Blue Bird Corporation · NASDAQ:BLBD
Blue Bird — SPAC Merger (February 2015)
54 slides from Blue Bird's SPAC merger presentation, February 2015
Slide 1: Acquisition of Blue Bird Corporation Investor Presentation
Hennessy Capital Acquisition Corp. Acquisition of Blue Bird Corporation Investor Presentation February 2015
Slide 2: Important Disclaimers
Important Disclaimers Confidentiality The information in this presentation is highly confidential. The distribution of this presentation by an authorized recipient to any other person is unauthorized. Any photocopying, disclosure, reproduction or alteration of the contents of this presentation and a
Slide 3: Important Disclaimers (continued)
Important Disclaimers (continued) Forward Looking Statements This presentation includes “forward looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of wo
Slide 4: Important Disclaimers (continued)
Important Disclaimers (continued) Additional Information HCAC has filed with the U. S. Securities and Exchange Commission (“SEC”) a definitive proxy statement in connection with the business combination and other matters and, beginning on January 21, 2015, mailed the definitive proxy statement and o
Slide 5: Daniel J. Hennessy, Chairman and CEO, HCAC
Daniel J. Hennessy Chairman and CEO, HCAC 5
Slide 6: Hennessy Capital Acquisition Corp.
Hennessy Capital Acquisition Corp. Hennessy Capital is a special purpose acquisition company formed in Delaware on September 24, 2013 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination Hennessy Capital’
Slide 7: HCAC View of Blue Bird
HCAC View of Blue Bird An iconic school bus brand Engaged and committed leadership team with a proven ability to drive productivity, growth and free cash flow Substantial growth opportunities from both domestic industry recovery and market share gains in existing and new markets Attractive v
Slide 8: Updated Transaction Overview
Updated Transaction Overview Under the terms of the purchase agreement amendment, stock consideration to Seller will be reduced and HCAC will forfeit a number of founder shares The effect of the proposed amendment will be to reduce the outstanding common share count by 5.4 million shares, or 20%
Slide 9: Sources and Uses
Sources and Uses ($ in millions) Sources $ % HCAC Cash $ 115 47% Convertible Preferred Stock 40 16% Reinvestment of Existing Stockholders' Equity 80 33% Cash from Blue Bird's Balance Sheet 10 4% Total Sources $ 245 100% Uses $ % Cash Purchase Price $ 140 57% Reinvestment of Existing Stockholders' Eq
Slide 10: Pro Forma Capitalization
Pro Forma Capitalization (1) ($ in millions) Cash on Balance Sheet $ 53 Total Debt (incl. Capital Leases) $ 223 Convertible Preferred Stock 40 (2) Market Equity Capitalization 217 Total Capitalization $ 480 Pro Forma Enterprise Value 427 (3) Pro Forma Ent. Value / FY2015E Adj. EBITDA 5.7 - 5.9x (4)
Slide 11: Pro Forma Ownership
Pro Forma Ownership (amounts in millions) Assumes No Conversion Assumes Conversion of Preferred Stock (1) of Preferred Stock (1)(2) Common Common Stock % Stock % Cerberus Affiliate 8.0 36.9% 8.0 31.9% HCAC Public Stockholders (3) 12.1 55.7% 12.1 48.1% HCAC Founders (4) 1.6 7.4% 1.6 6.4% PIPE Investm
Slide 12: The New Blue Bird Board of Directors
The New Blue Bird Board of Directors Years Directors Management and Board Experience Age Blue Bird Cerberus Operations and Advisory Co. (CEO), Invensys (President, Controls Division), The Chan Galbato Home Depot (President, Services Division), Armstrong Floor Products (CEO) 51 5 Chairman Board: YP H
Slide 13: Phil Horlock, President and CEO, Blue Bird
Phil Horlock President and CEO Blue Bird 13
Slide 14: Blue Bird Highlights & Agenda
Blue Bird Highlights & Agenda Iconic and Fastest Growing School Bus Brand Bus sales volume (units) up more than 40% since 2010 North American market share up from 23% in 2010 to an estimate of 30-31% in 2014 Undisputed Leader in Alternative Fuel-Powered Bus Sales Sold approximately 6x more
