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Hello, all. And welcome to the Blue Bird Corporation Fiscal 2024 First Quarter Earnings. My name is Lydia, and I'll be your operator today. [Operator Instructions]. I will now hand you over to your host, Mark Benfield, Head of Invest Relations, to begin.

Thank you. And welcome to Blue Bird's fiscal 2024 first quarter earnings conference call. The audio for our call is webcast live on blue-bird.com under the Investor Relations tab. You can access supporting slides on our website by clicking on the Presentations box on our IR website. Our comments today include forward-looking statements that are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters we have noted on the following two slides and in our filings with the SEC. Blue Bird disclaims any obligation to update the information in this call. This afternoon, you'll hear from Blue Bird CEO, Phil Horlock, and CFO, Razvan Radulescu. Then we'll take some questions. Let's get started. Phil?

Thanks, Mark. And good afternoon, everybody. It's great to be here and to share with you our results for our fiscal 2024 first quarter. Now, you recall in our last earnings call, we reported record results for fiscal 2023 fourth quarter and full year. Well, I'm pleased to tell you that our momentum has not slowed down at all, where the Blue Bird team did a fantastic job in delivering another all-time record profit in the first quarter of fiscal 2024. Razvan will be taking you through the details of our financial results shortly, so let me get started with the key takeaways for the first quarter on slide 6. As the headline states, we achieved record financial results in the first quarter of fiscal 2024. As I just mentioned, and as shown in the first line in the box, it was a record adjusted EBITDA for any quarter in our history. And our net sales revenue was a record for any quarter in the first half of fiscal year. So with record profits from revenue, I am very pleased to tell you that we achieved an all-time high adjusted EBITDA margin of 15% in the first quarter, and we're increasing full year guidance once again. In just a few minutes, Razvan will take you through the financial details of what was an exceptional first quarter results for Blue Bird, including a comparison with last year. As we look at the drivers for this terrific progress in Q1, it really is about maintaining and delivering the plan we laid out last year, which focuses on making significant improvements across our entire business. Market demand for school buses continues to be very strong. And our backlog for Blue Bird school buses was at a very healthy 4,600 units at the end of the first quarter. This bodes well for pricing, production stability, and profit margins. Now while supply chain issues are definitely easing, there are select constraints on a couple of chassis components across the truck and bus industry that are still limiting industry production and deliveries, but we are very engaged with those constrained suppliers with onsite support at their plants and we're managing the situation well. On that point, despite this component constraint, we sold 9% more school buses in the first quarter than a year ago. As I mentioned last quarter, the legacy price backlog which hurt us in fiscal 2022 and in the first quarter of fiscal 2023 is fully behind us. All those low margin units have been sold. Every bus in our order backlog now reflects current pricing, and we are priced competitively, which we can tell from our quote win rate and our incoming orders. This is an entirely different Blue Bird bus revenue and gross margin structure compared with just a year ago. On the EV front, thanks largely to the first phase of the billion dollars of funding from the EPA's unprecedented $5 billion Clean School Bus program, our first quarter deliveries of electric buses was an old time record in a quarter, more than doubling from a year ago, and we ended the first quarter with a strong backlog of EV orders. As we have done for many years, we again increased our sales mix of alternative powered vehicles over the last year and further strengthened our leadership position. The higher margins and higher [indiscernible] (00:04:30) from these products contributed to our profit improvement in the first quarter. We'll continue to reinvest back to the business by selectively upgrading facilities and processes, enhancing the plant working environment. And as Razvan will show you later, we are doubling our engineering spending this year as we embark on exciting new product programs that will hit the market in the next two to three years. Through the efforts of the best workforce in the business, strong leadership, lean process improvements and sheer hard work, we have been achieving some of the best manufacturing performance that company has ever achieved. Bottom line, we performed extremely well in a strong market. We're delivering a greater mix of higher margin alternative powered vehicles, we're priced competitively and appropriately for today's economic environment, and manufacturing efficiencies are improving. As a result of all these accomplishments, our first quarter profitability was an all-time record for Blue Bird of $48 million, with an exceptional adjusted EBITDA margin of 15%. Now let's take a closer look at the financial and key operating highlights for the first quarter on slide 7. I want to begin by saying the first quarter financial performance is transformed from a year ago, with many record highs