Management’s Discussion and Analysis of Financial Condition and Results of Operations.
−Removed: The following discussion and analysis of financial condition and results of operations of the Company should be read in conjunction with the Company’s unaudited condensed consolidated financial statements as of and for the three months ended December 31, 2022 and January 1, 2022 and related notes appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q ("Report").
+Added: The following discussion and analysis of financial condition and results of operations of the Company should be read in conjunction with the Company’s unaudited condensed consolidated financial statements as of and for the three and six months ended April 1, 2023 and April 2, 2022 and related notes appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q ("Report").
Our actual results may not be indicative of future performance.
50 unchanged sentences
Throughout this Report, we refer to the fiscal year ending September 30, 2023 as "fiscal 2023," the fiscal year ended October 1, 2022 as "fiscal 2022" and the fiscal year ended October 2, 2021 as “fiscal 2021.” There will be or were 52 weeks in fiscal 2023, fiscal 2022 and fiscal 2021.
−Removed: The first quarters of fiscal 2023 and fiscal 2022 both included 13 weeks.
+Added: The second quarters of fiscal 2023 and fiscal 2022 both included 13 weeks.
+Added: The six month periods in fiscal 2023 and 2022 both included 26 weeks.
Impacts of COVID-19 and Subsequent Supply Chain Constraints on Our Business
15 unchanged sentences
Shortages of key components during the second half of fiscal 2021 and most of fiscal 2022 hindered the Company's ability to complete the production of buses to fulfill sales orders, which had a significant, adverse impact on the Company's revenues during these periods.
−Removed: The Company has also experienced significant increased purchase costs for many of its raw materials as a result of supply chain disruptions over these same periods and continuing into the first quarter of fiscal 2023 that have negatively impacted the gross profit it recognized on sales.
+Added: The Company has also experienced significant increased purchase costs for many of its raw materials as a result of supply chain disruptions over these same periods and continuing into fiscal 2023 that have negatively impacted the gross profit it recognized on sales.
In response, beginning in July 2021 and continuing throughout fiscal 2022, the Company announced a number of sales price increases that apply to new sales orders and partially applied to backlog orders that were both intended to mitigate the impact of rising purchase costs on our operations and results.
2 unchanged sentences
While they began to impact sales and gross profit in the latter half of fiscal 2022, such impact did not offset the significant continued increase in the Company's production costs, resulting in further deterioration of the Company's gross profit during the second half of fiscal 2022 and continuing into the first quarter of fiscal 2023 as it produced and sold the oldest units included in the backlog as of the end of fiscal 2022.
−Removed: However, they are expected to have a positive impact on sales and gross profit during the remainder of fiscal 2023 as the Company fulfills sales orders (i) from the backlog existing as of the end of fiscal 2022 and (ii) that are taken during fiscal 2023, both of which contained, or will contain, most or all of the cumulative sales prices increases that have been announced since July 2021.
−Removed: New bus orders during the first quarter of fiscal 2023 remained extremely robust, primarily due to a combination of (i) pent-up demand resulting from the cumulative effect of the COVID-19 pandemic when many school systems conducted virtual learning and (ii) the challenged global supply chain for automotive parts that hindered the school bus industry's ability to produce and sell buses during the latter half of fiscal 2021 and most of fiscal 2022.
−Removed: Accordingly, the Company's backlog remained in excess of 5,000 units as of December 31, 2022 despite it selling almost 2,000 units during the first quarter of fiscal 2023 that were included in the backlog that existed as of October 1, 2022.
−Removed: In general, management believes that supply chain disruptions could continue in future periods and could materially impact our results if we are unable to i) produce during quarters having higher sales volumes and/or ii) pass along rising costs to our customers.
−Removed: Additionally, although we have not experienced any pervasive COVID-19 illnesses to date, if we were to experience some form of outbreak within our facilities, we would take all appropriate measures to protect the health and safety of our employees, which could include another temporary halt in production.
+Added: However, they had a positive impact on sales and gross profit during the second quarter of fiscal 2023, which is expected to continue for the remainder of fiscal 2023, as the Company fulfills sales orders (i) from the backlog existing as of the end of fiscal 2022 and (ii) that are taken during fiscal 2023, both of which contained, or will contain, most or all of the cumulative sales prices increases that have been announced since July 2021.
+Added: New bus orders during the first half of fiscal 2023 remained extremely robust, primarily due to a combination of (i) pent-up demand resulting from the cumulative effect of the COVID-19 pandemic when many school systems conducted virtual learning and (ii) the challenged global supply chain for automotive parts that hindered the school bus industry's ability to produce and sell buses during the latter half of fiscal 2021 and most of fiscal 2022.
+Added: Accordingly, the Company's backlog remained in excess of 5,700 units as of April 1, 2023 despite it selling over 4,200 units during the first half of fiscal 2023, most of which were included in the backlog that existed as of October 1, 2022.
+Added: In general, management believes that supply chain disruptions could continue in future periods and could materially impact our results if we are unable to i) obtain parts and supplies in sufficient quantities to meet our production needs and/or ii) pass along rising costs to our customers.
+Added: Additionally, although we have not experienced any pervasive COVID-19 illnesses to date, if we were to experience some form of outbreak within our facilities, we would take all appropriate measures to protect the health and safety of our employees, which could include a temporary halt in production.
The COVID-19 pandemic and subsequent supply chain constraints have resulted, and could to continue to result, in significant economic disruption and have adversely affected our business.
2 unchanged sentences
Accordingly, the magnitude and duration of any demand reductions, production and supply chain disruptions, and related financial impacts on our business cannot be estimated at this time.
