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Item 2. Management’s Discussion and Analysis

2026-02-04 compared with 2025-08-06 · 110 added, 213 removed, 278 unchanged (54% of the section changed)

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

The following discussion and analysis of financial condition and results of operations of Blue Bird Corporation (the "Company," "Blue Bird," "we," "our," or "us") should be read in conjunction with the Company’s unaudited condensed consolidated financial statements as of and for the three and nine months ended June 28, 2025 and June 29, 2024 and related notes appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q ("Report").

The following discussion and analysis of financial condition and results of operations of Blue Bird Corporation (the "Company," "Blue Bird," "we," "our," or "us") should be read in conjunction with the Company’s unaudited condensed consolidated financial statements as of and for the three months ended December 27, 2025 and December 28, 2024 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.

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increase the prices we charge for our products to pass along part or all of our increased purchase costs;

and/or impact the purchasing decisions of our customers that could result in them buying less, or none.

of our products in future periods;

and/or impact the purchasing decisions of our customers that could result in them buying less, or none, of our products in future periods;

◦ reductions in governmental grants, subsidies and/or other incentives, which would result in a decrease in funds that are used by school districts and fleet customers to partially, or fully, offset the higher price of alternative powered school buses and could impact the purchasing decisions of our customers that elect to buy less, or none.

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Government, state governments, and authorized dealers in certain limited foreign countries.

Throughout this Report, we refer to the fiscal year ending September 27, 2025 as "fiscal 2025," the fiscal year ended September 28, 2024 as "fiscal 2024," 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 will be or were 52 weeks in fiscal 2025 and fiscal 2024.

The three and nine month periods of fiscal 2025 and fiscal 2024 both included 13 weeks and 39 weeks, respectively.

Impacts of Supply Chain Constraints on Our Business

During the second half of fiscal 2021, the Company, and automotive industry as a whole, began experiencing significant supply chain constraints that arose subsequent to the novel coronavirus pandemic known as "COVID-19." Additionally, the already challenged global supply chain for automotive parts was further impacted, including continuing escalating inventory purchase costs, by additional stress resulting from Russia’s invasion of Ukraine in February 2022.

These supply chain disruptions had a significant adverse impact on our operations and results during the second half of fiscal 2021 and all of fiscal 2022.

Specifically, they resulted in 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, that outpaced the sales prices that we charged for the buses we sold during these periods.

During fiscal 2023 and fiscal 2024, 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.

However, the higher costs charged by suppliers to procure inventory continued over these same periods and adversely impacted our operations and results.

However, the cumulative increases in sales prices we charged for our buses outpaced the higher costs we paid to procure inventory, resulting in gross profit and gross margin in fiscal 2023 and fiscal 2024 that were consistent with, or better than, historic levels experienced prior to the COVID-19 pandemic.

Supply chain disruptions continued into the first nine months of fiscal 2025 as there were still occasional shortages of certain critical components as well as ongoing increases in raw materials costs, both of which impacted our business and operations by limiting the number and/or mix of school buses that we could produce and sell as well as increasing the costs to manufacture buses.

Nonetheless, the lessons learned, and resulting actions taken, by management over the past three fiscal years allowed the Company to better navigate these supply chain challenges to consistently produce buses to fulfill sales orders.

Ongoing improvements in manufacturing operations, when coupled with periodic pricing actions taken by the Company to ensure that the increased sales prices charged for buses keep pace with increased costs to procure inventory to produce the buses, allowed the Company to report gross profit and gross margin that are materially consistent with those reported in fiscal 2024.

New bus orders during fiscal 2024 and continuing into fiscal 2025 remained 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 as discussed previously above.

Accordingly, the Company's backlog remained strong at approximately 4,900 units and 3,900 units as of September 28, 2024 and June 28, 2025, respectively, despite it selling 9,000 units in fiscal 2024 and almost 6,900 units in the first nine months of fiscal 2025.

In general, management believes that supply chain disruptions, including those resulting from current or future military conflicts, 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.

They have resulted, and could continue to result, in significant economic disruption and have adversely affected our business.

They could adversely impact our business for the remainder of fiscal 2025 and perhaps beyond.

Significant uncertainty exists concerning the magnitude of the impact and duration of ongoing supply chain constraints and their potential impact on the overall economy, both within the U.S and globally.

Accordingly, the magnitude and duration of any production and supply chain disruptions and their related financial impacts on our business cannot be estimated at this time.

The impacts from supply chain constraints on the Company's business and operations beginning during the second half of fiscal 2021 and continuing into fiscal 2025 negatively affected our inventory procurement costs, gross profit, income and cash flows.

We continue to monitor and assess the ability of suppliers to maintain operations and to provide parts and supplies in sufficient quantities to meet our production needs and our ability to maintain continuous production during the remainder of fiscal 2025 and beyond.

See PART I, Item 1.A.

"Risk Factors," of our fiscal 2024 Form 10-K, filed with the SEC on November 25, 2024, for a discussion of the material risks we believe we face particularly related to supply chain disruptions and related constraints.

Impacts of Governmental Policies, Programs, Regulations and/or Laws on Our Business

Changes in trade policies and tariffs only began to materially impact our procurement costs for certain imported inventory during the three months ended June 28, 2025.

However, such higher inventory purchase costs did not negatively impact our operating results or cash flows during this same period as such impact was offset by increases in the sales prices we charged for our products.

Throughout this Report, we refer to the fiscal year ending October 3, 2026 as "fiscal 2026," the fiscal year ended September 27, 2025 as "fiscal 2025," and the fiscal year ended September 28, 2024 as "fiscal 2024." There will be 53 weeks in fiscal 2026 and were 52 weeks in fiscal 2025.

The first quarters of fiscal 2026 and fiscal 2025 both included 13 weeks.

Business Update

The global supply chain constraints for automotive parts that arose subsequent to the novel coronavirus pandemic known as "COVID-19" and that were further impacted by additional stress resulting from Russia’s invasion of Ukraine in February 2022, continued to impact our business and operations in the first quarters of both fiscal 2025 and 2026.

Specifically, there were occasional shortages of certain critical components that impacted our manufacturing production schedule and related operational efficiencies, while increasing costs charged by suppliers to procure inventory continued during both periods.

