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) March 28, 2026 September 27, 2025 Assets Current assets Cash and cash equivalents $ 275,893 $ 229,313 Accounts receivable, net 12,940 20,650 Inventories 144,765 139,470 Other current assets 32,969 22,195 Total current assets $ 466,567 $ 411,628 Property, plant and equipment, net $ 117,868 $ 108,541 Goodwill 18,825 18,825 Intangible assets, net 40,750 41,685 Equity investment in affiliates 39,204 35,197 Deferred tax assets — 2,697 Pension 4,664 4,889 Other assets 1,486 1,793 Total assets $ 689,364 $ 625,255 Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 127,124 $ 151,479 Warranty 7,235 7,494 Accrued expenses 53,752 55,164 Deferred warranty income 12,015 11,329 Other current liabilities 49,156 6,333 Current portion of long-term debt 5,000 5,000 Total current liabilities $ 254,282 $ 236,799 Long-term liabilities Revolving credit facility $ — $ — Long-term debt 82,982 85,324 Warranty 9,540 9,681 Deferred warranty income 23,292 22,368 Deferred tax liabilities 8,189 5,439 Other liabilities 13,151 10,229 Total long-term liabilities $ 137,154 $ 133,041 Guarantees, commitments and contingencies (Note 6) Stockholders' equity Preferred stock, $ 0.0001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding at March 28, 2026 and September 27, 2025 $ — $ — Common stock, $ 0.0001 par value, 100,000,000 shares authorized, 31,646,589 and 31,884,721 shares issued and outstanding at March 28, 2026 and September 27, 2025, respectively 3 3 Additional paid-in capital 197,690 195,466 Retained earnings 128,302 88,193 Accumulated other comprehensive loss ( 28,067 ) ( 28,247 ) Total stockholders' equity $ 297,928 $ 255,415 Total liabilities and stockholders' equity $ 689,364 $ 625,255 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 Six Months Ended (in thousands of dollars except for share data) March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025 Net sales $ 352,635 $ 358,851 $ 685,719 $ 672,723 Cost of goods sold 281,988 287,997 543,843 541,552 Gross profit $ 70,647 $ 70,854 $ 141,876 $ 131,171 Operating expenses Selling, general and administrative expenses 31,529 37,143 65,081 64,418 Operating profit $ 39,118 $ 33,711 $ 76,795 $ 66,753 Interest expense ( 1,545 ) ( 1,813 ) ( 3,111 ) ( 3,728 ) Interest income 1,929 1,258 3,910 2,826 Other (expense) income, net ( 2,922 ) 444 ( 3,133 ) 3,360 Income before income taxes $ 36,580 $ 33,600 $ 74,461 $ 69,211 Income tax expense ( 9,102 ) ( 9,129 ) ( 18,221 ) ( 17,822 ) Equity in net income of non-consolidated affiliates 1,823 1,575 3,817 3,379 Net income $ 29,301 $ 26,046 $ 60,057 $ 54,768 Earnings per share: Basic weighted average shares outstanding 31,629,376 31,917,407 31,703,272 32,072,354 Diluted weighted average shares outstanding 32,430,122 32,885,993 32,558,241 33,152,066 Basic earnings per share $ 0.93 $ 0.82 $ 1.89 $ 1.71 Diluted earnings per share $ 0.90 $ 0.79 $ 1.84 $ 1.65 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 Six Months Ended (in thousands of dollars) March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025 Net income $ 29,301 $ 26,046 $ 60,057 $ 54,768 Other comprehensive income, net of tax: Net change in defined benefit pension plan 90 52 180 105 Total other comprehensive income $ 90 $ 52 $ 180 $ 105 Comprehensive income $ 29,391 $ 26,098 $ 60,237 $ 54,873 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) Six Months Ended (in thousands of dollars) March 28, 2026 March 29, 2025 Cash flows from operating activities Net income $ 60,057 $ 54,768 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 8,045 7,710 Non-cash interest expense 158 167 Share-based compensation expense 4,027 9,940 Equity in net income of non-consolidated affiliates ( 3,817 ) ( 3,379 ) Loss on disposal of fixed assets 51 285 Deferred income tax expense (benefit) 5,390 ( 3,962 ) Amortization of deferred actuarial pension losses 236 139 Changes in assets and liabilities: Accounts receivable 7,710 43,313 Inventories ( 5,295 ) ( 36,034 ) Other assets ( 10,241 ) ( 10,955 ) Accounts payable ( 25,101 ) 9,929 Accrued expenses, pension and other liabilities 43,120 ( 17,741 ) Total adjustments $ 24,283 $ ( 588 ) Total cash provided by operating activities $ 84,340 $ 54,180 Cash flows from investing activities Cash paid for fixed assets $ ( 13,319 ) $ ( 13,616 ) Equity investment in affiliates (Note 11) ( 190 ) ( 500 ) Total cash used in investing activities $ ( 13,509 ) $ ( 14,116 ) Cash flows from financing activities Term loan repayments $ ( 2,500 ) $ ( 2,500 ) Principal payments on finance leases — ( 604 ) Repurchase of common stock in connection with repurchase