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Item 1. Financial Statements

2023-02-08 compared with 2022-08-10 · 184 added, 222 removed, 247 unchanged (62% of the section changed)

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CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands of dollars, except for share data) July 2, 2022 October 2, 2021

(in thousands of dollars, except for share data) December 31, 2022 October 1, 2022

Current assets

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Total current assets $ 157,957 $ 174,476

Restricted cash $ 236 $ —

Property, plant and equipment, net 99,110 100,608

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Total assets $ 351,605 $ 366,126

Liabilities and Stockholders' Equity (Deficit)

Liabilities and Stockholders' (Deficit) Equity

Current liabilities

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Guarantees, commitments and contingencies (Note 6)

Stockholders' equity (deficit)

Preferred stock, $ 0.0001 par value, 10,000,000 shares authorized, 0 shares outstanding at July 2, 2022 and October 2, 2021

Common stock, $ 0.0001 par value, 100,000,000 shares authorized, 31,990,860 and 27,205,269 shares outstanding at July 2, 2022 and October 2, 2021, respectively

Stockholders' (deficit) equity

Preferred stock, $ 0.0001 par value, 10,000,000 shares authorized, 0 shares outstanding at December 31, 2022 and October 1, 2022

Common stock, $ 0.0001 par value, 100,000,000 shares authorized, 32,032,067 and 32,024,911 shares outstanding at December 31, 2022 and October 1, 2022, respectively

Additional paid-in capital 173,592 173,103

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Accumulated other comprehensive loss ( 41,703 ) ( 41,930 )

Treasury stock, at cost, 1,782,568 shares at July 2, 2022 and October 2, 2021

Treasury stock, at cost, 1,782,568 shares at December 31, 2022 and October 1, 2022

( 50,282 ) ( 50,282 )

Total stockholders' equity (deficit) $ 21,987 $ ( 32,656 )

Total liabilities and stockholders' equity (deficit) $ 463,170 $ 356,020

Total stockholders' (deficit) equity $ ( 9,196 ) $ 1,382

Total liabilities and stockholders' (deficit) equity $ 351,605 $ 366,126

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended Nine Months Ended

(in thousands of dollars except for share data) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Three Months Ended

(in thousands of dollars except for share data) December 31, 2022 January 1, 2022

Net sales $ 235,732 $ 129,223

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Selling, general and administrative expenses 16,832 18,233

Operating profit (loss) $ 1,088 $ 8,086 $ ( 17,649 ) $ 8,996

Operating loss $ ( 9,375 ) $ ( 2,036 )

Interest expense ( 4,196 ) ( 3,082 )

Interest income — — — 1

Other income, net 735 426 2,215 1,491

Other (expense) income, net ( 236 ) 736

Loss on debt modification ( 537 ) ( 561 )

(Loss) income before income taxes $ ( 2,085 ) $ 5,707 $ ( 25,476 ) $ 2,821

Income tax (expense) benefit ( 2,860 ) ( 1,892 ) 6,317 ( 888 )

Equity in net (loss) income of non-consolidated affiliate ( 1,490 ) 517 ( 3,505 ) 166

Net (loss) income $ ( 6,435 ) $ 4,332 $ ( 22,664 ) $ 2,099

(Loss) earnings per share:

Loss before income taxes $ ( 14,344 ) $ ( 4,943 )

Income tax benefit 2,981 1,762

Equity in net income (loss) of non-consolidated affiliate 69 ( 901 )

Net loss $ ( 11,294 ) $ ( 4,082 )

Loss per share:

Basic weighted average shares outstanding 32,026,311 28,118,450

Diluted weighted average shares outstanding 32,026,311 28,118,450

Basic (loss) earnings per share $ ( 0.20 ) $ 0.16 $ ( 0.74 ) $ 0.08

Diluted (loss) earnings per share $ ( 0.20 ) $ 0.16 $ ( 0.74 ) $ 0.08

Basic loss per share $ ( 0.35 ) $ ( 0.15 )

Diluted loss per share $ ( 0.35 ) $ ( 0.15 )

The accompanying notes are an integral part of these condensed consolidated financial statements.

BLUE BIRD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

Three Months Ended Nine Months Ended

(in thousands of dollars) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Net (loss) income $ ( 6,435 ) $ 4,332 $ ( 22,664 ) $ 2,099

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended

(in thousands of dollars) December 31, 2022 January 1, 2022

Net loss $ ( 11,294 ) $ ( 4,082 )

Other comprehensive income, net of tax:

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Total other comprehensive income $ 227 $ 221

Comprehensive (loss) income $ ( 6,214 ) $ 4,686 $ ( 22,001 ) $ 3,160

Comprehensive loss $ ( 11,067 ) $ ( 3,861 )

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

(in thousands of dollars) July 2, 2022 July 3, 2021

Three Months Ended

(in thousands of dollars) December 31, 2022 January 1, 2022

Cash flows from operating activities

Net (loss) income $ ( 22,664 ) $ 2,099

Adjustments to reconcile net (loss) income to net cash used in operating activities:

Depreciation and amortization 10,089 10,145

Net loss $ ( 11,294 ) $ ( 4,082 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization expense 3,361 3,288

Non-cash interest expense 417 1,143

Share-based compensation 3,153 1,923

Equity in net loss (income) of non-consolidated affiliate 3,505 ( 166 )

Loss (gain) on disposal of fixed assets 12 ( 681 )

Impairment of fixed assets 1,354 —

Deferred taxes ( 6,293 ) 350

Share-based compensation expense 589 1,673

Equity in net (income) loss of non-consolidated affiliate ( 69 ) 901

Loss on disposal of fixed assets — 9

Deferred income tax benefit ( 2,986 ) ( 1,704 )

Amortization of deferred actuarial pension losses 299 291

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Total adjustments $ 31,220 $ ( 28,995 )

Total cash used in operating activities $ ( 54,451 ) $ ( 14,238 )

Total cash provided by (used in) operating activities $ 19,926 $ ( 33,077 )

Cash flows from investing activities

Cash paid for fixed assets $ ( 1,146 ) $ ( 1,570 )

Proceeds from sale of fixed assets — 901

Total cash used in investing activities $ ( 1,146 ) $ ( 1,570 )

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Revolving credit facility borrowings $ 5,000 $ 35,000

Principal payments of senior term loan borrowings ( 11,138 ) ( 7,425 )

Principal payments of finance lease borrowings ( 993 ) ( 1,147 )

Revolving credit facility repayments ( 20,000 ) ( 75,000 )

Term loan repayments ( 4,950 ) ( 3,713 )

