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Item 1. Financial Statements

2023-05-11 compared with 2023-02-08 · 121 added, 89 removed, 342 unchanged (38% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(in thousands of dollars, except for share data) April 1, 2023 October 1, 2022

Current assets

35 unchanged sentences

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

Preferred stock, $ 0.0001 par value, 10,000,000 shares authorized, 0 shares outstanding at April 1, 2023 and October 1, 2022

Common stock, $ 0.0001 par value, 100,000,000 shares authorized, 32,036,149 and 32,024,911 shares outstanding at April 1, 2023 and October 1, 2022, respectively

Additional paid-in capital 174,313 173,103

1 unchanged sentence

Accumulated other comprehensive loss ( 41,476 ) ( 41,930 )

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

Treasury stock, at cost, 1,782,568 shares at April 1, 2023 and October 1, 2022

( 50,282 ) ( 50,282 )

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

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

Three Months Ended Six Months Ended

(in thousands of dollars except for share data) April 1, 2023 April 2, 2022 April 1, 2023 April 2, 2022

Net sales $ 299,814 $ 207,659 $ 535,546 $ 336,882

3 unchanged sentences

Selling, general and administrative expenses 23,205 19,858 40,037 38,091

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

Operating profit (loss) $ 12,444 $ ( 16,701 ) $ 3,069 $ ( 18,737 )

Interest expense ( 5,192 ) ( 2,491 ) ( 9,388 ) ( 5,573 )

Interest income 12 — 12 —

Other (expense) income, net ( 342 ) 744 ( 578 ) 1,480

Loss on debt modification — — ( 537 ) ( 561 )

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

Income tax benefit 2,981 1,762

Income (loss) before income taxes $ 6,922 $ ( 18,448 ) $ ( 7,422 ) $ ( 23,391 )

Income tax (expense) benefit ( 1,389 ) 7,415 1,592 9,177

Equity in net income (loss) of non-consolidated affiliate 1,597 ( 1,114 ) 1,666 ( 2,015 )

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

Loss per share:

Net income (loss) $ 7,130 $ ( 12,147 ) $ ( 4,164 ) $ ( 16,229 )

Earnings (loss) per share:

Basic weighted average shares outstanding 32,033,709 31,981,073 32,029,999 30,039,240

Diluted weighted average shares outstanding 32,322,163 31,981,073 32,029,999 30,039,240

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

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

Basic earnings (loss) per share $ 0.22 $ ( 0.38 ) $ ( 0.13 ) $ ( 0.54 )

Diluted earnings (loss) per share $ 0.22 $ ( 0.38 ) $ ( 0.13 ) $ ( 0.54 )

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

BLUE BIRD CORPORATION AND SUBSIDIARIES

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 )

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended Six Months Ended

(in thousands of dollars) April 1, 2023 April 2, 2022 April 1, 2023 April 2, 2022

Net income (loss) $ 7,130 $ ( 12,147 ) $ ( 4,164 ) $ ( 16,229 )

Other comprehensive income, net of tax:

1 unchanged sentence

Total other comprehensive income $ 227 $ 221 $ 454 $ 442

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

Comprehensive income (loss) $ 7,357 $ ( 11,926 ) $ ( 3,710 ) $ ( 15,787 )

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

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

Six Months Ended

(in thousands of dollars) April 1, 2023 April 2, 2022

Cash flows from operating activities

6 unchanged sentences

Loss on disposal of fixed assets 11 12

Impairment of fixed assets — 1,354

Deferred income tax benefit ( 1,600 ) ( 9,127 )

19 unchanged sentences

Sale of common stock — 75,000

Cash paid for common stock issuance costs — ( 202 )

Repurchase of common stock in connection with stock award exercises ( 57 ) ( 1,503 )

Cash received from stock option exercises 66 303

Total cash (used in) provided by financing activities $ ( 33,444 ) $ 18,046

8 unchanged sentences

Changes in accounts payable for capital additions to property, plant and equipment $ 1,019 $ 1,119

