Blue Bird Q2 2025 Earnings Report

Blue Bird EPS Results

• Actual EPS: $0.96
• Consensus EPS: $0.95
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $0.89

Blue Bird Revenue Results

• Actual Revenue: $358.85 million
• Expected Revenue: $348.23 million
• Beat/Miss: Beat by +$10.62 million
• YoY Revenue Growth: +3.70%

Blue Bird Announcement Details

• Quarter: Q2 2025
• Date: 5/7/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, May 7, 2025
• Conference Call Time: 4:30PM ET

Blue Bird (NASDAQ:BLBD), together with its subsidiaries, designs, engineers, manufactures, and sells school buses in the United States, Canada, and internationally. The company operates through two segments, Bus and Parts. It offers Type C, Type D, and specialty buses; and alternative power options through its propane powered, gasoline powered, compressed natural gas powered, and electric powered school buses, as well as diesel engines. The company also sells replacement bus parts; and provides financing services and extended warranties related to its products. Blue Bird Corporation sells its products through drop ship and a network of dealers, as well as directly to fleet operators, the United States government, and state governments; independent service centers; and maintains a parts distribution center. Blue Bird Corporation was founded in 1927 and is headquartered in Macon, Georgia.

Blue Bird Q2 2025 Earnings Call Transcript

Key Takeaways

• Record Q2 results: Blue Bird delivered $359 M in revenue and $49 M in adjusted EBITDA (14% margin), beating guidance and maintaining full-year targets.
• Robust demand: Ended Q2 with a ~4,900-unit backlog (over six months of production), average selling prices up ~3%, and parts sales totaling $26 M, with 57% of buses powered by alternative fuels.
• EV leadership: Sold a record 265 electric buses in Q2, with 1,100 EVs in backlog and full-year EV guidance of 800–1,000 units, though some builds may be deferred due to new tariffs.
• Tariff headwinds: New U.S. tariffs (up to 145% on Chinese EV kits) are prompting price increases (initially 2%–4%) and a shift toward ICE production to preserve margins.
• Long-term investments: Reinvesting in facility upgrades, lean production systems, a DOE-backed Fort Valley plant expansion (adding 400 jobs), and launching a propane/EV commercial chassis in 2026.

Presentation

[Operator]

This is a holding announcement for the Blue Bird Fiscal twenty twenty five Second Quarter Earnings Conference Call. The call will begin shortly. Please stay on the lines. Good morning or good afternoon all, and welcome to the Blue Bird Fiscal twenty twenty five Second Quarter Earnings Conference Call. My name is Adam, and I'll be your operator for today.

[Operator]

I will now hand the floor to Mark Benefield to begin. Sir, Mark, please go ahead when you're ready.

[Mark Benfield, Executive Director of Profitability & Investor Relations at Blue Bird]

Thank you, and welcome to Blue Bird's fiscal twenty twenty five second quarter earnings conference call. The audio for our call is webcast live on bluebird.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. Our comments today include forward looking statements that are subject to risks 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 the SEC.

[Mark Benfield, Executive Director of Profitability & Investor Relations at Blue Bird]

Blue Bird disclaims any obligation to update the information in this call. This afternoon, you will hear from Blue Bird's President and CEO, John Weiszkaal and CFO, Rosvan Rajulescu. Maybe we'll take some questions. So let's get started. John?

[John Wyskiel, President, CEO & Director at Blue Bird]

Thanks, Mark, and good afternoon, everyone. Thanks for joining us. It's great to be here and to share with you our financial results for our fiscal twenty twenty five second quarter. As you might know, I worked for Blue Bird just over twenty years ago as a General Manager. It was a challenging period back then, but it was truly one of the most rewarding times in my career, and I'm excited to be back.

[John Wyskiel, President, CEO & Director at Blue Bird]

Before I get started, I want to thank outgoing CEO, Phil Horlock, our Board and, of course, our employees for welcoming me back into the company and making the transition very smooth. Likewise, it's great to be back working with our supply partners and of course our very dedicated dealer network. I'm really excited to be back. There is such a bright future ahead as you'll see today. Let's get to the quarter.

[John Wyskiel, President, CEO & Director at Blue Bird]

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 record adjusted EBITDA in the second quarter of fiscal twenty twenty five. Rajvan will be taking you through the details of our financial results shortly. So let me get started with the key takeaways for the second quarter on Slide six. Going straight to the headline, we achieved record quarterly revenue and profit in Q2 twenty twenty five. As shown in the first box, we beat Q2 guidance and are maintaining our full year guidance.

[John Wyskiel, President, CEO & Director at Blue Bird]

This despite the impact of the current administration policy on tariffs. And we'll talk more on that later in this call. We continue to execute our plan developed a few years ago, which focused on improvement across the entire business, and that focus is evident in our strong Q2 results. Now market demand for school buses continues to be very strong. We ended the quarter with just under 5,000 units in our backlog, representing over six months of production.

[John Wyskiel, President, CEO & Director at Blue Bird]

This bodes well for operational stability and margins. A few years ago, we had to take some strong pricing action, and we continue to maintain laser focus in this area. This is demonstrating our results. Bus prices were again higher in Q2 compared to a year ago on every combustion engine model. And we are still priced competitively, as we can see from our bid results and our overall win rate.

[John Wyskiel, President, CEO & Director at Blue Bird]

During the quarter, we also continued to see strong mix of alternative power vehicles. We maintain our lead position in this segment. And it's a segment we created more than fifteen years ago. We are also reinvesting back into the business by selectively updating facilities, focusing on lean production systems and developing exciting new and differentiated products that will hit the market beginning as early as next year. We recognize targeted investment in our operations will lead to better performance on the manufacturing side of the business and investment in our product portfolio will grow the top line.

[John Wyskiel, President, CEO & Director at Blue Bird]

It's our objective to position this business to be a strong long term investment. As a result of this continued path, our Q2 profitability and margin was the highest quarterly result we've ever achieved. Adjusted EBITDA came in at $49,000,000 or 14%. That's 6.5% better compared to last year's second quarter. Similar to almost every business in the country, we are also dealing with the impacts of the administration's executive orders and the tariff volatility.

[John Wyskiel, President, CEO & Director at Blue Bird]

We are fortunate to be well positioned to navigate this situation to a margin neutral outcome. But now let's take a closer look at the financial and key business highlights for the second quarter on Slide seven. We sold 2,295 buses in the second quarter and recorded revenue of $359,000,000 a quarterly record and $13,000,000 ahead of last year. On the EV side, we sold two sixty five vehicles, 11.5%, and we continue to have strong order intake for EVs. As I mentioned earlier, second quarter adjusted EBITDA of $49,000,000 was a quarterly record as well and was $3,000,000 above the second quarter of twenty twenty four.

[John Wyskiel, President, CEO & Director at Blue Bird]

That's a 14% margin, 50 basis points better than last year. We will talk more on our outlook later in this call. As a reminder, our margins are very balanced across our entire product line from a percentage basis, including EVs. And we think EVs are a perfect fit for the school bus market when you look at the duty cycle, available charging intervals, range and proven health benefits to our children. But our core business in the ICE segment is equally as strong.

[John Wyskiel, President, CEO & Director at Blue Bird]

Even with nearly 90% ICE mix, our second quarter results highlight the underlying strength in the overall business. And finally, adjusted free cash flow for the second quarter was $19,000,000 a decrease of $35,000,000 over a year ago, but mainly driven by a tax carryforward benefit that we had in 2024. Overall, we achieved an outstanding second quarter financial result. 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 of 4,900 buses representing CAD770 million in revenue.

[John Wyskiel, President, CEO & Director at Blue Bird]

Second quarter average selling prices for buses was up CAD4000 per unit or about 3% compared to last year. And part sales totaled $26,000,000 in Q2. Alt powered buses represented a 57% mix of unit sales in Q2. This compares with a typically less than 10% to 15% mix for our major competitors. We benefit from higher margins and higher owner loyalty with our gas and propane products, and we're the exclusive supplier in the industry.

[John Wyskiel, President, CEO & Director at Blue Bird]

At the end of the quarter, we had a combined 1,100 EVs either booked or in our order backlog. Our latest forecast reflects 800 to 1,000 EV unit sales for the full year. And we are well positioned from an order standpoint to achieve our previous target of 1,000 units. However, the tariff exposure is higher on EVs, and it may create a scenario where we intentionally push out some of our builds. Raghavan will cover this in more detail.

[John Wyskiel, President, CEO & Director at Blue Bird]

The current backlog of seven zero electric buses represents two thirty three million dollars in revenue. Throughout the second quarter, it was very encouraging to see Rounds two and three of the EPA Clean School Bus program flowing through to our end customers. It's a good program, and this momentum provides optimism that it will continue into round four. In addition, reimbursement funds were flowing for our CAD80 million mess contract with the DOE. This is for their funding towards our new plant expansion in Fort Valley.

[John Wyskiel, President, CEO & Director at Blue Bird]

As a reminder, this project adds 400 well paying American jobs to a century old American company with an iconic brand to build clean school buses, providing our children with the benefits of clean air. It's really a great story. And finally, we beat our guidance for the tenth consecutive quarter and are holding our full year guidance. With a 14% adjusted EBITDA margin and record profits in Q2, I'm very proud of the team's accomplishments. But before I hand it over to Razvan to cover the financials, I would ask that you turn to Slide eight so I can talk to another highlight in Q2.

[John Wyskiel, President, CEO & Director at Blue Bird]

Earlier in March, we debuted our Bluebird commercial chassis at the Work Truck Show in Indianapolis. We are a recognized OEM in this segment, and the reaction to this new product was overwhelming. The chassis will be offered in propane or EV. It has some best in class features, like a 55 degree wheel cut for tight turning radiuses, the highest front axle clearance at over eight inches, galvanized frame rails and is designed to have fewer electrical and fluid connection points for reliability. We are now executing our manufacturing strategy, but the product is scheduled to launch in 2026 at a market competitive price.

[John Wyskiel, President, CEO & Director at Blue Bird]

As mentioned, many company fleets, last mileers and delivery companies express strong interest. We will be finalizing our financial projections for this new segment this year as a part of our 2026 outlook. I'm really excited about this opportunity. So I would like to now hand it over to Razvan to walk through our fiscal 'twenty five second quarter financial results and full year guidance in more detail. Razvan?

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Thanks, John, and good afternoon. It's my pleasure to share with you the financial highlights from Blue Bird's fiscal twenty twenty five second quarter and first half of the year results. The quarter end is based on a close date of 03/29/2025, whereas the prior year was based on a close date of 03/30/2024. We will file the 10 Q today, May 7, after market close. Our 10 Q includes additional material and disclosures regarding our business and financial performance.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

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. Slide 10 is a summary of the fiscal 'twenty five second quarter record financial results. It was another great operating quarter for Blue Bird with highest ever EV volume, and they beat once again our guidance provided in the last earnings call. In fact, we delivered the best quarter ever in terms of both top line and bottom line and the testament of our continued journey of profitable growth.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

The team pushed hard and did once again a fantastic job generating 2,295 unit sales volume, which was just above prior year level. Record Q2 consolidated net revenue of $359,000,000 was $13,000,000 higher than prior year, driven by pricing actions that materialized in this quarter and increased EV volume. Adjusted EBITDA for the quarter was an all time record $49,000,000 driven by high bus and parts margins, partially offset by increased investments in headcount, engineering and business growth areas. The adjusted free cash flow was strong at $19,000,000 and $35,000,000 lower than the prior year second quarter, primarily due to increased tax expenses year over year. This result was due to continued strong profitability across all bus and powertrain types, strategic cost management and improvements in working capital.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Looking on the right side at the first half of the fiscal year, we posted all time record revenue of $673,000,000 and all time record adjusted EBITDA of $95,000,000 both improved versus then record last year's first half. Moving on to Slide 11. As mentioned before by John, our backlog at the end of Q2 continues to be strong at almost 5,000 units, including over 700 EVs. In fact, at the March, we have now 1,100 EVs sold in the first half and in backlog, with only 150 EPA Round three units in process to be funded. Round three is slowing again, as confirmed by the EPA as well as Round two.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Breaking down the Q2 '3 '50 '9 million dollars in revenue into our two business segments, the bus net revenue was $333,000,000 up by $15,000,000 versus prior year due to higher EV mix and improved pricing across non EV products. As a result, our average bus revenue per unit increased from $141,000 to 145,000 or approximately 3%. EV sales in Q2 were a record two sixty five units, double versus Q1 and fifty five units or 26% higher than last year as planned. Parts revenue for the quarter was flat from Q1 at 26,000,000 representing a small reduction of $2,000,000 compared to the prior year. This continued strong performance was in part due to increased demand for our parts as the fleet is aging, offset by a reduction of parts used in warranty due to quality improvements made year over year.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Gross margin for the quarter was 19.7% or 130 basis points higher than last year, in line with our target. Adjusted EBITDA of $49,000,000 or 13.7% was higher by $4,000,000 compared with prior year and showed a 50 basis point improvement. In fiscal twenty twenty five Q2, adjusted net income was a record $32,000,000 or $2,000,000 higher than last year. Adjusted diluted earnings per share of $0.96 was up $07 versus the prior year. Slide 12 shows the walk from fiscal twenty twenty four Q2 adjusted EBITDA to the fiscal twenty twenty five Q2 result.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Starting on the left at 45,800,000.0 the impact of the bus segment gross profit in total was $8,000,000 split between volume, EV mix and pricing effects, net of material cost increases of $8,500,000 and operational small cost increases of negative $500,000 largely driven by the USW labor agreement now in full effect, almost fully offset by other efficiency improvements. The small unfavorable development in the parts segment gross profit was negative $800,000 driven by lower sales of parts used in warranty as mentioned earlier in the call. Our fixed costs and other income were unfavorable year over year by negative 3 point 8 million dollars due to increased headcount and investments into our growth areas. The sum total of all the above mentioned developments drives our all time record fiscal 'twenty five Q2 reported adjusted EBITDA result of $49,200,000 or 13.7%. Moving on to slide 13.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

We have extremely positive developments year over year also on the balance sheet. We ended the quarter with a near record $131,000,000 in cash and further reduced our debt by approximately $5,000,000 over the last year. Our liquidity stood very strong at a near record $274,000,000 at the end of fiscal twenty twenty five Q2, a $38,000,000 increase compared to a year ago. Additionally, we have executed another tranche of share repurchases accelerated to $20,000,000 during fiscal twenty twenty five Q2, which brings us to $40,000,000 completed over the last nine months, with another $20,000,000 left to go on the existing program approved by our Board. The operating cash flow was strong for Q2 at 29,000,000 driven by great operational execution and margins, improvements in working capital and partially offset by increased tax payments.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

On Slide 14, we'd like to give you an update about the impact the new administration's tax policy already has on our business and the respective countermeasures we put in place. To level set definitions and how they work, tariffs are taxes imposed by the government on certain goods brought in from other countries. They are paid by the importer of record and usually are passed on to the end users. Since February, we have seen almost on a weekly basis and sometimes even twice in the same day new tariffs being imposed on various imports in The United States Of America. And while the majority of our parts and assemblies are sourced in The U.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

S, we are also using great suppliers from Mexico and Canada as well as a small number of components or subparts from China and Europe. We have highlighted on this chart the main components exposure for each tariff category. On Canada and Mexico, the good news is that, at least so far, the USMCA exemptions apply for a brief period they did not. Our exposure to Europe is low, but even a 10% tariff adds up, and this is temporary and could go up based on the ongoing negotiations. The steel and aluminum 25% import tariff gave The U.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

