Blue Bird Reports Fiscal 2024 First Quarter Record Results; Raises 2024 Guidance

Net Sales of $317.7M, up 35% and GAAP Net Income of $26.2M, up $37.4M

All-Time Record Adj. EBITDA of $47.6M, up $51.1M with 2,129 Buses Sold, up 9%

FY2024 Adj. EBITDA Guidance Raised to $130M or 11% of Revenue

Blue Bird Corporation (“Blue Bird”) (Nasdaq: BLBD), the leader in electric and low-emission school buses, announced today its fiscal 2024 first quarter results.

Highlights

"I am incredibly proud of our team’s continued progress in delivering record financial results in the first quarter,” said Phil Horlock, CEO of Blue Bird Corporation. “The Blue Bird team executed a rigorous transformational plan over the past two years to improve operations and throughput, control fixed costs, recover economics through pricing and expand our leadership position in alternative-powered buses. The market demand for our school buses remains very strong with approximately 4,600 units in our order backlog. Unit sales in the quarter were up 9% from a year ago and we grew revenue by an exceptional 35%, to $318 million. Adjusted EBITDA was an all-time quarterly record of $48 million, reflecting a 15% margin, which is an outstanding increase of $51 million compared with last year.

In expanding our leadership position in alternative-powered school buses, we achieved another record quarter of deliveries of our zero-emission EV buses. Additionally, at quarter-end, we had more than 400 electric school bus orders in our backlog. We saw strong growth in EV orders from the EPA’s Clean School Bus Program, which awarded nearly $1 billion in funding from Phase 1 of its $5 billion program in 2023. We are excited for new EV orders over the next year from the recently-announced Phase 2 (A and B) of the 5-year program, which provides at least $1.5 billion in grant and rebate funding for electric school buses. We’ve been working aggressively with our dealers and school districts in submitting applications and we are confident that continued, exciting growth is ahead for Blue Bird on the EV front!

Based on our strong start to the year and additional visibility into the 2024 operating environment, we have increased our full year financial guidance for Adjusted EBITDA to $130 million, with an 11% margin, which will be an all-time record for Blue Bird, and look forward to sustained profitable growth in the coming years, particularly as the global supply-chain recovery progresses.”

FY2024 Guidance Increased

“We are very pleased with the first quarter results, with an all-time record Adj. EBITDA margin,” said Razvan Radulescu, CFO of Blue Bird Corporation. “Our business transformation continues to yield great results, and ahead of plan. With better line-of-sight into 2024, we are raising our fiscal 2024 full-year guidance to Net Revenue to $1.15-1.25 Billion, Adj. EBITDA of $120-140 million and Adj. Free Cash Flow of $60-70 million. Additionally, we are reconfirming our long-term outlook of profitable growth towards ~$2 billion in revenues and Adjusted EBITDA margins of 12%+.”

Fiscal 2024 First Quarter Results

Net Sales

Net sales were $317.7 million for the first quarter of fiscal 2024, an increase of $81.9 million, or 34.8%, from the first quarter of last year. Bus sales increased $80.2 million, reflecting a 26.5% increase in average sales price per unit, resulting from pricing actions taken by management as well as product and customer mix changes, and an 8.8% increase in units booked. In the first quarter of fiscal 2024, 2,129 units were booked compared with 1,957 units booked for the same period in fiscal 2023. Additionally, Parts sales increased $1.7 million, or 7.7%, for the first quarter of fiscal 2024 compared with the first quarter of fiscal 2023. This increase is primarily attributed to price increases, driven by ongoing inflationary pressures, as well as higher fulfillment volumes and slight variations due to product and channel mix.

Gross Profit

First quarter gross profit of $63.6 million represented an increase of $56.1 million from the first quarter of last year. The increase was primarily driven by the $81.9 million increase in net sales, discussed above, as well as an increase of $25.8 million in cost of goods sold. The increase in cost of goods sold was primarily by the 8.8% increase in units booked, as well as increased raw material costs resulting from ongoing inflationary pressures.

