Blue Bird (BLBD) 10-Q 7 Feb 18 2018 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Dec. 30, 2017	Feb. 05, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	Blue Bird Corp
Entity Central Index Key	1,589,526
Current Fiscal Year End Date	--09-29
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Dec. 30, 2017
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		24,031,788

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 30, 2017	Sep. 30, 2017
Current assets
Cash and cash equivalents	$ 23,208	$ 62,616
Accounts receivable, net	6,279	10,148
Inventories	74,332	76,155
Other current assets	9,980	11,528
Total current assets	113,799	160,447
Property, plant and equipment, net	36,185	34,708
Goodwill	18,825	18,825
Intangible assets, net	56,979	57,481
Equity investment in affiliate	11,675	11,625
Deferred tax assets	10,283	11,755
Other assets	1,091	975
Total assets	248,837	295,816
Current liabilities
Accounts payable	60,669	87,331
Warranty	8,113	8,573
Accrued expenses	10,943	18,229
Deferred warranty income	6,821	6,776
Other current liabilities	8,078	9,847
Current portion of senior term debt	8,000	8,000
Total current liabilities	102,624	138,756
Long-term liabilities
Long-term debt	141,418	143,224
Warranty	11,675	12,337
Deferred warranty income	12,387	12,519
Other liabilities	15,233	15,064
Pension	30,816	32,426
Total long-term liabilities	211,529	215,570
Guarantees, commitments and contingencies (Note 6)
Stockholders' deficit
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 400,000 issued with liquidation preference of $40,000 at December 30, 2017 and September 30, 2017	40,000	40,000
Common stock, $0.0001 par value, 100,000,000 shares authorized, 23,914,310 and 23,739,344 issued and outstanding at December 30, 2017 and September 30, 2017, respectively	2	2
Additional paid-in capital	45,888	45,418
Accumulated deficit	(107,894)	(100,055)
Accumulated other comprehensive loss	(43,312)	(43,875)
Total stockholders' deficit	(65,316)	(58,510)
Total liabilities and stockholders' deficit	$ 248,837	$ 295,816

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Dec. 30, 2017	Sep. 30, 2017
Statement of Financial Position [Abstract]
Preferred Stock, Par Value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Shares Issued	400,000	400,000
Preferred Stock, Liquidation Preference, Value	$ 40,000,000	$ 40,000,000
Common Stock, Par Value (in dollars per share)	$ 0.0001	$ 0.0001
Common Stock, Shares Authorized	100,000,000	100,000,000
Common Stock, Shares Issued	23,914,310	23,739,344
Common Stock, Shares Outstanding	23,914,310	23,739,344

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Dec. 30, 2017	Dec. 31, 2016
Income Statement [Abstract]
Net sales	$ 162,549	$ 136,660
Cost of goods sold	141,901	118,462
Gross profit	20,648	18,198
Operating expenses
Selling, general and administrative expenses	25,918	18,192
Operating (loss) profit	(5,270)	6
Interest expense	(1,452)	(2,688)
Interest income	15	7
Other income (expense), net	170	(127)
Loss on debt extinguishment	0	(10,142)
Loss before income taxes	(6,537)	(12,944)
Income tax (expense) benefit	(1,352)	3,672
Equity in net income of non-consolidated affiliate	50	749
Net loss	(7,839)	(8,523)
Earnings per share:
Net loss (from above)	(7,839)	(8,523)
Less: preferred stock dividends	770	953
Net loss available to common stockholders	$ (8,609)	$ (9,476)
Basic weighted average shares outstanding	23,924,045	22,596,314
Diluted weighted average shares outstanding	23,924,045	22,596,314
Basic loss per share (in dollars per share)	$ (0.36)	$ (0.42)
Diluted loss per share (in dollars per share)	$ (0.36)	$ (0.42)

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended
	Dec. 30, 2017	Dec. 31, 2016
Statement of Comprehensive Income [Abstract]
Net loss	$ (7,839)	$ (8,523)
Other comprehensive income, net of tax
Net change in defined benefit pension plan	563	1,006
Net unrealized gain on cash flow hedges	0	149
Total other comprehensive income	563	1,155
Comprehensive loss	$ (7,276)	$ (7,368)

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Dec. 30, 2017	Dec. 31, 2016
Cash flows from operating activities
Net loss	$ (7,839)	$ (8,523)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	2,097	2,023
Amortization of debt costs	194	514
Share-based compensation	624	0
Equity in net income of affiliate	(50)	(749)
Deferred taxes	1,155	(3,875)
Amortization of deferred actuarial pension losses	880	1,573
Loss on debt extinguishment	0	10,142
Changes in assets and liabilities:
Accounts receivable	3,869	1,363
Inventories	1,823	(18,059)
Other assets	1,432	(23)
Accounts payable	(26,285)	(10,831)
Accrued expenses, pension and other liabilities	(11,708)	(5,761)
Total adjustments	(25,969)	(23,683)
Total cash used in operating activities	(33,808)	(32,206)
Cash flows from investing activities
Cash paid for fixed assets	(3,449)	(2,956)
Total cash used in investing activities	(3,449)	(2,956)
Cash flows from financing activities
Repayments under the former senior term loan	0	(161,500)
Borrowings under the new term loan	0	156,887
Repayments under the new term loan	(2,000)	0
Cash paid for capital leases	(38)	(42)
Cash paid for debt issuance costs	0	(210)
Cash paid to extinguish debt	0	(507)
Payment of dividends on preferred stock	(770)	(953)
Cash paid for employee taxes on stock option exercises	0	(613)
Proceeds from exercises of warrants	3,640	2,790
Common stock repurchases under the share repurchase program	(2,983)	0
Total cash used in financing activities	(2,151)	(4,148)
Change in cash and cash equivalents	(39,408)	(39,310)
Cash and cash equivalents, beginning of period	62,616	52,309
Cash and cash equivalents, end of period	23,208	12,999
Supplemental disclosures of cash flow information
Interest paid, net of interest received	1,289	1,866
Income tax paid, net of tax refunds	25	503
Non-cash Investing and Financing activities
Change in accounts payable for capital additions to property, plant and equipment	(377)	(1,866)
Cashless exercise of stock options	$ 0	$ 2,900

