Blue Bird Corporation · NASDAQ:BLBD
Blue Bird — Q3 FY2018 Earnings Presentation
29 slides from Blue Bird's earnings presentation, Aug 8, 2018
Slide 1: Fiscal 2018 Third Quarter Results Earnings Conference Call
Blue Bird Corporation (Nasdaq: BLBD) Fiscal 2018 Third Quarter Results Earnings Conference Call August 8, 2018
Slide 2: Agenda
Agenda ▪ Introductions & Forward-Looking Statements – Mark Benfield – Director, Investor Relations ▪ Business Overview – Phil Horlock – President & CEO ▪ Financial Results – Phil Tighe – CFO ▪ Outlook and Guidance – Phil Horlock – President & CEO ▪ Q&A – Group This presentation includes forward-look
Slide 3: Business Overview
Phil Horlock President & CEO BUSINESS OVERVIEW 3
Slide 4: 3Q Overview
3Q Overview ▪ Strong 3Q unit sales with 3,746 buses sold, 53% above prior quarter and only 100 below record achieved last year and 53% above prior quarter. Total net sales of $314.2M, down $18.4M from last year ▪ Adjusted EBITDA of $23.7M, was $9.2M lower than last year mainly due to significantly h
Slide 5: Significant Operating Achievements
Significant Operating Achievements Obtained 0.02g NOx Started production of Commenced Increased prices to offset certification for Propane our new electric buses construction of new paint impact of higher steel facility and freight costs Lowest NOx propane Deliveries commence in Plans progressing to
Slide 6: 3Q and YTD Financial Results
3Q and YTD Financial Results 3Q Net Sales YTD 3Q Bus Sales YTD Net Sales Bus Sales $314.2 $693.4 $297.7 $647.5 Million Million Million Million Up Up $15.4 $14.0 Down $18.4 Million Million Down $19.7 Million Million 3Q Parts Sales YTD Parts 3Q Adj. EBITDA1 YTD Adj. Sales EBITDA $16.5 $45.8 $23.7 $39.
Slide 7: Alternative-Fuel Leadership
Alternative-Fuel Leadership Alternative-Fuel Powered Bus Sales Highlights • Year-to-date orders (bookings and backlog) are 16% higher than same period last year ~ 4,500 • Exclusive relationship with Roush extended for another 7 years Up 16% • Achieved certification with EPA and CARB at 0.02g NOx; Bl
Slide 8: Financial Results & Outlook
Phil Tighe CFO FINANCIAL RESULTS & OUTLOOK 8
Slide 9: 3Q Results – Summary
3Q Results – Summary ($ Millions except EPS) 2Q FY2018 3Q FY2018 3Q FY2017 B/(W) Unit Volume 2,441 3,746 3,849 (103) Net Revenue $216.6 $314.2 $332.6 $(18.4) Gross Margin 10.0% 11.8% 13.5% (170) bps. Net Income $1.8 $21.9 $20.0 $1.9 Adj. Net Income1 $4.6 $25.8 $20.8 $5.1 Adj. EBITDA1 $10.0 $23.7 $32
Slide 10: 3Q FY2017 to FY2018 Adj. EBITDA Walk
3Q FY2017 to FY2018 Adj. EBITDA Walk ($ Millions) $33 $1 $(3) $24 $(6) 3Q FY2017 Bus Volume & Mix Parts Economics 3Q FY2018 Volume was lower as expected; steel and other cost increases will be offset by pricing taken in June that will impact sales late in 4Q 1 See appendix for additional detail rega
Slide 11: Steel and Freight Cost Increases
Steel and Freight Cost Increases % Change from July 2017 Hot Roll Cold Roll Van Spot Rates ($/mt) ($/mt) ($/mile) 55% 29% 27% 7 7 7 7 7 7 8 8 8 8 8 8 ul-1 ug-1 ep-1 ct-1 ov-1 ec-1 an-1 eb-1 ar-1 pr-1 ay-1 un-1 J A S O N D J F M A M J Substantial increases in commodity prices, led by tariff-related s
Slide 12: 4Q FY2017 to FY2018 Adj. EBITDA Walk
4Q FY2017 to FY2018 Adj. EBITDA Walk $11 $32 $3 $25 $(7) 4Q FY2017 Bus & Parts Economics All Other 4Q FY2018 Volume & Mix Economics partially offsets the positive growth in volume and other initiatives 12
Slide 13: FY2018 3Q Free Cash Flow
FY2018 3Q Free Cash Flow ($ Millions) FY2018 FY2017 Adjusted EBITDA $ 23.7 $ 32.9 Cash Paid for Interest (Net) (1.6) (1.5) Trade Working Capital1 14.8 (17.6) CAPEX (8.6) (2.0) Cash Taxes (0.1) (0.1) Other2 7.5 2.0 Adjusted Free Cash Flow $ 35.7 $ 13.7 Cash Paid for Operational Transformation Initiat
Slide 14: Improving Net Debt, Leverage & Liquidity
