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) June 27, 2026 September 27, 2025 Assets Current assets Cash and cash equivalents $ 116,824 $ 229,313 Accounts receivable, net 53,498 20,650 Inventories 302,468 139,470 Other current assets 40,920 22,195 Total current assets $ 513,710 $ 411,628 Property, plant and equipment, net $ 165,118 $ 108,541 Goodwill 264,102 18,825 Intangible assets, net 175,826 41,685 Equity investment in affiliates 27 35,197 Deferred tax assets — 2,697 Finance lease right-of-use assets 28,664 — Pension (Note 14) 17,726 4,889 Other assets 1,347 1,793 Total assets $ 1,166,520 $ 625,255 Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 174,964 $ 151,479 Warranty 10,924 7,494 Accrued expenses 66,385 55,164 Deferred warranty income 12,633 11,329 Finance lease obligations 976 — Other current liabilities 42,464 6,333 Current portion of long-term debt 5,000 5,000 Total current liabilities $ 313,346 $ 236,799 Long-term liabilities Revolving credit facility $ — $ — Long-term debt 81,810 85,324 Warranty 17,079 9,681 Deferred warranty income 24,262 22,368 Deferred tax liabilities 32,926 5,439 Finance lease obligations 27,965 — Other liabilities 14,240 10,229 Total long-term liabilities $ 198,282 $ 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 June 27, 2026 and September 27, 2025 $ — $ — Voting preferred stock, no par value, 1 and no shares authorized, issued and outstanding at June 27, 2026 and September 27, 2025, respectively (Note 12) — — Common stock, $ 0.0001 par value, 100,000,000 shares authorized, 31,676,039 and 31,884,721 shares issued and outstanding at June 27, 2026 and September 27, 2025, respectively 3 3 Exchangeable common stock, no par value, 2,702,180 and no shares authorized, issued and outstanding at June 27, 2026 and September 27, 2025, respectively (Note 12) — — Additional paid-in capital 342,115 195,466 Retained earnings 313,557 88,193 Accumulated other comprehensive loss (Note 10) ( 783 ) ( 28,247 ) Total stockholders' equity $ 654,892 $ 255,415 Total liabilities and stockholders' equity $ 1,166,520 $ 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 Nine Months Ended (in thousands of dollars except for share data) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Net sales $ 517,160 $ 398,011 $ 1,202,879 $ 1,070,734 Cost of goods sold 413,786 312,083 957,629 853,635 Gross profit $ 103,374 $ 85,928 $ 245,250 $ 217,099 Operating expenses Selling, general and administrative expenses 40,706 35,859 105,787 100,277 Operating profit $ 62,668 $ 50,069 $ 139,463 $ 116,822 Interest expense ( 1,964 ) ( 1,738 ) ( 5,075 ) ( 5,466 ) Interest income 627 1,483 4,537 4,309 Other income (expense), net (Notes 13 and 14) 135,690 ( 580 ) 132,557 2,780 Income before income taxes $ 197,021 $ 49,234 $ 271,482 $ 118,445 Income tax expense ( 10,173 ) ( 12,375 ) ( 28,394 ) ( 30,197 ) Equity in net (loss) income of non-consolidated affiliates ( 1,593 ) ( 404 ) 2,224 2,975 Net income $ 185,255 $ 36,455 $ 245,312 $ 91,223 Earnings per share: Basic weighted average shares outstanding 34,237,303 31,556,312 32,547,949 31,899,623 Diluted weighted average shares outstanding 35,150,916 32,581,820 33,464,047 33,023,743 Basic earnings per share $ 5.41 $ 1.16 $ 7.54 $ 2.86 Diluted earnings per share $ 5.27 $ 1.12 $ 7.33 $ 2.76 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 Nine Months Ended (in thousands of dollars) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Net income $ 185,255 $ 36,455 $ 245,312 $ 91,223 Other comprehensive income, net of tax: Net change in defined benefit pension plan 27,909 53 28,089 158 Net foreign currency translation adjustment ( 625 ) — ( 625 ) — Total other comprehensive income $ 27,284 $ 53 $ 27,464 $ 158 Comprehensive income $ 212,539 $ 36,508 $ 272,776 $ 91,381 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) Nine Months Ended (in thousands of dollars) June 27, 2026 June 28, 2025 Cash flows from operating activities Net income $ 245,312 $ 91,223 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 16,791 11,671 Non-cash interest expense 236 249 Share-based compensation expense 5,564 12,910 Equity in net income of non-consolidated affiliates ( 2,224 ) ( 2,975 ) Loss on disposal of fixed assets 52 316 Deferred income tax expense (benefit) 95 ( 5,442 ) Amortization of deferred actuarial pension losses 315 209 Pension plan settlement loss (Note 14) 19,562 — Gain from acquisition of joint venture (Note 13) ( 160,522 ) — Changes in assets and liabilities: Accounts receivable ( 32,848 ) 37,991 Inventories ( 17,894 ) ( 23,244 ) Other assets ( 3,097 ) ( 8,709 ) Accounts payable 7,663 7,305 Accrued expenses, pension and other liabilities 36,372 ( 10,408 ) Total adjustments $ ( 129,935 ) $ 19,873 Total cash provided by operating activities $ 115,377 $ 111,096 Cash flows from investing activities Cash paid for fixed assets $ ( 22,695 ) $ ( 18,215 ) Equity investment in affiliates (Note 11) ( 190 ) ( 850 ) Business acquisition, net of cash acquired (Note 13) ( 49,641 ) — Total cash used in investing activities $ ( 72,526 ) $ ( 19,065 ) Cash flows from financing activities Term loan repayments $ ( 3,750 ) $ ( 3,750 ) Repayment of Micro Bird debt (Note 4) ( 129,618 ) — Principal payments on finance leases ( 231 ) ( 981 ) Repurchase of common stock in connection with repurchase programs (Note 12) ( 19,948 ) ( 38,993 ) Repurchase of common stock in connection with stock award exercises ( 2,574 ) ( 4,412 ) Cash received from stock option exercises 781 1,484 Total cash used in financing activities $ ( 155,340 ) $ ( 46,652 ) Change in cash and cash equivalents ( 112,489 ) 45,379 Cash and cash equivalents at beginning of period 229,313 127,687 Cash and cash equivalents at end of period $ 116,824 $ 173,066 5 Nine Months Ended (in thousands of dollars) June 27, 2026 June 28, 2025 Supplemental disclosures of cash flow information Cash paid or received during the period: Interest paid $ 4,989 $ 5,710 Interest received ( 5,018 ) ( 4,132 ) Income tax paid, net of tax refunds 16,728 43,594 Non-cash investing and financing activities: Changes in accounts payable for capital additions to property, plant and equipment $ 2,402 $ 1,573 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. 