Blue Bird Corp

Previous wording

The following discussion and analysis of financial condition and results of operations of Blue Bird Corporation (the "Company," "Blue Bird," "we," "our," or "us") should be read in conjunction with the Company’s unaudited condensed consolidated financial statements as of and for the three and six months ended March 29, 2025 and March 30, 2024 and related notes appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q ("Report"). Our actual results may not be indicative of future performance. This discussion and analysis contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those discussed or incorporated by reference in the sections of this Report entitled “Special Note Regarding Forward-Looking Statements” and “Risk Factors.” Actual results may differ materially from those contained in any forward-looking statements. Certain monetary amounts, percentages and other figures included in this Report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated, may not be the arithmetic aggregation of the percentages that precede them.

Current wording

The following discussion and analysis of financial condition and results of operations of Blue Bird Corporation (the "Company," "Blue Bird," "we," "our," or "us") should be read in conjunction with the Company’s unaudited condensed consolidated financial statements as of and for the three and nine months ended June 28, 2025 and June 29, 2024 and related notes appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q ("Report"). Our actual results may not be indicative of future performance. This discussion and analysis contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those discussed or incorporated by reference in the sections of this Report entitled “Special Note Regarding Forward-Looking Statements” and “Risk Factors.” Actual results may differ materially from those contained in any forward-looking statements. Certain monetary amounts, percentages and other figures included in this Report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated, may not be the arithmetic aggregation of the percentages that precede them.

Previous wording

Throughout this Report, we refer to the fiscal year ending September 27, 2025 as "fiscal 2025," the fiscal year ended September 28, 2024 as "fiscal 2024," the fiscal year ended September 30, 2023 as "fiscal 2023," the fiscal year ended October 1, 2022 as “fiscal 2022” and the fiscal year ended October 2, 2021 as "fiscal 2021." There will be or were 52 weeks in fiscal 2025 and fiscal 2024. The three and six month periods of fiscal 2025 and fiscal 2024 both included 13 weeks and 26 weeks, respectively.

Current wording

Throughout this Report, we refer to the fiscal year ending September 27, 2025 as "fiscal 2025," the fiscal year ended September 28, 2024 as "fiscal 2024," the fiscal year ended September 30, 2023 as "fiscal 2023," the fiscal year ended October 1, 2022 as “fiscal 2022” and the fiscal year ended October 2, 2021 as "fiscal 2021." There will be or were 52 weeks in fiscal 2025 and fiscal 2024. The three and nine month periods of fiscal 2025 and fiscal 2024 both included 13 weeks and 39 weeks, respectively.

Previous wording

Supply chain disruptions continued into the first half of fiscal 2025 as there were still occasional shortages of certain critical components as well as ongoing increases in raw materials costs, both of which impacted our business and operations by limiting the number and/or mix of school buses that we could produce and sell as well as increasing the costs to manufacture buses. Nonetheless, the lessons learned, and resulting actions taken, by management over the past three fiscal years allowed the Company to better navigate these supply chain challenges to consistently produce buses to fulfill sales orders. Ongoing improvements in manufacturing operations, when coupled with periodic pricing actions taken by the Company to ensure that the increased sales prices charged for buses keep pace with increased costs to procure inventory to produce the buses, allowed the Company to report gross profit and gross margin that are materially consistent with those reported in fiscal 2024.

Current wording

Supply chain disruptions continued into the first nine months of fiscal 2025 as there were still occasional shortages of certain critical components as well as ongoing increases in raw materials costs, both of which impacted our business and operations by limiting the number and/or mix of school buses that we could produce and sell as well as increasing the costs to manufacture buses. Nonetheless, the lessons learned, and resulting actions taken, by management over the past three fiscal years allowed the Company to better navigate these supply chain challenges to consistently produce buses to fulfill sales orders. Ongoing improvements in manufacturing operations, when coupled with periodic pricing actions taken by the Company to ensure that the increased sales prices charged for buses keep pace with increased costs to procure inventory to produce the buses, allowed the Company to report gross profit and gross margin that are materially consistent with those reported in fiscal 2024.

Previous wording

New bus orders during fiscal 2024 and continuing into fiscal 2025 remained robust, primarily due to a combination of (i) pent-up demand resulting from the cumulative effect of the COVID-19 pandemic when many school systems conducted virtual learning and (ii) the challenged global supply chain for automotive parts that hindered the school bus industry's ability to produce and sell buses as discussed previously above. Accordingly, the Company's backlog remained strong at approximately 4,900 units and 4,400 units as of September 28, 2024 and March 29, 2025, respectively, despite it selling 9,000 units in fiscal 2024 and over 4,400 units in the first half of fiscal 2025.

