Blue Bird Corporation · NASDAQ:BLBD
Blue Bird — CJS Securities Conference 2019
33 slides from Blue Bird's conference presentation, Jan 9, 2019
Slide 1: CJS Securities Conference
Blue Bird Corporation CJS Securities Conference January 9, 2019 New York, NY Private & Confidential
Slide 2: Agenda
Agenda School Bus Industry Overview Blue Bird Highlights Financial Overview Private & Confidential 2
Slide 3: School Bus Industry Overview
School Bus Industry Overview Private & Confidential 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 40,000 37,641 35,000 35,000 30,000 Mean: 30,800 25,000 23,821 20,000 15,000 1992 1997 2019E 1985 1986 1987 1988 1989 1990 1991 1993 1994 1995 1996 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 New School Bus Re
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 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% Fuel-Type 17% 96% 83% 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 Private & Confidential 9
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 Private & Confidential 12
Slide 13: Alternative-Fuel Leadership
Alternative-Fuel Leadership FY2018 Highlights Alternative-fuel bus sales were 14% higher than prior 363 New Customers in FY2018 year; achieved 70% market share Exclusive relationship with Roush extended until 2025 Achieved certification from EPA and CARB at 0.02g NOx for both propane and CNG i
Slide 14: 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 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 Private & Confidential 16
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 $1,008 14,000 $991 $932 $62 $1,000 $919 $60 13,000 $963 $856 $57 $56 $931 $800 $7771 $54 $862 $876 11,649 12,000 $46 $802 11,317 $730 10,616 $598 11,000 10,378 $600 $44 9,604 10,000 $554
Slide 18: Increasing Profitability
Increasing Profitability ($ in millions) Adjusted EBITDA $90 $83 14% $80 $72 $70 $69 $70 12% $70 $67 $60 10% $50 $50 8% 8% 8% 8% $40 7% 7% 6% $30 6% 4% $20 $17 3% 2% $10 $- 0% FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019G Midpoint Adjusted EBITDA Adjusted EBITDA Margin Plan to achieve FY2
Slide 19: Strong Cash Flow Generation
Strong Cash Flow Generation ($ in millions) Lower FCF driven by higher $59 CapEx associated with new paint facility $45 $44 $40 $33 $31 $26 $12 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019G Midpoint Free cash flow typically represents at least 50% of Adj. EBITDA Private & Confidential 19
Slide 20: Walk to 10%+ Margin by FY2020
Walk to 10%+ Margin by FY2020 Operational Transformation Initiatives Purchasing: Manufacturing: Continue to Grow Mix of 40+ Company Quality Focus Alt. Fuels People Eliminate Waste Expert Support Lean Initiatives Innovation Product and Automation in Leadership other costs Key Areas
Slide 21: Key Drivers of Margin Growth
Key Drivers of Margin Growth Not to Scale; Illustrative Only ~ 10% 8-9% 7% 7% • Cost savings and efficiencies from new paint facility; • Surcharge in place • Efficiency gains to offset commodity from industrial cost increases; engineering work; • 1st wave of material • Capture full year of • Continu
Slide 22: Net Debt, Leverage & Liquidity
Net Debt, Leverage & Liquidity As of September 29, ($ Millions) 2018 Debt $142.1 Cash 60.3 Net Debt $81.9 Net Debt / Adjusted EBITDA 1.16x Net Leverage Ratio 1.7x Compared with minimum bank Net Leverage Ratio covenant of 4.0x Liquidity1 153.4 1 Liquidity is defined as cash and cash equivalents plus
Slide 23: Outlook for FY2019
Outlook for FY2019 School bus industry of about 35k, supported by continued growth in property taxes and funding from VW settlement Blue Bird expects substantially higher gross profit margins than FY2018 due to: Pricing already implemented in June 2018 which takes full effect in FY2019, offset
Slide 24: FY2019 Guidance
FY2019 Guidance FY2018 FY2018 FY2019 FY2019G $ Millions Guidance Actual Guidance B/(W) FY2018 Net Sales $1,010 - $1,020 $1,025 $990 - $1,025 $(35) - $0 Adj. EBITDA1 $70 - $72 $70 80-85 $10 - $15 Adj. Free Cash Flow1 $30 - $34 $40 $24 - $28 $(12) - $(16) FY2019 Guidance range for Adjusted EBITDA 14%
Slide 25: THANK YOU!
THANK YOU! Private & Confidential 25
Slide 26: Appendix
Appendix Private & Confidential 26
Slide 27: FY2018 Alternative-Fuel Bus Sales
FY2018 Alternative-Fuel Bus Sales Expected VW funds in FY2019 delayed orders for propane in FY2018 Private & Confidential 27
Slide 28: FY2017 to FY2018 Adj. EBITDA Walk
FY2017 to FY2018 Adj. EBITDA Walk ($ Millions) Transformational cost initiative, efficiencies and operating costs Bus volume up 332 units, offset by product and Material Economics customer mix largely due to steel & commodities and freight Volume improvements and cost reductions offset the impact of
Slide 29: FY2018 Free Cash Flow
FY2018 Free Cash Flow 4Q Full Year ($ Millions) FY2018 FY2017 FY2018 FY2017 Adjusted EBITDA $ 29.1 $ 25.1 $ 70.4 $ 68.9 Cash Paid for Interest (Net) (1.2) (1.3) (5.8) (6.1) Trade Working Capital1 14.3 26.0 7.0 (3.8) CAPEX (16.5) (2.1) (32.1) (9.3) Cash Taxes — (7.1) (3.7) (8.4) Other2 5.0 0.1 4.4 2.
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 29, 2018 September 30, 2017 September 29, 2018 September 30, 2017 Net income $ 14,932 $ 14,544 $ 30,820 $ 28,801 Adjustments: Discontinued operations in
Slide 31: 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 29, 2018 September 30, 2017 September 29, 2018 September 30, 2017 Net income $ 14,932 $ 14,544 $ 30,820 $ 28,801 Adjustments, net of tax benefit or
Slide 32: 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 33: End
End Private & Confidential 33