Blue Bird Corporation Q4 FY2025 earnings call

Key Takeaways

• The Blue Bird team delivered record sales and adjusted EBITDA for fiscal 2025 despite tariff challenges. Backlog ended at 3,100 units but increased to nearly 4,000 units including 850 EVs.
• Began scope development and automation business cases for a new factory to apply production automation and manufacturing execution systems for cost reduction and long-term competitiveness.
• Maintained disciplined pricing, with bus prices higher than prior year/quarter. EV demand remained stable, with 901 EVs sold in 2025 (9.6% of volume).
• Defined a long-term roadmap for manufacturing and product, focusing on projects with strong returns. Rounds two and three of the EPA clean school bus program were flowing, and reimbursement funds for a DOE MES contract continued.

The company has two main segments: Bus and Parts. In fiscal 2025, the Bus segment sold 9,409 buses, generating revenue of $1.377 billion. The average bus revenue per unit was $146,000, an increase of $8,000 from the prior year, driven by pricing actions and improved EV product mix. EV sales in 2025 were 901 units, accounting for 9.6% of the volume. The Parts segment had revenue flat at $103 million for the year. Adjusted EBITDA for the year was $221 million, which was 15% of revenue, $38 million better than the previous year.

Fiscal 2026 Guidance

• Maintains units and revenue midpoint guidance at ~9,500 units and $1.5 billion respectively. Adjusted EBITDA guidance is $220 million, with a range of $210-$230 million and a margin of 14.5%-15%.
• Quarterly breakdown: Q1 expects ~2,100 units, $325M revenue, $40-45M adjusted EBITDA; Q2 ~2,200 units, $350M revenue, $45-50M adjusted EBITDA; Q3 ~2,200 units, ~$400-425M revenue, $60M adjusted EBITDA; Q4 ~2,200 units, ~$400-425M revenue, $60-70M adjusted EBITDA.
• Medium-term outlook: 15% margin with volumes up to 10,500 units, revenue ~$1.6 billion, adjusted EBITDA ~$240 million. Long-term target: $1.8-$2 billion revenue, 12,000-13,500 units including 1,000-1,500 commercial chassis, adjusted EBITDA $280-320 million+ at 15.5%-16%+.

• Tariff volatility creates pricing uncertainty and impacts the market. - Material costs, labor, and health care costs remain headwinds. - Regulatory uncertainties from administration executive orders and EPA funding program fluctuations pose risks.

Q: Get more detail on federal EB bus program, importance to fiscal 2026 guidance, state vs federal EV demand drivers A: John and Razvan discuss that federal program relevance, fiscal 2026 EV guidance is maintained with a strong backlog, and state mandates support demand.

Q: Commercial chassis project detail, customer reactions, ramp in 2027 A: John talks about prototypes, positive customer reactions, and good indications for the commercial chassis product's future ramp.

Q: Backlog, EV backlog growth, New Jersey incentive program A: Razvan mentions EV backlog increase, and New Jersey's incentive program as part of broader state-level demand trends.

Q: First half vs second half price mix, tariff impact A: Razvan discusses price increase timing, product mix, and tariff uncertainties influencing guidance for different quarters.

Q: Backlog financial metrics, industry competitive dynamics, student enrollment impact A: Razvan and John address requests for backlog financial details, uncertainty around industry competition, and minimal impact of student enrollment changes on demand