Blue Bird Corporation · NASDAQ:BLBD
Blue Bird — Evercore ISI 2015 Annual Industrial Conference
71 slides from Blue Bird's conference presentation, Mar 3, 2015
Slide 1: Evercore ISI 2015 Annual Industrial Conference
Evercore ISI 2015 Annual Industrial Conference Investor Presentation March 3, 2015
Slide 2: Important Disclaimers: Forward Looking Statements
Important Disclaimers Forward Looking Statements This presentation may include 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 performan
Slide 3: Important Disclaimers: Non-GAAP Financial Measures
Important Disclaimers Non-GAAP Financial Measures Adjusted EBITDA should not be considered as an alternative to net income (loss) as an indicator of Blue Bird’s performance or as an alternative to any other measure prescribed by GAAP. There are limitations to using non- GAAP measures such as Adjuste
Slide 4: Phil Tighe, Jeff Merten
Phil Tighe Chief Financial Officer 478-822-2009 phil.tighe@blue-bird.com Jeff Merten Director of Investor Relations 478-822-2496 jeff.merten@blue-bird.com 4
Slide 5: 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 6: Why Blue Bird
Why Blue Bird Why What Where Blue Bird We’ve Done We’re Going 6
Slide 7: The New Blue Bird Board of Directors
The New Blue Bird Board of Directors Years Directors Management and Board Experience Blue Bird Cerberus Operations and Advisory Co. (CEO), Invensys (President, Controls Division), The Home Chan Galbato Depot (President, Services Division), Armstrong Floor Products (CEO) 5 Chairman Boards: YP Holding
Slide 8: 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 9: 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 10: 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 11: 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 12: 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 13: 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 14: What We've Done
What We’ve Done Why What Where Blue Bird We’ve Done We’re Going 14
Slide 15: 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 16: 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 17: 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 18: Where We're Going
Where We’re Going Why What Where Blue Bird We’ve Done We’re Going 18
Slide 19: 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 20: 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 21: 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 to -20% diesel has improved considerably Propane autogas pricing has decreased 47% over $3.89 the past year, wh
Slide 22: Share Growth: Propane Opportunity
Share Growth: Propane Opportunity Propane is an effective conquest tool that drives market share growth Fewer than 4% of Customers Have Tried Propane Early penetration of the market Only ~360 of ~10,000 customers have tried propane Customers that buy propane buses are purchasing more propane
Slide 23: Share Growth: Product & Dealer Initiatives
Share Growth: Product & Dealer Initiatives Continuous Product Enhancements Dealer Network Improvements Singular focus on buses Dealer network is strong and getting Purpose-built school bus chassis stronger Leading quality, reliability & durability Improve or replace underperforming dealers
Slide 24: Margin Expansion: Productivity
Margin Expansion: Productivity Lower Break-Even Labor Productivity Break-even volume (based on Adjusted 2014 EBITDA) was 315 units per month in 2014; down from 400 units per month in 2010 106% Continuous improvement 102% manufacturing mindset Reduce overhead/unit 96% Increase labor productiv
Slide 25: Margin Expansion: Growing Parts Business
Margin Expansion: Growing Parts Business ($ 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 $54 Blue Bird’s dealers maintain ~250 50 dealer-authorized service locat
