Blue Bird Stock

Blue Bird Corporation operates as an independent designer and manufacturer of school buses.

The company has built an extensive, experienced network of over 70 dealer locations to distribute its buses across the U.S. and Canada. The company's dealers have an average tenure of more than 31 years with the company and do not sell competing Type C or Type D school bus products in the areas assigned to them by the company.

Segments

The company operates through two segments, Bus and Parts.

Bus

This segment engages in the design, engineering, manufacture, and sale of school buses and extended warranties.

The company's buses are sold through an extensive network of over 70 U.S. and Canadian dealer locations that, in their territories, are exclusive to the company on Type C and Type D school buses. The company also sells directly to major fleet operators, the U.S. Government, state governments, and authorized dealers in certain limited foreign countries.

In the year ended September 30, 2023 (fiscal 2023), the company sold 8,514 buses throughout the world. Approximately 99% of the company's buses sold in fiscal 2023 were sold through distributors and dealers.

The company designs, engineers, manufactures, and sells three types of buses: Type C school buses, Type D school buses, and specialty buses. Each of its Type C and Type D buses is manufactured and assembled on its own dedicated purpose-built chassis in Fort Valley, Georgia. Regardless of specifications, all school bus bodies that the company manufactures include its signature 14-gauge one-piece steel bows roof system, complemented by a rugged and sturdy floor structure.

Specialty buses include school buses that are converted to suit applications required by the U.S. Government, state and local governments, and various customers for commercial and export markets.

The Blue Bird Micro Bird by Girardin Type A bus is produced through Micro Bird Holdings, Inc., an unconsolidated Canadian joint venture with Girardin Minibus JV Inc. (Micro Bird), and is sold through the company's dealer network. This is a smaller bus than the Type C or Type D bus and is produced on a traditional chassis provided by either Ford or GM or on an electric chassis produced by a Micro Bird subsidiary.

Parts

This segment engages in the sale of replacement bus parts.

The company maintains a parts distribution center in Delaware, Ohio that fills demand for the company specific and all-makes parts. Additional demand for parts is fulfilled by drop ship and direct sales. To fulfill demand for parts that are not maintained at the distribution center, the company is linked to approximately 40 suppliers that ship directly to dealers and independent service centers.

The company's network of dealers and authorized repair centers operate over 200 locations to support the fleet across the U.S. and Canada, the majority of which are owned by independent operators, to complement their primary locations. Field service engineers provide technical support to the company's dealer network. Service engineers are strategically placed throughout the U.S. and Canada to better serve both dealers and end-customers. The network leverages its parts inventory, technical training, and online warranty network to address customer service needs.

Sales Volume

In fiscal 2023, the company sold 8,514 Type C and Type D buses, including 8,410 school buses, 61 commercial buses, 16 export buses and 27 Government Services Administration (GSA) buses. The company's Type C school bus accounted for 87% of unit sales and its Type D school bus accounted for 12% of unit sales. Commercial, GSA, and export buses, which can be ordered with either the Type C or Type D chassis, accounted for the remaining 1% of unit sales.

Dealer Network

In fiscal 2023, the company sold approximately 99% of its vehicles through its U.S. and Canadian dealer network, consisting of over 70 dealer locations that, in their territories, are exclusive to it with Type C and D school buses. School buses sold in the U.S. and Canada through the company's dealer network are purchased by school districts and private schools, as well as small and medium size contractors that provide services to school districts on a fee basis. Bus purchases and contractor fees are funded through local school district budgets. Purchases of school buses are typically made through a bid process at the district or state level, with dealers coordinating this process. Dealers develop collaborative relationships with school districts, district transportation directors, and key officials in their states.

The company's dealers have access to financing through a financing product maintained by an independent third party, Huntington Distribution Finance, Inc. (Huntington).

Other Distribution Channels

Fleet Operators: The company also sells school buses directly to large national fleets that span multiple states and such sales are managed internally by its National Account Sales Team.

Export Dealers: The company regularly monitors opportunities to sell its Type C and Type D buses in either school bus or other configurations in certain limited international markets and typically sell these products through dealers assigned to those territories.

The U.S. Government and Other Specialty Sales: The company also sells buses through its U.S. GSA contract, an expedited procurement procedure designed to meet the needs of bus customers authorized to purchase through the GSA contracting offices, including the U.S. Air Force, the U.S. Army, Homeland Security, and the U.S. Department of Agriculture. This full line of bus models is configured for adult or school bus use. In addition to the base GSA specifications, the company offers several additional configurations to provide a wide range of passenger capacities and optional features. The company also offers a full line of activity bus and Multi-Function School Activity Bus (MFSAB) products. With varying vehicle sizes, capacities, power choices, and engine types, the company's bus options enable its customers to tailor their transportation solutions to their specific needs, be it transporting a church congregation or shuttling workers to job sites.

Seasonality

Historically, the company's business has been highly seasonal with school districts buying their new school buses so that they will be available for use on the first day of the school year, typically in mid-August to early September. This has resulted in its third and fourth fiscal quarters (September 30, 2023) becoming its two busiest quarters, the latter ending on the Saturday closest to September 30. The company's quarterly results of operations, cash flows, and liquidity have historically been, and are likely to be in future periods, impacted by seasonal patterns. Working capital has historically been a significant use of cash during the first fiscal quarter due to planned shutdowns and a significant source of cash generation in the fourth fiscal quarter.

Intellectual Property

Among other trademarks, the company has registered trademark rights in the principal names and designs used by it and Micro Bird in the U.S., Canada, and elsewhere.

Research and Development

The company's research and development costs were $6.6 million for the year ended September 30, 2023.

Government Contracts

As a U.S. government contractor, the company is subject to specific regulations and requirements as mandated by its contracts. These regulations include Federal Acquisition Regulations, Defense Federal Acquisition Regulations, and the Code of Federal Regulations. The company is also subject to routine audits and investigations by the U.S. government agencies, such as the Defense Contract Management Agency and Defense Contract Audit Agency.

Suppliers

The company purchases its engine and transmission components on a single-source basis from major original equipment manufacturers (OEMs) with sophisticated engineering, production, and logistics capabilities, such as diesel engines, diesel emissions kits, and electric powertrains and battery systems from Cummins Inc.; propane and gasoline engines and transmissions from Ford Motor Company; transmissions form Allison Transmission; and propane fueling kits from Roush CleanTech.

Competition

The company's two principal competitors are Thomas Built Bus (subsidiary of Daimler Trucks North America) and IC Bus (subsidiary of Navistar, Inc.).

Government Regulation

In Canada, where the company's Micro Bird joint venture operates, school buses are governed by the Canadian Motor Vehicle Safety Regulations. These regulations are patterned after the Federal Motor Vehicle Safety Standards regulations, although differences do exist between the two regulatory systems.

History

Blue Bird Corporation was founded in 1927.