What changed in this filing

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Item 1. Business

2023-12-11 compared with 2022-12-12 · 60 added, 60 removed, 285 unchanged (30% of the section changed)

19 unchanged sentences

Any amendments to our Code of Ethics or waivers granted to our directors and executive officers will be posted on our corporate website.

In addition to the information contained in this Annual Report on Form 10-K for the fiscal year ended October 1, 2022 (“2022 Form 10-K Report” or “Report”), information about our Company can be found at http://investors.blue-bird.com , including extensive information about our management team, our products and our corporate governance.

In addition to the information contained in this Annual Report on Form 10-K for the fiscal year ended September 30, 2023 (“2023 Form 10-K Report” or “Report”), information about our Company can be found at http://investors.blue-bird.com , including extensive information about our management team, our products and our corporate governance.

The foregoing information regarding content on our website is for convenience only and is not deemed to be incorporated by reference into this Report or filed with the SEC.

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Financial information is reported on the basis that it is used internally by the chief operating decision maker (“CODM”) in evaluating segment performance and deciding how to allocate resources to segments.

The President and Chief Executive Officer of the Company has been identified as the CODM.

The Chief Executive Officer of the Company has been identified as the CODM.

Management evaluates the segments based primarily upon revenues and gross profit.

Refer to Note 11, Segment Information , to the Company’s consolidated financial statements for additional financial information regarding our reportable segments including the primary geographic areas in which we earn revenues.

Throughout this Report, we refer to the fiscal year ended October 1, 2022 as “fiscal 2022,” the fiscal year ended October 2, 2021 as “fiscal 2021” and the fiscal year ended October 3, 2020 as “fiscal 2020.” There were 52 weeks in fiscal 2022 and fiscal 2021, and there were 53 weeks in fiscal 2020.

Throughout this Report, we refer to the fiscal year ended 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 were 52 weeks in fiscal 2023, fiscal 2022, and fiscal 2021.

Our performance in recent years has been driven by the implementation of repeatable processes focused on product initiatives, continuous improvement of both competitiveness and manufacturing flexibility, and lowering our cost of capital, as described below:

Alternative Power Initiatives — We believe Blue Bird is the clear leader in alternative powered school buses (defined as buses that do not operate on diesel fuel) and we continue to introduce new products to support growing consumer demand for these products.

• Propane — In fiscal 2012, we entered into our exclusive relationship with Ford Motor Company and Roush Clean Tech to offer propane powered Type C school buses.

• Propane — In the fiscal year ended September 29, 2012 ("fiscal 2012"), we entered into our exclusive relationship with Ford Motor Company and Roush Clean Tech to offer propane powered Type C school buses.

We have continued to lead the industry with this offering.

◦ We launched the industry’s first .05g/bhp-hr nitrogen oxide ("NOx") propane engine in fiscal 2017.

◦ We launched the industry’s first .05g/bhp-hr nitrogen oxide ("NOx") propane engine in the fiscal year ended September 30, 2017 ("fiscal 2017").

This engine operates four times cleaner than the current emission standard and is significantly better for the environment than competitors' published offerings.

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This engine complies with Ultra Low NOx classification and has an emissions level at 10% of the current standard and competitive offerings.

• Compressed Natural Gas ("CNG") — Blue Bird was the first Original Equipment Manufacturer ("OEM") to introduce a CNG powertrain for the Rear Engine Type D bus using Cummins Westport technology.

• Electric — Blue Bird is the first major school bus manufacturer to market, and presently the clear leader in, electric bus sales among all major OEMs.

• Electric — Blue Bird is the first major school bus manufacturer to market, and presently the clear leader in, electric bus sales among all major original equipment manufacturers ("OEM").

We have partnered with Cummins, one of our long-standing engine suppliers, to design and develop our electric vehicle offering.

We offer electric solutions in both our Type C and Type D buses and commenced delivery to customers in fiscal 2018.

We offer electric solutions in both our Type C and Type D buses and commenced delivery to customers in the fiscal year ended September 29, 2018 ("fiscal 2018").

With demand and interest growing quickly, we have taken, and will continue to take, actions to expand our electric vehicle production capacity.

• Gasoline — In fiscal 2016, we re-introduced gasoline engines in school buses, again using a Ford engine and transmission and a Roush Clean Tech fuel delivery.

• Gasoline — In the fiscal year ended October 1, 2016 ("fiscal 2016"), we re-introduced gasoline engines in school buses, again using a Ford engine and transmission and a Roush Clean Tech fuel usage evaporative emissions certification.

This product has been successful and continues to grow the Blue Bird customer base.

