Q1 2025 Blue Bird Corp Earnings Call
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Unnamed Moderator: Hello, everyone. Thank you for attending today's Blue Bird Fiscal 2025 First Quarter Earnings Conference Call.
Hello, everyone.
Thank you for attending todays Blue bar fiscal 'twenty 25, first quarter earnings conference call.
Unnamed Moderator: My name is Sierra and I will be your moderator for today. All lines have been muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, press star 1 on your telephone keypad.
Speaker Change: My name is here and I will be your moderator for today.
Speaker Change: All lines have been muted during the presentation portion of the call with an opportunity for questions and answers at the end.
Speaker Change: If you would like to ask a question press star one on your telephone keypad.
Mark Benfield: I would now like to pass the conference over to our host, Mark Benfield, Head of Investor Relations with Blue Bird. Please proceed.
Speaker Change: I'd like to pass the conference over to our host Marc Pinto head of Investor Relations with Bluebird. Please proceed.
Mark Benfield: Thank you and welcome to Blue Bird's Fiscal 2025 First Quarter Earnings Conference. The audio for our call is webcast live on bluedashbird.com under the investor relations tab. You can access the supporting slides on our website by clicking on the presentations box on the IR landing page.
Speaker Change: Thank you and welcome to Blue Bird's fiscal 2025 first quarter earnings Conference calls.
Speaker Change: The audio for our call is webcast live on Blue dashboard Dot com under the Investor Relations tab, you can access the supporting slides on our website by clicking on the presentations box on the IR landing page.
Phil Horlock: Our comments today include four looking statements that are subject to risk 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 SQA. Blue Bird disclaims any obligation to update the information in this call.
Speaker Change: Our comments today include forward looking statements that are subject to risks that could cause actual results to be materially different.
Speaker Change: Those risks include among others.
Speaker Change: Matters, we have noted on the following two slides and in our filings with the SEC.
Speaker Change: <unk> disclaims any obligation to update the information in this call.
Phil Horlock: This afternoon, you will hear from Blue Bird's president and CEO, Phil Horlock, and CFO, Razvan Radulescu.
Speaker Change: This afternoon, you will hear from Blue Bird's President and CEO, Phil <unk>, and CFO Roswell and Roger last year, then we will take some questions. So let's get started.
Phil Horlock: Then we will take some questions.
Phil Horlock: So let's get started. Thanks, Mark, and good afternoon to everyone. It's great to be here and to share with you our financial results for our fiscal 2025 first quarter. I'm very pleased to tell you that our momentum from last year has not slowed down at all, with the Blue Bird team doing a fantastic job in delivering near-record adjusted EBITDA and margin in the first quarter of fiscal 2025. Razvan will take us through the details of our financial results shortly, so let me get started with the key takeaways for the first quarter on slide 6.
Speaker Change: Thanks, Mark and good afternoon to everyone. It's great to be here and to share with you our financial results for our fiscal 2025 first quarter.
Speaker Change: I am very pleased to tell you that our momentum from last year has not slowed down at all with the Blue Bird team doing a fantastic job in delivering near record adjusted EBITDA and margin in the first quarter of fiscal 2025.
Speaker Change: <unk> will take you through the details of our financial results. Shortly so let me get started with the key takeaways for the first quarter on slide six.
Speaker Change: Yeah.
Phil Horlock: As the headline says, we achieved near record quarterly profits in the first quarter of fiscal 2025, which is particularly impressive as it has the fewest working days of any quarter in the year. As shown in the first box, we beat Q1 guidance and are maintaining our full year guidance. And that's despite the impact on our business of the President's Executive Orders. More to come on that a little later.
Speaker Change: As the headline says we achieved near record quarterly profits in the first quarter fiscal 2025, which is particularly impressive.
Speaker Change: Fewer working days of any quarter in the year.
Speaker Change: As shown in the first box, we beat Q1 guidance and are maintaining our full year guidance and that's despite the impact on our business of the President's executive orders multi come on that a little later.
Phil Horlock: As we look at the driver of this terrific result Q1, it really is about continuing to deliver the plan that we laid out a couple of years ago, which focuses on making significant improvements across our entire business. Market demand for school buses continues to be very strong, and the backlog for Blue Bird school buses was at a healthy 4,400 units at the end of the first quarter, representing almost six months of production. This bodes well for pricing, production stability, and profit margin. Bus prices were again higher than a year ago on every combustion engine model and we are priced competitively as we can see from bid results and our overall win rate.
Speaker Change: As we look at the drivers of this terrific results Q1, it really is about continuing to deliver the plan that we laid out a couple of years ago, which focuses on making significant improvements across our entire business.
Speaker Change: Market demand for school buses continues to be very strong and the backlog for Blue Bird School buses was at a healthy 4400 units at the end of the first quarter, representing almost six months of production.
Speaker Change: This bodes well as the pricing production stability and profit margins.
Speaker Change: Thus prices were again higher than a year ago on every combustion engine model and we are priced competitively as we can see from bid results and our overall win rate.
Phil Horlock: You will recall that on prior earnings calls, I talked about the expected surge in EB orders toward the end of December 2024, as orders were being submitted to meet the deadline for Rounds 2 and 3 of the federally funded Clean School Bus Program. These rounds represent almost $2 billion in funding for electric and propane powered buses. Well, despite the EPA subsequently allowing extensions to that EV order deadline, we saw a spike in our EV orders with the back of the end of Q1 standing their record 765 EVs. And that's 22% higher than at the end of fiscal 2024 and a substantial 82% above the same time a year ago.
Speaker Change: You will recall that on prior earnings calls I talk to expected surge in E. B orders towards the end of December 2024, as orders were being submitted to meet the deadline for <unk> two and three of the federally funded clean School bus program.
Speaker Change: These rounds represent almost $2 billion in funding for electric and propane powered buses.
Speaker Change: Well, despite the EPA subsequently, allowing extensions to that EV order deadline, we saw a spike in our <unk> with a backlog at the end of Q1 standing at a record 765, Evs and that's 22% higher than at the end of fiscal 2024, and a substantial 82%.
Speaker Change: Above the same time a year ago.
Phil Horlock: In a few minutes, I will cover where our fiscal 25 EV unit sales and backlog stand today. We continue to sell a strong mix of alternative powered vehicles and maintain our position as the undisputed leader in this segment, which you have held for more than 15 years. We're also reinvesting back into the business, too, by selectively upgrading facilities, installing lead manufacturing processes, and developing exciting new and differentiated products that will hit the market in the next two to three years. And we continue to enhance the plant working environment for employees. This investment is resulting in some of the best manufacturing performance the company has ever seen, with higher efficiencies and increased throughput.
Speaker Change: In a few minutes I will cover our fiscal 'twenty, five EV unit sales and backlog stand today.
Speaker Change: We continue to sell a strong mix of alternative powered vehicles and maintain our position as the undisputed leader in this segment, which you have held for more than 15 years.
Speaker Change: We're also reinvesting back into the business to buy selectively upgrading facilities, installing lean manufacturing processes and developing exciting new and differentiated products that will hit the market in the next two to three years.
Speaker Change: And we continue to enhance the plant working environment for employees.
This investment is resulting in some of the best manufacturing performance the company has ever seen with higher efficiencies and increase throughput.
Phil Horlock: As a result of all these accomplishments, our first quarter profitability and margin was the second highest Q1 result that we've ever achieved with an adjusted EBITDA of $46 million, just $2 million below last year's first quarter record, with an exceptional adjusted EBITDA margin of 15%.
Speaker Change: As a result of all of these accomplishments I will first quarter profitability and margin was the second highest Q1 result that we've ever achieved with an adjusted EBITDA of $46 million, just 2 million below last year's first quarter record with an exceptional adjusted EBITDA margin of 15%.
Phil Horlock: Now, since the first quarter, virtually all industries and businesses have been monitoring and responding to the executive orders issued by President Trump on January 20th, and we are no exception. We are dealing with those executive orders that could impact our business, namely the pausing of federal funding and new tariffs, which are certainly in a state of flux. And I will cover these in a couple of slides.
Speaker Change: Now since the first quarter virtually all industries and businesses have been monitoring and responding to the executive orders issued by President Trump on January 20th and we are no exception.
Speaker Change: We are dealing with those executive orders that could impact our business, namely the pausing of federal funding and new tariffs, which are certainly in a state of flux and I will cover these in a couple of slides.
Phil Horlock: But first, let's take a closer look at the financial and key business highlights for the first quarter on slide seven. We sold 2,130 buses in the first quarter and recorded revenue of $314 million dollars, just about the same as last year. By the way, the first quarter volume for last year and this year were highest for more than 15 years in what is typically a seasonally challenged quarter, having just followed the start of the new school year. As I mentioned earlier, first quarter adjusted EBITDA of $46 million was just $2 million below the Q1 record we set a year ago when we had a 10% sales mix of EVs compared with just 6% this year.
Speaker Change: But first let's take a closer look at our financial and key business highlights for the first quarter on slide seven.
Speaker Change: Yeah.
Speaker Change: We sold 2130 buses in the first quarter and recorded revenue of $314 million just about the same as last year.
Speaker Change: By the way the first quarter volume for last year and this year was high.
Speaker Change: I have some more than 15 years in what is typically a seasonally challenged quarter, having just followed the start of the new school year.
Speaker Change: As I mentioned earlier first quarter adjusted EBITDA of $46 million was just 2 million below the Q1 record we set a year ago. When we had a 10% sales mix of evs compared with just 6% this year.
Phil Horlock: More significantly, we achieved a 15% margin, equal to last year, with a 94% mix of combustion engine vehicles sold. While we enjoy the profit contribution of EVs, it should be noted that we achieve about the same percentage margin on all of our internal combustion-powered buses, or ICE vehicles, as they are called. We are not reliant on EVs to achieve a 14-15% EV down margin, and are highly profitable on all of our products. We are confident that we achieve best in industry margins and with a 94% mix of ICE buses sold, our exceptionally strong first quarter results highlight the underlying strength and profitability of our core business.
Speaker Change: Most significantly we achieved a 15% margin equal to last year with a 94% mix of combustion engine vehicles sold.
Speaker Change: While we enjoy the profit contribution of Evs. It should be noted that we achieve about the same percentage margin on all of our internal combustion powered buses are ice vehicles as they are called we're not reliant on evs to achieve a 40% to 50% EBITDA margin and they're highly profitable in all of our products.
Speaker Change: We are confident that we achieved best in industry margins and with a 94% mix of IC buses sold our exceptionally strong first quarter results highlight the underlying strength and profitability of our core business.
Phil Horlock: And finally, adjusted free cash flow for the first quarter was $22 million, an increase of $23 million over a year ago. Overall, we achieved outstanding first quarter financial results with a high mix of ICE buses at 94% of unit sales. Now, 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 strong, with our firm order backlog today representing $760 million in revenue, reflecting a backlog of over 4,700 buses. First quarter selling prices for each ICE bus were about 6% higher than a year ago, reflecting both pricing and the richer option take.
Speaker Change: And finally, adjusted free cash flow for the first quarter was $22 million, an increase of $23 million over a year ago.
Speaker Change: Overall, we achieved outstanding first quarter financial results with a high mix of ice buses, 94% of unit sales.
Speaker Change: Now 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 strong with our firm order backlog today, representing $760 million in revenue, reflecting our backlog above of 4700 buses.
Speaker Change: First quarter selling prices each ice bus, we're about 6% higher than a year ago, reflecting both pricing and the richer option take however, the lower easy make some fiscal 'twenty five Q1 up 6% compared with 10% last year resulted in the average vehicle selling price being close to last year.
