Blue Bird Corporation · NASDAQ:BLBD
Blue Bird — Craig-Hallum Conference 2017
46 slides from Blue Bird's conference presentation, May 31, 2017
Slide 1: Blue Bird Corporation
Blue Bird Corporation (Nasdaq: BLBD) Craig-Hallum Conference Minneapolis, MN May 31, 2017
Slide 2: Agenda
Agenda Industry Overview Blue Bird Overview & Product Focus Financials Summary Q&A This presentation includes forward-looking statements, including statements regarding full-year guidance and seasonality, that are subject to risks that could cause actual results to be materially different.
Slide 3: Industry Overview
Industry Overview BLUE BIRD A heritage of looking ahead.
Slide 4: School Bus Industry Products
School Bus Industry Products Type C Buses Type D FE Buses (Conventional) (Front Engine, Transit-Style) Seating Capacity: 36-78 Seating Capacity: 54-90 Fuel Types: Diesel, Propane, CNG, Gasoline Fuel Type: Diesel Type D RE Buses Type A Buses (Rear Engine, Transit-Style) Seating Capacity: 10-30 Seatin
Slide 5: Industry Overview
Industry Overview OEMs Thomas Blue Bird IC School Bus Customers ~3,400 Contractors ~10,000 School Districts Safe and reliable transportation for over 26 million students each day 5
Slide 6: North American school bus industry registrations
Market Recovery 40 FY1998-FY2001 Growth Period Thousands US GDP CAGR 4% 37,600 N.A. School Bus Industry CAGR 5% U.S. Enrollment Growth CAGR 1% 35 US Property Tax Receipts CAGR 4% 34,900 32,900 30 Mean: 30,600 FY2002-FY2007 Growth Period 25 US GDP CAGR 5% N.A. School Bus Industry CAGR 2% U.S. Enrollm
Slide 7: Long-Term Industry Outlook
Long-Term Industry Outlook Industry Drivers Number of school-age children Age of bus fleet Funding for school transportation Recent Industry Trend Low point in FY2011 of 23,800 CAGR since FY2011 of 6% Potential Industry Scenarios Incremental Industry GDP CAGR Funding CAGR School Bus
Slide 8: Market Share Growth
Market Share Growth Market Share Drivers North American Type C & D School Bus Market Bus focused dealers; strong 46% BB IC TH customer relationships 44% Upgrading dealers where 40% required 36% 38% Reduced complexity and 35% 35% 35% substantial quality gains 34% 34% 33% 33% Clear leader in a
Slide 9: Blue Bird Overview & Product Focus
Blue Bird Overview & Product Focus 9
Slide 10: Blue Bird Overview
Blue Bird Overview Founded in 1927 Product development, manufacturing, fabrication and headquarter facilities all located in Fort Valley, GA Produce 70 units per day on two shifts Only pure-play school bus manufacturer Product-focused and purpose-built High barriers to entry Highly spe
Slide 11: What Have We Learned in 90 Years
What Have We Learned in 90 Years Focus on designing and building the world’s finest school bus Continuous innovation that resonates with customers Sales experience and service support are key Value and support enduring relationships with our dealers, suppliers, customers and employees Manage our bus
Slide 12: Track Record of Growing Sales
Track Record of Growing Sales ($ in millions) Bus Net Sales Parts Net Sales Bus Units Sales $1,200 15,000 $995 14,000 $919 $932 $1,000 $856 13,000 $57 $56 $54 $876 $800 $7771 $862 12,000 $46 $802 $730 10,616 $598 11,000 10,378 $600 $566 $44 $44 9,604 10,000 $554 $522 $400 8,654 9,000 8,000 $200 6,88
Slide 13: Blue Bird Alternative Fuels
Blue Bird Alternative Fuels FY2016 Units Sales Gas CNG 7,863 4% 1% Propane 21% 2,240 406 107 Diesel Diesel Propane Gas CNG 74% Alternative Fuels Growth Competition Alt. Fuel Sales (Propane, CNG, Gas) % of Mix IC entered propane market in 2016 40% 3,500+ 4,000 Offering: Power Solutions Inc. (PSI)
Slide 14: Positive Press on Propane Cost Savings
Positive Press on Propane Cost Savings National Average Fuel Prices “Broward County saves over $600,000 with Blue Bird “Washingtonville Central Gas Diesel Propane CNG propane-powered buses” School District $4.50 School Transportation News maintenance costs drop August 14, 2015 30% with propane-power