Both of these factors impacted our

business and operations by limiting the number and/or mix of school buses that we could produce and sell as well as increasing the costs to manufacture buses.

Nonetheless, the lessons learned, and resulting actions taken, by management over the past several years allowed the Company to continue navigating these supply chain challenges to consistently produce buses to fulfill sales orders.

Such actions included, among others, sourcing inventory purchases from alternative suppliers and strategically acquiring larger quantities of certain critical components that have longer lead times that could impact our production schedule if not manufactured by our suppliers and delivered to us in a timely manner.

In addition to periodic inventory shortages and general inflationary pressures resulting from the global supply chain constraints discussed above, changes in trade policies and tariffs began to impact our business and operations in the second half of fiscal 2025 and continuing into the first quarter of fiscal 2026 by increasing our procurement costs for certain imported inventory.

Actions we have taken, and are continuing to take, to mitigate the impact from changes in trade policies and tariffs include increasing the volume of steel we purchase at fixed prices up to four quarters in advance and working with our suppliers to identify alternative supply chain sources to minimize the increase in inventory costs.

However, the higher inventory purchase costs that we incurred in producing and selling buses during the first quarters of fiscal 2025 and fiscal 2026 resulting from general inflationary pressures caused by global supply chain constraints as well as changes in trade policies and tariffs, as applicable, did not negatively impact our operating results or cash flows during these periods as such impacts were largely offset by proactive increases in the sales prices we charged for our products.

However, they could materially impact our operating results and cash flows in future periods if we are unable to (i) mitigate the increased cost of (a) procuring inventory to produce buses and (b) purchasing parts for resale and/or (ii) increase the sales prices we charge for our products to partially or fully offset these cost increases.

Actions we have taken, and/or are taking, to mitigate the impact from changes in trade policies and tariffs include increasing the volume of steel we purchase at fixed prices up to four quarters in advance, working with our suppliers to identify alternative supply chain sources to minimize the increase in inventory costs and proactively announcing price increases to partially or fully offset our increased costs to produce buses.

In addition to supply chain constraints discussed previously above, the deferral of funds relating to governmental grants, subsidies and/or other incentives that are intended to partially, or fully, offset the higher price of alternative powered school buses impacted, to a lesser extent, the mix of school buses that we produced and sold during the first nine months of fiscal 2025.

Although we noted an increase in the flow of government grant money during the three months ended June 28, 2025, the timing of some of these payments occurred too late in the quarter to adjust our production schedule to build and sell more higher priced alternative powered school buses.

However, such funding should positively impact subsequent quarters in fiscal 2025 and/or our 2026 fiscal year.

Additionally, although new bus orders during the majority of fiscal 2025 remained strong, management believes that the uncertainty in bus pricing resulting from changing tariffs temporarily impacted bus orders during the latter part of fiscal 2025 and, to a lesser extent, continuing into the first quarter of fiscal 2026.

Specifically, 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 in the years subsequent to the COVID-19 pandemic, the Company’s backlog approximated 4,400 units as of December 28, 2024.

Given the strong backlog in the overall school bus industry that resulted in long time lags between customers ordering and taking delivery of a school bus, when coupled with the uncertainty regarding the pricing of a school bus resulting from the inclusion of actual tariff charges in the final sales price, management believes that many customers elected to temporarily defer the purchase of buses towards the end of our fiscal 2025.

As a result, the Company’s backlog decreased to approximately 3,070 units as of September 27, 2025.

However, due to the Company’s proactive communications with our dealers and customers and committing to a tariff pricing strategy that significantly addressed the volatility in bus pricing for customers, we experienced an increase in orders during the first quarter that increased the backlog to approximately 3,370 units as of December 27, 2025, which included over 850 electric powered units.

Due to the age of school bus fleets in the U.S.

and Canada, which is at least partially attributable to supply chain disruptions in recent years that have left school districts with meaningful replacement needs, and the strong overall fundamentals in the school bus industry, management believes that this slowdown in orders is temporary in nature not indicative of a broader decrease in current or future market demand.

Finally, the deferral of funds relating to governmental grants, subsidies and/or other incentives that are intended to partially, or fully, offset the higher price of alternative powered school buses impacted, to a lesser extent, the mix of school buses that we produced and sold during the latter part of fiscal 2025 and continuing into the first quarter of fiscal 2026.

Although we noted that government grant money continued to flow during this period, the timing of some of these payments occurred too late to adjust our production schedule to build and sell more higher priced alternative powered school buses.

However, such funding should positively impact the remainder of fiscal 2026 and/or subsequent periods.

Nonetheless, any future decrease in such funds could impact the purchasing decisions of our customers that elect to buy less, or none, of our products in future periods.

Management believes that changes in governmental policies, programs, regulations and/or laws could materially impact our results in future periods as described previously above.

In general, management believes that the impacts from (i) supply chain disruptions, including those resulting from current or future military conflicts, and (ii) changes in governmental policies, programs, regulations and/or laws could continue in future periods and could materially impact our results if we are unable to (a) obtain parts and supplies in sufficient quantities to meet our production needs and/or (b) pass along rising costs to our customers.

They could result in significant economic disruption and adversely impact our business during the remainder of fiscal 2026 and perhaps beyond.

Significant uncertainty exists concerning the magnitude of the impact and duration of changes in governmental policies, programs, regulations and/or laws and their potential impact on the overall economy, both within the U.S and globally.

Accordingly, the magnitude and duration of such changes and their related financial impacts on our business cannot be estimated at this time.

Significant uncertainty exists concerning the magnitude of the impact and duration of (i) ongoing supply chain constraints and (ii) changes in governmental policies, programs, regulations and/or laws and their potential impact on the overall economy, both within the U.S and globally.

Accordingly, the magnitude and duration of such matters and their related financial impacts on our business cannot be estimated at this time.

We continue to monitor and assess the ability of suppliers to maintain operations and to provide parts and supplies in sufficient quantities and at acceptable costs to meet our production needs, including our ability to maintain continuous production during the

remainder of fiscal 2026 and beyond, and price our products at amounts that are attractive to our customers.

See PART I, Item 1.A.