Principal payments on finance leases ( 141 ) ( 328 )

Cash paid for debt costs ( 3,211 ) ( 2,468 )

Proceeds from Private Placement (Note 11) 75,000 —

Cash paid for stock issuance costs ( 202 ) —

Cash paid for repurchases of common stock in connection with employee stock award exercises ( 1,503 ) ( 518 )

Cash received from employee stock option exercises 303 1,923

Total cash provided by (used in) financing activities $ 73,999 $ ( 9,643 )

Change in cash and cash equivalents 14,800 ( 33,284 )

Cash and cash equivalents, beginning of period 11,709 44,507

Cash and cash equivalents, end of period $ 26,509 $ 11,223

Sale of common stock — 75,000

Repurchase of common stock in connection with stock award exercises ( 57 ) ( 1,484 )

Total cash (used in) provided by financing activities $ ( 23,359 ) $ 27,007

Change in cash, cash equivalents, and restricted cash ( 4,579 ) ( 7,640 )

Cash, cash equivalents, and restricted cash at beginning of period 10,479 11,709

Cash, cash equivalents, and restricted cash at end of period $ 5,900 $ 4,069

Supplemental disclosures of cash flow information

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Interest paid, net of interest received $ 3,170 $ 3,648

Income tax paid, net of tax refunds 48 52

Income tax (received) paid, net of tax refunds ( 90 ) —

Non-cash investing and financing activities:

Changes in accounts payable for capital additions to property, plant and equipment $ 672 $ 469

Accrue debt modification costs 61 —

Accrue common stock issuance costs — 178

Right-of-use assets obtained in exchange for operating lease obligations 199 —

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BLUE BIRD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

Three Months Ended

(in thousands of dollars, except for share data) Common Stock Convertible Preferred Stock Treasury Stock

Shares Par Value Additional Paid-In-Capital Shares Amount Accumulated Other Comprehensive Loss Accumulated Deficit Shares Amount Total Stockholders' Equity (Deficit)

Balance, April 2, 2022 31,990,860 $ 3 $ 172,191 — $ — $ ( 44,352 ) $ ( 49,982 ) 1,782,568 $ ( 50,282 ) $ 27,578

Share-based compensation expense — — 623 — — — — — — 623

Net loss — — — — — — ( 6,435 ) — — ( 6,435 )

Other comprehensive income, net of tax — — — — — 221 — — — 221

Balance, July 2, 2022 31,990,860 $ 3 $ 172,814 — $ — $ ( 44,131 ) $ ( 56,417 ) 1,782,568 $ ( 50,282 ) $ 21,987

Balance, April 3, 2021 27,153,872 $ 3 $ 91,078 — $ — $ ( 57,690 ) $ ( 35,697 ) 1,782,568 $ ( 50,282 ) $ ( 52,588 )

Stock option activity 50,563 — 794 — — — — — — 794

Share-based compensation expense — — 297 — — — — — — 297

Net income — — — — — — 4,332 — — 4,332

Other comprehensive income, net of tax — — — — — 354 — — — 354

Balance, July 3, 2021 27,204,435 $ 3 $ 92,169 — $ — $ ( 57,336 ) $ ( 31,365 ) 1,782,568 $ ( 50,282 ) $ ( 46,811 )

Nine Months Ended

(in thousands of dollars, except for share data) Common Stock Convertible Preferred Stock Treasury Stock

Shares Par Value Additional Paid-In-Capital Shares Amount Accumulated Other Comprehensive Loss Accumulated Deficit Shares Amount Total Stockholders' Equity (Deficit)

Shares Par Value Additional Paid-In-Capital Shares Amount Accumulated Other Comprehensive Loss Accumulated Deficit Shares Amount Total Stockholders' (Deficit) Equity

Balance, October 1, 2022 32,024,911 $ 3 $ 173,103 — $ — $ ( 41,930 ) $ ( 79,512 ) 1,782,568 $ ( 50,282 ) $ 1,382

Private Placement (Note 11) 4,687,500 — 74,798 — — — — — — 74,798

Restricted stock activity 7,156 — ( 57 ) — — — — — — ( 57 )

Stock option activity 15,586 — 284 — — — — — — 284

Share-based compensation expense — — 546 — — — — — — 546

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Other comprehensive income, net of tax — — — — — 227 — — — 227

Balance, July 2, 2022 31,990,860 $ 3 $ 172,814 — $ — $ ( 44,131 ) $ ( 56,417 ) 1,782,568 $ ( 50,282 ) $ 21,987

Balance, December 31, 2022 32,032,067 $ 3 $ 173,592 — $ — $ ( 41,703 ) $ ( 90,806 ) 1,782,568 $ ( 50,282 ) $ ( 9,196 )

Balance, October 2, 2021 27,205,269 $ 3 $ 96,170 — $ — $ ( 44,794 ) $ ( 33,753 ) 1,782,568 $ ( 50,282 ) $ ( 32,656 )

Private placement 4,687,500 — 74,822 — — — — — — 74,822

Restricted stock activity 82,505 — ( 1,484 ) — — — — — — ( 1,484 )

Stock option activity 119,627 — 1,922 — — — — — — 1,922

Share-based compensation expense — — 1,642 — — — — — — 1,642

Net income — — — — — — 2,099 — — 2,099

Net loss — — — — — — ( 4,082 ) — — ( 4,082 )

Other comprehensive income, net of tax — — — — — 221 — — — 221

Balance, July 3, 2021 27,204,435 $ 3 $ 92,169 — $ — $ ( 57,336 ) $ ( 31,365 ) 1,782,568 $ ( 50,282 ) $ ( 46,811 )

The accompanying notes are an integral part of these consolidated financial statements.

Balance, January 1, 2022 31,975,274 $ 3 $ 171,150 — $ — $ ( 44,573 ) $ ( 37,835 ) 1,782,568 $ ( 50,282 ) $ 38,463

BLUE BIRD CORPORATION

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The Company’s fiscal year ends on the Saturday closest to September 30 with its quarters consisting of thirteen weeks in most years.

The fiscal years ending October 1, 2022 ("fiscal 2022") and ended October 2, 2021 ("fiscal 2021") consist or consisted of 52 weeks.

The third quarters of fiscal 2022 and fiscal 2021 both included 13 weeks.

The nine month periods in fiscal 2022 and 2021 both included 39 weeks.

The fiscal years ending September 30, 2023 ("fiscal 2023") and ended October 1, 2022 ("fiscal 2022") consist or consisted of 52 weeks.

The first quarters of fiscal 2023 and fiscal 2022 both included 13 weeks.