programs (Note 12) ( 19,948 ) ( 30,053 ) Repurchase of common stock in connection with stock award exercises ( 2,574 ) ( 4,412 ) Cash received from stock option exercises 771 567 Total cash used in financing activities $ ( 24,251 ) $ ( 37,002 ) Change in cash and cash equivalents 46,580 3,062 Cash and cash equivalents at beginning of period 229,313 127,687 Cash and cash equivalents at end of period $ 275,893 $ 130,749 Supplemental disclosures of cash flow information Cash paid or received during the period: Interest paid $ 2,993 $ 4,048 Interest received ( 3,926 ) ( 2,761 ) Income tax paid, net of tax refunds 7,360 30,695 Non-cash investing and financing activities: Changes in accounts payable for capital additions to property, plant and equipment $ 2,873 $ 2,521 Right-of-use assets obtained in exchange for operating lease obligations 3,713 — The accompanying notes are an integral part of these condensed consolidated financial statements. 5 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 Shares Amount Total Stockholders' Equity Balance, December 27, 2025 31,679,557 $ 3 $ 195,532 — $ — $ ( 28,157 ) $ 103,990 — $ — $ 271,368 Restricted stock activity 14,015 — ( 197 ) — — — — — — ( 197 ) Stock option activity 54,687 — 685 — — — — — — 685 Share-based compensation expense — — 1,670 — — — — — — 1,670 Share repurchases (Note 12) ( 101,670 ) — — — — — ( 4,989 ) — — ( 4,989 ) Net income — — — — — — 29,301 — — 29,301 Other comprehensive income, net of tax — — — — — 90 — — — 90 Balance, March 28, 2026 31,646,589 $ 3 $ 197,690 — $ — $ ( 28,067 ) $ 128,302 — $ — $ 297,928 Balance, December 28, 2024 32,111,078 $ 3 $ 187,379 — $ — $ ( 26,363 ) $ 18,686 — $ — $ 179,705 Restricted stock activity 111,432 — ( 2,966 ) — — — — — — ( 2,966 ) Stock option activity 10,845 — 182 — — — — — — 182 Share-based compensation expense — — 7,390 — — — — — — 7,390 Share repurchases (Note 12) ( 559,352 ) — — — — — ( 20,017 ) — — ( 20,017 ) Net income — — — — — — 26,046 — — 26,046 Other comprehensive income, net of tax — — — — — 52 — — — 52 Balance, March 29, 2025 31,674,003 $ 3 $ 191,985 — $ — $ ( 26,311 ) $ 24,715 — $ — $ 190,392 6 Six Months Ended (in thousands of dollars, except for share data) Common Stock Convertible Preferred Stock Treasury Stock Shares Par Value Additional Paid-In-Capital Shares Amount Accumulated Other Comprehensive Loss Retained Earnings Shares Amount Total Stockholders' Equity Balance, September 27, 2025 31,884,721 $ 3 $ 195,466 — $ — $ ( 28,247 ) $ 88,193 — $ — $ 255,415 Restricted stock activity 92,593 — ( 2,574 ) — — — — — — ( 2,574 ) Stock option activity 61,693 — 771 — — — — — — 771 Share-based compensation expense — — 4,027 — — — — — — 4,027 Share repurchases (Note 12) ( 392,418 ) — — — — — ( 19,948 ) — — ( 19,948 ) Net income — — — — — — 60,057 — — 60,057 Other comprehensive income, net of tax — — — — — 180 — — — 180 Balance, March 28, 2026 31,646,589 $ 3 $ 197,690 — $ — $ ( 28,067 ) $ 128,302 — $ — $ 297,928 Balance, September 28, 2024 32,268,022 $ 3 $ 185,977 — $ — $ ( 26,416 ) $ — — $ — $ 159,564 Restricted stock activity 168,852 ( 4,412 ) ( 4,412 ) Stock option activity 39,931 567 567 Share-based compensation expense 9,853 9,853 Share repurchases (Note 12) ( 802,802 ) ( 30,053 ) ( 30,053 ) Net income 54,768 54,768 Other comprehensive income, net of tax 105 105 Balance, March 29, 2025 31,674,003 $ 3 $ 191,985 — $ — $ ( 26,311 ) $ 24,715 — $ — $ 190,392 The accompanying notes are an integral part of these consolidated financial statements. 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 October 3, 2026 ("fiscal 2026") and ended September 27, 2025 ("fiscal 2025") consist or consisted of 53 and 52 weeks, respectively. The second quarters of fiscal 2026 and fiscal 2025 both included 13 weeks. The six month periods in fiscal 2026 and 2025 both included 26 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 27, 2025 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 27, 2025 as set forth in the Company's fiscal 2025 Form 10-K filed with the Securities and Exchange Commission ("SEC") on November 24, 2025. Business Update 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 half of both fiscal 2025 and 2026. Specifically, they continued to result in higher purchasing costs to procure the raw materials inventory needed to produce buses. 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 over the past several years have resulted in the consistent production of buses to fulfill sales orders during these same periods. 