Phil Horlock: However, the lower EV mix in fiscal 25-Q1 of 6%, compared with 10% last year, resulted in the average vehicle selling price, being close to last year, at $135,000 per unit. Parts sales totaled $26 million in Q1, representing a solid 6% growth over last year in the typically slowest sales quarter of the year for our parts business. Switching to alternative powered buses, they represented a 51% mix of unit sales in Q1. This compares with typically less than a 10-15% mix for our major competitors. We benefit from the higher margins and higher on a loyalty of our gas and propane sales, which are exclusive to us in the industry.
Speaker Change: $135000 per unit.
Pulp sales totaled $26 million in Q1, representing a solid 6% growth over last year and are typically slowest sales quarter of the year for our parts business.
Speaker Change: Turning to alternative powered buses they represented 51% mix of unit sales in Q1.
Speaker Change: This compares with typically less than a 10% to 15% mix for our major competitors, we benefit from the higher margins and higher on a loyalty of our guests and propane sales, which are exclusive to us in the industry.
Phil Horlock: As previously mentioned, we have seen a spike on EV orders from late last year, and by this Monday, we are close to a combined 1,000 EV sold or in our order backlog for fiscal 2025. Our latest full year forecast reflects 1,000 EV unit sales for the full year, so we are well positioned to deliver on this projection. Incidentally, the current backlog of electric vehicles represents about $250 million in revenue, which is almost double the value at the end of Q1 a year ago.
Speaker Change: As previously mentioned, we have seen a spike on EV orders from late last year and by this Monday, we had close to a combined 1000 EV sold or in our order backlog for fiscal 2025 our.
Speaker Change: Our latest full year forecast reflects a thousand EV unit sales for the full year. So we are well positioned to deliver on this projection.
Speaker Change: Incidentally the current backlog of electric vehicles represents about $250 million in revenue, which is almost double the value at the end of Q1 a year ago.
Phil Horlock: Now with the President's Executive Order in place to pause EPA and federal funding programs for up to 90 days to allow review of the programs, I will cover the status and competence of funding for these EB buses on the next slide. I also have some late breaking news that was released late yesterday regarding executive order to pause federal funding programs and disbursements of funds. It is very impactful. I'll cover this shortly. I'm pleased to announce that late last year, we signed our contract with the DOE for the 50% funding of our new plant expansion in Fort Valley, representing $18 million of a total investment of $160 million.
Speaker Change: Now with the President's executive order in place to pause epi on federal funding programs for up to 90 days to allow review of the programs I will cover the status and comprehensive funding for these <unk> buses on the next slide.
Speaker Change: I also have some late breaking news that was released late yesterday regarding executive order to pulse federal funding programs and disbursement of funds. It is very impactful I will cover this shortly.
Speaker Change: I am pleased to announce that late last year, we signed a contract with the Doe for that 50% funding of our new plant expansion in Fort Valley, representing a $2 million of a total investment of $160 million. This means that the Doa funds are appropriated and we have a contractual agreement in place with the Doe.
Phil Horlock: This means that the DOE funds are appropriated and we have a contractual agreement in place with the DOE. Per the President's Executive Order, this grant funding is presently paused, although we are confident it will proceed following review. However, the pause in funding for this program should be impacted, too, by the late-breaking news that I just referred to. I'll cover this shortly.
Speaker Change: Per the President's Executive order. This grant funding is presently pause, although we are confident it will proceed following review however.
Speaker Change: However, the policy and funding for this program should be impacted by the late breaking news that I just referred to.
Speaker Change: A couple of this shortly.
Phil Horlock: As a reminder, this project adds 400 well-paying American jobs with clean buses built by a century-old American company located in Middle Georgia, providing our children with health and safety benefits of clean air.
Speaker Change: As a reminder, this project adds 400, well paying American jobs with clean buses built by a century old American company located in Middle, Georgia, providing our children withheld the safety benefits of clean air.
Phil Horlock: Last month, it was announced that I will be stepping down as president and CEO to enjoy my second retirement from Blue Bird, and John Whiskey will replace me, effective February the 17th. Now John has terrific operational experience, having held senior and executive positions at automotive system suppliers Magna, Dana, and BorgWarner. He also knows Blue Bird very well, having been general manager at our manufacturing location in Brantford, Canada in the past.
Speaker Change: Last month, it was announced that I will be stepping down as president and CEO to enjoy my second retirement for Bluebird and young with scale will replace me effective February 17 now.
Speaker Change: Now John is terrific operational experience, having held senior executive positions at automotive system suppliers Magna Dana and Borgwarner. He also knows bluebird very well covering being general manager at our manufacturing location in brand for Canada in the past.
Phil Horlock: I look forward to helping John and Blue Bird in any way I can from my seat on the board.
Speaker Change: I'll look forward to helping John and Bluebird in any way I can from my seat on the board.
Phil Horlock: And finally, we beat first quarter guidance, which is the eighth consecutive quarter in which you've done so, and we are holding our full year guidance. With a 15% adjusted EBITDA margin and near record profits in Q1, I'm very proud of our teams at company.
Speaker Change: And finally, we beat first quarter guidance, which is the eighth consecutive quarter in which you have done so and we are holding our full year guidance.
Speaker Change: With a 15% adjusted EBITDA margin and near record profits in Q1, I am very proud of our team's accomplishments.
Phil Horlock: Let's now turn to slide 8 and review the potential impact of the EPA funding pause on Blue Bird EV sales this year. As you can see on the left-hand chart, we have about 1,000 EVs either sold or in our backlog today. Our full-year forecast reflects EV sales of 1,000 buses for this fiscal year. Now, we've analyzed the disposition of each unit in the backlog to determine if EPA funding through the Clean School Bus program has yet been distributed to the customers for these orders. On 25% of the total sold or backlogged units, representing 250 school buses, customers have been fully approved for a rebate or grant from the EPA, but they have not yet received their funds.
Speaker Change: Let's now turn to slide eight and review the potential impact of the EPA funding pause on Bluebird EV sales this year.
Speaker Change: As you can see on the left hand chart, we have about 1000, evs either sold or in our backlog today.
Speaker Change: Our full year forecast reflects EV sales of a 1000 buses for this fiscal year.
Speaker Change: Now we've analyzed the disposition of each unit in the backlog to determine an EPA funding through the clean School bus program has yet been distributed to the customers for these orders.
Speaker Change: On 25% of the total sold all backlog units, representing 250 school buses customers have been fully approved for a rebate or grant from the EPA, but they have not yet received the funds.
Phil Horlock: Distribution of these funds is now on pause for up to 90 days, pending a review of the funding program for the President's Executive Order.
Speaker Change: Distribution of these funds is now on pause for up to 90 days pending a review of the funding program for the President's Executive order.
Phil Horlock: So let me now cover the late breaking news that is highlighted in yellow in the box at the bottom of this slide. The CFO of the EPA issued a memorandum late yesterday afternoon, potentially states that the court has declared that federal fund disbursements for programs funded under the Infrastructure and Investment Jobs Act and the Inflation Reduction Act shall not be paused while litigation is ongoing or a court rules otherwise. It further states that disbursement of funds will continue. Clearly, this is good news for Blue Bird, as customers will now start receiving federal funding again from the Clean School Bus Program, helping to address the 250 ordered EV buses for which funds have not yet been received.
Speaker Change: So let me now cover the late breaking news, but as highlighted in yellow in the box at the bottom of this slide.
Speaker Change: The CFO of the EPA issued a memorandum late yesterday afternoon.
Speaker Change: Chile States that the culture is declared.
Speaker Change: We will fund disbursements for programs funded under the infrastructure and investment jobs Act and the inflation reduction act shall not be paused, while litigation is ongoing Oracle rules otherwise it further states disbursement of funds will continue.
Clearly this is good news for Bluebird as customers will now start receiving federal suddenly again from this clean school bus program, helping to address the 250 audit EV buses, but which firms have not yet been received additionally.
Phil Horlock: Additionally, this news should apply also to the Department of Energy funding of our new plant in Fort Valley, so that the present pause in funding disbursement from the DOE will be lifted. As a reminder, funding for this program was covered by the Inflation Reduction Act. We will continue to monitor funding progress in this area and any changes in the EPA support of the Clean School Bus Program.
Speaker Change: Additionally, this new should apply also to the department of energy funding of our new plant in Fort Valley.
Speaker Change: The present pause in funding disbursement from the DLA will be lifted as.
Speaker Change: As a reminder, funding for this program was covered by the inflation reduction Act.
Speaker Change: We'll continue to monitor funding progress in this area and any changes in the EPA support of the clean School bus program.
Phil Horlock: So let's continue now with the left chart on the slide and the funding disposition of our EV audit. Seventy-five percent of the total units have funds in place and are either already sold or scheduled for production and delivery. Incidentally, almost thirty percent of the backlog represents buses that are fully funded with the help of state and local programs. With this funding uncertainty, we have taken a number of actions to support the sale of 1,000 EVs in fiscal 2025. First, we have reprioritized our production schedule to build fully funded buses first. Second, we have shifted production of buses with paused EPA funding to later in the year.
Speaker Change: So let's continue now the left chart on this slide and the funding disposition of our EV orders.
Speaker Change: 75% of the total units have funds in place and are either already sold all scheduled for production and delivery.
Speaker Change: <unk> almost 30% of the backlog represents buses that are fully funded with the help of state and local programs.
Speaker Change: With this funding uncertainty we have taken a number of actions to support the sale of 1000 Evs in fiscal 2025.
Speaker Change: We have re prioritized our production schedule to build fully funded buses first.
Speaker Change: Second we have shifted production of buses with pause EPA funding till later in the year.
Phil Horlock: Third, we are pursuing several new opportunities for EV orders utilizing state and local funding to mitigate the risk of unfunded EPA orders. And fourth, with a collaborative effort involving School Bus OEMs and several fleet customers, we have garnered significant political support for the resumption of the Clean School Bus Program Fund.
Speaker Change: Third we are pursuing several new opportunities for EV orders utilizing state and local funding to mitigate the risk of unfunded EPA orders and.
Speaker Change: And fourth with a collaborative effort involving school bus Oems and several fleet customers, we have gotten a significant political support for the resumption of the clean School bus program funding.
Phil Horlock: Bottom line, we have 750 EV buses either sold or funded in the backlog today, and we're pursuing funding for at least another 250 buses, including significant state and local funding opportunities, and we are confident in our 1,000 unit sales forecast. We also remain confident that the Clean School Bus program will be resumed as it fits the charter and the mission of the EPA.
Speaker Change: Bottom line, we have 750, <unk> buses either sold or funded in the backlog today and we're pursuing funding for at least another 250 buses, including significant state and local funding opportunities and we are confident in our thousand unit sales forecasts.
Speaker Change: We also remain confident that the clean school bus program will be resumed as it fits the charter and the mission of the EPA.
Phil Horlock: Let me now move to slide nine and assess the tariff impact of Blue Bird of another President Trump executive order. The original tariff proposals are presently in a state of flux, with the potential tariffs on imports of Canadian and Mexican goods on hold for 30 days while negotiations are underway with the U.S. Now Blue Bird is exploring various sourcing options with suppliers to mitigate potential tariff risks. Our position is that any potential government tariffs will be passed through to the end customer so there will be no net financial impact on Blue Bird. Should the tariffs be implemented as originally proposed, we would initiate a 5% price increase on all non-EV bus orders to cover the cost increase on imported components.
