it's still early <unk>.
Speaker Change: Tom around Q or is that something will yield spread throughout the remainder of the year in mobile.
Speaker Change: Hi, Eric it's Phil here.
Eric Andrew Stine: Yes, I mean, I think obviously when you get these grand towards you know you are a winner that took the time worrying about the infrastructure that it needs and utility companies are charging infrastructure to that.
Phil: That's all now in progress because the award winners filling it up.
Eric Andrew Stine: What I call Lee the first round of the second year.
Eric Andrew Stine: The work that we are starting to receive orders, though I think we got to come on I would tell you what I know, we got 50 more than 50 to date have just come in from the from the second one second round if you like.
Eric Andrew Stine: Of our total <unk>.
Eric Andrew Stine: Program to date, so that's promising that's good so I expect during the course of the year will receive more it'll pick up pace as people figure out their charging infrastructure needs.
Eric Andrew Stine: Many of those customers with them on that to try and accelerate our orders. So we feel we feel very confident in.
Eric Andrew Stine: And that we're going to have a nice.
Eric Andrew Stine: Order book, continuing through this year and a good.
Eric Andrew Stine: Data read numbers sold across I mentioned to you.
Eric Andrew Stine: Yes, it's good to hear you're starting to see it even though it's still early days.
Speaker Change: Maybe last one for me you mentioned the easy chassis.
Speaker Change: Business in <unk>.
Speaker Change: Can you kind of hinted at some.
Eric Andrew Stine: Some things are to stay tuned here over the remainder of 2004, just wondering if you can give a little more detail is lower but something we need to wait on.
Speaker Change: Yes, Okay. So obviously, we haven't gone into two public in this yet but I can tell you that we're in the pilot stage of those for that program. We have chassis on the ground here that we're working with testing out some report through the rigorous and we will at a future date this year.
Speaker Change: We're bringing customers into take a look at it give us feedback.
Eric Andrew Stine: I think there is a couple of shows down the road that we're probably exhibited out too so yes, it's well under development.
Eric Andrew Stine: And we're already generating customer interest and we will take up further this year.
Speaker Change: Okay. Thanks, a lot.
Speaker Change: You bet. Thanks.
Eric Andrew Stine: We take our next question is from Mike <unk> of da Davidson, Mike. Your line is now open. Please go ahead.
Mike: Yes, hi, good afternoon, thanks for taking my questions.
Mike: Why I wanted to touch first on.
Mike: On our market share in the quarter.
Mike: So were seeing somewhat flat shipments it's pretty good.
Mike: Although industry by most accounts with Wow quite a quite a bit over 20%.
Mike: When you ask.
Speaker Change: So I guess I was wondering.
Mike: I was wondering what you ascribe.
Mike: It looks like some decent market share gains in the quarter.
Mike: To better work.
Mike: For both the plasma will have some challenges.
Mike: The other players were just.
Speaker Change: Cut off.
Speaker Change: Issues with other vehicles.
Eric Andrew Stine: In the quarter or the Substations to how you got such a great job.
Eric Andrew Stine: Sure.
Eric Andrew Stine: Your fiscal fiscal Q4.
Eric Andrew Stine: Yes, Hi, Mike This is Ron Thanks for the question and good to hear from you today.
Ron: So at this point, we are focusing on our.
Ron: Deliveries in the managed to maintain this pace the pace of deliveries. Despite the still some select supply challenges that we see in the market I can't speak for the other competitors you have to ask them, but from our point of view, we maintain the speed and we improved our profitability and Thats, what we are focusing on.
Ron: Perhaps.
Ron: The other way.
Eric Andrew Stine: At this point I think we'll both supply chain challenges.
Eric Andrew Stine: Before year end.
Eric Andrew Stine: That improved at all or.
Eric Andrew Stine: Okay.
Eric Andrew Stine: We feel that the fiscal can't get worse than you would have a.
Eric Andrew Stine: Our quarter this quarter, probably down 20%.
Eric Andrew Stine: Even though it was profitable.
Eric Andrew Stine: Yes.
Eric Andrew Stine: Yes.
Speaker Change: Let me just talk about this I mean, when you saw the down 20% I guess I don't recognize that number.
Speaker Change: I can tell you this our orders for the quarter was terrific that we just went through and we delivered the plan we had for the quarter, we more than delivered as you know so we came in line we beat our plan and we're seeing very strong orders our orders for the quarter was 60% more than.
Speaker Change: Our bookings for the quarter when all of this is a leading indicator of what youre going to book.
Speaker Change: Certainly down the road I mean, some of those vehicles will be built in 25 smaller bill. This year. So we're feeling we're feeling good I don't see were thinking theres going to be and it's a negative along the way for us frankly, and that's what our guidance reflects.
Speaker Change: Well, thank you guys.
Speaker Change: It reflects.
Speaker Change: <unk> downturn in Houston, this quarter or next quarter.
Speaker Change: The surprise.
Speaker Change: It will be possible in wages.
Speaker Change: So let me try and.
Speaker Change: Square, how could revenues be down, 20% and down some big number.
Eric Andrew Stine: Despite.