6 BLUE BIRD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) Three Months Ended (in thousands of dollars, except for share data) Common Stock Exchangeable Common Stock Voting Preferred Stock Convertible Preferred Stock Shares Par Value Shares Amount Shares Amount Shares Amount Additional Paid-In-Capital Accumulated Other Comprehensive Loss Retained Earnings Total Stockholders' Equity Balance, March 28, 2026 31,646,589 $ 3 — $ — — $ — — $ — $ 197,690 $ ( 28,067 ) $ 128,302 $ 297,928 Acquisitions (Notes 12 and 13) — — 2,702,180 — 1 — — — 142,878 — — 142,878 Restricted stock activity 28,693 — — — — — — — — — — — Stock option activity 757 — — — — — — — 9 — — 9 Share-based compensation expense — — — — — — — — 1,538 — — 1,538 Net income — — — — — — — — — — 185,255 185,255 Other comprehensive income, net of tax — — — — — — — — — 27,284 — 27,284 Balance, June 27, 2026 31,676,039 $ 3 2,702,180 $ — 1 $ — — $ — $ 342,115 $ ( 783 ) $ 313,557 $ 654,892 Balance, March 29, 2025 31,674,003 $ 3 — $ — — $ — — $ — $ 191,985 $ ( 26,311 ) $ 24,715 $ 190,392 Stock option activity 51,497 — — — — — — — 916 — — 916 Share-based compensation expense — — — — — — — — 2,971 — — 2,971 Share repurchases (Note 12) ( 245,249 ) — — — — — — — — — ( 8,940 ) ( 8,940 ) Net income — — — — — — — — — — 36,455 36,455 Other comprehensive income, net of tax — — — — — — — — — 53 — 53 Balance, June 28, 2025 31,480,251 $ 3 — $ — — $ — — $ — $ 195,872 $ ( 26,258 ) $ 52,230 $ 221,847 7 Nine Months Ended (in thousands of dollars, except for share data) Common Stock Exchangeable Stock Voting Preferred Stock Convertible Preferred Stock Shares Par Value Shares Amount Shares Amount Shares Amount Additional Paid-In-Capital Accumulated Other Comprehensive Loss Retained Earnings Total Stockholders' Equity Balance, September 27, 2025 31,884,721 $ 3 — $ — — $ — — $ — $ 195,466 $ ( 28,247 ) $ 88,193 $ 255,415 Acquisitions (Notes 12 and 13) — — 2,702,180 — 1 — — — 142,878 — — 142,878 Restricted stock activity 121,286 — — — — — — — ( 2,574 ) — — ( 2,574 ) Stock option activity 62,450 — — — — — — — 781 — — 781 Share-based compensation expense — — — — — — — — 5,564 — — 5,564 Share repurchases (Note 12) ( 392,418 ) — — — — — — — — — ( 19,948 ) ( 19,948 ) Net income — — — — — — — — — — 245,312 245,312 Other comprehensive income, net of tax — — — — — — — — — 27,464 — 27,464 Balance, June 27, 2026 31,676,039 $ 3 2,702,180 $ — 1 $ — — $ — $ 342,115 $ ( 783 ) $ 313,557 $ 654,892 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 91,428 — — — — — — — 1,484 — — 1,484 Share-based compensation expense — — — — — — — — 12,823 — — 12,823 Share repurchases (Note 12) ( 1,048,051 ) — — — — — — — — — ( 38,993 ) ( 38,993 ) Net income — — — — — — — — — — 91,223 91,223 Other comprehensive income, net of tax — — — — — — — — — 158 — 158 Balance, June 28, 2025 31,480,251 $ 3 — $ — — $ — — $ — $ 195,872 $ ( 26,258 ) $ 52,230 $ 221,847 The accompanying notes are an integral part of these consolidated financial statements. 8 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. On April 1, 2026, BBBC completed its acquisition of the remaining 50 % of the outstanding voting common stock of Micro Bird Holdings, Inc. ("Micro Bird"), which was previously an unconsolidated Canadian joint venture. Micro Bird produces Type A school buses in Drummondville, Quebec, and since September 2025, 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. The acquisition of the remaining 50 % of the outstanding voting common stock of Micro Bird resulted in it becoming a wholly-owned subsidiary at the beginning of the third quarter of fiscal 2026 and subsequently. See Notes 11, Equity Investment in Affiliates , and 13, Micro Bird Acquisition , for further discussion. The majority of BBBC and Micro Bird 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 third quarters of fiscal 2026 and fiscal 2025 both included 13 weeks. The nine month periods in fiscal 2026 and 2025 both included 39 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 various global military conflicts continued to impact our business and operations during the firs t three quarters 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 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 9 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 firs t three quarters 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 three quarters 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. 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 nine months ended June 27, 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. 10 3. Supplemental Financial Information Inventories The following table presents the components of inventories at the dates indicated: (in thousands of dollars) June 27, 2026 September 27, 2025 Raw materials $ 203,406 $ 81,262 Work in process 55,252 42,838 Finished goods 43,810 15,370 Total inventories $ 302,468 $ 139,470 Product Warranties The following table reflects activity in accrued warranty cost (current and long-term portions combined) for the periods presented: Three Months Ended Nine Months Ended (in thousands of dollars) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Balance at beginning of period $ 16,775 $ 16,345 $ 17,175 $ 16,179 Additions from Micro Bird acquisition (Note 13) 11,168 — 11,168 — Current period accruals 2,954 2,856 7,951 8,092 Current period reductions of accrual ( 2,894 ) ( 2,627 ) ( 8,291 ) ( 7,697 ) Balance at end of period $ 28,003 $ 16,574 $ 28,003 $ 16,574 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 Nine Months Ended (in thousands of dollars) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Balance at beginning of period $ 35,307 $ 30,448 $ 33,697 $ 27,962 Additions from Micro Bird acquisition (Note 13) 510 — 510 — Current period deferred income 4,011 3,861 11,400 11,127 Current period recognition of income ( 2,933 ) ( 2,520 ) ( 8,712 ) ( 7,300 ) Balance at end of period $ 36,895 $ 31,789 $ 36,895 $ 31,789 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 $ 3.4 million of the outstanding contract liability during the remainder of fiscal 2026, $ 11.7 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 June 27, 2026 includes approximately $ 29.4 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 fourth quarter 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: 11 (in thousands of dollars) June 27, 2026 September 27, 2025 Current portion $ 5,121 $ 4,979 Long-term portion 1,693 2,097 Total accrued self-insurance $ 6,814 $ 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 $ 7.5 million and $ 6.9 million for the three months ended June 27, 2026 and June 28, 2025, respectively, and $ 17.2 million for each of the nine months ended June 27, 2026 and June 28, 2025. The related cost of goods sold was $ 6.9 million and $ 6.1 million for the three months ended June 27, 2026 and June 28, 2025, respectively, and $ 15.7 million and $ 15.4 million for the nine months ended June 27, 2026 and June 28, 2025, respectively. Pension Expense (Income) Components of net periodic pension benefit expense (income) were as follows for the periods presented: Three Months Ended Nine Months Ended (in thousands of dollars) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Interest