Diesel — Blue Bird works closely with Cummins on diesel engines, which continue to be the power source for the majority of school buses sold.

Diesel — Blue Bird works closely with Cummins on diesel engines, which continue to be the power source for the majority of buses sold in the school bus industry.

Product Initiatives — We continue to update and improve our products.

• During fiscal 2021, we successfully launched the all-new, Ford 7.3L V8 engine in our gasoline and propane powered offerings.

Manufacturing and Process Initiatives — We have commenced a number of initiatives to continue to build customer loyalty, reduce costs, and enhance competitiveness.

Manufacturing and Process Initiatives — We commenced and have continued a number of initiatives to continue to build customer loyalty, reduce costs, and enhance competitiveness.

• We launched our state-of-the-art 60,000 square foot paint facility in July 2019.

Using robotic technology, the paint facility is designed to paint a bus three times faster than can be done manually, with a higher paint transfer rate and consistent, outstanding coverage.

In keeping with Blue Bird's going green, the facility features a zero-to-landfill design.

In keeping with Blue Bird's environmental awareness focus, the facility features a zero-to-landfill design.

All paint over spray is captured, dried and sent to a power generation plant to be used as fuel.

• During fiscal 2022, we began to repurpose an existing building for the dedicated assembly of electric chassis production that is expected to increase our volume capacity in April 2023.

• We made investments in, and implemented process changes to, certain of our production areas, including the air conditioner installation department, that increased daily throughput by 20% to 50% within those areas.

Access to Capital — We refinanced our term debt on substantially better terms in December 2016 (the "Credit Agreement").

Since then, the Credit Agreement has been amended on six different occasions and as of the date of this filing, provides total revolving commitments of $90.0 million.

Additional details and discussion of these amendments can be found in the "Liquidity and Capital Resources" section of Item 7.

• During fiscal 2023, we opened the new Electric Vehicle Build-up Center, a transformed 40,000 square foot facility at the Fort Valley, Georgia manufacturing plant, designed to meet increasing demand for electric school buses.

Access to Capital — We refinanced our term debt with substantially better terms in November 2023 via execution of the 2023 Credit Agreement (as defined below), which also provides total revolving commitments of $150.0 million.

Additional details and discussion of this debt facility can be found in the "Liquidity and Capital Resources" section of Item 7.

"Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Report.

On December 15, 2021, we issued and sold through a private placement an aggregate 4,687,500 shares of our common stock at $16.00 per share.

The approximate $74.8 million of net proceeds that we received from this transaction were used to repay outstanding revolving borrowings as required by the terms of the Amended Credit Agreement (defined below), which increased the available borrowing capacity of the Revolving Credit Facility (defined below) that could be used for working capital and other general corporate purposes, including acquisitions, investments in technologies or businesses, operating expenses and capital expenditures.

Refer to Note 13, Stockholders' Equity (Deficit) , to the Company’s consolidated financial statements for additional information regarding this transaction.

Additionally, on November 16, 2021, we filed a Registration Statement on Form S-3 that allows the Company to sell up to $200.0 million in the aggregate of any combination of common stock, preferred stock, warrants, debt securities and/or units from time to time in one or more offerings.

Our management believes that Blue Bird is in a leading position in the industry due to our range of alternative power offerings and our strong diesel offering.

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(“Micro Bird”), and is sold through our dealer network.

This is a smaller bus than the Type C or Type D bus and is produced on a traditional chassis provided by either Ford or GM or on an electric chassis provided by a smaller supplier.

This is a smaller bus than the Type C or Type D bus and is produced on a traditional chassis provided by either Ford or GM or on an electric chassis produced by a Micro Bird subsidiary.

Parts Segment

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Field service engineers provide technical support to our dealer network.

At the end of fiscal 2022, service engineers had an average of over 25 years of experience with our Company and are strategically placed throughout the U.S.

Service engineers are strategically placed throughout the U.S.

and Canada to better serve both dealers and end-customers.

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Polk vehicle registration data, population of school age children forecasts from the National Center for Education Statistics and bus ridership data collected and published by School Transportation News.

Our management utilizes this and other models to assess historical experience and to predict demand for school buses in future periods.

Our management utilizes this and other models to assess historical experience and to predict demand for school buses in future

The ability to purchase new buses to fulfill predicted demand, however, is based on the assumption that funds will be available through property taxes and other state and federal sources.

and Canadian school bus industry for Type C and Type D buses has averaged approximately 30,600 unit sales annually between 1985 and 2023.

Unit sales for 2022 are projected to be about 23,900, a decrease of 14.0% when compared with 2021.

Both fiscal years were significantly impacted by supply chain constraints that resulted in shortages of critical components that hindered the production of units across the school bus industry to meet strong demand for buses.