Slide 15: Why Blue Bird
Why Blue Bird Why What Where Blue Bird We’ve Done We’re Going 15
Slide 16: Experienced Management Team
Experienced Management Team Years Auto Blue Name Position Key Prior Experience Industry Bird Phil Horlock President & Chief Executive Officer 37 5 Phil Tighe Chief Financial Officer 38 2 John Kwapis Chief Operating Officer 29 5 Dale Wendell Chief Commercial Officer 38 3 Mike McCurdy VP HR & External
Slide 17: Strong Reputation
Strong Reputation Blue Bird is the school bus brand Key Blue Bird Industry Innovations most likely to be recommended (1) All Steel-Body School Bus (1937) Singularly focused on building the All American Forward Engine (1948) world’s finest school bus Rear Engine Chassis (1978) Purpose-bui
Slide 18: Product-Focused Company
Product-Focused Company Full Product Range “Build the Best Bus” Expansive & innovative product cycle plans Proven product development process Type C Buses 65% Net Sales (2014) Leader in alternative fuels Exclusive engine offerings Differentiated product features Type D Buses 22% Net Sales
Slide 19: Product Leadership
Product Leadership Ranked in Order of Blue Competitor A Competitor B Importance (1) Bird #1 Safety -- -- #2 Quality, Reliability & -- -- Durability #3 Operating Costs -- -- #4 Acquisition Cost -- -- #5 How the Bus Drives -- -- Source: Freedonia Custom Research, Inc. 9/4/2013 (study commissioned by
Slide 20: Strong Dealer Network
Strong Dealer Network Blue Bird Blue Bird FY2014 Sales by Customer Type North American Dealer Network 3 Nat’l Fleets Export 5% 2% GSA 5% ~3,400 Contractors ~10,000 School 21% Districts = Dealer Location S = Service Center 67% Note: Many dealers have multiple locations 49 U.S. & Canadian dealers addr
Slide 21: Industry with High Barriers to Entry
Industry with High Barriers to Entry Substantial production complexity Stringent, industry-specific regulatory specifications Unique customer requirements at both state and district levels ~14,000 active production parts/bus Average same-bus order less than 2 units Labor-intensive produc
Slide 22: What We've Done
What We’ve Done Why What Where Blue Bird We’ve Done We’re Going 22
Slide 23: Transformational Initiatives
Transformational Initiatives Reduced product cost and improved quality, cutting warranty claims by 39% Placed more than 85% of material purchases on long term contracts Launched several leading and proprietary product features Increased productivity by reducing assembly plants from 2 to 1 Cut comple
Slide 24: Propane Advantage
Propane Advantage Blue Bird sold approximately ~6x more Blue Bird Propane Sales (units) alternative fuel buses than competitors combined since 2010 2,033 ~1,900 Gained first mover advantage in propane 430 unit with introduction in 2007 one-time fleet order Exclusive relationships with both For
Slide 25: Strong Market Share and Profit Growth
Strong Market Share and Profit Growth ($ in millions) Market Share Adj. EBITDA Revenue 80 Adjusted EBITDA $856M % of Revenue 10% 30% 30%-31% 70 $67 27% 9% 26% 60 Up 51% 8% 23% $50 8% 50 7% 40 7% 30 Revenue 6% $566M $17 5% 20 $14 3% 3% 4% 10 0 3% FY2010 FY2011 FY2012 FY2013 FY2014 FY2011 FY2012 FY201
Slide 26: Where We're Going
Where We’re Going Why What Where Blue Bird We’ve Done We’re Going 26
Slide 27: Future Growth & Profit Drivers
Future Growth & Profit Drivers Industry Volume Upside School Bus Market Recovery Future Market Share Growth Growth & Increasing Propane Penetration Profitability Continuous Product Enhancements Dealer Network Improvements Higher Operating Margins Drive Productivity Deliver Parts Growth Long-Term Fin
Slide 28: Early Stages of Industry Recovery
Early Stages of Industry Recovery Type C/D School Bus Recovery Historical Registrations Projected Registrations Historical Avg. ('85-'14) 40,000 37,641 34,882 35,000 31,600 Mean: 30,550 30,000 25,000 20,000 23,822 15,000 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Slide 29: Business Benefits from Lower Oil Prices