Accrue debt modification costs 61 —

Accrue common stock issuance costs — 178

6 unchanged sentences

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

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

Stock option activity 4,082 — 66 — — — — — — 66

Share-based compensation expense — — 655 — — — — — — 655

Net income — — — — — — 7,130 — — 7,130

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

Balance, April 1, 2023 32,036,149 $ 3 $ 174,313 — $ — $ ( 41,476 ) $ ( 83,676 ) 1,782,568 $ ( 50,282 ) $ ( 1,118 )

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

Private placement stock issuance costs — — ( 24 ) — — — — — — ( 24 )

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

Share-based compensation expense — — 781 — — — — — — 781

Net loss — — — — — — ( 12,147 ) — — ( 12,147 )

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

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

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

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

Stock option activity 4,082 — 66 — — — — — — 66

Share-based compensation expense — — 1,201 — — — — — — 1,201

1 unchanged sentence

Other comprehensive income, net of tax — — — — — 454 — — — 454

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

Balance, April 1, 2023 32,036,149 $ 3 $ 174,313 — $ — $ ( 41,476 ) $ ( 83,676 ) 1,782,568 $ ( 50,282 ) $ ( 1,118 )

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

1 unchanged sentence

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

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

Share-based compensation expense — — 2,423 — — — — — — 2,423

1 unchanged sentence

Other comprehensive income, net of tax — — — — — 442 — — — 442

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

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

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

BLUE BIRD CORPORATION

13 unchanged sentences

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.

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

The six month periods in fiscal 2023 and 2022 both included 26 weeks.

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

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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.

Towards the end of fiscal 2022 and continuing into 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 half of fiscal 2023.

However, the higher costs charged by suppliers to procure inventory continued into the first half of fiscal 2023 and had a

significant adverse impact on our operations and results.

Specifically, such cost increases outpaced the increases in sales prices that we charged for the buses that were sold during the first quarter of fiscal 2023, many of which were included in the backlog of fixed price sales orders originating in fiscal 2021 and the early months of fiscal 2022 that carried forward into fiscal 2023.

During the second quarter of fiscal 2023, the buses that were sold were generally included in the backlog of fixed price sales orders originating more recently (i.e., the latter months of fiscal 2022 and in fiscal 2023), with the cumulative increases in sales prices we charged for those buses generally outpacing the higher costs we paid to procure inventory, resulting in gross profit during the quarter.

However, the gross margin on bus sales during the second quarter of fiscal 2023 still lags the historical gross margin reported prior to the COVID-19 pandemic.

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.

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 second half of fiscal 2022 and continuing into the first quarter of fiscal 2023.

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.

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 half 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.

Significant uncertainty exists concerning the magnitude and duration of the the pandemic and subsequent supply chain constraints and accordingly, precludes 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

12 unchanged sentences

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.

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 three months ended December 31, 2022.

Recently Issued Accounting Standards

8 unchanged sentences

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.

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.

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 and has no plans to enter such contracts prior to the discontinuation of LIBOR.

The change in interest rate indices from LIBOR to SOFR occurred at the end of December 2022 when the LIBOR interest rate on outstanding borrowings on the fifth amendment effective date matured.

At that time, 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) December 31, 2022 October 1, 2022

(in thousands of dollars) April 1, 2023 October 1, 2022

Raw materials $ 94,589 $ 106,070

3 unchanged sentences

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

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the applicable 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) April 1, 2023 April 2, 2022

Cash and cash equivalents $ 17,773 $ 14,867

4 unchanged sentences

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

Three Months Ended

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

Three Months Ended Six Months Ended

(in thousands of dollars) April 1, 2023 April 2, 2022 April 1, 2023 April 2, 2022

Balance at beginning of period $ 15,580 $ 17,252 $ 15,970 $ 18,550

4 unchanged sentences

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

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

Three Months Ended Six Months Ended

(in thousands of dollars) April 1, 2023 April 2, 2022 April 1, 2023 April 2, 2022

Balance at beginning of period $ 19,290 $ 19,088 $ 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) December 31, 2022 October 1, 2022

(in thousands of dollars) April 1, 2023 October 1, 2022

Current portion $ 3,585 $ 3,996

3 unchanged sentences

Shipping and Handling Revenues

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.