Current wording

New bus orders during fiscal 2024 and continuing into fiscal 2025 remained robust, primarily due to a combination of (i) pent-up demand resulting from the cumulative effect of the COVID-19 pandemic when many school systems conducted virtual learning and (ii) the challenged global supply chain for automotive parts that hindered the school bus industry's ability to produce and sell buses as discussed previously above. Accordingly, the Company's backlog remained strong at approximately 4,900 units and 3,900 units as of September 28, 2024 and June 28, 2025, respectively, despite it selling 9,000 units in fiscal 2024 and almost 6,900 units in the first nine months of fiscal 2025.

Previous wording

Although changes in trade policies and tariffs did not materially impact our operations during the first half of fiscal 2025, they could materially impact our results in future periods if we are unable to (i) mitigate the increased cost of (a) procuring inventory to produce buses and (b) purchasing parts for resale and/or (ii) increase the sales prices we charge for our products to partially or fully offset these cost increases. Actions we have taken, and/or are taking, to mitigate the impact from changes in trade policies and tariffs include increasing the volume of steel we purchase at fixed prices up to four quarters in advance, working with our suppliers to identify alternative supply chain sources to minimize the increase in inventory costs and proactively announcing price increases to partially or fully offset our increased costs to produce buses.

Current wording

Changes in trade policies and tariffs only began to materially impact our procurement costs for certain imported inventory during the three months ended June 28, 2025. However, such higher inventory purchase costs did not negatively impact our operating results or cash flows during this same period as such impact was offset by increases in the sales prices we charged for our products. However, they could materially impact our operating results and cash flows in future periods if we are unable to (i) mitigate the increased cost of (a) procuring inventory to produce buses and (b) purchasing parts for resale and/or (ii) increase the sales prices we charge for our products to partially or fully offset these cost increases. Actions we have taken, and/or are taking, to mitigate the impact from changes in trade policies and tariffs include increasing the volume of steel we purchase at fixed prices up to four quarters in advance, working with our suppliers to identify alternative supply chain sources to minimize the increase in inventory costs and proactively announcing price increases to partially or fully offset our increased costs to produce buses.

Previous wording

In addition to supply chain constraints discussed previously above, the deferral of funds relating to governmental grants, subsidies and/or other incentives that are intended to partially, or fully, offset the higher price of alternative powered school buses impacted, to a lesser extent, the mix of school buses that we produced and sold during the fist half of fiscal 2025. Although we noted an increase in the flow of government grant money towards the end of the three months ended March 29, 2025, the timing of such payments occurred too late in the quarter to adjust our production schedule to build and sell more higher priced alternative powered school buses. However, such funding should positively impact subsequent quarters in fiscal 2025 and/or our 2026 fiscal year. Nonetheless, any future decrease in such funds could impact the purchasing decisions of our customers that elect to buy less, or none, of our products in future periods.

Current wording

In addition to supply chain constraints discussed previously above, the deferral of funds relating to governmental grants, subsidies and/or other incentives that are intended to partially, or fully, offset the higher price of alternative powered school buses impacted, to a lesser extent, the mix of school buses that we produced and sold during the first nine months of fiscal 2025. Although we noted an increase in the flow of government grant money during the three months ended June 28, 2025, the timing of some of these payments occurred too late in the quarter to adjust our production schedule to build and sell more higher priced alternative powered school buses. However, such funding should positively impact subsequent quarters in fiscal 2025 and/or our 2026 fiscal year. Nonetheless, any future decrease in such funds could impact the purchasing decisions of our customers that elect to buy less, or none, of our products in future periods.

Previous wording

The Company’s accounting policies that we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described in the Company’s fiscal 2024 Form 10-K, filed with the SEC on November 25, 2024, under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates,” which description is incorporated herein by reference. Our senior management has reviewed these critical accounting policies and related disclosures and determined that there were no significant changes in our critical accounting policies during the six months ended March 29, 2025.

Current wording

The Company’s accounting policies that we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described in the Company’s fiscal 2024 Form 10-K, filed with the SEC on November 25, 2024, under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates,” which description is incorporated herein by reference. Our senior management has reviewed these critical accounting policies and related disclosures and determined that there were no significant changes in our critical accounting policies during the nine months ended June 28, 2025.