reported. We sold over 2,100 buses in the first quarter of fiscal 2024, which is substantial 9% or 172 buses above last year. Incidentally, that is our highest first quarter unit sales volume in more than 15 years, in what is typically a seasonally challenged quarter, having just followed the start of the new school year. Those unit sales drove first quarter net revenue of $318 million. That's another first quarter sales record for Blue Bird and an outstanding 35% increase over the last year. So a volume up 9% and net revenue up 35%, the impact of higher pricing and the richer mix of alternative powered vehicles, including EVs, is clearly evident in the revenue growth. As I mentioned earlier, first quarter adjusted EBITDA of $48 million is another all-time record for Blue Bird, and that's $51 million above last year and well above that $25 million to $35 million general guidance range of quarterly profits that we set at our last earnings call. And finally, adjusted free cash flow for the first quarter was about breakeven, as we protected for future material needs, and $21 million below last year when, in fiscal 2023, we were aggressively cutting excess inventory left from the prior quarter. Razvan will cover this topic in detail in his section. Overall, with exceptional first quarter financial results and transformational gains from last year. On the right hand side of the slide, you can see some of the key operating highlights for the business. As I mentioned earlier, demand continues to be strong with our firm order backlog at the end of the first quarter with over $670 million in net revenue, reflecting a backlog of over 4,600 buses. Incidentally, as of Monday this week, our backlog has grown to 5,000 buses. So orders clearly haven't slowed down as we enter the traditional seasonal order cycle for school districts and fleet operators. We raised prices considerably over the past two years, and the average first quarter selling price for bus in fiscal 2024 was an outstanding 26% higher than a year ago. That's worth about $29,000 per bus in revenue. Parts sales totaled $24 million in Q1, representing a strong 8% growth over last year, in the typically slowest quarter of the year for parts sales. Another great result by the parts team. Turning to alternative powered buses, they represented our second highest mix of sales in any quarter, 66% of total unit sales. And that's 4 percentage points higher than last year. We continue to be the undisputed leader in this space. No other major school bus manufacturer comes close to that number. Incidentally, I would be remiss if I didn't mention that our principal competitors, IC and Thomas, are no longer offering the propane or gasoline powered school bus and we are once again the only OEM supplying these important products. EV buses were part of that alternative power mix growth, with Q1 bookings increasing by 124% over last year, as we sold a quarterly record of 206 EV school buses. That represents an all-time high mix at 10% of our total sales. Additionally, we left the first quarter with 420 firm EV orders in our backlog, which is around a 9% share of our total backlog. That's worth approximately $130 million in revenue. Incidentally, that backlog today is now at 500 EVs, representing 10% of our total current backlog. Clearly, we're benefiting substantially from the billion dollars funding from the first phase of the EPA's $5 billion Clean School Bus program. I'll cover later the exciting news on the second phase of the recently announced EPA funding, which is higher than was expected and will generate significant EV and propane school bus awards in the first half of 2024 calendar year. Continuing with our EV successes, I am incredibly proud that, during the first quarter of fiscal 2024, we received the largest single order ever of EV school buses from LA Unified School District following a competitive bidding process. That's 180 buses in total, with deliveries starting late this calendar year and, importantly, this order did not utilize the EPA's Clean School Bus funding program. That's a great testament to our competitiveness and to our leadership position in the EV segment. Late in the first quarter of fiscal 2024, we announced that we have formed an exclusive joint venture called Clean Bus Solutions. That's a 50/50 JV with Generate Capital, who is a leading sustainable investment and operating company focused on infrastructure transition. Clean Bus Solutions will provide electric school buses and charging infrastructure as a service to Blue Bird customers for an affordable monthly fee over the lifetime of the service. This turnkey service eliminates the typical high upfront cost for a school district and pay for electric bus when grants are limited and handles the entire charging infrastructure including installation. This recurring revenue business should accelerate adoption of Blue Bird electric buses by school districts and will be a great new sales tool for our dealers. We'll keep you posted on progress for the coming year as Clean Bus Solutions begins to transact business. And finally, on the back of our first quarter results, we are once again raising full year guidance for adjusted EBITDA and adjusted free cash flow. With an all-time record profit earned Q1, reflecting a 15% adjusted EBITDA margin, I am very proud of our team's accomplishments. I would now like to hand it over to Razvan to walk through our fiscal 2024 first quarter financial results and updated guidance in more detail. Over to your, Razvan.

