Blue Bird Corp 10-Q

Item 1. Financial Statements (Unaudited) BLUE BIRD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands of dollars, except for share data) December 28, 2024 September 28, 2024 Assets Current assets Cash and cash equivalents $ 136,119 $ 127,687 Accounts receivable, net 13,996 59,099 Inventories 163,120 127,798 Other current assets 17,623 8,795 Total current assets $ 330,858 $ 323,379 Property, plant and equipment, net $ 98,384 $ 97,322 Goodwill 18,825 18,825 Intangible assets, net 43,087 43,554 Equity investment in affiliates 34,393 32,089 Deferred tax assets 2,112 2,399 Finance lease right-of-use assets 156 332 Pension 5,156 4,649 Other assets 2,251 2,345 Total assets $ 535,222 $ 524,894 Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 137,757 $ 143,156 Warranty 7,059 7,166 Accrued expenses 46,738 55,775 Deferred warranty income 9,907 9,421 Finance lease obligations 436 975 Other current liabilities 22,530 14,480 Current portion of long-term debt 5,000 5,000 Total current liabilities $ 229,427 $ 235,973 Long-term liabilities Revolving credit facility $ — $ — Long-term debt 88,828 89,994 Warranty 9,068 9,013 Deferred warranty income 19,652 18,541 Deferred tax liabilities 368 2,783 Finance lease obligations 6 6 Other liabilities 8,168 9,020 Total long-term liabilities $ 126,090 $ 129,357 Guarantees, commitments and contingencies (Note 6) Stockholders' equity Preferred stock, $ 0.0001 par value, 10,000,000 shares authorized, 0 shares outstanding at December 28, 2024 and September 28, 2024 $ — $ — Common stock, $ 0.0001 par value, 100,000,000 shares authorized, 32,111,078 and 32,268,022 shares issued and outstanding at December 28, 2024 and September 28, 2024, respectively 3 3 Additional paid-in capital 187,379 185,977 Retained earnings 18,686 — Accumulated other comprehensive loss ( 26,363 ) ( 26,416 ) Total stockholders' equity $ 179,705 $ 159,564 Total liabilities and stockholders' equity $ 535,222 $ 524,894 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 BLUE BIRD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended (in thousands of dollars except for share data) December 28, 2024 December 30, 2023 Net sales $ 313,872 $ 317,660 Cost of goods sold 253,555 254,102 Gross profit $ 60,317 $ 63,558 Operating expenses Selling, general and administrative expenses 27,275 25,602 Operating profit $ 33,042 $ 37,956 Interest expense ( 1,915 ) ( 3,631 ) Interest income 1,568 1,088 Other income (expense), net 2,916 ( 1,221 ) Loss on debt refinancing — ( 1,558 ) Income before income taxes $ 35,611 $ 32,634 Income tax expense ( 8,693 ) ( 8,446 ) Equity in net income of non-consolidated affiliates 1,804 1,962 Net income $ 28,722 $ 26,150 Earnings per share: Basic weighted average shares outstanding 32,227,723 32,170,779 Diluted weighted average shares outstanding 33,360,940 32,429,127 Basic earnings per share $ 0.89 $ 0.81 Diluted earnings per share $ 0.86 $ 0.81 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 BLUE BIRD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended (in thousands of dollars) December 28, 2024 December 30, 2023 Net income $ 28,722 $ 26,150 Other comprehensive income, net of tax: Net change in defined benefit pension plan 53 131 Total other comprehensive income $ 53 $ 131 Comprehensive income $ 28,775 $ 26,281 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 BLUE BIRD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended (in thousands of dollars) December 28, 2024 December 30, 2023 Cash flows from operating activities Net income $ 28,722 $ 26,150 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 3,856 3,618 Non-cash interest expense 84 132 Share-based compensation expense 2,506 2,051 Equity in net income of non-consolidated affiliates ( 1,804 ) ( 1,962 ) Dividend from equity investment in affiliates — 2,991 Loss on disposal of fixed assets 20 4 Deferred income tax expense ( 2,145 ) 1,143 Amortization of deferred actuarial pension losses 70 172 Loss on debt refinancing — 1,558 Changes in assets and liabilities: Accounts receivable 45,103 1,467 Inventories ( 35,322 ) ( 7,171 ) Other assets ( 9,241 ) ( 3,095 ) Accounts payable ( 5,473 ) ( 23,103 ) Accrued expenses, pension and other liabilities 34 ( 3,738 ) Total adjustments $ ( 2,312 ) $ ( 25,933 ) Total cash provided by operating activities $ 26,410 $ 217 Cash flows from investing activities Cash paid for fixed