Net Income

Net income was $26.2 million for the first quarter of fiscal 2024, which was a $37.4 million increase from the first quarter of last year. The increase was primarily driven by the $56.1 million increase in gross profit, discussed above. Partially offsetting this was the corresponding $11.4 million increase in income tax expense, as well as an increase of $8.8 million in SG&A, which was primarily due to an increase in labor costs.

Adjusted Net Income

Adjusted net income was $29.7 million, representing an increase of $39.4 million compared with the same period last year, primarily due to the $37.4 million increase in net income, discussed above.

Adjusted EBITDA

Adjusted EBITDA was $47.6 million, which was an increase of $51.1 million compared with the first quarter last year. This increase primarily results from the $37.4 million increase in net income as a result of the factors discussed above, as well as the corresponding $11.4 million increase in income tax expense.

Conference Call Details

Blue Bird will discuss its first quarter 2024 results in a conference call at 4:30 PM ET today. Participants may listen to the audio portion of the conference call either through a live audio webcast on the Company's website or by telephone. The slide presentation and webcast can be accessed via the Investor Relations portion of Blue Bird's website at www.blue-bird.com.

• Webcast participants should log on and register at least 15 minutes prior to the start time on the Investor Relations homepage of Blue Bird’s website at http://investors.blue-bird.com. Click the link in the events box on the Investor Relations landing page.

• Participants desiring audio only should dial 404-975-4839 or 833-470-1428

A replay of the webcast will be available approximately two hours after the call concludes via the same link on Blue Bird’s website.

About Blue Bird Corporation

Blue Bird (NASDAQ: BLBD) is recognized as a technology leader and innovator of school buses since its founding in 1927. Our dedicated team members design, engineer and manufacture school buses with a singular focus on safety, reliability, and durability. School buses carry the most precious cargo in the world – 25 million children twice a day – making them the most trusted mode of student transportation. The company is the proven leader in low- and zero-emission school buses with more than 20,000 propane, natural gas, and electric powered buses in operation today. Blue Bird is transforming the student transportation industry through cleaner energy solutions. For more information on Blue Bird's complete product and service portfolio, visit www.blue-bird.com.

Key Non-GAAP Financial Measures We Use to Evaluate Our Performance

This press release includes the following non-GAAP financial measures “Adjusted EBITDA,” "Adjusted EBITDA Margin," "Adjusted Net Income," "Adjusted Diluted Earnings per Share," “Free Cash Flow” and “Adjusted Free Cash Flow”. Adjusted EBITDA and Free Cash Flow are financial metrics that are utilized by management and the board of directors to determine (a) the annual cash bonus payouts, if any, to be made to certain members of management based upon the terms of the Company’s Management Incentive Plan, and (b) whether the performance criteria have been met for the vesting of certain equity awards granted annually to certain members of management based upon the terms of the Company’s Omnibus Equity Incentive Plan. Additionally, consolidated EBITDA, which is an adjusted EBITDA metric defined by our Amended Credit Agreement that could differ from Adjusted EBITDA discussed above as the adjustments to the calculations are not uniform, is used to determine the Company's ongoing compliance with several financial covenant requirements, including being utilized in the denominator of the calculation of the Total Net Leverage Ratio. Accordingly, management views these non-GAAP financial metrics as key for the above purposes and as a useful way to evaluate the performance of our operations as discussed further below.

Adjusted EBITDA is defined as net income or loss prior to interest income; interest expense including the component of operating lease expense (which is presented as a single operating expense in selling, general and administrative expenses in our U.S. GAAP financial statements) that represents interest expense on lease liabilities; income taxes; and depreciation and amortization including the component of operating lease expense (which is presented as a single operating expense in selling, general and administrative expenses in our U.S. GAAP financial statements) that represents amortization charges on right-of-use lease assets; as adjusted for certain non-cash charges or credits that we may record on a recurring basis such as share-based compensation expense and unrealized gains or losses on certain derivative financial instruments; net gains or losses on the disposal of assets as well as certain charges such as (i) significant product design changes; (ii) transaction related costs; (iii) discrete expenses related to major cost cutting and/or operational transformation initiatives; or (iv) costs directly attributed to the COVID-19 pandemic. While certain of the charges that are added back in the Adjusted EBITDA calculation, such as transaction related costs and operational transformation and major product redesign initiatives, represent operating expenses that may be recorded in more than one annual period, the significant project or transaction giving rise to such expenses is not considered to be indicative of the Company’s normal operations. Accordingly, we believe that these, as well as the other credits and charges that comprise the amounts utilized in the determination of Adjusted EBITDA described above, should not be used in evaluating the Company’s ongoing annual operating performance.

We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of net sales. Adjusted EBITDA and Adjusted EBITDA Margin are not measures of performance defined in accordance with U.S. GAAP. The measures are used as a supplement to U.S. GAAP results in evaluating certain aspects of our business, as described below.

We believe that Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Diluted Earnings per Share are useful to investors in evaluating our performance because the measures consider the performance of our ongoing operations, excluding decisions made with respect to capital investment, financing, and certain other significant initiatives or transactions as outlined in the preceding paragraph. We believe the non-GAAP measures offer additional financial metrics that, when coupled with the GAAP results and the reconciliation to GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business.

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income and Adjusted Diluted Earnings per Share should not be considered as alternatives to net income or GAAP earnings per share as an indicator of our performance or as alternatives to any other measure prescribed by GAAP as there are limitations to using such non-GAAP measures. Although we believe the non-GAAP measures may enhance an evaluation of our operating performance based on recent revenue generation and product/overhead cost control because they exclude the impact of prior decisions made about capital investment, financing, and other expenses, (i) other companies in Blue Bird’s industry may define Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Diluted Earnings per Share differently than we do and, as a result, they may not be comparable to similarly titled measures used by other companies in Blue Bird’s industry, and (ii) Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Diluted Earnings per Share exclude certain financial information that some may consider important in evaluating our performance.

We compensate for these limitations by providing disclosure of the differences between Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Diluted Earnings per Share and GAAP results, including providing a reconciliation to GAAP results, to enable investors to perform their own analysis of our operating results.

Our measures of “Free Cash Flow” and "Adjusted Free Cash Flow" are used in addition to and in conjunction with results presented in accordance with GAAP and free cash flow and adjusted free cash flow should not be relied upon to the exclusion of GAAP financial measures. Free cash flow and adjusted free cash flow reflect an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. We strongly encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

We define Free Cash Flow as total cash provided by/used in operating activities as adjusted for net cash paid for the acquisition of fixed assets and intangible assets. We use Free Cash Flow, and ratios based on Free Cash Flow, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe it is a more conservative measure of cash flow since purchases of fixed assets and intangible assets are a necessary component of ongoing operations.

Forward Looking Statements

This press release includes forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for our business. Specifically, forward-looking statements include statements in this press release regarding guidance, seasonality, product mix and gross profits and may include statements relating to:

• Inherent limitations of internal controls impacting financial statements
• Growth opportunities
• Future profitability
• Ability to expand market share
• Customer demand for certain products
• Economic conditions (including tariffs) that could affect fuel costs, commodity costs, industry size and financial conditions of our dealers and suppliers
• Labor or other constraints on the Company’s ability to maintain a competitive cost structure
• Volatility in the tax base and other funding sources that support the purchase of buses by our end customers
• Lower or higher than anticipated market acceptance for our products
• Other statements preceded by, followed by or that include the words “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions

These forward-looking statements are based on information available as of the date of this press release, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. The factors described above, as well as risk factors described in reports filed with the SEC by us (available at www.sec.gov), could cause our actual results to differ materially from estimates or expectations reflected in such forward-looking statements.

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