What changed in this filing

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Item 1A. Risk Factors

2020-08-13 compared with 2020-05-14 · 35 added, 18 removed, 59 unchanged (47% of the section changed)

5 unchanged sentences

The risk factor below is an update to our 2019 Form 10-K.

The current COVID-19 pandemic, other public health crises, epidemics, or pandemics, could have a material adverse effect on our results of operations, financial condition and cash flows, particularly if we experience supply chain disruptions, reductions in demand for our products, disruptions impacting our workforce or workplace conditions, and/or reduced access to capital markets.

During our second fiscal quarter of 2020, the novel coronavirus known as "COVID-19" spread throughout the world creating a global pandemic.

The current COVID-19 pandemic has had, and other public health crises, epidemics or pandemics could have, a material adverse effect on our business, results of operations, financial condition, and cash flows, particularly resulting from supply chain disruptions, reductions in demand for our products, disruptions or other developments negatively impacting our workforce or workplace conditions, and/or reduced access to capital markets and reductions in liquidity.

During our second fiscal quarter of 2020, the novel coronavirus known as "COVID-19" spread throughout the world creating a global pandemic and continued to spread in our third quarter of fiscal 2020.

The pandemic has, among other impacts:

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halted global manufacturing operations resulting from plant shut-downs;

changed global workplace conditions resulting from "shelter-in-place" orders.

The pandemic did not materially impact our second quarter fiscal 2020 results, but could have a material adverse effect on our future results of operations, financial condition and cash flows.

The rapid development and fluidity of the pandemic precludes any prediction as to the ultimate adverse impact on our business, financial condition, results of operations, or liquidity, but we have already experienced reduced orders and enacted a manufacturing plant shut-down for the first two weeks of our third quarter in fiscal 2020.

At the present time, we consider the following areas to be the most significant material risks to our business resulting from the pandemic:

changed global workplace conditions resulting from "shelter-in-place" orders and "work from home" employer policies.

The pandemic materially impacted our third quarter of fiscal 2020 results causing lower customer orders for both buses and bus parts, supply disruptions, and absenteeism among our hourly production workforce.

The continuing development and fluidity of the pandemic precludes any prediction as to the ultimate severity of the adverse impacts on our business, financial condition, results of operations, or liquidity, but we have already experienced reduced orders and enacted a manufacturing plant shut-down for the first two weeks of our third quarter in fiscal 2020.

A prolonged economic downturn resulting from the continuing pandemic would likely have a material adverse impact on our business, financial condition, results of operations, and liquidity.

At the present time, we consider the following areas to be the most significant material risks to our business resulting from the current pandemic:

Supply Chain Disruptions

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In addition to protecting our employees' health, our plant shut-down was partially due to the potential for an inability to obtain critical components from our suppliers due to COVID-19.

Delays or interruptions in the supply chain due to the COVID-19 pandemic exposes us to the following risks that if materialized could significantly increase our costs and/or impact our ability to meet customer demand:

Future delays or interruptions in the supply chain due to the COVID-19 pandemic expose us to the following risks which would likely significantly increase our costs and/or impact our ability to meet customer demand:

we or our third-party suppliers may lose access to critical services and components, resulting in an interruption in the manufacture, assembly, and delivery or shipment of our products;

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In response to the pandemic, many school systems in North America canceled in-person schooling for the remainder of the 2019-2020 school year.

There remains uncertainty as to when traditional in-person schooling will resume.

A reduction in bus usage will likely reduce the demand for maintenance and replacement parts, which would negatively impact revenues in our Parts segment.

The cancellations disrupted the seasonal order pattern for school buses.

There remains uncertainty as to when traditional in-person schooling will resume, but we do know that many school systems have already declared that they will not hold in person classes for the fall of 2020.

Uncertainty in the form of learning (e.g.

a reduction of in-person to more remote arrangements) may lead to a reduction in bus orders until a degree of normalcy returns to the manner in which K-12 education is provided.

In addition, a delay in the start of the 2020-2021 school year may also impact the near-term demand for our buses.

Anticipated delays in the start of the 2020-2021 school year will likely impact at least the near-term demand for our buses.