S. Manufacturers the opportunity to raise prices immediately, as shown in the spot market at the March. The good news is that we have a robust steel hedging program covering our backlog. However, this cost increase impact will materialize in fiscal 'twenty six if the prices stay where they are now. And now to the big elephant in the room, China.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

The 145% tariffs are bringing the imports to a standstill, and we are particularly exposed on our EV kit from Accelera. To give you a rough order of magnitude, we are looking at more than 10% price increase on the total value of an EV bus. Therefore, we decided to prioritize ICE buses in fiscal Q4 and reduce the number of EVs we produce until the tariff situation comes to a resolution. As you will see in our updated guidance, Q3 is proceeding as planned due to already inbound and strategic inventory we have put in place. While we are working with our supply chain partners to find alternative sources in The United States and North America, this takes time, and we are not going to compromise safety or quality during this process.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

As a result, we had to implement a 2% tariff increase at the end of Q2 on all units sold as well as an additional 2% general price increase on all new orders after April 1. This was done when China new tariffs were at only 20%. More price increases are going to be announced in the near future, reflecting the now 145% new tariff levels for China. Our goal is to provide as much advance notice as possible to our dealers and customers, while preserving the financial health of our business. Let me be clear: these unprecedented tariffs have a real effect on our business, and they will drive our prices up.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

On Slide 15, we wanted to remind you about our quarterly guidance provided in our last earnings call. We are targeting $200,000,000 adjusted EBITDA for the year with approximately 1,000 EVs. On Slide 16, we want to share with you our confirmed fiscal 'twenty five total year $200,000,000 guidance with updated Q3 and Q4 and a tariff driven lower EV number for the year of 800 to 1,000 units. But first, looking at Q2 actuals, we have beat once again our guidance this past quarter, so we had a very strong and record breaking first half for the fiscal year. There is still some uncertainty on the EPA Rounds four and five due to the recent executive orders.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

However, the Rounds two and three funding disbursements are flowing again as confirmed by the EPA. We have booked approximately 400 EVs in the first half and have a backlog of 700 EVs, of which now only 150 are in process of receiving funding from Round three. On the adjusted EBITDA side, we are increasing slightly our guidance for Q3 given our strong business momentum, and we are lowering the bottom range by $5,000,000 for Q4, driven by lower EVs. We are maintaining our revenue to a range of 1,400,000,000.0 to $1,500,000,000 and we are confirming our adjusted EBITDA of $200,000,000 or approximately 14%, with a narrowed range of 190,000,000 to $210,000,000 or 13.5% to 14.5%. We'll provide further updates at the August after we close fiscal Q3 and gather further insight into the tariff situation, especially for China NDVs.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

On slide 17, we want to reiterate our thoughts on fiscal 'twenty five business environment and our total year guidance. We continue to have a number of both tailwinds and headwinds at play this year. As tailwinds, we have strong bus demand, stable pricing and still a very high industry backlog. We offer not only diesel and 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 few times, we are not a one trick pony.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

We are also leading in the EV segment with over 2,000 EV buses on the road. The state subsidies continue to be strong. EV pure play competitors are going out of business, and we have already approximately 1,100 EVs sold and in backlog at the March. But headwinds, there is some uncertainty regarding the timing of EPA Clean School Bus program future rounds four and five. Also, chain is still fragile at times while improving overall.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

The material cost and supplier inflation pressures are still present, and the newly implemented tariffs are impacting our cost of goods sold over time, with bus pricing countermeasures already announced and more to be implemented as needed. In summary, we are slightly raising our units and maintaining our revenue midpoint guidance to $9,300 and $1,450,000,000 respectively, with approximately 900 EVs. We are also confirming our adjusted EBITDA guidance of $200,000,000 or 14 percent, with a range of 190,000,000 to $210,000,000 and 13.5% to 14.5% margin. Moving to Slide 18. In summary, we are forecasting an improvement year over year, with revenue up to approximately $1,450,000,000 adjusted EBITDA in the range of 190,000,000 to $210,000,000 or 13.5% to 14.5% and improved adjusted free cash flow of 60,000,000 to 80,000,000 The free cash flow guidance is in line with our typical target of approximately 50% of adjusted EBITDA, and it includes on top the extraordinary CapEx of now 30,000,000 but our 50% fiscal twenty twenty five portion of the new plant investment funded by a DOE MAS grant, which is currently proceeding.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Moving on to Slide 19. Today, we are once again reconfirming the medium term outlook at 14% margin with volumes of up to 10,000 units, generating revenue around $1,600,000,000 and with adjusted EBITDA of $225,000,000 Starting in 2028 and beyond, our long term target remains to drive profitable growth to higher levels towards 1,850,000,000.00 to $2,000,000,000 in revenue, comprising of 11,000 to 12,000 units and generate EBITDA of $270,000,000 to 300,000,000 plus or 14.5% to 15% plus at best in class levels. 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 Microboard joint venture new plant expansion in The USA. A. We continue to be incredibly excited about Blueboard's future.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

And now I will turn it back over to John.

[John Wyskiel, President, CEO & Director at Blue Bird]

Thank you, Rasvan. Let's move on to Slide 21. We've shown this slide on several earnings calls, so I won't spend too much time on it today as our business priorities remain consistent. The chart on the left side of the page outlines our Bluebird value system as a company, taking care of employees, delighting our customers and dealers and delivering profitable growth. The right side of the page outlines how we get there.