Thanks, Phil. And good afternoon. It's my pleasure to share with you the financial highlights from Blue Bird's fiscal 2024 first quarter record results. The quarter end is based on a close date of December 30, 2023 whereas the prior year was based on a close date of December 31, 2022. We will file the 10-Q today, February 7, after market close. Our 10-Q includes additional material and disclosures regarding our business and financial performance. We encourage you to read the 10-Q and the important disclosures that it contains. The appendix attached to today's presentation includes reconciliations of differences between GAAP and non-GAAP measures mentioned on the call as well as other important disclaimers. Slide 9 is a summary of the fiscal 2024 first quarter record results. It was another outstanding operating quarter for Blue Bird, with somewhat limited supply chain challenges and with an increased number of higher margin units driving both our top line and our bottom line results. We significantly beat the adjusted EBITDA general quarterly guidance provided in the last earnings call. And in fact, we delivered again the best quarter ever for Blue Bird, with 15% adjusted EBITDA margin. The team pushed hard and continued doing a fantastic job and generated 2,129 unit sales volume, which was 172 units or 9% higher than prior year. Record Q1 consolidated net revenue of $318 million was $82 million or 35% higher than prior year, driven by a higher number of units, higher parts sales, improved mix of electric buses, and pricing actions that materialized in this quarter as expected. Adjusted EBITDA for the quarter was a record $48 million, driven by high margins, increased parts sales and margins, partly offset by increased labor costs. The adjusted free cash flow was negative $2 million, and $21 million lower than the prior-year first quarter. This result was due to increased profitability, which was more than offset by an increase in strategic inventories for long lead components, a reduction in accounts payable, and a reduction in the EPA prepaid received in fiscal 2023 Q4. Our liquidity position at the end of this quarter was very strong at $184 million. This performance was outstanding for both the top line and the bottom line – all-time record for Q1 quarterly revenue of $318 million, all-time record for quarterly EV sales above 200 units and all-time record for quarterly adjusted EBITDA of $48 million and 15%. Moving on to slide 10, as mentioned before by Phil, our backlog at the end of Q1 continues to be very strong at approximately 4,600 units, including 9% EVs. Breaking down the record Q1 $318 million in revenues into our two business segments, the Bus net revenue was $293 million, up by $80 million versus prior year. Our average bus revenue per unit increased from $109,000 to $138,000 or 26%, which was largely the result of pricing actions taken over the past 18 months, as well as a higher mix of electric buses. EV sales in Q1 were also at a record level of 206 units, or 114 more than last year, a 124% increase year-over-year. We'd like to remind you that we have announced in this fiscal year two price increases for new orders, one in last October and one for the end of March of $2,500 net per bus each in order to cover inflationary cost factors and significant long term strategic investments. Parts revenue for the quarter was $24 million, representing a growth of approximately $2 million or plus 8% compared to the prior year. This great performance was in part due to increased demand for our parts as the fleet is aging, as well as supply chain driven pricing actions and throughput improvements. Please also keep in mind that due to year-end holidays and Thanksgiving, our fiscal Q1 has a lower number of work weeks. However, this year, due to the very strong backlog and improve supply chain situation, we were able to maintain production levels and did not take the pre-COVID usual extended plant shutdown. Gross margin for the quarter was a record 20% or 17 percentage points higher than last year due to our improved operational performance and our pricing overtaking in the last two quarters the inflationary costs of the last 18-plus months. In fiscal 2024 Q1, adjusted net income was approximately $30 million or $40 million higher than last year. Adjusted EBITDA of approximately $14 million or 15% was up compared with prior year by $51 million and 17 percentage points. Adjusted diluted earnings per share of $0.91 was up $1.21 versus the prior year. Slide 11 shows the walk from fiscal 23 Q1 adjusted EBITDA to the fiscal 2024 Q1 results. Starting on the left at negative $3.5 million, the impact of the Bus segment gross profit in total was $55 million, split between volume and pricing effects, net of material cost increases of $48.6 million and operational improvements of $6.4 million. The operational improvements consist of year-over-year manufacturing efficiency and throughput improvements, as well as lower freighting costs. The favorable development in the Parts segment gross profit was $1.1 million, driven by higher sales and improved margins, as mentioned earlier in the call. These great improvements were slightly offset by increases in our other expenses and fixed costs, mainly personnel related of negative $5 million, as we continued to reinvest into our business and our teams during fiscal 2024. The sum total of all of the above mentioned development drives our record fiscal 2024 Q1 reported adjusted EBITDA result of $47.6 million or 15%. Moving on to slide 12, we have extremely positive developments year-over-year also on the balance sheet. We ended the quarter with $77 million in cash and reduced our debt significantly by close to $15 million over the last four quarters. Our liquidities are very strong at a record $184 million at the end of fiscal 2024 Q1, $100 million increase compared to a year ago. The operating cash flow was a black zero in this quarter, driven by an improvement in operations and margins, which was fully offset by an increase in trade working capital to lower payables and higher strategic inventories, a reduction of our EPA prepaid balance and the seasonal reduction in other accrued expenses. Moving to slide 13, as mentioned in our last call, at the end of November 2023, we refinanced our credit facility, a significant better term, with a five year maturity date for November 2028. The new structure consists of $100 million term loan with 5% per year amortization and the new revolver line of credit of $150 million. The reduced covenants and the extended maturity of our loan provide Blue Bird