Nature of Business and Basis of

Nature of Business and Basis of Presentation	3 Months Ended
	Dec. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of Business and Basis of Presentation	1. Nature of Business and Basis of Presentation Nature of Business Blue Bird Body Company, a wholly-owned subsidiary of Blue Bird Corporation, was incorporated in 1958 and has manufactured, assembled and sold school buses to a variety of municipal, federal and commercial customers since 1927. The majority of Blue Bird’s sales are made to an independent distributor network, which in turn sells buses to ultimate end users. We are headquartered in Macon, Georgia. References in these notes to financial statements to “Blue Bird”, the “Company,” “we,” “our,” or “us” refer to Blue Bird Corporation and its wholly-owned subsidiaries, unless the context specifically indicates otherwise. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company transactions and accounts have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and Article 8 of Regulation S-X. The Company’s fiscal year ends on the Saturday closest to September 30 with its quarters consisting of thirteen weeks in most years. In fiscal year 2018 , there is a total of 52 weeks. For fiscal years 2018 and 2017 , the first quarters both included 13 weeks. In the opinion of management, all adjustments considered necessary for a fair presentation of financial results have been made. Such adjustments consist of only those of a normal recurring nature. Operating results for any interim period are not necessarily indicative of the results that may be expected for the entire year. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The Condensed Consolidated Balance Sheet data as of September 30, 2017 was derived from the Company’s audited financial statements but do not include all disclosures required by generally accepted accounting principles. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes for the fiscal year ended September 30, 2017 as set forth in the Company's 2017 Form 10-K filed on December 8, 2017 . Use of Estimates and Assumptions The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions. At the date of the financial statements, these estimates and assumptions affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities, and during the reporting period, these estimates and assumptions affect the reported amounts of revenues and expenses. For example, significant management judgments are required in determining excess, obsolete, or unsalable inventory, allowance for doubtful accounts, potential impairment of long-lived assets, goodwill and intangibles, the accounting for self-insurance reserves, warranty reserves, pension obligations, income taxes, environmental liabilities and contingencies. Future events and their effects cannot be predicted with certainty, and, accordingly, the Company’s accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the Company’s condensed consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. The Company evaluates and updates its assumptions and estimates on an ongoing basis and may employ outside experts to assist in the Company’s evaluations. Actual results could differ from the estimates that the Company has used.

Summary of Significant Accounti

Summary of Significant Accounting Policies and Recently Issued Accounting Standards	3 Months Ended
	Dec. 30, 2017
Accounting Policies [Abstract]
Summary of Significant Accounting Policies and Recently Issued Accounting Standards	2. Summary of Significant Accounting Policies and Recent Accounting Standards The Company’s significant accounting policies are described in the Company’s 2017 Form 10-K, filed with the SEC on December 8, 2017 . Our senior management has reviewed these significant accounting policies and related disclosures and determined that there were no significant changes in our critical accounting policies in the three months ended December 30, 2017 . Recently Issued Accounting Standards We believe that no new accounting guidance was issued during the three months ended December 30, 2017 that is relevant to our financial statements. Recently Adopted Accounting Standards In the first quarter of fiscal 2018, the Company adopted ASU No. 2015-11, Simplifying the Measurement of Inventory , which requires inventory to be measured at the lower of cost or net realizable value. The adoption of this pronouncement did not have any impact on any component of our financial statements.

