Blue Bird Corporation, the leading independent designer and manufacturer of school buses, announced its fiscal 2019 third quarter results. Compared with prior year, Blue Bird improved Adjusted EBITDA by $4.9 million, or 20%, in the quarter to $29.0 million, despite higher commodity costs and lower volume. Diluted EPS and Adjusted Diluted EPS were lower than last year, down 22 cents and 23 cents, more than explained by a one-time tax benefit recorded in the third quarter of FY2018.

Highlights

¹ Reconciliation to relevant GAAP metrics shown below

“We are pleased with our third quarter performance and our continued progress in key areas of the business," said Phil Horlock, President and Chief Executive Officer of Blue Bird Corporation. “The bus pricing we took in late fiscal 2018 to offset rapidly-increasing commodity costs, together with a record 53% mix of alternative-fueled bus sales, contributed to an eight percent increase in net revenue per bus in the third quarter, compared with last year. We achieved significant structural cost reductions from the Transformational Initiatives we started last year, and expect continued gains through FY2019 and beyond from the implementation of these plans. The lower volume was primarily driven by delivery timing with units produced at the end of the third quarter being delivered and sold in the fourth quarter. We are pleased to reaffirm our FY2019 full-year revenue guidance of $990 - $1,025 million and Adjusted EBITDA guidance of $80 - 85 million.

"We are focused on delivering differentiated and innovative products that customers want and value, as demonstrated by our continued growth in alternative-fueled bus sales, with year-to-date bookings and firm order backlog at 21% above last year. With the broadest range of alternative-fueled school bus offerings in the market, offered at the lowest emission levels, we are the clear product and sales leader in the fastest growing segment of the business.

"While making significant capital investments in the business this year for our all-new, robotic paint facility, we will continue to generate positive cash flow and are reaffirming our full year Adjusted Free Cash Flow guidance of $24 - $28 million."

Fiscal 2019 Third Quarter Results

Net Sales
Net sales were $308.8 million for the third quarter of fiscal 2019, a decrease of $5.4 million, or 1.7%, from prior year period. Bus unit sales were 3,420 units for the quarter compared with 3,746 units for the same period last year.

Gross Profit
Third quarter gross profit of $41.8 million represented an increase of $4.8 million from the third quarter of last year. Gross profit margin improved 1.7 points to 13.5%.

Net Income
Net income was $14.6 million for the third quarter of fiscal 2019, representing a decrease in profit of $7.3 million compared with the same period last year, more than accounted for by the non-recurrence of tax benefits realized in third quarter of FY2018.

Adjusted Net Income
Adjusted Net Income was $18.3 million, representing a decrease of $7.9 million compared with the same period last year.

Adjusted EBITDA
Adjusted EBITDA was $29.0 million, representing an increase of $4.9 million compared with the third quarter last year. Bus pricing and cost reductions more than offset the impact of commodity-cost headwinds and lower volume.

Year-to-Date 2019 Results

Net Sales
Net sales were $675.3 million for the nine months ended June 29, 2019, a decrease of $18.0 million, or 2.6%, compared with the prior year. Bus unit sales were 7,291 units for the nine months ended June 29, 2019 compared with 7,892 units for the same period last year.

Gross Profit
Year-to-date gross profit was $86.8 million, an increase of $7.6 million from the prior year.

Net Income
Net income was $12.7 million for the nine months ended June 29, 2019, which was $3.2 million below the same period in the prior year.

Adjusted Net Income
Year-to-date Adjusted Net Income was $23.5 million, representing a decrease of $7.0 million compared with the prior year. The decline is more than accounted for by the non-recurrence of tax benefits realized in third quarter of FY2018.

Adjusted EBITDA
Adjusted EBITDA was $48.5 million for the nine months ended June 29, 2019, an increase of $7.2 million over the prior year.