In the opinion of management, all adjustments considered necessary for a fair presentation of financial results have been made.

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The Condensed Consolidated Balance Sheet data as of October 1, 2022 was derived from the Company’s audited financial statements but does not include all disclosures required by U.S.

For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes as of and for the fiscal year ended October 2, 2021 as set forth in the Company's fiscal 2021 Form 10-K filed on December 15, 2021.

Impacts of COVID-19 and Russia's Invasion of Ukraine on our Business

Towards the end of our second quarter of the fiscal year that ended October 3, 2020 ("fiscal 2020") and continuing through the third quarter of fiscal 2022, the novel coronavirus known as "COVID-19" spread throughout the world, resulting in a global pandemic.

The pandemic has significantly impacted our financial results from the second half of fiscal 2020, continuing through the third quarter of fiscal 2022, causing, among other matters, reduced demand for school buses and major supply chain disruptions during portions of this period of time.

Additionally, Russian military forces launched a large-scale invasion of Ukraine on February 24, 2022.

While the Company has no assets or customers in either of these countries, this military conflict significantly impacted our financial results during the third quarter of fiscal 2022, primarily in an indirect manner since the Company does not sell to customers located in, or source goods directly from, either country.

Specifically, it has contributed to increased a) costs charged by suppliers for the purchase of inventory that is at least partially dependent on resources originating from either of the countries and b) freight costs, both of which negatively impacted the gross profit recognized on sales during the third quarter of fiscal 2022.

The continuing development and fluidity of the pandemic and military conflict in Ukraine and their trailing impacts preclude any prediction as to the ultimate severity of the adverse impacts on our business, financial condition, results of operations, and liquidity.

For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes as of and for the fiscal year ended October 1, 2022 as set forth in the Company's fiscal 2022 Form 10-K filed with the Securities and Exchange Commission ("SEC") on December 12, 2022.

Impacts of COVID-19 and Subsequent Supply Chain Constraints on our Business

Towards the end of our second quarter of the fiscal year that ended October 3, 2020 ("fiscal 2020"), the novel coronavirus known as "COVID-19" spread throughout the world, resulting in a global pandemic.

Countermeasures taken to address the COVID-19 pandemic included virtual and hybrid schooling in many jurisdictions throughout the United States of America ("U.S.") and Canada.

The uncertainty of when and how schools would open materially affected demand for new buses and replacement/maintenance parts during the second half of fiscal 2020 and first half of the fiscal year that ended October 2, 2021 ("fiscal 2021"), significantly impacting our business and operations.

Demand for school buses strengthened substantially during the second half of fiscal 2021 as COVID-19 vaccines were administered and many jurisdictions began preparing for a return to in-person learning environments for the new school year that began in mid-August to early September 2021.

However, during this same period of time, the Company, and automotive industry as a whole, began experiencing significant supply chain constraints resulting from, among others, labor shortages;

the lack of maintenance on, and acquisition of, capital assets by suppliers during the extended COVID-19 global lockdowns;

significant increased demand for consumer products containing certain materials required for the production of vehicles, such as microchips, as consumers spent stimulus and other funds on items for their homes;

These supply chain disruptions had a significant adverse impact on our operations and results during the second half of fiscal 2021 and all of fiscal 2022 due to higher purchasing costs, including freight costs incurred to expedite receipt of critical components, increased manufacturing inefficiencies and our inability to complete the production of buses to fulfill sales orders.

Towards the end of fiscal 2022 and continuing throughout the first quarter of fiscal 2023, there were slight improvements in the supply chain's ability to deliver the parts and components necessary to support our production operations, resulting in increased (i) manufacturing efficiencies and (ii) production of buses to fulfill sales orders during the first quarter of fiscal 2023.

However, the higher costs charged by suppliers to procure inventory continued into the first quarter of fiscal 2023 and had a significant adverse impact on our operations and results as such costs outpaced the increases in sales prices that we

charged for the buses that were sold during the quarter, all of which were included in the backlog of fixed price sales orders originating in fiscal 2021 and 2022 that carried forward into fiscal 2023.

Additionally, Russian military forces launched a large-scale invasion of Ukraine on February 24, 2022, which further exacerbated global supply chain disruptions.

While the Company has no assets or customers in either of these countries, this military conflict significantly impacted our financial results during the second half of fiscal 2022 and continuing into the first quarter of fiscal 2023, primarily in an indirect manner since the Company does not sell to customers located in, or source goods directly from, either country.

The continuing development and fluidity of the pandemic and subsequent supply chain constraints and their trailing impacts preclude any prediction as to the ultimate severity of the adverse impacts on our business, financial condition, results of operations, and liquidity.

Use of Estimates and Assumptions

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GAAP requires management to make estimates and assumptions.

At the date of the financial statements, these estimates and assumptions affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities, and during the reporting period, these estimates and assumptions affect the reported

amounts of revenues and expenses.

For example, significant management judgments are required in determining excess, obsolete, or unsalable inventory;

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and the accounting for self-insurance reserves, warranty reserves, pension obligations, income taxes, environmental liabilities and contingencies.

Future events, including the extent and duration of COVID-19 related economic impacts, and their effects cannot be predicted with certainty, and, accordingly, the Company’s accounting estimates require the exercise of judgment.

Future events, including the extent and duration of any COVID-19 outbreaks and continued supply chain constraints and their related economic impacts, and their effects cannot be predicted with certainty, and, accordingly, the Company’s accounting estimates require the exercise of judgment.

The accounting estimates used in the preparation of the Company’s condensed consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes.

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Summary of Significant Accounting Policies and Recently Issued Accounting Standards

The Company’s significant accounting policies are described in the Company’s fiscal 2021 Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on December 15, 2021.

Our senior management has reviewed these significant accounting policies and related disclosures and determined that there were no significant changes in our critical accounting policies in the nine months ended July 2, 2022.

The Company’s significant accounting policies are described in the Company’s fiscal 2022 Form 10-K, filed with the SEC on December 12, 2022.

Recently Issued Accounting Standards

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The ASU permits entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, computing variation margin settlements, and calculating price alignment interest in connection with reference rate reform activities under way in global financial markets.

ASU 2022-06 On December 21, 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 , which defers the sunset date of ASC 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in ASC 848.

The above amendments are effective for all entities from March 12, 2020 through December 31, 2024.

An entity may elect to apply the amendments to contract modifications on a (i) full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 or (ii) prospective basis from any date within an interim period that includes or is subsequent to March 12, 2020 through the date that the interim financial statements are issued or available to be issued.