Supplemental Financial Informat

Supplemental Financial Information	3 Months Ended
	Dec. 30, 2017
Condensed Financial Information [Abstract]
Supplemental Financial Information	3. Supplemental Financial Information Inventory The Company values inventories at the lower of cost or net realizable value. The Company uses a standard costing methodology, which approximates cost on a first-in, first-out basis. The Company reviews the standard costs of raw materials, work-in-process and finished goods inventory on a periodic basis to ensure that its inventories approximate current actual costs. Manufacturing cost includes raw materials, direct labor and manufacturing overhead. The following table presents the components of inventory at the dates indicated: (in thousands of dollars) December 30, 2017 September 30, 2017 Raw materials $ 60,788 $ 54,379 Work in process 8,570 14,660 Finished goods 4,974 7,116 Total inventory $ 74,332 $ 76,155 Product Warranties The Company’s products are generally warranted against defects in material and workmanship for a period of one to five years . A provision for estimated warranty costs is recorded at the time the unit is sold. The methodology to determine the warranty reserve calculates average expected warranty claims using warranty claims by body type, by month, over the life of the bus, which is then multiplied by remaining months under warranty, by warranty type. Management believes the methodology provides an accurate reserve estimate. Actual claims incurred could differ from the original estimates, requiring future adjustments. The following table reflects activity in accrued warranty cost (current and long-term portion combined) for the periods presented: Three Months Ended (in thousands of dollars) December 30, 2017 December 31, 2016 Balance at beginning of period $ 20,910 $ 19,444 Add current period accruals 1,959 1,453 Current period reductions of accrual (3,081 ) (2,579 ) Balance at end of period $ 19,788 $ 18,318 The Company also sells extended warranties related to its products. Revenue related to these contracts is recognized on a straight-line basis over the contract period and costs thereunder are expensed as incurred. All warranty expenses are recorded in the cost of goods sold line in the Condensed Consolidated Statements of Operations. The methodology to determine the short-term extended warranty income reserve is based on twelve months of the remaining warranty value for each effective extended warranty at the balance sheet date. The following table reflects activity in deferred warranty income (current and long-term portions combined), for the sale of extended warranties of two to five years , for the periods presented: Three Months Ended (in thousands of dollars) December 30, 2017 December 31, 2016 Balance at beginning of period $ 19,295 $ 16,187 Add current period deferred income 2,063 1,129 Current period recognition of income (2,150 ) (1,507 ) Balance at end of period $ 19,208 $ 15,809 Self-Insurance The following table reflects our total accrued self-insurance liability, comprised of workers compensation and health insurance related claims, at the dates indicated: (in thousands of dollars) December 30, 2017 September 30, 2017 Current portion $ 3,465 $ 3,194 Long-term portion 2,199 2,251 Total accrued self-insurance $ 5,664 $ 5,445 The current and long-term portions of the accrued self-insurance liability are reflected in accrued expenses and other liabilities, respectively, on the Condensed Consolidated Balance Sheets. Shipping and Handling Revenues Shipping and handling revenues represent costs billed to customers and are included in net sales. Shipping and handling costs incurred are included in cost of goods sold. Shipping and handling revenues were $3.5 million and $3.3 million for the three months ended December 30, 2017 and December 31, 2016 , respectively. The related cost of goods sold was $2.8 million and $2.8 million for the three months ended December 30, 2017 and December 31, 2016 , respectively. Pension Expense Components of net periodic pension benefit cost were as follows for the periods presented: Three Months Ended (in thousands of dollars) December 30, 2017 December 31, 2016 Interest cost $ 1,357 $ 1,266 Expected return on plan assets (1,776 ) (1,590 ) Amortization of prior loss 880 1,573 Net periodic benefit cost $ 461 $ 1,249 Amortization of prior loss, recognized in other comprehensive income 880 1,573 Total recognized in net periodic pension benefit cost and other comprehensive income $ (419 ) $ (324 ) Warrants At December 30, 2017 , there were a total of 4,292,100 warrants outstanding to purchase 2,146,050 shares of our Common Stock.

Debt

Debt	3 Months Ended
	Dec. 30, 2017
Debt Disclosure [Abstract]
Debt	4. Debt Debt consisted of the following at the dates indicated: (in thousands of dollars) December 30, 2017 September 30, 2017 2021 term loan, net of deferred financing costs of $2,582 and $2,776, respectively $ 149,418 $ 151,224 Less: Current portion of long-term debt 8,000 8,000 Long-term debt, net of current portion $ 141,418 $ 143,224 Term loans are recognized on the Condensed Consolidated Balance Sheets at the unpaid principal balance, and are not subject to fair value measurement; however, given the variable rates on the loans, the Company estimates that the unpaid principal balance approximates fair value. If measured at fair value in the financial statements, the term loans would be classified as Level 2 in the fair value hierarchy. At December 30, 2017 and September 30, 2017 , $152.0 million and $154.0 million , respectively, were outstanding on the term loans. At December 30, 2017 and September 30, 2017 , the stated interest rates on the term loans were 3.1% and 2.8% , respectively. At December 30, 2017 and September 30, 2017 , the weighted-average annual effective interest rates for the term loans were 3.6% and 4.5% , respectively, which included amortization of the deferred financing costs. No borrowings were outstanding on the Revolving Credit Facility at December 30, 2017 ; however, since $7.7 million of Letters of Credit were outstanding on December 30, 2017 , the Company would have been able to borrow $67.3 million on the revolving line of credit. Interest expense on all indebtedness was $1.5 million and $2.7 million for the three months ended December 30, 2017 and December 31, 2016 , respectively. The schedules of remaining principal maturities for the term loan for the next five fiscal years are as follows: (in thousands of dollars) Year Principal Payments 2018 $ 6,000 2019 8,000 2020 11,000 2021 15,000 2022 112,000 Total remaining principal payments $ 152,000

Income Taxes

Income Taxes	3 Months Ended
	Dec. 30, 2017
Income Tax Disclosure [Abstract]
Income Taxes	5. Income Taxes Income tax provisions for interim periods are based on estimated annual income tax rates, adjusted to reflect the effects of any significant infrequent or unusual items which are required to be discretely recognized within the current interim period. The effective tax rates in the periods presented are largely based upon the forecast pre-tax earnings mix and allocation of certain expenses in various taxing jurisdictions where the Company conducts its business, primarily the United States. Due mainly to $2.4 million in period expense to reflect the newly enacted U.S. tax reform, the effective tax rate for the three month period ended December 30, 2017 was (20.7)% , which differs significantly from our transitional 2018 statutory federal income tax rate of 24.5% . The tax reform adjustments include resetting our deferred tax accounts to the new rates as well as $1.1 million of expense from increasing the carrying value of our uncertain tax positions, and $0.5 million of additional valuation allowance for our foreign tax credit carryforward. Without these adjustments, our effective tax rate for this period would have been approximately 17% . This tax rate differs from our transitional 2018 statutory federal income tax rate of 24.5% mainly due to normal tax rate benefit items, such as the domestic production activities deduction and state tax credits, which were partially offset by accrued interest and penalties on uncertain tax positions. The effective tax rate for the three month period ended December 31, 2016 was 28.4% and differed from the statutory federal income tax rate of 35% , mainly due to normal tax rate benefit items, such as the domestic production activities deduction and state tax credits. The benefit was partially offset by discrete items, the largest being interest and penalties on uncertain tax positions.