"Risk Factors," of our fiscal 2025 Form 10-K, filed with the SEC on November 24, 2025, for a discussion of the material risks we believe we face particularly related to (i) supply chain disruptions and related constraints and (ii) changes in governmental policies, programs, regulations and/or laws.

Critical Accounting Policies and Estimates, Recent Accounting Pronouncements

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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 fiscal 2025 Form 10-K, filed with the SEC on November 24, 2025, 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.

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 nine months ended June 28, 2025.

Recent Accounting Pronouncements

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Increases or decreases in the number of school bus riders have a direct impact on school district demand.

Evolving protocols for public health concerns and/or continued technological

advancements could shift the future form of educational delivery away from in-person learning on a more permanent basis, with increased remote learning reasonably expected to decrease the number of school bus riders.

Evolving protocols for public health concerns and/or continued technological advancements could shift the future form of educational delivery away from in-person learning on a more permanent basis, with increased remote learning reasonably expected to decrease the number of school bus riders.

• Revenue mix .

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Seasonality and variations from historical seasonality have impacted the comparison of results between fiscal periods.

As discussed previously above, supply chain disruptions developing subsequent to the COVID-19 pandemic and Russia's invasion of Ukraine have significantly increased our inventory purchase costs, including freight costs incurred to deliver critical components, reflected in cost of goods sold during all of fiscal 2022 and continuing, to a lesser extent, into fiscal 2023, fiscal 2024 and the first nine months of fiscal 2025.

Additionally, the imposition of tariffs on certain imported inventory that became effective beginning in the third quarter of fiscal 2025 has further increased our inventory purchase costs.

In response, the Company announced a number of sales price increases over this same period that applied to new sales orders and, in limited circumstances, to backlog orders that were both intended to mitigate the impact of rising purchase costs on our operations, results and cash flows.

These cumulative price increases have had a significant, positive impact on sales and gross profit during fiscal 2023, fiscal 2024 and continuing into the first nine months of fiscal 2025.

As discussed previously above, supply chain disruptions developing subsequent to the COVID-19 pandemic and Russia's invasion of Ukraine have significantly increased our inventory purchase costs, including freight costs incurred to deliver critical components, reflected in cost of goods sold during fiscal 2025 and continuing into the first three months of fiscal 2026.

Additionally, the imposition of tariffs on certain imported inventory that became effective during the second half of fiscal 2025 and continued into the first three months of fiscal 2026 has further increased our inventory purchase costs.

In response, the Company announced a number of sales price increases that applied to new sales orders that were intended to mitigate the impact of rising purchase costs on our operations, results and cash flows.

These cumulative price increases have had a significant, positive impact on sales and gross profit during fiscal 2025 and continuing into the first three months of fiscal 2026.

• Governmental grants, subsidies and/or other incentives.

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GAAP ("non-GAAP"):

“Adjusted EBITDA;” “Adjusted EBITDA Margin;” and “Free Cash Flow.” Adjusted EBITDA and Free Cash Flow are financial metrics that are utilized by management and the Board of Directors, as and when applicable, to determine (a) the annual cash bonus payouts, if any, to be made to certain employees based upon the terms of the Company’s Management Incentive Plan, and (b) whether the performance criteria have been met for the vesting of certain equity awards granted annually to certain members of management based upon the terms of the Company’s Omnibus Equity Incentive Plan.

annual cash bonus payouts, if any, to be made to certain employees based upon the terms of the Company’s Management Incentive Plan, and (b) whether the performance criteria have been met for the vesting of certain equity awards granted annually to certain members of management based upon the terms of the Company’s Omnibus Equity Incentive Plan.

Additionally, consolidated EBITDA, which is an adjusted EBITDA metric defined by our Credit Agreement (defined below) that could differ from Adjusted EBITDA discussed above as the adjustments to the calculations are not uniform, is used to determine the Company's ongoing compliance with several financial covenant requirements, including being utilized in the denominator of the calculation of the Total Net Leverage Ratio ("TNLR"), which is also utilized in determining the interest rate we pay on borrowings under our Credit Agreement (defined below).

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

Consolidated Results of Operations for the Three Months Ended June 28, 2025 and June 29, 2024:

Consolidated Results of Operations for the Three Months Ended December 27, 2025 and December 28, 2024:

Three Months Ended

(in thousands of dollars) June 28, 2025 June 29, 2024

(in thousands of dollars) December 27, 2025 December 28, 2024

$ 333,084 $ 313,872

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Interest income 1,981 1,568

Other expense, net (580) (2,729)

Other (expense) income, net (211) 2,916

Income before income taxes $ 37,881 $ 35,611

Income tax expense (9,119) (8,693)

Equity in net (loss) income of non-consolidated affiliates (404) 2,767

Equity in net income of non-consolidated affiliates 1,994 1,804

Net income $ 30,756 $ 28,722

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Net Sales by Segment

June 28, 2025 June 29, 2024

December 27, 2025 December 28, 2024

$ 307,662 $ 288,147

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$ 71,229 $ 60,317

Net sales were $398.0 million for the third quarter of fiscal 2025, an increase of $64.6 million, or 19.4%, compared to $333.4 million for the third quarter of fiscal 2024.

The increase in net sales is primarily due to an increase in Bus unit bookings, Bus customer and product mix changes and cumulative Bus price increases, including an increase that was intended to mitigate the impact of increased procurement costs for certain of our imported inventory as a result of the imposition of tariffs beginning during the third quarter of fiscal 2025, as well as a small increase in Parts sales.

Net sales were $333.1 million for the first quarter of fiscal 2026, an increase of $19.2 million, or 6.1%, compared to $313.9 million for the first quarter of fiscal 2025.

The increase in net sales is primarily due to Bus customer and product mix changes and cumulative Bus price increases, including increases that were intended to mitigate the impact of increased procurement costs for certain of our imported inventory as a result of the imposition of tariffs beginning during the second half of fiscal 2025 and continuing into the first quarter of fiscal 2026, which were partially offset by a small decrease in Parts sales.

Bus sales increased $19.5 million, or 6.8%, reflecting a 0.2% increase in unit bookings and a 6.5% increase in average sales price per unit.

In the third quarter of fiscal 2025, 2,467 units booked compared to 2,151 units booked for the same period in fiscal 2024.

