Blue Bird Q2 2026 Earnings Call Transcript

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Provided by Quartr
May 6, 2026

Key Takeaways

  • Positive Sentiment: Beat guidance for the 14th consecutive quarter—Q2 record $51 million Adjusted EBITDA, record free cash flow of $40 million, $353M revenue, and 2,148 buses sold.
  • Positive Sentiment: Backlog stands at roughly 3,600 units including over 900 EVs (912), alt‑power was 41% of Q2 mix and the company raised its EV target to 900 for the year, supporting continued EV demand into 2027.
  • Positive Sentiment: Closed acquisition of the remaining 50% of the Micro Bird JV—adds two plants, ~950 employees, integrated EV powertrain tech and Buy America shuttle access, expanding total addressable market by ~78% and increasing FY revenue/EBITDA guidance after consolidation.
  • Positive Sentiment: DOE reconfirmed an $80 million MESC grant$300 million new ~1M sq ft Type C plant (production targeted CY Q4 2028) to enable automation, Industry 3.0/4.0 efficiency gains and long‑term capacity.
  • Negative Sentiment: Administrative policy and tariff volatility (including Section 232 impacts) remain a material risk—management says it is targeting a margin‑neutral outcome, but continued policy uncertainty could pressure costs or timing.
AI Generated. May Contain Errors.
Earnings Conference Call
Blue Bird Q2 2026
00:00 / 00:00

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Operator

Ladies and gentlemen, thank you for joining us, and welcome to Blue Bird's fiscal 2026 second quarter earnings call. After today's prepared remarks, we will host a question and answer session if you would like to as a question please star one to raise your hand. To withdraw your question please press star one again. I will now hand the conference over to Mark Benfield, Blue Bird's Head of Investor Relations. Mark, please go ahead.

Mark Benfield
Mark Benfield
Head of Investor Relations at Blue Bird

Thank you, and welcome to Blue Bird's Fiscal 2026 second quarter earnings conference call. The audio for our call is webcast live on blue-bird.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. 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 Wyskiel, and CFO, Razvan Radulescu. We'll take some questions. Let's get started. John?

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

Thanks, Mark, and good afternoon, everyone. Thanks for joining us today. It's an exciting day today, and we're going to share our strong fiscal 2026 second quarter financial results and the significant progress we've made with our long-term strategy. Results for Q2 were once again very strong, and the Blue Bird team delivered outstanding sales at Adjusted EBITDA, beating guidance for the 14th consecutive quarter. Razvan will take you through the details of our financial results shortly, but let's turn to slide six where I will talk to some of the key takeaways for the quarter.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

First, Blue Bird beat guidance on all metrics for the quarter. Again, we continue to manage the volatility associated with the administration's policy on tariffs well. Backlog for the quarter ended at just under 3,600 units, and operationally, all metrics are pointing in the right direction. The team has been able to execute on a day-to-day basis while simultaneously developing detailed manufacturing plans for the future, which I will talk more to later in this call. In terms of pricing, we remain extremely disciplined. Bus prices remain higher than the previous year and the previous quarter.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

As I've communicated prior this process is just how we manage the business. In the alt-power segment, our dominance continues. Our EV backlog is over 900 units extending into 2027, we remain exclusive in propane, which has the lowest total cost of operation, and our gas variant continues to be a leader. Again, alt-power is a segment we created more than 15 years ago, and we continue to maintain our lead position. Our manufacturing strategy is coming into focus, and I will talk more to that later in this presentation.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

It's focused on building our new plant, automating where we can get good financial returns, and ensuring production contingency, all of which builds a safe path for ongoing cost improvement through Industry 3.0 and 4.0 opportunities. Finally, we continue to manage the impact of the administration's executive orders and tariff volatility. We are fortunate to be well-positioned to navigate this situation to a margin-neutral outcome. As I've said on every earnings call, it is our objective to position this business to be a strong long-term investment.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

