Blue Bird Corporation · NASDAQ:BLBD
Blue Bird — Investor Presentation (February 2020)
34 slides from Blue Bird's investor presentation, February 2020
Slide 1: Blue Bird Corporation Investor Presentation
Nasdaq: BLBD Blue Bird Corporation Investor Presentation February 2020
Slide 2: Agenda
Agenda Business Summary School Bus Industry Overview Blue Bird Highlights Financial Overview 2
Slide 3: Business Summary
Business Summary ❖ Continued strong outlook for school bus industry; expect ~35k buses per year over next few years ➢ Incremental school bus funding from the VW settlement will be flowing through the market over the next few years and is expected to accelerate the shift to alternative-fuel powered b
Slide 4: School Bus Industry Overview
School Bus Industry Overview 4
Slide 5: School Bus Industry Products
School Bus Industry Products Type C Buses Type D FE Buses (Conventional) (Front Engine, Transit-Style) Seating Capacity: 36-83 Seating Capacity: 54-90 Fuel Types: Diesel, Propane, CNG, Gasoline, Fuel Type: Diesel Electric (2019) Type D RE Buses Type A Buses (Rear Engine, Transit-Style) Seating Capac
Slide 6: Industry Highlights
Industry Highlights OEMs Thomas Blue Bird 590,000 IC School Bus Customers Attractive Industry Attributes ~3,400 High barriers to entry Contractors Highly specialized product Complex state and customer requirements Dealer and service network Customer relationship driven business ~10,000 Demand Driver
Slide 7: Type C & D School Bus Industry
Type C & D School Bus Industry 40,000 37,641 35,000 35,000 30,000 Mean: 30,800 25,000 23,821 20,000 15,000 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E New School Bus Re
Slide 8: School Buses in Operation
Fleet Age Profile Supports Industry Levels ~590k School Buses on the Road as of the end of FY2017 40,000 300k / 52% 110k / 19% 180k / 30% 35,000 15years and under 10 years 10-14 years older 30,000 School Buses in Operation 25,000 Average age of the 20,000 590k+ Unit Fleet is approx. 11 years 15,000
Slide 9: Type C and Diesel Dominate; Alt. Fuels Growing Rapidly
Type C and Diesel Dominate; Alt. Fuels Growing Rapidly FY2012 FY2018 Type C Type D RE Type D FE Type C Type D RE Type D FE 5% 6% 7% Bus-Type 8% 85% 89% Alt. Fuels Diesel Alt. Fuels Diesel 4% 38% mix for Fuel-Type Blue Bird 17% 96% 83% Type C dominant body type; diesel buses were 83% of FY2018 sales;
Slide 10: Blue Bird Highlights
Blue Bird Highlights (2) BLUE BIRD.
Slide 11: Dedicated Manufacturing Footprint
Dedicated Manufacturing Footprint Micro Bird JV Facility (Drummondville, Quebec, Canada) Micro Bird JV Facility Parts Distribution Center Parts Distribution Center (Drummondville, Quebec) (Delaware, Ohio) (Delaware, Ohio) Design, fabrication, and Electronically guided, houses Commentary assembly of
Slide 12: Leader in Key Attributes Our Customers Value
Leader in Key Attributes Our Customers Value 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 -- -- Blue Bird viewed as the lea
Slide 13: Our Exclusive Franchised Dealer Network
Our Exclusive Franchised Dealer Network More than 85% of Blue Bird dealers dedicated to bus sales and service 13
Slide 14: Alternative-Fuel Leadership
Alternative-Fuel Leadership Record Sales in FY2019 ▪ Full Year sales 21% above last year ▪ Record Full Year sales mix at 48% ▪ 54% sales mix achieved in 2H Up 21% ▪ Propane sales 41% above last year Opportunities ▪ VW mitigation funds ◦ 50 states have finalized mitigation plans ◦ Approximately $600M
Slide 15: Iconic Brand: History of Industry Innovation
Iconic Brand: History of Industry Innovation 1991–1994 First Propane, CNG and Electric Blue Bird Buses Exclusive Exclusive ROUSH 2018 2012 2017 Partnership with CleanTech and Ford ROUSH CleanTech Gen 4 Low NOx and Ford Propane Launched Established to Launch Gen 3 Propane Vision and Micro Bird Exclus
Slide 16: Broadest Range of Product Offerings
Broadest Range of Product Offerings NEW #1 #1 Type C & D Alternative Fuel Type D Rear Cummins Engine Electric #1 Type D Rear Alternative Engine Fuel #1 Type C Traditional Cummins ISL-G CNG Alternative Cummins ISB/ISL Type D Front Diesel Fuel #1 Engine Ford/ROUSH CNG Type C Traditional Alternative Cu
Slide 17: Financial Overview
Financial Overview (2) BLUE BIRD.