Slide 26: New Markets & Growth Beyond School Buses
New Markets & Growth Beyond School Buses Continue to grow Sigma Bus sales in Colombia and expand to other markets Continue to be preferred vehicle choice for General Services Administration (GSA) Grow international Type C & D bus sales through Bukkehave distributor Expand commercial bus busi
Slide 27: Financial Review
Financial Review 27
Slide 28: Substantial Revenue Growth
Substantial Revenue Growth ($ in millions) Bus Parts Volume $856 $900 12,000 (1) $800 $777 $54 $802 11,000 $46 $730 $700 $598 10,000 $600 $566 $44 $44 9,604 $500 $554 9,000 $522 $400 8,654 8,000 $300 7,000 6,882 $200 6,525 6,000 $100 $- 5,000 FY2011 FY2012 FY2013 FY2014 Memo: Revenue/Unit $80 $80 $8
Slide 29: Impressive Profit Growth
Impressive Profit Growth ($ in millions) 80 Adjusted EBITDA % of Revenue 10% 70 $67 9% 60 $50 8% 50 8% 7% 40 7% 6% 30 20 $17 5% $14 4% 10 3% 3% 0 3% FY2011 FY2012 FY2013 FY2014 Memo: GP Margin 9% 9% 12% 13% Note: Numbers have been rounded EBITDA has grown at a faster rate than revenue 29
Slide 30: Profit Drivers: FY2012 to FY2014
Profit Drivers: FY2012 to FY2014 ($ in millions) $29 $67 $(1) $21 $17 FY2012 Cost Reductions Volume & Mix Other FY2014 Adj. EBITDA Adj. EBITDA Note: Total Adj. EBITDA walk does not sum precisely due to rounding Relentless focus on cost competitiveness allows us to compete in all markets 30
Slide 31: Profit Drivers: FY2013 to FY2014
Profit Drivers: FY2013 to FY2014 ($ in millions) $3 $4 $67 $10 $50 FY2013 Cost Reductions Volume & Mix Other FY2014 Adj. EBITDA Adj. EBITDA Continuous improvements from cost reductions and mix 31
Slide 32: Substantial Free Cash Flow
Substantial Free Cash Flow ($ 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 $6 Source: Blue Bird Management Notes: Free Cash Flow is defined as Cash from Continuing Operations less Capex. (1) FY2014 Free Cash Flow inclu
Slide 33: School Bus Business is Highly Seasonal
School Bus Business is Highly Seasonal School districts typically purchase buses for the start of the school R.L. Polk Unit year, driving higher volumes in April through September Registration Seasonality Based on 3-Year Average FY2012-FY2014 Blue Bird’s quarterly financial results are impacted
Slide 34: Flexible Capital Structure
Flexible Capital Structure ($ 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 $60 million of availability Term Loan Facility (1) 222.9 supports working capital seasonality Total
Slide 35: Wrap-Up
Wrap-Up 35
Slide 36: Summary: Significant Momentum & Upside
Summary: Significant Momentum & Upside Iconic and Fastest Growing School Bus Brand Undisputed Leader in Alternative Fuel-Powered Bus Sales Downside Risk Mitigation Significant Upside Potential Led by an Experienced and Committed Management Team that Delivers Results 36
Slide 37: 2015 Guidance
2015 Guidance ($ in millions) Revenue $918–$940 Adj. EBITDA Up 7%-10% $72 - $75 Range Revenue $856 Up 7%-12% $67 (1) FY2014 FY2015 Guidance (Current) Source: Blue Bird Management Note: Adjusted EBITDA excludes public company costs, stock based compensation, amounts payable under the Blue Bird Phanto
Slide 38: Our Growth Objectives are Clear
Our Growth Objectives are Clear #1 in North American school bus market share with highest customer loyalty Differentiated and proprietary products and features that customers want and value Clear leader in affordable, alternative fuel- powered school buses Significant growth in parts sales
Slide 39: Appendix
Appendix 39
Slide 40: Blue Bird GAAP/Non-GAAP Reconciliation
Blue Bird GAAP/Non-GAAP Reconciliation Year Ended ($ in thousands) 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 $2,757 Loss (income) from discontinued operations, net of tax 1,625 328
