Blue Bird Corporation

Good morning or good afternoon all and welcome to the Bluebird Fiscal 2025 Second Quarter Earnings Conference Call. My name is Adam and I'll be your operator for today. If you'd like to ask a question at the Q&A portion of today's call, you may do so by pressing star followed by one on your telephone keypad. I will now hand the floor to Mark Benfield to begin. So Mark, please go ahead when you're ready.

Thank you and welcome to Bluebird's Fiscal 2025 Second 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 filings to SEC. Bluebird disclaims any obligation to update the information in this call. This afternoon, you will hear from Bluebird's president and CEO, John Whitescale, and CFO, Razvan Wajrilescu. Maybe we'll take some questions. So let's get started. John?

Thanks, Mark, and good afternoon, everyone. Thanks for joining us. It's great to be here and to share with you our financial results for our fiscal 2025 second quarter. As you might know, I worked for Bluebird just over 20 years ago as a general manager. It was a challenging period back then, but it was truly one of the most rewarding times in my career, and I'm excited to be back. Before I get started, I want to thank outgoing CEO Phil Horlock, our board, and of course our employees for welcoming me back into the company and making the transition very smooth. Likewise, it's great to be back working with our supply partners, and of course, a very dedicated dealer network. I'm really excited to be back. There is such a bright future ahead, as you'll see today. Let's get to the quarter. I'm very pleased to tell you that our momentum from last year has not slowed down at all, with the Bluebird team doing a fantastic job in delivering record-adjusted EBITDA in the second quarter of fiscal 2025. Razvan will be taking you through the details of our financial results shortly. So let me get started with the key takeaways for the second quarter on slide six. Going straight to the headline, we achieved record quarterly revenue and profit in Q2 2025. As shown in the first box, we beat Q2 guidance and are maintaining our full year guidance. This despite the impact of the current administration policy on tariffs. And we'll talk more on that later in this call. We continue to execute our plan developed a few years ago, which focused on improvement across the entire business. And that focus is evident in our strong Q2 results. Now, market demand for school buses continues to be very strong. We ended the quarter with just under 5,000 units in our backlog, representing over six months of production. This bodes well for operational stability and margins. A few years ago, we had to take some strong pricing action. and we continue to maintain laser focus in this area. This is demonstrated in our results. Bus prices were again higher in Q2 compared to a year ago on every combustion engine model. And we are still priced competitively, as we can see from our bid results and our overall win rate. During the quarter, we also continued to see strong mix of alternative power vehicles. We maintain our lead position in this segment, and it's a segment we created more than 15 years ago. We are also reinvesting back into the business by selectively updating facilities, focusing on lean production systems, and developing exciting new and differentiated products that will hit the market beginning as early as next year. We recognize targeted investment in our operations will lead to better performance on the manufacturing side of the business, and investment in our product portfolio will grow the top line. our objective to position this business to be a strong long-term investment. As a result of this continued path, our Q2 profitability and margin was the highest quarterly result we've ever achieved. Adjusted EBITDA came in at $49 million, or 14%. That's 6.5% better compared to last year's second quarter. Similar to almost every business in the country, we are also dealing with the impacts of the administration's executive orders and the tariff volatility. We are fortunate to be well positioned to navigate the situation to a margin neutral outcome. But now let's take a closer look at the financial and key business highlights for the second quarter on slide seven. We sold 2,295 buses in the second quarter and recorded revenue of $359 million. a quarterly record and $13 million ahead of last year. On the EV side, we sold 265 vehicles, 11.5%, and we continue to have strong order intake for EVs. As I mentioned earlier, second quarter adjusted EBITDA of $49 million was a quarterly record as well and was $3 million above the second quarter of 2024. That's a 14% margin, 50 basis points better than last year. We will talk more on our outlook later in this call. As a reminder, our margins are very balanced across our entire product line from a percentage basis, including EVs. And we think EVs are a perfect fit for the school bus market when you look at the duty cycle, available charging intervals, range, and proven health benefits to our children. But our core business in the ice segments is equally as strong. Even with nearly 90% ice mix, our second quarter results highlight the underlying strength in the overall business. And finally, adjusted free cash flow for the second quarter was $19 million, a decrease of $35 million over a year ago, but mainly driven by a tax carry forward benefit that we had in 2024. Overall, we achieved an outstanding second quarter financial result. 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 a firm order backlog of 4,900 buses representing $770 million in revenue. Second quarter average selling prices for buses was up $4,000 per unit, or about 3% compared to last year. And part sales totaled $26 million in Q2. All powered buses represented a 57% mix of unit sales in Q2. This compares with a typically less than 10 to 15% mix for our major competitors. We benefit from higher margins and higher owner loyalty with our gas and propane products. And we're the exclusive supplier in the industry. At the end of the quarter, we had a combined 1100 EVs either booked or in an order backlog. Our latest forecast reflects 800 to 1000 EV unit sales for the full year. and we are well positioned from an order standpoint to achieve our previous target of 1,000 units. However, the tariff exposure is higher on EVs, and it may create a scenario where we intentionally push out some of our bills. Rajban will cover this in more detail. The current backlog of 708 electric buses represents $233 million in revenue. Trudeau, Throughout the second quarter was very encouraging to see rounds two and three of the EPA clean school bus program flowing through to our end customers. Trudeau, So good program and this momentum provides optimism that will continue into round four. Trudeau, In addition, reimbursement funds were flowing for $80 million mass contract with the do we. Trudeau, This is for their funding towards our new plant expansion in Fort valley. As a reminder, this project adds 400 well-paying American jobs to a century-old American company with an iconic brand to build clean school buses, providing our children with the benefits of clean air. It's really a great story. And finally, we beat our guidance for the 10th consecutive quarter and are holding our full year guidance. With a 14% adjusted EBITDA margin and record profits in Q2, I'm very proud of the team's accomplishments. But before I hand it over to Razvan to cover the financials, I would ask that you turn to slide 8 so I can talk to another highlight in Q2. Earlier in March, we debuted our Bluebird commercial chassis at the Work Truck Show in Indianapolis. We are recognized, and we am in this segment, and the reaction to this new product was overwhelming. The chassis will be offered in propane or EV. It has some best-in-class features, like a 55-degree wheel cut for tight turning radiuses, the highest front axle clearance at over 8 inches, galvanized frame rails, and it's designed to have fewer electrical and fluid connection points for reliability. We are now executing our manufacturing strategy, but the product is scheduled to launch in 2026 at a market competitive price. As mentioned, many company fleets, last milers, and delivery companies express strong interest. We will be finalizing our financial projections for this new segment this year as a part of our 2026 outlook. I'm really excited about this opportunity. So I would like to now hand it over to Razvan to walk through our fiscal 25 second quarter financial results and full year guidance in more detail. Razvan.