Speaker Change: Let me now move to slide nine and assessed the tariff impact of Bluebird of another President Trump executive order.
Speaker Change: The original tariff proposals are presently in a state of flux with the potential tariffs on imports of Canadian and Mexican goods on hold for 30 days, while negotiations are underway with the U S.
Speaker Change: Now bluebird exploring various sourcing options with suppliers to mitigate potential tariff risks.
Speaker Change: Our position is that any potential government Paris will be passed through to the end customer. So there will be no net financial impact on Bluebird.
Speaker Change: <unk> implemented as originally proposed we would initiate a 5% price increase on all non EV bus orders to cover the cost increase of imported components.
Phil Horlock: We will continue to monitor and respond to any changes in tariff plans.
Speaker Change: We will continue to monitor and respond to any changes in tariff plans.
Razvan Radulescu: I'd now like to hand it over to Razvan to walk through our Fiscal 25 First Quarter financial results and our guidance in more detail.
I would now like and handed over to <unk> to walk through our fiscal 'twenty five first quarter financial results and our guidance in more detail over to you restaurant.
Razvan Radulescu: Over to you, Razvan. Thanks, Phil, and good afternoon. It's my pleasure to share with you the financial highlights from Blue Bird's fiscal 2025 first quarter results.
Speaker Change: Thanks, Phil and good afternoon, it's my pleasure to share with you the financial highlights from Bluebird fiscal 2025 first quarter results.
Razvan Radulescu: The quarter end is based on a close date of December 28th, 2024, whereas the prior year was based on a close date of December 30th, 2023. We will file the 10-Q today, February 5th, after market close. Our 10-Q includes additional material and disclosures regarding our business and financial performance. We encourage you to read the 10-Q 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 other important disclaimers.
Speaker Change: Quarter end is based on the close date of December 28 2024.
Speaker Change: The prior year was based on a close date of December 30, <unk> 2023.
Speaker Change: We will file the 10-Q today February 5th after market close.
Speaker Change: Our 10-Q includes additional material and disclosures 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.
Razvan Radulescu: Slide 11 is a summary of the fiscal 25 first quarter near record financial results. It was a great operating quarter for Blue Bird, a great start for the new fiscal year, and they beat our guidance provided in the last earnings call on all metrics. In fact, we deliver the second best adjusted EBITDA percentage margin quarter ever for Blue Bird with close to 15 percent. The team pushed hard and continued doing a fantastic job and generated 2130 unit sales volume, which was just above prior year level. Near-record Q1 consolidated net revenue of $314 million, was only $4 million lower than prior year, driven by pricing actions that materialized in this quarter.
Speaker Change: Slide 11 is a summary of our fiscal 'twenty five first quarter near record financial results.
Speaker Change: It was a great operating quarter for Bluebird, a great start for the new fiscal year and they beat our guidance provided in the last earnings call on all metrics.
Speaker Change: In fact, we delivered the second best adjusted EBITDA percentage margin quarter ever for Bluebird, but close to 15%.
Speaker Change: The team pushed hard and continue doing a fantastic job and generated 2130 unit sales volume.
Speaker Change: Which was just above prior year level.
Speaker Change: Record Q1, consolidated net revenue of $314 million was only $4 million lower than prior year.
Driven by pricing actions that materialized this quarter.
Razvan Radulescu: which nearly offset the reduction in EV volumes as guided last time. Adjusted EBITDA for the quarter was a new record $46 million, driven by high margins, increased parcels and margins, offset by increased labor costs due to the USW labor agreement, which is now in full effect. The Adjusted Free Cash Flow was a record Q1 of $22 million and $23 million higher than prior year for sports. This result was due to continued strong profitability across all bus and powertrain types and improvements in working capital. Our liquidity position at the end of this quarter was a record 280 million.
Speaker Change: Which nearly offset the reduction in the volumes of guided last time.
Speaker Change: Adjusted EBITDA for the quarter was a near record $46 million driven by higher margins increased parts sales and margins offset by increased labor costs due to the USW labor agreement, which is now in full effect.
Speaker Change: The adjusted free cash flow was a record Q1 of $22 million and $23 million higher than prior year first quarter.
Speaker Change: This result was due to continued strong profitability across all Boston powertrain types.
Speaker Change: And improvements in working capital.
Speaker Change: Our liquidity position at the end of this quarter was a record $280 million.
Razvan Radulescu: Moving on to slide 12, as mentioned before by Phil, our backlog at the end of Q1 continues to be very strong at approximately 4,400 units, including a record 17% EVs. In fact, at the end of January, we have now approximately 1,000 EVs sold in Q1 and in backlog, as mentioned by Phil before. Breaking down the Q1 $314 million in revenue into our two business segments, the bus net revenue was $288 million, down by $5 million versus prior year due to lower EV mix, nearly offset by increased prices across non-EV products. As a result, our average bus revenue per unit decreased from $138,000 to $135,000, or approximately $2.5 billion.
Speaker Change: Moving on to slide 12, as mentioned before by Phil our backlog at the end of Q1 continues to be very strong at approximately 4400 units.
Speaker Change: <unk> got record 17% EV.
Speaker Change: In fact at the end of January we have now approximately 1000 installed in Q1, ending backlog as mentioned by Phil before.
Speaker Change: Breaking down the Q1 and $314 million in revenue in two different segments. The vast net revenue was $288 million down by $5 million versus prior year due to lower <unk> nearly offset by increased prices across non EV products.
Speaker Change: As a result, our average bus revenue per unit decreased from 138430 5000.
Speaker Change: Approximately 2%.
Razvan Radulescu: The V cells in Q1 were 132 units. 74 units or 36% lower than last year as planned. Our revenue for the quarter was $26 million, representing a growth of $2 million or 6% increase compared to the prior year. This great performance was, in part, due to increased demand for our parts of the fleet is aging, as well as supply chain driven pricing actions and throughput improvements. Gross margin for the quarter was a near record 19.2% or 80 basis points lower than last year due to the expected impact of the USW labor agreements now in full effect.
<unk> sales in Q1 were 132 units.
Speaker Change: 74 units or 36% lower than last year plan.
Speaker Change: Revenue for the quarter was $26 million, representing a growth of $2 million or 6% increase compared to the prior year.
Speaker Change: Credit performance was in part due to increased demand for our part of the fleet is aging as well as supply chain driven pricing actions and throughput improvement.
Speaker Change: Gross margin for the quarter was a near record of 19, 2% or 80 basis points lower than last year due to the expected impact of the USW labor agreements now in full effect.
Razvan Radulescu: In fiscal 25-Q1, adjusted net income was approximately $31 million, or $1 million higher than last Adjusted EBITDA of $46 million, or 14.6%, was slightly lower compared with prior year by $2 million and $40 billion. Adjusted diluted earnings per share of $0.92, or about $0.01 versus the prior year.
Speaker Change: I mean fiscal 'twenty five Q1, adjusted net income was approximately $31 million or $1 million higher than last year.
Speaker Change: Adjusted EBITDA of $46 million or 14, 6% was slightly lower compared with prior year by 2 million and 40 basis points.
Adjusted diluted earnings per share of <unk> 92 was up one versus the prior year.
Razvan Radulescu: Slide 13 shows the walk from fiscal 24-Q1 adjusted EBITDA to the fiscal 25-Q1 result. Starting on the left at $47.6 million, the impact of the bus segment gross profit in total was negative $4.1 million. Split between volume, EV mix, and pricing effects, net of material cost increases of positive $2.2 million, and operational cost increases of negative $6.3 million, largely driven by the USW labor agreement. A favorable development in the part segment gross profit was $0.9 million, driven by higher sales and improved margins, as mentioned earlier in the call. Our fixed costs and other income were favorable year over year by $1.4 million.
Speaker Change: Slide 13 shows the walk from fiscal 2000 and for Q1 adjusted EBITDA for the fiscal 'twenty five Q1 results.
Speaker Change: Starting on the left at $47 6 million the impact of the bus segment gross profit in total was negative $4 1 million split between volume mix and pricing effects net of material cost increases.
Speaker Change: Positive $2 2 million and operational cost increases of negative $6 3 million largely driven by the USW labor agreement.
Speaker Change: Favorable development in the product segment gross profit was <unk> 9 million driven by higher sales and improved margins as mentioned earlier in the call.
Speaker Change: Our fixed costs and other income were favorable year over year by $1 4 million.
Razvan Radulescu: The sum total of all of the above-mentioned developments drives our near-record fiscal 25Q1, reported adjusted EBITDA result of 45.8 million, or 14.6%.
Speaker Change: The sum total of all of the above mentioned developments drives our near that quarter fiscal 'twenty. Five Q1 reported adjusted EBITDA result of $45 8 million or 14, 6%.
Razvan Radulescu: Moving on to slide 14, we have extremely positive developments year over year also on the balance. We ended the quarter with a record $136 million in cash and reduced our debt significantly by over $40 million over the last year. Our liquidity set very strong at a record $280 million at the end of fiscal 25-Q1, a $95 million increase compared to a year ago. Additionally, we have executed another plunge of shares buyback of $10 million during fiscal 25 Q1, which brings us to $20 million completed over the last six months, with another $40 million left to go on the existing share buyback program approved by our board.
Speaker Change: Moving on to slide 14, we have extremely positive developments in over here also on the balance sheet.
Speaker Change: Ended the quarter was a record $136 million in cash and reduced our debt significantly by over $40 million over the last year.
Speaker Change: Our liquidity is very strong at a record $280 million at the end of fiscal 'twenty, five Q1 $95 million increased compared to a year ago.
Speaker Change: Additionally, we have executed another tranche of shares buyback of $10 million during fiscal 2000, <unk> Q1, which brings us to $20 million completed over the last six months, there's another $40 million left to go on the existing share buyback program approved by our board.
Razvan Radulescu: The operating cash flow was very strong for Q1 at $26 million, driven by great operational execution and margins, and improvements in working capital.
Speaker Change: The operating cash flow was very strong for Q1 of 2000 6 million driven by great operational execution and margins and improvements in working capital.
Razvan Radulescu: On slide 15, we want to share with you our updated Fiscal 25 Guidelines. Looking at Q1 actuals, we have beaten every metric our guidance this past quarter, so we had a very strong start for the fiscal year. The recent executive orders and uncertainty of the timing for the EPA rounds two and three funding disbursements drove us to reduce the upside for the EV volumes for the second half of the fiscal year. However, given our sold and backlog position of 1,000 EV units at the end of January, we maintain this as our target for fiscal 25.
Speaker Change: On slide 15, we want to share with you our updated fiscal 'twenty guidance.
Speaker Change: Looking at Q1 actuals, we have built in every metric our guidance this past quarter.
Speaker Change: We had a very strong start for the fiscal year.
Speaker Change: The recent executive orders and uncertainty of the timing for the EPA announced jointly funding disbursements drove us to reduce the upside for the volumes for the second half of the fiscal year.
Speaker Change: Given our solid and backlog position of 1000 units at the end of January we maintain this is our target for fiscal 'twenty five.
Razvan Radulescu: On the adjusted EBITDA side, we are maintaining our previous guidance for Q2 and we are widening the range on the lower side by 5 million each for Q3 and Q4, also due to the timing uncertainty of the impact from newly proposed 25% tariff on Mexico and Canada imports to the USA. We have a relatively lower exposure to China sourcing than the respective 10% tariffs proposed. Nevertheless, all of our non-EV new quotes issued since the end of January have a conditional tariff clause of 5% price increase based on our estimated cost of goods sold increases run rate, newly proposed 25% tariff for Canada and Mexico, and 10% for China.