Reductions in bus orders would negatively impact revenues in our Bus segment.

Disruptions impacting our workforce or workplace conditions

A reduction in bus usage will likely reduce the demand for maintenance and replacement parts, which would negatively impact revenues in our Parts segment.

Disruptions or other developments negatively impacting our workforce or workplace conditions

Almost all U.S.

states, including Georgia where our headquarters and manufacturing facilities are located, have issued “shelter-in-place” orders, quarantines, executive orders and similar government orders, restrictions and recommendations for their residents to control the spread of COVID-19.

Orders could be re-issued at or after their expiration and future orders may introduce broader restrictions.

Many of these orders have been and may continue to be re-issued at or after their expiration, and future orders may introduce broader restrictions.

Such orders, restrictions and recommendations, and the perception that additional orders, restrictions or recommendations could occur, have resulted in widespread closures of businesses not deemed “essential,” work stoppages, interruptions, slowdowns and delays, work-from-home policies and travel restrictions.

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While we have not experienced any pervasive COVID-19 illnesses to date, if we were to experience some form of outbreak within our facilities, we would take all appropriate measures to protect the health and safety of our employees, which could include a temporary halt in production.

Any extended production halt or diminution in production capacity would likely have a negative impact on our ability to fulfill orders and on our revenues.

Possible reduced access to capital or credit markets

The COVID-19 pandemic has adversely impacted global commercial activity and has contributed to significant volatility in financial markets.

The pandemic may have a continued adverse impact on economic and market conditions and trigger an extended period of global economic slowdown and may result in significant disruptions in global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.

Any extended production halt or diminution in production capacity would likely have a negative impact on our ability to fulfill orders and thus negatively impact our revenues.

Reduced profitability and liquidity, resulting in possible restructuring of our credit facilities, and/or inadequate access to credit and capital markets

The COVID-19 pandemic has materially adversely impacted global commercial activity and has contributed to significant volatility in financial markets.

The pandemic continues to have a materially adverse impact on economic and market conditions, and may result in an extended period of global economic slowdown and significant disruptions in global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.

The continuing pandemic could cause a more severe contraction in our profits and/or liquidity which could lead to issues complying with the financial covenants in our credit facility.

Our primary financial covenant is our Total Net Leverage Ratio.

Our Total Net Leverage Ratio is defined as the ratio of (a) consolidated net debt to (b) consolidated EBITDA, which includes certain add-backs that are not reflected in the definition of Adjusted EBITDA appearing in the Company’s periodic filings on Form 10-K or Form 10-Q, at the end of each fiscal quarter for the consecutive four fiscal quarter period most recently then ending.

We may need to seek amendment for covenant relief or even refinance the debt to a "covenant light" or "no covenant" structure.

We cannot assure our investors that we would be successful in amending or refinancing our existing debt.

An amendment or refinancing of our existing debt could lead to higher interest rates and possible up front expenses not included in our historical financial statements.

The following Exhibits are filed with this Report:

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Bylaws of Blue Bird Corporation (incorporated by reference to the Company’s Form S-1, filed with the SEC on December 20, 2013).

Retirement Agreement, dated as of May 30, 2020, between Blue Bird Corporation and Phillip Tighe.

Consulting Agreement, dated as of May 30, 2020, between Blue Bird Corporation and Phillip Tighe.

Offer Letter, dated as of April 28, 2020, between Blue Bird Corporation and Jeffery L.

Severance Agreement, dated as of May 1, 2020, between Blue Bird Corporation and Jeffery L.

Second Amendment to Credit Agreement, dated as of May 7, 2020 by and among the Company, School Bus Holdings, Inc.

and certain of its subsidiaries, including Blue Bird Body Company as the borrower, Bank of Montreal, as Administrative Agent and certain other financial institutions party thereto (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed by the Company on May 8, 2020).

Chief Executive Officer’s Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.

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XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Filed herewith.

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Blue Bird Corporation

August 13, 2020

/s/ Philip Horlock

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Chief Executive Officer

/s/ Phillip Tighe

Phillip Tighe

August 13, 2020

/s/ Jeffery Taylor

Jeffery Taylor

Chief Financial Officer

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors