Blue Bird Corporation Common Stock 2026 Q3 Earnings Call

Welcome to Blue Bird's fiscal 2026 third quarter earnings conference call. The audio for our call is webcast live on blue-bird.com under the investor relations tab. You can access 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 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? Thanks, Mark. Good afternoon, everyone.

Thanks for joining us today. It's an exciting day today as we're going to share our strong fiscal 2026 third quarter financial results and the continued significant progress we've made with our long-term strategy, including a very special announcement we made late this afternoon. Results for Q3 were once again very strong. The Blue Bird team delivered outstanding sales and Adjusted EBITDA, beating guidance for the 15th consecutive quarter. Razvan will take you through the details of our financial results shortly. Let's turn to slide six, where I will talk to some of the key takeaways for the quarter. 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 4,900 units inclusive of Micro Bird and just under 3,600 units for Type C and D. Operationally, metrics are pointing in the right direction. The team has been able to execute on a day-to-day basis while simultaneously working on our long-term strategy. In terms of pricing, we remain extremely disciplined. Bus prices remain higher than the previous year and the previous quarter. As I continue to communicate, this process is just how we manage the business. In the All Power segment, our dominance continues. Our EV backlog is just under 800 units, and we have a strong EV order book into 2027. All Power is a segment we created over 15 years ago. We are a pioneer in EV. Our propane powertrains have the lowest total cost of operation, and our gas variant continues to be a market leader.

With increased diesel prices at the pump, we believe Alt Power is a great long-term play. We continue to maintain our lead position. 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. 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 3,525 buses in Q3 and recorded revenue of $517 million, $119 million above last year. On the EV side, we sold over 350 electric vehicles, 10% of unit volume, and our long-term outlook for EVs remains optimistic.

Adjusted EBITDA for the quarter came in at $71 million, $13 million stronger than last year, and adjusted free cash flow came in at $28 million. Razvan will talk more about this and our outlook later in this call. Turning to the right side of the page, I'll touch on a few points. As discussed earlier, our backlog finished at a solid 4,900 units combined. As you know, backlog is a function of orders and production. Orders for the industry were up 7% on a trailing 12-month basis, and Blue Bird's order intake was up 9% for the same period. We feel good about our position in the school bus 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.

The midterm horizon continues to look very good for school bus volumes. Year-over-year selling prices for buses was up almost $10,000. Of course, this also includes increased tariff recovery as part of our margin neutral tariff strategy. With tariffs excluded, pricing was still up year-over-year, and parts sales totaled $25.5 million for the quarter. Alt-powered Blue Bird buses represented a strong 54% unit sales mix for the quarter. Our powertrain strategy is a differentiator in the market and allows us to maintain stronger margins. For the quarter, we had 355 EVs booked and 776 EVs in our order backlog pushing into 2027. Again, 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 remain intact, with funds flowing to our end customers. The EPA has invited comments for 2026 funding, solidifying rounds four and five for the program, consistent with what we have been communicating. We should understand very soon how and when the EPA will administer these funds. Overall, when you look at state funding and fleet EV mandates, we believe this market will remain relevant. In the quarter, we closed on the Micro Bird transaction. This transaction brings us consolidated revenue with the Type A school bus and future growth in the commercial shuttle bus segment. It also brings us technology with the Ecotuned integrated EV platform. This transaction represents our strategic commitment for growth outside of the school bus segment and putting the balance sheet to work. Finally, I have another exciting item to report.

We made a very big move in the chassis market. Let's turn to slide eight, where I will talk about the exciting news we released earlier today. Our expanded collaboration into the Class 5 and 6 chassis market with Ford Motor Company and our asset purchase of Detroit Chassis LLC's Detroit Assembly Plant. Under the agreement, Blue Bird will assume design, manufacturing, and sales responsibility for the next generation F-53, F-59 commercial strip chassis. Additionally, Ford will supply to us its medium-duty, next generation Ford powertrain as part of this agreement. Finally, Ford and Blue Bird intend to collaborate on the seamless customer transfer of fleet, RV, and specialty body manufacturers. This collaboration with Ford will run through the end of 2033 with the extension opportunity into 2036.

As part of this significant market entry, Blue Bird will also acquire Detroit Assembly Plant assets of Detroit Chassis LLC, the current contract assembler for the F-53, F-59 chassis. Detroit Chassis brings workforce, leadership, equipment, while Blue Bird brings the overall design and business enterprise expertise to support this overall arrangement. The purchase is anticipated to close in calendar Q1 2027, shortly after the current chassis ends production. Production of our new chassis is expected to start in calendar Q1 2028. For Blue Bird, this arrangement and transaction focuses on the strategic value proposition of growth, technology, and collaboration. First, it expands Blue Bird's total addressable market by $1.4 billion in a largely two-player market in both commercial delivery and RV segments. The Ford-powered gas chassis is a competitive and dominant offering in this space. The collaboration will propel our market position in the strip chassis segment.

Second, this new chassis design will have considerable technical read across into our new bus design. We also see that this chassis design will be scalable and facilitate expansion into other product offerings. This technical approach will support even further growth down the road. Lastly, our collaborative approach with Ford will support an orderly transition with customers, enabling ease of entry into the market and mitigating risk. Overall, this is a very exciting announcement and is an important part of our strategy for the company. As I said earlier, it brings tremendous opportunity for growth, technology, and collaboration. It positions us to be a growing player in the specialty vehicle market. It has certainly been another busy quarter with strong results and a very exciting announcement.

I'd now like to hand it over to Razvan to walk through our fiscal 2026 third quarter financial results, as well as our full year updated guidance in more detail.

Razvan? Thanks, John, and good afternoon.