BLBD - Earnings call transcript Q2 2020

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Operator

Good day everyone and welcome to the Blue Bird Corporation Fiscal 2020 Second Quarter Earnings Conference Call.

As a reminder, today’s conference is being recorded.

At this time, I'd like to turn the conference over to Mr. Mark Benfield, Executive Director of Profitability & Investor Relations. Please go ahead, sir.

Mark Benfield

call tab. on our the websiteblue-bird.com for Relations Investor audio is our webcast under The

access supporting IR can the You the presentations clicking website portion on by of our landing slides page. on our

may update among the include earnings forward-looking to release our any information materially are risks to Our comments SEC. we this disclaims call. cause risks have obligation statements results include, today actual Those latest with Blue matters in subject Bird and that the to filings that others, different. in be noted

This Phil afternoon, questions. Tighe. will you'll and hear from Blue some Horlock; Then Bird’s President take CEO, Phil and CFO, we

Let's get started. Phil?

Phil Horlock

Well, our thanks, you for second thank quarter and earnings fiscal good Mark. afternoon, call everyone today for joining us for Well, XXXX.

I not is introduction grow state in But a presentation, position clearly January, to continue Before our assess changed to long our let in and into would on are to A I times. quarter pandemic I brief will lot has first and just today. unprecedented run. positioned since this the give well the me how normal or call like earnings these Bird thrive Blue that weather jump

very ample position financial a with in We're strong liquidity.

any a history and handling growth a difficult times. culture a cash these record has growing results delivering of team change track factors. of an winning of have with in robust experienced fully and leadership We strategy, of multi generation, segments, defined a not proven COVID-XX

quarter you will we As great shortly a result. see had second

being mid-March shelter-in-place the Canada. from All has not anyone. throughout third the this since U.S. last be quarter and schools year and expect volume has established and down We will mandates slowed surprised closed

bus staff. reopen see transportation higher we expect school states production of work, in new to teams as return increase school quarter fourth with to support and orders However,

business past of We profit fundamentals, in consecutive our year-over-year seven by as the growth strong evidenced quarters. have each

we measure, as decisively acted and credit secure taken chain. austerity We increased revolving our our employees insurance cash. have an to We protect preserve and facility to swiftly supply measures to our and

buses build customers to continue time. our to and on we So deliver

like I'd impacted dedication are over our to we to special control. every not thanks weeks. coronavirus and daily about and has incredible aspect own uncertainties, their making particular, Bird In a lives, which the of all limited facing employees to past commitment The for almost give all in several and Blue have our personal our we

outstanding to that Despite and challenges, these had we morale the unprecedented will the buses been healthy. Bird's and proud stay Blue do our and deliver positive keep children so and business I for of team company ensuring safe attitude of open our

look on our with So X the take business. that let's of introduction, a and closer at Slide move to state

state financial As are substantial strong growth We in uncertainties says, the volume facing. the and our despite company we the in quarter all headline of outlook, we business sales. in results the are our a have do second and confident net with

mix mix with fuel results delivered selling three-pronged done structural reducing as the Importantly, it once and combination again for higher alternative transformation which namely quarter, our the record a was annual a cost economics, from has profit two alternative fuels for ongoing our past strategy, our pricing costs initiatives, years. savings this growing growth was average price higher pricing than quarter. reflected priced buses, a richer and a powered year-ago, new second Together X% of of over

site Despite is fact to took increasing growing address based. In the concerns employees. second body middle had among no production our Georgia, half over cases of coronavirus of decisive confirmed March, the where whole action employee the our we we COVID-XX number in cases

the their in decision weeks We production the week March. being took to are down operations. forced Additionally, of commencing last for since several of suspend our to suppliers shut three

benefits unemployment them parts distribution assisted we and our full and Georgia classification state XXth. We were where this to as Ohio, during an production are restart center Operational employees and located both business in furloughed and essential were on April applying in period. is in achieving successful federal we the able

measures can revolver through instituted employee work infection I morale time. and will strict of being we plant, to ample back enthusiasm $XXX the $XXX the we the control you have this cover from million later. uncertain increased month, tell in now liquidity Early million outstanding. which to of manage and our risk We’ve been has to employee to I brand this capacity

reductions. implemented also limiting cash, a preserve of capital significant number including virtually measures austerity We and to SG&A expenditures, travel eliminating

and have actions, now As we region of working through July business September. consequence on quarter slots [indiscernible] filled now covering up our are a continuity fourth filling

and surprisingly, to should not come widespread. present shelter-in-place as Since not COVID-XX the impact. year, orders has have for seen buses market lower prior in at mid-March, Turning the had rate being being surprise a which schools closed an industry we anyone. school mandates general, than The in to incoming outlook a

work of industry Nevertheless, unlikely that XX,XXX buses, demand order the to level of XX% between states XX% prior the forecast. believe the it full-year forecast that prior buses supported we the employees will Our staff new industry as views XX,XXX and and will of rates June to return buses the school significant. dealer by or XX,XXX anticipate for will transportation through school to and our increase be is expectation recover the network reopen for below an to

at rate over uncertainty pandemic. the as expect our way some of for that by line, this to staff we But withdraw XXXX, staff. quarter Bottom recovered spill this several outlook school into well-prepared fiscal buses the we order time. do weeks guidance requires are the economic of first predicting lower manage through cannot that be We the past required the will over school

next school as transportation expect We view another of outlook and weeks, six work. within return the clearer the states reopen teams to four to

our EBITDA Let's profit of was for results Adjusted in for to years. over and performance. $XX.X a financial $X.X the second more second the now turn highest quarter We review second quarter had Slide this XX million million X financial to than key last year, strong very quarter.