Guarantees, Commitments and Con

Guarantees, Commitments and Contingencies	3 Months Ended
	Dec. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Guarantees, Commitments and Contingencies	6. Guarantees, Commitments and Contingencies Litigation At December 30, 2017 , the Company had a number of product liability and other cases pending. Management believes that, considering the Company’s insurance coverage and its intention to vigorously defend its positions, the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial statements. Environmental The Company is subject to a variety of environmental regulations relating to the use, storage, discharge and disposal of hazardous materials used in its manufacturing processes. Failure by the Company to comply with present and future regulations could subject it to future liabilities. In addition, such regulations could require the Company to acquire costly equipment or to incur other significant expenses to comply with environmental regulations. The Company is currently not involved in any material environmental proceedings and therefore management believes that the resolution of environmental matters will not have a material adverse effect on the Company’s financial statements.

Segment Information

Segment Information	3 Months Ended
	Dec. 30, 2017
Segment Reporting [Abstract]
Segment Information	7. Segment Information We manage our business in two operating segments, which are also our reportable segments. The Bus segment includes the manufacturing and assembly of buses to be sold to a variety of customers across the United States, Canada and in international markets. The Parts segment consists primarily of the purchase of parts from third parties to be sold to dealers within the Company’s network. Financial information is reported on the basis that it is used internally by the chief operating decision maker (the “CODM”) in evaluating segment performance and deciding how to allocate resources. The President and Chief Executive Officer of the Company has been identified as the CODM. Management evaluates the segments based primarily upon revenues and gross profit. A measure of assets is not applicable, as segment assets are not regularly reviewed by the CODM for evaluating performance or allocating resources. The tables below present segment net sales and gross profit for the periods presented: Net sales Three Months Ended (in thousands of dollars) December 30, 2017 December 31, 2016 Bus $ 148,098 $ 122,406 Parts 14,451 14,254 Segment net sales $ 162,549 $ 136,660 Gross profit Three Months Ended (in thousands of dollars) December 30, 2017 December 31, 2016 Bus $ 15,377 $ 13,162 Parts 5,271 5,036 Segment gross profit $ 20,648 $ 18,198 The following table is a reconciliation of segment gross profit to consolidated loss before income taxes for the periods presented: Three Months Ended (in thousands of dollars) December 30, 2017 December 31, 2016 Segment gross profit $ 20,648 $ 18,198 Adjustments: Selling, general and administrative expenses (25,918 ) (18,192 ) Interest expense (1,452 ) (2,688 ) Interest income 15 7 Other income (expense), net 170 (127 ) Loss on debt extinguishment — (10,142 ) Loss before income taxes $ (6,537 ) $ (12,944 ) Sales are attributable to geographic areas based on customer location and were as follows for the periods presented: Three Months Ended (in thousands of dollars) December 30, 2017 December 31, 2016 United States $ 154,648 $ 129,746 Canada 4,850 4,865 Rest of world 3,051 2,049 Total net sales $ 162,549 $ 136,660

Earnings Per Share

Earnings Per Share	3 Months Ended
	Dec. 30, 2017
Earnings Per Share [Abstract]
Earnings Per Share	8. Earnings Per Share We incurred a net loss for the three months ended December 30, 2017 and December 31, 2016 . As a result, basic and diluted shares outstanding are equal to each other for those periods due to the exclusion of potentially dilutive shares from the calculation of earnings per share as the effect would be anti-dilutive. For the three months ended December 30, 2017 and December 31, 2016 , potentially dilutive shares excluded from the calculation were 4,699,157 and 5,779,368 , respectively.

Share Based Compensation

Share Based Compensation	3 Months Ended
	Dec. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share Based Compensation	9. Share-Based Compensation Restricted Stock Awards The following table summarizes the Company's restricted stock ("RSAs") and restricted stock units ("RSUs") award activity for the period presented: Three Months Ended December 30, 2017 Restricted Stock Activity Number of Shares Weighted-Average Grant Date Fair Value Balance, beginning of period 75,590 $ 15.83 Granted 107,720 18.10 Balance, end of period 183,310 17.16 Compensation expense for restricted stock awards, recognized in selling, general and administrative expenses on the Condensed Consolidated Statements of Operations, was $0.4 million with associated tax benefits of $0.1 million for the three months ended December 30, 2017 . At December 30, 2017 , unrecognized compensation cost related to restricted stock awards totaled $1.9 million and is expected to be recognized over a weighted-average period of eleven months . Stock Option Awards The following table summarizes the Company's stock option activity for the period presented: Three Months Ended December 30, 2017 Stock Option Award Activity Number of Options Weighted Average Exercise Price per Share ($) Outstanding options, beginning of period 623,962 $ 11.15 Granted 215,530 16.83 Outstanding options, end of period (1) 839,492 12.55 Fully vested and exercisable options, end of period (2) 500,601 10.07 (1) Stock options outstanding at the end of the period had an aggregate intrinsic value totaling $6.4 million . (2) Fully vested and exercisable options at the end of the period had an aggregate intrinsic value totaling $4.9 million with a weighted average contractual remaining term of 7.3 years . Compensation expense for stock option awards, recognized in selling, general and administrative expenses on the Consolidated Statements of Operations, was $0.2 million with associated tax benefits of $0.1 million for the three months ended December 30, 2017 . At December 30, 2017 , unrecognized compensation cost related to stock option awards totaled $1.3 million and is expected to be recognized over a weighted-average period of twelve months . The fair value of each option award at grant date was estimated using the Black-Scholes option-pricing model with the following assumptions and resulting grant-date fair value during the period presented: Three Months Ended December 30, 2017 Expected volatility 29.2 % Expected dividend yield 0 % Risk-free interest rate 2.16 % Expected term (in years) 5.0 - 5.5 Weighted-average grant-date fair value $ 6.15