−Removed: The impacts from the COVID-19 pandemic and subsequent supply chain constraints on the Company's business and operations during the second half of fiscal 2020 and continuing through the first quarter of fiscal 2023 negatively affected our revenues, gross profit, income and cash flows.
+Added: The impacts from the COVID-19 pandemic and subsequent supply chain constraints on the Company's business and operations during the second half of fiscal 2020 and continuing through the first half of fiscal 2023 negatively affected our revenues, gross profit, income and cash flows.
We continue to monitor and assess the level of future customer demand, the ability of school boards to maintain normal in-person learning in the foreseeable future, the ability of suppliers to resume and/or maintain operations and to provide parts and supplies in sufficient quantities to meet our production needs, the ability of our employees to continue to work, and our ability to maintain continuous production during the remainder of fiscal 2023 and beyond.
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On February 24, 2022, Russian military forces launched a large-scale invasion of Ukraine.
−Removed: While the Company has no assets or customers in either of these countries, this military conflict has had a significant negative impact on the Company’s operations, cash flows and results during 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.
−Removed: Specifically, Ukraine has historically been a large exporter of ferroalloy materials used in the manufacture of steel and the disruption in the supply of these minerals resulted in a significant increase in the price of steel from $1,057 per ton the third week of February 2022 to as high as $1,492 per ton the third week of April 2022 before finally decreasing to an average of $1,078 per ton the last two weeks of June and continuing to decline to $791 and $664 per ton the last weeks in September and December 2022, respectively (source:
+Added: While the Company has no assets or customers in either of these countries, this military conflict has had a significant negative impact on the Company’s operations, cash flows and results during fiscal 2022 and continuing into fiscal 2023, primarily in an indirect manner since the Company does not sell to customers located in, or source goods directly from, either country.
+Added: Specifically, Ukraine has historically been a large exporter of ferroalloy materials used in the manufacture of steel and the disruption in the supply of these minerals resulted in a significant increase in the price of steel from $1,057 per ton the third week of February 2022 to as high as $1,492 per ton the third week of April 2022 before finally decreasing to an average of $1,078 per ton the last two weeks of June and continuing to decline to $791 per ton the last week in September 2022.
+Added: During fiscal 2023, the decrease in the price of steel continued during the first quarter to $664 per ton the last week in December 2022 but began to increase significantly during the second quarter to $1,152 per ton the last week in March 2023 and continuing into April 2023 (source for all per ton prices:
sheet prices published by the CRU Index every Wednesday that provide price benchmarking in North America for U.S.
Midwest Domestic Hot-Rolled Coil Steel).
−Removed: While the Company has generally mitigated its direct exposure to steel prices by executing fixed price purchase contracts (generally purchased one quarter in advance) for the majority of the significant amount of steel used in the manufacture of school bus bodies, many suppliers from which the Company purchases components containing steel increased the price that they charge the Company to acquire such inventory, primarily on a lagged basis, during the latter half of fiscal 2022 and continuing into the first quarter of fiscal 2023.
+Added: While the Company has generally mitigated its direct exposure to steel prices by executing fixed price purchase contracts (generally purchased up to six months in advance) for the majority of the significant amount of steel used in the manufacture of school bus bodies, many suppliers from which the Company purchases components containing steel increased the price that they charge the Company to acquire such inventory, primarily on a lagged basis, during the latter half of fiscal 2022 and continuing into the first half of fiscal 2023.
These inventory costs impact gross profit when school buses are sold and cash flows when the related invoices are paid.
1 unchanged sentence
and many European countries.
−Removed: Accordingly, the disruption in the supply of oil has significantly impacted the price of goods refined from oil, such as diesel fuel, which increased from $4.055 per gallon the week ending February 21, 2022 to as high as $5.810 per gallon the week ending June 20, 2022, before decreasing slightly throughout the remainder of our fiscal 2022 to $4.889 per gallon the week ending September 26, 2022 and fluctuating within a range from $5.341 and $4.537 per gallon during our first quarter of fiscal 2023 (source:
+Added: Accordingly, the disruption in the supply of oil has significantly impacted the price of goods refined from oil, such as diesel fuel, which increased from $4.055 per gallon the week ending February 21, 2022 to as high as $5.810 per gallon the week ending June 20, 2022, before decreasing slightly throughout the remainder of our fiscal 2022 to $4.889 per gallon the week ending September 26, 2022 and fluctuating within a range from $5.341 and $4.128 per gallon during the first half of fiscal 2023 (source:
U.S Energy Information Administration - Weekly U.S.
4 unchanged sentences
Russia’s invasion of Ukraine has resulted, and is likely to continue to result, in significant economic disruption and has adversely affected our business.
−Removed: Specifically, it has contributed to higher inventory purchase costs, including freight costs, that negatively impacted the gross profit recognized on sales during the latter part of fiscal 2022 and continuing into the first quarter of fiscal 2023.
+Added: Specifically, it has contributed to higher inventory purchase costs, including freight costs, that negatively impacted the gross profit recognized on sales during the latter part of fiscal 2022 and continuing into the first half of fiscal 2023.
Because peace negotiations do not appear to be productive and because Russia has announced its intention to continue military operations in Ukraine in the immediate term, we currently believe that this matter will continue to adversely impact our business for the remainder of fiscal 2023 and perhaps beyond.
2 unchanged sentences
Accordingly, the duration of any production and supply chain disruptions, and related financial impacts, cannot be estimated at this time.
+Added: Labor Union Representation Petition
+Added: In April 2023, the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied & Industrial Service Workers International Union, AFL-CIO, CLC ("USW") filed a petition with the National Labor Relations Board ("NLRB") seeking a representation election for the Company's full-time and regular part-time production, maintenance, quality control, and warehouse employees at the Company's Fort Valley and Macon (warehouse) facilities, with certain exceptions.