Let's turn the page and take a closer look at the financial and key business highlights for the quarter on slide seven. We sold 2,148 buses in Q2 and recorded revenue of $353 million, slightly below last year. On the EV side, we sold 201 electric vehicles, just under 10% of unit volume. Our long-term outlook for EVs remains optimistic. Adjusted EBITDA for the quarter came in at $51 million, $2 million stronger than last year. Free cash flow came in at an outstanding $40 million. Razvan will talk more about this and our outlook later in this call.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

Turning to the right side of the page, I will touch on a few points. As discussed earlier, our backlog finished at a solid 3,600 units. We remain close to the sweet spot. As you know, backlog is a function of orders and production. If you look at the first half of the year, order intake was up 7% from the same period last year versus the market, which was down almost 4%. Overall, we are feeling good about our performance in the market. I continue to reiterate, the overall market fundamentals are still strong. The fleet is aging, we are coming into a heavy replacement cycle, and there's been industry supply issues the last few years, leaving pent-up demand.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

The horizon ahead continues to look very good for school bus volumes. Year-over-year selling price for buses was up almost $6,400. Of course, this also includes tariff recovery as part of our margin neutral tariff strategy. With tariffs excluded, pricing was still up year-over-year and parts sales totaled $28 million for the quarter. Alt-powered buses represented a strong 41% of mix of unit sales for the quarter. Our powertrain strategy is a differentiator in the market and allows us to maintain stronger margins.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

For the quarter, we had 201 EVs booked and 912 EVs in our order backlog pushing into 2027. We remain optimistic on EVs in the school bus sector. EVs are a perfect fit for school buses when you look at the duty cycle, available charging intervals, range, and the proven health benefits for our children. Rounds two and three of the EPA Clean School Bus Program remains intact, with funds flowing to our end customers. The EPA has invited comments for 2026 funding, solidifying rounds four and five of the program consistent with what we've been communicating.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

We should understand very soon how and when the EPA will administer these funds. Overall, when you look at state funding and the fleet EV mandates, we believe this market will remain relevant. Finally, I have two very exciting items to report for the quarter. The $80 million MESC contract with the DOE has been officially reconfirmed for funding, solidifying our manufacturing strategy and new plan. Second, we announced the acquisition of our Micro Bird 50/50 JV. Similarly, this transaction is another key component of our profitable growth strategy.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

Let's turn to slide eight. Micro Bird has a rich history with three main segments: Type A school bus, commercial shuttle bus, and integrated EV powertrains. The acquisition was a safe and accretive play that brings with it two plants, 950 people, and best-in-class quality products. For Blue Bird, the transaction focused on a strategic value proposition for growth, technology, and efficiency. The transaction will allow us to consolidate sales and critical growth outside of the school bus segment by accessing the Buy America commercial shuttle bus segment, expanding our total addressable market.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

Second, it brings critical integrated EV technology through Ecotuned, expanding our product offering, bringing vertical integration opportunities, and ensuring supply stability. Lastly, this transaction brings efficiencies through critical integration, which has already begun both organizationally and in business processes. Overall, this is an excellent transaction for the company, and it brings a tremendous opportunity for growth, technology, and efficiency. It has certainly been a busy quarter, with strong results and some exciting announcements. I would like to now hand it over to Razvan to walk through our fiscal 2026 second quarter financial results, as well as our full-year updated guidance in more detail. Razvan?

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

Thanks, John, good afternoon. It's my pleasure to share with you the financial highlights from Blue Bird's fiscal 2026 second quarter and year-to-date record results. The quarter end is based on a close date of March 28, 2026, whereas the prior year was based on a close date of March 29, 2025. We will file the 10-Q today, May 6 after market close. Our 10-Q includes additional material and disclosures regarding our business and financial performance. We encourage you to read the 10-Q and the important disclosures that it contains.

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

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 2026 second quarter and first half record financial results. It was a seasonally strong operating quarter for Blue Bird and a great continuation for the first half of the fiscal year. We beat our guidance provided in the last earnings call on all metrics. In fact, we delivered the best Q2 profit ever for Blue Bird with $51 million in Adjusted EBITDA.