[John Wyskiel, President, CEO & Director at Blue Bird]

And of course, the objective of delivering sustained profitable growth for our investors is at the center of it all. And when you turn to Slide 22, I want to start with Blue Bird's history and resilience. After the COVID and inflationary period that affected the entire industry to epic proportions, we really worked hard to restructure and improve our business. So looking at 2025 and beyond, we are really coming into our moment. Razvan took you through the guidance for fiscal 'twenty five, and I'm showing some of those key metrics and the midpoint guidance here.

[John Wyskiel, President, CEO & Director at Blue Bird]

First, we're being cautious with our bookings outlook, only increasing volume by 3% over fiscal 'twenty four at this time. Net revenue of $1,450,000,000 will be a new record for Bluebird, up 8% from fiscal 'twenty four. And adjusted EBITDA guidance of $200,000,000 is 9% higher than our fiscal 'twenty four results. Importantly, we are planning on a robust 14% adjusted EBITDA margin in fiscal 'twenty five, up 40 basis points from fiscal 'twenty four. And finally, we are forecasting to grow EV unit sales to 900 buses in fiscal 'twenty five, up 28% from last year.

[John Wyskiel, President, CEO & Director at Blue Bird]

On the right chart, you can see there's still a lot of pent up demand following the low industry sales over the last five years, and the bus fleet has continued to age. ACT is forecasting a compounded annual growth rate of 6% through 02/1930, and that's great news for our business and our profit outlook. So I'll wrap it up with Slide 23. As I approach my first one hundred days since rejoining the company, I really do feel good about things. This great company and iconic brand is almost 100 years old.

[John Wyskiel, President, CEO & Director at Blue Bird]

It has stood the test of time, and it's poised for the future. We delivered record sales and adjusted EBITDA for the quarter and are maintaining our full year guidance despite the challenging tariff environment. We remain confident the Clean School Bus program will continue. It's a bipartisan initiative, it's 100% appropriated and eliminates harmful tailpipe toxins benefiting our children and communities. Over time, Blue Bird has demonstrated resilience.

[John Wyskiel, President, CEO & Director at Blue Bird]

Our performance has put us in a position to really look longer term as we invest and enter new segments and upgrade our operations. I want to thank our employees, our dealer network and our supply partners. All are critical to our success. And I'm really glad to have rejoined Blue Bird. It's been an incredible start with record results, maintaining guidance, a great history and an exciting future.

[John Wyskiel, President, CEO & Director at Blue Bird]

Thank you. So that concludes our formal presentation for today. And now I'd like to hand it back to the moderator for our Q and A session.

[Operator]

Thank you. And our first question comes from Mike Shlisky from D. A. Davidson. Mike, please go ahead. Your line is open.

[Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson]

Yes. Hi, good afternoon. And John, welcome. So I noticed that you didn't really change much on your outlook, your medium or long term targets. I was kinda wondering, John, you know, it's been about two months that you've been there, little more than two months.

[Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson]

Does your background lend itself to any margin improvements above and beyond what's been stated? Think you might wanna change. Now you probably you sat down and chat with a lot of folks in the company for the last couple of months here. Anything you can do to kind of get beyond that 50% over the over the long term in your personal goals?

[John Wyskiel, President, CEO & Director at Blue Bird]

Thanks, Mark. Thanks for the question, and thanks for welcoming welcoming me into the company. The couple of things. I think it's early. I've only been here the first one hundred days, so I wouldn't wanna speculate in that area.

[John Wyskiel, President, CEO & Director at Blue Bird]

But there's a a couple of things, I think, from my end, I can bring the company. You know? And I think you know my background. I have a strong operational background, and I can support the company in that area. Large part of my career was on the plant floor.

[John Wyskiel, President, CEO & Director at Blue Bird]

And if you look at the last twenty years, you know, predominantly in Magna, prior, I'm just running large, you know, groups, large segments in the company up to 60 plants. Probably, uniquely, I have an advantage in that I've run a bus plant in Blue Bird, so I have a lot of familiarity with the product and a lot of familiar with the manufacturing process. So, again, I think it's a little bit early to tell what we can do, but a big part of what we're focusing on is the longer term manufacturing strategy.

[Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson]

Got it. Thanks for that. So that's where a few comments made about the price, for non EV, buses. I was wondering if can share a little bit about the price expectations and performance for the EV buses themselves. I know there were plan to come down over time. That's been the whole point of all the subsets to get the kind of scale you need to get those prices down. But I was just kind of wondering if EV pricing is running in line with what you were targeting and do the tariffs throw all that off over the next couple of quarters here?

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Mike. This is Razvan. Thanks for the question. So as you might be aware and as we discussed last time, we took the first step to reduce prices on EVs by approximately $25,000 Unfortunately, the current situation with the tariffs is moving us backwards in that goal. By how much, we are still evaluating.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

But needless to say, it's a pause in our journey to reduce the price of the EV buses and improve the total cost of ownership. However, we are optimistic that the tariff situation will clarify hopefully in the next few months, and then we'll be able to resume our journey on the price reduction for Elite.

[Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson]

Okay. Great. I also want to clarify just kind of the broad guidance here. I mean, there are some uncertainties. It sounds like you're facing some of them.

[Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson]

Some of them were not there last quarter, especially in the EV business you just mentioned. But are you saying that EVs have a couple of headwinds that are taking place right now, but the ice and propane outlook has actually improved? So the net seems like it's pretty much unchanged. I was just curious if you give some of the big parts that are moving here that made the guidance stay roughly the exact same as it was before.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Yes, Mike. So obviously, we had a very strong first half, which gives us good momentum and it puts us in a position to strengthen our results for the total year. So that's the first thing. Second, the effects on the ICE from the tariffs so far are fairly moderate, and we have taken already pricing actions to offset that.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

So indeed, the variable now is the EV tariff levels that will affect us mainly in Q4. And therefore, we may decide together with our dealers and our customers to push some of the volume that we could build in Q4 into fiscal 'twenty six. So that's why we widened the guidance for Q4 now to 45 to $60,000,000 but we narrowed the guidance on Q3 towards the upper end now 50,000,000 to $55,000,000

[Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson]

So just to clarify, Razlan, if you don't build the EVs, you've got ice and propane orders to take those bills back. Am I on the right track there?

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Yeah. Absolutely. So we in terms of total volume, we will substitute EV with ice in q four.

[John Wyskiel, President, CEO & Director at Blue Bird]

Yeah. And keep in mind, we're closer to the fourth quarter as well compared to most companies just based on our reporting period. So the risk period for us is considerably less than other companies. Most companies are closing in December, of course.

[Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson]

Of course. Thanks so much for the answers. I'll pass it over.

[Mark Benfield, Executive Director of Profitability & Investor Relations at Blue Bird]

Thanks, Thanks, Mike.

[Operator]

The next question comes from Eric Stine from Craig Hallum. Eric, your line is open. Please go ahead.

[Eric Stine, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Hi, everyone. Thanks for taking the questions today. Hey. So

[Eric Stine, Senior Research Analyst at Craig-Hallum Capital Group LLC]

I know that your dealer network is certainly one of your strengths. Just curious on the pricing side, I mean, everyone's dealing with this tariff uncertainty. But just curious, I mean, you gotten any pushback from your dealer network? And then I guess it's your dealer network going to the school districts. But any pushback at either level?

[Eric Stine, Senior Research Analyst at Craig-Hallum Capital Group LLC]

And just curious, are it seems as if they are, but curious your thoughts on some of the other market participants and whether the other two are kind of following suit and acting rationally?

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Eric, this is Razwan. Thanks for the question. So we are obviously working very closely with our dealer partners and the end customers to navigate these challenging times regarding tariffs. Now the first price increase we put in place was fairly moderate, approximately 2%. And this is because the majority of our supply chain is from The United States and North America, and we have smaller exposure to other markets.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

So the level is while nobody likes to pay taxes or tariffs more than before, this is something that we are able to navigate and work together on. The risk right now is coming on the EV level and especially in the q four, because we have some exposure to China, and those dollars now are tariffed at 145%. So definitely, it's a bigger number.

[John Wyskiel, President, CEO & Director at Blue Bird]

Yeah. And maybe just a couple other points. Like, Rosman says, nobody likes price increases, but it's it's also not inherent to us. It's it's an entire industry. In fact, I would say it's nationwide versus what's going on.

[John Wyskiel, President, CEO & Director at Blue Bird]

So relative relative to our peers who are in the same situation. And then maybe just one last point on the dealers. I mean, we have a really collaborative relationship. We've been talking to them right since January on this. So they're lock stock and barrel with us on this whole thing.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

And then to the second part, we have seen similar actions from our competitors so far on the tariffs level.

[Eric Stine, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Okay. That's great. And I know top of mind for investors clearly is the CSP funding. And I know round two and round three now flowing, and it sounds like you're hopeful on round four. But could you just update us or give your updated thoughts on how much of the funding is federal versus state and local?

[Eric Stine, Senior Research Analyst at Craig-Hallum Capital Group LLC]

And then also just curious, and then I can jump back into line, but just curious, given everything going on, on the EV side, whether you are seeing a noticeable uptake in interest in propane and gasoline.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

So on the first question, so the level of funding and subsidies was roughly fifty-fifty between state and federal when we had the full Clean School Bus program announced, obviously, over a certain number of years. Right now, the good news is that the rounds two and three are flowing as we expected last time. So there is some uncertainty on rounds four and five, but we are optimistic that round four will continue given the fact that rounds two and three are flowing. So they are still fairly balanced at this point in time, and we see continued strength in the state level funding. So, so far, I would say it's still a balanced equation there with Rounds two and three flowing.

[John Wyskiel, President, CEO & Director at Blue Bird]

And then on the EV side that's right, Bhutat. On the EV side, I think we're in a pretty unique position, as you can appreciate. We're the only ones with this alt power segment, a segment we created, and it puts us in a great position in terms of dealers or districts that may want a clean a cleaner solution in their product.

[Eric Stine, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Yep. And and you know what? Maybe just just one more to sneak in. So you mentioned, I think you gave the number, it was a hundred or maybe it was a little bit over in terms of what's exposed to round three in school districts just waiting on that funding. Is that was that am I correct in that thinking?

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Yes. So last earnings call, had two fifty units waiting for funding, and now we have only 150, and they are all around three, and they are in process of being funded as we speak.

[Eric Stine, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Okay. Thank you.

[Operator]

Next question comes from Tyler DeMatteo from BTIG. Tyler, your line is open. Please go ahead.