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 half of fiscal 2026 by increasing our procurement costs for certain imported inventory. However, the higher inventory purchase costs that we incurred in producing and selling buses during the first half of fiscal 2025 and fiscal 2026 resulting from the above factors, 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. Significant uncertainty still exists concerning the magnitude and duration of the ongoing (i) supply chain constraints and (ii) changes in governmental policies, programs, regulations and/or laws and accordingly, precludes any prediction as to the ultimate severity of the adverse impacts on our business, financial condition, results of operations, and liquidity. 8 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 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 consolidated financial statements included in the Company’s fiscal 2025 Form 10-K, filed with the SEC on November 24, 2025. 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 six months ended March 28, 2026. Recently Issued Accounting Standards ASU 2023-09 On December 14, 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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. Public business entities ("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 statements. The Company plans to provide the updated disclosures required by the ASUs in the periods in which they are effective. Any recently issued accounting standards not identified above do not apply to the Company or the impact is expected to be immaterial. 3. Supplemental Financial Information Inventories The following table presents the components of inventories at the dates indicated: (in thousands of dollars) March 28, 2026 September 27, 2025 Raw materials $ 88,614 $ 81,262 Work in process 38,932 42,838 Finished goods 17,219 15,370 Total inventories $ 144,765 $ 139,470 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 Six Months Ended (in thousands of dollars) March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025 Balance at beginning of period $ 16,800 $ 16,127 $ 17,175 $ 16,179 Add current period accruals 2,346 2,698 4,997 5,236 Current period reductions of accrual ( 2,371 ) ( 2,480 ) ( 5,397 ) ( 5,070 ) Balance at end of period $ 16,775 $ 16,345 $ 16,775 $ 16,345 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 Six Months Ended (in thousands of dollars) March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025 Balance at beginning of period $ 34,525 $ 29,559 $ 33,697 $ 27,962 Add current period deferred income 3,611 3,337 7,389 7,266 Current period recognition of income ( 2,829 ) ( 2,448 ) ( 5,779 ) ( 4,780 ) Balance at end of period $ 35,307 $ 30,448 $ 35,307 $ 30,448 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 $ 6.3 million of the outstanding contract liability during the remainder of fiscal 2026, $ 10.7 million in the fiscal year ending October 2, 2027, and the remaining balance thereafter. Other Current Liabilities The balance in other current liabilities as of March 28, 2026 includes approximately $ 42.8 million of deferred income resulting from an advanced deposit made by a customer for a large order of electric school buses. The Company expects to recognize the vast majority of this amount as revenue during the third and fourth quarters of fiscal 2026 as the underlying buses are produced and delivered. There were no material amounts of deferred income reflected within the other current liabilities balance as of September 27, 2025. 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) March 28, 2026 September 27, 2025 Current portion $ 5,639 $ 4,979 Long-term portion 1,710 2,097 Total accrued self-insurance $ 7,349 $ 7,076 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 $ 4.6 million and $ 5.2 million for the three months ended March 28, 2026 and March 29, 2025, respectively, and $ 9.7 million and $ 10.3 million for the six months ended March 28, 2026 and March 29, 2025, respectively. The related cost of goods sold was $ 4.1 million and $ 4.7 million for the three months ended March 28, 2026 and March 29, 2025, respectively, and $ 8.8 million and $ 9.3 million for the six months ended March 28, 2026 and March 29, 2025, respectively. 