The first quarter saw 36% of units produced falling under the older 2021 Blue Bird pricing model, which gave lower profit margins.  -  Image: Canva

The first quarter saw 36% of units produced falling under the older 2021 Blue Bird pricing model, which gave lower profit margins.

Image: Canva

Blue Bird (NASDAQ: BLBD) corporate leaders on Feb. 8 reported positive results from their action plan to improve the school bus manufacturer's financial outlook.

"We made remarkable progress in the first quarter, as the overall operating environment continued to improve in line with our plan," said Matthew Stevenson, Blue Bird's CEO and president. "During the quarter we worked through the majority of the legacy-priced units in the backlog that have caused margin compression over the past several quarters. The Blue Bird team continued executing a rigorous plan to improve operations, reduce fixed costs, and recover economics through pricing. Therefore, we are well positioned for a significant recovery over the next several quarters."

Stevenson said that demand is strong for Blue Bird vehicles, with expanded growth in zero-emission school buses, including 130% more in electric school bus bookings, from states such as Nevada, Kentucky, Tennessee, and Utah. The company had more than 385 electric school buses in backlog at the end of Q1.

"Our order backlog will grow considerably over the next several months as orders are placed tied to the EPA's 2022 Clean School Bus Rebate Program, which will greatly accelerate the adoption of zero-emission student transportation across all 50 U.S. states," he said.

That EPA funding is expected to yield an estimated 500-700 orders for new Blue Bird electric buses, which could result in $200 million of additional revenue.

Razvan Radulescu, chief financial officer of Blue Bird, said the first-quarter results were exciting and gave reason for optimism. He reported that the company exceeded revenue projections, selling 808 more buses than during the same period in 2022. The company has sold out its Type D bus production slots for 2023, but some Q4 capacity may be reserved for Type C electric school buses.

Especially promising news came from the company's success at charging through production of buses purchased before per-unit prices started going up in 2021. About 36% of production in Q1 fell under the old backlog. In the next quarter, that should drop to 12%, with the bulk of the remaining production falling under the 11-25% higher priced backlog from 2022 and 2023.

"The great news is those (legacy-priced) units are now largely behind us," Stevenson said.

Wes Platt

Wes Platt

Executive Editor

Wes Platt joined Bobit in 2021 as executive editor of School Bus Fleet Magazine.

0 Comments