An entity may elect to apply the amendments to contract modifications on a (i) full retrospective basis as of any date from the beginning of an interim period that

includes or is subsequent to March 12, 2020 or (ii) prospective basis from any date within an interim period that includes or is subsequent to March 12, 2020 through the date that the interim financial statements are issued or available to be issued.

On March 5, 2021, the Intercontinental Exchange, Inc.

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The United Kingdom Financial Conduct Authority ("FCA"), which regulates the IBA, confirmed that, based on information it received from LIBOR panel banks, it does not expect that any LIBOR settings will become unrepresentative before the announced cessation dates summarized above.

Currently, the Company’s interest rate collar, which is not designated in a hedge accounting relationship, and Amended Credit Agreement (defined below) are the only contracts that reference an interest rate index (i.e., 3 month LIBOR) that is subject to the reference rate reform guidance included in the above amendments.

While the termination date of the interest rate collar, September 30, 2022, occurs prior to the July 1, 2023 date on which the IBA will no longer publish 3 month LIBOR, the Amended Credit Agreement matures on September 13, 2023, approximately 2.5 months subsequent to such cessation date.

However, as management does not currently forecast that the Company will have sufficient cash to fund the term loan borrowings that are expected to be outstanding under the terms of the Amended Credit Agreement upon maturity, it is expecting to refinance such borrowings prior to maturity, with such refinancing likely to occur before the July 1, 2023 LIBOR cessation date.

Therefore, it is likely that neither the interest rate collar nor Amended Credit Agreement will be modified to reflect the discontinuation of 3 month LIBOR effective July 1, 2023 and accordingly, the Company will not be required to decide whether or not to elect to adopt such amendments prior to or on December 31, 2022 (i.e., the last effective date for adopting the amendments).

However, to the extent that either or both of the contracts are

modified prior to December 31, 2022, the Company plans to adopt the amendments on a prospective basis by adjusting the derivative fair value and/or debt effective interest rate, as applicable, neither of which is expected to have a material impact on the consolidated financial statements.

With the maturity of the interest rate collar on September 30, 2022 and execution of the Fifth Amended Credit Agreement (defined below) on September 2, 2022, which, among other things, changed one of the market interest rate indices that the Company can elect to accrue interest on outstanding borrowings from LIBOR to the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York (“SOFR”) and became effective at the end of the applicable interest period for any LIBOR borrowings outstanding on the fifth amendment effective date, the Company no longer has any contracts that reference LIBOR as of December 31, 2022 and has no plans to enter such contracts prior to the discontinuation of LIBOR.

The change in interest rate indices from LIBOR to SOFR had virtually no impact on the first quarter of fiscal 2023 as the LIBOR interest rate on outstanding borrowings on the fifth amendment effective date remained in place through approximately the end of December 2022.

Accordingly, interest was accrued utilizing SOFR for only a short period of time and the Company adjusted the effective interest rate on outstanding borrowings on a prospective basis, which did not have a material impact on the condensed consolidated financial statements.

Supplemental Financial Information

The following table presents the components of inventories at the dates indicated:

(in thousands of dollars) July 2, 2022 October 2, 2021

(in thousands of dollars) December 31, 2022 October 1, 2022

Raw materials $ 89,099 $ 106,070

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Total inventories $ 129,120 $ 142,977

Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the Condensed Consolidated Balance Sheets that sum to the total of such amounts reported on the Condensed Consolidated Statements of Cash Flows:

(in thousands of dollars) December 31, 2022 January 1, 2022

Cash and cash equivalents $ 5,664 $ 4,069

Restricted cash 236 —

Total cash, cash equivalents, and restricted cash reported on the Condensed Consolidated Statements of Cash Flows $ 5,900 $ 4,069

Amounts included in restricted cash represent those required by a contractual agreement with a financial institution to serve as collateral against outstanding balances pertaining to the Company's corporate credit card program.

Product Warranties

The following table reflects activity in accrued warranty cost (current and long-term portions combined) for the periods presented:

Three Months Ended Nine Months Ended

(in thousands of dollars) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Three Months Ended

(in thousands of dollars) December 31, 2022 January 1, 2022

Balance at beginning of period $ 15,970 $ 18,550

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The following table reflects activity in deferred warranty income (current and long-term portions combined), for the sale of extended warranties of two to five years , for the periods presented:

Three Months Ended Nine Months Ended

(in thousands of dollars) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Three Months Ended

(in thousands of dollars) December 31, 2022 January 1, 2022

Balance at beginning of period $ 18,795 $ 20,144

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The following table reflects our total accrued self-insurance liability, comprised of workers' compensation and health insurance related claims, at the dates indicated:

(in thousands of dollars) July 2, 2022 October 2, 2021

(in thousands of dollars) December 31, 2022 October 1, 2022

Current portion $ 3,813 $ 3,996

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Shipping and Handling Revenues

Shipping and handling revenues were $ 4.2 million and $ 3.3 million for the three months ended July 2, 2022 and July 3, 2021, respectively, and $ 11.1 million and $ 9.2 million for the nine months ended July 2, 2022 and July 3, 2021, respectively.

The related cost of goods sold was $ 3.7 million and $ 2.9 million for the three months ended July 2, 2022 and July 3, 2021, respectively, and $ 9.9 million and $ 8.0 million for the nine months ended July 2, 2022 and July 3, 2021, respectively.

Shipping and handling revenues were $ 4.3 million and $ 3.4 million for the quarters ended December 31, 2022 and January 1, 2022, respectively.

The related cost of goods sold was $ 3.8 million and $ 3.1 million for the quarters ended December 31, 2022 and January 1, 2022, respectively.

Pension Expense

Components of net periodic pension benefit (income) expense were as follows for the periods presented:

Three Months Ended Nine Months Ended

(in thousands of dollars) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Components of net periodic pension benefit expense (income) were as follows for the periods presented:

Three Months Ended

(in thousands of dollars) December 31, 2022 January 1, 2022

Interest cost $ 1,509 $ 1,092

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Amortization of prior loss 299 291

Net periodic benefit income $ ( 739 ) $ ( 421 ) $ ( 2,217 ) $ ( 1,264 )

Net periodic benefit expense (income) $ 178 $ ( 739 )

Amortization of prior loss, recognized in other comprehensive income ( 299 ) ( 291 )

Total recognized in net periodic pension benefit income and other comprehensive income $ ( 1,030 ) $ ( 887 ) $ ( 3,090 ) $ ( 2,661 )

Derivative Instruments

We are charged variable rates of interest on our indebtedness outstanding under the Amended Credit Agreement (defined below) which exposes us to fluctuations in interest rates.

