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| 8-K - 8-K - Blue Bird Corp | a20181qcoverpage8-k.htm |
BLUE BIRD DELIVERS STRONG FISCAL 2018
FIRST QUARTER FINANCIAL PERFORMANCE;
INCREASES FULL YEAR GUIDANCE
Unit Sales up 14%, Net Loss reduced by $0.7 million,
Adjusted Diluted EPS up $0.03, Adjusted EBITDA up $2.7 million
and Adjusted Free Cash Flow $3.0 million better
Macon, GA, February 7, 2018 – Blue Bird Corporation (“Blue Bird”) (Nasdaq: BLBD), the leading independent designer and manufacturer of school buses, announced today its fiscal 2018 first quarter results
First Quarter Highlights
• | Bus sales for the quarter totaled 1,705 buses, 212 units (or 14%) higher than the same period last year. |
• | Net sales for the first quarter of $162.5 million, $25.9 million (or 19%) higher than the same period last year. |
• | First quarter net loss was $(7.8) million, an improvement of $0.7 million compared with the same period last year. |
• | First quarter GAAP diluted earnings per share of $(0.36), was an improvement of $0.06 compared with the same period last year. Adjusted Diluted Earnings per Share was $(0.10) for the first quarter, an improvement of $0.03. |
• | First quarter Adjusted EBITDA1 of $5.3 million was up $2.7 million compared with the same period last year. |
• | First quarter net cash provided by operating activities was $(33.8) million, $1.6 million better than the same period last year. Adjusted Free Cash Flow1 for first quarter was $31.8 million, an improvement of $3.0 million compared with the first quarter of last year. |
• | Net debt as of December 30, 2017 was $126.2 million, $17.5 million (or 12.2%) lower than the same time last year. |
• | Gross margin in the quarter was 12.7%, down 60 bps. from last year. |
• | Increasing full-year fiscal 2018 net sales guidance to $1,010 million - $1,040 million, Adjusted EBITDA guidance to $80 - $85 million and Adjusted Free Cash Flow guidance to $40 - $45 million. |
(in millions except EPS data) | Three Months Ended December 30, 2017 | B/(W) 2017 | |||||
Unit Sales | 1,705 | 212 | |||||
GAAP Measures: | |||||||
Revenue | $ | 162.5 | $ | 25.9 | |||
Net Income | $ | (7.8 | ) | $ | 0.7 | ||
Diluted Earnings per Share | $ | (0.36 | ) | $ | 0.06 | ||
Non-GAAP Measures1: | |||||||
Adjusted EBITDA | $ | 5.3 | $ | 2.7 | |||
Adjusted Net Loss | $ | (1.7 | ) | $ | 0.4 | ||
Adjusted Diluted Earnings per Share | $ | (0.10 | ) | $ | 0.03 | ||
1 Reconciliation to relevant GAAP metrics shown below
“We are pleased with our first quarter performance, with improvements in nearly all aspects of the business," said Phil Horlock, President and Chief Executive Officer of Blue Bird Corporation. “We are excited about the investments we are
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making to improve quality, reduce cost and increase capacity, which will drive higher profitability and margins. 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. We are pleased to announce that we are raising our full-year fiscal 2018 net revenue guidance to $1,010 million - $1,040 million, Adjusted EBITDA guidance to $80 - $85 million and Adjusted Free Cash Flow guidance to $40 - $45 million.”
First Quarter 2018 Results
Net Sales
Total net sales were $162.5 million for the first quarter of fiscal 2018, an increase of $25.9 million, or 18.9%, from prior year period. Bus unit sales were 1,705 units for the quarter compared with 1,493 units for the same period last year.
Gross Profit
First quarter gross profit of $20.6 million represents an increase of $2.5 million from the first quarter of last year.
Net Income/Loss
Net loss was $7.8 million for the first quarter of fiscal 2018, an increase of $0.7 million compared with the same period last year.
Adjusted Net Income/Loss
Adjusted Net Loss was $1.7 million, representing an improvement of $0.4 million compared with the same period last year.
Adjusted EBITDA
Adjusted EBITDA was $5.3 million, or 3.3% of net sales, representing an increase of $2.7 million compared with the first quarter of the prior year.