assets $ ( 4,594 ) $ ( 2,904 ) Equity investment in affiliates (Note 12) ( 500 ) — Total cash used in investing activities $ ( 5,094 ) $ ( 2,904 ) Cash flows from financing activities Revolving credit facility borrowings $ — $ 36,220 Term loan borrowings — 100,000 Term loan repayments ( 1,250 ) ( 131,800 ) Principal payments on finance leases ( 538 ) ( 145 ) Cash paid for debt costs — ( 3,128 ) Repurchase of common stock in connection with repurchase program (Note 13) ( 10,036 ) — Repurchase of common stock in connection with stock award exercises ( 1,445 ) ( 301 ) Cash received from stock option exercises 385 149 Total cash (used in) provided by financing activities $ ( 12,884 ) $ 995 Change in cash and cash equivalents 8,432 ( 1,692 ) Cash and cash equivalents at beginning of period 127,687 78,988 Cash and cash equivalents at end of period $ 136,119 $ 77,296 5 Three Months Ended (in thousands of dollars) December 28, 2024 December 30, 2023 Supplemental disclosures of cash flow information Cash paid or received during the period: Interest paid $ 2,368 $ 2,895 Interest received ( 1,436 ) ( 1,088 ) Income tax paid, net of tax refunds 80 2 Non-cash investing and financing activities: Changes in accounts payable for capital additions to property, plant and equipment $ 1,940 $ 953 Warrants issued for equity investment in affiliate — 7,416 Right-of-use assets obtained in exchange for operating lease obligations — 1,241 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 BLUE BIRD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) Three Months Ended (in thousands of dollars, except for share data) Common Stock Convertible Preferred Stock Treasury Stock Shares Par Value Additional Paid-In-Capital Shares Amount Accumulated Other Comprehensive Loss Retained Earnings (Accumulated Deficit) Shares Amount Total Stockholders' Equity Balance, September 28, 2024 32,268,022 $ 3 $ 185,977 — $ — $ ( 26,416 ) $ — — $ — $ 159,564 Restricted stock activity 57,420 — ( 1,445 ) — — — — — — ( 1,445 ) Stock option activity 29,086 — 385 — — — — — — 385 Share-based compensation expense — — 2,462 — — — — — — 2,462 Share repurchases (Note 13) ( 243,450 ) — — — — — ( 10,036 ) — — ( 10,036 ) Net income — — — — — — 28,722 — — 28,722 Other comprehensive income, net of tax — — — — — 53 — — — 53 Balance, December 28, 2024 32,111,078 $ 3 $ 187,379 — $ — $ ( 26,363 ) $ 18,686 — $ — $ 179,705 Balance, September 30, 2023 32,165,225 $ 3 $ 177,861 — $ — $ ( 31,884 ) $ ( 55,700 ) 1,782,568 $ ( 50,282 ) $ 39,998 Issuance of warrants — — 7,416 — — — — — — 7,416 Restricted stock activity 22,115 — ( 301 ) — — — — — — ( 301 ) Stock option activity 11,252 — 149 — — — — — — 149 Share-based compensation expense — — 2,034 — — — — — — 2,034 Net income — — — — — — 26,150 — — 26,150 Other comprehensive income, net of tax — — — — — 131 — — — 131 Balance, December 30, 2023 32,198,592 $ 3 $ 187,159 — $ — $ ( 31,753 ) $ ( 29,550 ) 1,782,568 $ ( 50,282 ) $ 75,577 7 BLUE BIRD CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Nature of Business and Basis of Presentation Nature of Business Blue Bird Body Company ("BBBC"), a wholly-owned subsidiary of Blue Bird Corporation, was incorporated in 1958 and has manufactured, assembled and sold school buses to a variety of municipal, federal and commercial customers since 1927. The majority of BBBC’s sales are made to an independent dealer network, which in turn sells buses to ultimate end users. References in these notes to condensed consolidated financial statements to “Blue Bird,” the “Company,” “we,” “our,” or “us” relate to Blue Bird Corporation and its wholly-owned subsidiaries, unless the context specifically indicates otherwise. We are headquartered in Macon, Georgia. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company transactions and accounts have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting and Article 10 of Regulation S-X. The Company’s fiscal year ends on the Saturday closest to September 30 with its quarters consisting of thirteen weeks in most years. The fiscal years ending September 27, 2025 ("fiscal 2025") and ended September 28, 2024 ("fiscal 2024") consist or consisted of 52 weeks. The first quarters of fiscal 2025 and fiscal 2024 both included 13 weeks. In the opinion of management, all adjustments considered necessary for a fair presentation of financial results have been made. Such adjustments consist of only those of a normal recurring nature. Operating results for any interim period are not necessarily indicative of the results that may be expected for the entire year. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The Condensed Consolidated Balance Sheet data as of September 28, 2024 was derived from the Company’s audited financial statements but does not include all disclosures required by U.S. GAAP. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes as of and for the fiscal year ended September 28, 2024 as set forth in the Company's fiscal 2024 Form 10-K filed with the Securities and Exchange Commission ("SEC") on November 25, 2024. Impacts of Supply Chain Constraints on Our Business The global automotive industry supply chain constraints that arose subsequent to the novel coronavirus pandemic known as "COVID-19" and that were further exacerbated by additional stress resulting from Russia’s invasion of Ukraine in February 2022 continued to impact our business and operations during the first quarters of fiscal 2024 and 2025. Specifically, they continued to result in higher purchasing costs, including freight costs incurred to deliver critical components, to procure the raw materials inventory needed to produce buses to fulfill sales orders. Additionally, there were still occasional shortages of certain critical components that limited the number and/or mix of school buses that we could produce and sell. Nonetheless, ongoing improvements in manufacturing operations that have resulted in the consistent production of buses, when coupled with periodic pricing actions taken to ensure that the increased sales prices charged for buses keep pace with increased costs to procure inventory to produce buses, have resulted in the Company reporting gross profit and gross margin in the first quarters of fiscal 2025 and 2024 that exceeded those reported in pre-pandemic fiscal years. Significant uncertainty still exists concerning the magnitude and duration of the ongoing 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 The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions. At the date of the financial statements, these estimates and assumptions affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities, and during the reporting period, these estimates and assumptions affect the reported amounts of revenues and expenses. For example, significant management judgments are required in determining excess, obsolete, or 8 unsalable inventory; the allowance for doubtful accounts; potential impairment of long-lived assets, goodwill and intangible assets; and the accounting for self-insurance reserves, warranty reserves, pension obligations, income taxes, environmental liabilities and contingencies. Future events, including the extent and duration of continued supply chain constraints and their related economic impacts, and their effects cannot be predicted with certainty, and, accordingly, the Company’s accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the Company’s condensed consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. The Company evaluates and updates its assumptions and estimates on an ongoing basis and may employ outside experts to assist in the Company’s evaluations. Actual results could differ from the estimates that the Company has used. 2. Summary of Significant Accounting Policies and Recently Issued Accounting Standards The Company’s significant accounting policies are described in the Company’s fiscal 2024 Form 10-K, filed with the SEC on November 25, 2024. 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 28, 2024. Recently Issued Accounting Standards ASU 2023-07 On November 27, 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires public business entities ("PBEs") to disclose information about their reportable segments’ significant expenses on an interim and annual basis. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024, with early adoption permitted. ASU 2023-09 On December 14, 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires entities to disclose more detailed information in their reconciliation of their statutory tax rate to their effective tax rate. PBEs are required to provide this incremental detail in a numerical, tabular format. The ASU also requires entities to disclose more detailed information about income taxes paid, including by jurisdiction; pretax income (or loss) from continuing operations; and income tax expense (or benefit). The ASU is effective for PBEs in fiscal years beginning after December 15, 2024, with early adoption permitted. ASUs 2024-03 & 2025-01 On November 4, 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which requires PBEs to disclose disaggregated information about certain income statement expense line items. On January 6, 2025, the FASB issued ASU 2025-01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date , to clarify the effective date of ASU 2024-03, which is for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. The new ASUs will not impact amounts recorded in the financial statements but instead, will require more detailed disclosures in the footnotes to the financial statement. The Company plans to provide the updated disclosures required by the ASUs in the periods in which they are effective. 3. Supplemental Financial Information Inventories The following table presents the components of inventories at the dates indicated: (in thousands of dollars) December 28, 2024 September 28, 2024 Raw materials $ 104,495 $ 83,027 Work in process 38,256 32,556 Finished goods 20,369 12,215 Total inventories $ 163,120 $ 127,798 9 Product Warranties 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 28, 2024 December 30, 2023 Balance at beginning of period $ 16,179 $ 15,434 Add current period accruals 2,538 2,341 Current period reductions of accrual ( 2,590 ) ( 2,492 ) Balance at end of period $ 16,127 $ 15,283 Extended Warranties 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 28, 2024 December 30, 2023 Balance at beginning of period $ 27,962 $ 23,123 Add current period deferred income 3,929 2,998 Current period recognition of income ( 2,332 ) ( 2,003 ) Balance at end of period $ 29,559 $ 24,118 The outstanding balance of deferred warranty income in the table above is considered a "contract liability," and represents a performance obligation of the Company that we satisfy over the term of the arrangement but for which we have been paid in full at the time the warranty was sold. We expect to recognize $ 8.6 million of the outstanding contract liability during the remainder of fiscal 2025, $ 13.6 million in fiscal 2026, and the remaining balance thereafter. Self-Insurance 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 28, 2024 September 28, 2024 Current portion $ 4,723 $ 5,008 Long-term portion 2,596 2,248 Total accrued self-insurance $ 7,319 $ 7,256 The current and long-term portions of the accrued self-insurance liability are reflected in accrued expenses and other liabilities, respectively, on the Condensed Consolidated Balance Sheets. Shipping and Handling Revenues Shipping and handling revenues were $ 5.1 million and $ 4.7 million for the three months ended December 28, 2024 and December 30, 2023, respectively. The related cost of goods sold was $ 4.6 million and $ 4.3 million for the three months ended December 28, 2024 and December 30, 2023, respectively. 10 Pension (Income) Expense Components of net periodic pension benefit (income) expense were as follows for the periods presented: Three Months Ended (in thousands of dollars) December 28, 2024 December 30, 2023 Interest cost $ 1,312 $ 1,484 Expected return on plan assets ( 1,819 ) ( 1,620 ) Amortization of prior loss 70 172 Net periodic pension benefit (income) expense $ ( 437 ) $ 36 Amortization of prior loss, recognized in other comprehensive income ( 70 ) ( 172 ) Total recognized in net periodic pension benefit (income) expense and other comprehensive income $ ( 507 ) $ ( 136 ) 4. Debt Term loan borrowings consisted of the following at the dates indicated: (in thousands of dollars) December 28, 2024 September 28, 2024 Term loan borrowings, net of deferred financing costs of $ 1,172 and $ 1,256 , respectively $ 93,828 $ 94,994 Less: current portion of long-term debt 5,000 5,000 Long-term debt, net of current portion $ 88,828 $ 89,994 Term loan borrowings are recognized on the Condensed Consolidated Balance Sheets at the unpaid principal balance, and are not subject to fair value measurement; however, given the variable rates on the loans, the Company estimates that the unpaid principal balance approximates fair value. 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 28, 2024 and September 28, 2024, $ 95.0 million and $ 96.3 million, respectively, were outstanding on the term loans. At December 28, 2024 and September 28, 2024, the stated interest rates on the term loans were 6.4 % and 6.9 %, respectively. At December 28, 2024 and September 28, 2024, the weighted-average annual effective interest rates for the term loans were 7.0 % and 8.2 %, respectively, which include amortization of the deferred financing costs. At December 28, 2024, $ 6.7 million of letters of credit were outstanding, which reduces the availability on the revolving line of credit. There were no borrowings outstanding on the Revolving Credit Facility; therefore, the Company would have been able to borrow $ 143.3 million on the revolving line of credit. Interest expense on all indebtedness was $ 1.9 million and $ 3.6 million for the three months ended December 28, 2024 and December 30, 2023, respectively. The schedule of remaining principal payments through maturity for the term loans is as follows: (in thousands of dollars) Fiscal Year Principal Payments 2025 $ 3,750 2026 5,000 2027 5,000 2028 5,000 2029 5,000 Thereafter 71,250 Total remaining principal payments $ 95,000 11 5. Income Taxes Income tax provisions for interim periods are based on estimated annual income tax rates, adjusted to reflect the effects of any significant infrequent or unusual items that are required to be discretely recognized within the current interim period. The effective tax rates in the periods presented are largely based upon the annual forecasted pre-tax earnings mix and allocation of certain expenses in various taxing jurisdictions where the Company conducts its business, primarily in the United States of America ("U.S."). In periods where our 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. Three Months The effective tax rate for the three months ended December 28, 2024 was 24.4 % and differed from the statutory federal income tax rate of 21 %. The increase was primarily due to the impacts from state taxes and certain permanent items on the federal rate, which were partially offset by the impacts from federal and state tax credits (net of valuation allowances) and discrete period items during the quarter. The effective tax rate for the three months ended December 30, 2023 was 25.9 % and differed from the statutory federal income tax rate of 21 %. The increase was primarily due to the impacts from state taxes and certain permanent items on the federal rate, which were partially offset by the impacts from federal and state tax credits (net of valuation allowances) and discrete period items during the quarter. 6. Guarantees, Commitments and Contingencies Litigation At December 28, 2024, 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. Environmental The Company is subject to a variety of environmental regulations relating to the use, storage, discharge and disposal of hazardous materials used in its manufacturing processes. Failure by the Company to comply with present and future regulations could subject it to future liabilities. In addition, such regulations could require the Company to acquire costly equipment or to incur other significant expenses to comply with environmental regulations. The Company is currently not involved in any material environmental proceedings and therefore, management believes that the resolution of pending environmental matters will not have a material adverse effect on the Company’s financial statements. 7. Segment Information We manage our business in two operating segments: (i) the Bus segment, which includes the manufacturing and assembly of buses to be sold to a variety of customers across the U.S., Canada and in certain limited international markets; and (ii) the Parts segment, which consists primarily of the purchase of parts from third parties to be sold to dealers within the Company’s network and certain large fleet customers. Management evaluates the segments based primarily upon revenues and gross profit, which are reflected in the tables below for the periods presented: 12 Net sales Three Months Ended (in thousands of dollars) December 28, 2024 December 30, 2023 Bus (1) $ 288,147 $ 293,437 Parts (1) 25,725 24,223 Segment net sales $ 313,872 $ 317,660 (1) Parts segment revenue includes $ 1.9 million and $ 1.6 million for the three months ended December 28, 2024 and December 30, 2023, respectively, related to inter-segment sales of parts that was eliminated by the Bus segment upon consolidation. Gross profit Three Months Ended (in thousands of dollars) December 28, 2024 December 30, 2023 Bus $ 47,172 $ 51,294 Parts 13,145 12,264 Segment gross profit $ 60,317 $ 63,558 The following table is a reconciliation of segment gross profit to consolidated income before income taxes for the periods presented: Three Months Ended (in thousands of dollars) December 28, 2024 December 30, 2023 Segment gross profit $ 60,317 $ 63,558 Adjustments: Selling, general and administrative expenses ( 27,275 ) ( 25,602 ) Interest expense ( 1,915 ) ( 3,631 ) Interest income 1,568 1,088 Other income (expense), net 2,916 ( 1,221 ) Loss on debt refinancing — ( 1,558 ) Income before income taxes $ 35,611 $ 32,634 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 28, 2024 December 30, 2023 U.S. $ 287,957 $ 302,532 Canada 24,603 15,119 Rest of world 1,312 9 Total net sales $ 313,872 $ 317,660 13 8. Revenue The following table disaggregates revenue by product category for the periods presented: Three Months Ended (in thousands of dollars) December 28, 2024 December 30, 2023 Diesel buses $ 124,372 $ 84,998 Alternative power buses (1) 148,922 195,329 Other (2) 15,487 13,697 Parts 25,091 23,636 Net sales $ 313,872 $ 317,660 (1) Includes buses sold with any power source other than diesel (e.g., gasoline, propane, compressed natural gas ("CNG") or electric). (2) Includes shipping and handling revenue, extended warranty income, surcharges and chassis and bus shell sales . 9. Earnings Per Share The following table presents the earnings per share computation for the periods presented: Three Months Ended (in thousands except for share data) December 28, 2024 December 30, 2023 Numerator: Net income $ 28,722 $ 26,150 Denominator: Weighted-average common shares outstanding 32,227,723 32,170,779 Weighted-average dilutive securities, restricted stock 479,759 145,759 Weighted-average dilutive securities, stock options 249,233 100,170 Weighted-average dilutive securities, warrants 404,225 12,419 Weighted-average shares and dilutive potential common shares (1) 33,360,940 32,429,127 Earnings per share: Basic earnings per share $ 0.89 $ 0.81 Diluted earnings per share $ 0.86 $ 0.81 (1) Potentially dilutive securities representing approximately 0.2 million shares of common stock were excluded from the computation of diluted earnings per share for the three months ended December 30, 2023, as their effect would have been antidilutive. 14 10. 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 28, 2024 Beginning Balance $ ( 26,416 ) $ ( 26,416 ) Amounts reclassified and included in earnings 70 70 Total before taxes 70 70 Income taxes ( 17 ) ( 17 ) Ending Balance December 28, 2024 $ ( 26,363 ) $ ( 26,363 ) December 30, 2023 Beginning Balance $ ( 31,884 ) $ ( 31,884 ) Amounts reclassified and included in earnings 172 172 Total before taxes 172 172 Income taxes ( 41 ) ( 41 ) Ending Balance December 30, 2023 $ ( 31,753 ) $ ( 31,753 ) 11. Stockholder Transaction Costs On December 14, 2023, the Company entered into an underwriting agreement with BofA Securities, Inc. and Barclays Capital Inc., as representatives of the several underwriters and American Securities LLC ("Selling Stockholder"), pursuant to which the Selling Stockholder agreed to sell 2,500,000 shares of common stock at a purchase price of $ 25.10 per share (“Offering”). The Offering was conducted pursuant to a prospectus supplement, dated December 14, 2023, to the prospectus dated December 22, 2021 included in the Company’s registration statement on Form S-3 (File No. 333-261858) that was initially filed with the SEC on December 23, 2021. The Offering closed on December 19, 2023. Although the Company did not sell any shares or receive any proceeds from the Offering, it was required to pay certain expenses in connection with the transaction that totaled approximately $ 1.2 million for the three months ended December 30, 2023. The $ 1.2 million of expense is included within other income (expense), net on the Condensed Consolidated Statements of Operations for the three months ended December 30, 2023. No such expense was incurred in the three months ended December 28, 2024. 