Improving Net Debt, Leverage & Liquidity ($ Millions) As of June 30, 2018 Debt $145.8 Cash 41.9 Net Debt 103.9 Net Debt / Adjusted EBITDA 1.6x Net Leverage Ratio 1.9x Compared with minimum bank Net Leverage Ratio covenant of 3.75x Liquidity1 110.0 1 Liquidity is defined as cash and cash equivalents
Slide 15: Outlook & Guidance
Phil Horlock President & CEO Outlook & Guidance 15
Slide 16: Outlook for FY2018
Outlook for FY2018 ▪ On track for another strong 35,000+ unit industry, about equal to last year ▪ Despite the expectation of a relatively flat industry, Blue Bird expects sales growth of ~3% ▪ Second half margins will be better than first half, but lower than previously expected in 3Q and Full Year
Slide 17: FY2018 4Q Outlook and Full-Year Guidance
FY2018 4Q Outlook and Full-Year Guidance FY2018 FY2018 FY2018 4Q Revised Memo: $ Millions Year-to-Date Forecast Guidance FY2017 4Q Net Sales $693 $317 - $327 $1,010 - $1,020 $313 Adj. EBITDA $39 $31 - $33 $70 - $72 $25 Adj. Free Cash Flow $8 $22 - $26 $30 - $34 $41 ▪ FY2018 tax rate expected to be 2
Slide 18: FY2019 Outlook
FY2019 Outlook ▪ Blue Bird expects substantially higher gross profit margins than FY2018 due to: – Pricing already implemented in June 2018 will take full effect in FY2019 and offset the impact of steel price and other commodity increases – The full-year impact of the cost reduction initiatives take
Slide 19: FY2019: Improving Margins Through Cost Reductions
FY2019: Improving Margins Through Cost Reductions Cost Savings from Transformational Initiatives FY2018 1H FY2018 2H FY2019 Full Year FY2019 saving will be about double FY2018 19
Slide 20: Wrap-Up
Wrap-Up ▪ Steel price escalation resulted in lower 3Q FY2018 profits and Full Year guidance has been lowered. Little ability to recover within the quarter ▪ Action has been taken to address the commodity headwinds and we expect a record Fourth Quarter profit as the actions take hold ▪ Many positives
Slide 21: 2) BLUE BIRD.
2) BLUE BIRD.
Slide 22: Appendix
Appendix 2) BLUE BIRD.
Slide 23: Adj. EBITDA Reconciliation
Adj. EBITDA Reconciliation Reconciliation of Net Income to Adjusted EBITDA (Unaudited) Three Months Ended Nine Months Ended (in thousands of dollars) June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Net income $ 21,891 $ 20,032 $ 15,888 $ 14,257 Adjustments: Discontinued operations loss (income
Slide 24: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Reconciliation of Free Cash Flow to Adjusted Free Cash Flow (Unaudited) Three Months Ended Nine Months Ended (in thousands of dollars) June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Net cash provided by operating activities $ 40,079 $ 15,076 $ 7,022 $ 5,751 Cash
Slide 25: Adjusted EPS Reconciliation
Adjusted EPS Reconciliation Reconciliation of Net Income to Adjusted Net Income (Unaudited) Three Months Ended Nine Months Ended (in thousands of dollars) June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Net income $ 21,891 $ 20,032 $ 15,888 $ 14,257 Adjustments, net of tax benefit or expense (
Slide 26: Important Disclaimers
Important Disclaimers Forward Looking Statements This presentation includes forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations for future financial performance,
Slide 27: Important Disclaimers
Important Disclaimers Non-GAAP Financial Measures This presentation may include the following non-GAAP financial measures: “Adjusted EBITDA,” “Adjusted Net Income,” “Adjusted Diluted Earnings per Share,” “Free Cash Flow” and “Adjusted Free Cash Flow.” Adjusted EBITDA is defined as income from contin
Slide 28: Important Disclaimers
Important Disclaimers Additional Information Regarding the Tender Offer The tender offer described in this document (the “Offer”) has not yet commenced and may not be commenced. This press release is for informational purposes only. This document is not a recommendation to buy or sell Blue Bird comm
Slide 29: END
2) BLUE BIRD.