Unit sales for 2023 are projected to be about 29,000, an increase of 21.3% when compared with 2022.

Both fiscal years were impacted by supply chain constraints that resulted in shortages of critical components that hindered the production of units across the school bus industry to meet strong demand for buses.

Historical registration data are based on R.L.

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In 2020, countermeasures taken to battle the COVID-19 pandemic included virtual and hybrid schooling in many jurisdictions throughout the U.S.

The uncertainty of when and how schools would open materially affected demand within the Type C and Type D school bus industry in the second half

of the Company's fiscal 2020 that continued into the first half of fiscal 2021.

The uncertainty of when and how schools would open materially affected demand within the Type C and Type D school bus industry in the second half of the Company's fiscal year ended October 3, 2020 ("fiscal 2020") that continued into the first half of fiscal 2021.

However, demand for Type C and Type D school buses strengthened substantially throughout 2021 as COVID-19 vaccines were administered and many school jurisdictions returned to in-person learning environments.

Nonetheless, subsequent supply chain shortages for certain components, such as microchips and products containing resins, that are critical to the manufacture of school buses, depressed sales during the latter half of fiscal 2021 and throughout fiscal 2022.

Although management began to see slight improvements in the challenges caused by supply chain disruptions towards the latter part of fiscal 2022, which are currently expected to continue into the fiscal year ending September 30, 2023 ("fiscal 2023"), future supply chain challenges could continue to hinder the Company's ability to produce sufficient units to meet the strong current demand for school buses.

Although management began to see improvements in the challenges caused by supply chain disruptions during fiscal 2023, there were still occasional shortages of certain components, as well as ongoing increases in raw materials costs.

Our management believes, based on our models, that Type C and Type D school bus registrations will return to a similar level as has been experienced over recent pre-pandemic years (2016-2019) once the supply chain constraints are fully addressed.

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Budgets for school bus purchases are directly related to property tax receipts.

Home prices have risen in recent years as home-buyers have taken advantage of historically low mortgage rates and thus, put additional pressure on housing inventories.

Home prices have risen in recent years as home inventories have not met demand, inflation of building materials cost has increased cost of construction, and as home-buyers have taken advantage of historically low mortgage rates prior to 2023.

However, the forecast for continued appreciation in housing prices is uncertain due to, among others, recent rises in mortgage rates and significant inflationary pressures that have reduced consumer purchasing power.

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school buses are one of the ten categories.

Over $440 million of the $2.9 billion has been awarded thus far and many more millions are under review by state agencies but are not yet publicly available.

Of the grants awarded, over $160 million has been issued to school bus projects and several states are continuing and/or increasing their focus on similar projects.

Of the grants awarded thus far, over $160 million has been issued to school bus projects and several states are continuing and/or increasing their focus on similar projects.

Given the historical trend and future projections, we expect as much as $1 billion in additional VW settlement funds may ultimately be allocated, or have a high probability of allocation, to the purchases of "cleaner running" school buses through 2028.

Beyond the VW funds, traditional grant programs are expected to continue, including the U.S Environmental Protection Agency ("EPA") National Clean Diesel Program and its various state versions.

These are valuable programs for potential propane and CNG engine platform sales, as annual budgets for these programs usually range from $40.0 to $100.0 million.

These are valuable programs for potential propane engine platform sales, as annual budgets for these programs usually range from $40.0 to $100.0 million.

Additionally, in November 2020, the Bezos Earth Fund awarded a grant of $100 million, to be disbursed over a five-year period, to the World Resources Institute, a global research organization that focuses on climate initiatives, among others.

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Infrastructure Investment and Jobs Act ("IIJA") was signed into law.

The IIJA allocates $5 billion of federal funds to help local school jurisdictions purchase zero and low emission school buses over the next five years.

Specifically, $2.5 billion of the funds are allocated solely for the purchase of electric powered buses, while the remaining $2.5 billion of funds are allocated for the purchase of low and zero emission school buses, including buses that are propane, CNG or electric powered.

In October 2022, the EPA announced the awarding of approximately $913 million from the IIJA as part of the 2022 Clean School Bus Rebate Program.

These awards will allow nearly 400 school districts to purchase over 2,400 zero and low emission school buses, of which 95% will be electric.

The Company and its dealer network is actively pursuing converting as many of those awards as possible to sales orders in the relatively near future.

Management estimates, based on the Company's historical market share as well as the number of school bus manufacturers competing for these orders, that the Company's share could approximate 25% or more.

Finally, in August 2022, the Inflation Reduction Act ("IRA") was signed into law.

The IIJA allocates $5 billion of federal funds to help local school jurisdictions purchase zero and low emission school buses over five years.

In October 2022, the EPA announced the awarding of approximately $913 million from the IIJA as part of its first round of funding for the Clean School Bus Rebate Program.

Although the EPA has not yet released the final count of school buses that were awarded during the first round, it is estimated that approximately 2,000 zero and low emission school buses were ordered by awardees.

The Company received orders for over 500 school buses, or approximately 25% of the estimated total.

In August 2022, the Inflation Reduction Act ("IRA") was signed into law.

The IRA authorizes a $369 billion investment in energy security and combating climate change.

This funding includes $1 billion in grants for clean Class 6 and 7 heavy-duty vehicles, up to $40,000 in tax credits for zero-emission commercial vehicles, up to $100,000 in tax credits for heavy-duty charging infrastructure, and $2 billion for grants to support electric and fuel cell manufacturing.

We believe our leadership in alternative power options, coupled with this external funding, provides a strong foundation to continue to increase sales of our propane, gasoline, CNG and electric powered bus platforms.

Finally, in April 2023, the EPA released a second round of funding for the Clean School Bus Rebate Program, which made $400 million available in the form of competitive grants.

The Company and its dealer network submitted grant applications on behalf of certain school district customers and also assisted certain other school district customers with completing and submitting their own grant applications.

Awarding of grants is anticipated to begin in December 2023, with management estimating, based on the Company's historical market share as well as the number of school bus manufacturers competing for these orders, that the Company's share could approximate 25% or more.

Our Competitive Strengths

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Alternative powered bus leadership .

We believe we are the market leader in electric, propane, gasoline, and CNG powered buses, having sold approximately 65% of all alternative powered school buses from fiscal 2013 through fiscal 2022.

In fiscal 2022, we sold 3,974 propane, gasoline, CNG, and electric powered buses, an increase of 18% when compared with the prior year, as market demand for alternative powered buses remained robust.

We believe we are the market leader in propane, gasoline and electric powered buses, having sold approximately 64% of all alternative powered school buses from fiscal 2014 through fiscal 2023.

In fiscal 2023, we sold 5,283

propane, gasoline, compressed natural gas ("CNG") and electric powered buses, an increase of 33% when compared with the prior year, as market demand for alternative powered buses remained robust.

To maintain our leadership position, we continue to expand the available features requested by our customers and during fiscal 2022, added a hydraulic braking system with electronic stability control and a fuel-fired heater for cold-weather markets to our Type C electric powered bus offering.

Additionally, during fiscal 2023, we opened the new Electric Vehicle Build-up Center, a transformed 40,000 square foot facility at the Fort Valley, Georgia manufacturing plant, designed to meet increasing demand for electric school buses.

Innovative product leadership .

We believe we have consistently led the school bus industry with innovative product leadership through several industry firsts, including the first Type D CNG powered school bus, the first unique school bus chassis, and the first OEM-manufactured propane powered bus.

In fiscal 2016, years ahead of our competition, we launched the industry's first gasoline powered Type C bus (utilizing an exclusive Ford and Roush CleanTech powertrain) and we were first-to-market with electronic stability control.

In fiscal 2018, we sold our first Type D electric vehicles and in fiscal 2019 we introduced our Type C electric vehicle.

We believe we have consistently led the school bus industry with innovative product leadership through several industry firsts, including the first unique school bus chassis and the first OEM-manufactured propane powered bus.

In fiscal 2016, years ahead of our competition, we launched the industry's first gasoline powered Type C bus (utilizing an exclusive Ford engine and transmission and Roush CleanTech fuel usage evaporative emissions certification) and we were first-to-market with electronic stability control.

In fiscal 2018, we sold our first Type D electric vehicles and in the fiscal year ended September 28, 2019 ("fiscal 2019"), we introduced our Type C electric vehicle.

In fiscal 2023, we sold 546 Type C and Type D electric vehicles.

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Our dealers have access to financing through a financing product maintained by an independent third party, Huntington Distribution Finance, Inc.

("Huntington," formerly TCF Inventory Finance, Inc.).

("Huntington").

We do not assume any balance sheet risk with respect to this type of financing and do not receive any direct economic benefit from Huntington.

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This full line of bus models is configured for adult or school bus use.

In addition to the base GSA specifications, we offer several additional configurations to provide a wide range of passenger capacities and optional features.

In addition to the base GSA specifications, we offer several additional configurations to provide a wide range of

passenger capacities and optional features.

We also offer a full line of activity bus and Multi-Function School Activity Bus (“MFSAB”) products.

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Component OEM Supplier

Diesel and CNG engines Cummins Inc.

