BLBD - Earnings call transcript Q2 2018

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Operator

Good day, and welcome to the Blue Bird Corporation Fiscal 2018 Third Quarter Earnings Conference Call and Webcast. Today's conference is being recorded. And at this time, I would like to turn the conference over to Mark Benfield, Director of Investor Relations. Please go ahead, sir.

Mark Benfield

Thank you, Yolanda. Fiscal XXXX Bird's conference Blue to third earnings quarter call. Welcome webcast for blue-bird.com our audio live call tab. The Relations is on Investor under the

clicking the our on access slides IR on by the can box the page. You landing Presentations supporting website on

forward-looking be earnings update the to Bird's the comments to in SEC. Phil have Blue subject questions. obligation Bird to actual will Then different. noted matters release Blue we any Those with risks This Phil? in that risks Our statements are latest could call. and from that filings Horlock Tighe. you some President information afternoon include will Phil cause others, disclaims this CEO, our today take materially we and hear results include, CFO, among and

Phil Horlock

Mark. thanks, Well,

and share for XXXX. results afternoon, latest calling earnings thanks So third today to for fiscal with call for us opportunity good our for this everyone joining quarter our you. quarterly We welcome in

with our overview start So of on financial slide let's an four. performance

Let slightly demand with bus second flat This XX,XXX strong still buses. be We be sales right would industry year to the a expect to on me now. new industry industry highest is a to than should again school good new last is and exceed XXXX. begin the bus since and high outlook. comment This be in

unit a for is for about sales a looking the sales stronger sales quarter third quarter over only XXXX units year’s strong sold in us. we decade, results back at achieved which Bird quarter so third So Blue with almost below very the buses a record XXX last

sales. year’s represents a it substantial Additionally, this increase over second unit quarter XX%

little are from of unit sales over year. nine the So for up first months X% the last year a

strong Blue reflecting the buses third the really conquest about brand way representing sales. of business. the At revenue I led dealers with a third sales bus diesel net of Bird level, were Importantly, as third last year. powered our At of than last leading $XXX million our and to gasoline by That’s and EBITDA volume XX% quarter our little year’s mix customers below a and this mentioned was total adjusted endorsement a lower quarter higher million products quarter $X.X average. gasoline XX% of $XX.X the diesel mixture was and new X% end plus year lower in almost in million below just

significant fuel Now not in government our by which on to experiencing by prior the earlier headwinds earnings imposed led we tariffs mentioned we anticipated were commodity prices call year. escalating our costs, that were related in the

you income quarter than $XX year was from million third than and a similarly per automotive that and income this and also however I As higher will just are which free same and on net GAAP basis year cash the million strong earnings for adjusted ago. is at share a ago later. diluted period the high improved Adjusted both higher were net quarter $XX year. Adjusted period flow a both per diluted last by of this specific the earnings industries same been profits last share primarily offset manufacturing little note a explain with issue the going compared our together no steel discuss higher year. to doubt It’s other prices, taken action with important aware, which specifics have to cost we’ve freight impacted lower forward,

firm backlog we now XXXX this line production margin quarter XXXX fourth full a time is through orders up so our XX% have our last sight of of our sales ahead, and over fiscal of is schedule from fiscal Looking and solid to year.

the year it record up nearly that sales. our industry’s from school prior last bus. of powered alternative-fuel bus make alternative-fuel best in sales strong with again selling That’s record once the for year total XX% growth double-digit predicting of are powered XX% We sales unit another

As powered staple natural a been of new as gas, compressed and gasoline years. these all all our our fuel electric in for all has alternative-fuels diesel reminder, buses, a which we of are propane, count alternatives of

for steel we discussed last in years, and down sales the achieving the unexpected mentioned action alternative-fuel third and that’s been taken earlier, year. not significant escalation impacted growth have as I we quarter. we’ve bus I this several Now address specific slowed the just have that to sudden price

now. me cover these let So

the cover steel. prices of we our increased in June bus in First, models all higher of to cost

our orders the a represents however, our there’s effect take for is this and for business before order lag as new course guaranteed – future are effect Now full protected of days. pipeline which backlog price XX

offset to limited. be fully our the quarter increases will third of steel Consequently action cost of the ability the seen our quarter was course impact in pricing fourth late apply recovery until XXXX. to within cost and So will fiscal this quarter

which previously well are initiatives the quarter, growth. our we’ve the Second, communicated we are as accelerating in also we underway first on off margin kicked transmission

significant see reducing made costs, we these progress we’ve quarter. margin on the will in hold taking While improvements procurement fourth

flow Importantly, outlook actions. full the presentation. of from in through substantially section year fiscal I will again will the these XXXX later touch of the benefit on this

we year As taking and effect. third pricing expect to and as quarter fourth and a profitability in impact see margins result reduction of on of our the the the our adverse quarter we earnings, are sudden full restore we guidance, improvements beyond cost lowering and economics in do actions

customers excited ride hour. and our on but of for recently We Let will were of NOx certification levels emits and their just one recorded buses already just five. of EPA our that leading offer. class grams significant operating one growth me CARB means per and competitive bus propane children achievements leader profitable the market achievements for achieved review NOx key our emissions report a parents. but and brake even level our now competitors NOx each of forward. propane support This who great tenth We our grams us horsepower have number X.X better. got X.X of the that’s at the the that emissions And news more engine make our we year-to-date slide our I’m to going

of low with of emission we including emissions the type the growing bus, type business. to leader powered segment broadest zero C So fastest in the be and in our market, continue the D vehicles electric the range undisputed

of quarter. electric Speaking new will week buses, our this line its production last bus and commence rolled up first electric deliveries