Previous wording

•Pricing. Our products are sold to school districts throughout the U.S. and Canada. Each state and each Canadian province has its own set of regulations that governs the purchase of products, including school buses, by their school districts. We and our dealers must navigate these regulations, purchasing procedures, and the districts’ specifications in order to reach mutually acceptable price terms. Pricing may or may not be favorable to us, depending upon a number of factors impacting purchasing decisions. Additionally, in certain cases, prices originally quoted with dealers and school districts may have become less favorable, or more unfavorable, to us given increasing inventory costs between the time the sales order was contractually agreed upon and the bus is built and delivered as a result of ongoing supply chain disruptions, general inflationary pressure and the imposition of new and/or revised trade policies and tariffs, among other factors.

Current wording

•Pricing. Our products are sold to school districts throughout the U.S. and Canada. Each state and each Canadian province has its own set of regulations that govern the purchase of products, including school buses, by their school districts. We and our dealers must navigate these regulations, purchasing procedures, and the districts’ specifications in order to reach mutually acceptable price terms. Pricing may or may not be favorable to us, depending upon a number of factors impacting purchasing decisions. Additionally, in certain cases, prices originally quoted with dealers and school districts may have become less favorable, or more unfavorable, to us given increasing inventory costs between the time the sales order was contractually agreed upon and the bus is built and delivered as a result of ongoing supply chain disruptions, general inflationary pressure and the imposition of new and/or revised trade policies and tariffs, among other factors.

Previous wording

•Inflation. As discussed previously above, supply chain disruptions developing subsequent to the COVID-19 pandemic and Russia's invasion of Ukraine have significantly increased our inventory purchase costs, including freight costs incurred to deliver critical components, reflected in cost of goods sold during all of fiscal 2022 and continuing, to a lesser extent, into fiscal 2023, fiscal 2024 and the first half of fiscal 2025. In response, the Company announced a number of sales price increases over this same period that applied to new sales orders and, in one limited circumstance, partially applied to backlog orders that were both intended to mitigate the impact of rising purchase costs on our operations and results. These cumulative price increases have had a significant, positive impact on sales and gross profit during fiscal 2023, fiscal 2024 and continuing into the first half of fiscal 2025.

Current wording

•Inflation. As discussed previously above, supply chain disruptions developing subsequent to the COVID-19 pandemic and Russia's invasion of Ukraine have significantly increased our inventory purchase costs, including freight costs incurred to deliver critical components, reflected in cost of goods sold during all of fiscal 2022 and continuing, to a lesser extent, into fiscal 2023, fiscal 2024 and the first nine months of fiscal 2025. Additionally, the imposition of tariffs on certain imported inventory that became effective beginning in the third quarter of fiscal 2025 has further increased our inventory purchase costs. In response, the Company announced a number of sales price increases over this same period that applied to new sales orders and, in limited circumstances, to backlog orders that were both intended to mitigate the impact of rising purchase costs on our operations, results and cash flows. These cumulative price increases have had a significant, positive impact on sales and gross profit during fiscal 2023, fiscal 2024 and continuing into the first nine months of fiscal 2025.

Previous wording

•Selling, general and administrative expenses. Our selling, general and administrative expenses include costs associated with our selling and marketing efforts, engineering, centralized finance, human resources, purchasing, information technology services, along with other administrative matters and functions. In most instances, other than direct costs associated with sales and marketing programs, the principal component of these costs is salary expense. Changes from period to period are typically driven by the number of our employees, as well as by merit increases provided to experienced personnel.

Current wording

•Selling, general and administrative expenses. Our selling, general and administrative expenses include costs associated with our selling and marketing efforts, engineering, centralized finance, human resources, purchasing, information technology services, along with other administrative matters and functions. In most instances, other than direct costs associated with sales and marketing programs, the principal component of these costs is compensation expense. Changes from period to period are typically driven by the number of our employees, as well as by merit increases provided to experienced personnel.

Previous wording

Adjusted EBITDA is defined as net income or loss prior to interest income; interest expense including the component of operating lease expense (which is presented as a single operating expense in selling, general and administrative expenses in our U.S. GAAP financial statements) that represents interest expense on lease liabilities; income taxes; and depreciation and amortization including the component of operating lease expense (which is presented as a single operating expense in selling, general and administrative expenses in our U.S. GAAP financial statements) that represents amortization charges on right-of-use lease assets; as adjusted for certain non-cash charges or credits that we may record on a recurring basis such as share-based compensation expense and unrealized gains or losses on certain derivative financial instruments as well as certain charges such as (i) transaction related costs or (ii) discrete expenses related to major cost cutting and/or operational transformation initiatives. While certain of the charges that are added back in the Adjusted EBITDA calculation, such as transaction related costs and major cost cutting and/or operational transformation initiatives, represent operating expenses that may be recorded in more than one annual period, the significant project or transaction giving rise to such expenses is not considered to be indicative of the Company’s normal operations. Accordingly, we believe that these, as well as the other credits and charges that comprise the amounts utilized in the determination of Adjusted EBITDA described above, should not be used in evaluating the Company’s ongoing annual operating performance.

