Blue Bird Corporation's Q1 2025: Contradictions on EV Sales, Tariff Impacts, and Pricing Strategy

These are the key contradictions discussed in Blue Bird Corporation's latest 2025 Q1 earnings call, specifically including: EV sales expectations and funding, impact of tariffs on pricing strategy, EV production and sales expectations, and pricing strategy:



Revenue and Profitability Growth:
- Blue Bird Corporation reported record revenue of $314 million for Q1 fiscal 2025, close to the previous year's level despite a seasonally challenged quarter.
- The company achieved near record quarterly profits with an adjusted EBITDA of $46 million, representing a 15% margin, despite a lower mix of EV units.
- This growth was driven by strong market demand for school buses, high backlog levels, and effective pricing strategies across all powertrain offerings, including internal combustion engines.

Electrified Vehicle Sales and Backlog:
- Blue Bird's EV backlog reached a record 765 units at the end of Q1, 22% higher than the previous fiscal year and 82% above the same time last year.
- The increase was due to a surge in orders submitted to meet the deadline for the federally funded Clean School Bus Program.
- The company remains the undisputed leader in the alternative-powered vehicle segment, benefiting from exclusive partnerships and strong state subsidies.

Supply Chain and Tariff Impact:
- The company has significant parts and component inventory thanks to strategic pre-buys, particularly for EVs, to ensure supply chain stability amid potential tariff threats.
- Blue Bird is prepared to implement a 5% price increase on non-EV orders to cover costs from proposed import tariffs on Canadian and Mexican goods.
- The company has positioned itself to manage these tariffs through potential price adjustments, ensuring minimal impact on its financials.

Executive Orders and Funding Uncertainty:
- The pause in federal funding, following President Trump's executive orders, has led to uncertainty regarding the EPA's Clean School Bus Program funding.
- Despite this, the CFO of the EPA issued a memorandum lifting the pause on fund disbursements, indicating ongoing support for the program.
- Blue Bird has implemented strategies to reprioritize production and pursue new opportunities for EV orders using state and local funding to mitigate risks from unfunded EPA orders.