Eric Andrew Stine: It sounds like a relatively stable credit environment.
Eric Andrew Stine: It will.
Eric Andrew Stine: Are there other issues other supply chain shortly popped up what we said in New York.
Eric Andrew Stine: I'm just trying to figure out how we can guide to a lower number in the quarter.
Eric Andrew Stine: So.
Speaker Change: Yes, so in terms of.
Eric Andrew Stine: So in terms of revenue guidance again, we're not giving specific quarterly guidance at this point in time for the remaining two quarters about we raised the range from $300 million to $350 million.
Eric Andrew Stine: Which is in line with the recent performance on the revenues that we had for the quarter.
Eric Andrew Stine: In terms of EBITDA is a conservative guidance as I said also in the prepared remarks, and we have when we expect to have some more inflationary cost factors hitting the second half was increase in engineering expenses additional labor inflation cost factors as well as some contractual price increases program select suppliers. So overall.
Eric Andrew Stine: That is what drives the EBITDA guidance for the second half of the revenue as well as the unions with 8800 units for the years, essentially modeled or maintain speeds of our throughput rifle.
Eric Andrew Stine: Okay.
Eric Andrew Stine: Yes.
Speaker Change: Im not the sales.
Speaker Change: Sounds from Boston.
Eric Andrew Stine: Maybe one last one for me about the Ta.
Eric Andrew Stine: Program.
Eric Andrew Stine: One other EV affiliates Scott.
Eric Andrew Stine: Scott will mostly directed the EPA Portugal.
Scott: Hello, Greg.
Speaker Change: Sluggish pace because we are.
Eric Andrew Stine: The ability of customers to get the full package of the charger.
Eric Andrew Stine: And the electricity et cetera, all set what they can get the whole.
Speaker Change: Next on behalf of <unk>.
Speaker Change: And the companies that we're approaching that illustration Charleston zone.
Speaker Change: Sure sure.
Eric Andrew Stine: Okay.
Eric Andrew Stine: Bluebird clumps of similar vessels.
Speaker Change: Yeah, obviously, I'm not going to comment on what someone else in our industry. As you told your what the weather point of view is but I can tell you this that.
Eric Andrew Stine: We also know this system works right we've been through the first round in 2023, we've got the Cyprus second round now for 2024 and when I look at this.
Eric Andrew Stine: We know for a fact that when an order is granted to someone then.
Eric Andrew Stine: People start to work to finalize their infrastructure requirements Chargers charging infrastructure requirements.
Eric Andrew Stine: And we worked with our customers on that I mean, we don't we don't put it in an application unless stock cost. We believe is extremely well qualified we showed that in the first year. When we did this for the first round of the program. So we do that we ensure and we're confident that.
Eric Andrew Stine: During this year, we'll start getting orders in place I think I mentioned earlier, we've already got over 50 from the one that was just announced was two 2% to three months ago and Thats pretty good and is on track with the first the first year. We had so we expect to continue to receive that continue to see it grow with orders coming through from our customers throughout the year.
Speaker Change: Outstanding Okay, great I'll leave it there thank you.
Speaker Change: Thanks, Mike.
Eric Andrew Stine: Thank you we now take our next question from Chris <unk> of Needham. Your line is now open. Please go ahead.
Chris: Hey, good afternoon, everyone.
Chris: Just.
Chris: On the doublet, the doubling of engineering spend that you had mentioned and new products are these new products or new iterations of existing fuel types that you have in <unk>.
Chris: Is the chassis that you referred to the EV chassis sort of part of that and kind of just kind of curious how to think about the net benefits from the spend.
Speaker Change: Yes, let me let me just take a quick one on that in Roslyn can jump in too but.
Roslyn: Yes, I mean, we look at engineering spend there are certainly new features we're introducing that we haven't announced those yet because we don't announce too far before we launch them and they'll be coming to the market new things for US New features froze new innovations if you like.
Roslyn: There's also a lot of work we talked about on their support in the emissions program.
Roslyn: It is a big emissions change coming forward in 2027, and Thats caused a requirement to do modifications on some of the emission controls on those products of ours, just a reminder, our propane product ally.
Roslyn: It does meet just completely meet the <unk> requirements of 2027.
Speaker Change: Like any changes about our further I'll call. It control systems on those vehicles as we move into the gas that needs a little bit of work, but he is well on its way and then of course.
Speaker Change: We take a diesel engine to on our products. So when we look at all that there is a bit of work there, but by and then there are some of our buses were putting like I say additional new features some cosmetic changes coming on there and some functional changes too. So they are all covered among other things in our engineering and bill.
Speaker Change: Okay and is that something that sort of helps you I don't want to use the word justify the price increase that helps kind of ease the price increases that you've been putting through or is that just the way. The industry operates where there are consistent upgrades, we choose those buses just like consumer cards.
Speaker Change: Well a couple of things obviously, we price for inflation I mean, we have to recognize raw material costs go up our labor cost go up we got to just like any industry does we priced to recover that.
Speaker Change: The cost of doing business and put on top of that when we bring an exciting new features we all talk about we want to appreciate features our customers want and the value. So we would expect.