Accumulated Other Comprehensive

Accumulated Other Comprehensive Income	3 Months Ended
	Dec. 30, 2017
Equity [Abstract]
Accumulated Other Comprehensive Income	10. Accumulated Other Comprehensive Income The following table provides information on changes in accumulated other comprehensive income (“AOCI”) for the periods presented: Three Months Ended (in thousands) Defined Benefit Pension Plan Cash Flow Hedges (Effective Portion) Total AOCI December 30, 2017 Balance, beginning of period $ (43,875 ) $ — $ (43,875 ) Other comprehensive income, gross — — — Amounts reclassified from other comprehensive income and included in earnings 880 — 880 Total other comprehensive income, before taxes 880 — 880 Income tax expense (317 ) — (317 ) Balance, end of period $ (43,312 ) $ — $ (43,312 ) December 31, 2016 Balance, beginning of period $ (58,878 ) $ (13 ) $ (58,891 ) Other comprehensive income, gross — 464 464 Amounts reclassified from other comprehensive income and included in earnings 1,573 (235 ) 1,338 Total other comprehensive income, before taxes 1,573 229 1,802 Income tax expense (567 ) (80 ) (647 ) Balance, end of period $ (57,872 ) $ 136 $ (57,736 )

Nature of Business and Basis 17

Nature of Business and Basis of Presentation (Policies)	3 Months Ended
	Dec. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company transactions and accounts have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and Article 8 of Regulation S-X. The Company’s fiscal year ends on the Saturday closest to September 30 with its quarters consisting of thirteen weeks in most years. In fiscal year 2018 , there is a total of 52 weeks. For fiscal years 2018 and 2017 , the first quarters both included 13 weeks. In the opinion of management, all adjustments considered necessary for a fair presentation of financial results have been made. Such adjustments consist of only those of a normal recurring nature. Operating results for any interim period are not necessarily indicative of the results that may be expected for the entire year. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The Condensed Consolidated Balance Sheet data as of September 30, 2017 was derived from the Company’s audited financial statements but do not include all disclosures required by generally accepted accounting principles. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes for the fiscal year ended September 30, 2017 as set forth in the Company's 2017 Form 10-K filed on December 8, 2017 .
Use of Estimates and Assumptions	Use of Estimates and Assumptions The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions. At the date of the financial statements, these estimates and assumptions affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities, and during the reporting period, these estimates and assumptions affect the reported amounts of revenues and expenses. For example, significant management judgments are required in determining excess, obsolete, or unsalable inventory, allowance for doubtful accounts, potential impairment of long-lived assets, goodwill and intangibles, the accounting for self-insurance reserves, warranty reserves, pension obligations, income taxes, environmental liabilities and contingencies. Future events and their effects cannot be predicted with certainty, and, accordingly, the Company’s accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the Company’s condensed consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. The Company evaluates and updates its assumptions and estimates on an ongoing basis and may employ outside experts to assist in the Company’s evaluations. Actual results could differ from the estimates that the Company has used.
Recently Issued Accounting Standards	Recently Issued Accounting Standards We believe that no new accounting guidance was issued during the three months ended December 30, 2017 that is relevant to our financial statements. Recently Adopted Accounting Standards In the first quarter of fiscal 2018, the Company adopted ASU No. 2015-11, Simplifying the Measurement of Inventory , which requires inventory to be measured at the lower of cost or net realizable value. The adoption of this pronouncement did not have any impact on any component of our financial statements.

Supplemental Financial Inform18

Supplemental Financial Information (Tables)	3 Months Ended
	Dec. 30, 2017
Condensed Financial Information [Abstract]
Inventory	Manufacturing cost includes raw materials, direct labor and manufacturing overhead. The following table presents the components of inventory at the dates indicated: (in thousands of dollars) December 30, 2017 September 30, 2017 Raw materials $ 60,788 $ 54,379 Work in process 8,570 14,660 Finished goods 4,974 7,116 Total inventory $ 74,332 $ 76,155
Product Warranties	The following table reflects activity in accrued warranty cost (current and long-term portion combined) for the periods presented: Three Months Ended (in thousands of dollars) December 30, 2017 December 31, 2016 Balance at beginning of period $ 20,910 $ 19,444 Add current period accruals 1,959 1,453 Current period reductions of accrual (3,081 ) (2,579 ) Balance at end of period $ 19,788 $ 18,318 The Company also sells extended warranties related to its products. Revenue related to these contracts is recognized on a straight-line basis over the contract period and costs thereunder are expensed as incurred. All warranty expenses are recorded in the cost of goods sold line in the Condensed Consolidated Statements of Operations. The methodology to determine the short-term extended warranty income reserve is based on twelve months of the remaining warranty value for each effective extended warranty at the balance sheet date. The following table reflects activity in deferred warranty income (current and long-term portions combined), for the sale of extended warranties of two to five years , for the periods presented: Three Months Ended (in thousands of dollars) December 30, 2017 December 31, 2016 Balance at beginning of period $ 19,295 $ 16,187 Add current period deferred income 2,063 1,129 Current period recognition of income (2,150 ) (1,507 ) Balance at end of period $ 19,208 $ 15,809
Self-Insurance	The following table reflects our total accrued self-insurance liability, comprised of workers compensation and health insurance related claims, at the dates indicated: (in thousands of dollars) December 30, 2017 September 30, 2017 Current portion $ 3,465 $ 3,194 Long-term portion 2,199 2,251 Total accrued self-insurance $ 5,664 $ 5,445
Pension Expense	Components of net periodic pension benefit cost were as follows for the periods presented: Three Months Ended (in thousands of dollars) December 30, 2017 December 31, 2016 Interest cost $ 1,357 $ 1,266 Expected return on plan assets (1,776 ) (1,590 ) Amortization of prior loss 880 1,573 Net periodic benefit cost $ 461 $ 1,249 Amortization of prior loss, recognized in other comprehensive income 880 1,573 Total recognized in net periodic pension benefit cost and other comprehensive income $ (419 ) $ (324 )