cost $ 488 $ 1,312 $ 1,920 $ 3,936 Expected return on plan assets ( 455 ) ( 1,819 ) ( 1,663 ) ( 5,457 ) Amortization of prior loss 79 70 315 209 Net periodic pension benefit expense (income) $ 112 $ ( 437 ) $ 572 $ ( 1,312 ) Amortization of prior loss, recognized in other comprehensive income ( 79 ) ( 70 ) ( 315 ) ( 209 ) Total recognized in net periodic pension benefit expense (income) and other comprehensive income $ 33 $ ( 507 ) $ 257 $ ( 1,521 ) 4. Debt Term loan borrowings consisted of the following at the dates indicated: (in thousands of dollars) June 27, 2026 September 27, 2025 Term loan borrowings, net of deferred financing costs of $ 690 and $ 926 , respectively $ 86,810 $ 90,324 Less: current portion of long-term debt 5,000 5,000 Long-term debt, net of current portion $ 81,810 $ 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 June 27, 2026 and September 27, 2025, $ 87.5 million and $ 91.3 million, respectively, were outstanding on the term loans. At June 27, 2026 and September 27, 2025, the stated interest rates on the term loans were 5.6 % and 6.1 %, respectively. At June 27, 2026 and September 27, 2025, the weighted-average annual effective interest rates for the term loans were 5.9 % and 6.6 %, respectively, which include amortization of the deferred debt issuance costs. At June 27, 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. In connection with the acquisition of Micro Bird (see Note 13, Micro Bird Acquisition , for further discussion), the Company repaid all of Micro Bird's outstanding bank debt obligations, including interest accrued on outstanding principal balances, existing on the closing 12 date, which totaled $ 129.6 million and was funded entirely from cash existing on the closing date. This amount is reflected as a financing cash outflow on the Condensed Consolidated Statement of Cash Flows for the nine months ended June 27, 2026. Although Micro Bird maintained an existing revolving credit facility with its primary bank subsequent to the acquisition having a maximum borrowing capacity of $ 50.0 million, no amounts were borrowed or repaid during the the three months ended June 27, 2026 following the repayment of the balance existing on the acquisition closing date as discussed previously above. Interest expense on all indebtedness was $ 2.0 million and $ 1.7 million for the three months ended June 27, 2026 and June 28, 2025, respectively, and $ 5.1 million and $ 5.5 million for the nine months ended June 27, 2026 and June 28, 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 $ 1,250 2027 5,000 2028 5,000 2029 76,250 Total remaining principal payments $ 87,500 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 in which 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 June 27, 2026 was 5.2 % due to the impact of the $ 160.5 million non-taxable gain from the acquisition of Micro Bird that was recognized during the third quarter of fiscal 2026 (see Note 13, Micro Bird Acquisition , for further discussion). When excluding this non-taxable gain, the effective tax rate for the three months ended June 27, 2026 was 27.9 % 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 as well as the impact from foreign taxes relating to Micro Bird's Canadian pretax earnings during the three months ended June 27, 2026, 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 28, 2025 was 25.1 % 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. Nine Months The effective tax rate for the nine months ended June 27, 2026 was 10.5 % due to the impact of the $ 160.5 million non-taxable gain from the acquisition of Micro Bird that was recognized during the third quarter of fiscal 2026. When excluding this non-taxable gain, the effective tax rate for the nine months ended June 27, 2026 was 25.6 % 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 as well as the impact from foreign taxes relating to Micro Bird's Canadian pretax earnings during the nine months ended June 27, 2026, 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 nine months ended June 28, 2025 was 25.5 % 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. 13 6. Guarantees, Commitments and Contingencies Litigation At June 27, 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. Micro Bird's financial results are included within the Bus segment effective April 1, 2026 (see Note 13, Micro Bird Acquisition , for further discussion). 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 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 Nine Months Ended (in thousands of dollars) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Bus segment Net sales (1) $ 491,696 $ 372,240 $ 1,124,445 $ 993,099 Cost of goods sold 400,623 299,029 917,858 815,082 Segment gross profit $ 91,073 $ 73,211 $ 206,587 $ 178,017 Parts segment Net sales (1) $ 25,464 $ 25,771 $ 78,434 $ 77,635 Cost of goods sold 13,163 13,054 39,771 38,553 Segment gross profit $ 12,301 $ 12,717 $ 38,663 $ 39,082 (1) Parts segment revenue includes $ 1.6 million for each of the three months ended June 27, 2026 and June 28, 2025 and $ 4.2 million and $ 5.4 million for the nine months ended June 27, 2026 and June 28, 2025, respectively, related to inter-segment sales of parts that was eliminated by the Bus segment upon consolidation. 14 The following table is a reconciliation of segment gross profit to consolidated income before income taxes for the periods presented: Three Months Ended Nine Months Ended (in thousands of dollars) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Bus segment gross profit $ 91,073 $ 73,211 $ 206,587 $ 178,017 Parts segment gross profit 12,301 12,717 38,663 39,082 Segment gross profit $ 103,374 $ 85,928 $ 245,250 $ 217,099 Adjustments: Selling, general and administrative expenses ( 40,706 ) ( 35,859 ) ( 105,787 ) ( 100,277 ) Interest expense ( 1,964 ) ( 1,738 ) ( 5,075 ) ( 5,466 ) Interest income 627 1,483 4,537 4,309 Other income (expense), net (Notes 13 and 14) 135,690 ( 580 ) 132,557 2,780 Income before income taxes $ 197,021 $ 49,234 $ 271,482 $ 118,445 Sales are attributable to geographic areas based on customer location and were as follows for the periods presented: Three Months Ended Nine Months Ended (in thousands of dollars) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 U.S. $ 472,300 $ 352,715 $ 1,067,750 $ 939,946 Canada 44,749 45,022 134,884 129,096 Rest of world 111 274 245 1,692 Total net sales $ 517,160 $ 398,011 $ 1,202,879 $ 1,070,734 8. Revenue The following table disaggregates revenue by product category for the periods presented: Three Months Ended Nine Months Ended (in thousands of dollars) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Diesel buses $ 139,754 $ 125,872 $ 449,827 $ 367,855 Alternative power buses (1) 339,513 234,373 640,722 582,757 Other (2) 13,165 12,699 36,018 44,471 Parts 24,728 25,067 76,312 75,651 Net sales $ 517,160 $ 398,011 $ 1,202,879 $ 1,070,734 (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 . 