& offers public our our we’ve this response configurations for As today is a school to reminder, pilot all fall. great scheduled and next paintshop got D Type for the country, Construction than from automated electric our customers. and ride nationwide is a validation Type a improvements manufacture efficiency great we drives with are XX buses key across more feedback This bus the runs only and new school underway C in that well for year. customer initiative

I steel As and of cost fourth late earlier, hold relation take apply mentioned we fully quarter and escalation to this in XXXX. will in priced the recent prices recover tariff the fiscal

fiscal orders. slots total at against outlook. XXXX XXXX are a bookings fiscal relatively X% with now and Looking includes non-cancellable quarter backlog industry And production orders flat our in is position from a up our which the fourth to year are order a which be orders, full strong ago

Working a ago for industry same were improvements Blue driving few improve up we're our on XX% XX% experts, the the a that by what fuel are year was Blue fiscal less Just and Importantly, of X%. another engines this come; engines alternative and our That’s and delivers are than track nearly fueled bus anticipate with years quality, non-diesel substantial last Bird backlog year. we shows sells. time sales Bird and almost alternative that being transformational have bus from It for growth to we XXXX our cost powered fuel in plans efficiencies capacity. in alternative way XX% margins

cost for our and supporting significant expect and We growth XX% EBITDA the margin objective. towards fourth in continued margin plan margin savings our beyond quarter growth

are guidance fourth EBITDA our and the however, Despite headwinds recover steel results. escalation and of other the of we the third impact expect is We guidance commodities. in than full prices these quarter higher sudden year year’s fiscal adjusted quarter XXXX of results outcome slightly to a last reducing of

financial results take of now many through on. I Tighe on run later will let’s our results at slide So financial Phil detail closer second quarter and on in touched a earlier these these six. look

quarter, our lower total to and powered steel franchise to than decline. the So we units net a sales by summarize our nine quarter of the $XX.X us quarter adjusted a strong more total just hit X% explained impact in we buses. were the months economics net third by Part third increased third channel. sales and up saw mix of the the adjusted throughout offset sales was new third diesel ability last course year, higher up EBITDA the million, And XXX record we volume quarter. added Through quarter sales we’re within range than $X.X hard EBITDA of gasoline the product about had to third Type C parts first the and quarter were cost with dealer as million while and as were in down down year the of

sales Turning now to slide performance. look close our a alternative-fuel at take bus seven, let’s

are a on shows last X,XXX sales alternative-fuel year As XX% left full school over to buses our of we increase chart a record that’s on new the powered way around the year. achieving

year. of the expect sales of our mentioned XX% from mix up last earlier, we buses I As these of XX% total nearly

future are be term it powered growth. haven’t proven powered in districts fuel have alternative modern ROUSH and XX% and with with positioned at school We in XX% alternative We continue buses easy offer we bus of long bus share clear even fueled makes most exclusive Blue XX,XXX with purchased now about fleet alternative for grow segment with CleanTech of buses widest school well across powered our are running of the on leader engine on not fuel all engines, and school an fuel some certainly the Bird. in range alternative-fuel the for parts to to all less the industry market it growing fastest road and the country. the still purchased Ford the with customers with than alternative now partnership than more We our running

and total same having widely three for engine transformation the architecture, school lowest a or service it’s cost fleet and an and Propane operator. the natural easy green move in ownership engine. gasoline With a is gas across all propane, as recognized of market products, requirements a is districts compressed

NOx the contributed at X.X manufacturer formation smug. latest manufacturer’s that one of of want power one horse level. is tenth to CARB oxides for certification other the buses. These and nitrogen brake have gas for that, and other hour to tenth rain of Our is submissions EPA emissions repeat emitting acid grams or I

in another Bird Blue NOx level best the propane. choosing class of for is So reason great

some of seen anticipation calendar have Now growth, despite we in fiscal to past late purchases Act Air fund elected their XXXX our funding buses to of in targets that all Clean That the the from levels push replacement customers submissions. receiving Settlement buses months this NOx new diesel with school low of few propane VW, the year. emit Fund

powered perfect Our utilize is are electric choices in position no Propane we buses funds, are neutralizing one capitalize compressed to them. a natural or gas, these to

appreciate acquisition is Our readily and understood sales and really where concern low year. price with has also those start simplicity the machine weather gasoline really cold technicians extremely works customers diesel in running strong is engine key by point it this so propane. and shares it a It mechanics capability a price for who

D all new electric quarter. our orders C Type We Type buses with for this deliveries and are beginning taking

the the fuel very eight powered competitors school fuel buses As having school cleanest our in position. range buses next Bird a bus, of we is XX% times low tried in to on alternative combined all an of with and powered and broadest forward the NOx industry more beyond Blue still year than less the look than alternative road strong of customers

cover XXXX. a me turn the to will and at Over Phil. over first Tighe you, take it look to you fiscal guidance Phil be financials, fiscal back who now later and then I’ll the through Let to outlook XXXX

Phil Tighe

of the of summary the financial third you Thank our hit a next some bit and you, slides highlights with time quarter. The everyone. data. Phil of little already afternoon performance few a for Phil. we’ll has spend some Good for are

appendix our out based would on it in factors encourage XX-Q the We the is Detailed changes material the reconciliations period critical point fiscal in the important XX-K. for today available discussing filed. policies previously and XX, GAAP been there and year of XXXX measures available XX-Q The disclaimers. I XXXX. unchanged has as filed is information close as read the well is we and July to important and fiscal with in year X, between deals that risk non-GAAP no as the disclosures our XXXX you material June and in are XXXX are from which are for Additional the contains.

