Blue Bird Corporation · NASDAQ:BLBD
Blue Bird — Craig-Hallum Capital Conference 2018
30 slides from Blue Bird's conference presentation, May 30, 2018
Slide 1: Craig-Hallum Capital Conference
Blue Bird Corporation Craig-Hallum Capital Conference May 30, 2018 Minneapolis, MN
Slide 2: Agenda
Agenda School Bus Industry Overview Blue Bird Highlights Financial Overview 2
Slide 3: School Bus Industry Overview
School Bus Industry Overview 3
Slide 4: 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 5: Type C & D School Bus Industry
Type C & D School Bus Industry 40 37,600 Thousands 34,900 35,200 35 Mean: 30,700 30 25 23,800 20 Historical Registrations Long-term Avg. ('85-'17) Source: R.L. Polk New Registrations, based on Type C/D school buses registered during BB fiscal year Industry average size is 30,700 new units annually
Slide 6: 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 (2018) Type D RE Buses Type A Buses (Rear Engine, Transit-Style) Seating Capac
Slide 7: Type C and Diesel Dominate; Alt. Fuels Growing Rapidly
Type C and Diesel Dominate; Alt. Fuels Growing Rapidly FY2012 FY2017 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% Fuel-Type 12% 96% 88% Type C dominant body type; diesel buses were 88% of FY2017 sales; alt. fuel growth 3X s
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: Blue Bird Highlights
Blue Bird Highlights (2) BLUE BIRD.
Slide 10: 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 11: 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 12: Our Exclusive Dealer Network
Our Exclusive Dealer Network More than 85% of Blue Bird dealers dedicated to bus sales and service 12
Slide 13: Alternative-Fuel Leadership
Alternative-Fuel Leadership FY2017 Alternative-Fuel Bus Sales FY2017 Highlights Sold 3,888 alternative fuel buses; 34% mix Ford/Roush partnership provides three distinct fuel types from the same engine/transmission combination Gasoline Blue Bird propane-powered Vision has the Propane 1,757 hig
Slide 14: Iconic Brand: History of Industry Innovation
Iconic Brand: History of Industry Innovation 1991–1994 First Propane, CNG and Electric COMING SOON IN 2018 Blue Bird Buses Exclusive Exclusive ROUSH 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 Mi
Slide 15: Broadest Range of Product Offerings
Broadest Range of Product Offerings NEW #1 Type C & D #1 Alternative Fuel Type D Rear Adomani/EDI Engine Electric Type D Rear Alternative #1 Engine Fuel Type C Traditional Cummins ISL-G #1 Alternative Cummins ISB/ISL Diesel CNG Type D Front Fuel Engine Ford/ROUSH CNG #1 Type C Traditional Alternativ
Slide 16: Financial Overview
Financial Overview (2) BLUE BIRD.
Slide 17: 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 14,000 $991 $932 $1,000 $919 $60 13,000 $856 $57 $56 $931 $800 $777 1 $54 $862 $876 12,000 $46 $802 11,317 $730 10,616 11,000 $600 $598 10,378 $44 9,604 10,000 $554 $400 8,654 9,000 8,000
Slide 18: Increasing Profitability
Increasing Profitability ($ in millions) Adjusted EBITDA $90 $83 14% $80 $70 $72 $69 $70 $67 12% 10% $60 $50 $50 8% $40 8% 8% 8% 7% 6% $30 6% 4% $20 $17 $10 3% 2% $- 0% FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018G Midpoint Adjusted EBITDA Adjusted EBITDA Margin Consistent improvement with FY202
Slide 19: Strong Cash Flow Generation
Strong Cash Flow Generation ($ in millions) 1 Adjusted Free Cash Flow $59 $45 $44 $42 $33 $31 $12 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018G Midpoint Free cash flow typically represents at least 50% of Adj. EBITDA 1Adjusted for Business Combination and Special Compensation Payments in FY2014,
Slide 20: 1H 2018 Commodity Headwinds
1H 2018 Commodity Headwinds 1H2018 vs. 1H2017 vs. 1H2016 Hot Roll 18% 72% Cold Roll 7% 58% Aluminum 18% 39% Rubber (21)% 24% Actions are being taken to offset headwinds: Pricing (quick) OpEx reductions (quick) Resourcing and Design Changes (6-12 month) 20
Slide 21: Walk to 10%+ Margin by FY2020
Walk to 10%+ Margin by FY2020 Operational Transformation Initiatives Purchasing: Manufacturing: Continue to Grow Mix of 40+ Company Quality Focus Alt. Fuels People Eliminate Waste Expert Support Lean Initiatives Innovation Product and Automation in Leadership other costs Key Areas
Slide 22: Key Drivers of Margin Growth
Key Drivers of Margin Growth Not to Scale; Illustrative Only ~ 10% ~ 8% 7% FY17 EBITDA Commodity Transformational FY18 EBITDA Transformational Alt. Fuel FY2020 Margin Costs (Net) Initiatives Guidance Initiatives Growth & Guidance & (Purchasing) (Purch./Mfg.) Other Other Gross Margin Existing initiat
Slide 23: Net Debt, Leverage & Liquidity
Net Debt, Leverage & Liquidity As of March 31, 2018 ($ Millions) Debt $ 147.6 Cash 10.3 Net Debt $ 137.3 Net Debt / Adjusted EBITDA 2.0x Net Leverage Ratio 1.6X Compared with minimum bank Net Leverage Ratio covenant of 3.75x Liquidity1 $ 78.4 1 Liquidity is defined as cash and cash equivalents plus
Slide 24: FY2018 Guidance
FY2018 Guidance FY2017 FY2018 $ Millions Results Guidance Net Sales $991 $1,010-1,040 Midpoint: $1,025 Adj. EBITDA $69 $80-85 Midpoint: $83 Adj. Free Cash Flow $44 $40-45 Midpoint: $42 FY2018 tax rate expected to be 28% - 29% (Federal and State), which will yield ~$5M in cash tax savings Expect
Slide 25: Wrap-Up
Wrap-Up We differentiate ourselves from our competitors We have exclusive and unique products that our customers want and value We are the undisputed leader in alternative fueled school buses, the fastest growing segment in the industry with double digit growth We are investing in our busine
Slide 26: Thank You!
THANK YOU! (2) BLUE BIRD.
Slide 27: Appendix
Appendix (2) BLUE BIRD.
Slide 28: FY2017 Free Cash Flow
FY2017 Free Cash Flow 4Q Full Year ($ Millions) FY2017 FY2016 FY2017 FY2016 Adjusted EBITDA $25.1 $24.3 $ 68.9 $ 72.2 Cash Paid for Interest (Net) (1.3) (3.9) (6.1) (13.3) Trade Working Capital1 26.0 (4.1) (3.8) (12.0) CAPEX (2.1) (3.1) (9.3) (9.6) Cash Taxes (7.1) 0.9 (8.4) (0.2) Other2 0.1 (11.6)
Slide 29: FY2018 2Q Free Cash Flow
FY2018 2Q Free Cash Flow ($ Millions) FY2018 FY2017 Adjusted EBITDA $ 10.0 $ 8.4 Cash Paid for Interest (Net) (1.7) (1.4) Trade Working Capital1 (1.6) 15.3 CAPEX (3.6) (2.2) Cash Taxes (3.6) (0.7) 2 Other 3.8 4.6 Adjusted Free Cash Flow $ 3.3 $24.0 3 Cash Paid for Operational Transformation Initiati
Slide 30: 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