+Added: The election is expected to be held in mid-May 2023.
Critical Accounting Policies and Estimates, Recent Accounting Pronouncements
2 unchanged sentences
Blue Bird evaluates its estimates on an ongoing basis, based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.
−Removed: Application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.
+Added: Application of these accounting policies
+Added: involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.
The Company’s accounting policies that we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described in the Company’s 2022 Form 10-K, filed with the SEC on December 12, 2022, under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates,” which description is incorporated herein by reference.
−Removed: Our senior management has reviewed these critical accounting policies and related disclosures and determined that there were no significant changes in our critical accounting policies during the three months ended December 31, 2022.
+Added: Our senior management has reviewed these critical accounting policies and related disclosures and determined that there were no significant changes in our critical accounting policies during the six months ended April 1, 2023.
Recent Accounting Pronouncements
30 unchanged sentences
Seasonality and variations from historical seasonality have impacted the comparison of results between fiscal periods.
−Removed: As discussed previously above, supply chain disruptions developing subsequent to the COVID-19 pandemic and, more recently, Russia's invasion of Ukraine, have significantly increased our inventory purchase costs, including freight costs incurred to expedite receipt of critical components, reflected in cost of goods sold during the latter half of fiscal 2021, all of fiscal 2022 and continuing into the first quarter of fiscal 2023.
+Added: As discussed previously above, supply chain disruptions developing subsequent to the COVID-19 pandemic and, more recently, Russia's invasion of Ukraine, have significantly increased our inventory purchase costs, including freight costs incurred to expedite receipt of critical components, reflected in cost of goods sold during the latter half of fiscal 2021, all of
+Added: fiscal 2022 and continuing into the first half of fiscal 2023.
In response, the Company announced several sales price increases that apply to new sales orders and partially applied to backlog orders that were both intended to mitigate the impact of rising purchase costs on our operations and results.
1 unchanged sentence
While they began to impact sales and gross profit in the latter half of fiscal 2022, such impact did not offset the significant continued increase in the Company's production costs, resulting in further deterioration of the Company's gross profit during the second half of fiscal 2022 and continuing into the first quarter of fiscal 2023 as it produced and sold the oldest units included in the backlog as of the end of fiscal 2022.
−Removed: However, they are expected to have a positive impact on sales and gross profit during the remainder of fiscal 2023 as the Company fulfills sales orders (i) from the
−Removed: backlog existing as of the end of fiscal 2022 and (ii) that are taken during fiscal 2023, both of which contained, or will contain, most or all of the cumulative sales prices increases that have been announced since July 2021.
+Added: However, they had a positive impact on sales and gross profit during the second quarter of fiscal 2023, which is expected to continue for the remainder of fiscal 2023, as the Company fulfills sales orders (i) from the backlog existing as of the end of fiscal 2022 and (ii) that are taken during fiscal 2023, both of which contained, or will contain, most or all of the cumulative sales prices increases that have been announced since July 2021.
Factors Affecting Our Expenses and Other Items
37 unchanged sentences
or (iv) costs directly attributed to the COVID-19 pandemic.
−Removed: While certain of the charges that are
−Removed: added back in the Adjusted EBITDA calculation, such as transaction related costs and operational transformation and major product redesign initiatives, represent operating expenses that may be recorded in more than one annual period, the significant project or transaction giving rise to such expenses is not considered to be indicative of the Company’s normal operations.
+Added: While certain of the charges that are added back in the Adjusted EBITDA calculation, such as transaction related costs and operational transformation and major product redesign initiatives, represent operating expenses that may be recorded in more than one annual period, the significant project or transaction giving rise to such expenses is not considered to be indicative of the Company’s normal operations.
Accordingly, we believe that these, as well as the other credits and charges that comprise the amounts utilized in the determination of Adjusted EBITDA described above, should not be used in evaluating the Company’s ongoing annual operating performance.
28 unchanged sentences
Management evaluates the segments based primarily upon revenues and gross profit.
−Removed: Consolidated Results of Operations for the Three Months Ended December 31, 2022 and January 1, 2022:
+Added: Consolidated Results of Operations for the Three Months Ended April 1, 2023 and April 2, 2022:
Three Months Ended
−Removed: (in thousands of dollars) December 31, 2022 January 1, 2022
+Added: (in thousands of dollars) April 1, 2023 April 2, 2022
$ 299,814 $ 207,659
4 unchanged sentences
Selling, general and administrative expenses 23,205 19,858
−Removed: Operating loss $ (9,375) $ (2,036)
+Added: Operating profit (loss) $ 12,444 $ (16,701)
Interest expense (5,192) (2,491)
+Added: Interest income 12 —
Other (expense) income, net (342) 744
−Removed: Loss on debt modification (537) (561)
−Removed: Loss before income taxes $ (14,344) $ (4,943)
−Removed: Income tax benefit 2,981 1,762
+Added: Income (loss) before income taxes $ 6,922 $ (18,448)
+Added: Income tax (expense) benefit (1,389) 7,415
Equity in net income (loss) of non-consolidated affiliate 1,597 (1,114)
−Removed: Net loss $ (11,294) $ (4,082)
+Added: Net income (loss) $ 7,130 $ (12,147)
Other financial data:
6 unchanged sentences
Net Sales by Segment
−Removed: December 31, 2022 January 1, 2022
+Added: April 1, 2023 April 2, 2022
$ 273,472 $ 188,484
1 unchanged sentence
$ 299,814 $ 207,659
−Removed: Gross (Loss) Profit by Segment
+Added: Gross Profit by Segment
$ 23,099 $ (3,984)
$ 35,649 $ 3,157
−Removed: Net sales were $235.7 million for the first quarter of fiscal 2023, an increase of $106.5 million, or 82.4%, compared to $129.2 million for the first quarter of fiscal 2022.