with both flexibility and stability as our business grows profitably, and we continue to lead the school bus industry in the alternative fuel space. Slide 14 shows the sustainable results achieved by our team over the last four quarters, generating almost $140 million in adjusted EBITDA or 11%. Our quarterly revenues have been in the $300 million range and growing, partially due to pricing realization, combined with a quarter-by-quarter increase in EV mix, which is now at approximately 10% of our sales. We have beaten/raised our conservative guidance every quarter due to the outstanding execution of our plans by our teams, despite a still difficult supply chain environment with select suppliers. The last three quarters have been in the 10% plus adjusted EBITDA range, demonstrating that we are delivering now consistently double-digit performance. Finally, it is important to note that, unlike in the not-too-distant past, our pricing curve has been ahead of our costing curve, especially in the last two quarters, preparing us for the significant investments lined up for 2024 and the contractual inflation factors expected ahead of us. Before we talk about the updated guidance for fiscal 2024 and our long-term outlook, on slide 15, we wanted to share with you again some significant investments that we are starting in fiscal 2024 to ensure that our profitable growth strategy is successful. Our engineering expenses planned for fiscal 2024 are double the level of fiscal 2023 as we began the integration work for the next generation of gas and propane engines for the next level of emission regulation. Additionally, we continue to evolve our EV offering and plan new product safety enhancement features. Finally, we will continue to ramp up our investment in bringing to market the commercial EV chassis by the end of calendar 2024. We are also planning to triple our capital investments into capacity expansion, production facility upgrade, quality improvements and our supply chain capability and tooling towards our target of 50 buses per day or approximately 12,000 buses per year. On the people side, we experienced inflationary pressures both externally from our supply base and internally, and we continue to provide very competitive benefits to our employees. We are also launching later this year a complexity reduction initiative, and we will begin the upgrade of our ERP system as well as modernization of our business intelligence and financial planning and analysis tools. All these costs combined can add up to 2% to 3% of our revenue on a run rate basis later in fiscal 2024 and beyond. On slide 16, we want to share with you our updated fiscal 2024 guidance. As a reminder, we are continuing to take a transparent and conservative approach also this year, but it is still a somewhat uncertain supply chain environment we are facing. However, we have improved already all the other business levers that we could address as now demonstrated by our very strong trailing 12-month actual results. Looking forward with fiscal 2024, we are maintaining our revenue to a range of $1.15 billion to $1.25 billion, and we are significantly increasing our adjusted EBITDA to $130 million or approximately 11%, with a range of $120 million to $140 million. This is an increase of almost 50% over the prior year record results. Due to supply chain volatility, at this point, we are only providing and maintaining our general quarterly ranges, with every remaining fiscal 2024 quarter expected to have revenue between $275 million to $325 million and adjusted EBITDA in the range of $25 million to $35 million or 9% to 11%. We will provide further updates in mid-May after we close Q2 and gather further insight into our supply chain capabilities to support our strong backlog and increasing EV mix. Moving to slide 17. In summary, we are forecasting a significant improvement year-over-year, with revenue up 6% to approximately $1.2 billion, adjusted EBITDA in the range of $120 million to $140 million and adjusted free cash flow of $60 million to $70 million, in line with our typical target of 50% of adjusted EBITDA. On slide 18, we'd like to give you an overview of our capital allocation for fiscal 2024 and the exciting share repurchase program we recently announced. Our capital allocation strategy balances investments for long term profitable growth, return of value to our shareholders and maintains a conservative cash position by year-end. On the left side, our sources of cash consist of a very strong cash flow from operations after tax and interest of $148 million, existing cash at fiscal 2023 year-end of $77 million and $5 million in dividends from our joint venture in Micro Bird. We do not expect to add new debt this year. On the right side, we have three uses of cash – growth, shareholders and debt repayments. As far as growth is concerned, we plan to use and not to exceed $25 million in each of these categories – R&D and engineering expenses, CapEx for growth and maintenance, and funding our newly formed Clean Bus Solutions JV, combined with potentially other small M&A activities. Moving on to shareholders category, we are very happy to have announced recently our stock buyback program for up to $60 million over the next two years. This is supported by our strong existing cash and free cash flow guidance, and we believe it is the best way at this point to return value to our shareholders. Finally, in addition to the required tern loan principal payment of $5 million, we plan to pay down the $35 million existing revolver balance to zero during fiscal 2024 and maintain a conservative cash balance at year-end in excess of $50 million. On slide 19, we wanted to also reiterate our long term outlook. The 11% adjusted EBITDA margin is firmly now in our updated short term outlook. And once the supply chain further normalizes, we expect to sell approximately 9,500 units, including 1,500 units EVs, and generate $150 million on $1.35 billion in revenue. This could be as early as 2025. Looking to the medium term, our EV growth and operational improvements can support volumes of 10,500 to 11,000 units, including EVs in the range of 2,500 to 3,500 units, generating revenues of $1.5 billion to $1.7 billion, with adjusted EBITDA of $175 million to $200 million or 11.5% to 12%. Our long term target remains to drive profitable growth towards approximately $2 billion in revenue, comprising of up to 12,000 units, of which up to 5000 are EVs and generate EBITDA in excess of $250 million or 12.5% plus. We're incredibly excited about Blue Bird's future. And now I'll turn it back over to Phil.