12. Equity Investment in Affiliates The Company has made investments in the below entities and utilizes the equity method of accounting to record its interest in them as it does not have control to direct the activities that most significantly impact their financial performance based on the shared powers of the venture partners. The carrying amount of the equity method investments is adjusted for any contribution that the Company makes to them as well as for the Company’s proportionate share of net earnings or losses and any dividends received. Micro Bird Holdings, Inc. The Company holds a 50 % equity interest in Micro Bird Holdings, Inc. ("Micro Bird"), our unconsolidated Canadian joint venture that produces Blue Bird Micro Bird by Girardin Type A buses in Drummondville, Quebec. In recognizing the Company’s 50 % portion of Micro Bird's net income or loss, the Company recorded $ 2.1 million and $ 2.0 million in equity in net income of non-consolidated affiliates on the Condensed Consolidated Statements of Operations for the three months ended December 28, 2024 and December 30, 2023, respectively. 15 In December 2023, Micro Bird paid dividends to all common stockholders, with the Company's proportionate share totaling $ 3.0 million, gross of required withholding taxes. The dividend was recorded as a reduction in the balance of equity investment in affiliates on the Condensed Consolidated Balance Sheets and is presented as a cash inflow in the operating section of the Condensed Consolidated Statements of Cash Flows. No dividends were paid in the three months ended December 28, 2024. At December 28, 2024 and September 28, 2024, the carrying value of the Company's investment in Micro Bird included within equity investment in affiliates on the Condensed Consolidated Balance Sheets was $ 26.6 million and $ 24.4 million, respectively. Clean Bus Solutions, LLC The Company holds a 50 % equity interest in Clean Bus Solutions, LLC ("CBS"), our unconsolidated joint venture that provides a fleet-as-a-service ("FaaS") offering using electric school buses manufactured and sold by the Company. The service is offered to qualified customers of the Company by providing them with turnkey electrification solutions, including a wide product range consisting of, among others, electric school buses, financing of electric buses and supporting charging infrastructure, project planning and management, and fleet optimization. During the three months ended December 28, 2024, the Company made a $ 0.5 million cash contribution to CBS and during the three months ended December 30, 2023, the Company recorded the $ 7.4 million fair value of warrants it issued to the joint venture partner as its initial investment in CBS, both of which increased the balance of equity investment in affiliates on the Condensed Consolidated Balance Sheets. In recognizing the Company’s 50 % portion of CBS' net income or loss, the Company recorded $( 0.3 ) million (a loss) in equity in net income of non-consolidated affiliates on the Condensed Consolidated Statements of Operations for the three months ended December 28, 2024, while no amount was recorded in the three months ended December 30, 2023. CBS paid no dividends in either period. At December 28, 2024 and September 28, 2024, the carrying value of the Company's investment in CBS included within equity investment in affiliates on the Condensed Consolidated Balance Sheets was $ 7.8 million and $ 7.7 million, respectively. 13. Stockholders’ Equity Share Repurchase Program and Common Stock Retirement On January 31, 2024, the Board of Directors of the Company authorized and approved a share repurchase program for up to $ 60 million of outstanding shares of the Company’s common stock over a period of 24 months, expiring January 31, 2026. Under the share repurchase program, the Company may repurchase shares through open market purchases, privately negotiated transactions, accelerated share repurchase transactions, block purchases or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. During the three months ended December 28, 2024, the Company repurchased 243,450 shares of its common stock for $ 10.0 million, pursuant to the share repurchase plan. The Company constructively retired these shares immediately after repurchase, with the $ 10.0 million amount paid in excess of the $ 0.0001 par value of each share recorded as a reduction in retained earnings. No such repurchases were made during the three months ended December 30, 2023. The total remaining authorization for future common stock repurchases under the Company's share repurchase program was $ 40.0 million as of December 28, 2024. 16