Current wording

Adjusted EBITDA is defined as net income or loss prior to interest income; interest expense including the component of operating lease expense (which is presented within cost of goods sold or selling, general and administrative expenses in our U.S. GAAP financial statements) that represents interest expense on operating lease liabilities; income taxes; and depreciation and amortization including the component of operating lease expense (which is presented within cost of goods sold or selling, general and administrative expenses in our U.S. GAAP financial statements) that represents amortization charges on right-of-use lease assets; as adjusted for certain non-cash charges or credits that we may record on a recurring basis such as share-based compensation expense and unrealized gains or losses on certain derivative financial instruments as well as certain charges such as (i) transaction related costs or (ii) discrete expenses related to major cost cutting and/or operational transformation initiatives. While certain of the charges that are added back in the Adjusted EBITDA calculation, such as transaction related costs and major cost cutting and/or operational transformation initiatives, represent operating expenses that may be recorded in more than one annual period, the significant project or transaction giving rise to such expenses is not considered to be indicative of the Company’s normal operations. Accordingly, we believe that these, as well as the other credits and charges that comprise the amounts utilized in the determination of Adjusted EBITDA described above, should not be used in evaluating the Company’s ongoing annual operating performance.

Previous wording

Net sales. Net sales were $358.9 million for the second quarter of fiscal 2025, an increase of $12.9 million, or 3.7%, compared to $345.9 million for the second quarter of fiscal 2024. The increase in net sales is primarily due to a small increase in Bus unit bookings as well as Bus customer and product mix changes that were partially offset by a small decrease in Parts sales.

Current wording

Net sales. Net sales were $398.0 million for the third quarter of fiscal 2025, an increase of $64.6 million, or 19.4%, compared to $333.4 million for the third quarter of fiscal 2024. The increase in net sales is primarily due to an increase in Bus unit bookings, Bus customer and product mix changes and cumulative Bus price increases, including an increase that was intended to mitigate the impact of increased procurement costs for certain of our imported inventory as a result of the imposition of tariffs beginning during the third quarter of fiscal 2025, as well as a small increase in Parts sales.

Previous wording

Bus sales increased $14.8 million, or 4.6%, reflecting a 1.8% increase in unit bookings and a 2.8% increase in average sales price per unit. In the second quarter of fiscal 2025, 2,295 units booked compared to 2,254 units booked for the same period in fiscal 2024. The small increase in unit price for the second quarter of fiscal 2025 compared to the same period in fiscal 2024 was primarily due to customer and product mix changes, although both quarters were negatively impacted by supply chain constraints that limited the Company's ability to produce and deliver buses due to shortages of critical components.

Current wording

Bus sales increased $64.2 million, or 20.8%, reflecting a 14.7% increase in unit bookings and a 5.4% increase in average sales price per unit. In the third quarter of fiscal 2025, 2,467 units booked compared to 2,151 units booked for the same period in fiscal 2024. The increase in unit price for the third quarter of fiscal 2025 compared to the same period in fiscal 2024 was primarily due to customer and product mix changes as well as price increases implemented to offset increases in inventory costs.

Previous wording

Parts sales decreased $1.8 million, or 6.5%, for the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024. This decrease is primarily attributed to slight variations due to product and channel mix.

Current wording

Parts sales increased $0.4 million, or 1.7%, for the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024. This increase is primarily attributed to price increases implemented to offset increases in inventory costs that were partially offset by slight variations due to product and channel mix.

Previous wording

Cost of goods sold. Total cost of goods sold was $288.0 million for the second quarter of fiscal 2025, an increase of $5.7 million, or 2.0%, compared to $282.3 million for the second quarter of fiscal 2024. As a percentage of net sales, total cost of goods sold improved from 81.6% to 80.3%, primarily due to the impact of ongoing pricing actions taken by management that exceeded the impact of increasing costs resulting from inflationary pressures relating to the procurement of inventory as well as finalizing the union contract in May 2024, which increased the labor costs for our covered production and supply chain employees. The improvement was also impacted by product and customer mix changes.