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

The team pushed hard and continued doing a fantastic job and generated 2,148 unit sales volume, which was just below prior year levels, driven by a lower number of production days in this fiscal quarter due to the way holidays fell in the year. As a result, Q2 consolidated net revenue of $353 million was $6 million lower than prior year. Adjusted EBITDA for the quarter was a Q2 record of $51 million, driven by high margins, partially offset by increased year-over-year healthcare costs.

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

The adjusted free cash flow was also a record Q2 of $40 million and $21 million higher than the prior year's second quarter. This result was due to continued strong profitability across all bus and powertrain types. Our liquidity position at the end of this quarter was a record $418 million. The first half results are equally impressive. While units sold of 4,283 buses were just slightly below prior year by 142 units, the revenue grew to $686 million, with adjusted EBITDA of $101 million, both record first half results. Free cash flow was also very strong at $71 million or $30 million above prior year's level.

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

Moving on to slide 11, as mentioned before by John, our backlogs increased versus Q1 and continues to be solid at approximately 3,600 units, including over 900 EVs, a record 25% EV backlog mix. Some of them are already scheduled to be built and delivered in fiscal 2027 Q1. Breaking down the Q2 $353 million in revenue into our two business segments, the bus net revenue was $325 million, down $8 million versus prior year due to slightly lower volumes. Our average bus revenue per unit increased by $6,000 from $145,000 to $151,000 or 4.3%. EV sales in Q2 were 201 units or 64 units lower than last year as planned. Parts revenue for the quarter was up at a strong $28 million.

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

This great performance was in part due to increased demand for our parts as the fleet is aging, as well as supply chain-driven pricing actions and throughput improvements. Gross margin for the quarter was a seasonal record 20% or 30 basis points higher than last year due to pricing actions, manufacturing efficiencies, and quality improvements. Adjusted EBITDA of $51 million or 14.4% was higher compared with prior year by $1.6 million and 70 basis points. In fiscal 2026 Q2, adjusted net income was a record Q2 at $32.5 million or $1 million higher than last year.

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

Adjusted diluted earnings per share of $1 was up $0.04 versus the prior year. Slide 12 shows the walk from fiscal 2025 Q2 Adjusted EBITDA to the fiscal 2026 Q2 result. Starting on the left at $49.2 million, the impact of the bus segment gross profit in total was $1.7 million, split between volume and pricing effects, net of material cost increases of $4.3 million and year-over-year healthcare cost increases and lower overhead absorption of $2.6 million. The parts segment gross profit was flat and our fixed costs and other income expenses were also almost flat.

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

The sum total of all the above-mentioned developments drives our record fiscal 2026 Q2 reported Adjusted EBITDA result of $50.8 million or 14.4%. Moving on to slide 13, we have extremely positive developments year-over-year also on the balance sheet. We ended the quarter with a record $276 million in cash and reduced our debt by $5 million over the last year. Our liquidity stood very strong at a record $418 million at the end of fiscal 2026 Q2, a $144 million increase compared to a year ago. Additionally, we have executed another $5 million tranche of shares buyback during fiscal 2026 Q2, part of our new $100 million program with $90 million left to go.

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

The operating cash flow was very strong for Q2 at $48 million, driven by great operational execution and margins and with almost flat working capital. On slide 14, we want to share with you our updated fiscal 2026 forecast prior to the Micro Bird acquisition and consolidation. Looking at Q2 actuals, we have beaten again in every metric our guidance this past quarter, and we had a very strong start for the first half of the fiscal year.

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

We continue to forecast a strong second half at 15%-16% Adjusted EBITDA margins. We are increasing our EV to 900 for the fiscal year and our pre-deal forecasted revenue to a range of $1.515 billion-$1.565 billion. Given also our beat in Q2, we are raising our forecasted Adjusted EBITDA to $230 million or 15% with a range of $220 million-$240 million. These numbers are prior to the Micro Bird acquisition and second half consolidation.

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

On slide 15, we want to share with you our updated fiscal 2026 guidance, post-close on April 1st of our acquisition of the remaining 50% of the Micro Bird joint venture. As you can see on this slide, the first half of the year remains reported as unconsolidated JV. However, in the second half we are now going to consolidate 100% of the revenue and the remaining 50% of the Adjusted EBITDA for Micro Bird. Building on the updated forecast for the year from the prior page, in Q3 and Q4, we are guiding to increase consolidated total revenue of $500 million and $560 million respectively, driving the total year to $1.725 billion-$1.775 billion in revenue.