Speaker Change: To price for those features as appropriate based on the value they bring to the customer.
Speaker Change: Now the roll it into an annual price increase or all sometimes we might do it separately in the middle of the model year. So we'll figure that out with the <unk>.
Speaker Change: Okay perfect. Thank you and then on the EPA, Thailand timelines can you just talk about the right way to think about this because we're talking about 2023 Grand but the final application was just put through there was an increase of over $500 million, but those orders don't come until 2025, so on the surface.
Speaker Change: Level it might look like we're halfway through the program dollar wise, but the amount of buses that have hit your income statement.
Speaker Change: Not close to halfway through it is that the right way to think about it.
Speaker Change: Yes, yes, I mean basically it is yes, there given that that long timeframe. The EPA has given because of there is an exceptional number of buses. They are obviously being sold through these grants and they know that people have to stagger that average over that period of time put charges in place infrastructure in place, but we've got used to the rhythm of that.
Speaker Change: <unk> comes in and the EPA has put out there, but obviously, we look to to install these as quickly as we can and get the buses out there and we'll work with our customers to do that with extended timeframe just recognize there's a lot of work to be done at.
Speaker Change: If a customer brand new customer this electric fleet of electric buses lets say they have quite a bit of work to do to prepare.
Speaker Change: The bus depot will be like for installing that in making sure. We can run correctly and Thats what allows us time to do.
Speaker Change: Maybe just to build on that what Phil said, then looking at the slide 20 of our presentation. So for example on the around 2023 Grand program on the left December 2025, as the deadline for these boxes to be on the ground and put in operation. So deliveries will be between now and then as the orders come demos are back.
Speaker Change: We'll develop so those dates are kind of the endpoints for the buses can be up and running on the ground.
Speaker Change: Perfect. Thank you and then just lastly on Michael <unk> question.
Speaker Change: Just wanted to understand you.
Speaker Change: We're talking about cost increases in the second half of the year.
Speaker Change: As someone new to the story is it correct that the second half of the year tends to be the seasonally strongest time of the year from a revenue perspective as well.
Speaker Change: Yes, so before Covid for sure there was a cyclicality to the production levels.
Speaker Change: We're two thirds of the volume was down in the second half of the fiscal year and about one third in the first half. However, after several years of under supply and we still being constrained on our supply chain at this point in time, we are now at a much more steady space. So that is not a factor anymore.
Speaker Change: Sort of.
Speaker Change: The number of weeks and a few holidays hit on that so we don't see the big gaps anymore.
Speaker Change: Okay I appreciate the time thank you.
Speaker Change: You bet. Thank you.
Speaker Change: As a reminder to ask any further questions. Please press star followed by one on your telephone keypad now.
Speaker Change: We have nice I have a question so I'd like to turn the call back to Joe.
Speaker Change: Mark.
Joe: Well, thank you Natasha and thanks, everyone for joining us on the call today before I close the call I'd like to summarize where I believe we stand today and also where we are going in the years ahead.
Mark: It's fair to sell last year, we saw you saw and we saw our momentum growing throughout the year with profitability, increasing remove through every quarter and.
Mark: And we've continued on the same path by delivering impressive record profit per second quarter with a 13% margin.
Speaker Change: That's on top of an all time record profit for any quarter that we delivered in Q1.
Speaker Change: So with this solid base behind as we raise guidance once again projecting our full year adjusted EBITDA margin of 12% for the fiscal year, which as we know is a full four percentage points above last year.
Speaker Change: So we're in a very very strong position you think when we look at it virtually where were a year ago and certainly two years ago.
Speaker Change: Going forward from here, our plan to drive profitability and grow shareholder value is used a number of extremely favorable factors.
Speaker Change: One we have an unprecedented backlog of firm orders and strong market demand ahead of us with an aging bus fleet out there.
Speaker Change: To supply chain constraints are easing, albeit there is still some way to go but nevertheless, we'll start to see what I called a light at the end of the tunnel at least on some near term issues that we were experiencing.
Speaker Change: Three upcoming 2027 emission standards will increase the need for alternative powered vehicles. There is no question about it in our minds, which is our sweet spot.
Speaker Change: Four we have strong federal and state support and customer demand for electric school buses.
Speaker Change: As I said before this is a perfect industry for deploying school buses are duty cycle is absolutely perfect for it and Thats one of our sweet spots as well.
Speaker Change: And five we achieved record profits margins cash and liquidity today, and that's a really strong base to grow from.
Speaker Change: So with these very positive tailwind we are confident in achieving a 13% margin within a couple of years, and then getting to 14% and beyond in the longer term.
Speaker Change: So we appreciate your continued interest in Blue Bird and we look forward to updating you again on our progress next quarter.
Speaker Change: Do you have any follow up questions. Please don't hesitate to reach out to us or contact our head of Investor Relations Mark Benfield.
Speaker Change: Thanks again from all of US here at Blue Bird and have a great evening.
Speaker Change: Okay.
Speaker Change: This concludes today's call. Thank you for joining you may now disconnect your lines.
Speaker Change: [music].