Speaker Change: On the adjusted EBITDA side, we are maintaining our previous guidance for Q2, and we are widening the range on the lower side by $5 million. Each for Q3 and Q4 also due to the timing uncertainty of the impact from newly proposed 25% tariffs on Mexico, and Canada imports to the USA.
Speaker Change: We have a relatively lower exposure to China sourcing that affect this 10% Paris proposed.
Speaker Change: Nevertheless, all of our non EV, new quotes issued since the end of January of a conditional tariff plus a 5% price increase based on our estimated cost of goods sold it increases run rate.
Speaker Change: The newly proposed 25% tariff for Canada, and Mexico, and 10% for China.
Razvan Radulescu: We are also prepared to apply this type of searcher to existing non-EV orders in the backlog at the appropriate time. On the EV side, we actually reduced our lease prices by $25,000 in line with our cost improvement as a step towards getting to total cost of ownership parity with the internal combustion engine buses over time. That's planned and indicated in our long-term outcome. Any tariff-related pricing surcharges on EVs will be evaluated and announced once we have more clarity of scope and timing, and we have already secured some strategic inventory of pre-buy EV components at the end of the 2024 calendar year.
We are also prepared to apply this tariff surcharge to existing non <unk> orders in the backlog at the appropriate time.
Speaker Change: On the energy side, we actually reduced our list prices by $25000 in line with our cost improvements.
Speaker Change: Pepco worth getting to total cost of ownership parity with the internal combustion engine buses over time.
Speaker Change: As planned and indicated in our long term outlook.
Speaker Change: Any tariff related pricing surcharges on evs, whether it be evaluated and announced once we have more clarity of scope and timing.
Speaker Change: And we have already secured some strategic inventory of pre buy EV components.
Speaker Change: Components at the end of 2024 calendar years.
Razvan Radulescu: See our increase in raw inventory during fiscal Q1. We are maintaining our revenue to a range of $1.4 to $1.5 billion, and we are confirming our adjusted EBITDA of $200 million, or 14%, with a widened range of $185 to $215 million, or 13.5% to 14.5%.
Speaker Change: Our increase in inventory during fiscal Q1.
Speaker Change: We are maintaining our revenue to a range of one four to $1 5 billion and we are confirming our adjusted EBITDA of $200 million or 14% with a wider range of $185 million to $215 million or 13, 5% to 14, 5%.
Razvan Radulescu: We'll provide further updates at the beginning of May after we close Fiscal Q2 and gather further insights into the EPA program timing and any tariff changes.
Speaker Change: We will provide further updates at the beginning of May after we close fiscal Q2 and gather further insights into the EPA program timing and any tariff changes.
Razvan Radulescu: On slide 16, we want to reiterate our thoughts on fiscal 25 business environment and our total year guidance. We continue to have a number of both tailwinds and headwinds at play this year. At Tailwinds, we have strong bus demand, stable pricing, and still a very high industry backlog. We offer not only diesel and exclusive gasoline school buses, but we have the only propane-fueled school bus in the industry, with clean fuel and best-in-class total cost of ownership. As mentioned last time, we are not a one-trick pony. We are also leading in the EV segment, with over 2,000 EV buses on the road.
Speaker Change: On slide 16, we want to reiterate our thoughts on fiscal 'twenty, five business environment, and our total year guidance.
Speaker Change: Continue to have a number of both tailwind and headwinds at play this year.
Speaker Change: The tailwind we have strong box demand favorable pricing and still a very high interest tobacco.
Speaker Change: Offer not only diesel and exclusive gasoline school buses, but they have the only propane school bus in the industry with clean fuel and best in class total cost of ownership.
Speaker Change: As mentioned last time, we are not a one trick pony.
Speaker Change: We are also leading in the EV segment with over 2000 TV buses on the road.
Razvan Radulescu: The state subsidies continue to be strong. EV PurePlay competitors are going out of business, and they have already approximately 1,000 EVs sold and in backlog at the end of January.
Speaker Change: Subsidies continued to be strong easy pure play competitors are going out of business and they have already approximately 1000. It is sold and in backlog at the end of January.
Razvan Radulescu: As headwinds, there is some uncertainty regarding the timing of the EPA Clean School Bus Program future rounds. Also, supply chain is still fragile at times while improving overall. The material costs and supplier inflation pressures are still present, and the newly proposed 25% tariffs on Mexico and Canada and 10% on China imports, once implemented, will impact our cost of goods sold over time, with bus pricing countermeasures already announced and ready to be implemented as needed. In summary, we are maintaining our units and revenue midpoint guidance to $9,250 and $1.45 billion respectively with approximately $1,000 in these.
Speaker Change: With headwinds there is some uncertainty regarding the timing of the EPA clinical bus program future around.
Speaker Change: Also our supply chain is still fragile at times, while improving overall.
Speaker Change: The material cost and supplier inflation pressures are still present and the newly proposed 25% Paris in Mexico, and Canada, and 10% on China imports once implemented will impact our cost of goods sold overtime with bus pricing countermeasures already announced and ready to be implemented.
Speaker Change: In summary, we are maintaining our units and revenue midpoint guidance to 9250, and $1 5 billion, respectively with approximately 1000.
Razvan Radulescu: We are also confirming our adjusted EBITDA guidance of $200 million or 14% with a range of $185 to $215 million and 13.5% to 14.5% margin.
Speaker Change: We are also confirming our adjusted EBITDA guidance of $200 million or 14% was the range of 185 to 215 million 13, 5% to 14, 5% margin.
Razvan Radulescu: Moving to slide 17. In summary, we are forecasting an improvement year-over-year, with revenue up to approximately $1.45 billion, adjusted EBITDA in the range of $185 to $215 million, or 13.5% to 14.5%, and adjusted free cash flow of $40 to $60 million. The free cash flow guidance is in line with our typical target of 50% of adjusted EBITDA, and it includes on top the extraordinary CAPEX of $50 million as our 50% fiscal 2025 portion of the new plant investment funded by the DOE MASC grant, which is currently proceeding as planned.
Speaker Change: Moving to slide 17 in summary, we are forecasting an improvement year over year with revenue up to approximately 145 billion adjusted EBITDA in the range of $185 million to $215 million or 13, 5% to 14, 5% and adjusted free cash flow.
Speaker Change: A $40 million to $60 million.
Speaker Change: Free cash flow guidance is in line with our typical target of 50% of adjusted EBITDA and it includes on top extraordinary capex of $50 million of that.
Speaker Change: Our 50% fiscal 2025 portion of the new plant investments funded by the Doe Grant, which is currently proceeding as planned.
Razvan Radulescu: Moving on to slide eight. Today, we are reconfirming the medium-term outlook at 14% margin, with volume of up to 10,000 units, generating revenue around $1.6 billion, and with adjusted EBITDA of approximately $225 million. Starting in 2028 and beyond, our long-term target remains to drive profitable growth to higher levels. Towards $1.85 to $2 billion in revenue, comprising of 11,000 to 12,000 units, and generate EBITDA of $270 to $300 plus million, or 14.5% to 15% plus. at best-in-class level. The growth comes not only from improved EV mix, driven by sustained state funding and improved EV total cost of ownership over time, but also from our new Blue Bird commercial chassis addressable market expansion, as well as our micro board joint venture new plant expansion in the U.S.
Speaker Change: Moving on to slide 18 today, we are reconfirming the medium term outlook at 14% margin with volume of up to 10000 units generating revenue around $1 6 billion with adjusted EBITDA of approximately $225 million.
Speaker Change: Starting in 2028 and beyond our long term target remains to drive profitable growth through higher levels of water to $185 2 billion in revenue comprising of 11 to 12000 units and generate EBITDA of 270 to 300 plus million or 14, 5% to <unk>.
Speaker Change: 15% plus.
Speaker Change: At best in class levels.
Speaker Change: The growth comes not only from improved mix driven by sustained state funding and improve the total cost of ownership over time, but also from our new global commercial chassis addressable market expansion as well as our micro bird joint venture New plant expansion in the U S.
Phil Horlock: We continue to be incredibly excited about Blue Bird's future, and now I'll turn it back over to Phil.
Phil: We continue to be incredibly excited about <unk> future and now I'll turn it back over to Phil.
Phil Horlock: Thanks, Razvan. That was a great explanation of our Q1 results and our financial outlook. Let's now move on to slide 20.
Phil: Thanks Raj man that was a great explanation about Q1 results and our financial outlook, let's now move on to slide 20.
Phil Horlock: I've shown this slide on several earnings calls, so I won't spend much time with it today, as our priorities and our strategy are unchanged, as they should be. The chart on the left illustrates the three priorities that continue to drive us. Taking care of our employees, delighting our customers and our dealers, and delivering profitable growth. The chart on the right provides more texture around the specific strategies that we are pursuing every day at Blue Bird that both align with our priorities and drive our four-year profitable growth plan. At the center is our ultimate objective to drive sustained, profitable growth.
Phil: I've shown this slide on several earnings calls so I won't spend much time on it today as our priorities and strategy are unchanged as they should be.
Phil: The chart on the left illustrates the three priorities that continues to drive us taking care of our employees delighting, our customers and our dealers and delivering profitable growth.
Phil: The chart on the right provides more texture around the specific strategies that we're pursuing every day, a bluebird that both align with our priorities and drive a full year of profitable growth plans at.
Phil: At the center is our ultimate objective to drive sustained profitable growth.
Phil Horlock: As you look at the accomplishments in Fiscal 23, we restructured the business from losses to record profitability, achieving a full year margin of 8%. For Fiscal 2024, we achieved a transformational improvement of 6 percentage points to a 14% adjusted EBITDA margin. This was truly a breakout profit year for Blue Bird, where we more than doubled our profitability over Fiscal 2023. We look to solidify and build on this in Fiscal 2025. Then over the next few years, we plan to grow our margin to 15% and beyond.
Phil: As you look at your accomplishments in fiscal 'twenty, three we restructured the business from losses to record profitability, achieving our full year margin of 8%.
For fiscal 2024, we achieved a transformational improvement of six percentage points to a 14% adjusted EBITDA margin.
Phil: This was truly a breakout profit year for Bluebird will be more than doubled our profitability over fiscal 'twenty three we look to solidify and build on this in fiscal 'twenty five.
Phil: Then over the next few years, we plan to grow our margin to 15% and beyond.
Phil Horlock: So let me now start to wrap up the earnings call with our outlook for the business on slide 21. Razvan took you through the guidance fiscal 25, and I'm showing some of the key metrics at the midpoint of guidance here. We are being prudent in our bookings outlook, only increasing volume by 3% over fiscal 24 at this time, as we still deal with a few select supply chain issues. But we managed those very well in 2024, and if we can build more in fiscal 25, we will, just as we did last year. Net revenue of $1.45 billion will be a new record for Blue Bird, up 8% from fiscal 24.
Phil: So let me start to wrap up the earnings call with our outlook for the business on slide 21.
Phil: Russia and took you through the guidance fiscal 'twenty, five and I am showing some of the key metrics of the midpoint of guidance here.
Phil: We are being prudent in our bookings outlook only increasing volume by 3% over fiscal 'twenty four at this time as we still deal with a few select supply chain issues.
Phil: But we manage those very well in 2024, and we can build more in fiscal 'twenty five we will just as we did last year.
Phil: Net revenue of $1 $45 billion.
Phil: Will be a new record for Blue bird up 8% from fiscal 'twenty four.