Thanks, Razvan. That was a great explanation of our Q1 financial results and our outlook. Let's move on to slide 21. I introduced this slide at our last earnings call. So I won't spend as much time on it today as our priorities and our strategy are unchanged, as they should be. The chart on the left illustrates the three priorities that continue to drive us. We're taking care of our employees, delighting our customers and dealers, and delivering profitable growth. The chart on the right provides more text around the specific strategies that we are pursuing that both align with our priorities and drive our forward year growth plans. At the center is our ultimate objective, to drive sustained profitable growth. As you look at the accomplishments in fiscal 2023, we transformed the business from losses to record profitability, achieving a full year margin of 8%. For fiscal 2024, we just increased our full year earnings guidance to reflect an 11% adjusted EBITDA margin. And over the next couple of years, we plan to grow that margin 12% and then beyond. Our specific strategies focus on delivering these financial goals and as spelled out in this chart, namely, leadership in safety, both in the workplace and with our products is paramount to us. And we're investing both engineering and CapEx in these areas in fiscal 2024. Best products and features, we seek to differentiate ourselves providing more value to our customers. Our buses are purpose built from the ground up for transporting children safely with many unique features. They're not a derivative of a truck chassis, like most of our competitors, and our customers understand the value of this. Leading in quality, durability and alternative power is the cornerstone of our product planning and development, and we will continue to differentiate in these areas. Having competitive cost through Lean manufacturing and efficient throughput, strong supplier relationships, and sheer smart product design are essential to compete in a business where competitive bids are required. And after the sale, we need to provide great service and ensure vehicle uptime throughout the 15 years or more that our buses need to run. This means partnering with our exclusive dealer network that covers every corner of the United States and Canada with our dealers having an average tenure with us of over 30 years. As I have said many times before on these calls, you can't make it in the school bus business without a fully capable and experienced dealer network that can reach more than 10,000 school districts that operate their own bus fleets and 3,400 independent owner operators of school buses. Following these core strategies have been key to our transformation and will continue to drive our forward year plans. Let's now turn to slide 22 and look at the latest impact of the federal government's Clean School Bus funding program, which is so important in helping to accelerate the adoption of electric and propane vehicles in fiscal 2024 and beyond. As a reminder, we are just entering the second year of this five year program, which provides $5 billion of funding of electric and propane powered school buses. There is still a $4 billion available after the first year of funding. The second year, which is referred to by the EPA as a 2023 program, provides the two rounds of funding, totaling at least $1.5 billion. Now that's about $500 million more than was anticipated, and it appears to be an acceleration by the EPA to deploy the $5 billion in total funding. As the left chart shows, Round 2 applications of the 2023 grant program were completed in August 2023. And in January 2024, the EPA announced they were increasing the funding for $400 million to $965 million due to the high level of grant applications. A total of 2,737 electric and propane buses were awarded, and the winners will have until December 2025 to purchase their buses using these awards. We expect Blue Bird buses to represent around 30% of the ultimate orders, amounting to approximately 800 electric and propane school buses through this program. Looking at the right chart, immediately after announcing the Round 2 award results, the EPA announced the Round 3 rebate program, which is also part of the 2023 program, will now total at least $500 million. Applications are being accepted until a week from now. It's anticipated award winners will be notified by May 2024, and will have until April 2026 to purchase buses and close out their awards. If our win rate holds at about 30%, Blue Bird should expect to receive around 450 electric and propane school bus order from this third round. Together, both of these funding rounds should generate orders for at least 4,300 electric and propane school buses and associated infrastructure, which is great for the industry and in particularly for Blue Bird with about 1,250 orders anticipated. Now with the deadline for purchase from grants from these two rounds being as late as April 2026, there is a likelihood that orders and corresponding deliveries could be late than we have been anticipating, pushing back deliveries into fiscal 2025 as end customers deal first with their charging infrastructure needs. We will work with our dealers and end customers to pull out as many as we can into fiscal 2024, but for prudency, we have cut our EV bookings forecast for this year from 900 units to 800 units. So let me now wrap up the earnings call and the outlook for the business on slide 23. Razvan took you through the raised guidance for fiscal 2024, and I'm showing you some of those metrics at the midpoint of guidance here. We have been prudent on our bookings outlook, only increasing volume by 3% over fiscal 2023 at this time, as we still deal with two specific suppliers of constrained chassis components that are impacting the broader truck and bus industries. But we did manage these very well in 2023. And if we can build more in fiscal 2024, we will, just as we did last year. Net revenue of $1.2 billion will be a new record for Blue Bird, up 6% from fiscal 2023. Adjusted EBITDA guidance of $130 million is almost 50% higher than the record $88 million we delivered in fiscal 2023. Importantly, we are planning an 11% EBITDA margin in fiscal 2024, up 3 percentage points from fiscal 2023, which is a couple of years ahead of the plan we have been sharing with you. We have confidence in achieving this margin after recording an impressive 15% adjusted EBITDA margin in the first quarter of fiscal 2024. It should be noted that the first quarter did benefit from an exceptionally high mix of EVs at 10% of unit sales, within a strong total mix of alternative fuel vehicles at 66% of sales. Now this mix may not repeat through all quarters, especially with extended time granted by the EPA for customers to complete their purchase and deployment of the new EV funding awards that I mentioned earlier. You remember that's as late as April 2026 to get them in service. Further, as Razvan pointed out, we are doubling engineering work in fiscal 2024 in support of new product programs, which is contained within our 11% margin outlook for fiscal 2024 full year, along with the potential economic impact of our first collective bargaining agreement with the USW that's expected later in the year. Finally, as I mentioned earlier, we're looking to grow EV unit sales to 800 buses in fiscal 2024. That's a substantial 47% increase over our sales last year. As you can see on the right chart, there is still a lot of pent up demand following the low industry sales in 2020, 2021 and 2022. And the bus fleet has aged by a couple of years. ACT is forecasting a compound annual industry growth rate of 7% from the end of fiscal 2023 through fiscal 2027. And that's great news for our business and it's great news for our profit outlook. With residual supply chain challenges still impacting the auto business, the ability to build all the units near term is not a given, but the demand is clearly there, and that's what's really important. After executing a substantial transformation across our business, the company is performing extremely well. We'll continue to improve operating performance, and look forward to sustained profitable growth in the robust market ahead. On that note, as Razvan covered in his session, our recently announced $60 million share repurchase program illustrates our confidence in the business outlook, our ability to generate cash and our commitment to drive shareholder value. The future is incredibly bright for Blue Bird and we're confident in achieving what has been our long term goal of 12% EBITDA margin within the next couple of years. I want to thank our nearly 2,000 employees for all the hard work and dedication, delivering our all-time record quarterly profit in Q1 on top of a record full year profit last year, as well as our outstanding dealer body who are critical to our successes. That concludes our formal presentation today. I delegate it back to our moderator for the Q&A session. Thank you.

