MACON, Ga. — Blue Bird Corporation (“Blue Bird”) (Nasdaq: BLBD), the leader in electric and low-emission school buses, announced today its fiscal 2022 fourth quarter and full year results.
“During a challenging 2022, the Blue Bird team developed and began execution of a rigorous plan to improve operations, reduce fixed costs, and recover economics through pricing. I am confident that this plan positions the company for a significant recovery over the next several years,” said Matthew Stevenson, president and CEO of Blue Bird Corporation. “In light of significant inflationary pressures experienced over the last 18 months, we were able to implement a total of 25% in price increases. In addition, we partnered with our valued dealer network and customer base to recover substantial pricing on backlog units. Demand for Blue Bird’s best-in-class school buses remains strong and we have expanded our leadership position in zero-emission school buses, seeing significant growth in both electric school bus bookings, up 85%, and firm order backlog, at more than 310 electric school buses as we ended the fiscal year. Our order backlog will grow significantly over the next several months as orders are placed with the EPA’s 2022 Clean School Bus Rebate Program, which will accelerate adoption of zero-emission student transportation across the United States.”
Added Stevenson: “Blue Bird continues to expand its portfolio of innovative products and services to develop a complete electric vehicle (EV) ecosystem for school districts, bus fleet operators, and its dealer network. This year, we launched our Blue Bird Energy Services, which provides comprehensive charging infrastructure for EV buses, including site engineering, permitting, construction, customizable hardware and software, warranties, and maintenance. We also announced a flexible Class 5-6 electric chassis which will enable a broad range of zero-emission vehicles, including last-mile delivery step vans, motorhomes, and other specialty vehicles. In addition, we announced a repower program, which will launch in 2023, for gasoline- and propane-powered Blue Bird Vision Type C school buses. All these developments clearly demonstrate that Blue Bird is well-positioned to shape the future of the student transportation industry.”
2023 Guidance Revised
“Looking back, FY2022 was an incredibly difficult year for Blue Bird. Starting in Q1 with a supplier allocation that cut our volumes approximately in half, unprecedented inflation and steel prices that almost tripled during Q2, fixed pricing on old backlog during the first half, unsuccessful production increase in Q3 and inventory accumulation, but with all the operational metrics starting to improve during Q3 and continuing in Q4” said Razvan Radulescu, CFO of Blue Bird Corporation. “However, the worst is behind us now, our turnaround is working and we expect to return to historical profitability levels during FY23, with increasing levels of revenues and performance each quarter, as shown in the forecast shared during the earnings call. We are providing full year fiscal 2023 guidance of Net Revenue of $900-1,000 million, Adj. EBITDA of $35-45 million and Adj. Free Cash Flow of $0-10 million. Additionally, we are reconfirming our long term outlook of profitable growth towards $2 billion in revenues and Adjusted EBITDA margins of 12%, or $250 million.”
Fiscal 2022 Fourth Quarter Results
Net Sales
Net sales were $257.7 million for the fourth quarter of fiscal 2022, an increase of $65.5 million, or 34.1%, from prior year period. Bus sales increased $60.6 million, reflecting a 27.6% increase in average sales price per unit, resulting from pricing actions taken by management to partially offset increases in inventory purchase costs as well as product and customer mix change, and a 5.5% increase in units booked. In the fourth quarter of fiscal 2022, 2,016 units were booked compared to 1,911 units booked for the same period in fiscal 2021. Additionally, Parts sales increased $4.8 million for the fourth quarter of fiscal 2022 compared to the fourth quarter of fiscal 2021. This increase is primarily attributed to (a) more schools offering in-person learning during the 2021/2022 school year when compared with the 2020/2021 school year, which increased school bus units in operation and thus increased bus repair and maintenance activities and (b) pricing actions taken by management to offset increases in purchased parts costs.
Gross Profit
Fourth quarter gross profit of $4.4 million represented a decrease of $17.4 million from the fourth quarter of last year. The decrease was primarily driven by increases in manufacturing costs attributable to a) increased raw materials costs resulting from ongoing inflationary pressures, b) supply chain disruptions that resulted in higher purchase costs for components and freight and c) increased manufacturing inefficiencies resulting from the shortage of certain critical components that required more off-line labor to produce buses. As a result, at October 1, 2022, certain Bus segment inventory had an approximate $8.8 million cumulative cost in excess of net realizable value that was recognized as a loss in fiscal 2022 with no similar activity in fiscal 2021.
Net Loss
Net loss was $23.1 million for the fourth quarter of fiscal 2022, which was a $20.7 million increase compared to the same period last year. The increase in net loss was primarily driven by the $17.4 million decrease in gross profit, discussed above. Also contributing was an increase of $3.2 million in SG&A, primarily due to an increase in professional services, largely relating to several cost cutting and operational transformation initiatives.