On October 24, 2018, the Company entered into a four-year interest rate collar with a $ 150.0 million notional value with an effective date of November 30, 2018.

The collar was entered into in order to partially mitigate our exposure to interest rate fluctuations on our variable rate debt.

The collar establishes a range whereby we will pay the counterparty if the three month LIBOR rate falls below the established floor rate of 1.5 %, and the counterparty will pay us if the three month LIBOR rate exceeds the ceiling rate of 3.3 %.

The collar settles quarterly through the termination date of September 30, 2022.

No payments or receipts are exchanged on the interest rate collar contract unless interest rates rise above or fall below the contracted ceiling or floor rates.

During the nine months ended July 2, 2022, the three month LIBOR rate fell below the established floor, which required us to make $ 1.2 million in total cash payments to the counterparty.

Changes in the interest rate collar fair value are recorded in interest expense as the collar does not qualify for hedge accounting.

At July 2, 2022, the fair value of the interest rate collar contract was $ 0 .

The fair value of the interest rate collar is a Level 2 fair value measurement, based on quoted prices of similar items in active markets.

On November 24, 2021, the Company executed a fourth amendment to the Credit Agreement, dated as of December 12, 2016;

as amended by the first amendment to the Credit Agreement, dated as of September 13, 2018 (the "First Amended Credit Agreement"), the second amendment to the Credit Agreement, dated as of May 7, 2020 (the "Second Amended Credit Agreement"), and the third amendment to the Credit Agreement, dated as of December 4, 2020 (the "Third Amended Credit Agreement");

and as further amended by the fourth amendment (the "Fourth Amended Credit Agreement" and collectively, the "Amended Credit Agreement").

The Fourth Amended Credit Agreement, among other things, provides for certain temporary amendments to the Credit Agreement from the third amendment effective date through and including (a) April 1, 2023 (the “Amended Limited Availability Period”) or (b) the first date on which BBBC (the "Borrower") elects to terminate the Amended Limited Availability Period, in each case, subject to (x) the absence of a default or event of default and (y) pro forma compliance with the financial covenant performance covenants under the Fourth Amended Credit Agreement.

With respect to the financial performance covenants, during the Amended Limited Availability Period for the fiscal quarters ending January 1, 2022 through October 1, 2022, the Total Net Leverage Ratio ("TNLR") requirement is not applicable, although it continues to impact the interest rate that is charged on outstanding borrowings as discussed below.

Instead, the minimum consolidated EBITDA that the Company is required to maintain during the Amended Limited Availability Period was updated to include fiscal 2022 as set forth in the table below (in millions):

Total recognized in net periodic pension benefit expense (income) and other comprehensive income $ ( 121 ) $ ( 1,030 )

On November 21, 2022, BBBC (as "Borrower") executed a sixth amendment to the Credit Agreement, dated as of December 12, 2016 ("Credit Agreement");

as amended by the first amendment to the Credit Agreement, dated as of September 13, 2018 (the "First Amended Credit Agreement"), the second amendment to the Credit Agreement, dated as of May 7, 2020 (the "Second Amended Credit Agreement"), the third amendment to the Credit Agreement, dated as of December 4, 2020 (the "Third Amended Credit Agreement");

the fourth amendment to the Credit Agreement, dated as of November 24, 2021 (the "Fourth Amended Credit Agreement:);

the fifth amendment and limited waiver to the Credit Agreement, dated as of September 2, 2022 (the "Fifth Amended Credit Agreement");

and as further amended by the sixth amendment (the "Sixth Amended Credit Agreement" and collectively, the "Amended Credit Agreement").

The Sixth Amended Credit Agreement, among other things, extends the maturity date for both the term loan and revolving credit facilities from September 13, 2023 to December 31, 2024.

The total revolving credit facility commitment is reduced to an aggregate principal amount of $ 90.0 million, of which $ 80.0 million is available for Borrower to draw, with the remaining $ 10.0 million subject to written approval from the lenders, which, once obtained, will be irrevocable.

There was no change in the term loan facility commitment;

however, the Sixth Amended Credit Agreement requires principal repayments approximating $ 5.0 million on a quarterly basis through September 30, 2024, with the remaining balance due upon maturity.

There were $ 151.6 million of term loan borrowings outstanding on the sixth amendment effective date.

The Sixth Amended Credit Agreement also provides for temporary amendments to certain financial performance covenants during the period from the third amendment effective date, December 4, 2020, through and including April 1, 2023 (the “Amended Limited Availability Period:), which will terminate on the date on which the Company’s Total Net Leverage Ratio ("TNLR"), defined as the ratio of (a) consolidated net debt to (b) consolidated EBITDA, for the two fiscal quarters most recently ended is each less than 4.00x and no default or event of default has occurred and is continuing.

However, the Amended Limited Availability Period can re-occur upon a default or event of default or if the TNLR for the immediately preceding fiscal quarter is equal to or greater than 4.00x.

The minimum consolidated EBITDA that the Company is required to maintain during the Amended Limited Availability Period is updated as set forth in the table below (in millions):

Period Minimum Consolidated EBITDA

Fiscal quarter ending January 1, 2022 $ 14.5

Fiscal quarter ending April 2, 2022 $( 4.5 )

Fiscal quarter ending July 1, 2023 $ 50.0

Fiscal quarter ending October 1, 2022 $ 20.0

However, in the event that Borrower elects to terminate the Amended Limited Availability Period in fiscal 2022, the maximum TNLR permitted is 3.50x.

The minimum liquidity (in the form of undrawn availability under the revolving credit facility and unrestricted cash and cash equivalents) that the Company must maintain during the Amended Limited Availability Period was amended as set forth in the table below (in millions):

Fiscal quarter ending September 30, 2023 $ 60.0

For purposes of complying with the above minimum consolidated EBITDA covenant, the Company’s consolidated EBITDA for the (i) two fiscal quarter period ending July 1, 2023 is multiplied by 2 and (ii) three fiscal quarter period ending September 30, 2023 is multiplied by 4/3.

The minimum liquidity (in the form of undrawn availability under the revolving credit facility and unrestricted cash and cash equivalents) that the Company is required to maintain at the end of each fiscal month during the Amended Limited Availability Period is amended as set forth in the table below (in millions):

Period Minimum Liquidity

Fourth amendment effective date through January 1, 2022 $ 10.0

January 2, 2022 through April 2, 2022 $ 5.0

April 3, 2022 through July 2, 2022 $ 15.0

Thereafter $ 20.0

Additionally, a new financial performance covenant was added in the Fourth Amended Credit Agreement, requiring that school bus units manufactured by the Company (“Units”) not fall below the pre-set thresholds set forth in the table below on a three month trailing basis (“Units Covenant”).