profit production cost $X included million this COVID-XX. due of Importantly, about penalties to

increased seventh Unit sales also sales quarter XX% a over X,XXX I were were a year. profits earlier, this buses XX% higher revenue consecutive net a than with prior was year-ago. at As year, at almost substantial the last above mentioned

price selling X%, grew bus than increase average represents an Our by unit. of per more $X,XXX

this strong revenue growth So a overall, is really performance.

of the Adjusted were free $XX.X ago. net and share respectively, about quarter a $XX million in down second earnings and per of year. $X.X adjusted million of was $X.XX, from cash an year And flow last $X.XX, the income million, million adjusted $X.X increase over

quarter. three another strategy. profits, Operationally, there the Those cornerstone margin was growth by not significant results are second in

in for a beat fastest buses. of record points. sales fuel quarter school mix undisputed alternative First, by the X powered business. the We segment market second leader XX% last remain growing the We year's

$X,XXX we key earlier and the Second, contributor bus holding encompassing are of to is bus And is structural we manufacturing in design that track. on initiatives selling the own took saw and savings delivering reduce July pricing a transformation material, third, price. purchase economics average recover in to increase costs, our XXXX our ongoing

strong second line. earnings second the ongoing strategy with And pleased particular, I’ve we represent our accomplishments. of calls, revolving our which we financial our in the improvement. weather $XX in our despite Overall, I liquidity cost impact underlying the and At in that million three position million and a COVID-XX, pleased a position very with and end drive pandemic. $XX.X profit on am initiatives these COVID-XX As finally, to the with margin strengthened credit of results, our quarter quarter, achieved to are key we’ve liquidity I'm communicated prior was operating increase

a look later financial results and the quarter numbers. take overall Phil I the provide of second many touched now will and run Tighe results these more financial texture details on on Slide closer X. our Let's through of beyond earlier

X half, quarter I by this year the think bus out and were illustrate summarize net adjusted business for sales both months we for XX% revenue the last first coming second half, net momentum sales adjusted in the the I the up the very total of up EBITDA from To that EBITDA first and up can for was were business. and of the X% and saying year. parts first have easily the

to Turning now Slide X.

adverse sales the of last an alternative of XX% this the alternative equal orders, fuel the mix backlog mix inherent slowdown strong powered buses in to closer bus year's bus of Let's Despite fuel and take and look COVID-XX, bookings year. a at the at performance. record of impact remains time

as the share remains strong by running XX% ever share of almost market is that of Our at to and segment. this XX%, segment about presently [indiscernible] as led in

options buses for XXX of of ever more have on who all tried the it, fuel from year. than alternative customers XXX us the Significantly, purchased year alternative top That's time time. customers first last first this fuel for

new facts. enable year. endorsement bringing the buses our new our it's powered fuel and high Bird far family bus network. XX business this achieve so our the the buses, And to with brand, Importantly, customers of we Blue of our fuel a compelling are exclusive from great products, alternative from loyalty these the customer conquest alternative competitors, new Those dealer

market slowing in sales our for segment that other alternative share. to comes this industry. So it's fuel close down our clear we are the No mix school not manufacturer of bus

alternative for customer firm are we all So line. fuel follow far addition electric sold this the more expect have fiscal to orders to than we hand more in the or have But our bus year, either newest we orders. for XXX seeing with interest

this operate dynamic number is grow very XXX that orders of the a by process fact, this that In order in. a than week. more to This end we

boost the with next ahead funds, earmarked of Looking of bus forward, VW majority still funding specific vast the will the or over us mitigation three sales purchases. is and many us states years help school the so

are CleanTech have for to We partnership fuel with low-NOx been we've exclusive engine and we well these in with and in the gasoline so and buses, of VW alternative are the leadership is and forward. powered growth and far most from which our on industry, position success a CNG had the Ford to opportunities emissions, With Blue funding pleased going ROUSH modern our capitalize Bird other funds the positioned really issued. proven expanding widest range propane, that

out continued very strong of date, and than summary, of we At position alternative have to for less fuels. bus [indiscernible] plenty fuels I'm of undisputed in XX% our school of ahead leadership have In purchased growth. proud runway which in been alternative

X in closed March dealing to will of be schools have mid-March some that School and to it. the the major the states Not to Since starting the disruption almost somewhat pandemic, then, Canadian Blue significant how XXth. we've how school first is confirmed we Let's COVID-XX from seen of XX% slowdown first at regions present. the business, end spend and their gears looking institutions the resulted surprisingly, By Slide on our has one time Bird closed importantly, in all closing to closures now of schools. and pandemic March, year. a react have orders and impacted to turn with change are school over U.S. the provinces school until have and all next with bus

home is from to came service Key slowdown were staff a and transformation a working orders school that standstill. bus in confound school to operations

meetings reopening, school not necessarily postponed. on is when school or focus Additionally, meet, education were And continuity procurement did of agenda a school Board of buses. eliminated they and