[Operator Instructions]. Our first question today comes from Mike Shlisky of D.A. Davidson.

I guess I wanted to ask first about the quarterly outlook that you put out there. Kind of you raised from last quarter that. The lowest quarter of the year will be $275 million. You just put up a quarter of $318 million in your fiscal first quarter, which I believe is usually the least revenue just because of the school calendar in most fiscal years. I'm having a hard time figuring out, and I do recognize that there was some EVs in there, even trying to back out the price effect of EVs, it's hard to imagine if the rest of the year typically from a unit level, whether it's EV or ICE, if they're usually up in the first quarter, you having a quarter this year that is $275 million. I'm curious, is there anything on the calendar or schedule that we should be thinking about here that I'm missing that would cause you to have a quarter that would have top line of about $275 million?

Regarding the seasonality of Q1, so before COVID, indeed, this was the lowest revenue and lowest number of units because, historically, we took extended shutdown for the plant to do extended maintenance work, but also because, at that time, the order backlog was very low after the start of the school year. And so, as I mentioned in my remarks, this year, we maintained the speed of production and we did not take an extended shutdown. So we only took a couple of days around Christmas and Thanksgiving break. So we did have indeed more working days in this Q1 than ever before. In terms of the remaining quarters, we want to be conservative in our revenue guidance. And as I said, supply chain still has some constraints, especially with two particular suppliers. So should the supply of parts be lower than the midpoint, this is how we might get to a lower quarter below $300 million, whether it comes through the total number of buses or through the percent of EV inside that number.

And just to follow up there, do you have any planned shutdown for the rest of the year just to kind of make up what you couldn't do in the first quarter or you're going to go forward with it, think about next…?

We're able to flex up if we can later in the year. I mentioned on my comments that, like we did last year, we can build more, we will build more, and that's where we stand. But we've been a little conservative. We're very active with a couple of constrained suppliers, as we mentioned. Really great, obviously, throughput through the first quarter. We've just been a bit prudent in the balance of the year at this point.

It's great to see that you also had growth in the unit sales during the quarter too. That was exciting. It doesn't appear to me as though some of your competitors had growth in their unit sales in the quarter. Can you comment on Blue Bird's market share? You think you're gaining share? And if you could give me two answers, one on the ICE side and one on the EV side, it will be appreciated.

Well, we don't tend to talk too much about share. We definitely have gained some share over the last trailing 12 months. Obviously, in the fiscal year, it's a short timeframe now and things change and different – we're just entering what we call the bigger order season, frankly, when people ramp up and start thinking about buses for school start. But I'll say, our share is strong. It's holding well. A lot of activity. A lot of interest. I mentioned about our win rate. And order rate supports a strong demand. So I think we're feeling – we're confident of what we're saying. We have great faith in our ability. And we have a great product range too that's very expensive. I've talked many times about no one has a product range we've got from electric to propane to gas to diesel, on Type 8, Type As, we're Type Cs and Type D. So we got by far the best product range. So we're confident in our outlook and what we're doing.

Maybe one last one for me. The increased engineering costs that you mentioned, $25 million, maybe a little less than that, that roughly equates to about 2 points of margin on this year's guidance. So, could you maybe tell us, do you think that – it sounds like, without that, you'd be at EBITDA margins of perhaps 13% this year. Are these one-time costs – and if we were to see a flat year next year, just to as a thought experiment, you should be seeing a 13% EBITDA margin business, 9% to 11% EBITDA margin business in a more normalized engineering investment environment.

The year-over-year increase is $12.5 million. So it doubled to $25 million. So that's about 1% of sales on a year-over-year basis. And we do expect to maintain this elevated level for the next couple of years. Some of these projects are multiple-year projects, especially with powertrain, and some other product enhancements. So for the next couple of years, we will sustain this level.

Our next question comes from Eric Stine of Craig-Hallum.

First of all, I've been covering you for a long time, to see almost $50 million in EBITDA in the first quarter is quite something. And with that in mind, as I think about the remainder of the year, and you just touched on it, but maybe I'll ask it a different way or clarify. So, Phil, were you saying that you've had price increases and now you're actually a little bit ahead of where you see materials cost scale? If that is the case, is that something where you think maybe EBITDA is more skewed towards the first half than the second? I guess I'll start there.

I think Razvan talked about in his script. So I'll just let – he wants to just jump in here on this one.