Adjusted Net (Loss) Income
Adjusted Net (Loss) Income was $(21.4) million, representing a decrease of $23.4 million compared with the same period last year. This decrease is primarily due to the $20.7 million increase in net loss, discussed above, and a decrease in share-based compensation expense of $2.2 million related to the retirement of two members of the executive team, as the expense recorded in fiscal 2021 had no similar activity in fiscal 2022.
Adjusted EBITDA
Adjusted EBITDA was $(16.4) million, which was a decrease of $24.0 million compared with the fourth quarter last year. This decrease primarily results from the $20.7 million increase in net loss, discussed above, and a decrease in share-based compensation expense of $2.2 million related to the retirement of two members of the executive team, as the expense recorded in fiscal 2021 had no similar activity in fiscal 2022.
Full Year 2022 Results
Net Sales
Net sales were $800.6 million for the fiscal year ended October 1, 2022, an increase of $116.6 million, or 17.1%, compared with the prior year. Bus unit sales were 6,822 units for the fiscal year ended October 1, 2022 compared with 6,679 units for the same period last year. The increase in net sales is primarily due to product and mix changes as well as pricing actions taken by management in response to increased inventory purchase costs. During the first half of fiscal 2021, the COVID-19 pandemic caused many schools to shut down in-person learning, decreasing the demand for buses and related maintenance and replacement parts. However, by the third quarter of fiscal 2021, many schools began signaling a return to in-person learning by the beginning of the 2021/2022 school year (i.e., August and September 2021), resulting in a significant increase in the demand for buses and a corresponding increase in our net sales during the second half of fiscal 2021. Although schools have generally continued to conduct in-person learning and demand for buses and related parts has remained strong as indicated by our sales backlog, significant supply chain disruptions began limiting the availability of certain critical components primarily beginning towards the end of the third quarter of fiscal 2021 and continuing throughout fiscal 2022. Accordingly, such shortages have limited the number of buses the Company could produce and deliver during this time period.
Gross Profit
Full year gross profit was $36.5 million, a decrease of $35.6 million from the prior year. The decrease in gross profit is primarily due to higher cost of goods sold, which increased as a percentage of sales from 89.5% to 95.4%. This was driven by increasing inventory costs as the average cost of goods sold per unit for fiscal 2022 was 22.4% higher compared to fiscal 2021. This increase was primarily due to increases in manufacturing costs attributable to a) increased raw materials costs resulting from ongoing inflationary pressures, b) supply chain disruptions that resulted in higher purchase costs for components and freight and c) increased manufacturing inefficiencies resulting from the shortage of certain critical components that required more off-line labor to produce buses. As a result, at October 1, 2022, certain Bus segment inventory had an approximate $8.8 million cumulative cost in excess of net realizable value that was recognized as a loss in fiscal 2022 with no similar activity in fiscal 2021.
Net Loss
Net loss was $45.8 million for the fiscal year ended October 1, 2022, which was $45.5 million below the prior year. The increase in net loss was primarily driven by the $36.5 million decrease in gross profit, discussed above. Also contributing was an increase of $11.6 million in SG&A, primarily due to a $7.5 million increase in professional services, largely relating to several cost cutting and operational transformation initiatives, a $1.2 million increase in research and development expense, and a $1.1 million increase in payroll, largely resulting from merit increases for all Company employees that were effective at the beginning of fiscal 2022 and were intended to partially mitigate the impact of increasing inflation. Additionally, selling, general and administrative expenses during the first half of fiscal 2021 benefited from actions taken by management to reduce labor costs and certain discretionary spending during the early months of the pandemic with similar actions taken to reduce labor costs only during the fourth quarter of fiscal 2022 given the competitiveness of the overall labor market primarily resulting from continuing labor shortages.
Adjusted Net (Loss) Income
Year-to-date adjusted net (loss) income was $(36.0) million, $44.6 million below with the prior year. This is primarily due to the $45.5 million increase in net loss, discussed above.
Adjusted EBITDA
Adjusted EBITDA was $(14.7) million for the fiscal year ended October 1, 2022, a decrease of $48.8 million compared to the prior year. This is primarily due to the $45.5 million increase in net loss, discussed above, and a decrease in share-based compensation expense of $2.2 million as the expense recorded in fiscal 2021 was impacted by the retirement of two members of the executive team with no similar activity in fiscal 2022.
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. Blue Bird buses carry the most precious cargo in the world – the majority of 25 million children twice a day – making us the most trusted brand in the industry. 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.