results of XXXX. at take nine. actual summarizes now low slide results a quarter and Let's our slide third a same period the This for shown summary of the on

We that results, highlight there XXXX seasonality that also business and included as some second of from of we in progress year that in important and quarter points are areas. fiscal some draw you importance to can about the key believe

bus Looking XX% production the XXXX quarter in XXX full the talked of in fact units and generally at third to seasonal that school the of units highly talked less for second volume previously from the over down you the XXXX already can about third volume record the see and units. Phil this, quarter half has first versus was nature in than volume a quarter, XXXX. about so year, growth the achieved the about sales of business We've is

volumes will be quarter XX% than in fourth the the Phil vehicles, expect mentioned, the and higher achieved we're We about similar fuel XX% about as third fourth for year. the fuel looking year. in quarter volume the alternative our last Alternative full for and accounted period quarter of at to third level

or announcing buses – on delivery factors; to in first about is is is a that revenue revenue mentioned the happy I X%, substantial part volume slide $XX one be prior we're Net decline as really fourth electric lower quarter. will making two its down to the very is [ph] attribute decline. also of be which the by million of We think we that the

their in very who due is in of is the and The and changes price quarter other contributed bus a to market is C also that with revenue. sold. We quarter had are we and partly for primarily is which the in very the mix decline per also price Type unit people diesel acquisition buses gasoline strong very revenue market which in great a we're to lowest bus minded strong average lower products third

would thing hit for But quarter. point XX.X% up It year. X.X it XX%. where almost So, It gross points the two to. was below about was another versus is margin by second the importantly down like was to we points I last quarter

see quarter in in the costs, improving second improvement Commodity second in the reduction about has versus quarter fourth the you in see could are So we as the Phil quarter. – majority for the talked margin. third we'll and further were of reasons

and steel roll, that's of Our versus XX% half second cold prices buy prior cold the roll the year. majority is about we the up steel of were

of term major we a factor see reduction steel our beginning While in XXXX. continues outlook, for in to the long to be the balance are profits some

Material a substantially continue of higher shortage discussed is to addition diesel freight In impact, The ratio we cost, last freight for that third commodity experience we same reports. economics to in deteriorated about almost something year. compared costs in up and which are would've time two the up total the margin last the inbound are to Freight same due points and by our our margin as year. freight high Blue to combined Bird's costs, been prior Absent costs quarter. in two this about drivers. XX%

cost production prices but fourth through significant coming These with fiscal some range had reduce to again sticking cost are increases In pricing starting XXXX and for in production. major experienced, advance we we a in help they discussed Phil see XXXX. to orders implemented to until improvement has they And Phil and on broad unchanged, our we're than predicted deliver actions that the not would. will due profits late offset of the had see to in explained contribution locked quarter of are June, plans our what we that pricing margins. we year fiscal ongoing as a firm the of year are are working a you'll impact in we As improve them where

small As operational transformation the margin previously in initiative from benefits our first provided the offset half. initially reductions discussed to a

expect quarter already third Net but have I in and we progress make covered and quarter initiative to the in income, substantial beyond. on a we've to more continue fourth margins impact We at was was dilutive despite the last lower year is $X.XX adjusted EBITDA million, last share versus up $X.X $XX.X year. by it than about and earnings better at million think that per $X.XX

the tax accounted costs. and caused and XXXX EBITDA always heard CapEx million new obviously cash, and volumes of we so due result also third that units This $X million the in favorable year profit down treatments a Type the things in driven year and items and XXXX Debt profit more quarter. the is than all and an adjusted about and talk slide, the period by of year go $XX.X again XXXX, diesel to primary that spending was the versus we in of all relevant out on production less are a the to experience the buses. same Gross by higher and of please net by down two the the EBITDA bus prior to from business. in quarter and putting $X cost cash facility XXXX on mix the was can If Our of for the that quarter adjusted basis, you've were was some second third by other support $X large in you see gross to lower mix million driver note compared slide. plant. that this the important, reductions to shop quarter period, change fiscal year next upgrades that our also million with to in we quarter debt about C to higher million higher pointing in income the We'll the of the we down in And $X net really Debt increase was by about the bridge $X XXX the cash. in that, closed the between can this reduced attributes was fiscal works seasonalities this million freight. margin big about the previously to was the deterioration period doing last for paint the offsetting volume material and in

rapid So offset be the taking the as year as XXXX. impact to in achieved in although cannot that as clear for full the third the actions we concerns major higher much can [Indiscernible] the is really quarter We're aggressive us. in of balance cost it offset the off full -- of

to prices This months. a domestic bank slide, On of downward at XX%, may with of can point freight the out roll on hot roll see I freight, what's next ton for is and XX% hot $XXX XX%. forward roll is and we start is that cold a moment. XX roll the hot it months appears showing indictor, steel would think Midwest with – uncertainty is turns, brief slide about of – about lot a actually reduction see XX can up happened that graphic still don’t maybe although actually and up starting there's XX that of about steel some a then the the promising about I around you we

actions. taking summarize that really three we're So just significant again I'll

mentioned, pricing we've in As already Phil implemented June.

quarter, will it the see substantially this XXXX. in fourth small of impact that in impact but fiscal will year We

logistics or less this of difficult capacity without with respect prices freight, being actions With and to options, will and we generally taking are at of to to ahead are a cost identify lower levers on it fuel the although transformational working to time. present considering at reduction offset to some we scope to to we pull added We are that expensive also resource suppliers initiative to expansion its areas steam structure our key improve magnitude other increase obviously routes. cost suppliers program in our more whatever and full working can