+Added: Net sales were $299.8 million for the second quarter of fiscal 2023, an increase of $92.2 million, or 44.4%, compared to $207.7 million for the second quarter of fiscal 2022.
The increase in net sales is primarily due to increased unit bookings, product and mix changes, as well as pricing actions taken by management in response to increased inventory purchase costs.
Significant supply chain disruptions began limiting the availability of certain critical components primarily beginning towards the end of the third quarter of fiscal 2021 and continuing throughout fiscal 2022.
−Removed: However, by the end of the first quarter of fiscal 2023, supply chain constraints began to improve slightly, allowing for increased production relative to the first quarter of fiscal 2022.
+Added: However, during the first half of fiscal 2023, supply chain constraints began to improve slightly, allowing for increased production during the second quarter of fiscal 2023 relative to the second quarter of fiscal 2022.
Bus sales increased $85.0 million, or 45.1%, reflecting a 19.3% increase in units booked and a 21.6% increase in average sales price per unit.
−Removed: In the first quarter of fiscal 2023, 1,957 units were booked compared to 1,149 units booked for the same period in fiscal 2022.
−Removed: The increase in units sold was primarily due to constraints in the Company's ability to produce and deliver buses due to shortages of critical components in the first quarter of fiscal 2022.
−Removed: The 11.4% increase in unit price for the first quarter of fiscal 2023 compared to the same period in fiscal 2022 reflects pricing actions taken by management as well as product and customer mix changes.
−Removed: Parts sales increased $5.7 million, or 33.9%, for the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022.
−Removed: This increase is primarily attributed to pricing actions taken by management to offset increases in purchased parts costs and increased inventory availability as supply chain constraints began to improve slightly during the first quarter of fiscal 2023 relative to the first quarter of fiscal 2022.
+Added: In the second quarter of fiscal 2023, 2,304 units were booked compared to 1,931 units booked for the same period in fiscal 2022.
+Added: The increase in units sold was primarily due to constraints in the Company's ability to produce and deliver buses due to shortages of critical components in the second quarter of fiscal 2022.
+Added: The 21.6% increase in unit price for the second quarter of fiscal 2023 compared to the same period in fiscal 2022 reflects pricing actions taken by management as well as product and customer mix changes.
+Added: Parts sales increased $7.2 million, or 37.4%, for the second quarter of fiscal 2023 compared to the second quarter of fiscal 2022.
+Added: This increase is primarily attributed to pricing actions taken by management to offset increases in purchased parts costs and increased inventory availability as supply chain constraints began to improve slightly during the second quarter of fiscal 2023 relative to the second quarter of fiscal 2022.
Cost of goods sold .
−Removed: Total cost of goods sold was $228.3 million for the first quarter of fiscal 2023, an increase of $115.2 million, or 102.0%, compared to $113.0 million for the first quarter of fiscal 2022.
−Removed: As a percentage of net sales, total cost of goods sold increased from 87.5% to 96.8%.
−Removed: Bus segment cost of goods sold increased $114.2 million, or 111.1%, for the first quarter of fiscal 2023 compared to the same period in fiscal 2022.
−Removed: The increase was primarily driven by the 70.3% increase in units booked, in the first quarter of fiscal 2023 compared to the same period in fiscal 2022.
−Removed: Also contributing was increased inventory costs, as the average cost of goods sold per unit for the first quarter of fiscal 2023 was 23.9% higher compared to the first quarter of fiscal 2022, primarily due to increases in manufacturing costs attributable to a) increased raw materials costs resulting from ongoing inflationary pressures and b) ongoing supply chain disruptions that resulted in higher purchase costs for components and freight.
−Removed: The $1.1 million, or 10.4%, increase in parts segment cost of goods sold for the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022 was primarily due to the increase in sales volume noted above, increased purchased parts costs, driven by ongoing inflationary pressures and supply chain disruptions, as well as slight variations due to product and channel mix.
−Removed: Operating loss .
−Removed: Operating loss was $9.4 million for the first quarter of fiscal 2023, an increase of $7.3 million, compared to operating loss of $2.0 million for the first quarter of fiscal 2022.
−Removed: Profitability was negatively impacted by a decrease of $8.7 million in gross profit as outlined in the revenue and cost of goods sold discussions.
−Removed: Specifically, the ongoing increases in manufacturing costs, when coupled with the fact that the Company produced and sold the oldest units in the backlog existing at the end of fiscal 2022, many of which had pricing from as early as fiscal 2021, resulted in the bus segment reporting gross loss of $3.7 million during the first quarter of fiscal 2023.
−Removed: The decrease in total gross profit was partially offset by a decrease of $1.4 million in selling, general and administrative expenses, primarily due to a decrease in share-based compensation expense as a result of the accelerated vesting of all outstanding stock awards for two of the Company's former executives in connection with their retirements during the first quarter of fiscal 2022, without comparable expense in the first quarter fiscal 2023.
−Removed: Additionally, selling, general and administrative expenses during the first quarter of fiscal 2023 benefited from actions taken by management to reduce labor costs and certain discretionary spending to mitigate the significant adverse impact of ongoing supply chain constraints on the Company's operations and results.
+Added: Total cost of goods sold was $264.2 million for the second quarter of fiscal 2023, an increase of $59.7 million, or 29.2%, compared to $204.5 million for the second quarter of fiscal 2022.