Slide 15: Launched Four New Powertrains
Launched Four New Powertrains Gasoline Engine V8 Diesel Engine Blue Bird is the only manufacturer to offer a Type C Blue Bird is the only gasoline-powered school bus manufacturer to offer the Cummins ISV 5.0L V8 diesel Lower acquisition cost than in a school bus other fuel types Lower acquis
Slide 16: Broadest Range of Product Offerings
Broadest Range of Product Offerings Type D Rear Engine Alternative Fuel Type D Rear Engine Cummins ISL-G CNG Traditional Type C Cummins ISB/ISL Diesel Alternative Fuel Type D Front Engine Ford/ROUSH CNG Traditional Type C Cummins ISB Diesel Alternative Fuel Type C Ford/ROUSH Propane Traditional Type
Slide 17: Areas of Opportunity
Areas of Opportunity Selection of Alternative-Use Buses Sold by Blue Bird Today Commercial Bus Prison Bus Type A Commercial Bus Purpose Built Bus (Blood Bank, Library etc.) Export Expanding into commercial and export markets using the school bus platform 17
Slide 18: Strategic Growth Objectives
Strategic Growth Objectives Continue to grow school bus market share and highest customer loyalty Lead the market with differentiating and proprietary products and features that customers want and value Continue to work with our dealers and customers to ensure we are delivering superior bus an
Slide 19: Financials
Financials BLUE BIRD A heritage of looking ahead.
Slide 20: Impressive Profit Growth
Impressive Profit Growth ($ in millions) $80 $74 $72 14% $70 $67 $70 12% $60 10% $50 $50 8% 8% 8% 8% $40 6% $30 6% 4% $20 $17 $14 $10 3% 2% 2% $- 0% FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017G Midpoint Adjusted EBITDA Adjusted EBITDA Margin Consistent improvement with 3-5 year target of 10% of
Slide 21: Strong Cash Flow Generation
Strong Cash Flow Generation ($ in millions) 1 Adjusted Free Cash Flow $59 $45 $40 $33 $31 $15 $12 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017G Midpoint Business generates strong free cash flow 1Adjusted for Business Combination and Special Compensation Payments in FY2014, FY2015 and FY2016 21
Slide 22: Improving Net Debt, Leverage & Liquidity
Improving Net Debt, Leverage & Liquidity As of April 1, 2017 ($ Millions) Debt $ 154.9 Cash 38.4 Net Debt $ 116.5 Net Debt / Adjusted EBITDA TTM 1.7x Net Leverage Ratio 1.71X Compared with minimum bank Net Leverage Ratio covenant of 4.0x Liquidity1 $ 108.4 1 Liquidity is defined as cash and cash equ
Slide 23: Seasonality and Growth
Seasonality and Growth Revenue % of Full Year Year-Over- Year Growth FY2014 FY2015 FY2016 FY2017 FY2015 FY2016 FY2017 1 65% 65% 60% 62% $56 1 $39 $41 40% 38% 35% 35% $22 $7 1H 2H 1H 2H $(26) Bookings % of Full Year Year-Over- Year Growth FY2014 FY2015 FY2016 FY2017 FY2015 FY2016 FY2017 1 67% 66% 61%
Slide 24: Summary
BLUE BIRD A heritage of looking ahead.
Slide 25: Significant FY17 1H Operating Achievements
Significant FY17 1H Operating Achievements Gen 4 Propane Emissions 8% Certification for 0.05g/bhp-hr NOx Will be 4x cleaner Awarded DoE E-Bus grant, YTD quote activity is up YTD bookings and order worth $4.4M, to develop than competitors’ 20+% from last year backlog up 8%1 eight electric buses CARB
Slide 26: Future Growth & Profit Drivers
Future Growth & Profit Drivers Industry Volume Upside Growing Student Enrollment & Improved Funding Future Market Share Growth Growth & Increasing Alternative Fuel Penetration Profitability Continuous Product Enhancements Dealer Network Improvements Higher Operating Margins Second Shift Drive Produc
Slide 27: Strong Outlook
Strong Outlook Fundamentals are strong Industry is growing Positive outlook with growing student population Increasing house prices provide funding growth Growing interest in replacing old buses Blue Bird Advantages Acknowledged leader in propane First to market with Gasoline Bus F
Slide 28: Blue Bird
BLUE BIRD A heritage of looking ahead.
