Blue Bird Corporation, the leading independent designer and manufacturer of school buses, announced its fiscal 2018 second quarter results. Blue Bird Corporation delivered higher revenue, up 4% from prior year, positive net income of $1.8 million and solid Adjusted EBITDA of $10.0 million. Positive earnings were delivered despite higher commodity costs.

Highlights

“We are pleased with our second quarter performance and are well positioned to deliver our full-year targets," said Phil Horlock, President and Chief Executive Officer of Blue Bird Corporation. “We are excited about the Operational Transformation Initiatives we are implementing to improve quality, reduce cost, increase capacity and ensure that Blue Bird continues its tradition as the innovator in the School Bus industry. These key initiatives will drive higher profitability and margins and we are pleased with progress toward our target of an Adjusted EBITDA margin of more than 10% by FY2020. Continuing to invest in differentiated products that customers want and value is a core priority in Blue Bird, as evidenced by another quarter of strong growth and leadership in sales of our alternative-fuel powered school buses and by customer reaction to our all-new range of electric-powered buses. Blue Bird will begin delivery of electric buses to school districts before the end of this fiscal year.

"Despite investment in our initiatives in the second quarter, we continue to generate positive cash flow, with positive net cash provided by operating activities of $0.8 million and Adjusted Free Cash Flow of $3.3 million for the quarter. With our peak sales months ahead, we are maintaining our full year guidance of $40 - $45 million for Adjusted Free Cash Flow for the fiscal year.

"Also, despite the substantial jump in commodity prices (especially steel), we are pleased to announce that we are able to re-affirm our full year guidance for both net revenue of $1,010 million - $1,040 million and Adjusted EBITDA guidance of $80 - $85 million."

Second Quarter 2018 Results

Net Sales

Net sales were $216.6 million for the second quarter of fiscal 2018, an increase of $8.0 million, or 3.8%, from prior year period. Bus unit sales were 2,441 units for the quarter compared with 2,367 units for the same period last year.

Gross Profit

Second quarter gross profit of $21.7 million represents a decrease of $3.0 million from the second quarter of last year.

Net Income

Net income was $1.8 million for the second quarter of fiscal 2018, a decrease of $0.9 million compared with the same period last year.

Adjusted Net Income

Adjusted Net Income was $4.6 million, representing an increase of $1.4 million compared with the same period last year.

Adjusted EBITDA

Adjusted EBITDA was $10.0 million, or 4.6% of net sales, representing an increase of $1.6 million compared with the second quarter of the prior year.

Year-to-Date 2018 Results

Net Sales

Net sales were $379.2 million for the six months ended March 31, 2018, an increase of $33.9 million, or 9.8%, compared with the prior year. This was primarily driven by higher bus unit sales, which were 286 units above the same period last year.

Gross Profit

Gross profit was $42.3 million, a decrease of $0.5 million from the prior year.

Net Income

Net income was $6.0 million for the six months ended March 31, 2018, which was $0.2 million below the same period in the prior year. The decrease was primarily driven by a decrease of $7.2 million in selling, general and administrative expenses, which was partially offset by a decrease of $0.5 million in gross profit.

Adjusted Net Income

Adjusted Net Income was $2.9 million, representing an increase of $1.8 million compared with the prior year.

Adjusted EBITDA

Adjusted EBITDA was $15.3 million, or 4.0% of net sales, for the six months ended March 31, 2018, an increase of $4.3 million from the prior year. The increase in adjusted EBITDA was primarily the of lower adjusted selling, general and administrative expenses.