15 9. Earnings Per Share The following table presents the earnings per share computation for the periods presented: Three Months Ended Nine Months Ended (in thousands except for share data) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Numerator: Net income $ 185,255 $ 36,455 $ 245,312 $ 91,223 Denominator: Weighted-average shares outstanding (1) 34,237,303 31,556,312 32,547,949 31,899,623 Weighted-average dilutive securities, restricted stock 180,285 471,039 226,835 535,117 Weighted-average dilutive securities, stock options 105,724 214,028 122,009 231,895 Weighted-average dilutive securities, warrants 627,604 340,441 567,254 357,108 Weighted-average shares and dilutive potential common shares (1) (2) 35,150,916 32,581,820 33,464,047 33,023,743 Earnings per share: Basic earnings per share $ 5.41 $ 1.16 $ 7.54 $ 2.86 Diluted earnings per share $ 5.27 $ 1.12 $ 7.33 $ 2.76 (1) The 2,702,180 shares of exchangeable common stock that were issued by a Canadian Company subsidiary in connection with the Micro Bird acquisition on April 1, 2026 (see Note 13, Micro Bird Acquisition , for further discussion) are exchangeable on a one -to-one basis with, and participate in Company dividends and undistributed earnings in an equal manner as, Company common stock. Accordingly, these equity securities are included in the weighted average shares denominators in both the basic and diluted earnings per share calculations, weighted for the portion of the applicable period during which they were outstanding. (2) There were no potentially dilutive securities excluded from the computation of diluted earnings per share for each of the three and nine months ended June 27, 2026 and June 28, 2025 because their effect was antidilutive. 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 Nine Months Ended (in thousands of dollars) Defined Benefit Pension Plan (Note 14) Foreign Currency Translation Adjustment Total AOCL Defined Benefit Pension Plan (Note 14) Foreign Currency Translation Adjustment Total AOCL June 27, 2026 Beginning Balance $ ( 28,067 ) $ — $ ( 28,067 ) $ ( 28,247 ) $ — $ ( 28,247 ) Other comprehensive income, gross 13,094 ( 834 ) 12,260 13,094 ( 834 ) 12,260 Settlement loss included in earnings 19,562 — 19,562 19,562 — 19,562 Amounts reclassified and included in earnings 79 — 79 315 — 315 Total before taxes 32,735 ( 834 ) 31,901 32,971 ( 834 ) 32,137 Income taxes ( 4,826 ) 209 ( 4,617 ) ( 4,882 ) 209 ( 4,673 ) Ending Balance June 27, 2026 $ ( 158 ) $ ( 625 ) $ ( 783 ) $ ( 158 ) $ ( 625 ) $ ( 783 ) June 28, 2025 Beginning Balance $ ( 26,311 ) $ — $ ( 26,311 ) $ ( 26,416 ) $ — $ ( 26,416 ) Amounts reclassified and included in earnings 70 — 70 209 — 209 Total before taxes 70 — 70 209 — 209 Income taxes ( 17 ) — ( 17 ) ( 51 ) — ( 51 ) Ending Balance June 28, 2025 $ ( 26,258 ) $ — $ ( 26,258 ) $ ( 26,258 ) $ — $ ( 26,258 ) 16 11. Equity Investment in Affiliates The Company made investments in the below entities and utilized the equity method of accounting to record its interest in them as it did 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. As discussed in further detail in Note 13, Micro Bird Acquisition , the Company completed its acquisition of the remaining 50 % of the outstanding voting common stock of Micro Bird on April 1, 2026, which previously represented an unconsolidated Canadian joint venture. Micro Bird produces Type A school buses in Drummondville, Quebec, and 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. Prior to the acquisition, in recognizing the Company’s 50 % portion of Micro Bird's net income or loss, the Company recorded equity in net (loss) income of non-consolidated affiliates on the Condensed Consolidated Statements of Operations totaling approximately $( 1.6 ) million and zero for the three months ended June 27, 2026 and June 28, 2025, respectively, and $ 2.4 million and $ 4.1 million for the nine months ended June 27, 2026 and June 28, 2025, respectively. The amount recorded in net (loss) income of non-consolidated affiliates during the three months ended June 27, 2026 represents a true-up of Micro Bird's year-to-date net income for the six-month period ended March 31, 2026 as the Company has historically accounted for its equity method investment in Micro Bird on a one month lag. Micro Bird paid no dividends in the three or nine months ended June 27, 2026 or June 28, 2025. The acquisition of the remaining 50 % of the outstanding voting common stock of Micro Bird resulted in the Company controlling it at the beginning of the third quarter of fiscal 2026 and subsequently. Accordingly, the Company ceased accounting for its original 50 % investment in Micro Bird utilizing the equity method as of March 28, 2026. In recording the investment in Micro Bird as a wholly-owned subsidiary as of April 1, 2026 to comply with the provisions of ASC 805, Business Combinations , the Company reversed the entire $ 37.6 million balance included within equity investment in affiliates on the Condensed Consolidated Balance Sheets, as well as a corresponding $ 2.0 million deferred tax liability balance, so that their carrying values were zero at June 27, 2026. The carrying value of the Company's investment in Micro Bird included within equity investment in affiliates on the Condensed Consolidated Balance Sheets was $ 35.2 million at September 27, 2025. Clean Bus Solutions, LLC The Company holds a 50 % equity interest in Clean Bus Solutions, LLC ("CBS"), our unconsolidated joint venture that provided a fleet-as-a-service ("FaaS") offering using electric school buses manufactured and sold by the Company. The service was 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. 