+Added: As a percentage of net sales, total cost of goods sold improved from 98.5% to 88.1%.
+Added: Bus segment cost of goods sold increased $57.9 million, or 30.1%, for the second quarter of fiscal 2023 compared to the same period in fiscal 2022.
+Added: The increase was primarily driven by the 19.3% increase in units booked, in the second quarter of fiscal 2023 compared to the same period in fiscal 2022.
+Added: Also contributing was increased inventory costs, as the average cost of goods sold per unit for the second quarter of fiscal 2023 was 9.0% higher compared to the second quarter of fiscal 2022, primarily due to increases in manufacturing costs attributable to a) increased raw materials costs resulting from ongoing inflationary pressures and b) ongoing supply chain disruptions that resulted in higher purchase costs for components and freight.
+Added: The $1.8 million, or 14.6%, increase in parts segment cost of goods sold for the second quarter of fiscal 2023 compared to the second quarter of fiscal 2022 was primarily due to increased purchased parts costs, driven by ongoing inflationary pressures and supply chain disruptions, as well as slight variations due to product and channel mix.
+Added: Operating profit (loss) .
+Added: Operating profit was $12.4 million for the second quarter of fiscal 2023, an increase of $29.1 million, compared to operating loss of $16.7 million for the second quarter of fiscal 2022.
+Added: Profitability was primarily impacted by an increase of $32.5 million in gross profit as outlined in the revenue and cost of goods sold discussions.
+Added: The increase in gross profit was partially offset by an increase of $3.3 million in selling, general and administrative expenses, primarily due to an increase in labor costs.
Interest expense .
−Removed: Interest expense was $4.2 million for the first quarter of fiscal 2023, an increase of $1.1 million, or 36.1%, compared to $3.1 million for the first quarter of fiscal 2022.
−Removed: The increase was primarily attributable to an increase in the stated term loan interest rate from 6.0% at January 1, 2022 to 10.5% at December 31, 2022.
+Added: Interest expense was $5.2 million for the second quarter of fiscal 2023, an increase of $2.7 million, or 108.4%, compared to $2.5 million for the second quarter of fiscal 2022.
+Added: The increase was primarily attributable to an increase in the stated term loan interest rate from 6.1% at April 2, 2022 to 10.5% at April 1, 2023.
Income taxes .
−Removed: We recorded income tax benefit of $3.0 million and $1.8 million for the first quarters of fiscal 2023 and fiscal 2022, respectively.
−Removed: 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.
−Removed: 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%.
−Removed: 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.
+Added: Income tax expense was $1.4 million for the second quarter of fiscal 2023, compared to income tax benefit of $7.4 million for the same period in fiscal 2022.
+Added: 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.
+Added: 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%.
+Added: 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 were partially offset by discrete period tax expense resulting from net non-deductible compensation expenses and other tax adjustments.
Adjusted EBITDA .
−Removed: Adjusted EBITDA was $(4.2) million, or (1.8)% of net sales, for the first quarter of fiscal 2023, a decrease of $7.8 million, or 217.9%, compared to $3.6 million, or 2.8% of net sales, for the first quarter of fiscal 2022.
−Removed: The decrease in Adjusted EBITDA primarily results from the $7.2 million increase in net loss, as a result of the factors discussed above.
−Removed: The following table sets forth a reconciliation of net loss to adjusted EBITDA for the periods presented:
+Added: Adjusted EBITDA was $19.8 million, or 6.6% of net sales, for the second quarter of fiscal 2023, an increase of $30.5 million, or 285.6%, compared to $(10.7) million, or (5.1)% of net sales, for the second quarter of fiscal 2022.
+Added: The increase in Adjusted EBITDA is primarily the result of the $19.3 million increase in net income and the related $8.8 million increase in income tax expense, as well as the $2.7 million increase in interest expense, as a result of the factors discussed above.
+Added: The following table sets forth a reconciliation of net income (loss) to adjusted EBITDA for the periods presented:
Three Months Ended
−Removed: (in thousands of dollars) December 31, 2022 January 1, 2022
−Removed: Net loss $ (11,294) $ (4,082)
+Added: (in thousands of dollars) April 1, 2023 April 2, 2022
+Added: Net income (loss) $ 7,130 $ (12,147)
Interest expense, net (1) 5,281 2,563
−Removed: Income tax benefit (2,981) (1,762)
+Added: Income tax expense (benefit) 1,389 (7,415)
Depreciation, amortization, and disposals (2) 4,181 3,622
2 unchanged sentences
Product redesign initiatives — 281
−Removed: Restructuring and other charges — 246
−Removed: Costs directly attributed to the COVID-19 pandemic (3) — 29
−Removed: Loss on debt modification 537 561
+Added: Other 1,024 8
Adjusted EBITDA
3 unchanged sentences
(1) Includes $0.1 million for both fiscal periods, representing interest expense on operating lease liabilities, which are a component of lease expense and presented as a single operating expense in selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.
−Removed: (2) Includes $0.4 million and $0.2 million for the three months ended December 31, 2022 and January 1, 2022, respectively, representing amortization charges on right-of-use lease assets, which are a component of lease expense and presented as a single operating expense in selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.
−Removed: (3) Primarily represents costs incurred for third party cleaning services and personal protective equipment for our employees in response to the COVID-19 pandemic.
+Added: (2) Includes $0.4 million and $0.2 million for the three months ended April 1, 2023 and April 2, 2022, respectively, representing amortization charges on right-of-use lease assets, which are a component of lease expense and presented as a single operating expense in selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.