Phil Horlock: adjusted EBITDA guidance of $200 million is 9% higher than our fiscal 2024 record results. Importantly, we are planning on a robust 14% adjusted EBITDA margin in Fiscal 2025, up 40 basis points from Fiscal 2024, as we look to maintain a momentum after such a surge in margin last year. And finally, we are looking to grow EV unit sales to 1,000 buses in fiscal 25, up 42% from last year. As you can see on the right chart, there was a lot of pent-up demand following the low industry sales between 2020 and 2022, and the bus fleet has aged by a couple of years.
Phil: Adjusted EBITDA guidance of $200 million is 9% higher than our fiscal 'twenty four record results.
Phil: Importantly, we are planning on a robust 14% adjusted EBITDA margin in fiscal 'twenty, five up 40 basis points from fiscal 'twenty four as we look to maintain a momentum after such a surge in margin last year.
Phil: And finally, we're looking to grow EV unit sales to 1000 buses in fiscal 'twenty five up 42% from last year.
Phil: As you can see on the right chart. There was a lot of pent up demand following the low industry sales between 2020 in 2022 and the bus fleets was aided by a couple of years.
Phil Horlock: ACT is forecasting a compound annual growth rate of 6% through to 2029. And that's great news for our business and great news for our profit outlook.
Phil: <unk> is forecasting a compound annual growth rate of 6% through to 2029 and Thats, great news for our business and great news for our profit outlook.
Phil Horlock: So let me now wrap up the call with a summary of the key messages that we want to convey today on slide 22. Our first quarter results, with 94% of our sales being traditional internal combustion engine vehicles, was exceptional, the second highest Q1 profit ever at $46 million and a margin of 15%. Further, this is the lowest volume quarter of the year and additional profit growth is ahead of us. Our margins are strong on all powertrain offerings. We enjoy the higher unit profits from EV vehicles and will pursue this business aggressively, but we are not dependent on them.
Phil: So let me now wrap up the call with a summary of the key messages that we want to convey today on slide 22.
Phil: Our first quarter results with 94% of our sales being traditional internal combustion engine vehicles was exceptional the second highest Q1 profit ever at $46 million and a margin of 15%.
Phil: Further this is our lowest volume quarter of the year and additional profit growth is ahead of us.
Phil: Our margins are strong on all powertrain offerings, we enjoy the higher unit profits from EV vehicles and will pursue this business aggressively, but we are not dependent on them.
Phil Horlock: Our strength is in having the broadest range of products and all having very strong margins. EV, propane, gas and diesel. That is how we win. We will sell around 1,000 EVs this year, more than 40% higher than a year ago. We have 1,000 EV buses, either sold or orders in hand today, of which 75% have funding in place. And we have more orders to come this year.
Phil: Our strength is in having the broadest range of products and all having very strong margins EV propane gas and diesel.
Phil: That is how we win.
Phil: We will sell around a thousand Tvs this year more than 40% higher than a year ago. We have 1000, EV buses either sold or orders in hand today of which 75% of funding in place and we have more orders to come this year.
Phil Horlock: We beat our first quarter guidance for the eighth consecutive quarter and we are maintaining full year guidance despite disruptive executive orders because our plans are robust. We remain confident that the Clean School Bus funding program will continue. It's a bipartisan program approved by Congress in 2022. It's 100 percent appropriated. It's been wildly successful and oversubscribed, and it provides clean air and eliminates harmful tailpipe toxins for the benefit of our children and our community. We are maintaining our financial outlook for a sustained 14 to 15 percent plus margin in the medium and longer term, with solid growth plans supporting this, including the expansion of our addressable market by supplying commercial chances to U.S.
Phil: We beat our first quarter guidance for the eighth consecutive quarter and we are maintaining full year guidance. Despite disruptive executive orders because our plans are robust.
Phil: We remain confident that the clean school bus funding program will continue its a bipartisan program approved by Congress in 2022, it's 100% appropriated it's been wildly successful and oversubscribed and it provides clean air and eliminate harmful tail pipe toxins for the benefits of our children and our <unk>.
Phil: Communities.
Phil: We are maintaining our financial outlook for our sustained 14% to 15% plus margin in the medium and longer term with solid growth plan supporting this including the expansion of our addressable market by supplying commercial chassis to U S last mile delivery businesses and the doubling of micro bird JV Buscopan.
Phil Horlock: last mile delivery businesses and the doubling of Micro Bird JV bus capacity following its plant acquisition in Plattsburgh, New York, late last year.
Phil: Following these plant acquisition in Plattsburgh, New York late last year.
Phil Horlock: The future is incredibly bright for Blue Bird, and we are on a trajectory of sustained profitable growth with the best team and best product offering in the industry.
Phil: The future is incredibly bright for Bluebird and we are on a trajectory of sustained profitable growth with the best team and best product offering in the industry.
Phil Horlock: I want to thank our nearly 2,000 employees for all their hard work and dedication in delivering a great first quarter result on top of a record full-year profit last year, as well as our outstanding dealer body who are critical to our success.
Phil: I want to thank our nearly 2000 employees for all their hard work and dedication in delivering a great first quarter result on top of a record full year profit last year as well as our extending dealer body, who are critical to our success.
Phil Horlock: That concludes our formal presentation today, and I'd now like to hand it back to our moderator for the Q&A session. Thank you.
Phil: That concludes our formal presentation today and I'd now like to hand, it back to our moderator for the Q&A session.
Phil: Thank you.
Unnamed Moderator: We will now begin the Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to remove that question, press star followed by two.
Phil: We will now begin the Q&A session.
Phil: If you would like to ask a question. Please press star followed by one on your telephone keypad.
Phil: If you would like to turn that question press star followed by team.
Unnamed Moderator: And if you are using a speakerphone, please pick up your handset before asking your question.
Phil: And if you are using a speakerphone. Please pick up your handset before asking a question.
Eric Stine: Our first question today comes from Eric Stine with Craig Howland. Your line is now open.
Speaker Change: Our first question today comes from Eric Stine with Craig Hallum.
Phil: Line is now open.
Eric Stine: Hi everyone, thanks for taking the questions. So, hey, so I can appreciate, I mean, given all the uncertainty, I certainly can appreciate taking the low end of the EBITDA guidance down, but I do notice you took the high end up by the same amount, and so I'm just wondering if you could talk through some of the scenarios that would get you to the high end of that range.
Speaker Change: Hi, everyone. Thanks for taking the questions.
Speaker Change: Alright, so hey, so I can appreciate I mean, given all the uncertainty I certainly can appreciate taking the low end of the EBITDA guidance down, but I do notice you took the high end up by the same amount and so I'm. Just wondering if you could talk through some of the scenarios that would get you to the high end of that.
Speaker Change: <unk>.
Razvan Radulescu: Yeah, Eric, thanks for the question.
Speaker Change: Yes. Thanks for the question. This is Rob. So obviously, we had a very strong Q1, we'd be at the upper end of guidance. We gave last time and we see strong momentum on several of the non EV powertrains and cross selling so.
Razvan Radulescu: This is Razvan. So obviously, we had a very strong Q1. We did the upper end of the guidance we gave last time. And we see strong momentum on several of the non-EV power trains that we are selling. So at this point, we do see a scenario where we can reach above the previous 210 up to 215. However, definitely, we need some higher EVs than 1,000 to reach these numbers. But overall, we feel very good about the upper end of 215 being achievable at the current point with the current.
Speaker Change: At this point.
Speaker Change: Do you see a scenario, where we can reach above the previous apparent. After 2016, however, definitely we need some hardy and he has been one to reach these numbers, but overall, we feel very good about the upper range of 2015 being achievable.
Speaker Change: At the current point as the economy.
Phil Horlock: Eric, if I can just add, Razvan's right. I mean, you know, with all the backlog of 4,700 buses we have today, we have a good line of sight, right? And with the pricing increase in October, and as the year goes by, that beds in as we start to build those units, and that'll come through. So, and then we look at us, where we are today, like Razvan said, lowest quarter of the year, lowest volume quarter of the year, great profitability, big guidance, and we project, you know, increased volume through the rest of the quarters, and so we have some confidence there.
Speaker Change: Eric if I can just add restaurants right.
Speaker Change: With the order backlog of 4700 buses we have today, we have good line of as we have.
Speaker Change: Assign right and we took pricing increase in October and as the year goes by that beds in.
Speaker Change: As we start to build those units and that will come through so and then we look at is where we also have that restaurant set lowest quarter, the lowest volume quarter of the great profitability beat guidance and we project increased volumes through the rest of the quarters and so we have some confidence that we'd like to think this latest.
Phil Horlock: We'd like to think this latest, you know, reversal of the pause on, that President Trump had put in place, Executive Order, is really going to help us get moving now again. We took it down a little bit. We took the, we took the range, cut the range down, as you know, and I think we're now, we're feeling a lot better about where that's heading. And I mentioned to Zeldin, looking at the comments he's been making on his strategy and his plans, moving forward with the EPA, it gives me a lot of confidence here that we'll get this program fully up and running.
Speaker Change: Reversal of the pause on.
Speaker Change: With President Trump put in place executive order is really going to help us get moving now again.
Speaker Change: Look it down a little bit we talked about we took our range couple of range down as you know and I think we're now what's been a lot better about where that's heading and administered as Eldon looking at his comments he has been making on the only strategy in these plans moving forward with the EPA. It gives me a lot of competency is that we will get this program fully up and running again.
Eric Stine: Got it.
Eric Stine: And then, you know, I guess I don't necessarily want to put you on the spot, but I mean, I'll ask it anyways. I mean, I know there's some uncertainty. because this pauses on, quote unquote, unspent funds. But, you know, there's some ambiguity there. Does unspent mean, I mean, it's allocated? Does that count as unspent? Or does allocated put it in a different category?
Speaker Change: Got it and then.
Speaker Change: Yes, I don't necessarily want to put you on the spot, but I'll ask it anyways I mean, I know theres some uncertainty.
Speaker Change: Because of this pause is on quote unquote unspent funds.
Speaker Change: But there is some ambiguity there is unspent mean allocated does.
Speaker Change: Does that count as unspent or it is allocated put it in a different category and maybe these are questions that just can't be answered, but I would love your thoughts.
Eric Stine: And maybe these are questions that just can't be answered, but I would love your thoughts.
Phil Horlock: Yeah, I mean, look, there are two things. First of all, we have 250 buses out there where the EPA, when they approve a customer to get their rebate or grant, they say, go and order your bus, and we'll provide you with your rebate and grant. That's what these people have done. They've ordered the buses. Those are firm, rock-solid orders. I should add, by the way, since the pause came in place, we're not on a single cancellation of an order, not a single cancellation.
Speaker Change: Yes, I mean look there are two things first of all we have 250 buses out there where.
Speaker Change: The EPA when they approve a customer to get the rebates Graham they say <unk>.
Audio bus and we will provide you with your rebate and grant the one already and that's what these people have done they've ordered the buses so as a firm rock solid also I should add by the way since the pulse came in place.
Speaker Change: Single cancellation on order now.
Speaker Change: On a single cancellation.
Phil Horlock: So that's the first part of it. But the resumption now here, it's a resumption of the program. It's not just a resumption of disbursement. It's a resumption of a proven program that was approved by Congress in 22 to get that moving again. So we're going to look for new orders going in now and new orders from customers and new orders coming to us and the disbursement of funds firing up again very quickly.
Speaker Change: So that's the first part of it for the resumption. How here isn't is a resumption of the program is not just the resumption of disbursements as resumption of our proven program was approved by Congress in 'twenty two.
Speaker Change: Moving again, so we're going to look for new orders going in now are new orders from customers and new owners coming to us.
The disposal of thumbs.
