Blue Bird Corporation, the leading independent designer and manufacturer of school buses, announced its fiscal 2020 second quarter results. GAAP net loss for the second quarter was $0.6 million, equal to the second quarter of FY2019. Blue Bird's Adjusted EBITDA for the quarter was $12.7 million, an increase of $0.5 million over prior year. Compared with prior year, Diluted EPS and Adjusted Diluted EPS were up 1 cent and down 5 cents, respectively for the quarter.

Highlights

“We are very pleased with our second quarter results," said Phil Horlock, President and Chief Executive Officer of Blue Bird Corporation. “We increased volume in the second quarter by 14% over last year and grew net sales revenue by a substantial 21%. This was a terrific achievement by our sales team in the seasonally-low first half of the fiscal year. The combination of additional electric bus sales and our focus on driving higher revenue through pricing, contributed to an increase in average selling price per bus of more than $6,000, or 7% over last year's second quarter. We also continued to make great progress in driving down structural costs with our Transformational Initiatives, resulting in our seventh consecutive quarter of year-over-year growth in Adjusted EBITDA.

"As many firms have been reporting, the COVID-19 pandemic has presented a number of unprecedented challenges to business continuity. Our team has done an outstanding job reacting decisively to keep our employees safe, ensuring that our supply-base is aligned with our production schedule, working with state and local officials to maintain an "essential business" designation, and ensuring the company has ample liquidity. Not surprisingly, we have seen significantly lower-than-normal order intake since the middle of March, as school districts across the US and Canada began to close. School boards have been dealing with many challenging issues around education and this has delayed their decisions on school bus purchases. In response, we have taken a number of austerity measures to conserve cash, including cutting non-essential spending, re-evaluating all outstanding capital spending projects, and reducing SG&A expenses. Additionally, we announced earlier this month that we had increased our revolving credit line by $42 million, which is a nice boost to our already-strong liquidity position of $97 million at quarter end. We really appreciate the partnership we have with our bank group. We will also move to a single-shift production schedule in June, which will improve efficiencies and reduce cost. We can handle future demand by moving from a four-day production schedule on two shifts to a five-day schedule on one shift, working ten hours per day at straight time. This a great example of restructuring our business in response to these difficult times and making us more competitive going forward.

“While orders since the middle of March have been consistently lower than last year, feedback from our dealers and customers indicate that there is significant demand for new school buses ahead as schools prepare for the next school year and school transportation teams return to work as shelter-in-place mandates are lifted. We anticipate orders to increase in the next few weeks in support of bus deliveries for the next school year and we are prepared to meet that demand through July to September production. That said, due to the impact of COVID-19 on the rate of order intake we have already seen, and uncertainty about the economic outlook, as well as timing of bus-purchase decisions, we are withdrawing our fiscal 2020 full-year guidance. We expect to have a clearer view of the full year outlook in the next four to six weeks."

Fiscal 2020 Second Quarter Results

Net Sales

Net sales were $255.4 million for the second quarter of fiscal 2020, an increase of $43.8 million, or 20.7%, from prior year period. Bus unit sales were 2,594 units for the quarter compared with 2,271 units for the same period last year.

Gross Profit

Second quarter gross profit of $24.2 million represented a decrease of $1.8 million from the second quarter of last year. Gross profit margin declined 2.8 points to 9.5%. The decline was primarily driven by higher manufacturing costs, including “unusual events” totaling about $6 million, encompassing COVID-19 and launch costs.

Net Loss

Net loss was $0.6 million for the second quarter of fiscal 2020, equal to the same period last year.

Adjusted Net Income

Adjusted Net Income was $2.8 million, representing a decrease of $1.1 million compared with the same period last year.

Adjusted EBITDA

Adjusted EBITDA was $12.7 million, representing an increase of $0.5 million compared with the second quarter last year. The increase was driven by higher volume, bus pricing and cost reductions, partially offset by higher manufacturing costs.

Year-to-Date 2020 Results

Net Sales

Net sales were $408.6 million for the six months ended April 4, 2020, an increase of $42.1 million, or 11.5%, compared with the prior year. Bus unit sales were 4,054 units for the six months ended April 4, 2020 compared with 3,871 units for the same period last year.

Gross Profit

Year-to-date gross profit was $45.5 million, an increase of $0.4 million from the prior year.

Net Income

Net income was $1.0 million for the six months ended April 4, 2020, which was $0.9 million above the same period in the prior year.

Adjusted Net Income

Year-to-date Adjusted Net Income was $4.8 million, representing a decrease of $0.4 million compared with the prior year. The decline is more than accounted for by the non-recurrence of tax benefits realized in the third quarter of FY2018.

Adjusted EBITDA

Adjusted EBITDA was $20.7 million for the six months ended April 4, 2020, an increase of $1.3 million over the prior year.