+Added: Consolidated Results of Operations for the Six Months Ended April 1, 2023 and April 2, 2022:
+Added: Six Months Ended
+Added: (in thousands of dollars) April 1, 2023 April 2, 2022
+Added: $ 535,546 $ 336,882
+Added: Cost of goods sold
+Added: 492,440 317,528
+Added: $ 43,106 $ 19,354
+Added: Operating expenses
+Added: Selling, general and administrative expenses
+Added: 40,037 38,091
+Added: Operating profit (loss) $ 3,069 $ (18,737)
+Added: Interest expense (9,388) (5,573)
+Added: Interest income 12 —
+Added: Other (expense) income, net (578) 1,480
+Added: Loss on debt modification (537) (561)
+Added: Loss before income taxes $ (7,422) $ (23,391)
+Added: Income tax benefit 1,592 9,177
+Added: Equity in net income (loss) of non-consolidated affiliate 1,666 (2,015)
+Added: Net loss $ (4,164) $ (16,229)
+Added: Other financial data:
+Added: Adjusted EBITDA
+Added: $ 15,596 $ (7,091)
+Added: Adjusted EBITDA margin
+Added: 2.9 % (2.1) %
+Added: The following provides the results of operations of Blue Bird’s two reportable segments:
+Added: (in thousands of dollars) Six Months Ended
+Added: Net Sales by Segment April 1, 2023 April 2, 2022
+Added: $ 486,721 $ 300,921
+Added: 48,825 35,961
+Added: Total $ 535,546 $ 336,882
+Added: Gross Profit by Segment
+Added: $ 19,368 $ 5,658
+Added: 23,738 13,696
+Added: $ 43,106 $ 19,354
+Added: Net sales were $535.5 million for the six months ended April 1, 2023, an increase of $198.7 million, or 59.0%, compared to $336.9 million for the six months ended April 2, 2022.
+Added: The increase in net sales is primarily due to increased unit bookings, product and mix changes, as well as pricing actions taken by management in response to increased inventory purchase costs.
+Added: Significant supply chain disruptions began limiting the availability of certain critical components primarily beginning towards the end of the third quarter of fiscal 2021 and continuing throughout most of fiscal 2022.
+Added: However, during the first half of fiscal 2023, supply chain constraints began to improve slightly, allowing for increased production relative to the first half of fiscal 2022.
+Added: Bus sales increased $185.8 million, or 61.7%, reflecting a 38.3% increase in units booked and a 16.9% increase in average sales price per unit.
+Added: 4,261 units booked in the six months ended April 1, 2023 compared with 3,080 units booked during the same period in fiscal 2022.
+Added: The increase in units sold was primarily due to constraints in the Company's ability to produce and deliver buses due to shortages of critical components in the first half of fiscal 2022.
+Added: The increase in unit price for the first half of fiscal 2023 compared to the same period in fiscal 2022 reflects pricing actions taken by management as well as product and customer mix changes.
+Added: Parts sales increased $12.9 million, or 35.8%, for the six months ended April 1, 2023 compared to the six months ended April 2, 2022.
+Added: This increase is primarily attributed to pricing actions taken by management to offset increases in purchased parts costs and increased inventory availability as supply chain constraints began to improve slightly during the first half of fiscal 2023 relative to the first half of fiscal 2022.
+Added: Cost of goods sold .
+Added: Total cost of goods sold was $492.4 million for the six months ended April 1, 2023, an increase of $174.9 million, or 55.1%, compared to $317.5 million for the six months ended April 2, 2022.
+Added: As a percentage of net sales, total cost of goods sold decreased from 94.3% to 92.0%.
+Added: Bus segment cost of goods sold increased $172.1 million, or 58.3%, for the six months ended April 1, 2023 compared to the six months ended April 2, 2022.
+Added: The increase was primarily driven by the 38.3% increase in units booked in the six months ended April 1, 2023 compared to the same period in fiscal 2022.
+Added: Also contributing was increased inventory costs, as the average cost of goods sold per unit for the six months ended April 1, 2023 was 14.4% higher compared to the six months ended April 2, 2022, primarily due to increases in manufacturing costs attributable to a) increased raw materials costs resulting from ongoing inflationary pressures and b) ongoing supply chain disruptions that resulted in higher purchase costs for components and freight.
+Added: The $2.8 million, or 12.7%, increase in parts segment cost of goods sold for the six months ended April 1, 2023 compared to the six months ended April 2, 2022 was primarily due to increased purchased parts costs, driven by ongoing inflationary pressures and supply chain disruptions, as well as slight variations due to product and channel mix.
+Added: Operating profit (loss) .
+Added: Operating profit was $3.1 million for the six months ended April 1, 2023, an increase of $21.8 million compared to operating loss of $18.7 million for the six months ended April 2, 2022.
+Added: Profitability was primarily impacted by an increase of $23.8 million in gross profit as outlined in the revenue and cost of goods sold discussions.
+Added: The increase in gross profit was partially offset by an increase of $1.9 million in selling, general and administrative expenses, primarily due to an increase in labor costs.
+Added: Interest expense .
+Added: Interest expense was $9.4 million for the six months ended April 1, 2023, an increase of $3.8 million, or 68.5%, compared to $5.6 million for the six months ended April 2, 2022.
+Added: The increase was primarily attributable to an increase in the stated term loan interest rate from 6.1% at April 2, 2022 to 10.5% at April 1, 2023.
+Added: Income taxes .
+Added: Income tax benefit was $1.6 million and $9.2 million for the six months ended April 1, 2023 and April 2, 2022, respectively.
+Added: 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.
+Added: The effective tax rate for the six months ended April 2, 2022 was 39.2%, which differed from the statutory federal income tax rate of 21%.