Slide 41: Blue Bird Income Statement
Blue Bird Income Statement ($ 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 $109,373 Operating expenses Selling, general and admin
Slide 42: Blue Bird Balance Sheet
Blue Bird Balance Sheet ($ 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 $164,062 Pr
Slide 43: Blue Bird Statement of Cash Flows
Blue Bird Statement of Cash Flows Year Ended ($ 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
Slide 44: 2015 Fiscal First Quarter Results Earnings Conference Call
Blue Bird Corporation (Nasdaq: BLBD) 2015 Fiscal First Quarter Results Earnings Conference Call February 27, 2015
Slide 45: Agenda
Agenda Introductions & Forward-Looking Statements Jeff Merten – Director, Investor Relations Business Overview Phil Horlock – President & CEO Financial Results Phil Tighe – CFO Closing and Q&A Investor Relations Contact Jeff Merten Director, Investor Relations 478-822-2496 jeff.merten@
Slide 46: Important Disclaimers: Forward Looking Statements
Important Disclaimers Forward Looking Statements This presentation may include 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 performan
Slide 47: Important Disclaimers: Non-GAAP Financial Measures
Important Disclaimers Non-GAAP Financial Measures Adjusted EBITDA should not be considered as an alternative to net income (loss) as an indicator of Blue Bird’s performance or as an alternative to any other measure prescribed by GAAP. There are limitations to using non- GAAP measures such as Adjuste
Slide 48: Business Overview
Phil Horlock President & CEO BUSINESS OVERVIEW 48
Slide 49: Business Combination Complete
Business Combination Complete Was Now Ticker: HCAC Ticker: BLBD BLBD replaced HCAC and started trading on NASDAQ on 2/25/15 49
Slide 50: Review of Product Offerings
Review of Product Offerings Blue Bird Vision Blue Bird All American Type C Bus Type D Bus 65% Net Sales 22% Net Sales (2014) (2014) Parts Business 6% Net Sales (2014) Blue Bird Sigma Micro Bird T-Series Specialty Bus Type A Bus 7% Net Sales (Unconsolidated) (2014) We build school and activity buses
Slide 51: 1Q 2015 Highlights
1Q 2015 Highlights Bus Volume Net Sales Adj. EBITDA* 1,824 $165.8 $7.4 Units Million Million Up 279 Units Up $19.8 Million Down $(2.2) Million Bus unit volume up 18% Total company net sales up 14% Strong Adjusted EBITDA of $7.4 million Consistent with our plan and supplemental proxy statemen
Slide 52: Momentum Continues
Momentum Continues Undisputed Leader in Propane Sales Significant Diesel Bus Sales Increase Operational Improvements Achieved Parts Business Growth Positive momentum across the business 52
Slide 53: All-New Micro Bird T-Series Launched
All-New Micro Bird T-Series Launched First in market with all-new Ford chassis New diesel and gasoline engines Approximately 20% increase in fuel economy Lowest total cost of ownership Micro Bird T-Series First in market with innovative new product 53
Slide 54: Here's What's New
Here’s What’s New Products that delight our customers and differentiate Blue Bird 54
Slide 55: Financial Results
Phil Tighe CFO FINANCIAL RESULTS 55
Slide 56: School Bus Business is Highly Seasonal
School Bus Business is Highly Seasonal Timing of sales influenced by R.L. Polk Unit school start Registration Seasonality Based on 3-Year Average FY2012-FY2014 First quarter is historically our lowest volume quarter and we 67% take planned shutdowns during this period 33% Company results follo
Slide 57: 1Q 2015 Sales Results
1Q 2015 Sales Results Bus Volume Bus Sales Parts Sales 1,824 $152.0 $13.8 Units Million Million Up 18% Up 13% Up 15% Total Company Net sales were $165.8 million, up 14% from $146.0 million in 2014 Bus Segment Revenue growth lower than volume growth due to product mix and conquest sales Parts Seg
