Blue Bird 1Q25 Write-Up: Mostly Thesis Confirming

Revenue: (1.2%) y/y

Gross Margin: 19.2%

EV Bus Shipments: 132, 32 above my forecast.

Updated Model: BLBD US Blue Bird Corporation.xlsx

It was a good quarter for Blue Bird, and the market has reacted accordingly. The stock is up 10.4% since a low of around $34.40 on February 3rd. Trump's regulatory moves surrounding grants and some management turmoil made January a very rocky month for the stock. Nonetheless, the position is up 3.5% mostly on the 1Q earnings print. BLBD beat on most measures, but did a very good job easing investors concerns over the regulatory environment. This was what I really needed to see to gain some ease of mind. They have made it a priority to complete orders for EPA-related purchases where the money has already been allocated to school districts. This will prevent them from manufacturing buses for school districts that have yet to receive money from the government, which eliminates potential issues with the government freezing funding. They're also being proactive on potential tariff related issues, which they do a great job explaining in the earnings deck and call.

The biggest beat I noticed when updating the model was their 132 EV bus shipments. This number was 32 over what I had originally modeled, which I feel has helped contribute to the very impressive gross margins we are seeing. When originally working through BLBD, a major question was about the sustainability of the margin profile at or near 20%. They have never done this in the non-alternative fuel bus era, and so to see them post another number above 19% is very comforting.

I think it will be extra important to watch for bus shipments over the next few quarters. I would really like to see these numbers start to be more impressive. While EV bus shipment were above our guidance, we were 96 buses above actual shipments. The EV shipments offset this on a revenue and cost basis, but it will be important to watch what happens with total bus shipments moving forward.