Current wording

Cost of goods sold. Total cost of goods sold was $312.1 million for the third quarter of fiscal 2025, an increase of $48.1 million, or 18.2%, compared to $264.0 million for the third quarter of fiscal 2024. As a percentage of net sales, total cost of goods sold improved from 79.2% to 78.4%, primarily due to the impact of ongoing pricing actions taken by management that exceeded the impact of increasing costs resulting from inflationary pressures and the imposition of tariffs relating to the procurement of inventory as well as finalizing the union contract in May 2024, which increased the labor costs for our covered production and supply chain employees. The improvement was also impacted by product and customer mix changes.

Previous wording

Bus segment cost of goods sold increased $6.7 million, or 2.5%, for the second quarter of fiscal 2025 compared to the same period in fiscal 2024. The increase was primarily driven by the 1.8% increase in units booked discussed above as well as the 0.7% increase in the average cost of goods sold per unit for the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024. This increase primarily resulted from increases in manufacturing costs attributable to a) increased raw materials costs resulting from ongoing inflationary pressures, b) ongoing supply chain disruptions that resulted in higher purchase costs for components and c) higher labor costs resulting from finalizing the union contract in May 2024. The increase was also impacted by customer and product mix changes.

Current wording

Bus segment cost of goods sold increased $47.5 million, or 18.9%, for the third quarter of fiscal 2025 compared to the same period in fiscal 2024. The increase was primarily driven by the 14.7% increase in units booked discussed above as well as a 3.7% increase in the average cost of goods sold per unit for the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024. This increase primarily resulted from increases in manufacturing costs attributable to a) increased raw materials costs resulting from ongoing inflationary pressures and the imposition of tariffs beginning during the third quarter of fiscal 2025, b) ongoing supply chain disruptions that resulted in higher purchase costs for components and c) higher labor costs resulting from finalizing the union contract in May 2024. The increase was also impacted by customer and product mix changes.

Previous wording

The $1.0 million, or 7.1%, decrease in Parts segment cost of goods sold for the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024 was primarily attributable to slight variations due to product and channel mix.

Current wording

The $0.5 million, or 4.2%, increase in Parts segment cost of goods sold for the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024 was attributable to increased product costs due to inflationary pressures and tariffs, which were partially offset by slight variations due to product and channel mix.

Previous wording

Operating profit. Operating profit was $33.7 million for the second quarter of fiscal 2025, a decrease of $2.4 million compared to operating profit of $36.1 million for the second quarter of fiscal 2024. Profitability was positively impacted by an increase of $7.2 million in gross profit as outlined in the revenue and cost of goods sold discussions above. However, it was negatively impacted by an increase of $9.6 million in selling, general and administrative expenses, primarily due to an increase in a) share-based compensation expense recorded in the second quarter of fiscal 2025 relating to the retirement of our former President and Chief Executive Officer and b) labor costs.

Current wording

Operating profit. Operating profit was $50.1 million for the third quarter of fiscal 2025, a increase of $10.3 million compared to operating profit of $39.7 million for the third quarter of fiscal 2024. Profitability was positively impacted by an increase of $16.6 million in gross profit as outlined in the revenue and cost of goods sold discussions above. However, it was negatively impacted by an increase of $6.2 million in selling, general and administrative expenses, primarily due to an increase in a) research and development expense in the third quarter of fiscal 2025 and b) labor costs.

Previous wording

Interest expense. Interest expense was $1.8 million for the second quarter of fiscal 2025, a decrease of $1.0 million, or 35.5%, compared to $2.8 million for the second quarter of fiscal 2024. The decrease was primarily attributable to a decrease in the stated term loan interest rate from 7.2% at March 30, 2024 to 6.2% at March 29, 2025, as well as lower outstanding borrowings in the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024.

Current wording

Interest expense. Interest expense was $1.7 million for the third quarter of fiscal 2025, a decrease of $0.4 million, or 17.5%, compared to $2.1 million for the third quarter of fiscal 2024. The decrease was primarily attributable to a decrease in the stated term loan interest rate from 7.2% at June 29, 2024 to 6.1% at June 28, 2025, as well as lower outstanding borrowings in the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024.

Previous wording

Other income (expense), net. Other income, net was $0.4 million for the second quarter of fiscal 2025, an increase of $2.4 million, or 122.6%, compared to $2.0 million of other expense, net for the same period in fiscal 2024.

Current wording

Other income (expense), net. Other expense, net was $0.6 million for the third quarter of fiscal 2025, a decrease of $2.1 million, or 78.7%, compared to $2.7 million of other expense, net for the same period in fiscal 2024.

