Blue Bird Corporation · NASDAQ:BLBD
Blue Bird — Investor Presentation (June 2019)
40 slides from Blue Bird's investor presentation, June 2019
Slide 1: Blue Bird Corporation Investor Presentation June 2019
Nasdaq: BLBD Blue Bird Corporation Investor Presentation June 2019
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 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 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 $1,008 14,000 $991 $1,000 $932 $62 $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 $554
Slide 19: Increasing Profitability
Increasing Profitability ($ in millions) Adjusted EBITDA $90 $83 14% $80 $72 $70 $69 $70 12% $70 $67 $60 10% $50 $50 8% 8-9% 8% 8% 8% $40 7% 7% 6% $30 6% 4% $20 $17 3% 2% $10 $- 0% FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019G Midpoint Adjusted EBITDA Adjusted EBITDA Margin Plan to achiev
Slide 20: Strong Cash Flow Generation
Strong Cash Flow Generation ($ in millions) Lower FCF driven by higher $59 CapEx associated with all-new robotic paint facility $45 $44 $40 $33 $31 $26 $12 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019G Midpoint Free cash flow typically represents at least 50% of Adj. EBITDA 20
Slide 21: Driving Down Total Costs
Driving Down Total Costs Purchased Material Commercial Sourcing Material & Design Operating Costs Cost of Production New Paint Facility First-Time Pass Rate 1 Straight Time Capacity Labor Cost Material Cost Warranty Expense Plant Rearrangement Re-Organize Stations Labor Efficiencies 2 Waste In-Line
Slide 22: Key Drivers of Margin Growth
Key Drivers of Margin Growth Not to Scale; Illustrative Only ~ 10% 8-9% 7% 7% • Cost savings and efficiencies from new paint facility; • Surcharge in place • Efficiency gains to offset commodity from industrial cost increases; engineering work; • 1st wave of material • Capture full year of • Product
Slide 23: Improving Net Debt, Leverage & Liquidity
Improving Net Debt, Leverage & Liquidity As of March 30, ($ Millions) 2019 Debt $207.6 Cash 25.6 Net Debt $182.0 Net Debt / Adjusted EBITDA 2.5x Net Leverage Ratio 2.5x Compared with minimum bank Net Leverage Ratio covenant of 4.0x Liquidity1 $98.7 1 Liquidity is defined as cash and cash equivalents
Slide 24: Profit and Margin Growth Targeted for FY2019
Profit and Margin Growth Targeted for FY2019 ❖ School bus market on track for another strong ~35,000 unit industry, supported by continued growth in property taxes, age of the fleet and funding from VW Settlement ❖ Blue Bird expects substantially higher gross profit margins than FY2018 due to: ➢ Pri
Slide 25: Reaffirming FY2019 Full Year Guidance
Reaffirming FY2019 Full Year Guidance Memo: FY2019 2H FY2018 FY2019 FY2019G FY2019 B/(W) $ Millions Actual Guidance B/(W) FY2018 2H FY2018 2H Net Sales $1,025 $990 - $1,025 $(35) - $0 $623 - $658 $(23) - $12 Adj. EBITDA1 $70 $80 - $85 $10 - $15 $61 - $66 $8 - $13 Adj. Free Cash Flow1 $40 $24 - $28 $
Slide 26: Thank You!
THANK YOU! (2) BLUE BIRD.
Slide 27: Appendix
Appendix (2) BLUE BIRD.
Slide 28: FY2018 Alternative-Fuel Bus Sales
FY2018 Alternative-Fuel Bus Sales Expected VW funds in FY2019 delayed orders for propane in FY2018 28
Slide 29: Alternative-Fuel Leadership
Alternative-Fuel Leadership FY2019 2Q Highlights ▪ Alternative-fuel bus sales 15% above prior year ▪ YTD 1 sales and order backlog up 24%; record 46% + mix of total sales ▪ Strong electric bus interest; 100+ units ordered Opportunities ▪ VW mitigation funds ◦ 30 states earmarked specific funds for s
Slide 30: 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 31: 2Q FY2018 to FY2019 Adj. EBITDA Walk
2Q FY2018 to FY2019 Adj. EBITDA Walk Bus volume down 170 ($ Millions) units, improved mix and higher parts profits Commodity & other cost increases Pricing to offset economics and cost reductions through Transformational Initiatives drove higher profits 1See appendix for additional detail regarding
Slide 32: 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 33: 2Q FY2019 Free Cash Flow
2Q FY2019 Free Cash Flow 2Q ($ Millions) FY2019 FY2018 Adjusted EBITDA $ 12.2 $ 10.0 Cash Paid for Interest (Net) (2.6) (1.7) Trade Working Capital1 5.0 (1.5) CAPEX (11.9) (3.6) Cash Taxes (2.3) (3.6) Other2 14.0 1.5 Adjusted Free Cash Flow $ 14.4 $ 1.1 Operational Transformation Initiatives/Other (
Slide 34: Adj. EBITDA Reconciliation FY2018
Adj. EBITDA Reconciliation FY2018 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 operat
Slide 35: 2Q Adj. EBITDA Reconciliation
2Q Adj. EBITDA Reconciliation Reconciliation of Net (Loss) Income to Adjusted EBITDA Three Months Ended Six Months Ended (in thousands of dollars) March 30, 2019 March 31, 2018 March 30, 2019 March 31, 2018 Net (loss) income $ (673) $ 1,836 $ (1,893) $ (6,003) Adjustments: Discontinued operations lo
Slide 36: Adjusted EPS Reconciliation FY2018
Adjusted EPS Reconciliation FY2018 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 ben
Slide 37: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Reconciliation of Free Cash Flow to Adjusted Free Cash Flow Three Months Ended Six Months Ended (in thousands of dollars) March 30, 2019 March 31, 2018 March 30, 2019 March 31, 2018 Net cash provided by (used in) operating activities $ 21,436 $ 751 $ (26,772) $ (33,057)
Slide 38: Adjusted EPS Reconciliation
Adjusted EPS Reconciliation Reconciliation of Net (Loss) Income to Adjusted Net Income Three Months Ended Six Months Ended (in thousands of dollars) March 30, 2019 March 31, 2018 March 30, 2019 March 31, 2018 Net (loss) income $ (673) $ 1,836 $ (1,893) $ (6,003) Adjustments, net of tax benefit or ex
Slide 39: 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 40: End
BLUE BIRD, BUILT TO TAKE ON TOMORROW.