Diesel engines

Diesel emissions kits Cummins Inc.

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Transmissions Allison Transmission

Propane and gasoline fueling kits Roush CleanTech

Propane fueling kits

Roush CleanTech

Our purchasing department continually works to improve our purchasing processes by rationalizing the supplier base and by implementing improved control processes.

We regularly perform supplier audits and, when necessary, will meet with under-performing suppliers in order to enhance performance.

At October 1, 2022, we had in place long-term supply contracts (addressing both component price and supply) covering nearly 83% of the value of our purchases from suppliers, including long-term agreements with our major single-source suppliers.

As a result of ongoing supply chain disruptions that began in the latter half of fiscal 2021 and continued throughout fiscal 2022, we have experienced significant supplier shortages of critical components, which have prevented the Company from initiating or completing, as applicable, the production process for certain units that were otherwise scheduled to be delivered to customers during fiscal 2021 and fiscal 2022.

At September 30, 2023, we had in place long-term supply contracts (addressing both component price and supply) covering nearly 69% of the value of our purchases from suppliers, including long-term agreements with our major single-source suppliers.

As a result of ongoing supply chain disruptions that began in the latter half of fiscal 2021 and continued throughout fiscal 2023, we have experienced significant supplier shortages of critical components, which prevented the Company from initiating or completing, as applicable, the production process for certain units that were otherwise scheduled to be delivered to customers during fiscal 2021, fiscal 2022 and, to a lesser extent, fiscal 2023.

For further details and discussion about the impact of these supply chain disruptions, refer to the "Impacts of COVID-19 and Subsequent Supply Chain Constraints on Our Business" section of Item 7.

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Our two principal competitors are Thomas Built Bus and IC Bus.

Thomas Built Bus is a subsidiary of Daimler Trucks North America and IC Bus is a subsidiary of Navistar International.

Thomas Built Bus is a subsidiary of Daimler Trucks North America and IC Bus is a subsidiary of Navistar, Inc.

We compete primarily on the basis of product diversification, school bus innovation, safety, quality, durability and drivability of our products, the scope and strength of our dealer network and price.

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Such access, in turn, may be used by such companies to compete with us and others in the industry.

Our corporate headquarters are located in Macon, Georgia.

Our corporate headquarters are located in Macon, Georgia and we have an additional office in Troy, Michigan.

Our Bus segment operates a fabrication plant and an integrated chassis manufacturing and body assembly plant in Fort Valley, Georgia, where components for Type C, Type D, and specialty buses are manufactured and assembled.

Our Parts segment operates a parts distribution center located in Delaware, Ohio.

Our Parts segment operates a parts distribution

center located in Delaware, Ohio.

We own our facilities in Fort Valley, Georgia (approximately 1.5 million square feet).

We lease facilities in Macon, Georgia (approximately 0.3 million square feet) and Delaware, Ohio (approximately 0.1 million square feet).

We lease facilities in Macon, Georgia (approximately 0.3 million square feet), Troy, Michigan (approximately 5 thousand square feet) and Delaware, Ohio (approximately 0.1 million square feet).

Our Micro Bird joint venture leases its facility (0.2 million square feet) in Drummondville, Quebec, Canada.

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We must also consider the rules and regulations of foreign jurisdictions.

In Canada, where our Micro Bird joint venture operates,

school buses are governed by the Canadian Motor Vehicle Safety Regulations.

In Canada, where our Micro Bird joint venture operates, school buses are governed by the Canadian Motor Vehicle Safety Regulations.

These regulations are patterned after the FMVSS regulations, although differences do exist between the two regulatory systems.

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The Company’s leaders and managers continuously address safety enhancements, provide regular and ongoing safety training, and use displays located near our employee work areas to provide all employees with safety-related information.

At October 1, 2022, we employed 1,596 employees, of which 1,593 were full-time.

Our workforce is non-union.

At September 30, 2023, we employed 1,830 employees, of which 1,829 were full-time.

On May 22, 2023, the National Labor Relations Board (“NLRB”) certified the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied & Industrial Service Workers International Union, AFL-CIO, CLC (“USW”) as the exclusive bargaining representative for a bargaining unit of the Company’s full-time and regular part-time production, maintenance, quality control, and warehouse employees at the Company’s Fort Valley and Macon, Georgia locations, with certain exceptions.

The bargaining unit consists of approximately 1,400 employees.

As a result, the Company is obligated to bargain with the USW as the bargaining representative for employees within the designated bargaining unit.

The Company has recently commenced bargaining sessions and thus, has not yet entered into any collective bargaining agreement as of September 30, 2023.

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-K

Item 1. Business