Key Points
- Blue Bird is the nation's largest school bus manufacturer, with a 40% market share.
- Its yellow and black school buses have been used by generations of students since 1927.
- Blue Bird is also the nation's largest EV school bus maker, with over $200 million in backlog orders and $775 million in conventional school bus orders for 5.8K units.
- The company had 44% YoY revenue growth in Q2 2023.
- The EPA-sponsored Clean School Bus Rebate Program will provide up to $5 billion in rebates to school districts that purchase zero and low-emissions school buses for the next five years.
- Blue Bird beat and raised its forward guidance.
- BLBD shares are trading near 52-week highs at 53X forward earnings with a 3.3% short interest.
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Blue Bird Co. NASDAQ: BLBD is the largest manufacturer of low-emission school buses in the U.S. Its yellow school buses have been used by generations of students since 1927. The company is firing on all pistons as they beat and raised their earnings estimates. Blue Bird owns more than a 40% market share of the school bus market. They have embraced the electric vehicle (EV) movement, growing its EV school bus sales by 176% with over $200 million in firm order backlog.
They are scaling up production capacity towards 20 EV school buses per day. Most EV companies are still losing money handover first, including Rivian Automotive Inc. NASDAQ: RIVN, Lucid Group Inc. NASDAQ: LCID and Fisker Inc. NYSE: FSR. However, Tesla Inc. NASDAQ: TSLA isn’t the only profitable EV maker. Blue Bird is the largest and most profitable EV school bus manufacturer.
EPA Clean School Bus Rebate Program
Federal incentives are helping drive more EV school bus purchases. The U.S. Environmental Protection Agency (EPA) Clean School Bus Rebate Program provides rebates of up to $300,000 for purchasing a zero-emission school bus and up to $150,000 for a low-emission school bus. The program has $5 billion in funding over the next five years, with $1 billion released in 2022 for 2,468 bus awards at 391 school districts.
The $1 billion funding alone will generate orders for 500 to 700 EV school buses and a minimum of $200 million in additional revenues. Blue Bird expects to make $200 million in the short term and over $1 billion in potential revenues during the five-year program.
The Turnaround
Blue Bird had suffered from the COVID-19 pandemic as schools converted to online classes and inflationary pressures. When the reopening occurred, Blue Bird had supply chain and margin problems from the inflated steel and materials prices. Eventually, positive normalization kicked in as input costs fell while supply chains improved. The EV movement continued accelerating, driven by global decarbonization efforts and Federal incentive programs. Fast forward to 2023, and Blue Bird is back on top, raising its guidance.
Blowout Top and Bottom Line Results
On May 11, 2022, Blue Bird released its second-quarter 2023 earnings report. The company reported a non-GAAP earnings-per-share (EPS) profit of $0.27, beating consensus analyst expectations for $0.08 by $0.19. It recorded a net income of $7.1 million and adjusted EBITDA of $19.8 million with 2,304 sold buses. Revenues rose 44% year-over-year (YoY) to $299.81 million, crushing estimates for $249.53 million. The company has a backlog of almost 5,800 units or over $775 million.
Blue Bird CEO Matthew Stevenson commented, "The market demand for Blue Bird’s best-in-class school buses continues to remain strong with nearly 5,800 units in the backlog. We also expanded our leadership position in zero-emission school buses, realizing exceptional growth in electric school bus bookings, up 176%, and our firm order backlog, of more than 620 electric school buses, as of the end of April, continues to grow.”
Raising the Bar
Blue Bird raised its fiscal full-year 2023 revenues of $1.1 billion versus $1.02 billion consensus analyst estimates. It expects adjusted EBITDA between $55 million and $65 million and adjusted free cash flow of $30 million to $40 million. Blue Bird reiterated its long-term outlook of profitable growth towards $2 billion in annual revenues with adjusted EBITDA margins of 12% or $250 million.
Blue Bird analyst ratings and price targets can be found at MarketBeat.
Weekly Cup and Handle Breakout
The weekly candlestick chart on BLBD illustrates a cup and handle breakout. The cup lip line commenced after peaking at $22.10 in March 2022. BLBD continued to sell off, forming a rounded bottom of the $7.14 low in October 2022. Shares were able to rise and retest the cup lip line in February 2023 but reject.
The sell-off bottomed at $17.37 in April 2023, forming the handle. The weekly stochastic crossed back up through the 60-band giving BLBD the momentum to surge through the cup lip line on the weekly MSL breakout through $19.59. The weekly 20-period exponential moving average (EMA) support is rising at $19.09, followed by the weekly 50-period MA at $13.83.
Pullback support levels are at $23.99, $22.10 cup lip line, $19.59 weekly MSL trigger and $17.37 handle low.
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