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01/10 16:01
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reflects a positive outlook with raised revenue and EBITDA guidance, an increased share repurchase program, and a strong EV sales forecast. The Q&A section reveals confidence in state subsidies over federal programs and stable demand despite earlier tariff issues. While management was unclear on some metrics, overall sentiment is positive, supported by a strong backlog and strategic investments. Considering the market cap of $1.76 billion, the stock is likely to see a positive movement of 2% to 8%.
Adjusted EBITDA $221 million for the year, representing 15% of revenue. This is $38 million better compared to last year's record year, driven by higher volumes, improved pricing, and operational efficiencies.
Revenue $1.48 billion for the year, a record year and $133 million ahead of last year, driven by increased bus prices and higher EV product mix.
Electric Vehicle (EV) Sales 901 units sold, representing 9.6% of total volume. This is an increase of 197 units or 28% year-over-year, driven by stable EV demand and EPA funding.
Free Cash Flow $153 million for the year, a $10 million increase versus the prior year, driven by strong operating margins and working capital improvements.
Gross Margin 20.5% for the year, up 1.5 percentage points from last year, due to sustained operational performance and pricing overtaking inflationary costs, including tariff effects.
Average Bus Revenue Per Unit $146,000 per unit, an increase of $8,000 year-over-year, driven by pricing actions and improved EV product mix.
Backlog Ended the year at 3,100 units, down due to industry volatility and seasonal factors. However, it increased to nearly 4,000 units post-year-end, including 850 EVs, driven by pricing stability strategies.
Parts Revenue $103 million for the year, flat compared to the prior year, supported by strong demand due to an aging fleet.
EV Sales: Sold 901 electric vehicles in 2025, representing 9.6% of total volume. Long-term outlook for EVs remains optimistic.
Alternative Powered Buses: 56% of unit sales were alternative powered buses, maintaining a lead position in the segment.
New Commercial Chassis Product: Planning to launch a new commercial chassis product by the end of fiscal 2026.
Market Expansion: Entered new market adjacencies, including the commercial chassis market and Micro Bird joint venture expansion in the U.S.A.
EV Market Position: Maintained leadership in the EV school bus sector, with a strong backlog of 680 EVs and plans to sell 750 EVs in fiscal 2026.
Manufacturing Strategy: Initiated scope development and automation business cases for a new factory to improve long-term competitiveness and reduce costs.
Operational Efficiencies: Achieved record adjusted EBITDA of $221 million (15% of revenue) through pricing actions, operational improvements, and quality enhancements.
Investment in Manufacturing and Products: Investing up to $200 million over the next two years in manufacturing capabilities and product portfolio.
Margin Management: Implemented price increases and maintained a margin-neutral tariff strategy to offset cost pressures.
Tariff Policy Impact: The administration's policy on tariffs continues to create pricing uncertainty in the market, impacting backlog and overall market stability.
Backlog Reduction: The backlog dropped to 3,100 units in Q4, attributed to industry volatility and the typically light order period, which could affect production planning and revenue.
Government Shutdown Delays: Delays in rounds 4 and 5 of the EPA clean school bus program funding due to the government shutdown could impact EV sales and funding timelines.
Tariff Volatility: Unpredictable tariff changes over the last six months have created uncertainty in bus pricing, affecting order intake and financial planning.
Material and Labor Cost Inflation: Inflationary pressures on materials, labor, and healthcare costs continue to challenge operational margins and profitability.
Supply Chain Issues: Ongoing supply chain disruptions have contributed to pent-up demand and could impact production schedules and delivery timelines.
EV Funding Uncertainty: Uncertainty around EPA funding and government policies related to EVs could affect the long-term outlook for electric vehicle sales.
Aging Fleet Replacement Cycle: While the aging fleet presents an opportunity, delays in replacement cycles due to economic or funding constraints could impact demand.
Backlog and Order Trends: The backlog at the end of Q4 2025 was 3,100 units, including 680 EVs. This was attributed to pricing uncertainty driven by tariffs. However, the backlog has since increased to nearly 4,000 units, including over 850 EVs. The company expects to deliver approximately 750 EV units in fiscal 2026, with some bookings extending into fiscal 2027.
Revenue and Profitability Guidance: For fiscal 2026, the company projects revenue of $1.45 billion to $1.55 billion and adjusted EBITDA of $210 million to $230 million, maintaining a margin of 14.5% to 15%. Quarterly revenue is expected to range from $325 million to $425 million, with adjusted EBITDA between $40 million and $70 million per quarter.
EV Market Outlook: The company remains optimistic about the EV market in the school bus sector, citing strong demand and the suitability of EVs for school bus operations. EV sales are projected to grow, supported by EPA clean school bus program funding and state-level initiatives.
Capital Expenditures and Investments: Blue Bird plans to invest up to $200 million over the next two years in manufacturing capabilities, including a new plant in Fort Valley. This project is expected to add 400 jobs and enhance production efficiency.
Long-Term Growth Projections: The company aims to achieve revenue of $1.8 billion to $2 billion and adjusted EBITDA of $280 million to $320 million by 2029 and beyond. This growth will be driven by increased EV adoption, new market adjacencies, and expanded production capabilities.
Market and Industry Trends: The school bus market is projected to grow at a 6% CAGR, with a heavy replacement cycle and pent-up demand due to aging fleets and prior supply chain issues. The company expects these factors to support long-term volume growth.
share repurchase: We ended the year with $229 million in cash and this is after we repurchased $40 million worth of shares during the year. Our liquidity stand at a record $371 million at the end of fiscal '25, a $100 million increase compared to a year ago. We already completed $50 million buyback through fiscal '25 Q4. We expect another $10 million in the current quarter, and we have a new program announced in the last earnings call for up to $100 million over the next 2 years.
The earnings call reflects a positive outlook with raised revenue and EBITDA guidance, an increased share repurchase program, and a strong EV sales forecast. The Q&A section reveals confidence in state subsidies over federal programs and stable demand despite earlier tariff issues. While management was unclear on some metrics, overall sentiment is positive, supported by a strong backlog and strategic investments. Considering the market cap of $1.76 billion, the stock is likely to see a positive movement of 2% to 8%.
The earnings call highlighted strong financial performance with record revenue, increased sales volumes, and improved margins. Despite some concerns about backlog and tariffs, management's optimism about order recovery and sustainable margins is reassuring. The Q&A session revealed confidence in EV momentum and addressed pricing concerns, suggesting stability. The positive outlook on financial metrics and strategic initiatives, including automation and state incentives, supports a positive sentiment. Given the company's mid-cap status, the stock is likely to react positively in the short term, with a predicted price movement between 2% and 8%.
The earnings call highlights positive financial metrics such as increased revenue, strong EV sales, and a healthy cash position. However, concerns about supply chain challenges, regulatory uncertainty, and competitive pressures balance this positivity. The Q&A session reveals management's vague responses on key issues like margin improvements and EV pricing. Despite a share repurchase program, the mixed signals from guidance and external challenges suggest a neutral sentiment, with limited immediate stock price movement expected.
The earnings call reveals strong financial performance, with increased EBITDA margin and liquidity, and a robust share buyback program. Despite risks from tariffs and funding pauses, the company maintains optimistic guidance and growth plans, particularly in EV sales. The market strategy and shareholder return plans are well-received, though some uncertainties remain. Given the company's small-cap status, the positive sentiment and strategic initiatives are likely to result in a 2% to 8% stock price increase over the next two weeks.
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