Blue Bird Corporation

Greetings. Welcome to the Bluebird Corporation Fiscal 2022 First Quarter 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, Head of Investor Relations. You may begin.

Thank you. And welcome to Bluebird's fiscal 2022 first 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 latest filings with the SEC. Bluebird disclaims any obligation to update the information on this call. This afternoon, you will hear from Bluebird's president and CEO, Matthew Stevenson, and CFO, Rozvon Radulescu. Then we will take some questions. Let's get started. Matt?

All right. Thank you, Mark, and good afternoon, everyone. The first quarter of our fiscal year 2022 was filled with a lot of activity centered around strong demand and navigating a sea of supply chain disruption. It was also the first quarter that Razvan and I were in our respective roles, as I assumed the role of CEO on November 1st, and Razvan became CFO on October 1st. On slide six, you can see the demand for our products is now at pre-COVID levels. Our order intake for Q1 was up 18% year over year, supporting a record backlog of roughly 500 million. We believe there is a lot of pent-up demand out there, as evidenced by the fact our dealer inventories are down 50% compared to this time last year. We are making adjustments in our operations for the second half to support higher build levels to maximize all the production our supply base can support. We would have loved to produce more buses in the first quarter, but we had a critical electrical component sole source from a supplier that had a limited availability of microprocessors. Their inability to supply us negatively impacted our production rate and booking. We have since engineered a second source for this critical component, as well as the original supplier has improved its chip allocations. We are constantly driving engineering projects to create deviations in resource parts that are limiting production. Late in this quarter, we also saw disruptions in the supply chain driven by the Omicron variant of COVID. As we discussed during our last earnings call, the first half of this year's production is primarily comprised of units that should have been produced in fiscal year 21 if we had access to the volume of components needed to support our production demand. Instead, these units have been pushed out into our first half at a cost basis that is now much higher, and with contractual customer pricing that was agreed to nearly a year ago, capturing little of the recent price increases and putting pressure on first half margins. We continue to monitor the inflationary pressures in the economy and our pricing in line with our expected cost increases. We've previously announced total price increases of 11% and effective March 1st, we are taking another 4% price increase for new orders that will equate to a total of 15% in less than 12 months, which is unprecedented for our industry. Slide seven has our financial results and our ongoing business highlights. In the first quarter, we booked 1,149 units with sales of 129 million. This was 106 units less than the fiscal year 21, but only 1 million less in revenue due to an increase in our average selling price by $4,000 and stronger part sales. Our adjusted EBITDA was $4 million, $2 million less than the first quarter of 21, and our adjusted free cash flow was negative $34 million, driven by high levels of raw and work-in-process inventory caused by supply chain disruptions. In the quarter, and since our last earnings call, we have accomplished a number of key items. We continue to make progress on our first foundational objective, which is taking care of our employees. We made critical upgrades to the facility during the quarter, including improvements to the cafeteria, break rooms, and key engagement areas. We're also driving new safety culture initiatives to lower the incident rates. In November, we had the opportunity to meet in person with 92% of the Bluebird dealers at our annual dealer meeting, which had not taken place in a couple of years due to COVID. We are very transparent with our dealer partners about the inflationary pressure in the global marketplace and the resulting need to revise our historic pricing and business practices to improve our collective profitability in a volatile macroeconomic environment. In the EV sector, we are continuing our dominance, and so our EV school bus backlog in Type C and D alone go to nearly 300 units. We secured a 30-unit EV order for the Modesto City Schools, the largest single order placed by any school district to date. We were also awarded the EV Business of the General Services Administration, or GSA, a longtime customer. Our bookings for the quarter reflected an Alternative Power mix of 56%, up 10 points year over year. And our leadership in Alternative Power shows no signs of slowing down and extends past EV. with Zoom services awarding us the business for 400 units, including 350 gasoline and 50 CNG units. Overall, in a difficult quarter, we still drove improvements in our business and focused on streamlining our operations so that we can ramp up volume in the back half of the year. I will discuss additional progress in our focus areas later in the call, but first I would like to hand over to Razvan to walk through our financial results in more detail. Razvan.