MACON, Ga. — Blue Bird Corporation (“Blue Bird”) (Nasdaq: BLBD), the leading independent designer and manufacturer of school buses, announced today its fiscal 2020 third-quarter results. GAAP net income for the third quarter was $1.3 million, down $13.3 million from the third quarter of FY2019. Adjusted EBITDA for the quarter was $12.5 million, a decrease of $16.6 million from the prior year. Diluted EPS and Adjusted Diluted EPS were down 50 cents and 53 cents, respectively, from the prior year.
“The third quarter was a challenge as operations were significantly impacted by COVID-19,” said Phil Horlock, president and chief executive officer of Blue Bird Corporation. “School shutdowns and shelter-in-place mandates delayed orders through the third quarter and continued supplier disruptions impacted our efficiencies throughout the quarter. We have seen significant stabilization in our supply base since then, although orders have continued to be slow as schools deliberate online versus in-classroom teaching this fall.
“While working through these challenges, however, I am very pleased with our progress in improving the underlying business structure that is key to achieving our EBITDA margin target of at least 10% in the near-term. We successfully moved to a single shift production schedule late in the quarter, which will drive efficiency and quality improvement. Average selling price per bus increased by more than $7,000, or 9%, over last year’s third quarter. The increase was due to a combination of pricing and a richer mix of higher-priced vehicles, including electric-powered buses. I am particularly pleased with our alternative-fuel results, which represents a 48% mix of our year-to-date sales and backlog, and we are the market share leader in propane, gasoline and electric-powered buses, based on fiscal year vehicle registrations through June. Our overall alternative-fuel market share is very strong at 64%. We also continued to make great progress in driving down structural costs with our Transformational Initiatives, which improved profits by $2.3 million in the quarter. In fact, this initiative has reduced our structural costs by about $50 million since inception three years ago.
“We are in a strong financial position with liquidity in excess of $100 million at the end of the third quarter. We have a history of robust cash generation, a culture of winning and leadership in growing segments, a clearly defined margin-growth strategy and an experienced team with a proven track record of delivering results and handling difficult times. The challenges that we are all facing are temporary, and we will get through it, taking the necessary restructuring actions along the way.”
Fiscal 2020 Third Quarter Results
Net Sales
Net sales were $189.2 million for the third quarter of fiscal 2020, a decrease of $119.6 million, or 38.7%, from prior-year period. Bus unit sales were 1,948 units for the quarter compared with 3,420 units for the same period last year.
Gross Profit
Third-quarter gross profit of $21.1 million represented a decrease of $20.7 million from the third quarter of last year. Gross profit margin declined 2.4 points to 11.1%. The decline was driven by lower volumes and manufacturing disruptions due to COVID-19, partially offset by bus pricing and cost reductions.
Net Income
Net income was $1.3 million for the third quarter of fiscal 2020, a decrease of $13.3 million compared with the same period last year.
Adjusted Net Income
Adjusted Net Income was $4.4 million, representing a decrease of $14.0 million compared with the same period last year.
Adjusted EBITDA
Adjusted EBITDA was $12.5 million, representing a decrease of $16.6 million compared with the third quarter last year. The decrease was driven by lower volume and production inefficiencies due to COVID-19, partially offset by bus pricing and cost reductions.
Year-to-Date 2020 Results
Net Sales
Net sales were $597.8 million for the nine months ended July 4, 2020, a decrease of $77.5 million, or 11.5%, compared with the prior year. Bus unit sales were 6,002 units for the nine months ended July 4, 2020, compared with 7,291 units for the same period last year.
Gross Profit
Year-to-date gross profit was $66.6 million, a decrease of $20.3 million from the prior year.
Net Income
Net income was $0.2 million for the nine months ended July 4, 2020, which was $12.5 million below the same period in the prior year.
Adjusted Net Income
Year-to-date Adjusted Net Income was $8.9 million, representing a decrease of $14.6 million compared with the prior year. The decline is more than accounted for by the combination of the non-recurrence of tax benefits realized in the third quarter of FY2018 and decline in profits due to COVID-19 disruptions.
Adjusted EBITDA
Adjusted EBITDA was $32.8 million for the nine months ended July 4, 2020, a decrease of $15.7 million below the prior year.
About Blue Bird Corporation
Blue Bird is the leading independent designer and manufacturer of school buses, with more than 570,000 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.