But from and mid are as to begin states being restrictions reopen shelter-in-place May lifted.

placed new feedback as seeing their And return anticipate Through bus a step staff. business a from school school increased school by significant are directors. supported and up buses" school interest "new as we are transportation now year on for transportation this orders focus to staff start needs June delivered. in school in We for demand work

Following for orders more months. two is the slowdown than

fiscal to Consequently, forecast is new bus starts. infeasible school is to XXXX to for bus to XX,XXX deliver be range, it the of school business prior some the in XX% XX% XX,XXX below the now forecast. However, all needs units

fiscal delivers additional uncertainty too XXXX, at impact the start. first bus need be much made of will There We in the do to anticipate of economic simply COVID-XX. around was quarter the school as sales social however, and

in mentioned guidance the have next XXXX as for X this earlier, X withdrawing should -- to clearer time. are business resumes. financial We picture as fiscal a I at back it's we So

with to Blue cover of to along to prime is in as now X all business pandemic. COVID-XX our both virtually business Slide response objective take Ohio, continuity. dealerships, a Georgia Classified an our me essential Let Bird's and

from well-being successful three receipt continuity Two, on our continuous see safety slide, critical material production can at and of plan preserve three, you and liquidity elements. employees. and base. business And robust the As requires sufficient One, of Blue our timely to and Bird. generate supply of cash this

of We are these focused on elements. all three

of check environment. ensure to safe are mandatory individuals each all day, a a place plant mask including social are First, in work on the in robust place, distancing we entering protocols temperature plant the in

We are of all COVID-XX. tested been the tested. have to And date have plant working employees National Guard onsite with employees also half for our Georgia to

austerity address all component Two, as for board while production deliveries items on facilitating benefits following production necessitating of reductions capital and liquidity measures needs parts and additional to spending its during to sequencing with all needed the and shipping line. were own and cash expedited shutting critical revolving and three, significant expense nonessential credit shutdown, increasing suppliers preserve including of suppliers their handle practicable. the on federal payments of unemployment And cuts bringing employees to the to inventory our our timing state and

the continuity helping are objectives. us manage All time through to as these business employee of this difficult with and well-being major actions

haven't cost away taken focus times, As our reductions. we we these driving face from uncertain

take now transformation in at to us with and our help look structure to the a initiatives today closer cost Let's future. improve

Let's turn and over showed Slide of it the fiscal last We XXXX. over our into initiatives two calls, XX. the to slide two but years past progression the the demonstrates transformation earnings

Importantly, processes tools additional as for and can see costs. drive punitive we down global as added to being strive approach you a this are

was began of change. combination services agreements XXXX. on minimal with and suppliers one including phase a design initiatives, with And purchase sourcing recommenced product cost focus material, in We fiscal initial our lead and through reducing

recall fact, of that million we In actions. these from over XXXX, you $XX might savings recorded fiscal

and costs initiative rearrangements plant compromising our changes and we build paint We facility, optimize validation quality. the continue also process. focused this in to without redesign to In reduce XXXX necessitated already to to to to phase, pursue process on heavily our our second launch, fiscal this testing began which Robotic also of

XXXX We by these the of fully In productivity now processes achieved billion a and fiscal additional III Phase supplements operational, fiscal production print robotic order and actions XXXX, driving plant continue fiscal some focused beyond, savings $XX into from cost and of the XXXX. facility both down initiatives. in

to Well, capability, Our opportunity make capacity. costs through rework and work you deliver in provide have provide the labor the with time increased new material highest free application. paint automated first to facility lay warranty and opportunity reduce savings reduce to to to pay facility, reduce to expense the robotic And achieve it time around

target rework. and results engineering costs of on production folks improving manufacture and to We design, are reducing capability, quality applying

are months We and are higher you confident few in more the Many delivering years call. quarterly costs over to share continue years. our and This earnings total margins. with achieving is multiple of significant down efficiencies planned years the We'll next in cumulative gross to ahead. in actions efficiency a EBITDA results key the profit systemic approach to driving and

over the I Phil Tighe, I with through back and will it financials to who take outlook now will fiscal turn wrap be will up presentation. XXXX you and the formal

Over to Phil. you

Phil Tighe

Bird's everyone. X March year attention contains. XXXX or is filed 'XX. of and a to and of of material be today. is the read XX-Q Blue XXXX. close that you Thank which it quarter we We encourage today the you second It's to fiscal with afternoon filed details our and XXXX my disclosures today. share material Detailed financial good year to discussing XX-Q, April in The are which to available able was you, Phil pleasure XX, fiscal the the and important that was

we our have items that in note You'll XX-Q included new filing. two

other buy components. the demand, a and potential is uncertainty products, with MD&A of funds companies and risk impact both on Bird major supply The included many is the at a people levels, Blue First factor. availability to of about of discussion safety issues face is and This new COVID-XX. in as most

mentioned system has throw the products us in Phil, have uncertainties XXXX. forced to As

included We also subsequent the event.

already on he's to an existing -- this, go so for did way And Blue touched revolver. our Bird, other increase syndicate banks system

Second the closed revolver up $XX and from about successfully $XXX level. the recently is have a million, now prior We Amendment by the million at

in this most by reconciliation Mark. mentioned There deals to planning to disclaimers in non-GAAP adequate ensure with important as year significant adopted quarter appendix well risks this review, second 'XX. and of in fiscal The as the as measures between accounting presentation GAAP were scenarios. already today's prudent pronouncements see liquidity We attached potential no of mentioned