Debt (Tables)

Debt (Tables)	3 Months Ended
	Dec. 30, 2017
Debt Disclosure [Abstract]
Schedule of Long-term Debt Instruments	Debt consisted of the following at the dates indicated: (in thousands of dollars) December 30, 2017 September 30, 2017 2021 term loan, net of deferred financing costs of $2,582 and $2,776, respectively $ 149,418 $ 151,224 Less: Current portion of long-term debt 8,000 8,000 Long-term debt, net of current portion $ 141,418 $ 143,224
Schedule of Maturities of Long-term Debt	The schedules of remaining principal maturities for the term loan for the next five fiscal years are as follows: (in thousands of dollars) Year Principal Payments 2018 $ 6,000 2019 8,000 2020 11,000 2021 15,000 2022 112,000 Total remaining principal payments $ 152,000

Segment Information (Tables)

Segment Information (Tables)	3 Months Ended
	Dec. 30, 2017
Segment Reporting [Abstract]
Schedule of Segment Reporting Information, by Segment	The tables below present segment net sales and gross profit for the periods presented: Net sales Three Months Ended (in thousands of dollars) December 30, 2017 December 31, 2016 Bus $ 148,098 $ 122,406 Parts 14,451 14,254 Segment net sales $ 162,549 $ 136,660 Gross profit Three Months Ended (in thousands of dollars) December 30, 2017 December 31, 2016 Bus $ 15,377 $ 13,162 Parts 5,271 5,036 Segment gross profit $ 20,648 $ 18,198
Reconciliation of Operating Profit (Loss) from Segments to Consolidated	The following table is a reconciliation of segment gross profit to consolidated loss before income taxes for the periods presented: Three Months Ended (in thousands of dollars) December 30, 2017 December 31, 2016 Segment gross profit $ 20,648 $ 18,198 Adjustments: Selling, general and administrative expenses (25,918 ) (18,192 ) Interest expense (1,452 ) (2,688 ) Interest income 15 7 Other income (expense), net 170 (127 ) Loss on debt extinguishment — (10,142 ) Loss before income taxes $ (6,537 ) $ (12,944 )
Revenue from External Customers by Geographic Areas	Sales are attributable to geographic areas based on customer location and were as follows for the periods presented: Three Months Ended (in thousands of dollars) December 30, 2017 December 31, 2016 United States $ 154,648 $ 129,746 Canada 4,850 4,865 Rest of world 3,051 2,049 Total net sales $ 162,549 $ 136,660

Share Based Compensation (Table

Share Based Compensation (Tables)	3 Months Ended
	Dec. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity	The following table summarizes the Company's restricted stock ("RSAs") and restricted stock units ("RSUs") award activity for the period presented: Three Months Ended December 30, 2017 Restricted Stock Activity Number of Shares Weighted-Average Grant Date Fair Value Balance, beginning of period 75,590 $ 15.83 Granted 107,720 18.10 Balance, end of period 183,310 17.16
Schedule of Share-based Compensation, Stock Options, Activity	The following table summarizes the Company's stock option activity for the period presented: Three Months Ended December 30, 2017 Stock Option Award Activity Number of Options Weighted Average Exercise Price per Share ($) Outstanding options, beginning of period 623,962 $ 11.15 Granted 215,530 16.83 Outstanding options, end of period (1) 839,492 12.55 Fully vested and exercisable options, end of period (2) 500,601 10.07 (1) Stock options outstanding at the end of the period had an aggregate intrinsic value totaling $6.4 million . (2) Fully vested and exercisable options at the end of the period had an aggregate intrinsic value totaling $4.9 million with a weighted average contractual remaining term of 7.3 years .
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions	The fair value of each option award at grant date was estimated using the Black-Scholes option-pricing model with the following assumptions and resulting grant-date fair value during the period presented: Three Months Ended December 30, 2017 Expected volatility 29.2 % Expected dividend yield 0 % Risk-free interest rate 2.16 % Expected term (in years) 5.0 - 5.5 Weighted-average grant-date fair value $ 6.15