Speaker Change: Firing up again very quickly.
Eric Stine: Got it. Maybe last one for me just on pricing. I would assume you talked about the ability if needed in response to tariffs to to apply higher prices to your backlog. Is that is your ability to do that because of steps that you've taken over the last couple of years? I know your your pricing was really overhauled, especially during COVID and coming out of COVID. You know, just speak to your ability to do that if needed.
Speaker Change: Got it maybe last one for me just on pricing I would assume.
Speaker Change: You talked about the ability if needed in.
Speaker Change: In response to tariffs to to apply higher prices to your backlog is that.
Speaker Change: Our ability to do that because of the steps that you've taken over the last couple of years I know you're your pricing.
Speaker Change: Was really overhauled, especially during COVID-19 and coming out of Covid.
Speaker Change: Just speak to your ability to do that if needed.
Razvan Radulescu: Yes, definitely there is some precedent measures we had to put in place about two or three years ago where we had to go back on the backlog. However, the situation these days with tariffs is something that will be experienced by everybody across all the goods that are crossing the borders should these tariffs ultimately be put in place. So in a way, it's almost like a sales tax that the government is imposing, and we are ready to do it and push it through our downstream flow and collect the money from the ultimate end customer.
Speaker Change: Yes, definitely there is some precedent measures we had to put in place about two or three years ago. When we had to go back on the backlog. However, the situation. These days with Paris, it's something that will be experienced by everybody across all the goods that are crossing the borders should.
Speaker Change: Ultimately be put in place so in a way it's almost like a sales tax but the government is imposing and we are ready to do it and push it forward.
Speaker Change: Downstream flow and collect the money from the ultimate customer.
Phil Horlock: I would add to Eric, we already talked to our dealer network on this. We have a great dealer network. They've been through this before, as Razvan said, post COVID. They understand, you know, this isn't, this is a little different, right?
Speaker Change: I would add too Eric we already talked through our dealer network on this we have a great dealer network they've been through this before as Russ on set post COVID-19.
Speaker Change: Understand this isn't this is a little different right. This is not like rampant inflation on commodities. This is the U S government deciding they want attacks products that are imported.
Phil Horlock: This is not like rampant inflation on commodities. This is the US government deciding they want to tax products that are and I think they understand that's going to be part of it.
Speaker Change: We understand that's going be a pass through.
Speaker Change: Mhm.
Eric Stine: Okay, I appreciate it. Thanks.
Speaker Change: Okay I appreciate it thanks.
Eric Stine: You bet.
Speaker Change: Okay you bet.
Greg Lewis: Our next question comes from Greg Lewis with BTIG. Your line is now open.
Speaker Change: Our next question comes from Greg Lewis with <unk>.
Speaker Change: Your line is now open.
Greg Lewis: Hi. Thank you, and good afternoon, and thanks for taking my questions. I did want to follow up on kind of the tenor or pace of the EV mix in, you know, this year and the guidance. You know, you called out that I guess EVs were 6% of kind of the Q1 mix, as I think about, or as you kind of talked to, the 1,000 vehicles in the guidance. I guess that points it to maybe being, you know, 17% of a full year. How should we think about the progression of the EV mix, you know, I guess in the final three quarters of the year?
Greg Lewis: Hi, Thank you and good afternoon, and thanks for taking my questions.
Speaker Change: I did want to follow up on.
Speaker Change: Kind of the tenor or pace of the EV mix in.
This year in the guidance you called out that I guess Evs, we're 6%.
Speaker Change: Kind of the Q1 mix as I think about or as you kind of talk to the <unk> thousand vehicles in the guidance I guess that points to maybe being.
Speaker Change: 17%.
Speaker Change: Full year.
Speaker Change: Should we think about the progression of the EV mix I guess in the final three quarters of the year.
Razvan Radulescu: Hey, Greg. It's Razvan. Thanks for the question. I'll take it. So our thousand units is about 11% of the total year volume that we are forecasting. So 1,000 EVs on 90 to 50 units. And Q1 was at 6%. And we are forecasting, as you can see on slide 15, a progression going up to 200, 300, 400, respectively, until Q4.
Speaker Change: Hey, Greg it's Roslyn and thanks for the question I'll take it. So our 1000 units is about 11% of the total year volumes that we are forecasting so 11.
Speaker Change: 1000 views on 90 to 50 units in Q1 was 6% and we are forecasting because you can see on slide 15, our progression going up to 200, 300 400, respectively until Q4.
Phil Horlock: Okay, Greg, I don't care who you film me, but, Greg, I'm not... Greg, just a little bit of texture, just in case you're familiar, but on the last earnings call, we signaled very clearly that we were going to get a low mix in the first quarter, because what happened was the round one of the EPA funding closed out in 2024, but the rounds two and three was just starting going right towards the end of the fiscal year of 2020. So there's a little bit of a lull between a program ending and a new one starting.
Speaker Change: Okay.
Greg Lewis: Greg Greg.
Greg Lewis: Greg just a little bit of texture executive familiar but on the last earnings call. We signaled very clearly we're going to get a loan mix in the first quarter because what happened was the round one of the EIA EPA funding closed out in 2024.
Greg Lewis: <unk> two and three was just starting going right towards the end of the fiscal year of 2004, so theres a little bit of a lull between the program ending in a new one starting and Thats, what we and we knew that was going to happen and then we know what that's going to accelerate all of this should accelerate as was applicant.
Phil Horlock: And that's what we, and we knew that was going to happen. And then we knew it was going to accelerate. All of a sudden it would accelerate. As was that. or of those orders, I guess, get. Once it all is cemented, that's when the EPA begins to process the rebate of the government.
Greg Lewis: Four of those orders I guess.
Greg Lewis: Once it I'll just submit it that's when the EPA begins to process a rebate on the ground.
Greg Lewis: Okay, yes, super helpful.
Greg Lewis: Okay, Yes, that's super helpful. And then my other question was around.
Greg Lewis: And then my other question was around, you know, even last year, you know, in November when, you know, the new administration was coming in and they were flagging, you know, the potential for tariffs. It looked like, you know, and I guess we have a temporary pause or maybe who knows when they'll be implemented. It looked like inventories went up in the fourth quarter, last quarter, in the December quarter versus the September quarter. You know, could you talk a little bit about why those inventories went up? Is that kind of related to a lull or, you know, what was the company kind of maybe building up inventories ahead of some potential issues, really, and whether it was tariffs or concerns around supply changes, kind of some color around why that inventory spiked up sequentially this quarter?
Speaker Change: EBIT even last year.
Greg Lewis: On November one.
Greg Lewis: The new administration was coming in and they were flagging.
Greg Lewis: Potential for tariffs it looked like.
Greg Lewis: And I guess, we have a temporary pause or maybe who knows when that will be implemented it looked like inventories. It looks like inventories went up in the fourth quarter last quarter and the December quarter versus the September quarter.
Greg Lewis: Could you talk a little bit about why those inventories went up is that kind of related to a lull or.
Greg Lewis: Does the company kind of maybe building up inventory ahead of some potential issues.
Greg Lewis: Really in <unk>.
Greg Lewis: Whether it was tariffs or concerns around supply chain, just kind of some color around why that inventory spiked up sequentially this quarter.
Razvan Radulescu: Oh, yes, Craig. So definitely, we took some measures to increase inventory. solid and pre-buy some components for various reasons. Majority of the pre-buy consists of EV components, batteries and some other components from the EV system, as well as some other components. So there is an aspect of ensuring supply chain stability with these measures. At the same time, the threat of tariffs existed. But at that point, it was a bit unclear if and when and how much it could be. So it's more to ensure stability of supply chain than fighting tariffs.
Greg Lewis: Yes, Greg.
Greg Lewis: So definitely we took some measures to increase the inventories too.
Greg Lewis: Police and pre buy some components for various reason majority of the pre buy consists of EV components batteries and some other components from the EV system as well as some other component. So there is an aspect of ensuring supply chain.
Greg Lewis: Stability with these measures.
Greg Lewis: At the same time the threat of tariffs existed method that point it was a bit unclear, if and when and how much it could be so it's more to ensure stability of supply chain than fighting MTV.
Greg Lewis: Okay Super helpful. Thanks for the time.
Greg Lewis: Super helpful, thank you for the time. You bet. Thanks, Craig.
Greg Lewis: You bet, thanks for an excellent.
Michael Shlisky: Our next question comes from Michael Shlisky with D.A. Davidson.
Speaker Change: Our next question comes from Michael Slutsky with D. A Davidson your line is now open.
Linda and Wally: Your line is now open. Hi, good afternoon. This is Linda and Wally on for Max Shlisky. Thank you for letting us ask questions.
Linda: Hi, Good afternoon. This is Linda <unk> <unk>. Thank you for letting us ask questions.
Razvan Radulescu: So my first question here is, I know we don't really have any finality on what the federal government might do with respect to the EPA program, but if they pull it tomorrow, what's your confidence level on hitting the 270 to 300 million long-term guidance without as many EVs? Thanks, Linda. This is Razvan.
Speaker Change: First question here is I know, we don't really have any finality on what that federal government might do with respect to the EPA program, but if they pull it tomorrow, what's your confidence level in hitting that $270 million to $200 million.
Linda: Long term guidance without as many events.
Speaker Change: Thanks, Linda Roslyn I'll take that question. So there are multiple avenues of growth for our long term outlook both on the top line as well as on the EBITDA. So we are standing by assessing the prior remarks in the prepared remarks.
Razvan Radulescu: I'll take that question. So there are multiple avenues of growth for our long-term outlook, both on the top line as well as on the EBITDA. So we are standing by, as said in the prior remarks, in the prepared remarks. We are standing by by those numbers. We will drive the company up to $2 billion and to 15% plus EBITDA. There is a certain EV mix growth that will still be driven by state and local funding and potentially still some federal funding. We are driving down the total cost of ownership on EVs. So slowly over time, they will reach parity with the internal combustion engines.
Speaker Change: Tended by by those numbers will drive the company after $2 billion in to 15% plus EBITDA.
Speaker Change: Set on economic growth.
Speaker Change: Driven by state and local funding and potentially still some federal funding we are driving down the total cost of ownership quantities.
Speaker Change: Slowly over time, there will reach parity with the internal combustion engine.
Razvan Radulescu: We are entering a new area of addressable market with our Blue Bird commercial chassis, which is an extension. And this will add both top line and bottom line results. And our joint venture, Micro Bird, we just announced in December, we purchased a new factory in New York State. And that will over time double their production capacity. So we have multiple engines of growth. And we will execute on all of them. And therefore, we are standing by those long-term targets, both for the revenue as well as the bottom line.
Speaker Change: We are entering a new area of our addressable market with a robust commercial chassis.
Speaker Change: <unk> been expansion and this will add both topline and bottom line results and our joint venture micro bird.
Speaker Change: Just announced in December we purchased a new factory in New York State and that will over time doubled their production capacity. So we have multiple engines of growth and that we will execute on all of them on their photographs spending by both long term targets both for the revenue as well as the bottom line.
Speaker Change: Yeah.
Michael Shlisky: Got it. Thanks.
Speaker Change: Got it thanks and then.
Razvan Radulescu: And then I appreciate the clarification on the impact of tariffs on Canada and Mexico, but I wanted to double click on the 10 percent tariffs on China. Could you elaborate on your level of exposure there and tell us if there is any impact with regards to your exposure and yeah, a bit more call will be helpful. Thank you. Yeah, so we have some limited exposure on China is the lowest of all those three countries mentioned. And we are monitoring it, we will assess it and we will take necessary actions. Once we have a clear magnitude of those Yeah, we don't have any major components sold to China at all.