XXXX obvious not On to outlook the please got something in our we talk we read projections. update something three an of one on slide that useful, for this to only we XX, but XXXX. that committing the provide the to next that fourth that fourth slide reasons would given but to we've quarter don't This quarter typically calls, indication regularly at is it it quarter is months we're was thought for go, which as an

be have to total fourth year, you backlog seem have quarter so visibility does Volume of As be better problem now up to mix last a for that we the on will project for can and around million than will see firm fairly us. right year. bookings hand remind $X and you we would I this that. be balance and parts the not

closer been XX, looking great our million economics, for free strong $XX.X than at quarter and the the taking You at number if million CapEx for All million a we've hard adjusted for it were fourth we can now transformational of part cash favorable the hit of offset a I flow is Bird. in the see see And serious our for more you would cash Other take starting had unexpected have lower quarter. and free $XX is flow. and the at trade We which cost The and the flow. hold. that We're the include to free initiative Blue continues it by fourth working million to recently slide cost called much higher flow other maintain economics; also $X free guess economics expenses. finally fourth $XX.X a which about adjusted to outlook which looking cash reduce $XX profits EBITDA next capital impact cash and out year-over-year. be important result year of a to large that for quarter to lot quarter initiatives I'll us you about a to been that does is move would of million slide bit took obviously have last which

the to long-term support final the achieve to debt we're net The and for substantial greater even our $XXX.X leverage allow X.X cash. of $XX no quarter to quarter stood net substantially leverage. shareholders. drawings us targets million is better This the second debt making at of about a of create Our slide end level of strength profits result at and quarter. ratio Net better the at of is the me third The generation XXX the that X.XX. stood our and at value than the was million including one there end was of then second below XX.X $XX.X the required for million in million, million the at end cash than Liquidity on looks the continues changes liquidity revolver.

for thank balance you will to attention. turn So your for Phil, back about outlook will now XXXX. who talk our of I you the

Phil Tighe

Well, Phil. thanks Okay.

So let's year focus on outlook guidance. the our and now full

XX. to Let's turn slide

anticipate mentioned start I the at XX,XXX the or presentation about we another stronger units did do of As industry, today, slightly higher.

is this right now. again operating XX-year in we're So [ph] business high

little above we said, good are. to Blue Bird That industry in we the bit range sales growth just we about be really the feel where X% expect So growth.

So that's as a to well strong be in. position

Second EBITDA be but margins half adjusted in lower quarter. the half expected better first the than than will third

forecasting margin recovery you Phil pricing reductions cost in talked the and fourth cost about. is quarter late from that in which We we that quarter, bridge showed are recovery

X% doing, of structure and a is here on this set of you sort adjusted and year, focus cost Now of as to We this our last on our series we're business transforming goal much really on X% product know, a efficiency, our year. next fiscal very EBITDA this upgrade capacity actions, margin transforming focus our operations. year early quality, XXXX up but had is multiyear from

we account for the what quarter that's third is margin. While one year the full about commodities about, the see escalating impact to EBITDA also that in we'll another that be and talked of through fourth, point prices

And full so for around to the we year. expect be now again X%

again, look steel full would the for really been increases they margin commodity we're economics you along EBITDA about saw happen, year. don't with you the [Indiscernible] through have we some other that if X% So, unanticipated

X% looking we're reason one at again. the that's again down and So

as range in importantly taken to the exit we towards try the well position the of next XX% the cost to as However, year, create and value. have shareholder years. grow and margin you the on know we coming EBITDA extremely desire year actions pricing us we to margins XX% And finally reduction

you're announced programs we approved sure to premium this initiated in stock to market. I'm tender that offer aware $XX past year, a has I'm repurchase Directors million to our shares the two while Board all As fact at repurchase pleased of

We expect to this at mid-September time. tender in release further initiate offer we'll that and details

let's XXXX into fiscal now XX. So turn on slide guidance

net have we've raise a First, billion our $XX lowered about that $X.XX to between million billion, of to less guidance $X.XX previously. we sales

flow to fiscal reflecting despite strong Phil outlook. Adjusted upgrade investments $XX the cash EBITDA low cash XX% between to as to from of $XX million. flow million we're continues XX% mentioned, adjusted in significant of to Our XXXX making free we guidance guidance headwinds million representing a now Adjusted $XX model XXXX. half, second feature of the fiscal our free results increase business EBITDA is $XX a that’s a million a is but between $XX now of in profit adjusted it slight plant to million $XX facility saw commodity million despite is down our be prior

slide our fourth guidance shows XXXX. Now forecast revise our the consistent showed between bridge and for quarter XXXX and with in Phil the

in record make outlook recover a over third point the the quarter. profit think quarters is fall from we I the looked here decade saw to expect for as we've profit I past we is volume short and fourth want back to

and we're initiated taking cost already we're taking already planned and actions quarter. are pricing you actually recovery know, As actions, fourth they in the

slide fiscal at take XX. initial an XXXX let's So now on look

in key and fiscal look profitability margins expect As outlook, XXXX we overall areas. gross to from we profit high three XXXX