Conference Call Details
Blue Bird will discuss its first quarter 2018 results and other related matters in a conference call at 8:00 AM ET today. Participants may listen to the audio portion of the conference call either through a live audio webcast on the Company's website or by telephone. The slide presentation and webcast can be accessed via the Investor Relations portion of Blue Bird's website at www.blue-bird.com.
• | Webcast participants should log on and register at least 15 minutes prior to the start time on the Investor Relations homepage of Blue Bird’s website at http://investors.blue-bird.com. Click the link in the events box on the Investor Relations landing page. |
• | Participants desiring audio only should dial 800-281-7829 or 323-794-2140. |
A replay of the webcast will be available approximately two hours after the call concludes via the same link on Blue Bird’s website.
About Blue Bird Corporation
Blue Bird is the leading independent designer and manufacturer of school buses, with more than 550,000 buses sold since its formation in 1927 and approximately 180,000 buses in operation today. Blue Bird’s longevity and reputation in the school bus industry have made it an iconic American brand. Blue Bird distinguishes itself from its principal competitors by its singular focus on the design, engineering, manufacture and sale of school buses and related parts. As the only manufacturer of chassis and body production specifically designed for school bus applications, Blue Bird is recognized as an industry leader for school bus innovation, safety, product quality/reliability/durability, operating costs and drivability. In addition, Blue Bird is the market leader in alternative fuel applications with its propane-powered and compressed natural gas-powered school buses. Blue Bird manufactures school buses at two facilities in Fort Valley, Georgia. Its Micro Bird joint venture operates a manufacturing facility in Drummondville, Quebec, Canada. Service and after-market parts are distributed from Blue Bird’s parts distribution center located in Delaware, Ohio.
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Key Non-GAAP Financial Measures We Use to Evaluate Our Performance
This press release includes the following non-GAAP financial measures “Adjusted EBITDA,” "Adjusted EBITDA Margin," "Adjusted Net Income (Loss)," "Adjusted Diluted Earnings per Share," “Free Cash Flow” and “Adjusted Free Cash Flow” because management views these metrics as a useful way to look at the performance of our operations between periods and to exclude decisions on capital investment and financing that might otherwise impact the review of profitability of the business based on present market conditions.
Adjusted EBITDA is defined as net income prior to discontinued operations income or loss, interest income, interest expense, income taxes, and depreciation, amortization, and disposals, as adjusted to add back certain charges that we may record each year, such as stock-compensation expense and transaction costs, as these expenses are not considered an indicator of ongoing company performance. We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of net sales. Adjusted Net Income (Loss) is net income as adjusted to add back certain transaction costs not considered an indicator of ongoing company performance. Adjusted diluted earnings per share represents Adjusted Net Income (Loss) by diluted weighted average common shares outstanding (as if we had GAAP net income during the respective period). Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income (Loss), and Adjusted Diluted Earnings per Share are not measures of performance defined in accordance with GAAP. The measures are used as a supplement to GAAP results in evaluating certain aspects of our business, as described below.
We believe that Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income (Loss), and Adjusted Diluted Earnings per Share are useful to investors in evaluating our performance because the measures consider the performance of our operations, excluding decisions made with respect to capital investment, financing, and other expenses. We believe that the non-GAAP metrics offer additional financial metrics that, when coupled with the GAAP results and the reconciliation to GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business.
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income (Loss) and Adjusted Diluted Earnings per Share should not be considered as alternatives to net income or GAAP earnings per share as an indicator of our performance or as alternatives to any other measure prescribed by GAAP as there are limitations to using such non-GAAP measures. Although we believe the non-GAAP measures may enhance the evaluation of our operating performance based on recent revenue generation and product/overhead cost control because they exclude the impact of prior decisions made about capital investment, financing, and other expenses, (i) other companies in Blue Bird’s industry may define Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income (Loss), and Adjusted Diluted Earnings per Share differently than we do and, as a result, they may not be comparable to similarly titled measures used by other companies in Blue Bird’s industry, and (ii) Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income (Loss), and Adjusted Diluted Earnings per Share exclude certain financial information that some may consider important in evaluating our performance.
We compensate for these limitations by providing disclosure of the differences between Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income (Loss), and Adjusted Diluted Earnings per Share and GAAP results, including providing a reconciliation to GAAP results, to enable investors to perform their own analysis of our operating results.
