It’s been a tough first quarter of 2022 for Blue Bird Corporation (NASDAQ: BLBD) thanks to continued supply chain disruptions and inflationary pressures.

On the other hand, this time in 2021, company leaders were forced to cut employee pay and furlough workers after school bus demand dropped due to COVID. During an investor call Wednesday, Blue Bird President and CEO Matthew Stevenson and Razvan Radulescu, the company’s chief financial officer, noted that demand is now back to pre-COVID levels. They’ve increased their workers’ pay in an effort to match inflation and remain competitive in the industry.

They’ve also raised the prices of Type C and D school buses a total of 15% since last quarter. The most recent price increase takes effect on buses ordered on or after March 1. However, the company is continuing to work through a production backlog of buses purchased last year at the lower price points. So, it’s going to be a while before Blue Bird starts to see that new money having any real effect, Radulescu said.

By the third quarter, supply chain constraints should start to ease, he said, and orders reflecting the higher price should begin to roll off the line. But margin pressures and supply problems, combined with a backlog of old orders, make for a bumpy first half of 2022.

Reported net sales for the first quarter, $129.2 million, is a decrease of $1.2 million. Bus unit sales were down to 1,149 units from 1,255 during the same period last year. However, the drop in bus segment sales got partially offset by parts sales. The parts segment and pricing actions to offset increases in purchased part costs are credited with giving Blue Bird a first-quarter gross profit of $16.2 million, up $1.7 million from first quarter 2021.

The company is continuing with plans announced last year to shift into markets beyond the familiar yellow school bus.

“We are expanding our chassis business to motor homes and electrified last-mile delivery vehicles,” Stevenson said. “With a market size of more than 30,000 units, we will effectively double our addressable market.”

Like other bus manufacturers, Blue Bird also awaits implementation of $5 billion in funding for electric and low-emission school buses from the Bipartisan Infrastructure Law. The U.S. Environmental Protection Agency (EPA) reported to Congress that it may have the first phase – a rebate program – online by April.

“Blue Bird is the proven technology leader for zero-emission electric activity and school buses,” Stevenson said. “We anticipate scaling up our electric-vehicle production capacity to 4,000 vehicles a year by 2024 to meet demand.”

Stevenson told investors Wednesday that Blue Bird is repurposing a 40,000-square-foot building on its Georgia campus for dedicated EV chassis assembly to expand production to 12 per day by the end of this fiscal year.