The increase in unit price for the third quarter of fiscal 2025 compared to the same period in fiscal 2024 was primarily due to customer and product mix changes as well as price increases implemented to offset increases in inventory costs.

Parts sales increased $0.4 million, or 1.7%, for the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024.

This increase is primarily attributed to price increases implemented to offset increases in inventory costs that were partially offset by slight variations due to product and channel mix.

In the first quarter of fiscal 2026, 2,135 units booked compared to 2,130 units booked for the same period in fiscal 2025.

The increase in unit price for the first quarter of fiscal 2026 compared to the same period in fiscal 2025 was primarily due to customer and product mix changes as well as price increases implemented to offset increases in inventory costs.

Parts sales decreased $0.3 million, or 1.2%, for the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025.

This small decrease is primarily attributed to slight variations due to product and channel mix that were slightly larger than price increases that were implemented to offset increases in inventory costs.

Cost of goods sold .

Total cost of goods sold was $312.1 million for the third quarter of fiscal 2025, an increase of $48.1 million, or 18.2%, compared to $264.0 million for the third quarter of fiscal 2024.

As a percentage of net sales, total cost of goods sold improved from 79.2% to 78.4%, primarily due to the impact of ongoing pricing actions taken by management that exceeded the impact of increasing costs resulting from inflationary pressures and the imposition of tariffs relating to the procurement of inventory as well as finalizing the union contract in May 2024, which increased the labor costs for our covered production and supply chain employees.

Total cost of goods sold was $261.9 million for the first quarter of fiscal 2026, an increase of $8.3 million, or 3.3%, compared to $253.6 million for the first quarter of fiscal 2025.

As a percentage of net sales, total cost of goods sold improved from 80.8% to 78.6%, primarily due to the impact of ongoing pricing actions taken by management that exceeded the impact of increasing costs resulting from inflationary pressures and the imposition of tariffs relating to the procurement of inventory.

The improvement was also impacted by product and customer mix changes.

Bus segment cost of goods sold increased $47.5 million, or 18.9%, for the third quarter of fiscal 2025 compared to the same period in fiscal 2024.

The increase was primarily driven by the 14.7% increase in units booked discussed above as well as a 3.7% increase in the average cost of goods sold per unit for the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024.

This increase primarily resulted from increases in manufacturing costs attributable to a) increased raw materials costs resulting from ongoing inflationary pressures and the imposition of tariffs beginning during the third quarter of fiscal 2025, b) ongoing supply chain disruptions that resulted in higher purchase costs for components and c) higher labor costs resulting from finalizing the union contract in May 2024.

Bus segment cost of goods sold increased $8.4 million, or 3.5%, for the first quarter of fiscal 2026 compared to the same period in fiscal 2025.

The increase was primarily driven by a 3.3% increase in the average cost of goods sold per unit for the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025, as well as the 0.2% increase in units booked.

The increase in average cost of goods sold per unit primarily resulted from increases in manufacturing costs attributable to (a) increased raw materials costs resulting from ongoing inflationary pressures and the imposition of tariffs beginning during the second half of fiscal 2025 and (b) ongoing supply chain disruptions that resulted in higher purchase costs for components.

The increase was also impacted by customer and product mix changes.

The $0.5 million, or 4.2%, increase in Parts segment cost of goods sold for the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024 was attributable to increased product costs due to inflationary pressures and tariffs, which were partially offset by slight variations due to product and channel mix.

The $0.1 million, or 1.0%, decrease in Parts segment cost of goods sold for the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025 was primarily due to slight variations due to product and channel mix that were slightly larger than increased product costs driven by inflationary pressures and tariffs.

Operating profit .

Operating profit was $50.1 million for the third quarter of fiscal 2025, a increase of $10.3 million compared to operating profit of $39.7 million for the third quarter of fiscal 2024.

Operating profit was $37.7 million for the first quarter of fiscal 2026, an increase of $4.6 million compared to operating profit of $33.0 million for the first quarter of fiscal 2025.

Profitability was positively impacted by an increase of $10.9 million in gross profit as outlined in the revenue and cost of goods sold discussions above.

However, it was negatively impacted by an increase of $6.2 million in selling, general and administrative expenses, primarily due to an increase in a) research and development expense in the third quarter of fiscal 2025 and b) labor costs.

However, it was negatively impacted by an increase of $6.3 million in selling, general and administrative expenses, primarily due to an increase in (a) research and development expense and (b) labor costs.

Interest expense .

Interest expense was $1.7 million for the third quarter of fiscal 2025, a decrease of $0.4 million, or 17.5%, compared to $2.1 million for the third quarter of fiscal 2024.

The decrease was primarily attributable to a decrease in the stated term loan interest rate from 7.2% at June 29, 2024 to 6.1% at June 28, 2025, as well as lower outstanding borrowings in the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024.

Other income (expense), net.

Other expense, net was $0.6 million for the third quarter of fiscal 2025, a decrease of $2.1 million, or 78.7%, compared to $2.7 million of other expense, net for the same period in fiscal 2024.

During the third quarter of fiscal 2025, the Company recorded net periodic pension income of approximately $0.4 million compared with net periodic pension expense of less than $0.1 million for the same period in fiscal 2024.

Additionally, on May 23, 2024, eligible members of the United Steelworkers Union ("USW") voted to ratify a three-year collective bargaining agreement ("CBA") with Blue Bird Body Company ("BBBC"), a wholly-owned subsidiary of Blue Bird Corporation.

Among other items, the CBA requires the payment of a (i) lump-sum payment to certain employees who were not eligible for an annual wage increase because their hourly wage rate exceeded the rate required by the terms of the CBA as well as (ii) one-time $750 signing bonus to the approximate 1,500 covered production workers in our Fort Valley and Perry, Georgia facilities at the time the CBA was executed.

During the third quarters of both fiscal 2025 and 2024, the Company paid the above applicable amounts to those employees covered by the CBA as well as similar amounts to a small number of hourly employees not covered by the CBA so that their total compensation was competitive with that of unionized employees performing comparable job functions.

These payments totaled $1.1 million and $2.7 million for the three months ended June 28, 2025 and June 29, 2024, respectively, and were recorded in other expense, net because such compensation is not reflective of wages paid for services provided by the direct and indirect employees who support our operating activities and is expensed within cost of goods sold.