Shipping and handling revenues were $ 4.2 million and $ 3.5 million for the three months ended April 1, 2023 and April 2, 2022, respectively, and $ 8.5 million and $ 6.9 million for the six months ended April 1, 2023 and April 2, 2022, respectively.

The related cost of goods sold was $ 3.9 million and $ 3.1 million for the three months ended April 1, 2023 and April 2, 2022, respectively, and $ 7.7 million and $ 6.2 million for the six months ended April 1, 2023 and April 2, 2022, respectively.

Pension Expense

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

Three Months Ended Six Months Ended

(in thousands of dollars) April 1, 2023 April 2, 2022 April 1, 2023 April 2, 2022

Interest cost $ 1,509 $ 1,092 $ 3,018 $ 2,184

50 unchanged sentences

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.

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 quarters 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.

3 unchanged sentences

Term debt consisted of the following at the dates indicated:

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

(in thousands of dollars) April 1, 2023 October 1, 2022

2023 term loan, net of deferred financing costs of $ 2,148 and $ 1,410 , respectively

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

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;

At April 1, 2023 and October 1, 2022, $ 141.7 million and $ 151.6 million, respectively, were outstanding on the term loans.

At April 1, 2023 and October 1, 2022, the stated interest rates on the term loans were 10.5 % and 7.9 %, respectively.

At April 1, 2023 and October 1, 2022, the weighted-average annual effective interest rates for the term loans were 11.6 % and 8.0 %, respectively, which includes amortization of the deferred financing costs and interest relating to the interest rate collar, as applicable.

At April 1, 2023, $ 6.3 million of letters of credit were outstanding, which reduces the availability on the revolving line of credit.

There were no in borrowings outstanding on the revolving credit facility;

therefore, the Company would have been able to borrow $ 83.7 million on the revolving line of credit.

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.

Interest expense on all indebtedness was $ 5.2 million and $ 2.5 million for the three months ended April 1, 2023 and April 2, 2022, respectively, and $ 9.4 million and $ 5.6 million for the six months ended April 1, 2023 and April 2, 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 $ 141,700

2 unchanged sentences

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.

The effective tax rate for the three months ended April 1, 2023 was 20.1 %, 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 April 2, 2022 was 40.2 %, which 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 and federal and state tax credits (net of

valuation allowances), which were partially offset by discrete period tax expense resulting from net non-deductible compensation expenses and other tax adjustments.

The effective tax rate for the six months ended April 1, 2023 was 21.4 %, which aligned with the statutory federal 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 period.

The effective tax rate for the six months ended April 2, 2022 was 39.2 % 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 and federal and state tax credits (net of valuation allowances), which were partially offset by discrete period tax expense resulting from net non-deductible compensation expenses and other tax adjustments.

Guarantees, Commitments and Contingencies

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

At April 1, 2023, 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.

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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

Three Months Ended Six Months Ended

(in thousands of dollars) April 1, 2023 April 2, 2022 April 1, 2023 April 2, 2022

Bus (1) $ 273,472 $ 188,484 $ 486,721 $ 300,921

1 unchanged sentence

Segment net sales $ 299,814 $ 207,659 $ 535,546 $ 336,882

(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

(1) Parts segment revenue includes $ 1.3 million and $ 1.1 million for the three months ended April 1, 2023 and April 2, 2022, respectively, and $ 2.4 million and $ 1.9 million for the six months ended April 1, 2023 and April 2, 2022, respectively, related to the inter-segment sale of parts that was eliminated by the Bus segment upon consolidation.