+Added: 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.
+Added: Adjusted EBITDA .
+Added: Adjusted EBITDA was $15.6 million, or 2.9% of net sales, for the six months ended April 1, 2023, an increase of $22.7 million, or 319.9%, compared to $(7.1) million, or (2.1)% of net sales, for the six months ended April 2, 2022.
+Added: The increase in Adjusted EBITDA is primarily the result of the $12.1 million decrease in net loss and the related $7.6 million decrease in income tax benefit, as well as the $3.8 million increase in interest expense, as a result of the factors discussed above.
+Added: The following table sets forth a reconciliation of net loss to adjusted EBITDA for the periods presented:
+Added: Six Months Ended
+Added: (in thousands of dollars) April 1, 2023 April 2, 2022
+Added: Net loss $ (4,164) $ (16,229)
+Added: Interest expense, net (1) 9,570 5,720
+Added: Income tax benefit (1,592) (9,177)
+Added: Depreciation, amortization, and disposals (2) 7,996 7,145
+Added: Operational transformation initiatives 937 1,586
+Added: Loss on debt modification 537 561
+Added: Share-based compensation 1,288 2,486
+Added: Product redesign initiatives — 534
+Added: Other 1,024 283
+Added: Adjusted EBITDA $ 15,596 $ (7,091)
+Added: Adjusted EBITDA margin (percentage of net sales) 2.9 % (2.1) %
+Added: (1) Includes $0.2 million and $0.1 million for the six months ended April 1, 2023 and April 2, 2022, respectively, representing interest expense on operating lease liabilities, which are a component of lease expense and presented as a single operating expense in selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.
+Added: (2) Includes $0.9 million and $0.4 million for the six months ended April 1, 2023 and April 2, 2022, respectively, representing amortization charges on right-of-use lease assets, which are a component of lease expense and presented as a single operating expense in selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.
Liquidity and Capital Resources
The Company’s primary sources of liquidity are cash generated from its operations, available cash and cash equivalents and borrowings under its credit facility.
−Removed: At December 31, 2022, the Company had $5.7 million of available cash (net of outstanding checks) and $78.7 million of additional borrowings available under the revolving line of credit portion of its credit facility.
+Added: At April 1, 2023, the Company had $17.8 million of available cash (net of outstanding checks) and $83.7 million of additional borrowings available under the revolving line of credit portion of its credit facility.
The Company’s revolving line of credit is available for working capital requirements, capital expenditures and other general corporate purposes.
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and as further amended by the sixth amendment (the "Sixth Amended Credit Agreement" and collectively, the "Amended Credit Agreement").
−Removed: 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.
+Added: The Sixth Amended Credit Agreement, among other things, extends the maturity date for both the
+Added: 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.
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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.
−Removed: 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.
+Added: 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.
Detailed descriptions of the Credit Agreement as well as the First, Second, Third, Fourth, and Fifth Amended Credit Agreements are set forth under “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” contained in the Company’s Annual Report on Form 10-K for the fiscal year ended October 1, 2022, filed with the SEC on December 12, 2022.
−Removed: At December 31, 2022, the Borrower and the guarantors under the Amended Credit Agreement were in compliance with all covenants.
+Added: At April 1, 2023, the Borrower and the guarantors under the Amended Credit Agreement were in compliance with all covenants.
Short-Term and Long-Term Liquidity Requirements
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The adverse impacts from ongoing supply chain disruptions, which were further exacerbated by Russia's invasion of Ukraine in February 2022, materially impacted 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.
−Removed: 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.
−Removed: 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: However, the gross margin on bus sales during the second quarter of
+Added: fiscal 2023 still lags the historical gross margin reported prior to the COVID-19 pandemic.
The development and fluidity of ongoing or future supply chain constraints preclude any prediction as to the ultimate severity of the adverse impacts on our business, financial condition, results of operations, and liquidity.
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The following table sets forth general information derived from our Condensed Consolidated Statements of Cash Flows:
−Removed: Three Months Ended
−Removed: (in thousands of dollars) December 31, 2022 January 1, 2022
−Removed: Cash and cash equivalents at beginning of period $ 10,479 $ 11,709
+Added: Six Months Ended
+Added: (in thousands of dollars) April 1, 2023 April 2, 2022
+Added: Cash, cash equivalents and restricted cash at beginning of period $ 10,479 $ 11,709
Total cash provided by (used in) operating activities 44,716 (11,410)
1 unchanged sentence
Total cash (used in) provided by financing activities (33,444) 18,046
−Removed: Change in cash and cash equivalents $ (4,579) $ (7,640)
−Removed: Cash and cash equivalents at end of period $ 5,900 $ 4,069
+Added: Change in cash, cash equivalents and restricted cash $ 7,532 $ 3,158
+Added: Cash, cash equivalents and restricted cash at end of period $ 18,011 $ 14,867
Total cash provided by (used in) operating activities
−Removed: Cash flows provided by operating activities totaled $19.9 million for the three months ended December 31, 2022, an increase of $53.0 million from the $33.1 million of cash flows used in operating activities during the three months ended January 1, 2022.
−Removed: The increase was primarily due to $30.6 million, $27.7 million, and $9.0 million increases in cash provided by favorable changes in inventory, accounts payable, and accrued expenses, pension and other liabilities, respectively.
−Removed: At the end of fiscal 2022 and during the first quarter of fiscal 2023, inflationary pressures and supply chain disruptions significantly increased our purchase costs for components and freight, which, when coupled with increased production and sales volumes during the first quarter of fiscal 2023, resulted in a significant increase in the accounts payable balance (a net source of cash) when compared with a significant decrease in the accounts payable balance at the end of the first quarter of fiscal 2022 (a net use of cash).