XX, let's the for the second take results move then summary look Slide at of now to a So a quarter.

bus, versus slide our quarter some we for million, and slide improving important took for growth up see year. on transformational alternative get Phil second the last year. has So that each ongoing last this the cost fuel summarizes [Technical million our XX% mix, GAAP initiatives. revenue we $XXX.X the margin improving measures difficulty] on discussed, the very strategy, same non-GAAP you or remains was period Bird, $XX.X as and as can Blue focused

worth of Prior that in each mix translates try unit, XX million million of business into the to alternative of well bus the FY we vehicles, the X% program to $X,XXX on volume which an we pricing [indiscernible] team in unit. inflation, July to revenue unit revenue to or each about as offset bus 'XX that XXX by was and business improving. was revenue units contributed increase actions successful [Indiscernible] implemented due per really by The $XX hire vehicles took the per was of improve incremental electric per our higher that strategy to sold, sales did as revenue impact

future the The Being points cost including launch is Gross with our rearrangements. the quarter, you margin about margin, slides. facility. talk into assembly down and X.X%, of almost about in versus second associated costs of We'll see a entirely was in can unusual XXX this impact ago. mined result the year deterioration basis the in factors COVID-XX more

interest less use loss higher fiscal year. largely EBITDA XXXX net costs the higher Blue depreciation, million, and tenths. million year quarter $X.X than favorable offset was about in to basis, was six Bird Improved of reduced last On in adjusted an the tax. second by down income versus $X.X incurred net

was versus more million the by and margin year be X% discussed is compared than with $X.X actions we prior $XX.X was Adjusted up on deterioration The described. EBITDA of the details EBITDA that by will year million prior the next the and previously explained slide. unusual

Diluted quarter this per prior of quarter loss last diluted less the up $X.XX better year. to which the of Cash $X.XX, million was share the second in end was of was $X.XX was year. $X.XX the than earnings $X.X and million, by compared second earnings Adjusted year. share per at a prior was $XX.X than

quarter, end million on our the At of last revolver the second year. $XX had we $XX drawn versus million

Importantly, us million, $XX with available $XX had left was including prior this we $XX million approval down by that additional This million Debt was revolver to $X.X recently an that amount from the banks. and drawn on million. of was million. that additional $XXX.X the was

We In go improving importantly, talk moving cost direction. conclusion, on made top revenue cash good our made we to about of get COVID-XX good still slides. the a to progress have And we'll in revenue line new required progress right again, per sold. cognate in this and We production generating bus and critical meeting way on on environment. next that

move $X.X year. balance by up mix. the of XXX This from improved XXXX. quarter of million. part key and second drivers the customer product of was came year volume, 'XX The by slide quarter change Two items, in adjusted mix prior key versus and the are second EBITDA pricing, If $XX pricing. fiscal of Volume improvement million we this These XX, fiscal from in year now and shows factors. takeaway about to customer market mix, Slide was the sales worth to product units.

the favorable added and second and reduction we’ve benefit take. actions in to from on quarters initiatives we benefit more impact is we cost about the prior positive that year clearly come Transformational $X these as quarter results. there mix continue are again on progresses. very from to million the We and cost aggressive to pricing a And our this continue that to the continue seen

to are impact in and inefficiencies the continuing and million. Launch had are [indiscernible] substantial But place until key of year be chooses the sourcing rearrangement due of the to plant activities. to factors achievement considered a from to benefits costs fiscal other Two confined are about plant second all quarter, full the on probably our $X enable XXXX. new

Costs precautions be last point in the the April. protective We absorption. the continuously support loss expect incurred plant's, weeks to temperatures to first to to changes March second included sanitize during point, of of workers, equipment year cost week gear caused expenses us fiscal worker of two half Fort our a during XXXX. COVID-XX the overhead for employees monitor shutdown largely the enter these to and and close for Valley completed they of the as during

this the million. a health scrap our to written Fort from cleanup obsolete about really a whole the JV to worth we close all In April our other dive was material of care that fiscal deep facility also off. to contributes almost see we to addition, year and was unfavorable and obsolete as we and to $X the included in 'XX by and the all March on had costs in way, Efficiencies quarter. The inventory warehouse the well moved of plant Canada second was Valley in were material costs, central [indiscernible]. close loss of a that did also scrap and have in team and that This as of higher

So and I labor time over that’s other higher think And largely costs. behind us. then

since manufacturing of started working operating experienced team the improved the improve And we've the that again balance year. is on cost on April efficiency through plant plants our the XX. Importantly, will

in We of on ongoing enablers continue key The results unit second Bird our per for are encouraging, the the impact structure quarter both at achieving to [indiscernible] () profit the Blue long-term work cost and improving the COVID-XX. revenue despite as objectives.