10 Pension Expense (Income) Components of net periodic pension benefit expense (income) were as follows for the periods presented: Three Months Ended Six Months Ended (in thousands of dollars) March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025 Interest cost $ 716 $ 1,312 $ 1,432 $ 2,624 Expected return on plan assets ( 604 ) ( 1,819 ) ( 1,208 ) ( 3,638 ) Amortization of prior loss 118 69 236 139 Net periodic pension benefit expense (income) $ 230 $ ( 438 ) $ 460 $ ( 875 ) Amortization of prior loss, recognized in other comprehensive income ( 118 ) ( 69 ) ( 236 ) ( 139 ) Total recognized in net periodic pension benefit expense (income) and other comprehensive income $ 112 $ ( 507 ) $ 224 $ ( 1,014 ) 4. Debt Term loan borrowings consisted of the following at the dates indicated: (in thousands of dollars) March 28, 2026 September 27, 2025 Term loan borrowings, net of deferred financing costs of $ 768 and $ 926 , respectively $ 87,982 $ 90,324 Less: current portion of long-term debt 5,000 5,000 Long-term debt, net of current portion $ 82,982 $ 85,324 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 that reset frequently, 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 March 28, 2026 and September 27, 2025, $ 88.8 million and $ 91.3 million, respectively, were outstanding on the term loans. At March 28, 2026 and September 27, 2025, the stated interest rates on the term loans were 5.5 % and 6.1 %, respectively. At March 28, 2026 and September 27, 2025, the weighted-average annual effective interest rates for the term loans were 6.0 % and 6.6 %, respectively, which include amortization of the deferred debt issuance costs. At March 28, 2026, $ 8.3 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 $ 141.7 million on the revolving line of credit. Interest expense on all indebtedness was $ 1.5 million and $ 1.8 million for the three months ended March 28, 2026 and March 29, 2025, respectively, and $ 3.1 million and $ 3.7 million for the six months ended March 28, 2026 and March 29, 2025, respectively. The schedule of remaining principal payments through maturity for the term loans is as follows: (in thousands of dollars) Fiscal Year Principal Payments 2026 $ 2,500 2027 5,000 2028 5,000 2029 76,250 Total remaining principal payments $ 88,750 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 March 28, 2026 was 24.9 % 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. The effective tax rate for the three months ended March 29, 2025 was 27.2 % 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. Six Months The effective tax rate for the six months ended March 28, 2026 was 24.5 % 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 period. The effective tax rate for the six months ended March 29, 2025 was 25.8 % 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 period. 6. Guarantees, Commitments and Contingencies Litigation At March 28, 2026, 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, both of which are reportable segments: (i) the Bus segment, which includes the manufacture 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. Our chief operating decision maker ("CODM") is our President and Chief Executive Officer. The CODM primarily uses net sales and gross profit to evaluate segment performance, allocate resources, and make operating decisions as these metrics align with the 12 Company's mission to deliver profitable growth to our stockholders over time. Specifically, net sales is utilized to evaluate the effectiveness of the Company's sales functions in obtaining a fair price for the significant value that our products offer and ensuring that the sales prices charged for our products appropriately consider changes in the costs we incur to procure inventory for the products we offer. Gross profit is utilized to evaluate the effectiveness of the Company's purchasing functions in controlling the costs we incur in procuring inventory and the effectiveness and efficiency of the Company's manufacturing operations in converting inventory into finished products. The CODM does not utilize segment asset information to evaluate performance and make resource allocation decisions, primarily because the Parts segment operates as a distributor and accordingly, does not have a significant amount of assets. Therefore, disclosures of assets for the segments are not provided. The accounting policies of the reportable segments are the same as those applied in preparation of the condensed consolidated financial statements included herein. Significant reportable segment information provided to and used by the CODM in assessing performance and allocating resources is as follows: Three Months Ended Six Months Ended (in thousands of dollars) March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025 Bus segment Net sales (1) $ 325,087 $ 332,712 $ 632,749 $ 620,859 Cost of goods sold 267,832 275,078 517,235 516,053 Segment gross profit $ 57,255 $ 57,634 $ 115,514 $ 104,806 Parts segment Net sales (1) $ 27,548 $ 26,139 $ 52,970 $ 51,864 Cost of goods sold 14,156 12,919 26,608 25,499 Segment gross profit $ 13,392 $ 13,220 $ 26,362 $ 26,365 (1) Parts segment revenue includes $ 1.4 million and $ 1.9 million for the three months ended March 28, 2026 and March 29, 2025, respectively, and $ 2.6 million and $ 3.8 million for the six months ended March 28, 2026 and March 29, 2025, respectively, related to inter-segment sales of parts that was eliminated by the Bus segment upon consolidation. The following table is a reconciliation of segment gross profit to consolidated income before income taxes for the periods presented: Three Months Ended Six Months Ended (in thousands of dollars) March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025 Bus segment gross profit $ 57,255 $ 57,634 $ 115,514 $ 104,806 Parts segment gross profit 13,392 13,220 26,362 26,365 Segment gross profit $ 70,647 $ 70,854 $ 141,876 $ 131,171 Adjustments: Selling, general and administrative expenses ( 31,529 ) ( 37,143 ) ( 65,081 ) ( 64,418 ) Interest expense ( 1,545 ) ( 1,813 ) ( 3,111 ) ( 3,728 ) Interest income 1,929 1,258 3,910 2,826 Other (expense) income, net ( 2,922 ) 444 ( 3,133 ) 3,360 Income before income taxes $ 36,580 $ 33,600 $ 74,461 $ 69,211 Sales are attributable to geographic areas based on customer location and were as follows for the periods presented: Three Months Ended Six Months Ended (in thousands of dollars) March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025 U.S. $ 316,779 $ 299,274 $ 595,450 $ 587,231 Canada 35,809 59,471 90,135 84,074 Rest of world 47 106 134 1,418 Total net sales $ 352,635 $ 358,851 $ 685,719 $ 672,723 13 8. Revenue The following table disaggregates revenue by product category for the periods presented: Three Months Ended Six Months Ended (in thousands of dollars) March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025 Diesel buses $ 165,220 $ 117,611 $ 310,073 $ 241,983 Alternative power buses (1) 149,832 199,462 301,209 348,384 Other (2) 10,764 16,285 22,853 31,772 Parts 26,819 25,493 51,584 50,584 Net sales $ 352,635 $ 358,851 $ 685,719 $ 672,723 (1) Includes buses sold with any power source other than diesel (e.g., gasoline, propane 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 Six Months Ended (in thousands except for share data) March 28, 2026 March 29, 2025 March 28, 2026 March 29, 2025 Numerator: Net income $ 29,301 $ 26,046 $ 60,057 $ 54,768 Denominator: Weighted-average common shares outstanding 31,629,376 31,917,407 31,703,272 32,072,354 Weighted-average dilutive securities, restricted stock 148,195 432,673 207,296 475,526 Weighted-average dilutive securities, stock options 118,933 216,937 118,243 239,056 Weighted-average dilutive securities, warrants 533,618 318,976 529,430 365,130 Weighted-average shares and dilutive potential common shares (1) 32,430,122 32,885,993 32,558,241 33,152,066 Earnings per share: Basic earnings per share $ 0.93 $ 0.82 $ 1.89 $ 1.71 Diluted earnings per share $ 0.90 $ 0.79 $ 1.84 $ 1.65 (1) Potentially dilutive securities representing 0.1 million shares of common stock were excluded from the computation of diluted earnings per share for the three months ended March 29, 2025 as their effect would have been antidilutive. There were no potentially dilutive securities excluded from the computation of diluted earnings per share for the three and six month periods ended March 28, 2026 and for the six month period ended March 29, 2025 because their effect was 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 Six Months Ended (in thousands of dollars) Defined Benefit Pension Plan Total AOCL Defined Benefit Pension Plan Total AOCL March 28, 2026 Beginning Balance $ ( 28,157 ) $ ( 28,157 ) $ ( 28,247 ) $ ( 28,247 ) Amounts reclassified and included in earnings 118 118 236 236 Total before taxes 118 118 236 236 Income taxes ( 28 ) ( 28 ) ( 56 ) ( 56 ) Ending Balance March 28, 2026 $ ( 28,067 ) $ ( 28,067 ) $ ( 28,067 ) $ ( 28,067 ) March 29, 2025 Beginning Balance $ ( 26,363 ) $ ( 26,363 ) $ ( 26,416 ) $ ( 26,416 ) Amounts reclassified and included in earnings 69 69 139 139 Total before taxes 69 69 139 139 Income taxes ( 17 ) ( 17 ) ( 34 ) ( 34 ) Ending Balance March 29, 2025 $ ( 26,311 ) $ ( 26,311 ) $ ( 26,311 ) $ ( 26,311 ) 11. 