−Removed: Additionally, we became more efficient at managing supply chain disruptions, and thus building and selling buses, during the latter months of fiscal 2022 and continuing into the first quarter of fiscal 2023 when compared with the first quarter of fiscal 2022.
−Removed: These efficiencies resulted in us consuming more inventory in production, which resulted in a significant decrease in the inventory balance at the end of the first quarter of fiscal 2023 (a net source of cash) when compared with a significant increase in the inventory balance at the end of the corresponding period of fiscal 2022 (a net use of cash).
−Removed: These favorable changes were partially offset by several unfavorable changes including a $7.2 million increase in net loss, a $1.1 million decrease in share-based compensation, and a $2.7 million decrease in cash provided by changes in other assets.
+Added: Cash flows provided by operating activities totaled $44.7 million for the six months ended April 1, 2023, an increase of $56.1 million from the $11.4 million of cash flows used in operating activities during the six months ended April 2, 2022.
+Added: The increase was primarily due to $44.3 million, $9.8 million, and $7.5 million increases in cash provided by favorable changes in inventory, accrued expenses, pension and other liabilities, and deferred income tax benefit, respectively, as well as the $12.1 million decrease in net loss.
+Added: At the end of fiscal 2022 and during the first half of fiscal 2023, we became more efficient at managing supply chain disruptions, and thus building and selling buses, during the latter months of fiscal 2022 and continuing into the first half of fiscal 2023 when compared with the first half of fiscal 2022.
+Added: These efficiencies resulted in us consuming more inventory in production, which resulted in a
+Added: significant decrease in the inventory balance at the end of the second quarter of fiscal 2023 (a net source of cash) when compared with a significant increase in the inventory balance at the end of the corresponding period of fiscal 2022 (a net use of cash).
+Added: These favorable changes were partially offset by several unfavorable changes including a $10.8 million decrease in cash provided by changes in accounts payable, $3.7 million increase in equity in net income of non-consolidated affiliate, $1.7 million decrease in non-cash interest expense, $1.4 million decrease in impairment of fixed assets, and $1.2 million decrease in share-based compensation expense.
Total cash used in investing activities
−Removed: Cash flows used in investing activities totaled $1.1 million for the three months ended December 31, 2022, as compared to $1.6 million for the three months ended January 1, 2022.
−Removed: The $0.4 million decrease was primarily due to a reduction in spending on fixed assets to mitigate the ongoing impact of supply chain constraints on our operations, financial results and cash flows.
+Added: Cash flows used in investing activities totaled $3.7 million for the six months ended April 1, 2023, as compared to $3.5 million for the six months ended April 2, 2022.
+Added: The $0.3 million increase was primarily due to a reduction in spending on fixed assets to mitigate the ongoing impact of supply chain constraints on our operations, financial results and cash flows.
Total cash (used in) provided by financing activities
−Removed: Cash flows used in financing activities totaled $23.4 million for the three months ended December 31, 2022, as compared to $27.0 million of cash flows provided by financing activities for the three months ended January 1, 2022.
−Removed: The $50.4 million decrease between fiscal periods was primarily attributable to $75.0 million of proceeds received from the issuance and sale of common stock in a private placement transaction during the first quarter of fiscal 2022 with no similar activity in the corresponding period of fiscal 2023.
−Removed: This cash inflow was partially offset by a net $25.0 million decrease (i.e., repayments) in revolving credit facility borrowings in the three months ended December 31, 2022 compared to the three months ended January 1, 2022.
+Added: Cash flows used in financing activities totaled $33.4 million for the six months ended April 1, 2023, as compared to $18.0 million of cash flows provided by financing activities for the six months ended April 2, 2022.
+Added: The $51.5 million difference between fiscal periods was primarily attributable to $75.0 million of proceeds received from the issuance and sale of common stock in a private placement transaction during the first half of fiscal 2022 with no similar activity in the corresponding period of fiscal 2023.
+Added: This cash inflow was partially offset by a net $25.0 million decrease (i.e., repayments) in revolving credit facility borrowings in the six months ended April 1, 2023 compared to the six months ended April 2, 2022.
Free cash flow
2 unchanged sentences
The following table sets forth the calculation of Free Cash Flow for the periods presented:
−Removed: Three Months Ended
−Removed: (in thousands of dollars) December 31, 2022 January 1, 2022
+Added: Six Months Ended
+Added: (in thousands of dollars) April 1, 2023 April 2, 2022
Net cash provided by (used in) operating activities $ 44,716 $ (11,410)
2 unchanged sentences
$ 40,976 $ (14,888)
−Removed: Free Cash Flow for the three months ended December 31, 2022 was $53.4 million higher than the three months ended January 1, 2022, due to a $53.0 million increase in cash provided by (used in) operating activities, as well as a decrease of $0.4 million in cash paid for fixed assets, both as discussed above.
+Added: Free Cash Flow for the six months ended April 1, 2023 was $55.9 million higher than the six months ended April 2, 2022, due to a $56.1 million increase in cash provided by (used in) operating activities, as well as an increase of $0.3 million in cash paid for fixed assets, both as discussed above.
Off-Balance Sheet Arrangements
−Removed: We had outstanding letters of credit totaling $6.3 million at December 31, 2022, the majority of which secure our self-insured workers compensation program, the collateral for which is regulated by the State of Georgia.
+Added: We had outstanding letters of credit totaling $6.3 million at April 1, 2023, the majority of which secure our self-insured workers compensation program, the collateral for which is regulated by the State of Georgia.
Quantitative and Qualitative Disclosures About Mar ket Risk.
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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.