Sixth amendment effective date through December 30, 2023 $ 30.0

Additionally, the financial performance covenant requiring that school bus units manufactured by the Company (“Units”) not fall below certain pre-set thresholds on a three month trailing basis (“Units Covenant”) is amended for Units to be calculated at the end of each applicable fiscal month on a cumulative basis, with the minimum cumulative threshold that the Company is required to maintain during the Amended Limited Availability Period amended as set forth in the table below.

The Units Covenant is triggered only if the Company’s liquidity for the most-recently ended fiscal month is less than $50.0 million during the Amended Limited Availability Period:

Period Minimum Units Manufactured

Three month period ending November 27, 2021 1,128

Three month period ending January 1, 2022 776

Three month period ending January 29, 2022 748

Three month period ending February 26, 2022 727

Three month period ending April 2, 2022 763

Three month period ending April 30, 2022 1,111

Three month period ending May 28, 2022 1,525

Three month period ending July 2, 2022 2,053

Three month period ending July30, 2022 2,072

Three month period ending August 27, 2022 2,199

Three month period ending October 1, 2022 2,306

If the Units during any three fiscal month period set forth above is less than the minimum required by the Units Covenant, Borrower may elect to carry forward up to 50% of certain applicable excess Units to satisfy the Units Covenant requirement.

However, Borrower may not make such election in two consecutive three fiscal month periods.

The pricing grid in the Fourth Amended Credit Agreement, which is based on the TNLR, is determined in accordance with the amended pricing matrix set forth below:

Level Total Net Leverage Ratio ABR Loans Eurodollar Loans

Period from October 2, 2022 and ending October 29, 2022 450

Period from October 2, 2022 and ending November 26, 2022 900

Period from October 2, 2022 and ending December 31, 2022 1,400

Period from October 2, 2022 and ending January 28, 2023 1,900

Period from October 2, 2022 and ending February 25, 2023 2,400

Period from October 2, 2022 and ending April 1, 2023 3,000

The Company is not required to comply with a maximum TNLR financial maintenance covenant for any fiscal quarters from the sixth amendment effective date through September 30, 2023, with the maximum threshold amended thereafter as follows :

Period Maximum Total

Net Leverage Ratio

Fiscal Quarter ending December 30, 2023 through the fiscal quarter ending March 30, 2024 4.00 :1.00

Fiscal quarter ending June 29, 2024 and thereafter 3.50:1.00

The pricing grid in the Amended Credit Agreement, which is based on the TNLR, is applicable to both term loan and revolving borrowings and is determined in accordance with the amended pricing matrix set forth below:

Level Total Net Leverage Ratio ABR Loans SOFR Loans

I Less than 2.00x 0.75 % 1.75 %

5 unchanged sentences

VII Greater than or equal to 4.00x and less than 4.50x 2.75 % 3.75 %

VIII Greater than 5.00x 4.25 % 5.25 %

During the Amended Limited Availability Period, the applicable rate for outstanding revolving loans is the sum of the rate determined by the administrative agent in accordance with the pricing grid set forth above, plus 0.50%.

Additional allowances were made in the Fourth Amended Credit Agreement for the Company to issue or incur up to $100.0 million of qualified equity interests issued by the Company, unsecured subordinated indebtedness or unsecured convertible indebtedness (collectively, “Junior Capital”).

Upon the issuance or incurrence of any Junior Capital, the Company is required to prepay the outstanding revolving loans (with no permanent reduction in the revolving commitments) in an amount equal to the lesser of (a) 100% of the net proceeds from such Junior Capital and (b) the aggregate of revolving exposures then outstanding.

Prior to the initial issuance or incurrence of any Junior Capital, any issuance, amendment, renewal, or extension of credit during the Amended Limited Availability Period may not cause the aggregate outstanding Revolving Credit Facility principal to exceed $110.0 million (“Availability Cap”).

Following the issuance and sale of $ 75.0 million of common stock in a private placement transaction on December 15, 2021 (see Note 11 for further details), the Availability Cap was permanently reduced to $100.0 million.

For the duration of the Amended Limited Availability Period, the Fourth Amended Credit Agreement sets forth additional monthly reporting requirements in connection with the manufactured school bus units required by the financial performance covenants, when applicable.

The Company incurred approximately $ 2.5 million in lender fees and other issuance costs relating to the fourth amendment.

VIII Greater than or equal to 4.50x and less than 5.00x 3.75 % 4.75 %

IX Greater than 5.00x 4.75 % 5.75 %

Further, the pricing margins for levels VII though IX above are each increased (x) by 0.25% if the aggregate revolving borrowings are equal to or greater than $ 50.0 million and less than or equal to $ 80.0 million and (y) by 0.50% if the aggregate revolving borrowings are greater than $ 80.0 million.

On the sixth amendment effective date, the interest rate was set at SOFR plus 5.75% and will be adjusted, as applicable, for future fiscal quarter in accordance with the amended pricing grid set forth above.

Finally, the Company is required to deliver to the administrative agent, on a quarterly basis, a projected consolidated balance sheet and consolidated statements of projected operations and cash flows containing the next four fiscal quarters.

The Company incurred approximately $ 3.3 million in lender fees and other issuance costs relating to the sixth amendment.

Of such total, approximately $ 1.2 million and $ 1.5 million was capitalized within other assets and long-term debt (as a contra-balance), respectively, on the Condensed Consolidated Balance Sheets and will be amortized as an adjustment to interest expense on a straight-line basis and utilizing the effective interest method, respectively, until maturity of the Amended Credit Agreement.

The remaining approximate $ 0.5 million was recorded to loss on debt modification on the Condensed Consolidated Statements of Operations.

In conjunction with executing the fourth amendment, previously capitalized lender fees and other issuance costs incurred in prior periods totaling approximately $ 0.1 million were also expensed to loss on debt modification on the Condensed Consolidated Statements of Operations.

Term debt consisted of the following at the dates indicated:

(in thousands of dollars) July 2, 2022 October 2, 2021

(in thousands of dollars) December 31, 2022 October 1, 2022

2023 term loan, net of deferred financing costs of $ 2,509 and $ 1,410 , respectively

5 unchanged sentences

If measured at fair value in the financial statements, the term loans would be classified as Level 2 in the fair value hierarchy.

At July 2, 2022 and October 2, 2021, $ 155.3 million and $ 166.5 million, respectively, were outstanding on the term loans.