XXXX. pricing fiscal quarter. First, effect took the This recovery lat impact that in and annual a significant we affect will the have of full annual in cost fourth

we we year in year facility in Second, two. depict making are that this, reduction of the and or just second XXXX. this The improvements impact cost a And slide of implemented following cover in initiatives margin late drive XXXX. fiscal will third, and the efficiency that full transformational increase improvement manufacturing help planned I'll the process to will the significance

expect fiscal fiscal in communicated And of on plus our towards by to target XXXX. next financial part previously call be We December. for earnings we'll our XX% EBITDA XXXX margin XXXX the at guidance fiscal goal glide provide

to So how It’s reduce that reduction will fiscal costs. see I our it XX, rate XXXX actions cost our we to to transformational run XXXX should can let's but turn with begin in impact see simple fairly to savings you a XXXX. now fiscal be from think taken slide existing significant we've slide already

In XXXX. fact, the we effect as those at about rate savings run twice its to of the level we in saw actions, look

this a we've XXXX improvement significant will details we But So guidance still in look capitalize again the next are and year. discuss at we'll margin and well-positioned through flow when of provide savings December. to fiscal more we done work to that is good we XXXX these this as year

So let XX. up the me slide presentation on now wrap

within clear First, quarter that sudden itself. by steel that fiscal XXXX recover prices profits third those escalation ability was little to its the third in and the quarter significantly impacted

quarter. the However we've be and margins to the economics of to in fourth taken address results impact and higher specific actions we restored expect

You in analysis saw when that earlier. the showed you bridge Phil

and alternative operational in fuel our many buses, is our leadership which cash free of model. have a also school positive business initiatives We track on transformational underway our and powered feature strong including flow

quarter a to to market That shareholder each other mid back Thank session. you. share on our the includes guidance late moderator profitable we did in fiscal and XXXX benefit plus margin support of are growth and as value to tender expect $XX it and I EBITDA fiscal pleased finally for premium fiscal XXXX XXXX providing to September XXXX we earlier well-positioned a as shareholder XX% initiative I on these rate that this pass our to our goal to formal begin we we and offer expect Instructions]. took run Q&A continue [Operator with announce profitable launch by we're another million we repurchase objective to our the our now from to are a We actions by update growth price. in the initiatives. presentation. committed will of progress and you Yolanda

Koranda ahead. Our from first come Capital. will question with Roth Please Matt go

Matt Koranda

of just get guys a timing to for increases mentioned. you Hey that I afternoon. price the sense the good wanted

I give of guess of the they said put bit little of a and through was how in the just that in form more terms those increases of in the the of sort think June took vehicle could magnitude you terms color more but price it was I transpired. little a he sort first surcharges; detail

Phil Horlock

was pretty mean about want about to we basis we I talk specifically the, to to on unit want say talk specifics per significant. Yes. a needless but don't it pricing on well

through you through our can the put we we where look put all pretty think customers that. the our that short of we get bridge in with but on at Matt you steel significant all fell the account to price a that I of surcharge June a impression amount dealers, for

we our So we of got took under products. we've across of literally put for surcharge standard vehicle all prices all our single every

are we recognize because timeline earlier As have have to we we I do big in business. a mentioned this

out school the bids there takes boards have XX them ballot for to time. [indiscernible] get to It approved. to go days, We

and similarly months protective. of several are future which backlog price honor those commitments orders are So in out we the

the we've dealers. dealers understand see they it, of impact basically our So real it that we price but to of about our our to model that's about and before it's fourth there's for full right a relate timeline month the like quarter I in on now it's and and three talked pricing impact look I the that all said

Matt Koranda

you I ahead for could I this sense through assuming a discussion guess it had So -- mean when I'm help I we've just P&L? flows steel how think then And with your Okay. what us you steel before So bus far a into just how buy head, today. but can't It my you at are goes steel? top the point at buying recall time? I of in

Phil Horlock

generally our bus the being built. Matt in because say little we buy. earlier come actually for do comes than our we two raw material weeks Steel may that that in prior a let's to fabrication steel

advance three to weeks look actual that the in in could you of So coming vendor-supplied two at potentially commodity.

moment advantage a we might some for about Probably of the in raw price six be largely do and where the a is Some take ever the steel. more do try on the from some and and That point our a at than the market steel. be those further we pre-buys of we get major month will time. deals on that months. suppliers factor step We can go can

Matt Koranda

in was kind of you sort maybe just picking the there and if of late of of it you guess had guys commodity little trying for mean you the out and put Okay at what to up out just price I'm bids the pricing before last like seem as or at toward expire sort of last wait was had got it. wait is you even get earlier had you could so with it to indices guys year I increases this see to look a a – sort you the rolled you year that steel I'm factor year. of surprising to end a bunch had of to like confused to you it year why visibility it through? June into I those can earlier this

Phil Horlock

Yes. I right That's and fairly really prices factors spots was the the of I the that steel steel tariffs. increase close rapid surprise the price announcement the all producers their up this in when driven point. year it two different versus to was happened and run of the domestic mean guess

add prices where to our going a the on So issue going we industry. something time was to Once us this adjustments conclusions was took where we you The increase one. your own little into pricing then to more saw cost we because subsequently wanted thought a for and go be exactly the different. out draw long-term of confusion that we lot initially not to we was what make and is understand steel

steel we understood where So actually prior it. made deal how to settling once was decision dealers it out announcing the we in what with we and to sure our meetings we to June that make and a understood thought with of they all coming of round was through went

see bit us time a cover price for and but we largely us us of future. that in what out put versus increase think I which there little where a stand took good So we've steel the will stead done is we've

there's that assuming that's no going forward. major in dislocation other steel course, Of

real a downward in or just trend don't a the As seeing noise I that's of moment. the are future. I the future, bit said know just XX-month at we whether