[Tyler DiMatteo, Equity Research Analyst at BTIG]

All right. Thanks for taking the questions here and good afternoon. I wanted to follow-up on the some of the pricing comments here. And I guess I'm curious, how do you think about balancing the pricing equation with some of the win rate comments? Is it as simple as, hey, if we can't sell EVs to customers, we substitute to some of the other all powered buses as you alluded to?

[Tyler DiMatteo, Equity Research Analyst at BTIG]

I guess just how do you think about kind of maybe leaning into this as an opportunity given your market leading position here?

[John Wyskiel, President, CEO & Director at Blue Bird]

Yes. I'll start, and then I'll hand it to Razvan. I mean, it's early to tell in terms of seeing a shift if they're going to go from propane to say or sorry, from EV to propane. But I think we're well situated. I mean, we're the only ones with the product.

[John Wyskiel, President, CEO & Director at Blue Bird]

So that leaves me, mister Maran, I think, more comfortable. But, again, early. I mean, we're only a week or so since the China tariffs were announced. So, Razan, I don't know if you have anything to add.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Yeah. On the pricing side, it appears that all the major manufacturers in the school bus industry are similarly affected by these tariffs based on what we've seen for our competitors' pricing actions. So from that perspective, it seems like we are in balance, at least on the first rounds that we have put in place so far. So therefore, they did not have any material effect on our win rate.

[Tyler DiMatteo, Equity Research Analyst at BTIG]

Okay. Great. And then my follow-up here is, I wanted to kind of get a little bit more color on maybe the cost sharing split here. I know, Rasmus, to your point that you've spoken a few times here to the pricing and kind of how that would flow through to customers. Guess, how do you think about that dynamic in terms of the the supplier base here?

[Tyler DiMatteo, Equity Research Analyst at BTIG]

Maybe what are the conversations there? And, you know, kinda how do you think about that as you kind of look at the entire value chain here?

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Yeah. Thank you. It's a great question. And, obviously, we are working very closely with our supply chain partners to first understand the exposure and then take mitigating steps, whether it's identifying alternative sources or potentially stair stepping the cost increases over time. But this is definitely a one on one discussion.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

It varies by country, by supplier, by component, by lead time. So there is no really simple or universal answer to this.

[Tyler DiMatteo, Equity Research Analyst at BTIG]

Okay, great. Thank you guys. Really appreciate the time. I'll turn it back to the queue.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Thanks Howard.

[Operator]

The next question comes from Craig Irwin from ROTH Capital Partners. Craig, your line is open. Please go ahead.

[Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Thank you for taking my questions. So I wanted to ask about the change to your fourth fiscal quarter guidance. I appreciate the granularity going in and saying 100 to 300 units of EVs in the quarter and you did tap higher your total number of units to 2,500. If the tariff situation was to resolve, the couple of hundred units of EVs that look like they maybe are less likely to materialize now, would that be a potential source of upside for you in the fourth fiscal quarter? Or is this something where the customers maybe are delayed into the next next year, given the uncertainty that's been introduced by the tariffs?

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Hi, Craig. This is Razwan. Thanks for the question. So we do have the orders in our backlog. So there is indeed upside should the tariff EV situation, solve, favorably, let's call it, very soon.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

So there is some upside. That's why our upper end of the guide is at two ten with 300 EVs in q four.

[Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Okay. Excellent, excellent. My next question is about the commercial chassis that you're introducing. So a year ago at ACT Expo, you showed an EV chassis this year. It's propane.

[Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

I know you can do gas and other drivetrains in there. When you're doing the early development work with your customers as you put together the business model to share details with investors. What drivetrain or what fuel preference are you hearing from your customers? You know, this this seems to be an area of the market that might be underserved, and you have interesting partners. You know, can you can you maybe just give us an update on on the early conversations and how this is playing out into your potential investment, you know, in in the different technologies that might, you know, serve you over the next number of years?

[John Wyskiel, President, CEO & Director at Blue Bird]

Yeah. Thanks, Craig. Great question. So a couple of things. I I had a chance, of course, to be at the work truck show and and could see firsthand the positive response.

[John Wyskiel, President, CEO & Director at Blue Bird]

And then ACT, everything we heard similar was very favorable. Similar to you, I believe there's room in this segment. We can see that. And initial indications seem to be, I'd say, there's greater interest on the propane side right now. Now some of that may just be the sentiment that we see with EVs and, you know, people recognizing there'll be stronger tariffs in that area because of China.

[John Wyskiel, President, CEO & Director at Blue Bird]

But certainly, propane has got a great opportunity in that segment from everything we can see. And if you couple that as well with some of the best in class features that we have, we think we're pretty well positioned.

[Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Okay. And and then lastly, if I may. You know, I met with management from both of your your leading competitors at ACT Expo in Anaheim and a bunch of industry suppliers. And there seems to be some chatter out there that one of the other two will have a propane bus next year. The volumes and customer experience is obviously undefined at this moment.

[Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Can you talk about brand loyalty and how propane has helped you with existing Blue Bird customers and winning new customers? Would you expect to continue to sell propane to existing Blue Bird customers instead of wins? Does this really impact you? Or is this really them taking care of their existing brand loyal customer base?