Previous wording

During the second quarter of fiscal 2025, the Company recorded net periodic pension income of approximately $0.4 million compared with net periodic pension expense of less than $0.1 million for the same period in fiscal 2024.

Current wording

During the third quarter of fiscal 2025, the Company recorded net periodic pension income of approximately $0.4 million compared with net periodic pension expense of less than $0.1 million for the same period in fiscal 2024.

Previous wording

Income taxes. Income tax expense was $9.1 million for the second quarter of fiscal 2025 compared to $8.3 million for the same period in fiscal 2024.

Current wording

Income taxes. Income tax expense was $12.4 million for the third quarter of fiscal 2025 compared to $9.9 million for the same period in fiscal 2024.

Previous wording

Adjusted EBITDA. Adjusted EBITDA was $49.2 million, or 13.7% of net sales, for the second quarter of fiscal 2025, an increase of $3.5 million, or 7.6%, compared to $45.8 million, or 13.2% of net sales, for the second quarter of fiscal 2024. The increase primarily relates to the $7.2 million increase in gross profit as outlined in the revenue and cost of goods sold discussions above, which was partially offset by a smaller increase in selling, general and administrative expenses, when adjusted for the impact of share-based compensation expense that is excluded in calculating Adjusted EBITDA, as discussed above.

Current wording

Adjusted EBITDA. Adjusted EBITDA was $58.5 million, or 14.7% of net sales, for the third quarter of fiscal 2025, an increase of $10.2 million, or 21.2%, compared to $48.2 million, or 14.5% of net sales, for the third quarter of fiscal 2024. The increase primarily relates to the increase in gross profit, when adjusting for the impact of expenses that are excluded in calculating Adjusted EBITDA, as outlined in the revenue and cost of goods sold discussions above that was partially offset by a smaller increase in selling, general and administrative expenses, when adjusting for the impact of expenses that are excluded in calculating Adjusted EBITDA, as discussed above.

Previous wording

(1) Includes $0.1 million for both fiscal periods, representing interest expense on operating lease liabilities, which are a component of lease expense and presented as a single operating expense in selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.

Current wording

(1) Includes $0.1 million for both fiscal periods, representing interest expense on operating lease liabilities, which are a component of lease expense and presented within cost of goods sold or selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.

Previous wording

(2) Includes $0.4 million and $0.3 million for the three months ended March 29, 2025 and March 30, 2024, respectively, representing amortization charges on right-of-use lease assets, which are a component of lease expense and presented as a single operating expense in selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.

Current wording

(2) Includes $0.4 million and $0.3 million for the three months ended June 28, 2025 and June 29, 2024, respectively, representing amortization charges on right-of-use lease assets, which are a component of lease expense and presented within cost of goods sold or selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.

Previous wording

Consolidated Results of Operations for the Six Months Ended March 29, 2025 and March 30, 2024:

Current wording

Consolidated Results of Operations for the Nine Months Ended June 28, 2025 and June 29, 2024:

Previous wording

Net sales. Net sales were $672.7 million for the six months ended March 29, 2025, an increase of $9.1 million, or 1.4%, compared to $663.6 million for the six months ended March 30, 2024. The increase in net sales is primarily due to a small increase in Bus unit bookings as well as Bus customer and product mix changes that were partially offset by a small decrease in Parts sales.

Current wording

Net sales. Net sales were $1,070.7 million for the nine months ended June 28, 2025, an increase of $73.8 million, or 7.4%, compared to $996.9 million for the nine months ended June 29, 2024. The increase in net sales is primarily due to an increase in Bus unit bookings, Bus customer and product mix changes and cumulative Bus price increases, including an increase that was intended to mitigate the impact of increased procurement costs for certain of our imported inventory as a result of the imposition of tariffs beginning during the third quarter of fiscal 2025, as well as a small increase in Parts sales.

Previous wording

Bus sales increased $9.5 million, or 1.5%, reflecting a 1.0% increase in units booked and a 0.6% increase in average sales price per unit. 4,425 units booked in the six months ended March 29, 2025 compared with 4,383 units booked during the same period in fiscal 2024. The small increase in unit price for the first six months of fiscal 2025 compared to the same period in fiscal 2024 was primarily due to customer and product mix changes, although both periods were negatively impacted by supply chain constraints that limited the Company's ability to produce and deliver buses due to shortages of critical components.

