Blue Bird Beats Guidance, EV Backlog Stretches Into 2027

Date of Call: Feb 4, 2026

Financials Results

• Revenue: $333 million, up 6% year-over-year
• EPS: $1.00 per diluted share, up $0.08 year-over-year
• Gross Margin: 21.4%, up 220 basis points year-over-year
• Operating Margin: 15% adjusted EBITDA margin, up 40 basis points year-over-year

Guidance:

• Revenue for fiscal 2026 expected to be $1.45B to $1.55B.
• Adjusted EBITDA for fiscal 2026 raised to $225M (15%), range of $215M to $230M.
• Adjusted free cash flow for fiscal 2026 expected to be $40M to $60M.
• Q2 forecasted to repeat Q1 strength with additional cost pressures from tariffs and labor.
• Strong second half expected with 15% to 16% adjusted EBITDA margin.
• Medium-term outlook maintained at 15% margin with volumes up to 10,500 units.
• Long-term target revenue of $1.8B to $2.0B with EBITDA of $280M to $320M+ and margin of 15.5% to 16%+.

Business Commentary:

Strong Financial Performance:

• Blue Bird Corporation reported record revenue of $333 million for Q1 of fiscal 2026, 6% higher than the previous year.
• Adjusted EBITDA reached $50 million, a 15% margin, with free cash flow of $31 million.
• The performance was driven by strong sales volume, pricing strategies, and operational efficiencies.

Order Intake and Backlog Growth:

• Order intake for the quarter was up 45% from Q1 of the previous fiscal year, resulting in a backlog of 3,400 units.
• This increase was attributed to stable pricing, strong demand, and continued interest in alternative power buses.

Alternative Power Segment Dominance:

• Alternative fuel buses represented 48% of unit sales in Q1, with the EV backlog extending into 2027.
• The company's leadership in propane and EV segments is supported by favorable total cost of operation and strong state funding for EVs.

Tariff Impact and Pricing Strategy:

• The company's pricing strategy included tariff recovery, with year-over-year selling price per bus increasing by $8,800.
• Despite tariff volatility, Blue Bird maintained margin neutrality through strategic pricing and cost management.

Sentiment Analysis:

Overall Tone: Positive

• CEO stated 'Blue Bird beat guidance on all metrics for the quarter' and 'we are off to a great start.' Management highlighted 'extremely positive development year-over-year' on the balance sheet, record liquidity, and raised guidance. CEO expressed optimism: 'the outlook for Blue Bird is very strong' and 'I remain very optimistic for Blue Bird and its future.'

Q&A:

• Question from Gregory Lewis (BTIG): Could you give color on how much of the margin benefit was pricing versus efficiencies?
  Response: Approximately two-thirds came from pricing (net of material cost increases) and about one-third from better efficiency and quality improvements.

• Question from Gregory Lewis (BTIG): Has diesel gained share recently, and are customers shifting from EVs?
  Response: EV backlog remains very strong (over 1,000 units sold/backlog, extending into 2027). Diesel had a strong quarter but potential prebuy/pull-forward into this year due to uncertainty around 2027 emission regulations.

• Question from Eric Stine (Craig-Hallum): What are trends and advantage for propane?
  Response: Propane remains the preferred alternative fuel for total cost of operation and ease of fleet conversion; no significant change in dynamics.

• Question from Eric Stine (Craig-Hallum): What are current order trends and outlook for order season?
  Response: Order intake was exceptionally strong, up 45% year-over-year, validating pricing stability and supported by strong state funding; backlog is seasonally strong at 3,400 units.

• Question from Eric Stine (Craig-Hallum): Can you expand on capital allocation strategy for acquisitions?
  Response: Strong balance sheet enables strategic evaluation of growth and vertical integration opportunities; focus remains on safe, accretive deals.

• Question from Michael Shlisky (D.A. Davidson): What is the potential impact of adding more automation on margins?
  Response: Automation initiatives have favorable returns and fit within the longer-term outlook, providing tailwinds but not a major change to the 15%+ margin target.

• Question from Michael Shlisky (D.A. Davidson): With strong cash, what is the plan if no M&A emerges?
  Response: Strategy includes ongoing share buybacks ($100M program), capital investment for new plant ($200M over two years), increased CapEx, and engineering investments; future may consider a dividend.

• Question from Michael Shlisky (D.A. Davidson): Any market share threats from competitors?
  Response: Market has normalized after a competitor's supply issues; order intake indicates business as usual with no strange activity.

• Question from Christopher Pierce (Needham): Are there pushbacks on tariff-related pricing, and what role does pricing play in margin guidance?
  Response: Tariffs are seen as a government tax; company works with partners to minimize them and provides fixed pricing certainty to dealers/customers. Target remains margin-neutral on tariffs.