17 The Company made (i) no cash contributions to CBS during the three months ended June 27, 2026, (ii) $ 0.4 million of cash contributions to CBS during the three months ended June 28, 2025 and (iii) $ 0.2 million and $ 0.9 million of cash contributions to CBS during the nine months ended June 27, 2026 and June 28, 2025, respectively, which increased the balance of equity investment in affiliates on the Condensed Consolidated Balance Sheets. The cash contributions during the nine months ended June 27, 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 zero and $( 0.4 ) million in equity in net (loss) income of non-consolidated affiliates on the Condensed Consolidated Statements of Operations for the three months ended June 27, 2026 and June 28, 2025, respectively, and $( 0.2 ) million and $( 1.1 ) million for the nine months ended June 27, 2026 and June 28, 2025, respectively. CBS paid no dividends in any period. At both June 27, 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 approximately $ 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 no shares of its common stock and 392,418 shares of its common stock for $ 19.9 million during the three and nine months ended June 27, 2026. respectively. During the same periods in fiscal 2025, the Company repurchased 245,249 and 1,048,051 shares of its common stock, respectively, for $ 8.9 million and $ 39.0 million, respectively. The Company constructively retired these shares immediately after repurchase, with the $ 8.9 million amount paid in excess of the $ 0.0001 par value of each share during the three months ended June 28, 2025, and the $ 19.9 million and $ 39.0 million amounts paid in excess of the $ 0.0001 par value of each share during the nine months ended June 27, 2026 and June 28, 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 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 June 27, 2026. Exchangeable Common Stock and Voting Preferred Stock In connection with the acquisition of Micro Bird as discussed in further detail in Note 13, Micro Bird Acquisition , below, the former owners of the 50 % of the outstanding voting common stock of Micro Bird that the Company acquired received 2,702,180 shares of Class A non-voting exchangeable common stock of MB Exchangeco Inc. (“MB ExchangeCo”), a newly formed Canadian Company subsidiary. The shares of exchangeable common stock are exchangeable on a one -to-one basis with, and participate in Company dividends and undistributed earnings in an equal manner as, Company common stock. The exchangeable common stock has 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 each share of exchangeable common stock upon the request of the holder for one share of Company common stock, plus unpaid dividends declared by the Company, if any. The exchangeable common stock may not be transferred without the Company's consent. In addition, the exchangeable common stock and any Company common stock issued upon exchange is subject to a contractual lock-up period as follows: no transfers of the shares may occur for a period of six months following the acquisition closing date, or until October 1, 2026. Thereafter, the shares will be released from lock-up as follows: 17.9 % on each of October 1, 2026, April 1, 2027 and October 1, 2027; 27.8 % on April 1, 2028 and the remaining 18.5 % on April 1, 2029. The issuance of the exchangeable common stock was not registered under the Securities Act of 1933, as amended. The Company agreed to file a registration statement with the SEC covering the resale of the Company common stock issued upon the exchange of the exchangeable common stock, 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 common stock remains outstanding. 18 The former owners also received one share of newly-created Company preferred stock with voting rights in Company common stock equivalent to the number of shares of exchangeable common stock outstanding at any time. The combination of the exchangeable common stock and the voting preferred stock results in the holders having rights equivalent to those of holders of Company common stock as it pertains to voting, dividends, undistributed earnings and and other economic rights. 13. Micro Bird Acquisition On April 1, 2026, the Company completed its acquisition of the remaining 50 % of the outstanding voting common stock of Micro Bird pursuant to the terms of a Purchase Agreement dated February 15, 2026. Following the acquisition, the Company can directly offer customers a full suite of school bus models, including the Type A school buses produced by Micro Bird in its Drummondville, Quebec production facility, and can fully pursue the significant opportunity that the Company believes exists in the U.S. commercial bus market by offering existing and new customers buses manufactured at the production facility that Micro Bird recently opened in Plattsburgh, New York, which also currently produces a small number of Type A school buses. Prior to the acquisition date, the Company owned 50 % of the outstanding voting stock of Micro Bird and accounted for it utilizing the equity method of accounting as discussed in further detail in Note 11, Equity Investment in Affiliates , above. As a result of the acquisition, Micro Bird is now a wholly-owned consolidated subsidiary of the Company, with the acquisition accounted for as a business combination. The purchase consideration transferred by the Company to the former owners totaled $ 205.9 million, inclusive of preliminary customary adjustments related to working capital and net debt, and was comprised of (i) $ 63.0 million in cash, funded entirely with cash existing on the closing date, and (ii) 2,702,180 shares of exchangeable common stock of a newly-formed Canadian Company subsidiary that are substantially equivalent to, and exchangeable on a one -to-one basis for, shares of Company common stock. In addition, the former owners received one share of newly-created Company preferred stock with voting rights in Company common stock equivalent to the number of shares of exchangeable common stock outstanding at any time. The aggregate value of the above issued securities totaled $ 142.9 million on the closing date. Since, as discussed previously above, the combination of the exchangeable common stock and the voting preferred stock resulted in the holders having rights equivalent to those of holders of Company common stock, the aggregate value of the equity securities was estimated via reference to the number of shares of exchangeable common stock issued and the closing stock price of a share of Company common stock on April 1, 2026. However, such amount was adjusted for an estimated discount because the shares of exchangeable common stock, and the underlying shares of Company common stock for which such exchangeable shares may be redeemed on a one -to-one basis, were not registered and are legally restricted from being sold on a national securities exchange until the underlying shares of Company common stock are registered. In connection with the acquisition, the Company remeasured the value of its previously held 50 % equity investment to its acquisition date fair value of $ 196.1 million, which resulted in a $ 160.5 million gain that is reported within other income (expense), net on the Condensed Consolidated Statements of Operations since such amount is not indicative of the Company's normal earnings activities. The fair value of the previously held equity investment was determined