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

For Adjusted EBITDA, the Q3 midpoint is increased by $5 million, and Q4 midpoint is increased by $10 million for a total year guidance of $245 million with a range of $235 million-$255 million. Due to consolidation of 100% of the Micro Bird revenue for the second half and only 50% of the Adjusted EBITDA, the Adjusted EBITDA margin percentage is being updated to approximately 14% for the year. Moving to slide 16, in summary, we are forecasting an improvement year-over-year to a new record with revenue up to approximately $1.75 billion, Adjusted EBITDA in the range of $235 million-$255 million or approximately 14%, and adjusted free cash flow of $100 million-$125 million.

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

In line with our typical target of 50% of Adjusted EBITDA and after accounting for the extraordinary CapEx of $25 million with our 50% fiscal 2026 portion of the new plant investment funded by a reconfirmed DOE MESC grant, which is currently proceeding with the permitting phase. Moving on to slide 17, we wanted to remind you of our medium and long-term outlook prior to the Micro Bird acquisition. Medium-term outlook was a $240 million Adjusted EBITDA, which included $25 million for our 50% portion of Micro Bird results.

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

Our long-term target was to generate EBITDA of $280 million-$320 million, which included Micro Bird with $30 million-$35 million. Moving on to slide 18, we want to remind you of the growth potential we see for Micro Bird, especially in the commercial shuttle bus segment in the U.S. with Buy America certification. We are driving towards $450 million in revenue midterm with $60 million in Adjusted EBITDA. The long-term outlook is for $500 million-$550 million in revenue and $75 million-$90 million in Adjusted EBITDA.

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

Moving on to slide 19, you can see our updated medium and long-term outlook post Micro Bird acquisition. What used to be our long-term target of $2 billion in revenue moved to midterm with approximately $275 million in adjusted EBITDA. The long-term outlook is raised now to $2.5 billion in revenue and $325 million-$375+ million in adjusted EBITDA or 14%-15%+. This is what we call profitable growth. We continue to be incredibly excited about Blue Bird's future, and now I will turn it back over to John.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

Thank you, Razvan. Let's move to slide 21. I want to take this opportunity to remind everyone of our long-term strategy, which consists of four key elements and positions the company for the future. First, as an almost 100 year old company, business continuity and long-term stability is a core element. This includes investing and updating our manufacturing facilities and products. A great example is our new assembly plant, which I will talk to further in a couple of minutes. Infrastructure and competitive products are an essential part of our plan.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

The next element is a theme that has been consistent in the last few years, profitable growth. Of course, the school bus market is projected to grow over the next few years, and our new plant will allow us to capitalize on that. For Blue Bird, it also means expanding our total addressable market by entering new adjacencies. The Blue Bird commercial chassis and the Micro Bird Buy America shuttle bus are great examples. Margin expansion is the next element. This area focuses on advancing competitiveness and cost reduction.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

For Blue Bird, this means continuing our Industry 3.0 automation initiative. As well, the new plant will allow for further factory of the future opportunities, including Industry 4.0 initiatives. The last area is putting the balance sheet to work. The Micro Bird acquisition was a great example of this. Even after this transaction, Blue Bird continues to have a pristine balance sheet, strong liquidity, and solid cash flows. This will allow us to continue to be strategically opportunistic. We continue to have the ability to grow through acquisition or exploit vertical integration. Overall, we have a balanced strategy that positions the company for the future and delivers value to our shareholders. Let's turn to slide 22.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

Earlier in the presentation, I spoke about the DOE MESC grant. Now that it's been reconfirmed, I think it's a good time to provide some more details about our manufacturing strategy and our new plant. First, the new plant will be just under 1 million sq ft and an overall total of investment of over $300 million, replacing our current 75 year old plant. The $80 million MESC grant will contribute towards this. We are scheduled to start production in Q4 calendar year 2028. We thank the DOE for the consideration and confirmation of this project.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