Speaker Change: I appreciate the clarification on the impact of tariffs on Canada, and Mexico, but I wanted to double click on that 10% tariffs on China.
Speaker Change: Could you elaborate on your.
Speaker Change: The level of exposure there and tell.
Speaker Change: Tell us.
Speaker Change: Is any impact.
Speaker Change: With regards to your exposure there and.
Speaker Change: Yes, a bit more color will be helpful. Thank you.
Speaker Change: Yes, so we have some limited exposure on China is the lowest of all of those three countries mentioned.
Speaker Change: And we are monitoring it we will assess sequencing will take necessary actions.
Speaker Change: Once we have a clear magnitude of those tariffs.
Speaker Change: We don't have any major components sold to China at all they are all they're all very small piece of our business and we understand exactly what it is what the exposure would be and we can handle that.
Phil Horlock: They're all, you know, they're all, it's a very small piece of our business. And we understand exactly what it is, what the exposure would be, and we can handle it.
Razvan Radulescu: And maybe additionally, we are also evaluating countermeasures by resourcing parts that are currently sourced from China to potentially other Asian countries, or bring them closer on. Thanks for the color.
Speaker Change: And maybe additionally, we are also evaluating contacts measures by Eddie sourcing parts that are currently sourced from China to potentially other Asian countries.
Speaker Change: Them closer I'm sure.
Speaker Change: Thanks for the color and my last question is with the supply chain in good shape.
Phil Horlock: And my last question is, with the supply chain in good shape, what are some risks that we should be looking at for this quarter? Any concerns with regards to labor availability or components? No, I think for this quarter, we've got a very good line of sight. We're obviously well in the middle of the quarter now, and I think it's going well on plan, we expect it. So I think where we stand, we've got a great labor force. We know we. We have a great retention of our employees, and we feel very strong about what we're doing.
Speaker Change: One is some risks that we should be looking at for this quarter.
With regards to labor availability or a component.
Speaker Change: No I think for this quarter, we've got very good line of sight.
Speaker Change: Obviously, while in the middle of the quarter now and I think it's going well on plan and we expected. So I think where we stand and we got a great Labor force.
Speaker Change: Great retention of our employees and we feel very strong about what were doing supply chain is in good shape.
Phil Horlock: The supply chain is in good shape. Right now, it's the way it's running, and we're looking good. I would also add the collaboration with USW is very good, and we feel very confident in our workforce, and we have a good line of sight right now for the current situation.
Speaker Change: Right now its way it's running.
Speaker Change: We are looking good.
Speaker Change: I would also add to our collaboration with U S. W is very good and I feel very confident in our workforce.
Speaker Change: Yes.
Speaker Change: For the current quarter.
Phil Horlock: Awesome.
Linda and Wally: Thank you for your time. Thanks, Linda.
Speaker Change: Awesome. Thank you for your time.
Linda Roslyn: Thanks, Linda Thank you.
Craig Irwin: Our next question comes from Craig Irwin with Roth Capital Partners. Your line is now open.
Operator: Our next question comes from Craig Irwin with Roth Capital Partners. Your line is now open.
Razvan Radulescu: Good evening and thanks for taking my questions. First question I want to ask is the cost structure on your EV school buses. I know you've been working hard to explore new approaches, new avenues to take costs out of the bus. Can you maybe give us an update on the potential there over the next, you know, series of quarters? And, you know, I don't know if you have an update on tests you've been doing with potential alternate drivetrain OEMs. Anything you can share with us on that would be helpful.
Craig Irwin: Good evening and thanks for taking my questions first question I wanted to ask is.
Craig Irwin: The cost structure on your EV School buses I know you've been working hard to <unk>.
Craig Irwin: Explored new approaches new avenues to take cost out of the bus.
Craig Irwin: Can you maybe give us an update on the potential there over the next.
Craig Irwin: Series of quarters.
Craig Irwin: And I don't know if you have an update on tests, you've been doing with that.
Craig Irwin: Potential alternate drivetrain Oems.
Craig Irwin: Anything you can share with that with us on that would be helpful.
Razvan Radulescu: Hi, Craig, it's Razvan. Thanks for the question. So we announced recently, and it's in the prepared remarks, the fact that we reduced the price of our easy school buses by $25,000 over the prior level, as mentioned repeatedly on our long-term the first step towards that, in terms of other technologies and new sources.
Craig Irwin: Hey, Craig it's Roslyn. Thanks for the question. So we are now recently and it's in the prepared remarks. The fact that when you reduce the price of our easy school buses by $25000 over the prior level us mentioned repeatedly on our long term.
Craig Irwin: The first step towards that.
Craig Irwin: In terms of other technologies in your source.
Phil Horlock: I think we are not going to comment today on that work that's going on. And as always, we work hard with all of our suppliers and partners to drive down the cost of the buses and essentially bring the total cost of ownership close to the one of the ICE powertrain school buses.
Craig Irwin: I think we are not kind of comment today on that.
Craig Irwin: What's going on and as always we work hard with all of our suppliers and partners to drive down the cost of buses and essentially bring the total cost of ownership.
Craig Irwin: One of the powertrain.
Craig Irwin: Powertrain school buses.
Phil Horlock: Yeah, I would just add, Craig, I mean, obviously there's competitive knowledge here. We are working with a number of alternative suppliers on different componentry here to really help drive down our costs. And I think we know that's going to be successful. We have plans in place.
Craig Irwin: Yes, I would just add Greg.
Craig Irwin: Obviously, there's competitive technology, we are working with a number of alternative supply has some different componentry to really help drive down our cost and I think we know that's going to be successful we have plans in place.
Phil Horlock: I mean, I'll pick on one which you know about is the, is, for example, we're going to be demonstrating, which is a demonstration program coming up shortly for our new commercial chassis that we're very excited about. That is a different, different drive train that we've used previously. We're excited about it, and we'll be demonstrating that at the... show with a ride and drive and customers get in. That's a key growth initiative at a good cost point for us. Good cost-benefit ratio for future growth.
Craig Irwin: <unk>.
Craig Irwin: I mean I'll pick on one which you know about is the.
Craig Irwin: As for example, we're going to be demonstrating demonstration program coming up shortly for a new commercial chassis that were very excited about.
Craig Irwin: That use a different different drivetrain than we've used previously.
Craig Irwin: We're excited about it and we'll be demonstrating that simply.
Joe: Joe with a ride and drive and customers getting.
As a key growth initiative, but at a good cost point for our future.
Joe: Good customer and price excellent refresh.
Joe: For future growth.
Craig Irwin: That's good to hear.
Joe: Okay.
Joe: Good to hear so my second question is about.
Craig Irwin: So my second question is about the potential for, you know, a mixed shift versus expectations. You know, if the executive orders actually do hold and we see, you know, less funding support than previously expected for EB school buses, what's the potential to backfill that demand with something like propane? Do the propane customers typically wait for Vera funding or other relevant state or federal funding before they book orders with you? You know, can you talk about the potential for, you know, alternative solutions to be delivered to different school districts if, you know, if we do see any real impact from the pause in EB funding?
Joe: The potential for a mix shift versus expectations.
Joe: Yes.
Joe: The.
Joe: The executive orders actually do hold and we see them.
Joe: Less funding support than.
Joe: <unk> previously expected for EBIT school busses whats the potential to backfill that demand with something like propane and propane customers typically wait for <unk>.
Joe: <unk> funding or other relevant state or federal funding before the poor quarters with you.
Joe: Can you talk about the potential for alternative solutions to be delivered to different school districts.
If we do see any real impact from the pause in EBT funding.
Phil Horlock: Sure, I'll pick that one up, Craig. I mean, absolutely, you're completely right with what you suggest here. I mean, propane is a logical choice in the marketplace. You know, we've been delivering that propane product with our partnership with Ford and Roush now for the best part of 15 years or so. So it's a very strong product. The beauty of the propane product... It's the total lowest cost of ownership of any vehicle on the road, period. I mean, it is it will save money, a little bit of a premium to diesel, but you'll save costs in terms of fuel and maintenance costs significantly every year, three to four thousand dollars per bus.
Joe: Sure I'll take that one Craig I mean, absolutely.
Joe: You arrive at what you suggested I mean propane is a logical choice in the marketplace, we've been deliberate about.
Joe: Propane product with our partnership with Ford and rationale for for the best part of 15 years or so so it's a very it's a very it's a very strong product the beauty of the propane product is.
Joe: It's a total cost of ownership of any vehicle on the road period.
Joe: It is it will save money there is a little bit of a premium to diesel, but youll save costs in terms of fuel and maintenance costs significantly every three to $4000 per bus, let's say a diesel engine no subsidies are required to make unaffected thats the beauty of that product and its proven we've got a lot on the road fantastic testimony.
Phil Horlock: But you say a diesel engine, no subsidies are required to make that effective. That's the beauty of that product. And it's proven we got a lot on the road. Fantastic testimonials. That's what we'd look. Also, I should add, it's clean. It's ultra low emissions. It already meets the 2027 standards of NOx. It's exceeded, actually, 0.02 grams per brake horsepower hour. So it's a fantastic product and we're very pleased to have it. Of course, it's exclusive to us. So absolutely right.
Joe: So that's what we'd look.
Joe: Also I should add it's clean it's ultra low emissions in already meets the 2027 standards of Nox at point.
Joe: <unk> is actually a point zero to.
Joe: Grams for break horsepower hour. So it's a fantastic product and we're very pleased to happen of course is exclusive to us. So absolutely right that would be the shift that I think it will be logical for customers and certainly for ourselves to make we've done it before before we base came on the market that was the clean product that we push revenue.
Phil Horlock: That would be the shift that I think would be logical for customers and certainly for ourselves to make. We've done it before. Before eBase came on the market, that was the clean product which we pushed hard and we've been very successful at it and I think that's what we'd look to do going forward.
Joe: Which we pushed hard and we've been very successful at it nothing.
Joe: What we'd look to do going forward.
Craig Irwin: Great.
Craig Irwin: Well, thanks again for taking my question. You bet.
Joe: Great well, thanks again for taking my questions.
Brad: You bet. Thanks, Brad.
Craig Irwin: Thanks, Greg. Thank you for your questions.
Joe: Thank you for your questions.
Unnamed Moderator: As a reminder, it is Star 1 to ask a question and Star 2 to remove.
Speaker Change: As a reminder, the star one to ask a question and start to women.
Chris Pierce: Our next question comes from Chris Pierce with Needham. Your line is now open.
Joe: Our next question comes from Chris Harris with Needham.
Speaker Change: Your line is now open.
Chris Pierce: Hey, guess.
Speaker Change: Sure.
Phil Horlock: Good afternoon everyone. Can you just talk to, you know, yourself, Thomas, IC, first student, is, you know, school district stakeholders, is there any sort of working group to put together a consistent message to go to DC and kind of, not necessarily lobby for these funds because it's a law that's been passed, but I would just like to hear some sort of offensive measures that you're taking around, you know, disbursement of these funds if it exists at this time. Yeah, good question, Chris. I mean, we touched on that a little bit in our discussion around what we're doing with the EPA funding and so on in our presentation, but let me give a little color on that.
Speaker Change: And good afternoon, everyone can you just talk to.
Speaker Change: So Thomas I see first student is.
Speaker Change: Because of <unk> stakeholders.
Speaker Change: Is there any sort of working group to put together a consistent message to go to D C and kind of.