Accumulated Other Comprehensi22

Accumulated Other Comprehensive Income (Tables)	3 Months Ended
	Dec. 30, 2017
Equity [Abstract]
Schedule of Accumulated Other Comprehensive Income (Loss)	The following table provides information on changes in accumulated other comprehensive income (“AOCI”) for the periods presented: Three Months Ended (in thousands) Defined Benefit Pension Plan Cash Flow Hedges (Effective Portion) Total AOCI December 30, 2017 Balance, beginning of period $ (43,875 ) $ — $ (43,875 ) Other comprehensive income, gross — — — Amounts reclassified from other comprehensive income and included in earnings 880 — 880 Total other comprehensive income, before taxes 880 — 880 Income tax expense (317 ) — (317 ) Balance, end of period $ (43,312 ) $ — $ (43,312 ) December 31, 2016 Balance, beginning of period $ (58,878 ) $ (13 ) $ (58,891 ) Other comprehensive income, gross — 464 464 Amounts reclassified from other comprehensive income and included in earnings 1,573 (235 ) 1,338 Total other comprehensive income, before taxes 1,573 229 1,802 Income tax expense (567 ) (80 ) (647 ) Balance, end of period $ (57,872 ) $ 136 $ (57,736 )

Supplemental Financial Inform23

Supplemental Financial Information - Inventory (Details) - USD ($) $ in Thousands	Dec. 30, 2017	Sep. 30, 2017
Condensed Financial Information [Abstract]
Raw materials	$ 60,788	$ 54,379
Work in process	8,570	14,660
Finished goods	4,974	7,116
Total inventory	$ 74,332	$ 76,155

Supplemental Financial Inform24

Supplemental Financial Information - Product Warranty Rollforward (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 30, 2017	Dec. 31, 2016
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance at beginning of period	$ 20,910	$ 19,444
Add current period accruals	1,959	1,453
Current period reductions of accrual	(3,081)	(2,579)
Balance at end of period	$ 19,788	$ 18,318

Supplemental Financial Inform25

Supplemental Financial Information - Extended Warranty Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 30, 2017	Dec. 31, 2016
Movement in Extended Product Warranty Accrual [Roll Forward]
Balance at beginning of period	$ 19,295	$ 16,187
Add current period deferred income	2,063	1,129
Current period recognition of income	(2,150)	(1,507)
Balance at end of period	$ 19,208	$ 15,809

Supplemental Financial Inform26

Supplemental Financial Information - Self Insurance (Details) - USD ($) $ in Thousands	Dec. 30, 2017	Sep. 30, 2017
Condensed Financial Information [Abstract]
Current portion	$ 3,465	$ 3,194
Long-term portion	2,199	2,251
Total accrued self-insurance	$ 5,664	$ 5,445

Supplemental Financial Inform27

Supplemental Financial Information - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 30, 2017	Dec. 31, 2016
Product Warranty Liability [Line Items]
Shipping and handling revenues	$ 3.5	$ 3.3
Shipping and handling cost of goods sold	$ 2.8	$ 2.8
Warrants outstanding (in shares)	4,292,100
Common stock shares that may be called by warrants (in shares)	2,146,050
Minimum
Product Warranty Liability [Line Items]
Standard product warranty, period	1 year
Extended product warranty, period	2 years
Maximum
Product Warranty Liability [Line Items]
Standard product warranty, period	5 years
Extended product warranty, period	5 years

Supplemental Financial Inform28

Supplemental Financial Information - Pension Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 30, 2017	Dec. 31, 2016
Condensed Financial Information [Abstract]
Interest cost	$ 1,357	$ 1,266
Expected return on plan assets	(1,776)	(1,590)
Amortization of prior loss	880	1,573
Net periodic benefit cost	461	1,249
Amortization of prior loss, recognized in other comprehensive income	880	1,573
Total recognized in net periodic pension benefit cost and other comprehensive income	$ (419)	$ (324)

Debt - Narrative (Details)

Debt - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 30, 2017	Dec. 31, 2016	Sep. 30, 2017
Debt Instrument [Line Items]
Loss on debt extinguishment	$ 0	$ (10,142)
Interest expense	1,500	$ 2,700
Senior Term Loan | Senior Credit Facility
Debt Instrument [Line Items]
Long-term line of credit	$ 152,000		$ 154,000
Stated interest rate (as a percent)	3.10%		2.80%
Weighted average effective interest rate (as a percent)	3.60%		4.50%
Revolving Credit Facility | Credit Facility | Senior Revolving Credit Facility
Debt Instrument [Line Items]
Long-term line of credit	$ 0
Letters of Credit | Credit Facility | Senior Revolving Credit Facility
Debt Instrument [Line Items]
Letters of credit, amount outstanding	7,700
Remaining borrowing capacity	$ 67,300

Debt - Schedule of Long-term De

Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands	Dec. 30, 2017	Sep. 30, 2017
Debt Instrument [Line Items]
Current portion of senior term debt	$ 8,000	$ 8,000
Long-term debt	141,418	143,224
Senior Term Loan | 2021 Term Loan
Debt Instrument [Line Items]
Total debt	149,418	151,224
Deferred financing costs	$ 2,582	$ 2,776

Debt - Maturity Schedule (Detai

Debt - Maturity Schedule (Details) $ in Thousands	Dec. 30, 2017USD ($)
Long-term Debt, Fiscal Year Maturity
2,018	$ 6,000
2,019	8,000
2,020	11,000
2,021	15,000
2,022	112,000
Total debt	$ 152,000

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 30, 2017	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Period expense for newly enacted US tax reform	$ 2.4
Effective tax rate (as a percent)	(20.70%)	28.40%
Statutory Federal income tax rate (as a percent)	24.50%	35.00%
Increase in uncertain tax position	$ 1.1
Additional valuation allowance	$ 0.5
Effective income tax rate without adjustment for US tax reform (as a percent)	17.00%

Segment Information (Details)

