Blue Bird Corporation

Greetings. Welcome to the Bluebird Corporation Fiscal 2021 Fourth Quarter and Full Year Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Mark Benfield. You may begin.

Thank you. Welcome to Bluebird's fiscal 2021 fourth quarter and full year 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 presentation box on our IR landing page. Our comments today include forward-looking statements that are subject to risk that could cause actual results to be materially different. Those risks include, among others, matters we have noted on the following two slides in our latest earnings release and filings with the SEC. Bluebird disclaims any obligation to update the information in this call. This afternoon, we will hear from Bluebird's President and CEO, Matt Stevenson, and CFO, Razvan Radulescu. Then we will take some questions. So let's get started. Matt?

Thank you, Mark. And it is a pleasure to speak with everyone today during my first earnings call here at Bluebird. In July, I joined the company as president and assumed the CEO role on November 1st. I am incredibly excited about the opportunity to lead such a great company with a phenomenal future in front of it. Overall demand for more environmentally friendly school buses is strong, and our company's competitive position to provide those buses and serve those customers who operate them is unparalleled. On slide six, you can see some of the major headlines of our fiscal year, which ended on October 2, 2021. At the beginning of our fiscal year, a large number of schools were still closed or in a hybrid learning approach. As schools started to fully reopen in the second half of our fiscal year, it reignited the replacement demand for buses. We saw that market demand increasing through the second half to near pre-pandemic order levels. Our nation's school bus fleet continues to age, and the ongoing need to upgrade to safer, lower emissions, and more modern vehicles is inevitable. However, the well-documented and publicized disruptions in the global supply chain environment made it difficult to fully realize those exciting fundamental trends. As volume in the automotive and commercial vehicle sectors ramped up, many of our suppliers had trouble keeping up with our demand. Our Tier 1 suppliers faced challenges, including a shortage of labor, COVID outbreaks, a scarcity of raw materials, semiconductor shortages, and other impacts from their Tier 2 and 3 suppliers. In many instances, we are missing over 25 parts per bus in our production. These supplier disruptions dramatically slowed down our production and caused us to take numerous unexpected down days. It also drove decreased efficiencies and productivities in our manufacturing operations. In addition to the supply chain disruptions, we saw the inflationary pressure everyone has seen in labor, raw materials, and minor or major components. While we pursued multiple strategies that Razvan will discuss in more detail to minimize escalating input costs and recover them in our pricing, the macro challenges still mask the strong underlying fundamentals of our business this past quarter. However, I am incredibly proud of the operations team of Bluebird for powering through these unprecedented times and producing the number of units that we did. Our estimate is more than 2,000 additional units should have been produced and delivered in fiscal 21, if not for all the supply chain disruptions and shortages. These delays in sales dramatically impacted our revenue and profitability for the year. The good news is our backlog is at record levels with over $400 million in revenue. Customers are patiently waiting for our buses. They understand what is happening in the global economic markets, and we have not seen cancellation. Again, these are delays in sales rather than permanently lost opportunities. Slide 7 highlights a number of accomplishments for Bluebird in fiscal year 21. And as I assess our company's prospects, I remain extremely confident and optimistic about the fundamental drivers of our business. and how it lines to the market demand for cleaner emissions school buses. Our alternative powertrain sales mix is now over 50%. We have built our 20,000 propane bus and are well positioned to capture accelerating demand for EV buses and have delivered or taken orders for over 550 electric school buses this past year. As stated previously, at the end of our fiscal year, we have a record number of units in the backlog. with over 40 to 100 vehicles worth over 400 million. As further evidence of our bright future, six of our major dealers are investing in all new dealerships to continue to enhance our customer service level to our end operators. Slide eight highlights our results for Q4 and fiscal year 2021. When you consider how disruptive the supply chain was this year, especially where we saw the worst of it in our fiscal year Q4, which is historically our highest volume and most profitable quarter, the solid results we are presenting here are a testament to the tenacity of the Bluebird team. We sold over 1,900 buses in the quarter and posted nearly $200 million in revenue, resulting in an adjusted EBITDA of $8 million. As you can imagine, the supply chain disruptions and missing parts contributed to increased inventory levels of raw material as we delayed setting up planned buses and grew our work in process to over 500 units, significantly impacting free cash flow in the quarter. The results of fiscal year 2021 are characterized by first half with soft demand and a second half fraught with supply chain disruptions when volume recovered. However, there is clear evidence of exciting longer-term trends in demand, and we are going to be ideally positioned to capture our profitable share. The unprecedented situation in the world around us has only temporarily delayed what I see as a remarkable opportunity ahead for our company and its investors. I would now like to turn it over to Razvan to discuss our financial results in more detail.