Slide 18: Track Record of Growing Sales
Track Record of Growing Sales ($ in millions) Bus Net Sales Parts Net Sales Bus Units Sales $1,200 15,000 $1,025 $1,018 $1,035 14,000 $991 $932 $62 $1,000 $66 $919 $60 13,000 $56 $963 $952 $856 $57 $931 $54 $862 $876 $800 $7771 11,649 12,000 $46 $802 11,317 $11,017 $730 10,616 11,000 $600 $598 10,37
Slide 19: Increasing Profitability
Increasing Profitability ($ in millions) $90 $82 $83 14% $80 $72 $70 $70 $69 12% $70 $67 10% $60 $50 $50 8% 8% 8% 8% 7% 7% 7% $40 6% 6% $30 4% $20 $17 3% 2% $10 $- 0% FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020G Midpoint Adjusted EBITDA Adjusted EBITDA Margin Plan to achieve margi
Slide 20: Strong Cash Flow Generation
Strong Cash Flow Generation ($ in millions) Lower FCF driven by higher $59 CapEx associated with all-new robotic paint facility $45 $44 $40 $36 $33 $33 $31 $12 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020G Midpoint Free cash flow typically represents at least 50% of Adj. EBITDA 20
Slide 21: Driving Down Total Costs
Driving Down Total Costs Purchased Material Commercial Sourcing Material & Design Operating Costs Cost of Production New Paint Facility First-Time Pass Rate 1 Straight Time Capacity Labor Cost Material Cost Warranty Expense Plant Rearrangement Re-Organize Stations Labor Efficiencies 2 Waste In-Line
Slide 22: Key Drivers of Margin Growth
Key Drivers of Margin Growth Not to Scale; Illustrative Only ~ 10% 8-9% 7% 7% • Cost savings and efficiencies from new paint facility; • Surcharge in place • Efficiency gains to offset commodity from industrial cost increases; engineering work; • 1st wave of material • Capture full year of • Product
Slide 23: Improving Net Debt, Leverage & Liquidity
Improving Net Debt, Leverage & Liquidity As of ($ Millions) September 28, 2019 Debt $183.1 Cash 71.0 Net Debt $112.2 Net Debt / Adjusted EBITDA 1.4x Net Leverage Ratio 2.1x Compared with minimum bank Net Leverage Ratio covenant of 3.75x Liquidity1 $164.1 1 Liquidity is defined as cash and cash equiv
Slide 24: Outlook for FY2020 - Following Our Plan
Outlook for FY2020 - Following Our Plan ❖ School bus industry outlook at about 34k, the same level as prior two years, supported by continued growth in property taxes, high mix of buses that are more than 15 years old and VW settlement and other funding to replace aging diesel buses ❖ In FY2020, Blu
Slide 25: FY2020 Full Year Guidance
FY2020 Full Year Guidance FY2019 FY2020 FY2020G $ Millions Actual Guidance B/(W) FY2019 Net Sales $1,018 $1,020 - $1,050 $2 - $32 Adj. EBITDA1 $82 $90-95 $8 - $13 Adj. Free Cash Flow1 $36 $30 - $35 $(6) - $(1) FY2020 Guidance mid-point for Adjusted EBITDA 13% higher than FY2019, driven by improvemen
Slide 26: Thank You!
THANK YOU! (2) BLUE BIRD.
Slide 27: Appendix
Appendix (2) BLUE BIRD.
Slide 28: FY2018 to FY2019 Adj. EBITDA Walk
FY2018 to FY2019 Adj. EBITDA Walk ($ Millions) Pricing and Transformational Initiatives more than offset the impact of lower volume, material economics and manufacturing launch costs See appendix for additional detail regarding Adjusted EBITDA 28
Slide 29: FY2019 Free Cash Flow
FY2019 Free Cash Flow 4Q Full Year ($ Millions) FY2019 FY2018 FY2019 FY2018 Adjusted EBITDA $ 33.4 $ 29.1 $ 81.8 $ 70.4 Cash Paid for Interest (Net) (2.5) (1.2) (10.4) (5.8) Trade Working Capital1 55.4 14.3 (1.6) 7.0 CAPEX (5.4) (16.5) (35.5) (32.1) Cash Taxes (2.2) — (4.6) (3.7) Other2 (1.5) 5.0 5.
Slide 30: Adj. EBITDA Reconciliation
Adj. EBITDA Reconciliation Reconciliation of Net Income to Adjusted EBITDA Three Months Ended Fiscal Year Ended (in thousands of dollars) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Net income $ 11,592 $ 14,932 $ 24,300 $ 30,820 Adjustments: Discontinued operations in
Slide 31: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Reconciliation of Free Cash Flow to Adjusted Free Cash Flow Three Months Ended Fiscal Year Ended (in thousands of dollars) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Net cash provided by operating activities $ 74,819 $ 41,331 $ 55,706 $
Slide 32: Adjusted EPS Reconciliation
Adjusted EPS Reconciliation Reconciliation of Net Income to Adjusted Net Income Three Months Ended Fiscal Year Ended (in thousands of dollars) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Net income $ 11,592 $ 14,932 $ 24,300 $ 30,820 Adjustments, net of tax benefit or
Slide 33: Disclaimer
Disclaimer THE INFORMATION CONTAINED IN THIS PRESENTATION HAS BEEN PREPARED OR OBTAINED BY THE COMPANY FROM ITS BOOKS AND RECORDS AND OTHER SOURCES THAT THE COMPANY BELIEVES TO BE REASONABLY ACCURATE AND RELIABLE. HOWEVER, SUCH INFORMATION NECESSARILY INCORPORATES SIGNIFICANT ASSUMPTIONS AND ESTIMAT
Slide 34: Blue Bird, Built to Take on Tomorrow
BLUE BIRD, BUILT TO TAKE ON TOMORROW.