Gross profit (loss)

Three Months Ended Six Months Ended

(in thousands of dollars) April 1, 2023 April 2, 2022 April 1, 2023 April 2, 2022

Bus $ 23,099 $ ( 3,984 ) $ 19,368 $ 5,658

1 unchanged sentence

Segment gross profit $ 35,649 $ 3,157 $ 43,106 $ 19,354

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

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

Three Months Ended Six Months Ended

(in thousands of dollars) April 1, 2023 April 2, 2022 April 1, 2023 April 2, 2022

Segment gross profit $ 35,649 $ 3,157 $ 43,106 $ 19,354

1 unchanged sentence

Interest expense ( 5,192 ) ( 2,491 ) ( 9,388 ) ( 5,573 )

Interest income 12 — 12 —

Other (expense) income, net ( 342 ) 744 ( 578 ) 1,480

Loss on debt modification — — ( 537 ) ( 561 )

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

Income (loss) before income taxes $ 6,922 $ ( 18,448 ) $ ( 7,422 ) $ ( 23,391 )

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

Three Months Ended

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

Three Months Ended Six Months Ended

(in thousands of dollars) April 1, 2023 April 2, 2022 April 1, 2023 April 2, 2022

United States $ 264,281 $ 194,245 $ 468,822 $ 294,792

3 unchanged sentences

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

Three Months Ended

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

Three Months Ended Six Months Ended

(in thousands of dollars) April 1, 2023 April 2, 2022 April 1, 2023 April 2, 2022

Diesel buses $ 89,795 $ 96,281 $ 161,289 $ 142,314

5 unchanged sentences

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

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 )

Earnings (Loss) Per Share

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

Three Months Ended Six Months Ended

(in thousands except for share data) April 1, 2023 April 2, 2022 April 1, 2023 April 2, 2022

Net income (loss) $ 7,130 $ ( 12,147 ) $ ( 4,164 ) $ ( 16,229 )

Weighted-average common shares outstanding 32,033,709 31,981,073 32,029,999 30,039,240

Weighted-average dilutive securities, restricted stock 270,156 — — —

Weighted-average dilutive securities, stock options 18,298 — — —

Weighted-average shares and dilutive potential common shares (1) 32,322,163 31,981,073 32,029,999 30,039,240

Loss per share:

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.

Earnings (loss) per share:

Basic earnings (loss) per share $ 0.22 $ ( 0.38 ) $ ( 0.13 ) $ ( 0.54 )

Diluted earnings (loss) per share $ 0.22 $ ( 0.38 ) $ ( 0.13 ) $ ( 0.54 )

(1) Potentially dilutive securities representing 0.4 million and 0.3 million shares of common stock were excluded from the computation of diluted earnings per share for the three month periods ending April 1, 2023 and April 2, 2022, respectively, and potentially dilutive securities representing 0.7 million and 0.3 million shares of common stock were excluded from the computation of diluted earnings per share for the six months ending April 1, 2023 and April 2, 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

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

December 31, 2022

Three Months Ended Six Months Ended

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

April 1, 2023

Beginning Balance $ ( 41,703 ) $ ( 41,703 ) $ ( 41,930 ) $ ( 41,930 )

2 unchanged sentences

Income taxes ( 72 ) ( 72 ) ( 144 ) ( 144 )

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

January 1, 2022

Ending Balance April 1, 2023 $ ( 41,476 ) $ ( 41,476 ) $ ( 41,476 ) $ ( 41,476 )

April 2, 2022

Beginning Balance $ ( 44,573 ) $ ( 44,573 ) $ ( 44,794 ) $ ( 44,794 )

2 unchanged sentences

Income taxes ( 70 ) ( 70 ) ( 140 ) ( 140 )

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

Ending Balance April 2, 2022 $ ( 44,352 ) $ ( 44,352 ) $ ( 44,352 ) $ ( 44,352 )

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