As I mentioned in my remarks, indeed, our pricing curve is now head of the costing curve, especially for the last two quarters. And also, as highlighted with upcoming investments, whether it's on the product and powertrain and R&D, whether it's into CapEx and manufacturing capabilities, which includes also a component of NRE in there, whether it's inflation from the supply chain or on the people side, all these costs are coming mostly starting in Q2, Q3 and Q4. So, the costs are back-end loaded. And the pricing curve is now, let's say, almost maximized for the year. So indeed, we do expect somewhat lower EBITDA in Q2 to Q4 compared to Q1.

You recall what we said Eric was that we priced $2,500 in every bus fixed price in October, start of our fiscal year. And then we priced again six months later. Another pre price increase will go on. Dealers know about it. They have it, accepted it. When we bid with our dealers, we look at – every single bid we do, we have an opportunity to adjust the price up or adjust it down as we see fit with our dealers. But we're keeping really, really close tabs on this. And I think as Razvan explained, we've used the term conservative in our outlook for the rest of the year and we continue to be so because you can never know what happens in a constrained environment we're still dealing with. So I think the position we're in right now is a good position to be.

I can appreciate still being conservative, given all what's going on. Maybe just turning to the EPA funding you mentioned. Well, first of all, good to see that the deadlines to actually get the funding that that's been closed out. I know, for round one, the infrastructure was a big issue. As you think about trying to pull things as much as you can forward into fiscal 2024, where do you think things stand on the infrastructure side? Is that still a limiting factor? Do you see that easing at all?

Yeah, I think it definitely is. Look, I think everyone's getting better at it. We're active with several infrastructure providers. But I think certainly the pace of activity in the first year of this caught a few by surprise. They weren't quite ready for the utility companies, all the charging equipment was in the right place. And actually, I think I've mentioned the last call, I think it was three vehicles were canceled. Others had a lot of cancellations because they were not ready and they just pulled out. And I think that's really the gating factor I was mentioning when I was being a little cautious. I said, look, second half of this year, we've got – awards are being granted and given to people for both these rounds, let's say, by May. And then they've got until April 2026 as the endpoint which to install these buses in. And they're going to work on charging stations first, it feels like to me, and we're helping them. And we working on the chargers they need. But obviously, it could well push back a little bit when they want their buses. They're not going to get buses before they know they got charging stations in place. And that's the challenge now for all of us in this industry to help that and move it along. The fantastic news is EPA stepped up this round two and round three to $1.5 billion. We thought it was going to be $1 billion for the year. $1.5 billion for the year. Well, they have extended the timeframe. Now, like I said before, we're going to do everything we can to accelerate our deployment because we like doing that. I think it's the right thing to do. And we'll work with the charging guys that we work with and others, and we'll work with our end customers too to help them.

Maybe last one for me just on the Clean Bus Solutions joint venture. Just curious, early returns on that? And is that something where you would expect – do you see people waiting to see if the EPA, if they're able to get either grants or rebates? If not, then they turn to the joint venture in that financing solution? Or do you think that that's not necessarily the case and that people go that route regardless, just having a monthly cost that's similar to diesel?

Yeah. I look at it this way. First of all, obviously, EPA grants are really exciting. We have 500,000 school buses on the road, and we're talking about funding 4,300 with this next round. So there's a huge appetite and huge oversubscription of school districts that want electric buses. That's why they stepped up this $1 billion to $1.5 billion. So the EPA – there's a big demand is what I'm saying. So definitely outside of this, outside of the EPA money, and there are other grants around, by the way, there are things called HVIP and TVIP in different states. But this Clean Bus Solutions gives a chance for really affordable – get rid of the upfront stick shock of an EV, get it installed in your business quickly, in your district quickly. So we are very excited about that. So they go hand in hand frankly. Obviously, the EPA is such a tremendous opportunity to accelerate. But our Clean Bus Solutions activity too, we got a ton of interest in it from our dealers and their customers. And we'll just keep working that through the year here and let you know when we get our transactions start hitting.

Our next question comes from Craig Irwin of ROTH-MKM.

Congratulations on the really strong quarter. Much deserved. Even coming into the quarter, there was quite a lot of interest around the gross margin trajectory. And you gave us just another really chunky number this quarter. Can you maybe talk a little bit about the retreat of your competition, the other major school bus OEMs retreating from the alternative fuel markets and how this could impact your gross margins? In the conventional business, the business where you've excelled over the last many years, does this impact the longer term potential margin trajectory for Blue Bird? And then, how should we be looking at EV mix and the impact on margins over the next couple of quarters? Is this may be part of the conservatism that you're giving us in the forward guidance comments?