• Question from Unknown Analyst (ROTH Capital Partners): Can you provide more color on the EV market?
  Response: Strong EV orders supported by EPA rounds 2/3 and state funding; guidance raised to 800 units for the year, with upside potential if more can be built/delivered.

• Question from Unknown Analyst (ROTH Capital Partners): What is the update on commercial chassis?
  Response: First order received; production start pushed to late Q4 (sales in fiscal 2027). Focus is on getting design, cost, and quality right before timing.

Contradiction Point 1

EV Demand and Guidance Drivers

Contradiction on whether EV guidance relies on new federal funding.

Could you share insights on the current trends in the EV market? - Andrew (ROTH Capital Partners, on for Craig Irwin)

2026Q1: EV demand is stable and supported by state mandates. The outlook is strong and not contingent on new federal funding (rounds 4 & 5). - John Wyskiel(CEO)

How important is the federal EV bus program to fiscal '26 guidance, is additional funding required to meet EV targets, and have state/local subsidy programs increased to surpass federal funding as the main driver of EV demand? - Michael Shlisky (D.A. Davidson Companies)

20251125-2025 Q4: Fiscal '26 EV guidance (750 units, with upside to 1,000) does not rely on rounds 4 & 5 of the federal program. It is supported by a very strong existing backlog. - Razvan Radulescu(CFO)

Contradiction Point 2

EV Backlog Growth Dynamics

Contradiction on whether the strong EV backlog growth mirrors the overall trend.

Have customers shifted to alternatives due to EV delays, or has diesel gained market share recently? - Gregory Lewis (BTIG, LLC, Research Division)

2026Q1: EV backlog remains very strong, with over 1,000 units sold in Q1 plus backlog, extending into fiscal 2027... - John Wyskiel(CEO)

How has EV backlog growth progressed quarter-to-date, and does it align with the overall backlog trend? - Gregory Lewis (BTIG)

20251125-2025 Q4: Yes. The EV backlog also grew. The number of EVs in backlog increased to 850 units. - Razvan Radulescu(CFO)

Contradiction Point 3

EV Demand Outlook and Fiscal 2026 Guidance Reliance

Contradiction on whether EV sales guidance depends on new federal funding.

What are your observations regarding the overall EV market? - Andrew (ROTH Capital Partners, on for Craig Irwin)

2026Q1: EV orders are strong, supported by EPA rounds 2 & 3, state funding subsidies... The upside to overall guidance comes partly from EVs. - Razvan Radulescu(CFO), John Wyskiel(CEO)

How critical is the federal EV bus program to fiscal '26 guidance, and does the EV business require additional funding to succeed? - Michael Shlisky (D.A. Davidson & Co.)

2025Q4: The EV outlook is stable and does not rely on new federal funding rounds... Fiscal '26 EV guidance of 750 units... is supported by a strong existing backlog. - John Wyskiel(CEO), Razvan Radulescu(CFO)

Contradiction Point 4

Materiality of Commercial Chassis Units in Fiscal Guidance

Contradiction on whether commercial chassis units are a material driver for the quarterly sales ramp.

What's the current status and timeline for the commercial chassis development? - Andrew (ROTH Capital Partners, on for Craig Irwin)

2026Q1: The first order for commercial chassis was received... Planned start of production is late Q4 2026, which will push sales into fiscal 2027. For FY26 guidance, these 100 chassis units have been substituted with bus sales, maintaining the total volume of 9,500 units. - John Wyskiel(CEO), Razvan Radulescu(CFO)

Was the fiscal Q4 commercial chassis contribution minimal and not a driver for the guidance range? - Eric Stine (Craig-Hallum Capital Group LLC)

2025Q4: Yes, the ~100 commercial chassis units in guidance are not material to the ramp from the low end to the high end of the fiscal year guidance. - Razvan Radulescu(CFO)

Contradiction Point 5

Pricing Strategy and Tariff Impact

Contradiction on the stability and communication of pricing and tariff impacts to customers.

What feedback are distributors providing on tariff pass-through pricing, any pushback encountered, and how does pricing impact long-term margin guidance? - Christopher Pierce (Needham & Company, LLC)

2026Q1: The company provides fixed tariff pricing certainty to dealers/customers through June. - Razvan Radulescu(CFO), John Wyskiel(CEO)

Are school districts choosing propane school buses over EVs due to battery prices and funding uncertainty, and what protections exist against pricing volatility from tariffs and potential pushback on price increases? - Eric Stine (Craig-Hallum Capital Group LLC)

2025Q3: The company has restructured its go-to-market and pricing strategy... The latest move to provide stability through March is recent... They believe its countermeasures will unlock orders. - Razvan Radulescu(CFO)