This increased investment was a result of shifting our manufacturing strategy to build Type C buses in the new plant at a capacity of 9,000 buses per year on 1 shift. The original scope over a year ago was to build Type D. The shift to Type C is critical, as Type C is 90% of the market, 80% of our sales, and 70% of our people. This allows us to align our investment and improvements with the biggest, most competitive segment of the market. Our successful Type D bus will remain in the current facility. Critically, we have identified a number of automation use cases with strong returns that will be incorporated into the new plant at the start of production.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

We will also maintain Type C capacity in the current plant to protect volume as a startup contingency. This will allow us to ramp up production at the new plant while production winds down at the old plant during an overlap period. This new plant will also enable further Industry 3.0 and 4.0 opportunities, providing a roadmap to continue our long-term cost competitiveness. This investment in critical infrastructure is part of the business continuity and long-term stability component of our strategy. We're very excited about the new plant and what it will bring to us in decades to come.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

I want to finish up with the strong outlook we have for the business on slide 23. As we've shown before, the fundamentals of the school bus segment remain strong as shown on the left side of the page. We are moving into the replacement cycle for the high volume period between 2017 and 2019. We know there is pent-up demand remaining from the COVID period, there are still over 180,000 buses over 10 years old. Funding remains stable for this market. All of this contributes to a strong ACT outlook of approximately 6% CAGR over the next several years.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

With the addition of Micro Bird, we now get the consolidation benefit of Type A school bus and the growth associated with entering the Buy America commercial shuttle bus market, as shown on the right side of the page. Combined, this move increases our total addressable market by 78%. When you add other contributors for growth, like the commercial stripped chassis, the outlook will get even stronger. Profitable growth is a key component of our strategy. I will wrap it up on slide 24. This great company and iconic brand is almost 100 years old.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

It has stood the test of time. We delivered outstanding results again in the second quarter of 2026, and we continue to demonstrate credibility by delivering on our targets. We are excited about the Micro Bird acquisition and the new plant that we discussed today. Both are key components of our very important long-term strategy. Looking ahead, our strategy, discipline, and demonstrated execution will set this great company up for the future and deliver value to our shareholders.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

As always, I want to thank our employees, our dealer network, our supply partners, and of course, our investors. All are critical to our success. I remain excited about Blue Bird, and we've had a great start to the first half of 2026. This company is a great American story with such a rich history and exciting future ahead. Thank you. That concludes our formal presentation for today, and I'd now like to hand it back to our moderator for the Q&A session.

Operator

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Eric Stine with Craig-Hallum. Your line is open. Please go ahead.

Eric Stine
Eric Stine
Senior Research Analyst at Craig-Hallum

Hey, everyone.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

Eric.

Eric Stine
Eric Stine
Senior Research Analyst at Craig-Hallum

Hey, hi. Maybe just wanted to start with Micro Bird, timely since it recently closed. I know that the Plattsburgh plant, that that is a big deal and, you know, I know a big part of this and why now is the fact that in addition to Type A, you can go after this Buy America fleet market. Just curious, I mean, is that, are you already going after that market? Is that an initiative that, you know, we need to see a few steps before that plays out? Or, how should we think about when that starts to contribute?

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

Eric, I'll start, for sure. There's three main segments. There's FTA,FAA that's one segment. There's large fleets, there's retail. The retail side is already started. We've been working through that with dealers. On the FAA and FTA, which is the biggest segment, we've been working there to get on contracts. These are cooperative contracts as well as state contracts. Activity's begun. We have won some contracts, we're starting to work through that process. That puts us on a list for like a bid, essentially a list for purchase orders to be materialized. The process is on its way.

Eric Stine
Eric Stine
Senior Research Analyst at Craig-Hallum

Got it. I mean, is that, since you are on that list, is that something that it's fairly, you know, I mean, it is a near-term event? It would have to ramp, but it is a near-term event.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

Yeah. It will do just what you said. It'll ramp.

Eric Stine
Eric Stine
Senior Research Analyst at Craig-Hallum

Okay.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

Keep in mind, not every state is open as well in terms of contracts. There's like a phase-in period. Like, some contracts are, you know, in their second year of five available. All of this process will take some time to ramp up, but it's coming.