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 school buses in Drummondville, Quebec. Additionally, since September 2025, Micro Bird has been producing small and mid-sized commercial buses and a small number of Type A school buses at a newly opened facility in Plattsburgh, New York. In recognizing the Company’s 50 % portion of Micro Bird's net income or loss, the Company recorded equity in net income of non-consolidated affiliates on the Condensed Consolidated Statements of Operations totaling approximately $ 1.8 million and $ 2.0 million for the three months ended March 28, 2026 and March 29, 2025, respectively, and $ 4.0 million and $ 4.1 million for the six months ended March 28, 2026 and March 29, 2025, respectively. Micro Bird paid no dividends in the three or six month periods ended March 28, 2026 or March 29, 2025. At March 28, 2026 and September 27, 2025, the carrying value of the Company's investment in Micro Bird included within equity investment in affiliates on the Condensed Consolidated Balance Sheets was $ 39.2 million and $ 35.2 million, respectively. On April 1, 2026, prior to filing the second quarter fiscal 2026 Form 10-Q with the SEC, the Company completed its acquisition of the remaining 50 % of the outstanding common stock of Micro Bird. Since Micro Bird's fiscal periods align with calendar months, its financial results for the three and six month periods ended March 31, 2026 were utilized to record the equity in net income of non-consolidated affiliates reflected on the Condensed Consolidated Statement of Operations for the three and six month periods ended March 28, 2026 as discussed above. However, this acquisition will result in the Company ceasing to account for Micro Bird utilizing the equity method of accounting effective March 28, 2026 and fully consolidating Micro Bird at the beginning of the third quarter of fiscal 2026 and subsequently. See Note 13, Subsequent Events , for further discussion. 15 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. In the fourth quarter of fiscal 2025, the Company performed an impairment assessment of its equity investment in CBS. Based upon the historical losses generated by CBS since inception, when coupled with CBS' projections of continued losses in future periods, management determined that the Company would not recover the carrying amount of its investment in the near term. Accordingly, a conclusion was reached that an impairment that was other-than-temporary in nature existed. During the fourth quarter of fiscal 2025, the Company recorded a non-cash impairment charge of $ 7.4 million that reduced the carrying value of the Company's investment in CBS to $ 0 at September 27, 2025. Through the course of its operations, CBS was unable to generate business on a timeline that was likely to generate profitable returns for the entity within the expectations of the Company and the other joint venture partner, Generate Capital, PBC (“Generate Capital”). In October 2025, the CBS Board of Managers met and voted to recommend to the joint venture partners to terminate the business, wind down operations, and dissolve the legal entity. On October 22, 2025, the Company's Board of Directors approved the termination of CBS and the joint venture agreement governing its operations. Upon obtaining similar approval from Generate Capital, the CBS Board of Managers authorized winding down and dissolution of the business on October 24, 2025, which was largely completed by the end of 2025. The Company made no cash contributions to CBS during the three months ended March 28, 2026 and March 29, 2025 but made $ 0.2 million and $ 0.5 million of cash contributions to CBS during the six months ended March 28, 2026 and March 29, 2025, respectively, both of which increased the balance of equity investment in affiliates on the Condensed Consolidated Balance Sheets. The cash contributions during the six months ended March 28, 2026 were made to allow CBS to pay its obligations in connection with winding down its operations, terminating its business and dissolving the entity. In recognizing the Company’s 50 % portion of CBS' net income or loss, the Company recorded less than $( 0.1 ) million and $( 0.4 ) million (both losses) in equity in net income of non-consolidated affiliates on the Condensed Consolidated Statements of Operations for the three months ended March 28, 2026 and March 29, 2025, respectively, and $( 0.2 ) million and $( 0.7 ) million (both losses) for the six months ended March 28, 2026 and March 29, 2025, respectively. CBS paid no dividends in any period. At both March 28, 2026 and September 27, 2025, the carrying value of the Company's investment in CBS included within equity investment in affiliates on the Condensed Consolidated Balance Sheets was $ 0 . 12. 