Segment Information (Details) $ in Thousands	3 Months Ended
	Dec. 30, 2017USD ($)segment	Dec. 31, 2016USD ($)
Segment Reporting Information [Line Items]
Number of Operating Segments | segment	2
Net sales	$ 162,549	$ 136,660
Gross profit	20,648	18,198
United States
Segment Reporting Information [Line Items]
Net sales	154,648	129,746
Canada
Segment Reporting Information [Line Items]
Net sales	4,850	4,865
Rest of world
Segment Reporting Information [Line Items]
Net sales	3,051	2,049
Operating Segments
Segment Reporting Information [Line Items]
Gross profit	20,648	18,198
Operating Segments | Bus
Segment Reporting Information [Line Items]
Net sales	148,098	122,406
Gross profit	15,377	13,162
Operating Segments | Parts
Segment Reporting Information [Line Items]
Net sales	14,451	14,254
Gross profit	$ 5,271	$ 5,036

Segment Information - Reconcili

Segment Information - Reconciliation of Segment Gross Profit (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 30, 2017	Dec. 31, 2016
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment gross profit	$ 20,648	$ 18,198
Selling, general and administrative expenses	(25,918)	(18,192)
Interest expense	(1,452)	(2,688)
Interest income	15	7
Other income (expense), net	170	(127)
Loss on debt extinguishment	0	(10,142)
Loss before income taxes	(6,537)	(12,944)
Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment gross profit	20,648	18,198
Segment Reconciling Items
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Selling, general and administrative expenses	(25,918)	(18,192)
Interest expense	(1,452)	(2,688)
Interest income	15	7
Other income (expense), net	170	(127)
Loss on debt extinguishment	$ 0	$ (10,142)

Earnings Per Share - Narrative

Earnings Per Share - Narrative (Details) - shares	3 Months Ended
	Dec. 30, 2017	Dec. 31, 2016
Earnings Per Share [Abstract]
Anti-dilutive securities excluded from computation of earnings per share (in shares)	4,699,157	5,779,368

Share Based Compensation - Rest

Share Based Compensation - Restricted Stock and Unit Activity (Details) - Restricted Stock and Restricted Stock Units (RSUs) $ / shares in Units, $ in Millions	3 Months Ended
	Dec. 30, 2017USD ($)$ / sharesshares
Number of Shares
Balance, beginning of period (in shares) | shares	75,590
Granted (in shares) | shares	107,720
Balance, end of period (in shares) | shares	183,310
Weighted-Average Grant Date Fair Value
Balance, beginning of period (in dollars per share) | $ / shares	$ 15.83
Granted (in dollars per share) | $ / shares	18.10
Balance, end of period (in dollars per share) | $ / shares	$ 17.16
Share-based compensation | $	$ 0.4
Excess tax benefit | $	0.1
Unrecognized compensation cost | $	$ 1.9
Period for recognition of unrecognized compensation costs	11 months

Share Based Compensation - Stoc

Share Based Compensation - Stock Option Activity (Details) - Options $ / shares in Units, $ in Millions	3 Months Ended
	Dec. 30, 2017USD ($)$ / sharesshares
Number of Shares
Outstanding options, beginning of period (in shares) | shares	623,962
Granted (in shares) | shares	215,530
Outstanding options, end of period (in shares) | shares	839,492
Fully vested and exercisable options, end of period (in shares) | shares	500,601
Weighted Average Exercise Price per Share
Outstanding options, beginning of period (in dollars per share) | $ / shares	$ 11.15
Granted (in dollars per share) | $ / shares	16.83
Outstanding options, end of period (in dollars per share) | $ / shares	12.55
Fully vested and exercisable options, end of period (in dollars per share) | $ / shares	$ 10.07
Outstanding options, Aggregate Intrinsic Value	$ 6.4
Fully vested and exercisable options, end of period, Aggregate Intrinsic Value	$ 4.9
Fully vested and exercisable options, end of period, Weighted Average Contractual Remaining Term	7 years 3 months
Share-based compensation	$ 0.2
Excess tax benefit	0.1
Unrecognized compensation cost	$ 1.3
Period for recognition of unrecognized compensation costs	12 months

Share Based Compensation - Fair

Share Based Compensation - Fair Value Assumptions (Details) - Options	3 Months Ended
	Dec. 30, 2017$ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Volatility	29.20%
Dividend Yield	0.00%
Risk-Free Interest Rate	2.16%
Weighted-average grant date fair value of an option award granted in period (in dollars per share)	$ 6.15
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Term	5 years
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Term	5 years 6 months

Accumulated Other Comprehensi39

Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 30, 2017	Dec. 31, 2016
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance, beginning period	$ (58,510)
Balance, ending period	(65,316)
Total AOCI
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance, beginning period	(43,875)	$ (58,891)
Other comprehensive income (loss), gross	0	464
Amounts reclassified from other comprehensive income and included in earnings	880	1,338
Total other comprehensive income (loss), before taxes	880	1,802
Income tax benefit (expense)	(317)	(647)
Balance, ending period	(43,312)	(57,736)
Defined Benefit Pension Plan
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance, beginning period	(43,875)	(58,878)
Other comprehensive income (loss), gross	0	0
Amounts reclassified from other comprehensive income and included in earnings	880	1,573
Total other comprehensive income (loss), before taxes	880	1,573
Income tax benefit (expense)	(317)	(567)
Balance, ending period	(43,312)	(57,872)
Cash Flow Hedges (Effective Portion)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance, beginning period	0	(13)
Other comprehensive income (loss), gross	0	464
Amounts reclassified from other comprehensive income and included in earnings	0	(235)
Total other comprehensive income (loss), before taxes	0	229
Income tax benefit (expense)	0	(80)
Balance, ending period	$ 0	$ 136