At July 2, 2022 and October 2, 2021, the stated interest rates on the term loans were 7.9 % and 4.0 %, respectively.

At July 2, 2022 and October 2, 2021, the weighted-average annual effective interest rates for the term loans were 7.7 % and 6.0 %, respectively, which includes amortization of the deferred financing costs and interest relating to the interest rate collar, as applicable.

At July 2, 2022, $ 6.3 million of letters of credit were outstanding, which reduces the availability on the revolving line of credit.

At December 31, 2022 and October 1, 2022, $ 146.7 million and $ 151.6 million, respectively, were outstanding on the term loans.

At December 31, 2022 and October 1, 2022, the stated interest rates on the term loans were 10.5 % and 7.9 %, respectively.

At December 31, 2022 and October 1, 2022, the weighted-average annual effective interest rates for the term loans were 9.6 % and 8.0 %, respectively, which includes amortization of the deferred financing costs and interest relating to the interest rate collar, as applicable.

At December 31, 2022, $ 6.3 million of letters of credit were outstanding, which reduces the availability on the revolving line of credit.

There were $ 5.0 million in borrowings outstanding on the revolving credit facility;

therefore, the Company would have been able to borrow $ 78.7 million on the revolving line of credit.

Interest expense on all indebtedness was $ 3.9 million and $ 2.8 million for the three months ended July 2, 2022 and July 3, 2021, respectively, and $9.5 million and $7.1 million for the nine months ended July 2, 2022 and July 3, 2021, respectively.

Interest expense on all indebtedness was $ 4.2 million and $ 3.1 million for the three months ended December 31, 2022 and January 1, 2022, respectively.

The schedule of remaining principal payments through maturity for the term loans is as follows:

1 unchanged sentence

Fiscal Year Principal Payments

2023 $ 14,850

Total remaining principal payments $ 146,650

Income tax provisions for interim periods are based on estimated annual income tax rates, adjusted to reflect the effects of any significant infrequent or unusual items that are required to be discretely recognized within the current interim period.

The effective tax rates in the periods presented are largely based upon the annual forecasted pre-tax earnings mix and allocation of certain expenses in various taxing jurisdictions where the Company conducts its business, primarily in the United States of America ("U.S.").

In periods where our operating income approximates or is equal to break-even, the effective tax rates for quarter-to-date and full-year periods may not be meaningful due to discrete period items.

The effective tax rate for the three months ended July 2, 2022 was ( 137.2 )%, which differed from the statutory federal income tax rate of 21 %.

In addition, the amount recorded represents income tax expense in a three month period in which the Company recorded loss before income taxes.

This unusual relationship exists as the amount recorded was necessary to adjust the income tax benefit for the nine months ended July 2, 2022, discussed below, to reflect the Company's revised estimated annual income tax rate, including the effects of discrete period tax items.

The effective tax rate for the three months ended July 3, 2021 was 33.2 %, which differed from the statutory federal tax rate of 21 %.

The difference is mainly due to normal tax rate items, including impacts from state taxes, net non-deductible compensation expenses and other tax adjustments.

The effective tax rate was also impacted by discrete period tax expense resulting from recording a liability for uncertain tax positions ("UTPs"), including accrued interest and penalties, that was partially offset by discrete period tax benefits resulting from share-based compensation expenses and prior year tax return adjustments.

The effective tax rate for the nine months ended July 2, 2022 was 24.8 % and differed from the statutory federal tax rate of 21 %.

The difference is mainly due to normal tax rate items, including impacts from state taxes and federal and state tax credits (net of valuation allowances), which was partially offset by discrete period tax expense resulting from net non-deductible compensation expenses and other tax adjustments.

The effective tax rate for the nine months ended July 3, 2021 was 31.5 % and differed from the statutory federal income tax rate of 21 %.

The difference is mainly due to normal tax rate items, including impacts from state taxes, net non-deductible compensation expenses and other tax adjustments.

The effective tax rate was also impacted by discrete period tax expense resulting from recording a liability for UTPs, including accrued interest and penalties, that was partially offset by discrete period tax benefits resulting from share-based compensation expenses and prior year tax return adjustments.

In periods where our pre-tax income approximates or is equal to break-even, the effective tax rates for quarter-to-date and full-year periods may not be meaningful due to discrete period items.

The effective tax rate for the three months ended December 31, 2022 was 20.8 %, which aligned with the statutory federal income tax rate of 21 % and is comprised of normal tax rate items, including impacts from state taxes and federal and state tax credits (net of valuation allowances), with discrete period items having a nominal impact on the effective rate during the quarter.

The effective tax rate for the three months ended January 1, 2022 was 35.6 %, which differed from the statutory federal income tax rate of 21 %.

The difference was mainly due to normal tax rate items, including impacts from state taxes and federal and state tax credits (net of valuation allowances), which was partially offset by discrete period tax expense resulting from net non-deductible compensation expenses and other tax adjustments.

Guarantees, Commitments and Contingencies

At July 2, 2022, the Company had a number of product liability and other cases pending.

At December 31, 2022, the Company had a number of product liability and other cases pending.

Management believes that, considering the Company’s insurance coverage and its intention to vigorously defend its positions, the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial statements.

4 unchanged sentences

The Company is currently not involved in any material environmental proceedings and therefore, management believes that the resolution of pending environmental matters will not have a material adverse effect on the Company’s financial statements.

In the ordinary course of business, we may provide guarantees for certain transactions entered into by our dealers.

At July 2, 2022, we had a $ 3.0 million guarantee outstanding that relates to a guarantee of dealer indebtedness for a term loan with remaining maturity up to 0.5 years.

The $ 3.0 million represents the estimated maximum amount we would be required to pay upon default of all guaranteed indebtedness, and we believe the likelihood of required performance to be remote.

At July 2, 2022, $ 0.1 million was included in other current liabilities on our Condensed Consolidated Balance Sheets for the estimated fair value of the guarantee.

Segment Information

We manage our business in two operating segments:

(i) the Bus segment, which includes the manufacturing and assembly of buses to be sold to a variety of customers across the U.S., Canada and in international markets;

and (ii) the Parts segment, which consists primarily of the purchase of parts from third parties to be sold to dealers within the Company’s network.

The tables below present segment net sales and gross profit for the periods presented:

Three Months Ended Nine Months Ended

(in thousands of dollars) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

(i) the Bus segment, which includes the manufacturing and assembly of buses to be sold to a variety of customers across the U.S., Canada and in certain limited international markets;

and (ii) the Parts segment, which consists primarily of the purchase of parts from third parties to be sold to dealers within the Company’s network and certain large fleet customers.