Speaker Change: Not necessarily lobby for these funds because it's allowed us to in past I would just like to hear sort of offensive measures that you're taking around discretionary. These funds if it exists at this time.
Speaker Change: Okay.
Speaker Change: Yes. Good question, Chris I mean, we touched on it a little bit in our discussion around what we would do it.
Speaker Change: With the EPA funding and so on in our presentation, but let me give a little color on that we absolutely do have such a consortium.
Phil Horlock: We absolutely do have such a consortium. We've been to Washington several times, DC meeting with a lot of influential folks either in Congress, the Senators, on both sides of the party, right, Democrat and Republican, particularly the Republican side. And we have that, our competitors are part of that group. We have our customers are in that group. It's a very, it's a quite influential group and a lot of access, a lot of recognition, and I think we made the comment in there that from all of our meetings, I can tell you we've had outstanding support. presented to us by all of those parties that this Clean School Bus program is the right thing to do.
Speaker Change: We've been to Washington, several times DC meeting with a lot of influential folks either in Congress percentages.
Speaker Change: On both sides on both sides of the party Democrat and Republican Republican side, and we have that our competitors are part of that group. We have our customers are in that group.
Speaker Change: It's a very it's a quite influential group.
Speaker Change: I don't have access to a lot of recognition and I think we made the comment in that.
Speaker Change: From all of our meetings I can tell you we've had outstanding.
Speaker Change: Sure.
Speaker Change:
Speaker Change: Presented to us by all of those potash. This clean school bus program is the right thing to do it's what we need to do for our children clean air for our kids and so yes, that's been going very well and we're going to keep we're going to keep pushing that.
Phil Horlock: It's what we need to do for our children, for clean air for our kids. And so, yeah, that's been going very well, and we're going to keep pushing that. Just this week, that team was together in D.C., for example, earlier this week, doing exactly what you said, presenting the case and garnering support, and it's just been nothing but supportive.
Speaker Change: This week that team was together in D. C. For example earlier this week doing exactly what you said.
Speaker Change: Presenting the case again, garnering supported its just been nothing but supportive because of what I would say.
Chris Pierce: Okay, and then just a point of clarification.
Speaker Change: Okay, and then just a point of clarification.
Phil Horlock: You deliver 132 EV school buses, you have $1,000 in backlog right now, but you're only getting to $1,000 for the full year because of 75% of that $1,000 is, there's money in place for that, and the rest is uncertainty, and that is what's driving the wider range on the adjustability, but I just want to make sure I have that buttoned up. Yeah, Chris, actually, that's not correct. So what we said is we have a thousand between what we saw in Q1 plus the backlog. So the total is a thousand for the era. Perfect.
Speaker Change: You delivered 132 EV school buses you have a thousand in backlog right now, but you're only guiding to for the full year because of 75% of that 1000 is.
Speaker Change: There's money in place for that and the rest is uncertainty and that is what's driving the wider range on the adjusted EBITDA I just want to make sure I have that.
Speaker Change: Yep.
Speaker Change: Yes, Chris Thanks for me that's not correct. So what we said is we have 1000 between what we saw in Q1 plus the backdrop. So the total needs of thousands for the year right now.
Phil Horlock: Okay, and then, I'm just curious, why not... Go on, sorry. Go ahead, Phil. Well, no, I mean, you're actually right. That's for one reason. Certainly on the on the bottom end, we pulled it, we widened both on the top and the bottom end, because you're right, a thousand units is a lot of units. But, you know, when we when we put together that forecast, we were working with a pause from the president, executive order, and that there was no eBay programs were being processed by the EPA on the Clean School Bus. No customer requests will be in progress.
Speaker Change: Perfect. Okay, and then let's just curious why not.
Speaker Change: Yeah.
Speaker Change: So im sorry.
Speaker Change: Go ahead, Phil go ahead Phil.
Speaker Change: No.
Speaker Change: Youre, absolutely right and that's one reason is certainly on the bottom and we pulled we wide worldwide. Both on the top and the bottom end because you're right. It's obviously units are a lot of units right.
Speaker Change: But when we when we put together our forecast we were working with a pause from the precedent is that good.
Speaker Change: <unk> ended the problem there was no no ebay programs will be processed by the EPA on disputes Clean School bus program no customer requests will be in progress now.
Phil Horlock: Now, that just late last yesterday, that pause has been lifted. So we'll take a look at that. We'll see what it means. But right now, we just want to recognize that We've talked about this all the time that, you know, orders get put in and then the grants follow. But we were recognizing the fact when we lowered it down to the, at least talked about the 1,000 versus the 1,000 to 1,300 range, that with the pause, there was a potential that all of those units may not got supported, certainly within the fiscal year, so we could build them.
Speaker Change: Just late last yesterday.
Speaker Change: Paul has been lifted so we'll take a look at that and see what it means but right now.
Speaker Change: We just want to recognize that.
Speaker Change: That's all the time, but I'll just get put in and then the.
Speaker Change: Follow up while we were recognizing the fact, when we lowered it down to the at least talked about 1000 buses.
Speaker Change: 700 range.
Speaker Change: Pause there was a potential all of those units.
Speaker Change: Supported certainly within the fiscal year, so we can build them.
Phil Horlock: Obviously, I think we feel a little more optimistic now of where we are today and, you know, we'll progress where this thing goes. But certainly, we just wanted to be a little prudent and managing this correctly.
Speaker Change: Obviously, I think we would get a little more optimistic now of where we are today and well progressed with this thing goes but certainly but just wanted to be a little prudent in managing this correctly, but we'll update you next earnings call to see what happens on this review should be over the epa's programs by that time and like I said before we are very confident that this program will continue.
Phil Horlock: But we'll update you on our next earnings call, see what happens on this. The review should be over of the EPA's programs by that time. And like I said before, we are very confident that this program will continue, very confident. based on the support that we've garnered from our trips up the hill and doing up the hill there in Washington. That's why we had to put the range where it is. As I mentioned earlier, the high end of the range, I think, also talks about this resumes, marauders come in. We can see ourselves pushing beyond the original guidance that we had.
Speaker Change: Very confident.
Speaker Change: Based on the support that we've gone it from our trips.
Speaker Change: They're in Washington, So.
Speaker Change: That's why we haven't put a range of where it is as I mentioned earlier at the high end of the range. I think also talks about this resumes more orders come in we can see ourselves pushing beyond the original guidance that we had so we that's why the highest often on a lower a lower bottom end of the range is still the same midpoint.
Chris Pierce: So that's why the higher top end and the lower bottom end of the range are still the same. Okay, okay. I appreciate the detail.
Speaker Change: Okay. Okay I appreciate the detail and then just lastly, what would you say to investors, who asked why you guys aren't more aggressive with the buyback given the multiple of the stock trading at.
Phil Horlock: And then just lastly, what would you say to an investor who, you know, asked why you guys aren't more aggressive with the buyback given the multiple stocks trading? Well, I mean, we have an agreement right now through our board of what we spend per quarter.
Speaker Change: Well I mean, we do we will.
Speaker Change: We have an agreement right now through our board of spend per quarter.
Phil Horlock: and Bill Gates. Thank you. and we've only deburred $10 million there in the last round and we'll do the same again. Okay, thanks for everything.
Speaker Change: $10 million per quarter is sort of a bogey. So we want to be at and that's what we've been working on.
Speaker Change: Good question you raised there is interesting, but certainly will.
Speaker Change: We have to we have to recognize we can only do this when the windows of what's called the open window comes so that when the window opens two days after our earnings call on or close to <unk> 47.
Speaker Change: So that's the window, we have to operate it.
Speaker Change: And we manage it.
Speaker Change: $10 million.
Speaker Change: They're in the last year in the last round and we will do the same again this time.
Speaker Change: Okay. Thanks for everything.
Unnamed Moderator: Thank you. Thank you for your questions.
Speaker Change: Thank you.
Speaker Change: Thank you for your questions.
Phil Horlock: There are no longer questions in queue, so I will turn the conference back to Philip Horlock for any closing remarks. Okay well thank you Sierra and thanks to all of you for joining us on the call today. I just want to say that I think last year you saw momentum increasing throughout the year as profitability improved as we moved through the quarters and we've continued on the same path by delivering an impressive 15 percent EBITDA margin in the first quarter fiscal 25 and that's with a 94 percent mix of ICE vehicles. I just want to stress that we said before we've got a 14 to 15 percent margin with a very high mix of ICE vehicles.
Speaker Change: There are no longer questions in queue. So I'll turn the conference back to Philip where Locke for any closing remarks.
Speaker Change: Okay, well, thank you Sarah and thanks to all of you joining us on our call today I.
Speaker Change: Just wanted to say that I think last year, you saw momentum increasing throughout the year as profitability improves as we move through the quarters and we've continued on the same path, but delivered an impressive 15% EBITDA margin in the first quarter fiscal 'twenty five.
Speaker Change: And that's where the 94% mix of ice vehicles I just want to stress that we said before we've got a 14% to 15% margin with a very high mix of ice vehicles, we call out best in class.
Phil Horlock: We call that best in class.
Phil Horlock: We do appreciate Blue Bird and we do look forward, however, to keep updating you all again on our progress next quarter.
Speaker Change: We do appreciate it.
Speaker Change: Blue Bird and we do look forward however to keep updating you all again on our progress next quarter.
Mark Benfield: Should you have any follow-up questions, please don't hesitate to contact our Head of Investor Relations, Mark Benfield.
Speaker Change: You have any follow up questions. Please don't hesitate to contact our head of Investor Relations Mark Benfield, just one more thing on a personal note. This will be my 35th and final blueberry earnings call as I step down as CEO, just 12 days from now.
Phil Horlock: Just one more thing, on a personal note, this will be my 35th and final Blue Bird earnings call as I step down as CEO just 12 days from now. I want to thank all of you for the time you spent together, either on these calls or meeting in person with many of you. I would say the company has never been stronger than it is today and has a fantastic future as we approach our 100th year anniversary in just a couple of years. With John Whiskiel taking over as CEO, I know Blue Bird will be in good hands.
Speaker Change: Want to thank all of you for the time, we spent together either on these calls our meeting in person with many of you.
Speaker Change: I'd say the company has never been stronger than it is today and is a fantastic future as we approach our 100th year anniversary and I am just a couple of years with.
Speaker Change: <unk> Zhang with skill taking over as CEO I know Bluebird will be in good hands. John is a seasoned professional a great leader and a veteran of the auto business and he knows bluebird well from the time he spent here kian.
Phil Horlock: John's a seasoned business professional, a great leader, and a veteran of the auto business. And he knows Blue Bird well from the time he spent here. He understands our strategy and our priorities, and he's very excited to be joining us and meeting you along the way. Now, with John, Razvan and Mark leading and attending the many conferences that they have, the investor conferences, those being every year, you can be assured of continued, strong, effective and clear communication and discussion of Blue Bird's quarterly results and the business outlook.
Speaker Change: Our strategy on our priorities and he is very excited to be joining us a meeting you along the way now.
Speaker Change: Now with John Razvan are market leading.
Speaker Change: Turning the many conferences.
Speaker Change: Investor confidence as those begin every year you can be assured of continued strong effective and clear communication and discussion of <unk> quarterly results and business outlook.
Phil Horlock: I want to thank you all again for the team here at Blue Bird.
Speaker Change: I want to thank you all again for the team here at Bluebird have a great evening.
Unnamed Moderator: Have a great evening. That will conclude today's conference call. Thank you all for your participation. You may now disconnect your line.
Speaker Change: That will conclude today's conference call. Thank you all for your participation you may now disconnect your line.