Interest expense was $1.6 million for the first quarter of fiscal 2026, a decrease of $0.3 million, or 18.2%, compared to $1.9 million for the first quarter of fiscal 2025.

The decrease was primarily attributable to a decrease in the stated term loan interest rate from 6.4% at December 28, 2024 to 5.9% at December 27, 2025, as well as lower outstanding borrowings in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025.

Other (expense) income, net.

Other expense, net was $0.2 million for the first quarter of fiscal 2026, a decrease of $3.1 million, or 107.2%, compared to $2.9 million of other income, net for the same period in fiscal 2025.

During the first quarter of fiscal 2026, the Company recorded net periodic pension expense of approximately $0.2 million compared with net periodic pension income of $0.4 million for the same period in fiscal 2025.

Additionally, during the first quarter of fiscal 2025, the Company sold certain state emissions credits that it was not projecting to use for approximately $2.6 million, with no such sales during the first quarter of fiscal 2026.

The proceeds from this sale was recorded in other (expense) income, net in the Condensed Consolidated Statements of Operations as this transaction is not indicative of our normal revenue generating activities.

Income taxes .

Income tax expense was $12.4 million for the third quarter of fiscal 2025 compared to $9.9 million for the same period in fiscal 2024.

The effective tax rate for the three months ended June 28, 2025 was 25.1% and differed from the statutory federal income tax rate of 21%.

Income tax expense was $9.1 million for the first quarter of fiscal 2026 compared to $8.7 million for the same period in fiscal 2025.

The effective tax rate for the three months ended December 27, 2025 was 24.1% 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 June 29, 2024 was 27.7% and differed from the statutory federal income tax rate of 21%.

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%.

Adjusted EBITDA .

Adjusted EBITDA was $58.5 million, or 14.7% of net sales, for the third quarter of fiscal 2025, an increase of $10.2 million, or 21.2%, compared to $48.2 million, or 14.5% of net sales, for the third quarter of fiscal 2024.

The increase primarily relates to the increase in gross profit, when adjusting for the impact of expenses that are excluded in calculating Adjusted EBITDA, as outlined in the revenue and cost of goods sold discussions above that was partially offset by a smaller increase in selling, general and administrative expenses, when adjusting for the impact of expenses that are excluded in calculating Adjusted EBITDA, as discussed above.

Adjusted EBITDA was $50.1 million, or 15.0% of net sales, for the first quarter of fiscal 2026, an increase of $4.3 million, or 9.4%, compared to $45.8 million, or 14.6% of net sales, for the first quarter of fiscal 2025.

The increase primarily relates to the increase in gross profit, when adjusting for the impact of expenses that are excluded in calculating Adjusted EBITDA, as outlined

in the revenue and cost of goods sold discussions above, that was partially offset by a smaller increase in selling, general and administrative expenses, when adjusting for the impact of expenses that are excluded in calculating Adjusted EBITDA, as discussed above.

The following table sets forth a reconciliation of net income to Adjusted EBITDA for the periods presented:

Three Months Ended

(in thousands of dollars) June 28, 2025 June 29, 2024

(in thousands of dollars) December 27, 2025 December 28, 2024

Net income $ 30,756 $ 28,722

Interest expense, net (1) 326 1,214

Interest (income) expense, net (1)

Income tax expense 9,119 8,693

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15.0 % 14.6 %

(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 within cost of goods sold or selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.

(2) Includes $0.4 million and $0.3 million for the three months ended June 28, 2025 and June 29, 2024, respectively, representing amortization charges on right-of-use lease assets, which are a component of lease expense and presented within cost of goods sold or selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.

Consolidated Results of Operations for the Nine Months Ended June 28, 2025 and June 29, 2024:

Nine Months Ended

(in thousands of dollars) June 28, 2025 June 29, 2024

$ 1,070,734 $ 996,942

Cost of goods sold

853,635 800,392

$ 217,099 $ 196,550

Operating expenses

Selling, general and administrative expenses

100,277 82,798

Operating profit $ 116,822 $ 113,752

Interest expense (5,466) (8,550)

Interest income 4,309 3,132

Other income (expense), net 2,780 (5,918)

Loss on debt refinancing

Income before income taxes $ 118,445 $ 100,858

Income tax expense (30,197) (26,645)

Equity in net income of non-consolidated affiliates 2,975 6,671

Net income $ 91,223 $ 80,884

Other financial data:

Adjusted EBITDA

$ 153,438 $ 141,601

Adjusted EBITDA margin

14.3 % 14.2 %

The following provides the results of operations of Blue Bird’s two reportable segments:

(in thousands of dollars) Nine Months Ended

Net Sales by Segment June 28, 2025 June 29, 2024

$ 993,099 $ 919,433

77,635 77,509

Total $ 1,070,734 $ 996,942

Gross Profit by Segment

$ 178,017 $ 157,428

39,082 39,122

$ 217,099 $ 196,550

Net sales were $1,070.7 million for the nine months ended June 28, 2025, an increase of $73.8 million, or 7.4%, compared to $996.9 million for the nine months ended June 29, 2024.

Bus sales increased $73.7 million, or 8.0%, reflecting a 5.5% increase in units booked and a 2.4% increase in average sales price per unit.

6,892 units booked in the nine months ended June 28, 2025 compared with 6,534 units booked during the same period in fiscal 2024.

The increase in unit price for the first nine months of fiscal 2025 compared to the same period in fiscal 2024 was primarily due to customer and product mix changes as well as price increases implemented to offset increases in inventory costs.

Parts sales increased $0.1 million, or 0.2%, for the nine months ended June 28, 2025 compared to the nine months ended June 29, 2024.

This small increase is primarily attributed to price increases implemented to offset increases in inventory costs that were partially offset by slight variations due to product and channel mix.

Cost of goods sold .

Total cost of goods sold was $853.6 million for the nine months ended June 28, 2025, an increase of $53.2 million, or 6.7%, compared to $800.4 million for the nine months ended June 29, 2024.

As a percentage of net sales, total cost of goods sold improved from 80.3% to 79.7%, primarily due to the impact of ongoing pricing actions taken by management that exceeded the impact of increasing costs resulting from inflationary pressures and the imposition of tariffs relating to the procurement of inventory as well as finalizing the union contract in May 2024, which increased the labor costs for our covered production and supply chain employees.