Management evaluates the segments based primarily upon revenues and gross profit, which are reflected in the tables below for the periods presented :

Three Months Ended

(in thousands of dollars) December 31, 2022 January 1, 2022

Bus (1) $ 213,249 $ 112,437

1 unchanged sentence

Segment net sales $ 235,732 $ 129,223

(1) Parts segment revenue includes $ 0.7 million and $ 0.9 million for the three months ended July 2, 2022 and July 3, 2021, respectively, and $ 2.6 million and $ 2.9 million for the nine months ended July 2, 2022 and July 3, 2021, respectively, related to inter-segment sales of parts that were eliminated by the Bus segment upon consolidation.

Three Months Ended Nine Months Ended

(in thousands of dollars) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

(1) Parts segment revenue includes $ 1.1 million and $ 0.8 million for the three months ended December 31, 2022 and January 1, 2022, respectively, related to inter-segment sales of parts that were eliminated by the Bus segment upon consolidation.

Three Months Ended

(in thousands of dollars) December 31, 2022 January 1, 2022

Bus $ ( 3,731 ) $ 9,642

1 unchanged sentence

Segment gross profit $ 7,457 $ 16,197

The following table is a reconciliation of segment gross profit to consolidated (loss) income before income taxes for the periods presented:

Three Months Ended Nine Months Ended

(in thousands of dollars) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

The following table is a reconciliation of segment gross profit to consolidated loss before income taxes for the periods presented:

Three Months Ended

(in thousands of dollars) December 31, 2022 January 1, 2022

Segment gross profit $ 7,457 $ 16,197

1 unchanged sentence

Interest expense ( 4,196 ) ( 3,082 )

Interest income — — — 1

Other income, net 735 426 2,215 1,491

Other (expense) income, net ( 236 ) 736

Loss on debt modification ( 537 ) ( 561 )

(Loss) income before income taxes $ ( 2,085 ) $ 5,707 $ ( 25,476 ) $ 2,821

Loss before income taxes $ ( 14,344 ) $ ( 4,943 )

Sales are attributable to geographic areas based on customer location and were as follows for the periods presented:

Three Months Ended Nine Months Ended

(in thousands of dollars) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Three Months Ended

(in thousands of dollars) December 31, 2022 January 1, 2022

United States $ 204,541 $ 100,547

3 unchanged sentences

The following table disaggregates revenue by product category for the periods presented:

Three Months Ended Nine Months Ended

(in thousands of dollars) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Three Months Ended

(in thousands of dollars) December 31, 2022 January 1, 2022

Diesel buses $ 71,494 $ 46,033

5 unchanged sentences

(2) Includes shipping and handling revenue, extended warranty income, surcharges and chassis and bus shell sales .

(Loss) Earnings Per Share

The following table presents the (loss) earnings per share computation for the periods presented:

Three Months Ended Nine Months Ended

(in thousands except for share data) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Net (loss) income $ ( 6,435 ) $ 4,332 $ ( 22,664 ) $ 2,099

Loss Per Share

The following table presents the loss per share computation for the periods presented:

Three Months Ended

(in thousands except for share data) December 31, 2022 January 1, 2022

Net loss $ ( 11,294 ) $ ( 4,082 )

Weighted-average common shares outstanding 32,026,311 28,118,450

Weighted-average dilutive securities, restricted stock — 121,399 — 144,835

Weighted-average dilutive securities, stock options — 135,316 — 75,610

Weighted-average shares and dilutive potential common shares (1) 32,026,311 28,118,450

Loss per share:

Basic (loss) earnings per share $ ( 0.20 ) $ 0.16 $ ( 0.74 ) $ 0.08

Diluted (loss) earnings per share $ ( 0.20 ) $ 0.16 $ ( 0.74 ) $ 0.08

(1) Potentially dilutive securities representing 0.6 million and 0.0 million shares of common stock were excluded from the computation of diluted (loss) earnings per share for the three months ending July 2, 2022 and July 3, 2021, respectively, and potentially dilutive securities representing 0.4 million and 0.1 million shares of common stock were excluded from the computation of diluted (loss) earnings per share for the nine months ending July 2, 2022 and July 3, 2021, respectively, as their effect would have been antidilutive.

Basic loss per share $ ( 0.35 ) $ ( 0.15 )

Diluted loss per share $ ( 0.35 ) $ ( 0.15 )

(1) Potentially dilutive securities representing 0.8 million and 0.4 million shares of common stock were excluded from the computation of diluted loss per share for the three months ending December 31, 2022 and January 1, 2022, respectively, as their effect would have been antidilutive.

Accumulated Other Comprehensive Loss

The following table provides information on changes in accumulated other comprehensive loss ("AOCL") for the periods presented:

Three Months Ended Nine Months Ended

(in thousands of dollars) Defined Benefit Pension Plan Total AOCL Defined Benefit Pension Plan Total AOCL

Three Months Ended

(in thousands of dollars) Defined Benefit Pension Plan Total AOCL

December 31, 2022

Beginning Balance $ ( 41,930 ) $ ( 41,930 )

2 unchanged sentences

Income taxes ( 72 ) ( 72 )

Ending Balance July 2, 2022 $ ( 44,131 ) $ ( 44,131 ) $ ( 44,131 ) $ ( 44,131 )

Ending Balance December 31, 2022 $ ( 41,703 ) $ ( 41,703 )

January 1, 2022

Beginning Balance $ ( 44,794 ) $ ( 44,794 )

2 unchanged sentences

Income taxes ( 70 ) ( 70 )

Ending Balance July 3, 2021 $ ( 57,336 ) $ ( 57,336 ) $ ( 57,336 ) $ ( 57,336 )

Stockholders' Equity (Deficit)

Sale of Common Stock

On December 15, 2021, the Company issued and sold through a private placement transaction an aggregate 4,687,500 shares of its common stock at $ 16.00 per share (“Private Placement”) to Coliseum Capital Partners, L.P.

and Blackwell Partners LLC - Series A (collectively, “Coliseum”).

Subsequent to the sale, Coliseum owns an approximate 15 % equity interest in the Company.

In connection

with the purchase of the shares, Coliseum received customary registration rights and the Company added Adam Gray of Coliseum as a Class II director.

The Company used the net proceeds (approximately $ 74.8 million) from the Private Placement to repay outstanding revolving loans as required by the terms of the Fourth Amended Credit Agreement.

Ending Balance January 1, 2022 $ ( 44,573 ) $ ( 44,573 )

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements