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Introduction & Market Context
Blue Bird Corporation (NASDAQ:BLBD) presented its fiscal third-quarter 2025 results on August 6, showcasing record performance that exceeded guidance across all metrics. The school bus manufacturer reported significant year-over-year improvements in revenue, profitability, and cash flow, despite ongoing challenges from tariffs and market volatility.
The company’s stock closed at $43.61 on the day of the earnings release, up 1.24% in regular trading, with an additional 0.44% gain in aftermarket trading. This positive market response contrasts with the slight decline seen after the previous quarter’s results, suggesting growing investor confidence in Blue Bird’s execution and outlook.
Quarterly Performance Highlights
Blue Bird delivered exceptional third-quarter results, with substantial improvements across all key financial metrics compared to the same period in 2024.
As shown in the following comprehensive overview of Q3 financial results and business highlights:
The company sold 2,467 units during the quarter, representing a 14.7% increase from the prior year. This drove net sales to $398 million, up $65 million or 19.5% year-over-year. The average selling price increased by $7,700 per unit, reflecting Blue Bird’s pricing power and favorable product mix.
Alternative power vehicles, including electric buses, continued to gain traction, accounting for 61% of the sales mix. The company maintained a strong backlog of approximately $618 million, representing 3,900 units, including 1,200 electric vehicles worth approximately $174 million.
A detailed comparison of Q3 and year-to-date financial results reveals consistent improvement across all metrics:
Detailed Financial Analysis
Blue Bird’s income statement shows significant improvement in both top and bottom-line performance, with higher unit volumes and increased revenue per unit driving profitability.
The following income statement comparison highlights the key financial metrics:
Gross margin expanded by 80 basis points to 21.6%, while Adjusted EBITDA increased by $10.3 million to $58.5 million, representing a 14.7% margin. Adjusted net income grew by $8.2 million to $38.7 million, resulting in adjusted diluted earnings per share of $1.19, up from $0.91 in the prior year.
The drivers behind the Adjusted EBITDA improvement are clearly illustrated in this bridge analysis:
The $10.3 million increase in Adjusted EBITDA was primarily driven by favorable bus volume and pricing ($14.3 million), improved operations and quality ($2.4 million), and higher parts gross profit ($10.3 million), partially offset by increased operating expenses and other factors ($6.4 million).
Blue Bird’s balance sheet and cash flow position strengthened considerably, with cash increasing to $173.1 million (up $84.7 million year-over-year) and debt decreasing to $91.5 million (down $4.6 million). The company generated $56.9 million in operating cash flow during the quarter, a dramatic improvement from just $1.0 million in the same period last year. Adjusted free cash flow reached $52.3 million, compared to negative $3.5 million in the prior year.
Strategic Initiatives & Capital Allocation
A significant highlight of Blue Bird’s presentation was the announcement of a new $100 million share repurchase program for 2026-2027, signaling management’s confidence in the company’s future prospects.
The following slide outlines the company’s comprehensive capital allocation strategy:
With approximately $475 million in available funds (including projected cash flow from operations and existing cash), Blue Bird plans to allocate capital across several strategic initiatives: $150 million for manufacturing expansion, up to $50 million each for R&D expenditures, capital expenditures, and small acquisitions, and up to $100 million for the new share repurchase program.
The company is also investing in operational improvements, new product development, and capacity expansion to support long-term growth. This includes the launch of a new manufacturing plant and entry into new market segments with commercial chassis offerings.
Blue Bird continues to lead in the alternative power segment, particularly electric vehicles, despite some softening in EV demand. Management noted they are effectively managing the impact of tariffs through a "margin-neutral tariff strategy" while maintaining their competitive position.
Forward-Looking Statements
Based on the strong Q3 performance, Blue Bird raised its full-year guidance for fiscal 2025:
The company now expects net revenue of approximately $1.45 billion (up $103 million from fiscal 2024) and Adjusted EBITDA of $205-215 million (up $22-32 million), representing a margin of approximately 14.5%. Adjusted free cash flow is projected at $90-100 million.
Looking ahead to fiscal 2026, Blue Bird provided preliminary guidance:
The base case scenario projects 9,500 units (including 750 EVs), revenue of approximately $1.5 billion, and Adjusted EBITDA of $220 million at a 14.5% margin. Management also outlined upside and downside scenarios based on various market conditions.
For the longer term, Blue Bird has raised its EBITDA margin target to 16% or higher, as illustrated in this comprehensive outlook:
The company expects to achieve this through continued operational improvements, pricing discipline, and scale benefits as it grows toward $2 billion in annual revenue.
President and CEO John Wyskiel emphasized the company’s strong positioning: "We are managing the volatility well, taking action to provide stability to customers. We’ve delivered record quarterly sales and Adjusted EBITDA of $398 million and $58 million, respectively, and we’re entering exciting new market segments with best-in-class commercial chassis."
Blue Bird’s Q3 results and updated outlook demonstrate the company’s ability to execute effectively despite market challenges, while its strategic investments and capital allocation decisions position it for sustainable long-term growth.
Full presentation:
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