FORT VALLEY, Ga. — Blue Bird Corp., the leading independent designer and manufacturer of school buses, announced today its fiscal 2017 third quarter results and the authorization by its Board of Directors of a capital stock repurchase program.
Third Quarter Highlights
- Unit sales for the quarter totaled 3,849 buses, 81 units (or 2 percent) higher than the same period last year
- Net sales of $332.6 million, $9.5 million (or 3 percent) higher than the same period last year
- Third quarter income from continuing operations of $20.1 million, up $23.0 million compared with the same period last year. Diluted earnings-per-share was $0.68, an increase of $0.86 compared with last year
- Third quarter Adjusted EBITDA1 of $32.2 million was down $0.3 million compared with the same period last year. Higher peak production cost more than offset increased volume and lower operating expenses
- Net cash provided by continuing operations was $15.1 million, down $19.5 million compared with the same period last year. The decline was more than explained by elevated working capital in support of units that were built in June and were delivered in July. Adjusted Free Cash Flow1 was $13.1 million in the quarter
- Net debt as of July 1, 2017 was $102.7 million, $9.7 million (or 8 percent) lower than the same time last year
- Gross margin in the quarter was 13.5%, down 1 pt. from last year. Higher peak production cost more than offset increased volume
- Narrowing full-year fiscal 2017 net sales guidance to $980 million-$1 billion, as well as lowering Adjusted EBITDA guidance to $68-$70 million and Adjusted Free Cash Flow guidance to $33-$37 million. The decrease is due to specific customers taking bus deliveries in the first quarter of FY2018, shifting planned unit sales from the fourth quarter of FY2017
“Our third quarter sales were strong as we delivered the largest third quarter volume in 10 years,” said Phil Horlock, presiden/CEO of Blue Bird Corp. “We maintained our strong leadership position in alternative-fuel-powered buses, with year-to-date orders 37 percent higher than the same period last year. We have a strong backlog through the fourth quarter, although some specific customers will now take delivery in the first quarter of the next fiscal year for buses that will be produced in FY2017. As such, we are narrowing our full-year fiscal 2017 net revenue guidance to $980 million-$1 billion, as well as lowering Adjusted EBITDA guidance to $68-$70 million and Adjusted Free Cash Flow guidance to $33-$37 million. The shifting of bus deliveries into the first quarter of FY2018 will be a boost to next year’s earnings.”
Blue Bird also announced that its Board of Directors has approved a capital stock repurchase program to buy-back up to $50 million over the next 24 months. This program reflects the Company’s confidence in its future growth plans. “Blue Bird’s strong free cash flow generation affords us the flexibility to drive incremental shareholder returns through share-repurchase activity without detracting from our ability to invest in the growth of our business,” said Phil Horlock.
Third Quarter 2017 Results:
Net Sales
Total net sales were $332.6 million for the third quarter of fiscal 2017, an increase of $9.5 million, or 3.0 percent, from prior year period. Bus unit sales were 3,849 units for the quarter compared with 3,768 units for the same period last year.
Gross Profit
Third quarter gross profit of $45.0 million represents a decrease of $1.8 million from the third quarter of last year.
Income/Loss from Continuing Operations
Income from continuing operations was $20.1 million for the third quarter of fiscal 2017, an increase of $23.0 million compared with the same period last year. The increase was primarily driven by lower operating and interest expenses, partially offset by higher tax expense.
Adjusted Income from Continuing Operations was $20.4 million, representing an increase of $5.1 million compared with the same period last year.
Adjusted EBITDA
Adjusted EBITDA was $32.2 million, or 9.7 percent of net sales, for the third quarter of fiscal 2017, representing a decrease of $0.3 million compared with the third quarter of the prior year.
Year-to-Date 2017 Results:
Net Sales
Total net sales were $677.9 million for the nine months ended July 1, 2017, an increase of $32.3 million, or 5.0 percent, compared with the prior year. This was primarily driven by higher bus unit sales, which were 401 units above the same period last year.
Gross Profit
Year-to-date gross profit was $87.9 million, a decrease of $2.8 million from the prior year.
Income/Loss from Continuing Operations
Income from continuing operations was $14.4 million for the nine months ended July 1, 2017, which was $18.2 million above the same period in the prior year. The increase was primarily driven by a decrease of $27.5 million in selling, general and administrative expenses, which was partially offset by a decrease of $2.8 million in gross profit.
Adjusted Income from Continuing Operations was $21.4 million, representing an increase of $10.4 million compared with the prior year.
Adjusted EBITDA
Adjusted EBITDA was $42.9 million, or 6.3 percent of net sales, for the nine months ended July 1, 2017, a decrease of $5.0 million from the prior year. The decrease in adjusted EBITDA was primarily the result of lower gross profit.
Capital Stock Repurchase Program Authorized
Blue Bird also announced today that its Board of Directors authorized the company to repurchase up to $50 million in the aggregate of its outstanding common stock, series A convertible preferred stock, and/or warrants during the next 24 months. The repurchase program permits repurchases in open market or private transactions, including accelerated share repurchase transactions, block trades, or pursuant to trading plans intended to comply with SEC Rule 10b5-1.
The timing, manner, price, and amount of securities to be repurchased will be determined by management at their discretion. The repurchase program does not obligate us to acquire any specific amount of securities and can be modified or terminated at any time without notice. Repurchases under this program are expected to be funded from one or a combination of existing cash balances, future free cash flow and indebtedness. Shares repurchased under the program are expected to be retired stock.
Conference Call Details
Blue Bird will discuss its third quarter 2017 results and other related matters 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 800-500-3170 or 719-457-2641.
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 is the leading independent designer and manufacturer of school buses, with more than 550,000 buses sold since its formation in 1927 and approximately 180,000 buses in operation today. Blue Bird’s longevity and reputation in the school bus industry have made it an iconic American brand. Blue Bird distinguishes itself from its principal competitors by its singular focus on the design, engineering, manufacture and sale of school buses and related parts. As the only manufacturer of chassis and body production specifically designed for school bus applications, Blue Bird is recognized as an industry leader for school bus innovation, safety, product quality/reliability/durability, operating costs and drivability.
In addition, Blue Bird is the market leader in alternative fuel applications with its propane-powered and compressed natural gas-powered school buses. Blue Bird manufactures school buses at two facilities in Fort Valley, Georgia. Its Micro Bird joint venture operates a manufacturing facility in Drummondville, Quebec, Canada. Service and after-market parts are distributed from Blue Bird’s parts distribution center located in Delaware, Ohio.