using a market approach based on the cash and equity consideration exchanged for the newly acquired 50 % equity interest, which was reduced for an estimated discount because the previous equity interest did not provide the Company the ability to control the activities that most significantly impacted Micro Bird's financial performance based on the shared powers of the joint venture partners. The Company also separately acquired the Plattsburgh, New York real estate from the former owners for $ 15.4 million in cash, which was funded entirely with cash existing on the closing date. These assets were previously leased by Micro Bird and accordingly, were not part of the Company's original 50 % equity investment or the additional 50 % equity investment acquired as discussed above. The following is a summary of the purchase consideration transferred: (in thousands of dollars) Purchase Consideration Cash consideration transferred for the newly acquired interest $ 63,021 Equity consideration transferred for the newly acquired interest 142,878 Fair value of the previously held interest 196,095 Total consideration transferred for the Micro Bird interest 401,994 Cash consideration transferred for the Plattsburgh, New York real estate 15,369 Total consideration transferred $ 417,363 During the three and nine months ended June 27, 2026, the Company incurred approximately $ 4.9 million and $ 7.6 million of pretax costs, respectively, relating to this transaction, which are recorded in other income (expense), net on the Condensed Consolidated 19 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. Preliminary Fair Values of the Assets Acquired and the Liabilities Assumed The Company allocated the purchase price based upon a preliminary assessment of the fair value of the assets acquired and the liabilities assumed on April 1, 2026. The preliminary fair values are based on management’s estimates and assumptions, using the best information available at the time of this filing. The final valuation and related allocation of the purchase price will be completed no later than 12 months after the closing date of the acquisition. The final acquisition accounting adjustments could be materially different and may include (1) changes in the allocations to the intangible assets as well as goodwill and (2) other changes to assets and liabilities, such as working capital. The preliminary allocation of the purchase price is as follows: (in thousands of dollars) April 1, 2026 Assets acquired Cash and cash equivalents $ 28,749 Inventories 145,104 Other current assets 14,924 Property, plant and equipment 45,613 Finance lease right-of-use assets 29,734 Intangible assets 137,599 Total assets acquired $ 401,723 Liabilities assumed Accounts payable $ 16,457 Accrued expenses 9,171 Other current liabilities 3,043 Long-term debt 17,603 Revolving credit facility 112,015 Finance lease obligations 29,734 Warranty 11,168 Deferred warranty income 510 Deferred tax liabilities 27,427 Other liabilities 2,509 Total liabilities assumed $ 229,637 Fair value of net assets acquired $ 172,086 Goodwill 245,277 Total consideration transferred $ 417,363 Identified Intangible Assets The estimated fair values of the acquired identified intangible assets and their estimated useful lives are as follows: (in thousands of dollars) Estimated Useful Life (in years) Estimated Fair Value (in thousands of dollars) Customer relationships 15 $ 130,000 Engineering designs 4 6,700 In-process research & development 5 899 Total intangible assets $ 137,599 The customer relationships represent the value attributed to the dealer network that was estimated using a multi-period excess earnings method, which is a variation of the income approach. This method, which utilizes Level 3 inputs, calculates the present value of the incremental after-tax cash flows attributable to the intangible asset to estimate the fair value. The fair values of the engineering designs and in-process research & development were estimated using the cost approach. This valuation method is based on the premise that a buyer will not pay more for an asset than it would cost to build or acquire an equally desirable substitute and utilizes level 2 inputs in estimating fair value. The Company is continuing to assess the assumptions used in the estimated fair values described above, as well as the respective useful lives, which could result in changes to the provisional values. 20 Goodwill Goodwill represents the excess of the purchase price over the net amount of the fair values assigned to assets acquired and liabilities assumed. The $ 245.3 million of goodwill recorded in connection with the acquisition is primarily attributable to the value that the Company expects to realize from the existing customer base as well as the significant opportunity that management believes exists in the U.S. commercial bus market, which Micro Bird recently entered in connection with opening its manufacturing facility in Plattsburgh, New York in the second half of 2025. Goodwill also includes an estimated $ 11.0 million value pertaining to Micro Bird's assembled workforce, which U.S. GAAP does not allow to be recorded as a separate identifiable asset in a business combination and therefore, must be subsumed into goodwill. The goodwill is fully attributable to, and was included within, the Company's Bus segment at June 27, 2026. The following table summarizes the carrying amount of the Company's goodwill, including the goodwill arising from the Micro Bird acquisition discussed above, as of June 27, 2026: (in thousands of dollars) Goodwill, excluding goodwill arising from the Micro Bird acquisition $ 18,825 Goodwill arising from the Micro Bird acquisition 245,277 Total goodwill $ 264,102 Income Taxes As the acquisition is accounted for as a business combination, deferred tax assets and liabilities were generally recognized on the differences between the fair value and the tax bases of the assets acquired and the liabilities assumed. However, none of the goodwill is expected to be deductible for income tax purposes, so no deferred tax liability was recognized on the difference between the book and tax bases of this asset. Pro Forma Results of Operations The following supplemental pro forma results of operations have been provided for illustrative purposes only and do not purport to be indicative of the actual results that would have been achieved by the combined companies for the periods presented or that may be achieved by the combined companies in the future. Future results may vary significantly from the results reflected in the following pro forma financial information because of future events and transactions, as well as other