Blue Bird Corporation

Ladies and gentlemen, please remain holding your conference call will begin momentarily. Again, please remain holding your conference call will begin momentarily. Hello, everyone. Thank you for attending Bluebird Corporation's fiscal 2023 fourth quarter and full year earnings call. My name is Sierra, and I'll be your moderator today. All lines will be muted during the prepared remarks from our management team, with an opportunity for questions and answers at the end. If you'd like to ask a question, press star one on your telephone keypad. I would now like to pass the conference over to our hearse, Mark Benfield, head of investor relations. Please proceed.

Thank you and welcome to Bluebird's fiscal 2023 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 supporting slides on our website by clicking on the presentation box on the IR website. Our comments today include four 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. Bluebird disclaims any obligation to update the information in this call. This afternoon, you'll hear from Bluebird CEO, Phil Horlock, and CFO, Razvan Radulescu. They will take some questions. Let's get started.

Phil? Well, thank you, Mark, and good afternoon, everybody. First, let me say the Bluebird team has done a fantastic job in delivering continually approved results as we have moved through each quarter in 2023. As you'll see shortly in Razadan's section, the fourth quarter was no exception to that, where we achieved outstanding financial performance. For the full year, we delivered record financial results across the board, well ahead of the transformational plan that we outlined just a year ago, following a very tough year in fiscal 2022. So let's get started with the key takeaways for the full year on slide six. As the headline says, we achieved record full-year financial results in fiscal 2023, and we beat guidance every quarter, including the fourth quarter. In fact, as Razvan will show you in just a few minutes, the fourth quarter was an all-time record profit for any quarter in Bluebird's history, with an exceptional adjusted EBITDA margin of 13%. As we look at the drivers for this terrific progress in fiscal 2023, it really is about making significant improvements across our entire business throughout the year. Market demand for school buses continues to be very strong, and the backlog for Bluebird school buses was at a very healthy 4,600 units at the end of the fourth quarter. This falls well for pricing, production stability, and profit margins. Now, while supply chain constraints are easing, there are select constraints across the industry which are still limiting industry production and deliveries. But we are very engaged with those constrained suppliers with onsite support at their plants, and we are managing the situation very well. On that point, the evidence is clear with our bus deliveries in 2023 being 25% higher than last year. I'm pleased to tell you that legacy price backlog, which hurt us in fiscal 2022, and in the first quarter this year is now fully behind us. As a reminder, we define those legacy price units as those at contractual price levels prior to October 21. Every bus in our order backlog now reflects current pricing. And we're priced competitively, which we can tell from our quote win rate and incoming orders. This is an entirely different Bluebird bus revenue structure compared with a year ago. On the EV front, thanks largely to the first phase of funding of $1 billion from the EPA's unprecedented $5 billion Clean School Bus Program, we had nearly 600 EVs in our firm backlog at the end of the fiscal year, and full-year deliveries more than doubled from a year ago. With $4 billion still to go, this program is really accelerating the adoption of electric school buses. As we have done for many years, we again increased our sales mix of alternative powered vehicles and strengthen our leadership position even further. The higher margins and higher owner loyalty from these products contributed to our profit improvement in fiscal 2023. We also reinvested back into the business by selectively upgrading facilities and processes, enhancing the plant working environment, and adding electric bus capacity through our new EV production center. Through the efforts of the best workforce in the business, strong leadership, lean process improvements, and sheer hard work, we have been achieving some of the best manufacturing performance the company has ever achieved. Bottom line, we're performing extremely well in a strong market. We're delivering a greater mix of higher margin, alternative powered vehicles. We are priced competitively and appropriately for today's economic environment, and financial results are at an all-time record level. Now let's take a closer look at the financial and business highlights for the full year on slide seven. I want to start by saying that our full year financial performance is transformed from a year ago with many record highs achieved. We sold over 8,500 buses in fiscal 23, which is a substantial 25% or almost 1,700 buses above last year. Those unit sales drove full-year net revenue of $1.13 billion. That's an all-time net sales record for Bluebird and an exceptional 41% higher than a year ago. Full-year adjusted EBITDA of $88 million is another all-time record for Bluebird. That's $103 million higher than last year and $15 million above the midpoint of guidance that we set at our last earnings call. And finally, adjusted free cash flow for the year was $121 million. That's an extraordinary increase of $144 million over last year and another all-time cash flow record for Bluebird. Overall, these are outstanding full-year results and transformational gains from last year. Although not shown on this slide, it's worth pointing out that in the second half of fiscal 2023, we achieved an adjusted EBITDA of $70 million, representing a margin of 12%. It's clear we have great momentum going into fiscal 24. On the right-hand side of the slide, you can see some of the operating highlights for the business. As I mentioned earlier, demand continues to be strong, with our firm order backlog at fiscal year-end worth over $670 million in revenue. We raised prices considerably over the past two years, and the average full-year selling price per bus in fiscal 23 was 15% higher than a year ago. Part sales were just shy of $100 million, another bluebird record, and up 27% year-over-year. The increasing average age of buses on the road is having a material positive impact on our aftermarket business, and we gain market share. Turning to alternative powered buses, they represent a record 62% of our full-year unit sales, and that's a 4 percentage points increase compared with last year. We continue to be the clear leader in this space. No other school bus manufacturer comes close to that number. Now, EV buses were part of that mixed growth, with bookings more than doubling from last year. Additionally, we left the year with nearly 600 firm EV orders in our backlog, which is around a 12% share of our total backlog. That's worth approximately $180 million in revenue. Clearly, we're benefiting substantially from the billion-dollar funding from the first phase of the EPA's $5 billion Clean School Bus Program. And last on our EV business, we did launch an all-new extended range battery in the second half of the year, providing around a 30% increase in range on a single charge over our standard battery. That's an expected range of about 130 miles, which is a terrific value offering for our customers by meeting the sweet spot for daily school bus use. From an operations standpoint, a great example of lean manufacturing is improved throughput. Looking at the time taken from initially setting up a bus chassis to receiving payment for the complete finished bus. We cut that from 40 days to 20 days in fiscal 23. Incidentally, we've been running it around 16 days in the first quarter of fiscal 24. That's a great performance by our operations team. And finally, we beat full year guidance, reporting record net sales, record adjusted EBITDA, and record adjusted free cash flow for fiscal 2023. We finished the year incredibly strong with a 13% adjusted EBITDA margin in the fourth quarter, and I'm very proud of our accomplishments. I would now like to hand it over to Razvan to walk through our fiscal 23 financial results in more detail. In addition, we will be providing our updated fiscal 2024 guidance, which an adjusted EBITDA margin of 10% is substantially higher than what we showed you in our last earnings call. Over to you, Razvan.