Our measures of “Free Cash Flow” and "Adjusted Free Cash Flow" are used in addition to and in conjunction with results presented in accordance with GAAP and free cash flow and adjusted free cash flow should not be relied upon to the exclusion of GAAP financial measures. Free cash flow and adjusted free cash flow reflect an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. We strongly encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
We define free cash flow as net cash provided by/used in operations minus cash paid for fixed assets. We define adjusted free cash flow as free cash flow minus cash paid for special compensation and other business combination expenses. We use free cash flow and adjusted free cash flow, and ratios based on both, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe it is a more conservative measure of cash flow since purchases of fixed assets and intangible assets are a necessary component of ongoing operations. In limited circumstances in which proceeds from sales of fixed or intangible assets exceed purchases, free cash flow would exceed cash flow from operations. However, since we do not anticipate being a net seller of fixed or intangible assets, we expect free cash flow to be less than operating cash flows.
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Forward Looking Statements
This press release includes forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for our business. Specifically, forward-looking statements include statements in this press release regarding guidance, seasonality, product mix and gross profits and may include statements relating to:
• | Inherent limitations of internal controls impacting financial statements |
• | Growth opportunities |
• | Future profitability |
• | Ability to expand market share |
• | Customer demand for certain products |
• | Economic conditions that could affect fuel costs, commodity costs, industry size and financial conditions of our dealers and suppliers |
• | Labor or other constraints on the Company’s ability to maintain a competitive cost structure |
• | Volatility in the tax base and other funding sources that support the purchase of buses by our end customers |
• | Lower or higher than anticipated market acceptance for our products |
• | Other statements preceded by, followed by or that include the words “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions |
These forward-looking statements are based on information available as of the date of this press release, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. The factors described above, as well as risk factors described in reports filed with the SEC by us (available at www.sec.gov), could cause our actual results to differ materially from estimates or expectations reflected in such forward-looking statements.
Contact:
Mark Benfield
Investor Relations & Government Affairs
(478) 822-2315
Mark.Benfield@blue-bird.com
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BLUE BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands except for share data) | December 30, 2017 | September 30, 2017 | |||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 23,208 | $ | 62,616 | |||
Accounts receivable, net | 6,279 | 10,148 | |||||
Inventories | 74,332 | 76,155 | |||||
Other current assets | 9,980 | 11,528 | |||||
Total current assets | $ | 113,799 | $ | 160,447 | |||
Property, plant and equipment, net | 36,185 | 34,708 | |||||
Goodwill | 18,825 | 18,825 | |||||
Intangible assets, net | 56,979 | 57,481 | |||||
Equity investment in affiliate | 11,675 | 11,625 | |||||
Deferred tax asset | 10,283 | 11,755 | |||||
Other assets | 1,091 | 975 | |||||
Total assets | $ | 248,837 | $ | 295,816 | |||
Liabilities and Stockholders' Deficit | |||||||
Current liabilities | |||||||
Accounts payable | $ | 60,669 | $ | 87,331 | |||
Warranty | 8,113 | 8,573 | |||||
Accrued expenses | 10,943 | 18,229 | |||||
Deferred warranty income | 6,821 | 6,776 | |||||
Other current liabilities | 8,078 | 9,847 | |||||
Current portion of senior term debt | 8,000 | 8,000 | |||||