factors. Three Months Ended Nine Months Ended (in thousands of dollars) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Revenues $ 517,160 $ 453,921 $ 1,396,098 $ 1,258,010 Net income (1) 32,117 34,009 92,161 78,568 (1) Net income for both the the three and nine months ended June 27, 2026 is reduced by the approximate $ 14.5 million non-cash, after-tax pension plan settlement loss discussed in further detail in Note 14, Defined Benefit Pension Plan Settlement and Termination , below. The pro forma results of operations for each of the applicable periods have been prepared by combining the historical results of Blue Bird with the historical results of Micro Bird, which were adjusted for the preliminary fair values of the assets acquired and the liabilities assumed reflected above as if the acquisition date occurred on September 29, 2024, which was the first day of Blue Bird's fiscal 2025. These pro forma combined historical results were then modified for the following: adjustments to the amounts recorded as revenue by Micro Bird to conform with Blue Bird's accounting policies; an increase in depreciation expense for Micro Bird related to the net impact of adjusting acquired property and equipment, including the Plattsburgh, New York real estate that was separately acquired as discussed previously above, to the acquisition date fair value and modifying depreciable lives to conform with Blue Bird's accounting policies; an increase in amortization expense for Micro Bird due to the incremental intangible assets recorded in connection with the acquisition; an increase, in fiscal 2025, and decrease, in fiscal 2026, in cost of goods sold for Micro Bird related to the impact of adjusting acquired inventory to the acquisition date fair value; a decrease in equity in net income of non-consolidated affiliates for Blue Bird resulting from historically accounting for Micro Bird using the equity method in periods prior to the acquisition; a reclassification of transaction costs incurred by both Blue Bird and Micro Bird in fiscal 2026 to the first quarter of fiscal 2025; a decrease in other income for Blue Bird during fiscal 2026 relating to the gain recorded for the acquisition of Micro Bird as discussed previously above; a reduction of interest expense for Micro Bird and interest income for Blue Bird as a result of the cash that Blue Bird provided so that Micro Bird could repay all of its outstanding bank debt in connection with the acquisition; a reduction 21 of interest income for Blue Bird as a result of the cash consideration paid; and the income tax impact from the aforementioned pro forma adjustments, as applicable. The pro forma results of operations do not include any adjustments for any cost savings or other synergies that may result from the acquisition. As noted above, the pro forma results of operations do not purport to be indicative of the actual results that would have been achieved by the combined company for the periods presented or that may be achieved by the combined company in the future. Micro Bird Results of Operations The Company's Condensed Consolidated Statements of Operations include Micro Bird's results of operations as a wholly-owned consolidated subsidiary of the Company since the April 1, 2026 acquisition date. Micro Bird contributed $ 122.9 million and $ 7.4 million in total revenues and net income, respectively, for both the three and nine months ended June 27, 2026. 14. 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"). While such actions continued during the first two quarters of fiscal 2026, none of them resulted in a significant financial impact for the Plan or Company. However, during the third quarter of fiscal 2026, the pension benefits earned by the majority of Plan participants were settled via (i) lump-sum cash payments and (ii) the purchase of group annuity contracts from Pacific Life Insurance Company and Pacific Life & Annuity Company (collectively, “Pacific Life”) that irrevocably transferred the future benefit obligations and annuity administration for 2,044 Plan participants or their beneficiaries (“Transferred Participants”) to Pacific Life. This transfer did not affect the amount of the (i) future benefit obligations or (ii) monthly benefit payments for the Transferred Participants, both of which are irrevocably guaranteed by Pacific Life, with Pacific Life assuming responsibility for disbursing monthly benefit payments effective August 1, 2026. The $ 92.1 million total amount paid for the lump-sum distributions and purchase of the group annuity contracts was funded entirely from Plan assets, with no additional funding required by the Company as part of these transactions. Subsequent to the lump-sum cash payments and purchase of group annuity contracts, the Plan is relieved of the primary responsibility for paying the benefit obligations earned by the impacted 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. However, such guidance also requires that the Plan's benefit obligations and assets be remeasured immediately prior to computing and recognizing a settlement gain or loss. During the third quarter of fiscal 2026, the Company, with assistance from its external actuarial specialist, remeasured the Plan's benefit obligations and assets, which resulted in a $ 13.1 million increase, $ 10.0 million decrease and $ 3.1 million increase in the pension, accumulated other comprehensive loss and deferred tax liabilities balances, respectively, included on the Condensed Consolidated Balance Sheet as of June 27, 2026. Subsequently, since the Plan settled over 99 % of its remeasured benefit obligations during the third quarter of fiscal 2026, the Company recognized a $ 19.6 million settlement loss during the three and nine months ended June 27, 2026, which is included within other income (expense), net on the Condensed Consolidated Statements of Operations. The recording of such loss resulted in a $ 17.9 million decrease and $ 1.7 million increase in the accumulated other comprehensive loss and deferred tax liabilities balances, respectively, included on the Condensed Consolidated Balance Sheet as of June 27, 2026. At June 27, 2026, the $ 17.7 million pension balance included on the Condensed Consolidated Balance Sheet is comprised of Plan assets and benefit obligations approximating $ 18.5 million and $ 0.8 million, respectively. The benefit obligations are expected to be settled via (i) the monthly benefit payment to retirees during July 2026, which are expected to approximate $ 0.7 million, and (ii) the transfer of the approximate $ 0.1 million of pension benefits for the small number of remaining Plan participants via a cash payment to the Pension Benefit Guaranty Corporation ("PBGC") prior to the end of 2026, both using Plan assets. The settlement of these benefit obligations will result in the recording of an additional settlement loss on the Condensed Consolidated Statements of Operations during the fourth quarter of fiscal 2026, and perhaps in a subsequent period depending on the timing of making such payments, which is not expected to be material. The Plan's assets will also be used to pay Plan expenses in future periods, which include the fees charged by external service providers that assisted with the termination process as well as regulatory fees and expenses. Following the settlement of the benefit obligations and Plan expenses discussed above, the Plan's remaining excess assets will be available to return to the Company and the Plan will terminate. 