Business Benefits from Lower Oil Prices Fuel cost reductions have produced a greater Propane Diesel benefit for propane buses to date The value proposition for propane buses relative -20% to diesel has improved considerably Propane autogas pricing has decreased 47% over $3.89 the past year, wh
Slide 30: Share Growth: Propane Opportunity
Share Growth: Propane Opportunity Propane is an effective conquest tool that drives market share growth Fewer than 4% of Customers Have Tried Propane Early penetration of the market Only ~360 of ~10,000 customers have tried propane Customers that buy propane buses are purchasing more propane
Slide 31: Share Growth: Product & Dealer Initiatives
Share Growth: Product & Dealer Initiatives Continuous Product Enhancements Dealer Network Improvements Singular focus on buses Dealer network is strong and getting Purpose-built school bus chassis stronger Leading quality, reliability & durability Improve or replace underperforming dealers
Slide 32: Margin Expansion: Productivity
Margin Expansion: Productivity Lower Break-Even Labor Productivity Break-even volume (based on Adjusted 2014 EBITDA) was 315 units per month in 2014; down from 400 units per month in 2010 106% Continuous improvement 102% manufacturing mindset Reduce overhead/unit 96% Increase labor productiv
Slide 33: Margin Expansion: Growing Parts Business
Margin Expansion: Growing Parts Business ($ in millions) Parts Sales Outlook Parts Sales Revenue & Gross Margin Platform for growth 2014 Revenue Installed base of ~180,000 buses in 60 Gross Profit Margin 50% North America $54 Blue Bird’s dealers maintain ~250 50 dealer-authorized service locat
Slide 34: New Markets & Growth Beyond School Buses
New Markets & Growth Beyond School Buses Continue to grow Sigma Bus sales in Colombia and expand to other markets Continue to be preferred vehicle choice for General Services Administration (GSA) Grow international Type C & D bus sales through Bukkehave distributor Expand commercial bus busi
Slide 35: Phil Tighe, CFO, Blue Bird
Phil Tighe CFO Blue Bird 35
Slide 36: Substantial Revenue Growth
Substantial Revenue Growth ($ in millions) Bus Parts Volume $856 $900 12,000 $800 $777 (1) $54 $46 $802 11,000 $730 $700 $598 10,000 $600 $566 $44 $44 9,604 $500 $554 9,000 $522 $400 8,654 8,000 $300 7,000 $200 6,882 6,525 6,000 $100 $- 5,000 FY2011 FY2012 FY2013 FY2014 Memo: Revenue/Unit $80 $80 $8
Slide 37: Impressive Profit Growth
Impressive Profit Growth ($ in millions) 80 Adjusted EBITDA % of Revenue 10% 70 $67 9% 60 $50 8% 50 8% 7% 40 7% 6% 30 $17 5% 20 $14 4% 10 3% 3% 0 3% FY2011 FY2012 FY2013 FY2014 Memo: GP Margin 9% 9% 12% 13% Note: Numbers have been rounded EBITDA has grown at a faster rate than revenue 37
Slide 38: Profit Drivers: FY2012 to FY2014
Profit Drivers: FY2012 to FY2014 ($ in millions) $29 $67 $(1) $21 $17 FY2012 Cost Reductions Volume & Mix Other FY2014 Adj. EBITDA Adj. EBITDA Note: Total Adj. EBITDA walk does not sum precisely due to rounding Relentless focus on cost competitiveness allows us to compete in all markets 38
Slide 39: Profit Drivers: FY2013 to FY2014
Profit Drivers: FY2013 to FY2014 ($ in millions) $3 $4 $67 $10 $50 FY2013 Cost Reductions Volume & Mix Other FY2014 Adj. EBITDA Adj. EBITDA Continuous improvements from cost reductions and mix 39
Slide 40: Substantial Free Cash Flow
Substantial Free Cash Flow ($ in millions) Free Cash Flow $35 (1) $32 $31 $30 $25 $20 $15 $15 $12 $10 $5 $- FY2011 FY2012 FY2013 FY2014 Memo: Capex $5 $4 $5 $6 Source: Blue Bird Management Notes: Free Cash Flow is defined as Cash from Continuing Operations less Capex. (1) FY2014 Free Cash Flow inclu
Slide 41: School Bus Business is Highly Seasonal
School Bus Business is Highly Seasonal School districts typically purchase buses for the start of the school R.L. Polk Unit year, driving higher volumes in April through September Registration Seasonality Based on 3-Year Average FY2012-FY2014 Blue Bird’s quarterly financial results are impacted