plant improved up will Transformational our basis result reopened quarter. by mid a weeks the in was team's reductions prior above to the cost of launch on activities second XXs on half. efficiencies These running in XX% and continue $X,XXX at new the said, to cost million. we with the a as or since unit April in by in initiatives are XX.X%. or actions And the $X compared unit, second per finally, continue the revenue Bus XX manufacturing year-to-date

our XX cash free during so and Slide maintaining unusual liquidity to But an as time turn critical it's any all attention adequate of more at is flow the pandemic. move you to cash $XX.X in time, know. present Let's business, even and flow. to XXXX compared quarter as a period for such million This Fiscal was cash million the $XX.X second free can as improvement, year as last adjusted see. you significant year. same was Generation

flow $XX.X $XX.X cash Free working better capital. than the flow million was cash which year. free million, prior was trade were also The normalization favorable of in results from largely

trade volume. seasonal fluctuates capital Our and working is very with

As quarter you first build the first drain start typically lower and We a second the very it's know, the and in to in holiday quarter cash see December down. low volumes to shut quarter. due in

in normal second our we model, see providing [indiscernible] traditional to us resumed operations a working and the flow. negative level incremental quarter capital free As increase, with cash

million payable on first was who suppliers second in were the reached the and all that quarter. It accounts you supplier included reflection And paid changes basis. sheet our a in see interested, of no activity. the $XXX million is truly in a terms and conditions. those $XX on For balance quarter can increase timely in a to are This

$X were We reduced of cash by improved and $X capital million were year-over-year million. outflows our spending taxes

cash And of allows that million. cash important This And identified with sources discussed, the two, all focus analysis our we and an of cash adopted one team versus items we COVID-XX, about senior covering number we of by conservation second finally, XX-week we revolver business. have take half. Number on week cash million of assigned step. forecast. charge was million to items. Three the forecast a have and $XX team existing caused strengthened cash uses VPs the have $XX cash flow. of our disruption the delivering movements forecasting by of to improvement is our a charged presently One, added process as aspects During and in $XXX cash three, weekly we our

amendment $XX.X was have well We our credit coronavirus on quarter. including Slide forma issue. are May liquidity positioned leverage by in $XXX.X increased and $XX.X which second addresses of to our giving facility, slide at end pro effect debt the million Liquidity revolver terms been Xth further XX. the disruptions the that at liquidity Last million. After million, the weather of liquidity we to would from to believe

We of first weeks of X-week majority in took week our the March last two a caused April, -- cash inflows. the in of shut which down and

period, payments to suppliers, to $XX $XX During a announcement our which that we million. continued million weekly amounted of to

Our April XX. normalized operations And receipts. restarted of bus now assembly seeing level are a on cash we

in the us the of soon pursued liquidity early reopening We actions, that strong for million with being outlook and significant balance and backlog an order conservation been combination revolver the provides cash and a Increasing has having in combination production year. the to further and provides liquidity So of stream. now it's already XXX through our revenue factors is to identified. believe the of July, steady a three predictable these and pushing

And to NAV of asked meet objections. is our all

below additional under revolver second was million at down at trade $XXX.X, quarter the ratio stood million year, X.X:X, revenue per far the our the which was versus despite $XX on an the of end X.XX:X Importantly, for threshold. is working to Debt quarter capital. $X.X drawn which

discussion to outlook Over of taking. I balance the will to Horlock now important and turn the some are 'XX the comments fiscal we for Phil. you, the actions year back Phil for about

Phil Horlock

Thanks, Phil.

cover Turn outlook. So XXXX let's the now Slide to full-year XX. fiscal

uncertain. headline the isn't says, unique as But fundamentals market our confident given economic experiencing. our As remains we’ve are because to This Bird's accompanying Blue remain in quarter to seen as outlook the many well we several and storm ability second the same the ability Bird headline weather Blue business companies But message over the weeks. the results show, strong. past are we

strategy, to done so continue profit the on two we deliver we have our over years. As as past growth

it's new to and This XXX,XXX that of years school buses. for customers of a represents than remains worth of XX% more buses Canadian XX market, customer or the the high U.S. that replace. very older. noting to Turning want age demand fleets buses are

factor limiting is funding So customer high. very availability. The demand is

funding in remain taxes intestate While and still for to property impact to and the overall could are state for school of income be major values and impact continue state expected buses, the near-term, sales funding taxes includes taxes the buses. which school strong property mechanism lost education,

impact unclear. assistance government federal precise on The potential are

provided education recent to public [indiscernible] needs billion assist in K-XX in $XX action the schools. April late Although for funding

outweigh putting is less X.X% the purchases year, total we're size United billion than context of if a typically K-XX bus of States. capital represents the budget in of annual the expense capital this that total the of $X education for public of $XXX and school into expenditures, schools. education bus cost for annual Out However, new the billion the school

I small buses to each important It funding will is the recognize remains used the be states major budget think that forward. portion property to however, of being year seen, it's source. school taxes to how with funding education the allocate purchase going

is our rate regard, and Our a been our we March Bird incoming this we’ve mandates safety shelter-in-place we immediate that slower when have were meeting schools seeing continuity. business so protecting while order on June, close since can Blue In employees ensure mid focus at rate lowered set. in production

fourth to slots. beginning quarter our now are We fill production

and terms in work orders needs their coming staff transportation star. We for of expect bus the increase time focus in with on weeks significant school school of a full

built to prepared four are demand. We in quarter an increase

several For from the third slowdown the was down volume in orders over year weeks. of because the quarter past last

orders with school for recent next strong fiscal star will into expect the fiscal spill quarter year. over delayed first the to We also the volumes XXXX

are companies guidance many done, time. this withdrawing at we public however, have Like

up states to a clarity four business As I the and open the and mentioned expect outlook better for next weeks resumes. to earlier, six as on we provinces