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

Maybe just to.

Eric Stine
Eric Stine
Senior Research Analyst at Craig-Hallum

Okay

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

implement that, Eric. If you look at our long-term growth chart for Micro Bird on slide 18, you see kind of the ramp-up between the current forecast midterm and long term. The vast majority of that growth comes from the shuttle bus segment. You can also correlate that.

Eric Stine
Eric Stine
Senior Research Analyst at Craig-Hallum

Got it. Okay, that's helpful. I guess for my follow-up, just on EPA funding, I mean, I know it's kind of in that comment period and a lot of, you know, discussions and you certainly get questions from investors on it. I mean, how do you see that playing out, you know, in line with the administration? Is it potentially more skewed to propane? You know, does it stay kind of as is or any thoughts there would be helpful.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

I'll start and then Razvan or Mark may want to chime in. I think a couple things. I don't want to speculate 'cause we don't know what will happen, certainly propane would be a great opportunity, especially since we're the only company that builds propane school buses. I think that's a possibility. EV, who knows what they do with funding. Right now they fund essentially the entire price of a bus. Maybe they reduce that, if they do, then it would be applicable to a larger number of buses, spreading it across more units, which would be advantageous as well.

Eric Stine
Eric Stine
Senior Research Analyst at Craig-Hallum

Okay. Thank you very much.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

Thanks, Eric.

Operator

Our next question comes from the line of Michael Shlisky with D.A. Davidson. Your line is open. Please go ahead.

Michael Shlisky
Michael Shlisky
Managing Director and Senior Research Analyst at D.A. Davidson

Good afternoon. Thanks for taking my questions here. I'm curious, you didn't change your margin outlook all that much despite 9% of the buses going to this new facility, which I assume would be state-of-the-art with some substantial margin opportunities. I'm just kind of curious why you didn't do that. Just as part of this whole process, do you do any CapEx from the old plant to accommodate those larger Type Ds? Is this all one big package of CapEx, or you're talking strictly about the brand-new building?

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

Yeah. I'll start, and then Razvan will probably provide a little more color. We look at the automation. First of all, we have a number of use cases that will go into start-up on this plant. We look at the automation as the plus side of our longer term outlook. You'll see that You'll see the plus side, and that's really what it's referring to. That's one of our opportunities. Probably the big one as well, Mike, is, you know, I spoke earlier about the contingency that we put in here.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

I wanna just highlight that for a moment because this has been an area where competitors have stumbled because they didn't have the ability to have contingency on start-up with a more mechanized or automated factory. We've got that in place as well, which is a protect. We see upside, and then, we see with our contingency, probably an ability to protect any downside. Razvan?

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

Maybe in terms of the CapEx for the old building, it does not require any additional CapEx because essentially it's already tooled up to produce today both Type C and Type D. Once the Type C moves to the old plant, the Type D will remain there, and then it will also make room for more capacity in terms of stripped chassis that we could ramp up at that point in time. The CapEx we talk about is for the new plant in this call.

Michael Shlisky
Michael Shlisky
Managing Director and Senior Research Analyst at D.A. Davidson

Okay, great. Just maybe a quick broad question about market share. Do you believe that Blue Bird may have gained market share so far this year from what has been delivered and the orders you've taken in the last month, the last couple of months, do you think you may have gained market share of the next few quarters?

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

I'll start and the guys can chime in. I mean, our order intake has been positive. I mean, the market was down, we were up, and then I think from that aspect it was positive. I wouldn't try to read into that much deeper. We know this, it's only a half a year. From my perspective, I would probably limit it to that. It's something we don't chase. We don't chase market share. That's been always our philosophy.

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

Also we operate now almost at max capacity on one shift, so the production, I think, is more of a gating factor at this point in time.

Michael Shlisky
Michael Shlisky
Managing Director and Senior Research Analyst at D.A. Davidson

Okay, great. I'll pass it along. Thank you.

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

Thanks, Mike.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

Thanks, Mike.

Operator

Our next question comes from the line of Chris Pierce with Needham. Your line is open. Please go ahead.