Phil Tighe

other have benefits price I about think before the you've as mean this I of actually sure I the RVs, carry industries mentioned price all dealers trucks they're impact those sell school got besides steel same some of may They and specialist lines all all our on and you fire increases I'm seen equipment, automotive guys of our agricultural, other increases. buses. talked or all product GM also pressing

we by past this thing we've not the have unusual because to in It's something and same do to way previously as out surcharge appropriate before a technique. as done done So it's now. it the we do well have taken

Matt Koranda

following or then there And does little about of we the competitively just you competitors this guys some suit out how sort about it. could I are think processes mean any competitive of going Got you're a bit sort you of for should maybe competitive environment way the that? bid and impact talk in – when

Phil Horlock

customers with We are into are business I in and end or and is end dealers. line my with all that's business competitors dealer surcharge doing body – are buses difficult. We our dealers – I I really exactly don't deal is the doing really the their through what of site they're the customers customer; our onto really sell deal our the our dealers know. you it's really get that, don't I role. with don't XX% the turn there I of what can't though tell will other most to pass dealers. our of our

are we they appropriate. of passing value So where say I've give orders have it. we're as felt and we've they and to was holding now right have doing. they now have the been at right dealers thing we're do that certainly we're strong we to on where feel is selling and say job – do very I the and would out what right accepted can and about looking so the it have products going been we I'd and our continue backlog always the own

Matt Koranda

sense EBITDA break adjusted provided at if a XX mean guys one most wanted of for I'm mean all trying look Okay. we the I other looks category QX me the the pricing just out sort in Last the get you on it in it's like XX guys a actually just have. could million the of that you of in one that I sort get for that I immediate you other mean that of for thanks just and terms levers to to positives sense Slide

Phil Horlock

progression the agreements year inventory much many first really we new end in always to into the of of little in is the it's say little pricing. the came think want any this with towards to talked going – bit of that stride We our of before pricing. and This and too fundamentally our Very not knew just about if initiative a be in through activity of I Matt there we suppliers new mixture half it you that. the we about little very and was and much the cost work various that transformational the quarter the place. hit was too a as the a reduction of will think fourth

So that's increase where the we from. of coming part see a cost large

that we increases of where given cost the take would other However, did lot actions between reducing areas. we gap a spending take saw effect other pricing in and the in

Matt Koranda

Thanks. jump I'll Thanks. in queue. back

Phil Horlock

Matt. Thanks

Operator

Thank you.

from Please Our next question will come Stein go with Craig-Hallum. Eric ahead.

Eric Stein

everyone. Hi

maybe fuels of how just on XX% quarter you've the given and start alternative sales that that new or and of just is was head gasoline your customers and for only propane in it into were XX% your electric can to and your of and I'm the commentary if year-to-date market. got that big much the curious the but not we you So dig mentioned I'm sure sales for bus

Phil Horlock

good the to a right. come little me let think same a I've mean differently I the we lumpy stuff before don't look and give year that run question business exactly orders can which quarter and can that background mean our we're at on out to go Yes. they to are find and I business, looking question Customer their always a That's I where do sort talking where this said come strengths They you so in every when year. the to so at business of trying time strengths on so deals play are quarter these sales obviously just customer. for for they was in new the we end of is

have got w know we So hands into network. dealer through our customers

to we in a So -- chunk it – gasoline we of big customers was actually when in new Bird Blue we majority propane. those diesel to the new in a about of customers sort terms area the grew in extent who in of of were total in grew XX% gasoline we're and and I were propane, said lesser the in diesel in a say impact grew are you'd come gasoline, less we

for is propane too a seen months the high I've that have think those four very-very VW or little to Propane touched on bit funds. monies point we of I that I wanted coming five last agenda available. getting in that on the aware stakes make are utilizing

with and my the me and the instead it know fleet it I'll So for gasoline they products. I that's and are VW expert till diesel pushing with say wait well up I get because money don't deal

propane. Although for lesser propane extent it's on some say conquests the saw I'd of that the year we was largely excellent and gasoline a diesel but third been an and to

Eric Stein

that's that I and push anticipated the how mix just of XX% year out the it to this the propane alternative thoughts mean that your out and my funding curious question to will buys? mean fact be next are fuels that segue a Got impressive VW number by any pushing guess on good limited I fiscal people there. be I much

Phil Horlock

the gasoline fact product good funding the the think that a say I we're in finally in think some included funding. I some gasoline VW is do here though would on line-of-sight the position. I availability. getting Well, mentioned I we're VW not

gas on that been vehicles states school and with and the our actually a we a a we compressed for our we really with active as lot I state put buses the our and and this us the get electric entities and team being closely working working plan with stories. at dealers, natural the propane very it's and who to have here them into out go opportunity – district, and there, very yes telling our money So we've think been working decide put looking have that great they but we have – key have certainly

[indiscernible] excited I enter we the think other for as electric this we're So do fiscal And actually. ‘XX particularly about propane. for

Eric Stein

it. Got

Phil Horlock

Okay.

Eric Stein

there know are job the really similar Maybe one was Phil more big me in any little scope large on last are impact and additional say of steps initiatives. one mean I operational the for to other the broad-based any just or things but XX paint when early that instance? in there comes I you that'll have a would those scope that paint anything for if a – on I the potentially expand you don't big are know in and I steps there? shop can that mentioned you share know

Phil Horlock

Eric. of areas forward. plant some initiatives a pay lot Nothing some may where we We're significantly the hard the a can bus look going paint looking at improve also redesign dividends efficiency the taking the of job and workflow. at of which We're size existing of

we that excited a it. from we to lot things whole off until fiscal have kicked in the won't and are XX these about So see but fairly team's later these year

Eric Stein

lot. a Thanks it. Got

Phil Horlock

Okay thank you.

