Blue Bird(BLBD) - 2024 Q3 - Quarterly Report

Supply Chain Disruptions - The company experienced significant supply chain disruptions that began in the second half of fiscal 2021 and continued into fiscal 2024, impacting production capabilities and increasing costs[86]. - Supply chain constraints have resulted in significant economic disruption, adversely affecting the company's operations and cash flows[88]. - The impacts of Russia's invasion of Ukraine have contributed to higher inventory purchase costs and volatility in commodity prices, further straining the supply chain[95]. - The company has no direct exposure to Ukraine or Russia but has been affected indirectly through increased costs of materials and components[91]. - Management believes that ongoing supply chain disruptions could continue to materially impact results if parts and supplies cannot be obtained in sufficient quantities[88]. - Supply chain disruptions continued to impact operations, limiting the number of school buses produced and sold, while also increasing manufacturing costs[153]. Financial Performance - Net sales for the third quarter of fiscal 2024 were $333.4 million, an increase of$39.1 million, or 13.3%, compared to $294.3 million for the same period in fiscal 2023[112]. - Net sales for the nine months ended June 29, 2024, were$996.9 million, an increase of $167.1 million, or 20.1$829.8 million for the same period in 2023[126]. - Operating profit for the third quarter was $39.7 million, an increase of$20.3 million compared to $19.4 million for the same period in fiscal 2023[116]. - Operating profit was$113.8 million, an increase of $91.3 million compared to$22.5 million for the same period in 2023[133]. - The company experienced a significant increase in net income of $75.7 million during the first nine months of fiscal 2024 compared to the same period in fiscal 2023[164]. Cost and Pricing - The company faced higher inventory purchase costs, including freight costs, which negatively impacted gross profit beginning in the latter part of fiscal 2022 and continuing into fiscal 2024[95]. - The company has implemented periodic pricing actions to ensure that sales prices keep pace with increased costs to procure inventory[86]. - The company reported that cumulative price increases began to have a significant positive impact on sales and gross profit during the remainder of fiscal 2023 and the first nine months of fiscal 2024[100]. - Parts sales increased by$1.3 million, or 5.5%, primarily due to price increases driven by inflationary pressures[114]. - Parts sales increased by $4.7 million, or 6.4$55.8 million for the nine months ended June 29, 2024, a decrease of $28.4 million from$84.1 million during the same period in 2023[160]. - Free Cash Flow for the nine months ended June 29, 2024 was $45.6 million, which is$32.1 million lower than the $77.7 million reported for the nine months ended July 1, 2023[167]. - The company had$88.4 million of available cash and $143.3 million of additional borrowings available under its revolving credit facility as of June 29, 2024[142]. - The company executed a$250.0 million five-year credit agreement, which includes a term loan facility of $100.0 million and a revolving credit facility of$150.0 million[144]. - The company borrowed $100.0 million from the Term Loan Facility and$36.2 million from the Revolving Credit Facility to pay off $131.8 million of term loan indebtedness and associated costs[147]. Segment Performance - The company operates in two segments: the Bus segment, which includes the design and sales of school buses, and the Parts segment, which involves the sale of replacement bus parts[109]. - The company evaluates segment performance based on revenues and gross profit, with the Chief Executive Officer identified as the chief operating decision maker[109]. Tax and Interest Expenses - Interest expense decreased by$2.4 million, or 53.3%, to $2.1 million due to a lower interest rate and reduced borrowings[117]. - Income tax expense for the third quarter was$9.9 million, compared to $1.9 million for the same period in fiscal 2023[120]. - The effective tax rate for the third quarter was 27.7%, influenced by state taxes and certain permanent items[121]. - The effective tax rate for the nine months ended June 29, 2024, was 26.4%, compared to 22.2% for the same period in 2023[140].