Current wording

Bus sales increased $73.7 million, or 8.0%, reflecting a 5.5% increase in units booked and a 2.4% increase in average sales price per unit. 6,892 units booked in the nine months ended June 28, 2025 compared with 6,534 units booked during the same period in fiscal 2024. The increase in unit price for the first nine months of fiscal 2025 compared to the same period in fiscal 2024 was primarily due to customer and product mix changes as well as price increases implemented to offset increases in inventory costs.

Previous wording

Parts sales decreased $0.3 million, or 0.6%, for the six months ended March 29, 2025 compared to the six months ended March 30, 2024. This small decrease is primarily attributed to slight variations due to product and channel mix.

Current wording

Parts sales increased $0.1 million, or 0.2%, for the nine months ended June 28, 2025 compared to the nine months ended June 29, 2024. This small increase is primarily attributed to price increases implemented to offset increases in inventory costs that were partially offset by slight variations due to product and channel mix.

Previous wording

Cost of goods sold. Total cost of goods sold was $541.6 million for the six months ended March 29, 2025, an increase of $5.2 million, or 1.0%, compared to $536.4 million for the six months ended March 30, 2024. As a percentage of net sales, total cost of goods sold improved from 80.8% to 80.5%, primarily due to the impact of ongoing pricing actions taken by management that exceeded the impact of increasing costs resulting from inflationary pressures relating to the procurement of inventory as well as finalizing the union contract in May 2024, which increased the labor costs for our covered production and supply chain employees. The improvement was also impacted by product and customer mix changes.

Current wording

Cost of goods sold. Total cost of goods sold was $853.6 million for the nine months ended June 28, 2025, an increase of $53.2 million, or 6.7%, compared to $800.4 million for the nine months ended June 29, 2024. As a percentage of net sales, total cost of goods sold improved from 80.3% to 79.7%, primarily due to the impact of ongoing pricing actions taken by management that exceeded the impact of increasing costs resulting from inflationary pressures and the imposition of tariffs relating to the procurement of inventory as well as finalizing the union contract in May 2024, which increased the labor costs for our covered production and supply chain employees. The improvement was also impacted by product and customer mix changes.

Previous wording

Bus segment cost of goods sold increased $5.5 million, or 1.1%, for the six months ended March 29, 2025 compared to the six months ended March 30, 2024. The increase was primarily driven by the 1.0% increase in units booked discussed above as well as the 0.1% increase in the average cost of goods sold per unit in the six months ended March 29, 2025 compared to the same period in fiscal 2024. This increase primarily resulted from increases in manufacturing costs attributable to a) increased raw materials costs resulting from ongoing inflationary pressures, b) ongoing supply chain disruptions that resulted in higher purchase costs for components and c) higher labor costs resulting from finalizing the union contract in May 2024. The increase was also impacted by customer and product mix changes.

Current wording

Bus segment cost of goods sold increased $53.1 million, or 7.0%, for the nine months ended June 28, 2025 compared to the nine months ended June 29, 2024. The increase was primarily driven by the 5.5% increase in units booked discussed above as well as the 1.4% increase in the average cost of goods sold per unit in the nine months ended June 28, 2025 compared to the same period in fiscal 2024. This increase primarily resulted from increases in manufacturing costs attributable to a) increased raw materials costs resulting from ongoing inflationary pressures and the imposition of tariffs beginning during the third quarter of fiscal 2025, b) ongoing supply chain disruptions that resulted in higher purchase costs for components and c) higher labor costs resulting from finalizing the union contract in May 2024. The increase was also impacted by customer and product mix changes.

Previous wording

The $0.4 million, or 1.4%, decrease in parts segment cost of goods sold for the six months ended March 29, 2025 compared to the six months ended March 30, 2024 was primarily attributable to slight variations due to product and channel mix.

Current wording

The $0.2 million, or 0.4%, increase in parts segment cost of goods sold for the nine months ended June 28, 2025 compared to the nine months ended June 29, 2024 was primarily attributable to increased product costs due to inflationary pressures and tariffs, which were partially offset by slight variations due to product and channel mix.

Previous wording

Operating profit. Operating profit was $66.8 million for the six months ended March 29, 2025, a decrease of $7.3 million compared to operating profit of $74.0 million for the six months ended March 30, 2024. Profitability was positively impacted by an increase of $4.0 million in gross profit as outlined in the revenue and cost of goods sold discussions. However, it was negatively impacted by an increase of $11.2 million in selling, general and administrative expenses, primarily due to an increase in a) share-based compensation expense recorded in the second quarter of fiscal 2025 relating to the retirement of our former President and Chief Executive Officer and b) labor costs.