Operator

Thank you.

come Please next Securities. question Our ahead. will go from with Chris CJS Moore

Chris Moore

Can on bit little that? a Yes. Thanks guys. little benefit. detail on just a bit just talk to you Maybe the tax

Phil Horlock

technical. cover in actions. XX-Q I of you are we quite is a chance because fairly detail you it a range that There lot think when a get in it of Chris the

of we the uncertain we was balance advised been working did in of that's a consultants ones and a sheet part could with that our we've and fairly tax that an the have provision large large One that so release auditors reduction.

now one-timer a a but for it go. ready and we really news So it's it bad years let couple of the to ago we're took

Chris Moore

Got it.

talked all The of million about you terms the those of some had Okay. initiatives. that other XX in

that bit of lower the structure? things a is to to kind belt of what trying understand pricing. the much transformational, I'm is you're tightening cost that one-time I just how little is some guess of kind of short-term Some is reduction spending

Phil Horlock

if the of exactly. it take Phil actually I any [indiscernible] purpose you if Small Slide way on look that that. you didn't Chris and which I go part a is presented at mean look numbers include at XX

Chris Moore

question. ahead. was my that Exactly next Go

Phil Horlock

if I'm box But large see XX. jump especially of there's fairly which fiscal you're a not you going good size into can year the that in

a and getting portion would only I should XX. benefit we're contribution fiscal a it XX, doing suggest large to the that fourth in of what quarter year stuff expect of fiscal in year of rather of you all is see the So the we're

Phil Tighe

call mean Phil bit with in September. just I one mean about was Yes. of the that there I portion timer very asked small for the late we I what mean you a but mean a these clear made little I price year million you saw I is demands XX only in absolutely in right. the

really that's So date to now by pushed after June period. the

efficiencies earlier on plan. bolt full talked believe to we've stuff business and got a sustainable next you we with got So as other terrific the That's that year then to team transformational got working we in year increase mentioned is have bulk of well effect will as and year. that and we into this that. do that hard trying got we is call that out it the earlier We've we're run and of cost the initiatives full that year get a and this we next to we why all we've of on

the coming year really up it's good outlook. we can this by launch I have that of So into we're now ‘XX. ramp mean this end all really together excited the one ‘XX a

Chris Moore

guys Alright it. Got appreciate it.

Let in me line. jump back

Operator

next ahead. you. Please Instructions]. with Michael to Stifel. go We'll Thank Baudendistel go [Operator Mike

Mike Baudendistel

think ask just sounds year next EBITDA like progress cost XX more made maybe that at any the you're in going expecting versus neighborhood XX I'm there's less to to is margin in for somewhere X% two least the if the I that? in am about sounds wanted you. the you like on adjusted there and on it I expecting or adjust margin in that input Thank EBITDA and of XXX your the it X% you're the years comments be basis right and you mean points reason to and next

Phil Tighe

Yes.

know are because still to it's a drop it but model I on that's little X% the and not get that certainly we You before give to Mike actions X% right with a difficulty year ready here to guidance it's fair tell always budget of say bit to do fair I'm to to certainly working to it be we north XXXX. XXXX the adjusted going somewhere we're look would with you taken be we've obviously XX% now this a by

you bit that have I direction where. So wait it a the what you're but right you in put on do think to out little

Mike. what good think you're thinking I is

Mike Baudendistel

a Okay difference range mean reasonably I the it's XX would and what then XX to XX? between related XX and to range. of that the by be XXXX pretty wide

Phil Horlock

to more I is our think I XX term. say XX long

it's going. keep want I mean plus it, don't to think to want are I by to We I like we we've get XX% and XXXX we XXXX great. say mean not we stop. done

We are whole.

XXXX how to next think XX I and years we what plus want in keep will that XX% to away for be from we the growing want just obviously say is and level beyond certainly XX bogey our to XXXX couple to a get longer-term. from and

Mike Baudendistel

with Got customers for any make the budgeted? the would wanted buses just that fewer all so buying make see increase has you you it. That at elasticity there's ask sense. there prices been only in much to up And

Phil Horlock

been year I I mean good seen haven't that here we it's really think No. a everybody. solid for

well really gone and us – has for industry Our

Phil Tighe

we I would drop-off haven't Phil outlook seen [indiscernible] anywhere think we -- order mentioned forward any based seen the bid. on where the lost well haven't

Phil Horlock

No.

Mike Baudendistel

and so annual on to freight much of give us you spend Got ballpark you is sort in can freight I want your figure a it. that good. of we how It's that put just ask costs also the perspective. can

Phil Horlock

running freight excessive a year Mike. it's that. is $XX in like something This inbound And typically million

Mike Baudendistel

the Okay. a Got me sort there? your deal do is on relationship has I you it a what four your competitive with to electric [indiscernible] access your drafts such and similar one or partner of then relationship it from exclusive mean for partner is have been that mean I last just competitors the

Phil Horlock

partner that about in I Cummins. we saw excited with EDI they've recently our partners is this even event No have use on been acquired one technology in we're fact you exclusive our what don't know I'm that by

time, move a the I've and Cummins about already and a it week an Cummins Cummins on to They've and but exclusive owns that product got excited yeah period now met partnership and last strengthen talk yes. our EDI it's about us have we're backbone we of with it's that because great of really for So gives technology.