Chris Pierce
Chris Pierce
Senior Analyst at Needham

Hey, good afternoon. Sort of following along the lines of that last question, if you look at the alt-power mix, it's kinda come down a little bit over the past couple of years. Is that you guys are able to, at the plant, deliver what the market wants and those sort of alt-power sort of out of favor right now to an extent versus prior years, or should we think of it as short-term share fluctuations that is kinda you guys are delivering more diesel buses?

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

Yeah, I'll start. Probably more short-term share fluctuation. diesel's also probably a little bit heavier now in terms of market share, maybe because of the new legislation coming in, and that could have an impact with some pre-buy. I think there's a little bit of consideration that has to be given to that. Fortunately, we're strong in diesel too. Like, if you look at our numbers, we're up, so it's proving we're competitive in this segment.

Chris Pierce
Chris Pierce
Senior Analyst at Needham

Okay. Just if I look at the absolute bus backlog, like this second quarter versus second quarter 2025, second quarter 2024, I know that in the past you described the elevated backlog as unhealthy. Can you sort of remind us where a healthy backlog should be and what, you know, what's expected in backlog, you know, as you came out of sort of that large, you know, aggressive ordering period and what things look like going forward?

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

Yeah. I think a couple of things. We always look at 3,000 to 4,000 as the sweet spot. Too shallow, it's hard to schedule. If it's too deep, then you're vulnerable to the cost side for inflation, tariffs, et cetera. You know, I think the industry had, if you look at the post-COVID period, had very unusually high backlogs, and they were problematic. Where we are now is probably more normalized. I think COVID may have helped in regards to how the backlog's structured. I think some of that seasonality has been flattened out, which helps the industry. I think it's good for quality, it's good for production, it's good for people, all those things. In that regards, it may have helped the industry a bit.

Mark Benfield
Mark Benfield
Head of Investor Relations at Blue Bird

Chris Pierce, I'll add, you know, for us, one to two quarters of production visibility is really the way to think about that sweet spot in backlog.

Chris Pierce
Chris Pierce
Senior Analyst at Needham

Okay. If I could just ask one more. Can you just touch on Section 232 tariffs and like raw materials and things like that, hedging you guys have in place or just able to pass through pricing? Like, how do those pieces sort of fit together? I'll pass it along. Thank you.

Razvan Radulescu
Razvan Radulescu
CFO at Blue Bird

Chris. Thanks, Chris. Razvan. Definitely we are dealing with a myriad of tariffs in the last year plus. Section 232 is one of them. We are managing that very well. We are targeting a margin neutral outcome, as you can see from our results. We are working on one hand with the dealers and customers on the pricing side to price some of those tariffs, and at the same time, we are working hard with our suppliers to mitigate or resource to minimize other type of tariffs.

Chris Pierce
Chris Pierce
Senior Analyst at Needham

Okay. Thank you.

Operator

There are no further questions at this time. I will now turn the call back to John Wyskiel for closing remarks.

John Wyskiel
John Wyskiel
President and CEO at Blue Bird

Thank you, Paige. Thanks to each of you for joining us on the call today. Blue Bird has delivered a great start to the first half of 2026 with strong results, meeting expectations and raising our guidance. This is despite a challenging environment. With the fundamentals of the industry and the key elements of our strategy, I remain very enthusiastic for Blue Bird and its future. We look forward to updating you on our progress next quarter. Should you have any follow-up questions, please don't hesitate to contact our Head of Investor Relations, Mark Benfield. Blue Bird continues to be stronger than ever and has an amazing future ahead as we approach our 100-year anniversary. Thanks again from all of us at Blue Bird and have a great evening.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.

Executives
    • John Wyskiel
      John Wyskiel
      President and CEO
    • Mark Benfield
      Mark Benfield
      Head of Investor Relations
    • Razvan Radulescu
      Razvan Radulescu
      CFO
Analysts
    • Chris Pierce
      Senior Analyst at Needham
    • Eric Stine
      Senior Research Analyst at Craig-Hallum
    • Michael Shlisky
      Managing Director and Senior Research Analyst at D.A. Davidson
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