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Yes. So Greg, thanks for the question. However, we are not aware or we do not have any confirmation of any competitive propane engine products coming into the market at this time for a school bus application. However, we are, very confident in the value and the performance of our Ford propane engine together with Rausch that we've put in place several years ago. We have over 20,000 buses in operation with propane, and we have a great owner loyalty and repeat customers.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

So we welcome any competition in this segment if they come.

[John Wyskiel, President, CEO & Director at Blue Bird]

Yeah. And maybe just a couple of other things. I think our supply partner with Roche has has equity in the name, and that helps us tuck into that brand loyalty. And of course, it's not a retrofit. So there's a lot of benefits to that.

[Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Excellent. Well, you've demonstrated the value of propane, and that's why I think the market is paying attention. So congratulations on another strong quarter here. I'll hop back in the queue.

[John Wyskiel, President, CEO & Director at Blue Bird]

Thanks, Chris.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Thanks, Chris.

[Operator]

The next question is from Chris Pearce at Needham. Chris, your line is open. Please go ahead.

[Chris Pierce, Senior Analyst at Needham & Company]

Hey, good afternoon. About three months ago, we were on this call and there was just a lot of uncertainty around clean school bus EPA. Is there any way to kind of get a sense of and then I know headlines hit and the portals were open. Is there any way to get a sense of what kinda levers within the industry kinda help push that to happen, or was it just with were you guys as surprised as everyone else? And the reason I asked is just I I know no one knows what's gonna happen with round four, but just try to see how much of a topic this is within the administration and within the industry.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Hey, Chris. This is Razvan. Thanks for the question. So first of all, we are not surprised because as we discussed three months ago and as we messaged in all our meetings, we were confident that rounds two and three were gonna flow because there is there was a legal obligation and the potential liability if they were to stop or to be stopped. So, it confirmed what we were expecting.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Obviously, we didn't know for sure, but, we had that positive sentiment that rounds two and three will be completed. So this also gives us some optimism now for round four, at least, was the next step. But, obviously, we'll have to wait and see what the EPA decides to do with round four.

[Chris Pierce, Senior Analyst at Needham & Company]

Okay. But rounds four and five would follow that same logical argument that there's a, you know, a a law in place and repercussions and that type of thing. That's fair to say?

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

No. Because rounds two and three were awarded, so people started to put programs in place, break ground for infrastructure. People were told to order buses. Rounds four was not awarded yet. Only the applications were collected, so they are earlier in the stage of maturity, if you will.

[Chris Pierce, Senior Analyst at Needham & Company]

Okay. Thanks for the clarification. And then on China and EVs, because, let's say, round four does start flowing or state subsidies for EVs or just market based purchases, do you have pricing power on EVs? Or it's because there's a certain stair step ASP built into the round four, round five, that could, you know, have a a be a headwind to margins on EVs?

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

So the details for round four or five, as far as what is the level of funding per bus, are not yet confirmed or clarified by the EPA. We do have some idea what the prices will be based on the current tariffs. But, obviously, by the time rounds four are awarded, orders are put in place, we work through the backlog. It's it's several it's towards the end of twenty twenty six calendar year, most likely. So by then, we will know for sure the tariffs, what they are for an Aviso.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

I would say it's a bit early to have this conversation for rounds four or five.

[Chris Pierce, Senior Analyst at Needham & Company]

Okay. Perfect. And then just lastly, with the accelerated buyback and the $20,000,000 left, how should we think about, you know, if that cash balance and you talked about the balance sheet, you know, what the, I guess, how should investors think about that moving forward with the stock trading at the multiple it's at?

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Yeah. So, as you saw this quarter, we accelerated our previous phase. So we went up from 10,000,000 before to 20,000,000 now. We still have 20,000,000 left in the current program, and, we will let you know in the next earnings call, what we have done during this quarter and potentially what our plans might be for the future on this topic.

[Chris Pierce, Senior Analyst at Needham & Company]

Okay. Thanks for everything.

[Razvan Radulescu, Chief Financial Officer at Blue Bird]

Thanks, Chris.

[Operator]

This concludes today's Q and A session. So I hand the call back to John for some closing comments.

[John Wyskiel, President, CEO & Director at Blue Bird]

Yes. Thank you, Adam, and thanks to each of you for joining us on the call today. Last year, you saw momentum increasing throughout the year with profitability improving as we move through the quarters, and we're continuing that theme for 2025. I think you can share my enthusiasm for Blue Bird, and we look forward to updating you on our progress in the next call next quarter. Should you have any follow-up questions, please do not hesitate to contact our Head of Investor Relations, Mark Benfield.

[John Wyskiel, President, CEO & Director at Blue Bird]

And Blue Bird has never been in a stronger position than it is today. It has a fantastic future ahead as we approach a hundred years as a company. And from all of us here, thanks, for joining us on the call from Bluebird, and have a great evening.

[Operator]

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.

Participants

Executives

• Mark Benfield, Executive Director of Profitability & Investor Relations
• John Wyskiel, President, CEO & Director
• Razvan Radulescu, Chief Financial Officer

Analysts

• Michael Shlisky, Managing Director & Senior Equity Research Analyst at D.A. Davidson
• Eric Stine, Senior Research Analyst at Craig-Hallum Capital Group LLC
• Tyler DiMatteo, Equity Research Analyst at BTIG
• Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC
• Chris Pierce, Senior Analyst at Needham & Company