Mike Baudendistel

very good. Sounds much. Thanks

Phil Horlock

Thank you.

Operator

you. Thank

Our with Advisers. Scott next Blumenthal ahead. question Emerald Please comes from go

Scott Blumenthal

my Good afternoon for taking gentlemen. Thank you question.

Phil Horlock

Hi Scott.

Scott Blumenthal

either Phil this. Phil could answer

of same point. pretty thing visibility have what lower wondering good I the seeing the think QX since you a that pretty but that gas little explained in also was into little diesel QX. guide price because came may bit sales and I which the is be the well lowered QX and mix in your guide and of least a QX mentioned steel lowering you you issue was higher in top-line there a have if you of

Phil Horlock

mix No and it I were We quarter is I think the before by think – [indiscernible] I'd the of We lower yes quite say of amount gasoline was resolved a diesel. gasoline a think actually was revenue. was I I mean definitely terrific. richer just surprised third

got sight close the as out saw prudent – we to yearend of our only was if prudent got line looks the look we they getting have So which quarter we narrow now to look to pretty fourth we it guidance. specially we're

on but was low saw revenue year-over-year look we the down drop average due down the the impact still of you when point so the but in third to saw kept off largely $XX at million it quarter. as see could we we just sort and we it came we're the So top you the you narrowed

So to quarter. do about more to prudent strong. Fourth be quarter typical think It's it was going is I that.

quarter bit revenue but the down narrow to down. – fourth good was I really it be The just I the the mix fall looks good prudent It pretty us. that's and strong is it'll looks take quarter think the we in range good. little it a for propane think year find

Scott Blumenthal

deliver you mention line we Okay a deliver that and this or a the fair some quarter. off bus saw may recently you – Do And you enough. roll saw couple the of in of first to expect did electric deliver those the even fourth week handful those that – or saw

Phil Horlock

Yes.

that lined delivery the will we and event and was excited are for got We hundred support several got is are yes first one all ground that our California-based. up a was customers and for mean several [indiscernible] in quarter. deliver I there us not partner will and and the several mean out fourth but several nice more in [indiscernible] about California. we some have so the I it they is we've

Scott Blumenthal

XXXX talked be bit push little about enough XXXX you Fair then is and suspect that VW out great. which that and I would a That's into the pushing pushing Okay. into customers also customers pricing.

orders then out increases? price at a that So due benefit customers price higher to is your up actually derive getting pushed from end a those it then the are possible booking going that those you may to and fact

Phil Horlock

at we've tariff mean feel now it's got little range product I of stress from way the on Yes the to got that we I to have really mean you're fine that bit I feel buses good will too the it to VW point mean and good say the a great do money. I in that move about we've but the I I going the and think look good made when really will be just pricing funds. a prior steel VW change got we I a that's the for a do want I the obviously access to call they think point it. up for prices on I bought raised. it's I think us system mean I I [indiscernible] I price

best partner. propane CleanTech mean have ROUSH a the We mile and with partners terrific by on Ford I

we cloud We product and with guys commons XXXX. shape now electric in the on just have EDI great been are that the too. and great the those behind think of We're power since I position in

a and where in are right so like we're think good now really dealers. we do position. I We our So

Scott Blumenthal

of And of to visibility impact you bulk really that a money. said that expect When decent pretty some some you to that the start you had into kind of do your orders?

Phil Horlock

of -- amount like of sort looks orders I second minimal It coming free just out money think the some they've of it over start it's November/December. it's get probably we'll can to next people through mainly year through and got year all it the quarter because coming I see they apply in several when see and the then years. this

– later on the are good and is calendar zero prices, guys or two made funds to the vehicle obviously [indiscernible] we what emissions who why So money, are use we our looks than I to you but of to level for it little of to organizing point all some can are I a paying decide emissions great level real take it in the determines going use are is expected a well the on and an The thing bus differently varies propane how discounts line. differently; are it. Everybody start electric faster and it available all of shape doing the for are of against giving years like some year. how which that's these and by that three is entire the them are it now end grants think see [indiscernible] vehicle we'll on big they're smaller utilize metric

a November/ some start it'll XX December January few maybe I but we and of XX, in onward. start think interest of year will then really the So up in calendar the get next pick

Scott Blumenthal

Okay.

orders for We those are deliveries talking about those. for not

Phil Horlock

Yes talking orders. we are about Yes.

Scott Blumenthal

be I Phil of said the will in full clarification in XXXX. his comments not that think prices one just and achieved Tighe Okay steel offset

that Is meant correct. he think I XX?

Phil Tighe

think I mean XX Scott. I

Scott Blumenthal

you think XX mean I Thank too. you.

Phil Tighe

letting clarify Thanks it. for picking and me that up

Scott Blumenthal

Okay. Thank you.

Phil Horlock

Okay. Thanks Scott.

Operator

closing over additional session or our conclude That Horlock will the now Phil remarks. turn would like conference back question-and-answer for any today. I to to for

Phil Horlock

focused future. and your contact joining believe and for thank on Relations Head us to us follow-up Mark on again deliver commitments. continued was positioned Blue once we day. We of you intend on any from are do of to our all Investor and are you growth not into questions growth the Please in Bird profitable today. Benfield and the well of you our I all that have I have a hesitate appreciate Blue great thanks Well realize call today to hope thanks do Yolanda Bird. we should at we interest

Operator

Again for today's you Thank that conclude will conference. joining. all

disconnect. now may You

Blue Bird (BLBD) 12 Aug 182018 Q2 Earnings call transcript