Slide 42: Flexible Capital Structure
Flexible Capital Structure ($ in millions) Pro Forma Capital Structure (9/27/14) Considerations Cash and Cash Equivalents $53.0 Undrawn Revolving Credit Facility Revolving Credit Facility $0.0 with $60 million of availability Term Loan Facility (1) 222.9 supports working capital seasonality Total
Slide 43: Phil Horlock, President and CEO, Blue Bird
Phil Horlock President and CEO Blue Bird 43
Slide 44: Summary: Significant Momentum & Upside
Summary: Significant Momentum & Upside Iconic and Fastest Growing School Bus Brand Undisputed Leader in Alternative Fuel-Powered Bus Sales Downside Risk Mitigation Significant Upside Potential Led by an Experienced and Committed Management Team that Delivers Results 44
Slide 45: 2015 Guidance
2015 Guidance ($ in millions) Revenue $918–$940 Adj. EBITDA Up 7%-10% $72 - $75 Range Revenue $856 Up 7%-12% $67 FY2014 FY2015 (1) Guidance (Current) Source: Blue Bird Management Note: Adjusted EBITDA excludes public company costs, stock based compensation, amounts payable under the Blue Bird Phanto
Slide 46: Our Growth Objectives are Clear
Our Growth Objectives are Clear #1 in North American school bus market share with highest customer loyalty Differentiated and proprietary products and features that customers want and value Clear leader in affordable, alternative fuel- powered school buses Significant growth in parts sales
Slide 47: Appendix
Appendix 47
Slide 48: Public Company Valuation Benchmarks
Public Company Valuation Benchmarks FY 2014 EV / Adjusted EBITDA FY 2015E EV / Adjusted EBITDA Mean: 10.6x Mean: 9.9x Mean: 9.6x Mean: 9.1x Deal Multiple: 6.4x Deal Multiple Range: 5.7 – 5.9x 23.0x 15.0x 15.0x 13.5x 12.4x 12.6x 11.9x 12.0x 12.2x 11.7x 11.5x 11.1x 10.9x 10.4x 10.3x 10.0x 10.1x 10.0x
Slide 49: Detailed Comparable Company Benchmarks
Detailed Comparable Company Benchmarks ($ in millions, except per share values) Stock Price Market Value Balance Sheet Valuation Multiples Large Cap Branded Industrials Above Below Equity Ent. EV / Rev EV / EBITDA EV / EBIT P/E Price/ & Specialty Vehicles 2/6/15 Low High Value Value Cash Debt FY13 F
Slide 50: Detailed Comparable Company Benchmarks
Detailed Comparable Company Benchmarks ($ in millions) Revenue Revenue Growth Margin Analysis Large Cap Branded Industrials EBITDA EBIT Net Income & Specialty Vehicles FY13 FY14 FY15 FY13 FY14 FY15 FY13 FY14 FY15 FY14 FY15 FY13 FY14 FY15 Cummins Inc. $17,005 $18,719 $20,573 (2%) 10.1% 9.9% 12.5% 12.
Slide 51: Blue Bird GAAP/Non-GAAP Reconciliation
Blue Bird GAAP/Non-GAAP Reconciliation ($ in thousands) Year Ended Net Income to Adjusted EBITDA Reconciliation October 1, 2011 September 29, 2012 September 28, 2013 September 27, 2014 Net income (loss) ($5,224) ($2,998) $54,208 $2,757 Loss (income) from discontinued operations, net of tax 1,625 328
Slide 52: Blue Bird Income Statement
Blue Bird Income Statement ($ in thousands, except per share values) Year Ended September 29, 2012 September 28, 2013 September 27, 2014 Net sales $598,330 $776,558 $855,735 Cost of goods sold 542,086 684,109 746,362 Gross profit $56,244 $92,449 $109,373 Operating expenses Selling, general and admin
Slide 53: Blue Bird Balance Sheet
Blue Bird Balance Sheet ($ in thousands) September 28, 2013 September 27, 2014 ASSETS Cash and cash equivalents $46,594 $61,137 Accounts receivables, net. 13,493 21,215 Inventories 62,603 71,300 Other current assets 3,125 4,353 Deferred tax asset 3,030 6,057 Total current assets $128,845 $164,062 Pr
Slide 54: Blue Bird Statement of Cash Flows
Blue Bird Statement of Cash Flows Year Ended ($ in thousands) September 29, 2012 September 28, 2013 September 27, 2014 Cash flows from operating activities Net income (loss) ($2,998) $54,208 $2,757 (Income) loss from discontinued operations, net of tax 328 159 (42) Adjustments to reconcile net incom