XX,XXX between state now XX,XXX to for in fiscal our buses. is While XXXX industry latest the

XX% a year averaged bus While that prior below units has years. industry XX% the It's forecasts. noting XX about the to worth our XX,XXX school over past

I implement forward a to announcing production taken pull today action today two we shift that think X. the industry times. even [indiscernible] am to I is in this the sums plan to forecast, will have shifts our new the put responding a from focus strong business we single decision still forecast relatively lower difficult these in to and schedule this June context In on move to

this a pattern today XX-hour and to five, be a at per operating from week straight forward. shifts one vision days time. to to prudent efficiencies believe will on improve will of days week We moving production This going require per XX-hour our four move shift two cost

investing be quarter constraints more ensure Bird difficult schedule. production fiscal future. business peak example restructuring great and in we next this do half is shift the can year the capacity in first we'll This to forward, second times sustained us of Looking single a the responsibly demand Blue XXXX are making in a with production competitive of season

to comment I my is to want beginning Bird of this just with pandemic. the end conclusion, call. at well-positioned that this In made I Blue unprecedented weather

We have ample liquidity.

business strong. are fundamentals Our

through into We and this necessary long will restructuring are in period to run. actions the and will get we take whatever grow fly

I now presentation. our session. to That begin concludes back formal pass to will it our Q&A the moderator

Operator

Thank you, Stein we'll Eric hear sir. [Operator Instructions] from Craig-Hallum. with And first

Eric Stine

everyone. taking the for Thanks Hi, questions.

Phil Horlock

Hi, Eric.

Eric Stine

relatively thoughts your from of would I now? school the of long-term, Is that rather do are that though on So you given you know be municipal going even budgets think what the timing buses, the maybe like mentioned near-term, little insulated that? a some about other small talking school of of a stretched, But side, more mean, some spending, what's you about just about or I given feel municipality, bit issues, it's needs it it's funding how part availability. than spending, and that something right on a

Phil Horlock

this think, why guidance Eric, tough withdrawing we at to about Truly, talk I Well, that's time. say. this

going states This the are with federal the States amounts what are government, taxes what is. sales The lifted, think -- just see income lost State Shelter-in-place of appetite outlook couple too. the have is. we're they obviously so. did reopen. significant over or to reopening. months an outlook tax have being I to to of are last Because obviously the states? been support have impacted, starting

It that just funding property small only XX% is -- school of reference bus there there, purchase. give to don't our budget we mentioned I bus from the of I So stole school a mechanism, funding for how out. point major they that just plays because are piece a relatively taxes. see what

We prices collection our expect critical is holding are up, business. still bumps of they'll bus those the for stay high. Housing

to out this how rides outlook. to we've XX% going just industry a taken see Obviously, these full from are. we're year So XX%

school that time. budgets to and and in sign got see of approved seat reacts. buses just the education buying when that We schools start set released, boards. look. support near-term get how of the the government are late that's be to first Typically, So will schools. June in the And budgets that's when for by school triggers then to the

four weeks report. replay So what the in to the that so get should Prichard see or a start next of and we

have I’m We I can just like this everybody we right do just think, we forecast, else at a just now limited point. conjecture. and that. You're but on try -- can else We just information,

so move How this. get to staff I will of coming volume, in the the this to increase year onwards confidence. happen. I you I from We'll increase June confident that that do balance do. that is I the an we thing rapidly will. support into requirements this if school new don’t think through in feel So an hope on see bosses.

Eric Stine

Yes.

maybe any the that. Obviously cash the fair and commentary with that clearly, uncertainty. big quarters Okay, that been But of guidance guidance, million. still forward? on for going very you've to of generation for objectives with say? year, likely turning that's a know, expectation lot I pulling just your Is thanks And mean, cash strong I to $XXX and I guidance think, a I just last you. previous for generation. generating, three about talking mean, the you're

Phil Tighe

Eric, Phil. is this

The other Phil.

quarter, and which true still predict. will sales, of month. source, third generation to at down the cash traditional the be fourth as The we So little hard a get is quarter, which least through

of stock want well, on said, to a terms of until Phil we here, budget the in get it's we input of that some lot -- school open As

Eric Stine

the mention initially, in cash place target. get the of items a our we’ve I've a that to got of I've call did and spending of of the team balance We a $XX year. target all that put in to million the identified for to reduce lot

will that will predict that second can't where. very bit will still we're in that they exactly and So have we comfortable squeeze will succeed. I the a And more. we just say we half if positive need But we cash be,

Eric Stine

quarter then mean, that. you still in and there's mean I pattern from that I yes, high but uncertainty, the mean, place. first year. a of, sounds get typical the it for -- of like flips I remainder level, usage a I big know, the that that's sounds It

Phil Tighe

Yes.

Okay always [Indiscernible] Well, maybe think for I I well, yes, down. mean, me. like I'm

on we cash initiatives and I conservation call generation, call cash preservation, them I working been think so volume. [indiscernible] will cash But more of will combination a these generation, have then.

We are cash call distribution will base eaten our into don’t year. positive this We flow we anticipate business. core

will this We positive to be that's unfold. And see and year go. in do we are a But we place we to -- tend that. plans have that

Phil Horlock

Last it. me. Got Okay. one for

of unintended the consequences is COVID. One

just it's forward? think of on "normalize" given thoughts alternative environmental focus Any looks the your that pick things whatever as: about you, like more to share up I a ability leadership fuels, position the side. in going

Phil Tighe

Yes, for a up and bit us. market month the We had, bumpy certainly is the, us XX% bit it the quite from pick pick of a look scheduled a little is we fact on [indiscernible]. Nothing at we're in in you we terms last we last conquest to feel for always last share. just year, a almost call XX% which, the Elements we propane. even when actually share still wanted year in of got up is quarter that business, from frankly,

which buses. try our the thing So this we do. children the bode those the to mix our who I always environment. for quarter, great to in products, up for us. seven It's a we've the last ride is significant fact grown It's well And yet in right points again, great percentage think for emphasize

pick business. the call and to we I and -- keep because to our bread intend schools That's our butter through our if we see district. yes, selling can to school channel, district business dealer in forward share So, up trying to what go directly school

our goal, to keep that pushing that's So on front.

Eric Stine

Okay, thanks.

Phil Tighe

Eric. Thanks,

Operator

we Partners. with from [Operator Instructions] ROTH will Craig Capital Irwin Next hear

Craig Irwin

for God taking evening thanks and my questions.

of to in Can data that specific working you've maybe prepared seemed And confidence and to And this your year? to remarks a of of the that fourth the your V give question with by next in few right compare share orders what points for you optimism the about And your a you strong been So shaped is second point up what through quarter now. inflection us does portion recovered this the months? fiscal how recovery. last production out confidence slots hand? part

Phil Horlock

you specific, get and backlog we some our we to want bookings on today. give call where let's because Well, to stand specific we what and without take

really much that's industry we couple decline in if what last and now happened the hold. I the look think the what's as has well right months pretty That's as And in really you bookings showing at see are pandemic our of we backlog. projection. taken in

So we're at think pace. It's would that right about to that it of what we that's now we'd -- we a XX%. number seeing looking be was where down. to And XX% probably be

where right worried slots terms July. filling are our In to we now of were to

the fall will there in July now. are we August, and right June weeks in and our we We through don't third We've know still September, three we not volume So build quarter. to July. know I'm we're have what got in

to where keep trying that's at, go want are talked are report we and the When who other these kids who mean, to was we look optimism are. to the buy safe to out to directors. it guys transportation buses. I day So comes there from this out guys every

school talk get out on And don't to You dealer needs guy network are their to our ground as the about these what seats a their well boards are. there. as

business points, our real we taxes. at [indiscernible] In closely data is correlate very property terms hard values. We look with property of

comments quite support lost we found budgets. powerful, that. The our remain know cast We What clearly on allocate going what interesting to is week sales the was, public as do to dividend act. pretty I pretty in last couple the powerful the collapsed last high. funding mean, that education. $XX stay tax. I We school, billion which did said Income about earlier, to of mentioned we As federal my state April, before values government's mechanism still the major funding as the in [indiscernible] of homes revenue, knowledge optimistic don’t They're I that being bigger tax months. though,

in quickly pandemic this So process.

see for year. important coming as for school July, the and June are So I this that, their obviously looking That's boards what July. of against approving states in release their prices, budgets through thing. June finalize budget think countries, talking unfolds most year, this at and for funds beginning house hearing all to Virtually wait

the to four So us. for that's hence clear very I six things become when talked about will weeks

Craig Irwin

Great. Thank that. you for

the few the parallels bus of bottom the a your on Seven, potentially shorter onset duration, for abrupt. shorter minds It than point the would shareholders anything process this took pandemic to scraping home time? you have been in similar more at overall are that much that the and would be that a a obvious to and from So to the back rapid to the important us of market. much and would stock COVID look more bottoming the obviously most years Nine. you Is everybody that largest work your process crisis. anything last a and question has point handful of institutions financial But bottom market there in the actually handful to us can a that point to of sales years finding specifically to school of the years, the in for actually, from us Eight,

Phil Horlock

was have I will a I all And and good that the it lack on. XXXX, occurred. between too. really to was in significantly, prices let a fell took it trough We financial banking and mean, to default prices three the what things crisis crisis. hit learned some for house But Yes, increase I'm mortgages swaps last that sorts because while XXXX. on it house precipitously the by Phil people sure and on took foreclosing. I mortgage and one. actually foreclosures defaults me when that's to credit I’m was for happened and about, bottom. a of learned us going take have that the And driven XXXX, comments years this about a bed We

buses. the people aren't say situation the that we school because in that also That had loans. mean, car don't defaulting their is I on here. major that we You funding

see And about in units fell, So in once drop to we of here XXXXX the is precipitous precipitous in housing prices recovered. out We from as we units saw taxes we don't property we that XXXX drop that a to then XX,XXX The way industry prices. housing our clawed difference three eventually months. just the researched talking over XXXX. look significantly see This get about down states two anyone the some I from trying business that issue. out to talked look it. last thing. pandemic a This that, to we're to we And different at is don't of shut We've it those a of experts we that all reopen. that is way. sold

be remains with quickly think the seen other what mean, to government is the federal does. package. reacted a factor the I I government federal stimulus