I don't really like to comment on what our competition is doing. What I do know is that we bid together on state bids, we attend different conferences, and we're there together and they're no longer offering the product that we're both offering, the propane and gasoline. They just got a diesel and electric offering as in the marketplace. All I can tell you is we picked a different competitor, right? We're in our 13th – 14th year actually now with an exclusive with Ford and Roush, which is a pretty strong relationship we have. There was a company called PSI and they're no longer offering it. So, I'd defer to them on why they did that. Obviously, it's exciting for us. We are the leaders in this space. You look at our mix of old fuel vehicles, it's been over 60%. Old power, as they're called, alternatives diesel for quite a while now. Our competition's footprint has been quite different, even with that power train that they had. And so, yeah, we're excited about the opportunity that brings because our propane we know is ultra-low emissions. It's a great product. It gets a great rebate and a grant from the EPA fund to make it very attractive. There are other grants around to support it. It's a terrific product along with our low maintenance gasoline product that's super inexpensive to run. So, you put that together, we feel in good shape. I'm not going to commit on – I see big showgirls here. But I can tell you obviously, not surprisingly, we're looking at who's driving those buses today and what we can do for them. So, that's really important. If I can move to the EV mix side, it's a difficult one to predict. Obviously, 10% mix in the first quarter, we got 10%, mix in our current backlog. We're talking about 800 now on our volume of sort of 8,750, we're looking at midpoint, or more like 9% in total for the year. And we're just waiting to see – a big piece of that will be the EPA grants. So I'm just a little cautious on how quickly those awards, when they're given, how quickly the audit is going to come in, how quickly we can build them [indiscernible]. And that's driven by two, when do they want it and when can we build it? There are still constraints in the battery business. There's no one battery manufacturer out there building packs that can say, I can build anything you want at whatever pace you want. One recently dropped out, if you like. [indiscernible]. So, it doesn't affect us. But nevertheless, it's a sign of things that are happening in the industry. So I think we've been a little prudent right now and probably looking at – as I've laid out, 808 on 8,750, total volume, probably an 8% to 9% mix for the balance of the year. If we can build more, if we get more orders in, we certainly will because it's a priority for us with the margins on those products, obviously, and customers who want the best product in the market. So that's about where we are, Craig. I hope that answers your question.

My next question is around your expectations, you put in the presentation around the EPA Clean School Bus program, Round 2 and Round 3. The 30% win rate is dramatically lower than your long term share in the alternative fuels markets. And it really is mostly the same people, the same group at EPA that's handling the awards, the vouchers for the adoption of EV school buses, these funding opportunities that are so important. You've done way better than 30% with them in the past. Can you maybe talk a little bit about whether or not you think that that EPA is under pressure to share this between different OEMs, if there's maybe just factors in the market that you're considering with knowledge of different programs and different commitments from customers? And why 30%, I guess is the question I'm asking you.

Why 30% is a target we put out there. There's a lot of activity around this. And when you look at who's bidding, we know it's ourselves and our major competitors, IC and Thomas, [indiscernible], BYD, you know these guys, you cover them all, they're all in there. Have they really penetrated our business of school buses significantly? Not the newer guys. If you look at it in totality, it is the big three, so to speak, right, who tends to get the bulk of the business. But I think, right now, I don't see the EPA is targeting share in this. They're not looking at it. When you look at the last grant round, while we got a lot of – this is the one I'm talking now, the 2023 grant that we called it Round A that was just announced. We sort of know where we stand on that so far. A lot of fleet customers won some awards, and they'll be choosing their own buses. A lot of school districts that we traditionally haven't sold to got a lot of awards. Other fleet operators – and I'm talking about the likes of – we all know them, right? First Student, NEC, STA, they got awards. So, obviously, they haven't selected which bus they're going to use yet as such. So we're being a little prudent, right? 30% is a good target to go for. Love to see us beat. We're definitely beating it today looking at our market share. I can see where we are. But this is open to everybody to apply. And obviously, all these manufacturers are putting in applications. All these dealers are putting in applications and many end customers as possible are putting them in. So we haven't got this captive to ourselves. This is sort of broad network of all those districts and operators out there. What we've got to make sure is – we'll try and do our best to make sure they pick our buses. That's what we're going to work on, but we put 30% out there as a target.

My last question is really one of clarification. The 180 buses from LA United, what a win, right? No EPA funding behind that and it's really just state and local funding. So a really strong win. Are those 180 units included in the 420 that you said was in backlog at the end of December or is incremental to the EV school bus backlog?

They were not in the backlog at the end of the [indiscernible]. They're not in that number. Correct.

Hey, congrats on the quarter.

We have no further questions in the queue. So I'll turn the call back over to Phil Horlock for any closing remarks.

Well, thank you, Lydia. And thanks, everyone, for joining us on the call today. We do appreciate your continued interest in Blue Bird and we look forward to updating you again on our progress next quarter. Just a couple of comments, I think last year you saw the momentum increasing throughout the year, profitability improved as we moved through the quarters. And we have continued on the same path by delivering impressive all-time record quarterly profit in the first quarter of fiscal 2024. And with that solid base behind us, that's why we raised our guidance once again, projecting a full-year adjusted EBITDA margin of 11% for fiscal 2024. As a reminder, that is a full 3 percentage points above last year's then record profitability level. And we're confident in getting to a 12% margin within a couple of years as the supply chain constraints continue to ease and we could grow in our business. So with that, any further questions, please don't hesitate to follow up with our head of investor relations, Mark Benfield. And thanks again for all of you for joining us today at Blue Bird and have a great evening. Good night.