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. On August 5, 2025, the Board of Directors of the Company authorized and approved a second share repurchase program for up to $ 100 million of outstanding shares of the Company’s common stock, expiring January 1, 2028. Under both share repurchase programs, 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. Pursuant to the share repurchase plans, the Company repurchased 101,670 shares of its common stock for $ 5.0 million during the three months ended March 28, 2026 and 392,418 shares of its common stock for $ 19.9 million during the six months ended March 28, 2026. During the same periods in fiscal 2025, the Company repurchased 559,352 and 802,802 shares of its common stock, respectively, for $ 20.0 million and $ 30.1 million, respectively. The Company constructively retired these shares immediately after repurchase, with the $ 5.0 million and $ 20.0 million amounts paid in excess of the $ 0.0001 par value of each share during the three months ended March 28, 2026 and March 29, 2025, respectively, and the $ 19.9 million and $ 30.1 million amounts paid in excess of the $ 0.0001 par value of each share during the six months ended March 28, 2026 and March 29, 2025, respectively, recorded as a reduction in retained earnings. The shares repurchased during the first quarter of fiscal 2026 resulted in the Company utilizing all $ 60 million that was 16 authorized under the initial share repurchase program prior to its expiration date. The total remaining authorization for future common stock repurchases under the Company's $ 100 million share repurchase program was $ 90.6 million as of March 28, 2026. 13. Subsequent Events Defined Benefit Pension Plan Settlement and Termination During the latter part of fiscal 2025, the Company initiated actions to terminate its Defined Benefit Pension Plan (the "Plan"). During April 2026, the pension benefits earned by certain Plan participants were settled via lump-sum cash payments totaling $ 13.0 million, representing approximately 11.8 % of the $ 109.6 million total projected benefit obligation as of September 27, 2025, using Plan assets. Also during April 2026, the Company received initial bids to purchase a group annuity contract from a significant number of insurance companies. Management is currently evaluating such bids and expects to finalize this process by executing an agreement with the selected insurance company in May 2026. The pension benefits earned by those Plan participants remaining after the lump-sum cash payments described above are expected to be settled prior to the end of the third quarter of fiscal 2026 via the transfer of such obligations to either the (i) selected insurance company, via the purchase of a group annuity contract, or (ii) Pension Benefit Guaranty Corporation ("PBGC") via the transfer of cash, both using Plan assets. Subsequent to the lump-sum cash payments, purchase of a group annuity contract and transfer of cash to the PBGC, as applicable, the Company is, or will be, relieved of the primary responsibility for paying the benefit obligations earned by Plan participants in future periods, which constitutes a plan settlement. The provisions of ASC 715, Postretirement Benefits , indicate that the settlement of all, or more than a minor portion, of a pension plan benefit obligation represents an event that requires the recognition in income of all, or part, of the net gain or loss deferred in accumulated other comprehensive income or loss. Since the Company has settled, or will settle, all of the Plan's benefit obligations during the third quarter of fiscal 2026, the entire after-tax balance recorded in accumulated other comprehensive loss within stockholders' equity on the Condensed Consolidated Balance Sheets, which totaled $ 28.1 million as of March 28, 2026, will be recognized as a loss in the Condensed Consolidated Statements of Operations during the third quarter of fiscal 2026, as will the corresponding deferred tax asset, which totaled $ 4.8 million as of March 28, 2026. However, both of these amounts are subject to change during the third quarter of fiscal 2026 as normal pension accounting entries are recorded through the date that the Plan is completely terminated and as the provisions of ASC 715 require that pension plan assets and obligations be remeasured immediately prior to a plan settlement. Micro Bird Acquisition On April 1, 2026, the Company completed its acquisition of the remaining 50 % of the outstanding common stock of Micro Bird pursuant to the terms of a Purchase Agreement dated February 15, 2026 (the “Purchase Agreement”) with the AG 2014 Trust (“AG Trust”), the SG One 2014 Trust (“SG Trust”), and the DG One 2014 Trust (“DG Trust” and collectively with AG Trust and SG Trust, the “Trusts”), Groupe Autobus Girardin Ltée, a corporation existing under the federal laws of Canada (“GAG”), and Girardin Minibus JV 2 Inc., a corporation existing under the laws of the Province of Québec (the “MB US Seller” and