Current wording

Operating profit. Operating profit was $116.8 million for the nine months ended June 28, 2025, an increase of $3.1 million compared to operating profit of $113.8 million for the nine months ended June 29, 2024. Profitability was positively impacted by an increase of $20.5 million in gross profit as outlined in the revenue and cost of goods sold discussions. However, it was negatively impacted by an increase of $17.5 million in selling, general and administrative expenses, primarily due to an increase in a) share-based compensation expense recorded in the second quarter of fiscal 2025 relating to the retirement of our former President and Chief Executive Officer, b) labor costs and c) research and development expense.

Previous wording

Interest expense. Interest expense was $3.7 million for the six months ended March 29, 2025, a decrease of $2.7 million, or 42.1%, compared to $6.4 million for the six months ended March 30, 2024. The decrease was primarily attributable to a decrease in the stated term loan interest rate from 7.2% at March 30, 2024 to 6.2% at March 29, 2025, as well as lower outstanding borrowings in the first six months of fiscal 2025 compared to the first six months of fiscal 2024.

Current wording

Interest expense. Interest expense was $5.5 million for the nine months ended June 28, 2025, a decrease of $3.1 million, or 36.1%, compared to $8.6 million for the nine months ended June 29, 2024. The decrease was primarily attributable to a decrease in the stated term loan interest rate from 7.2% at June 29, 2024 to 6.1% at June 28, 2025, as well as lower outstanding borrowings in the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024.

Previous wording

Other income (expense), net. Other income, net was $3.4 million for the six months ended March 29, 2025, an increase of $6.5 million, or 205.4%, compared to $3.2 million of other expense, net for the six months ended March 30, 2024.

Current wording

Other income (expense), net. Other income, net was $2.8 million for the nine months ended June 28, 2025, an increase of $8.7 million, or 147.0%, compared to $5.9 million of other expense, net for the nine months ended June 29, 2024.

Previous wording

The Company recorded $0.9 million of net periodic pension income during the six months ended March 29, 2025 when compared with $0.1 million of net periodic pension expense recorded during the six months ended March 30, 2024.

Current wording

The Company recorded $1.3 million of net periodic pension income during the nine months ended June 28, 2025 when compared with $0.1 million of net periodic pension expense recorded during the nine months ended June 29, 2024.

Previous wording

Additionally, during the first quarter of fiscal 2025, the Company sold certain state emissions credits that it was not projecting to use for approximately $2.6 million, with no similar income recorded during the the first six months of fiscal 2024. The proceeds from this sale were recorded in other income (expense), net in the Condensed Consolidated Statements of Operations as this transaction is not indicative of our normal revenue generating activities.

Current wording

Also, during the first quarter of fiscal 2025, the Company sold certain state emissions credits that it was not projecting to use for approximately $2.6 million, with no similar income recorded during the the first nine months of fiscal 2024. The proceeds from this sale were recorded in other income, net as this transaction is not indicative of our normal revenue generating activities.

Previous wording

The December Offering closed on December 19, 2023 and the February Offering closed on February 21, 2024. Although the Company did not sell any shares or receive any proceeds from the Offerings, it was required to pay certain expenses in connection with the Offerings that totaled approximately $3.2 million for the six months ended March 30, 2024. No such expense was incurred in the six months ended March 29, 2025.

Current wording

The December Offering closed on December 19, 2023 and the February Offering closed on February 21, 2024. Although the Company did not sell any shares or receive any proceeds from the Offerings, it was required to pay certain expenses in connection with the Offerings that totaled approximately $3.2 million for the nine months ended June 29, 2024. No such expense was incurred in the nine months ended June 28, 2025.

Previous wording

Income taxes. Income tax expense was $17.8 million for the six months ended March 29, 2025 compared to $16.7 million for the six months ended March 30, 2024.

Current wording

Income taxes. Income tax expense was $30.2 million for the nine months ended June 28, 2025 compared to $26.6 million for the nine months ended June 29, 2024.

Previous wording

The effective tax rate for the three months ended March 30, 2024 was 25.5% and differed from the statutory federal income tax rate of 21%. The increase was primarily due to the impacts from state taxes and certain permanent items on the federal rate, which were partially offset by the impacts from federal and state tax credits (net of valuation allowances) and discrete period items during the quarter.

Current wording

The effective tax rate for the nine months ended June 28, 2025 was 25.5% and differed from the statutory federal income tax rate of 21%. The increase was primarily due to the impacts from state taxes and certain permanent items on the federal rate, which were partially offset by the impacts from federal and state tax credits (net of valuation allowances) and discrete period items during the period.