In fact they supported education, CARES the funding. quickly, got billion from injection $XX

economy more past. their support Probably the to than so think I in there the willingness shows aggressively.

over XX Similar those of buses. years. issues now the age. than this, age. earlier, eleven high. of right fifteen our [indiscernible] I So that about That’s I XXXX, life duration were useful we. eight still a North one a different run of from standpoint, of we're fleet And I costs the for of a a as America. now of to about I lasts in XXX,XXX when has in was into on the It too, bus school operating walked eight we years. bus those, about half talked costs years too in age about average that situation it's XXX,XXX lot bus. That's business That's was conservative thing Right say buses years. total It quite get in mentioned we XXXX. buses years what

children them and because to our bode that off dirty the with bus to the set say those thing think a I that buses school what we've good would buses, got get products old for I environment replace out lot is right these in road to going So the say argument well the carve clean. to school do does for and in it's money when keeping a -- said

different the now you seem have stay downturn? back between you want just What's that in only. to Phil, to last we answer and what

Phil Tighe

okay? Okay. to Looks there's else say, like nothing got

Craig Irwin

Question right. number all That’s new

Phil Horlock

I frankly, for it states tax, We shorter school of the back prior so state The last quite coffers and pretty sales took be state can rightly big get come levels. tax bless get of lot reason because one % on a there's the there'll years to up driven funding running get pointed will of the about years. more but thorough the relatively that the back much hurt. central the funds to no it property term between bottomed, But up it curve and really for to as that by covered to as took and should the the the with prior think get in there's income levels the that it out, long quickly back now. running. long the probably sales quickly tax which be think the taxes majority of And income tax businesses property little the three And that and can and ahead property doubt or and taxes we once as come difference four state funding. mentioned, it rebound a are a Phil buses. XX property than taxes, that took, is you from is some you

Craig Irwin

you. for you Thank that. Okay. Thank

is wanted to I spending. ability flex question last the my So ask about

the number the do. EPA testimony in for you tightening what obligation you your whether maybe March obviously Can obviously a in whether a SG&A of from to One you year or managing saw number So the the investing been issue the around meet with been actually the cost you or have you you've you talk need really you've is in not design that the made the guys specifically defer and And, to bus waiver to proactive working been and yet screws environmental doing not the that of package? decision have about and quarter expenses. manufacture, future. next the as higher engine would for investment next in you quarters reliability about whether to lower a new you've the generation last design things of

Phil Horlock

I then, given And us. and to very try. we at will that. you plans regularly, already. We try connected our clear and ROUSH our we’re product tell when We this. CleanTech. to We about closely. talked the [indiscernible] at talked stay talking announced CARB to We what question competitive to or They’re obviously specific, Ford very things -- a looked EPA regularly. going That's

will a say and with want it meet all environment him we we basis whatever to on meet the yes, do So, all that requirements That's ensure operate in. the we recognize to on this matter takes we that time.

that much comment it's I reasons think a into good Unfortunately, asked. one. can't competitive you've details on I get for too

Craig Irwin

understood. number. you Congratulations should controls this Completely market. the positioning strong on commended proactive guys cost for stance and And the be for for deliveries

quarter. congratulations again the for So

Phil Horlock

Thanks you. Thank very much. appreciate I that.

Operator

And back additional Horlock, will no Mr. questions the further you closing there or to remarks. turn for conference at any are this over time.

Phil Horlock

appreciate today. in Blue Thank you Yes. joining thanks interest continued the you, Millender, all for to of and us on call We the Bird.

fronts that. focused. progress as and I significant grow team to made about long-term. our have results, will you work We've see we and we and who's no the a continue on by multiple will COVID-XX pandemic As this can adapting doubts got over second way we quarter restructuring great needed our and through thrive profitably

a Tighe. the After CFO from off role on [indiscernible] drop my than He's I bid with though, a to XXXX. to at in be years to XX opportunity Blue his will Bird more of friend the thank on real company pleasure today, company Before want for Bird, Phil, stepping and It's eight call the May. of Phil take privately been public this held taking I Blue down Phil years. colleague from call end the to a

that of number strategic and staying his me us, I on want for thank all consulting Phil time leadership be with best. be team topics. I'm Bird. I our capacity, contributions say working but also to his to to Blue obliged with wish and a on want during the him issues we'll won't be leaving endless special Phil

my and years to everything the give of over a share few got thank us. I'm for sure him know call well call you on done and you free past feel him Please for to he's sentiment. Phil the Many

as recognize Xst. So Taylor will recently the July has I'm new to most be Jeff public coming company Phil enjoyed Jeff moves, as a years that as pleased many CFO in CFO, effective him great months. asset and will be was as of will of over sure you the be coming I'm CFO our and call actually on company a Wabash, our to today. Jeff meeting many

faces for positioned to for And Blue for we your Jeff, Phil, all us to you to terrific with to today. look the pandemic of thanks, So bus school and continued dealing joining welcome, Bird long-term profitable We're business. forward that thanks and well growth. call this service the

hesitate please to So again should great don't here you and our Relations, have contact questions. Benfield, at Mark Profitability of from Investor any & us Bird a have up of Thanks Blue follow all evening. Head

Operator

participation. conclude thank We you does conference. for today's That your

disconnect. may You now

Blue Bird (BLBD) 15 May 202020 Q2 Earnings call transcript