Total current liabilities | $ | 102,624 | $ | 138,756 | |||
Long-term liabilities | |||||||
Long-term debt | $ | 141,418 | $ | 143,224 | |||
Warranty | 11,675 | 12,337 | |||||
Deferred warranty income | 12,387 | 12,519 | |||||
Other liabilities | 15,233 | 15,064 | |||||
Pension | 30,816 | 32,426 | |||||
Total long-term liabilities | $ | 211,529 | $ | 215,570 | |||
Stockholders' deficit | |||||||
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 400,000 issued with liquidation preference of $40,000 at December 30, 2017 and September 30, 2017 | $ | 40,000 | $ | 40,000 | |||
Common stock, $0.0001 par value, 100,000,000 shares authorized, 23,914,310 and 23,739,344 issued and outstanding at December 30, 2017 and September 30, 2017, respectively. | 2 | 2 | |||||
Additional paid-in capital | 45,888 | 45,418 | |||||
Accumulated deficit | (107,894 | ) | (100,055 | ) | |||
Accumulated other comprehensive loss | (43,312 | ) | (43,875 | ) | |||
Total stockholders' deficit | $ | (65,316 | ) | $ | (58,510 | ) | |
Total liabilities and stockholders' deficit | $ | 248,837 | $ | 295,816 | |||
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BLUE BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended | |||||||
(in thousands except for share data) | December 30, 2017 | December 31, 2016 | |||||
Net sales | $ | 162,549 | $ | 136,660 | |||
Cost of goods sold | 141,901 | 118,462 | |||||
Gross profit | $ | 20,648 | $ | 18,198 | |||
Operating expenses | |||||||
Selling, general and administrative expenses | 25,918 | 18,192 | |||||
Operating (loss) profit | $ | (5,270 | ) | $ | 6 | ||
Interest expense | (1,452 | ) | (2,688 | ) | |||
Interest income | 15 | 7 | |||||
Other income (expense), net | 170 | (127 | ) | ||||
Loss on debt extinguishment | — | (10,142 | ) | ||||
Loss before income taxes | $ | (6,537 | ) | $ | (12,944 | ) | |
Income tax (expense) benefit | (1,352 | ) | 3,672 | ||||
Equity in net income of non-consolidated affiliate | 50 | 749 | |||||
Net loss | $ | (7,839 | ) | $ | (8,523 | ) | |
Earnings per share: | |||||||
Net loss (from above) | $ | (7,839 | ) | $ | (8,523 | ) | |
Less: preferred stock dividends | 770 | 953 | |||||
Net loss available to common stockholders | $ | (8,609 | ) | $ | (9,476 | ) | |
Basic weighted average shares outstanding | 23,924,045 | 22,596,314 | |||||
Diluted weighted average shares outstanding | 23,924,045 | 22,596,314 | |||||
Basic loss per share | $ | (0.36 | ) | $ | (0.42 | ) | |
Diluted loss per share | $ | (0.36 | ) | $ | (0.42 | ) | |
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BLUE BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended | |||||||
(in thousands of dollars) | December 30, 2017 | December 31, 2016 | |||||
Cash flows from operating activities | |||||||
Net loss | $ | (7,839 | ) | $ | (8,523 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation and amortization | 2,097 | 2,023 | |||||
Amortization of debt costs | 194 | 514 | |||||
Share-based compensation | 624 | — | |||||
Equity in net income of affiliate | (50 | ) | (749 | ) | |||
Deferred taxes | 1,155 | (3,875 | ) | ||||
Amortization of deferred actuarial pension losses | 880 | 1,573 | |||||
Loss on debt extinguishment | — | 10,142 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable | 3,869 | 1,363 | |||||
Inventories | 1,823 | (18,059 | ) | ||||
Other assets | 1,432 | (23 | ) | ||||
Accounts payable | (26,285 | ) | (10,831 | ) | |||
Accrued expenses, pension and other liabilities | (11,708 | ) | (5,761 | ) | |||
Total adjustments | $ | (25,969 | ) | $ | (23,683 | ) | |
Total cash used in operating activities | $ | (33,808 | ) | $ | (32,206 | ) | |
Cash flows from investing activities | |||||||
Cash paid for fixed assets | (3,449 | ) | (2,956 | ) | |||
Total cash used in investing activities | $ | (3,449 | ) | $ | (2,956 | ) | |
Cash flows from financing activities | |||||||
Repayments under the former senior term loan | $ | — | $ | (161,500 | ) | ||
Borrowings under new term loan | — | 156,887 | |||||
Repayments under the new term loan | (2,000 | ) | — | ||||