15. Subsequent Event On August 3, 2026, BBBC entered into an agreement to acquire certain assets of Detroit Chassis LLC, a Michigan limited liability company and the longtime manufacturer of Ford Motor Company’s (“Ford”) F53 (Class A motorhome) and F59 commercial (step-van, delivery, and logistics market) stripped chassis for Ford’s “F5X” commercial vehicle business. 22 Also on August 3, 2026 but effective July 31, 2026, BBBC entered into a Master Collaboration Agreement with Ford, pursuant to which the BBBC will assume responsibility from Ford for the design and manufacture of the next generation F53 and F59 chassis, which will be paired with Ford’s powertrain solutions. The parties expect this collaboration agreement to support the continued evolution of the stripped chassis vehicle market and offerings, and ensure a seamless transition for Ford customers and fleets. Company management believes that the F53 and F59 chassis market represents a significant long-term growth opportunity for stockholders. Asset Purchase Agreement The Asset Purchase Agreement ("Purchase Agreement") pertaining to the Detroit Chassis Plant ("DCP") was executed by BBBC, Detroit Chassis LLC and Spectra LMP, LLC, a Michigan limited liability company (the “Member” and referred to with the DCP collectively as the “Sellers”). Pursuant to the Purchase Agreement, BBBC will acquire certain of Sellers' assets, including but not limited to, equipment, tooling, inventory, rights to leased real property, intellectual property, certain contracts and rights related thereto, permits, and goodwill and going concern value, all related solely to the F53/F59 chassis production (“Acquired Assets”) and will assume only the liabilities associated with the acquired assets and contracts (“Assumed Liabilities”). The purchase price (“Purchase Price”) to be paid to Sellers will be $ 7.0 million plus the assumption of the Assumed Liabilities. BBBC owes $ 700,000 of the Purchase Price to Sellers upon execution of the Purchase Agreement. At the closing of the transaction, BBBC will pay the balance of $ 6.3 million to Sellers minus the amount of any indebtedness of Sellers secured by any lien on the Acquired Assets. The transaction closing is anticipated to occur in the first calendar quarter of 2027, expected approximately thirty ( 30 ) days after the date that Ford ceases production of the F53/F59 commercial chassis. The DCP will continue to manufacture chassis under its agreement with Ford through the end of Ford production. The DCP’s workforce is covered under a collective bargaining agreement with United Auto Workers Local 155 (“UAW”). As part of its manufacturing assessment for the next-generation F-53/F-59 stripped chassis, BBBC intends to prioritize the existing DCP facility located in Detroit, Michigan as the primary path under evaluation, while collaborating with the UAW to leverage the experience of the existing workforce. The parties made customary representations, warranties, and covenants in the Purchase Agreement, including, but not limited to, the agreement of the parties to indemnify each other for certain breaches of representations and covenants, as well as other pre-closing matters. The Sellers agreed to certain non-competition and non-solicitation restricted periods following the transaction closing, subject to certain continued access and cooperation agreements between the parties. Master Collaboration Agreement The Master Collaboration Agreement (“MCA”) executed by Ford and BBBC is intended to further expand and strengthen the long-standing collaboration between the parties and will result in BBBC taking over the F53/F59 chassis business from Ford. New production is anticipated to begin in the first half of calendar year 2028. The new platform is expected to build on the strong legacy of the F53/F59 stripped chassis products while introducing a next-generation solution to address evolving customer requirements and regulatory standards. While no assurances can be given that the following can be achieved, Company management believes that the growth opportunity in this market represents the potential to achieve annual volume of approximately 10,000 units with potential annual revenue generation of $ 600 million or more. Pursuant to the MCA, Ford will supply BBBC with its proprietary powertrains and provide limited transition support services. BBBC will strive to utilize Ford’s powertrain technology, existing customer relationships, and transition support to capture profitable market share in this chassis segment. The parties will also enter into a powertrain supply agreement governing the specific terms related to the sale and purchase of the powertrains. The primary objectives of the MCA are: (i) the development by BBBC of a next generation replacement portfolio of stripped chassis products for the motorhome/recreational vehicle and commercial step-van, delivery, and logistics markets, and (ii) to ensure continuity of supply for Ford’s long-standing customer base, and to preserve and expand the customer base. The parties will conduct 23 collaborative initial concentrated reviews of the feasibility and viability of the objectives under the MCA. Upfront investment and manufacturing costs will be borne by BBBC, with cooperative efforts by Ford. The target launch date for the replacement prototypes is January 1, 2028, or as mutually agreed between BBBC and Ford. All tooling and equipment related to the F5X commercial vehicle business owned by Ford will be sold and transferred to BBBC, with closing to be within thirty ( 30 ) days after the date that Ford ceases production of the F53/F59 commercial chassis. Ford has also agreed to a multi-year exclusivity period in favor of BBBC with respect to sales of its powertrain to non-Ford affiliated third party competitors in this market. Ford will support the transition of its existing customer base to BBBC.