Slide 58: 1Q 2015 Gross Profit
1Q 2015 Gross Profit Total Company Bus Parts $19.5M $14.3M $5.2M Down $1.0M Down $1.7M Up $0.7M Bus Segment Gross profits were down due to a higher mix of new conquest accounts and other one-time factors Favorable mix of propane and efficiencies were a partial offset Parts Segment Gross profit
Slide 59: 1Q 2014 to 2015 Adj. EBITDA Walk
1Q 2014 to 2015 Adj. EBITDA Walk ($ millions) $9.6 One-time warranty adjustment last year and higher sales expense to support growth $7.4 $0.5 $0.3 Other 1Q 2014 Cost Volume & Mix 1Q 2015 Adj. EBITDA Reductions Adj. EBITDA Net Income Net Income $4.1 $(0.6) $(3.0) Note: See slide 27 for additional de
Slide 60: 1Q Adj. EBITDA to Free Cash Flow Walk
1Q Adj. EBITDA to Free Cash Flow Walk ($ millions) FY15 FY14 Adjusted EBITDA $ 7.4 $ 9.6 Capital Expenditures (0.8) (0.6) Cash Interest (8.3) (0.2) Cash Taxes (0.4) 0.0 Working Capital and Other (29.7) (28.9) Free Cash Flow $(31.8) $(20.1) Cash Flow from Operations $(31.0) $(19.5) Note: See slide 28
Slide 61: 1Q 2015 Net Debt, Leverage & Liquidity
1Q 2015 Net Debt, Leverage & Liquidity ($ millions) As of January 3, 2015 Cash $ 23.5 Gross Debt 220.6 Net Debt $ 197.1 Total Debt / Adj. EBITDA (LTM) 3.4x Net Debt / Adj. EBITDA (LTM) 3.0x Liquidity $ 78.2 61
Slide 62: Closing and Q&A
Phil Horlock President & CEO CLOSING AND Q&A 62
Slide 63: Reaffirming 2015 Full-Year Guidance
Reaffirming 2015 Full-Year Guidance 2015 Revenue 2015 Adj. EBITDA $918 - $940 $72 - $75 Million Million Up 7% - 10% Up 7% - 12% On track to grow Adjusted EBITDA 7-12% in FY2015 63
Slide 64: First Quarter Wrap-Up
First Quarter Wrap-Up Delivered strong bus and parts sales growth Achieved solid Adj. EBITDA in lowest volume quarter Conquested customers in new markets Introduced innovative new products and features Continued to drive productivity Penetrated more new accounts with propane buses Reaffi
Slide 65: A heritage of looking ahead
E> .LUvE BIRD A heritage of looking ahead.
Slide 66: Appendix
Appendix E> .LUvE BIRD A heritage of looking ahead.
Slide 67: Income Statement
Income Statement Three Months Ended Increase/ Three Months Ended (in thousands except for share data) January 3, 2015 Decrease December 28, 2013 (unaudited) $ % (unaudited) Net sales $ 165,833 $ 19,840 13.6 $ 145,993 Cost of goods sold 146,355 20,822 16.6 125,533 Gross profit 19,478 (982) (4.8) 20,4
Slide 68: Balance Sheet
Balance Sheet As of January As of September (in thousands except for share data) 3, 2015 27, 2014 Assets (unaudited) (unaudited) Current assets Cash and cash equivalents $ 23,485 $ 61,137 Accounts receivable, net 14,296 21,215 Inventories 68,916 71,300 Other current assets 3,682 4,353 Deferred tax a
Slide 69: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows Three Months Ended Three Months Ended (in thousands of dollars) January 3, 2015 December 28, 2013 (unaudited) (unaudited) Cash flows from operating activities Net (loss) income $ (628) $ 4,063 Loss from discontinued operations, net of tax 4 6 Adjustments to recon
Slide 70: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Three Months Ended Three Months Ended (in thousands of dollars) January 3, 2015 December 28, 2013 (unaudited) (unaudited) Adjusted EBITDA $ 7,402 $ 9,593 Loss on disposal of fixed assets (469) - Business combination expenses (611) - Tax expense, non-consolidated (10) (
Slide 71: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (In Thousands of Dollars) Three Months Ended Three Months Ended January 3, 2015 December 28, 2013 Net cash used in continuing operations $(30,950) $(19,471) Cash paid for fixed assets (861) (613) Free cash flow $(31,811) $(20,084) 71
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