Cash paid for capital leases | (38 | ) | (42 | ) | |||
Cash paid for debt issuance costs | — | (210 | ) | ||||
Cash paid to extinguish debt | — | (507 | ) | ||||
Payment of dividends on preferred stock | (770 | ) | (953 | ) | |||
Cash paid for employee taxes on stock option exercises | — | (613 | ) | ||||
Proceeds from exercises of warrants | 3,640 | 2,790 | |||||
Common stock repurchases under the share repurchase program | (2,983 | ) | — | ||||
Total cash used in financing activities | $ | (2,151 | ) | $ | (4,148 | ) | |
Change in cash and cash equivalents | (39,408 | ) | (39,310 | ) | |||
Cash and cash equivalents, beginning of period | 62,616 | 52,861 | |||||
Cash and cash equivalents, end of period | $ | 23,208 | $ | 13,551 | |||
Supplemental disclosures of cash flow information | |||||||
Cash paid during the period for: | |||||||
Interest paid, net of interest received | $ | 1,289 | $ | 1,866 | |||
Income tax paid, net of tax refunds | 25 | 503 | |||||
Non-cash investing and financing activities | |||||||
Change in accounts payable for capital additions to property, plant and equipment | (377 | ) | (1,866 | ) | |||
Cashless exercise of stock options | — | 2,900 | |||||
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Reconciliation of Net Loss to Adjusted EBITDA
(Unaudited)
Three Months Ended | |||||||
(in thousands of dollars) | December 30, 2017 | December 31, 2016 | |||||
Net loss | $ | (7,839 | ) | $ | (8,523 | ) | |
Adjustments: | |||||||
Discontinued operations (income) loss | (87 | ) | 127 | ||||
Interest expense, net | 1,437 | 2,681 | |||||
Income tax expense | 1,352 | (3,672 | ) | ||||
Depreciation, amortization, and disposals | 2,111 | 2,037 | |||||
Loss on debt extinguishment | — | 10,142 | |||||
Operational transformation initiatives | 6,958 | — | |||||
Business combination expenses | — | (174 | ) | ||||
Share-based compensation | 624 | — | |||||
Product redesign initiatives | 740 | — | |||||
Adjusted EBITDA | $ | 5,296 | $ | 2,618 | |||
Adjusted EBITDA margin (percentage of net sales) | 3.3 | % | 1.9 | % | |||
Reconciliation of Free Cash Flow to Adjusted Free Cash Flow
(Unaudited)
Three Months Ended | |||||||
(in thousands of dollars) | December 30, 2017 | December 31, 2016 | |||||
Net cash used in operating activities | $ | (33,808 | ) | $ | (32,206 | ) | |
Cash paid for fixed assets | (3,449 | ) | (2,956 | ) | |||
Free cash flow | $ | (37,257 | ) | $ | (35,162 | ) | |
Cash paid for operational transformation initiatives | (4,674 | ) | — | ||||
Cash paid for product redesign initiatives | (740 | ) | — | ||||
Cash paid for business combination expenses | — | (313 | ) | ||||
Adjusted free cash flow | (31,843 | ) | (34,849 | ) | |||
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Reconciliation of Net Loss to Adjusted Net Loss
(Unaudited)
Three Months Ended | |||||||
(in thousands of dollars) | December 30, 2017 | December 31, 2016 | |||||
Net loss | $ | (7,839 | ) | $ | (8,523 | ) | |
Adjustments, net of tax benefit or expense (1) | |||||||
Operational transformation initiatives | 5,219 | — | |||||
Loss on debt extinguishment | — | 6,491 | |||||
Business combination expenses | — | (111 | ) | ||||
Share-based compensation | 468 | — | |||||
Product redesign initiatives | 555 | — | |||||
Discontinued operations (income) loss | (65 | ) | 95 | ||||
Adjusted net loss, non-GAAP | $ | (1,663 | ) | $ | (2,048 | ) | |
(1) Amounts are net of estimated statutory tax rates of 25% and 36% for the three months ended December 30, 2017 and December 31, 2016, respectively.
Reconciliation of Diluted EPS to Adjusted Diluted EPS
(Unaudited)
Three Months Ended | |||||||
December 30, 2017 | December 31, 2016 | ||||||
Diluted earnings per share | $ | (0.36 | ) | $ | (0.42 | ) | |
One-time charge adjustments, net of tax benefit or expense | 0.26 | 0.29 | |||||
Adjusted diluted earnings per share, non-GAAP (1) | $ | (0.10 | ) | $ | (0.13 | ) | |
Weighted average dilutive shares outstanding | 25,171,951 | 26,910,378 | |||||
(1) Numerator is adjusted loss, non-GAAP.
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