together with the Trusts and GAG, the “Sellers” and each, a “Seller”). Specifically, the Company acquired 100 % of the issued and outstanding equity securities of Girardin Minibus JV 2 USA Inc., a Delaware corporation (“MB US Target”) and, through its newly formed Canadian subsidiary, MB Exchangeco Inc. (“MB ExchangeCo”), 100 % of the issued and outstanding equity securities of Girardin Minibus JV Inc., a corporation existing under the laws of the Province of Québec (“MB Canada Target” and together with MB US Target, the “Micro Bird Targets” and each, a “Target”) collectively in exchange for an aggregate purchase price of $ 201.8 million (the “Purchase Price”) that was established at the time of signing the Purchase Agreement and was modified only for changes in working capital and net debt amounts between February 15 and April 1, 2026. Under the terms of the Purchase Agreement, the Purchase Price was paid as follows: (i) approximately 30 % was paid in cash in the amount of $ 63.0 million, after closing adjustments, and (ii) approximately 70 % was valued via reference to 2,702,180 shares of Company common stock at a share price of $ 51.35 for a total value of $ 138.8 million (the “Stock Consideration”) and paid through the issuance of a combination of (i) 2,702,180 Class A non-voting exchangeable common shares in the capital of MB ExchangeCo (the “Exchangeable Shares”), which are exchangeable on a one -to-one basis into shares of Company common stock, and (ii) one share of newly-created Company preferred stock with voting rights equivalent to the number of Company common shares that the outstanding Exchangeable Shares are exchangeable into at any time (the “Special Voting Share”). The Exchangeable Shares are not transferable without Company consent. In addition, the Exchangeable Shares and any shares of Company common stock issued upon the exchange of the Exchangeable Shares will be subject to a contractual lock-up as follows: no transfers of the shares may occur for a period of six months, or until October 1, 2026. Thereafter, (i) 17.9 % of the shares will be released from lock-up on October 1, 2026, (ii) an additional 17.9 % of the shares will be released from lock-up on April 1, 2027, (iii) an additional 17.9 % of the shares will be released from lock-up on October 1, 2027, (iv) an additional 27.8 % of the shares will be released from lock-up on April 1, 2028, and (v) the remaining 18.5 % of the shares will be released from lock-up on April 1, 2029. 17 The issuance of the Exchangeable Shares was not registered under the Securities Act of 1933. The Company has agreed to file with the SEC a registration statement covering the resale of the Company common stock issued upon the exchange of the Exchangeable Shares, use commercially reasonable efforts to cause the registration statement to become effective prior to the expiration of the contractual restrictions described above, and to generally cause the registration statement to remain effective while the Exchangeable Shares remain outstanding. The Exchangeable Shares issued by MB ExchangeCo have no rights with respect to MB ExchangeCo, other than the right to exchange into shares of Company common stock. This right requires MB ExchangeCo to redeem Exchangeable Shares upon the request of the holder for a redemption price equal to one share of Company common stock for each Exchangeable Share redeemed, plus any unpaid dividends. The terms of the Purchase Agreement also required the Company to repay all of Micro Bird's outstanding bank debt obligations, including interest accrued on outstanding principal balances, existing on the date of closing, which totaled $ 129.6 million. The acquisition of the remaining 50 % of the outstanding common stock of Micro Bird will result in the Company controlling Micro Bird effective April 1, 2026. Accordingly, the acquisition will be recorded as a business combination in accordance with the provisions of ASC 805, Business Combinations , which will result in the Company ceasing to account for Micro Bird utilizing the equity method of accounting at the end of the second quarter of fiscal 2026 and fully consolidating Micro Bird at the beginning of the third quarter of fiscal 2026 and subsequently. During the three and six months ended March 28, 2026, the Company incurred approximately $ 2.7 million of pretax costs relating to this transaction, which are recorded in Other (expense) income, net on the Condensed Consolidated Statements of Operations as they are not indicative of our normal operating activities. No similar costs were incurred in the corresponding periods of fiscal 2025.