The improvement was also impacted by product and customer mix changes.

Bus segment cost of goods sold increased $53.1 million, or 7.0%, for the nine months ended June 28, 2025 compared to the nine months ended June 29, 2024.

The increase was primarily driven by the 5.5% increase in units booked discussed above as well as the 1.4% increase in the average cost of goods sold per unit in the nine months ended June 28, 2025 compared to the same period in fiscal 2024.

The increase was also impacted by customer and product mix changes.

The $0.2 million, or 0.4%, increase in parts segment cost of goods sold for the nine months ended June 28, 2025 compared to the nine months ended June 29, 2024 was primarily attributable to increased product costs due to inflationary pressures and tariffs, which were partially offset by slight variations due to product and channel mix.

Operating profit .

Operating profit was $116.8 million for the nine months ended June 28, 2025, an increase of $3.1 million compared to operating profit of $113.8 million for the nine months ended June 29, 2024.

Profitability was positively impacted by an increase of $20.5 million in gross profit as outlined in the revenue and cost of goods sold discussions.

However, it was negatively impacted by an increase of $17.5 million in selling, general and administrative expenses, primarily due to an increase in a) share-based compensation expense recorded in the second quarter of fiscal 2025 relating to the retirement of our former President and Chief Executive Officer, b) labor costs and c) research and development expense.

Interest expense .

Interest expense was $5.5 million for the nine months ended June 28, 2025, a decrease of $3.1 million, or 36.1%, compared to $8.6 million for the nine months ended June 29, 2024.

The decrease was primarily attributable to a decrease in the stated term loan interest rate from 7.2% at June 29, 2024 to 6.1% at June 28, 2025, as well as lower outstanding borrowings in the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024.

Other income (expense), net.

Other income, net was $2.8 million for the nine months ended June 28, 2025, an increase of $8.7 million, or 147.0%, compared to $5.9 million of other expense, net for the nine months ended June 29, 2024.

The Company recorded $1.3 million of net periodic pension income during the nine months ended June 28, 2025 when compared with $0.1 million of net periodic pension expense recorded during the nine months ended June 29, 2024.

Also, during the first quarter of fiscal 2025, the Company sold certain state emissions credits that it was not projecting to use for approximately $2.6 million, with no similar income recorded during the the first nine months of fiscal 2024.

The proceeds from this sale were recorded in other income, net as this transaction is not indicative of our normal revenue generating activities.

Additionally, on May 23, 2024, eligible members of the USW voted to ratify a three-year CBA with BBBC.

These payments totaled $1.1 million and $2.7 million for the three and nine months ended June 28, 2025 and June 29, 2024, respectively, and were recorded in other expense, net because such compensation is not reflective of wages paid for services provided by the direct and indirect employees who support our operating activities and is expensed within cost of goods sold.

Finally, 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 Selling Stockholder agreed to sell 2,500,000 shares of common stock at a purchase price of $25.10 per share ("December Offering").

On February 15, 2024, the Company entered into an underwriting agreement with Barclays Capital Inc., as representative of the several underwriters and Selling Stockholder, pursuant to which Selling Stockholder agreed to sell 4,042,650 shares of common stock at a purchase price of $32.90 per share ("February Offering," and collectively with the December Offering, "Offerings").

The December Offering was conducted pursuant to a prospectus supplement, dated December 14, 2023, and the February Offering was conducted pursuant to a prospectus supplement, dated February 15, 2024, both 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 December Offering closed on December 19, 2023 and the February Offering closed on February 21, 2024.

Although the Company did not sell any shares or receive any proceeds from the Offerings, it was required to pay certain expenses in connection with the Offerings that totaled approximately $3.2 million for the nine months ended June 29, 2024.

No such expense was incurred in the nine months ended June 28, 2025.

Income taxes .

Income tax expense was $30.2 million for the nine months ended June 28, 2025 compared to $26.6 million for the nine months ended June 29, 2024.

The effective tax rate for the nine months ended June 28, 2025 was 25.5% and differed from the statutory federal income tax rate of 21%.

The effective tax rate for the nine months ended June 29, 2024 was 26.4% and differed from the statutory federal income tax rate of 21%.

Adjusted EBITDA .

Adjusted EBITDA was $153.4 million, or 14.3% of net sales, for the nine months ended June 28, 2025, an increase of $11.8 million, or 8.4%, compared to $141.6 million, or 14.2% of net sales, for the nine months ended June 29, 2024.

The increase primarily relates to the a) increase in gross profit, when adjusting for the impact of expenses that are excluded in calculating Adjusted EBITDA, as outlined in the revenue and cost of goods sold discussions above and b) $2.6 million sale of certain state emissions credits included in the other income (expense), net discussion above, both of which were partially offset by a smaller increase in selling, general and administrative expenses, when adjusting for the impact of expenses that are excluded in calculating Adjusted EBITDA, as discussed above.

The following table sets forth a reconciliation of net income to Adjusted EBITDA for the periods presented:

Nine Months Ended

(in thousands of dollars) June 28, 2025 June 29, 2024

Net income $ 91,223 $ 80,884

Interest expense, net (1) 1,392 5,729

Income tax expense 30,197 26,645

Depreciation, amortization and disposals (2)

12,858 12,253

Loss on debt refinancing

Share-based compensation expense

Stockholder transaction costs — 3,154

Micro Bird Holdings, Inc.

total interest expense, net;

income tax expense or benefit;

depreciation expense and amortization expense

Adjusted EBITDA $ 153,438 $ 141,601

Adjusted EBITDA margin (percentage of net sales) 14.3 % 14.2 %

(1) Includes $0.2 million and $0.3 million for the nine months ended June 28, 2025 and June 29, 2024, respectively, representing interest expense on operating lease liabilities, which are a component of lease expense and presented within cost of goods sold or selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.

(2) Includes $1.1 million and $1.3 million for the nine months ended June 28, 2025 and June 29, 2024, respectively, representing amortization charges on right-of-use lease assets, which are a component of lease expense and presented within cost of goods sold or selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.

(1) Includes $0.2 million and $0.1 million for the three months ended December 27, 2025 and December 28, 2024, respectively, representing interest expense on operating lease liabilities, which are a component of lease expense and presented within cost of goods sold or selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.

(2) Includes $0.6 million and $0.4 million for the three months ended December 27, 2025 and December 28, 2024, respectively, representing amortization charges on right-of-use lease assets, which are a component of lease expense and presented within cost of goods sold or 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 revolving credit facility.

At June 28, 2025, the Company had $173.1 million of available cash (net of outstanding checks) and $141.7 million of additional borrowings available under the revolving line of credit portion of its credit facility.

At December 27, 2025, the Company had $241.7 million of available cash (net of outstanding checks) and $141.7 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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The Credit Facilities are guaranteed by all of the Company’s wholly-owned domestic restricted subsidiaries (subject to customary exceptions) and are secured by a security agreement which pledges a lien on virtually all of the assets of Borrower, the Company and the Company’s other wholly-owned domestic restricted subsidiaries, other than any owned or leased real property and subject to customary exceptions.

The $100.0 million of Term Loan Facility proceeds and $36.2 million of Revolving Credit Facility proceeds that were borrowed on the Closing Date were used to pay (i) the $131.8 million of term loan indebtedness outstanding under the previous credit agreement ("Amended Credit Agreement"), (ii) interest and commitment fees accrued under the Amended Credit Agreement through the Closing Date and (iii) transaction costs associated with the consummation of the Credit Agreement.

Under the terms of the Credit Agreement, Borrower, the Company and the Company’s other wholly-owned domestic restricted subsidiaries are subject to customary affirmative and negative covenants and events of default for facilities of this type (with customary grace periods, as applicable, and lender remedies).

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IV Greater than or equal to 2.25x

Pricing on the Closing Date was set at Level III until receipt of the financial information and related compliance certificate for the first fiscal quarter ending after the Closing Date, with pricing as of June 28, 2025 set at Level I.

Borrower is also required to pay lenders an unused commitment fee of between 0.25% and 0.45% per annum on the undrawn commitments under the Revolving Credit Facility, depending on the TNLR, quarterly in arrears.

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(i) a pro forma TNLR of not greater than 3.00:1.00 and (ii) a pro forma fixed charge coverage ratio (as defined in the Credit Agreement) of not less than 1.20:1.00.

Detailed descriptions of the Amended Credit Agreement 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 September 28, 2024, filed with the SEC on November 25, 2024.

At June 28, 2025, Borrower and the guarantors under the Credit Agreement were in compliance with all covenants.

At December 27, 2025, Borrower and the guarantors under the Credit Agreement were in compliance with all covenants.

Short-Term and Long-Term Liquidity Requirements

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Based on the current level of operations, we believe that our existing cash balances and expected cash flows from operations will be sufficient to meet our operating requirements for at least the next 12 months.

To increase our liquidity in future periods, we could pursue raising additional capital via an equity or debt offering utilizing a currently effective "shelf" registration statement.

To increase our liquidity in future periods, we could pursue raising additional capital via an equity or debt offering utilizing a currently effective "automatic shelf" registration statement.

However, we can offer no assurance that we would be successful in raising this additional capital, which could also lead to increased expense and larger up-front fees when compared with our historical financial statements.

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The following table sets forth general information derived from our Condensed Consolidated Statements of Cash Flows:

Nine Months Ended

(in thousands of dollars) June 28, 2025 June 29, 2024

Cash, cash equivalents and restricted cash at beginning of period $ 127,687 $ 78,988

Three Months Ended

(in thousands of dollars) December 27, 2025 December 28, 2024

Cash and cash equivalents at beginning of period

$ 229,313 $ 127,687

Total cash provided by operating activities 36,579 26,410

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Total cash used in financing activities (18,498) (12,884)

Change in cash, cash equivalents and restricted cash $ 45,379 $ 9,428

Cash, cash equivalents and restricted cash at end of period $ 173,066 $ 88,416

Change in cash and cash equivalents

$ 12,426 $ 8,432

Cash and cash equivalents at end of period

$ 241,739 $ 136,119

Total cash provided by operating activities

Cash flows provided by operating activities totaled $111.1 million for the nine months ended June 28, 2025, an increase of $55.3 million from the $55.8 million of cash flows provided by operating activities during the nine months ended June 29, 2024.

The increase primarily resulted from the effect of net changes in operating assets and liabilities that positively impacted operating cash flows by $62.7 million during the nine months ended June 28, 2025 when compared with the nine months ended June 29, 2024.

The primary drivers in this category were favorable changes in accounts receivable and accounts payable of $59.4 million and $17.3 million, respectively, that were partially offset by an unfavorable change in inventory of $14.0 million, as follows:

• A shift in our customer mix resulted in an increase in the accounts receivable balance towards the end of fiscal 2024, including at the end of the third quarter of fiscal 2024, when compared with the end of fiscal 2023.

Cash flows provided by operating activities totaled $36.6 million for the three months ended December 27, 2025, an increase of $10.2 million from the $26.4 million of cash flows provided by operating activities during the three months ended December 28, 2024.

The increase primarily resulted from (i) the $2.0 million increase in net income and (ii) the effect of net changes in operating assets and liabilities that positively impacted operating cash flows by $3.4 million, both during the three months ended December 27, 2025 when compared with the three months ended December 28, 2024.

The primary drivers in the changes in operations assets and liabilities were favorable changes in inventories and accrued expenses, pension and other liabilities of $33.9 million and $28.9 million, respectively, that were partially offset by an unfavorable changes in accounts receivable and accounts payable of $35.2 million and $23.6 million, respectively, as follows:

• We had a larger increase in the balance of our inventory during the first quarter of fiscal 2025 when compared with the first quarter of fiscal 2026 (that resulted in a significant decrease in the use of cash when comparing periods).

Specifically, the bus orders that we produced during the first quarter of fiscal 2025 contained a larger mix of units for certain customers, primarily fleet and specific governmental customers, for which the sales cycle is longer when compared with sales to dealers, resulting in increases in all categories of inventories (raw material, work in process and finished goods) as of December 28, 2024 when compared with December 27, 2025.

Additionally, at the end of the first quarter of fiscal 2025, we elected to strategically acquire larger quantities of certain critical components that have longer lead times and could impact our production schedule in future periods if not manufactured by our suppliers and delivered to us in a timely manner when compared with similar activity in the first quarter of fiscal 2026.