Slide 29: Appendix
Appendix BLUE BIRD A heritage of looking ahead.
Slide 30: FY2017 Guidance
FY2017 Guidance 2017G FY2017 1H FY2017 2H ($ Millions) FY2017G B/(W) 2016 Results Expectation Net Sales $980-1,010 $48-78 $345 $635-665 Adj. EBITDA1 $72-76 $0-4 $11 $61-65 Adj. Free Cash $38-42 $5-9 $(14) $52-56 Flow1 Strong 2H expected; reaffirming full-year guidance 1 See appendix for additional d
Slide 31: Key Senior Executives
Key Senior Executives Years Experience Auto Name Position Key Prior Experience Blue Bird Industry Phil Horlock President & Chief Executive Officer 38 7 Phil Tighe Chief Financial Officer 39 4 Tom Roberts Chief Administrative Officer 6 6 Mark Terry Chief Commercial Officer 37 8 Paul Yousif General Co
Slide 32: Iconic History
Iconic History 2016 American Securities becomes majority shareholder 89 Years of Innovation 32
Slide 33: Customer View of Blue Bird
Customer View of Blue Bird Product Attributes Blue Competitor Competitor Ranked in Order of Bird A B Importance1 #1 Safety -- -- #2 Quality, Reliability and -- -- Durability #3 Operating Costs -- -- #4 Acquisition Cost -- -- #5 How the Bus Drives -- -- 1 Checkmarks/Corporate Logo indicate leadersh
Slide 34: Total Projected U.S. Enrollment
Total Projected U.S. Enrollment (000’s of Enrolled Students) 57,023 56,684 56,343 56,010 55,671 55,380 55,132 54,731 54,790 Fall 2015 2016 2017 2018 2019 2020 2021 2022 2023 2015 – 2023 Enrollment Growth of +2 Million Students State Growth 2015-2023 % of Total Growth California 471 24% Texas 443 22%
Slide 35: Recently Improved Financing
Recently Improved Financing Prior Credit Agreement New Credit Agreement Rate: Rate (Grid Pricing): Term Loan Revolver Total Net Leverage Ratio Eurodollar Loans Less than 2.00x 1.75% LIBOR (Floor 1%) LIBOR Greater than or equal to 2.00x 2.00% and less than 2.50x + + Greater than or equal to 2.50x 2.2
Slide 36: FY2016 Year-End Balance Sheet
FY2016 Year-End Balance Sheet 36
Slide 37: FY2016 Income Statement
FY2016 Income Statement BLUE BIRD CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) Fiscal Years Ended (in thousands except for share data) 2016 2015 2014 Net sales $ 932,010 $ 919.128 $ 855,735 Cost of goods sold 802,654 798,733 746,362 Gross profit
Slide 38: FY2016 Statement of Cash Flows
FY2016 Statement of Cash Flows 38
Slide 39: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation 4Q Full Year ($ Millions) FY2016 FY2015 FY2016 FY2015 $ 4.0 $ 55.1 $ 25.3 $ 23.5 Total Cash Provided by Continuing Operations (3.1) (1.8) (9.6) (5.2) Less Cash Paid for Fixed Assets and Acquired Intangibles $ 0.9 $ 53.4 $ 15.7 $ 18.3 Free Cash Flow Business Combination
Slide 40: FY2016 Adjusted EBITDA Reconciliation
FY2016 Adjusted EBITDA Reconciliation 40
Slide 41: Adj. Income from Cont. Ops. Reconciliation
Adj. Income from Cont. Ops. Reconciliation 41
Slide 42: Adj. Diluted EPS Reconciliation
Adj. Diluted EPS Reconciliation 42
Slide 43: FY2016 Segment Revenue and Gross Profit
FY2016 Segment Revenue and Gross Profit 43
Slide 44: 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 45: Important Disclaimers
Important Disclaimers Non-GAAP Financial Measures This presentation includes 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 net income prior to i
Slide 46: END
BLUE BIRD A heritage of looking ahead.