• There was a larger increase in accrued expenses, pension and other liabilities (that resulted in a significant increase in a source of cash) during the first quarter of fiscal 2026 when compared with the first quarter of fiscal 2025.

This increase was primarily driven by a $42.8 million advanced payment made by a customer in the first quarter of fiscal 2026, with no similar activity in the first quarter of fiscal 2025.

This increase was partially offset by a $17.8 million decrease in accrued income taxes in the first quarter of fiscal 2026 when compared with the similar period in 2025, primarily due to the timing of income tax payments that impacted the balances at the end of each quarter.

• A shift in our customer mix resulted in an increase in the accounts receivable balance towards the end of fiscal 2024, when compared with the end of fiscal 2025.

Specifically, we had a significant increase in fleet revenue towards the end of fiscal 2024 relating to school buses that were delivered to coincide with the start of the new school year, with such revenue representing the majority of sales we make on credit.

During the nine months ended June 28, 2025, the accounts receivable balances relating to fiscal 2024 fleet revenue were collected, representing a significant cash inflow.

There were no similar significant collections of fiscal 2023 accounts receivable balances during the nine months ended June 29, 2024.

• There was an increase in accounts payable (a source of cash) and a larger net increase in inventory (a use of cash) during the nine months ended June 28, 2025 when compared with the nine months ended June 29, 2024.

These changes were driven by an increase in the volume of buses we are producing in fiscal 2025 when compared with fiscal 2024 as well as an increase in the cost of procuring inventory that is attributable to inflationary pressures resulting from ongoing supply chain disruptions and the imposition of tariffs beginning during the third quarter of fiscal 2025.

Finally, during the third quarter of fiscal 2025, we elected to strategically acquire larger quantities of certain critical components that have longer lead times and could impact our production schedule in future periods if not manufactured by our suppliers and delivered to us in a timely manner, with no similar activity in the third quarter of fiscal 2024.

During the three months ended December 28, 2024, the accounts receivable balances relating to fiscal 2024 fleet revenue were collected, representing a significant cash inflow.

As the accounts receivable balance at the end of fiscal 2025 was significantly lower than the balance at the end of fiscal 2024 due to a significant reduction in sales we made on credit at the end of each respective period, the amount of accounts receivable collected during the three months ended December 27, 2025 was significantly lower when compared with the same period in fiscal 2025.

• There was a larger decrease in accounts payable (that resulted in a significant increase in the use of cash) during the first quarter of fiscal 2026 when compared with the the first quarter of fiscal 2025.

This decrease primarily resulted from decreases in (i) our production volume and (ii) our strategic acquisition of certain critical components during the first quarter of fiscal 2026 when compared with the first quarter of fiscal 2025 as described previously above.

Total cash used in investing activities

Cash flows used in investing activities totaled $19.1 million for the nine months ended June 28, 2025 as compared to $10.1 million for the nine months ended June 29, 2024.

Cash flows used in investing activities totaled $5.7 million for the three months ended December 27, 2025 as compared to $5.1 million for the three months ended December 28, 2024.

The $0.6 million increase was primarily due to an increase in spending on fixed assets, as increasing recent profitability has allowed for more capital spending.

Total cash used in financing activities

Cash flows used in financing activities totaled $46.7 million for the nine months ended June 28, 2025 as compared to $36.2 million for the nine months ended June 29, 2024, resulting in a $10.5 million increase between fiscal periods.

During the first nine months of fiscal 2025, the Company purchased $39.0 million of common stock in connection with its share repurchase program with no similar activity in the same period in fiscal 2024.

Additionally, there was a $4.1 million increase in purchases of Company common stock in connection with stock award exercises in the nine months ended June 28, 2025 when compared with the nine months ended June 29, 2024.

During the first nine months of fiscal 2024, primarily as a result of executing the Credit Agreement during this period, there was a $30.6 million increase in net term loan repayments when compared with the same period in fiscal 2025.

Additionally, we paid $3.1 million of costs in completing the debt refinancing in the nine months ended June 29, 2024 with no similar activity in the nine months ended June 28, 2025.

Cash flows used in financing activities totaled $18.5 million for the three months ended December 27, 2025 as compared to $12.9 million for the three months ended December 28, 2024, resulting in a $5.6 million increase between fiscal periods.

During the first three months of fiscal 2026, the Company purchased an incremental $4.9 million of common stock in connection with its share repurchase programs when compared with the same period in fiscal 2025.

Additionally, there was a $0.9 million increase in purchases of Company common stock in connection with stock award exercises in the three months ended December 27, 2025 when compared with the three months ended December 28, 2024.

These increases were partially offset by a $0.5 million decrease in principal payments on financing leases, which expired in fiscal 2025 and accordingly, there was no similar activity in the three months ended December 27, 2025.

Free cash flow

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The following table sets forth the calculation of Free Cash Flow for the periods presented:

Nine Months Ended

(in thousands of dollars) June 28, 2025 June 29, 2024

Three Months Ended

(in thousands of dollars) December 27, 2025 December 28, 2024

Net cash provided by operating activities $ 36,579 $ 26,410

2 unchanged sentences

$ 31,114 $ 21,816

Free Cash Flow for the nine months ended June 28, 2025 was $47.3 million higher than for the nine months ended June 29, 2024 due to a $55.3 million increase in net cash provided by operating activities that was partially offset by an $8.1 million increase in cash paid for fixed assets, both as discussed above.

Free Cash Flow for the three months ended December 27, 2025 was $9.3 million higher than for the three months ended December 28, 2024 due to a $10.2 million increase in net cash provided by operating activities that was partially offset by an $0.9 million increase in cash paid for fixed assets, both as discussed above.

Off-Balance Sheet Arrangements

We had outstanding letters of credit totaling $8.3 million at June 28, 2025 that secure our a) self-insured workers compensation program and b) performance obligations relating to certain environmental matters, the collateral for both of which is regulated by the State of Georgia.

We had outstanding letters of credit totaling $8.3 million at December 27, 2025 that secure our (a) self-insured workers compensation program and (b) performance obligations relating to certain environmental matters, the collateral for both of 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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis