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 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.

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 months ended December 27, 2025 and December 28, 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 nine month periods of fiscal 2025 and fiscal 2024 both included 13 weeks and 39 weeks, respectively.

Current wording

Throughout this Report, we refer to the fiscal year ending October 3, 2026 as "fiscal 2026," the fiscal year ended September 27, 2025 as "fiscal 2025," and the fiscal year ended September 28, 2024 as "fiscal 2024." There will be 53 weeks in fiscal 2026 and were 52 weeks in fiscal 2025. The first quarters of fiscal 2026 and fiscal 2025 both included 13 weeks.

Previous 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.

Current wording

However, the higher inventory purchase costs that we incurred in producing and selling buses during the first quarters of fiscal 2025 and fiscal 2026 resulting from general inflationary pressures caused by global supply chain constraints as well as changes in trade policies and tariffs, as applicable, did not negatively impact our operating results or cash flows during these periods as such impacts were largely offset by proactive 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.

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 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.

Current wording

Additionally, although new bus orders during the majority of fiscal 2025 remained strong, management believes that the uncertainty in bus pricing resulting from changing tariffs temporarily impacted bus orders during the latter part of fiscal 2025 and, to a lesser extent, continuing into the first quarter of fiscal 2026. Specifically, 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 in the years subsequent to the COVID-19 pandemic, the Company’s backlog approximated 4,400 units as of December 28, 2024. Given the strong backlog in the overall school bus industry that resulted in long time lags between customers ordering and taking delivery of a school bus, when coupled with the uncertainty regarding the pricing of a school bus resulting from the inclusion of actual tariff charges in the final sales price, management believes that many customers elected to temporarily defer the purchase of buses towards the end of our fiscal 2025. As a result, the Company’s backlog decreased to approximately 3,070 units as of September 27, 2025. However, due to the Company’s proactive communications with our dealers and customers and committing to a tariff pricing strategy that significantly addressed the volatility in bus pricing for customers, we experienced an increase in orders during the first quarter that increased the backlog to approximately 3,370 units as of December 27, 2025, which included over 850 electric powered units. Due to the age of school bus fleets in the U.S. and Canada, which is at least partially attributable to supply chain disruptions in recent years that have left school districts with meaningful replacement needs, and the strong overall fundamentals in the school bus industry, management believes that this slowdown in orders is temporary in nature not indicative of a broader decrease in current or future market demand.

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 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.

Current wording

Finally, 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 latter part of fiscal 2025 and continuing into the first quarter of fiscal 2026. Although we noted that government grant money continued to flow during this period, the timing of some of these payments occurred too late to adjust our production schedule to build and sell more higher priced alternative powered school buses. However, such funding should positively impact the remainder of fiscal 2026 and/or subsequent periods. 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

In general, management believes that supply chain disruptions, including those resulting from current or future military conflicts, could continue in future periods and could materially impact our results if we are unable to i) obtain parts and supplies in sufficient quantities to meet our production needs and/or ii) pass along rising costs to our customers. They have resulted, and could continue to result, in significant economic disruption and have adversely affected our business. They could adversely impact our business for the remainder of fiscal 2025 and perhaps beyond. Significant uncertainty exists concerning the magnitude of the impact and duration of ongoing supply chain constraints and their potential impact on the overall economy, both within the U.S and globally. Accordingly, the magnitude and duration of any production and supply chain disruptions and their related financial impacts on our business cannot be estimated at this time.

Current wording

In general, management believes that the impacts from (i) supply chain disruptions, including those resulting from current or future military conflicts, and (ii) changes in governmental policies, programs, regulations and/or laws could continue in future periods and could materially impact our results if we are unable to (a) obtain parts and supplies in sufficient quantities to meet our production needs and/or (b) pass along rising costs to our customers. They could result in significant economic disruption and adversely impact our business during the remainder of fiscal 2026 and perhaps beyond. Significant uncertainty exists concerning the magnitude of the impact and duration of (i) ongoing supply chain constraints and (ii) changes in governmental policies, programs, regulations and/or laws and their potential impact on the overall economy, both within the U.S and globally. Accordingly, the magnitude and duration of such matters and their related financial impacts on our business cannot be estimated at this time.

Previous wording

The impacts from supply chain constraints on the Company's business and operations beginning during the second half of fiscal 2021 and continuing into fiscal 2025 negatively affected our inventory procurement costs, gross profit, income and cash flows. We continue to monitor and assess the ability of suppliers to maintain operations and to provide parts and supplies in sufficient quantities to meet our production needs and our ability to maintain continuous production during the remainder of fiscal 2025 and beyond. See PART I, Item 1.A. "Risk Factors," of our fiscal 2024 Form 10-K, filed with the SEC on November 25, 2024, for a discussion of the material risks we believe we face particularly related to supply chain disruptions and related constraints.

Current wording

We continue to monitor and assess the ability of suppliers to maintain operations and to provide parts and supplies in sufficient quantities and at acceptable costs to meet our production needs, including our ability to maintain continuous production during the remainder of fiscal 2026 and beyond, and price our products at amounts that are attractive to our customers. See PART I, Item 1.A. "Risk Factors," of our fiscal 2025 Form 10-K, filed with the SEC on November 24, 2025, for a discussion of the material risks we believe we face particularly related to (i) supply chain disruptions and related constraints and (ii) changes in governmental policies, programs, regulations and/or laws.

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 nine months ended June 28, 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 2025 Form 10-K, filed with the SEC on November 24, 2025, 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 three months ended December 27, 2025.

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 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.

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 fiscal 2025 and continuing into the first three months of fiscal 2026. Additionally, the imposition of tariffs on certain imported inventory that became effective during the second half of fiscal 2025 and continued into the first three months of fiscal 2026 has further increased our inventory purchase costs. In response, the Company announced a number of sales price increases that applied to new sales orders that were 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 2025 and continuing into the first three months of fiscal 2026.

Previous 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.

Current wording

Net sales. Net sales were $333.1 million for the first quarter of fiscal 2026, an increase of $19.2 million, or 6.1%, compared to $313.9 million for the first quarter of fiscal 2025. The increase in net sales is primarily due to Bus customer and product mix changes and cumulative Bus price increases, including increases that were 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 second half of fiscal 2025 and continuing into the first quarter of fiscal 2026, which were partially offset by a small decrease in Parts sales.

Previous 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.

Current wording

Bus sales increased $19.5 million, or 6.8%, reflecting a 0.2% increase in unit bookings and a 6.5% increase in average sales price per unit. In the first quarter of fiscal 2026, 2,135 units booked compared to 2,130 units booked for the same period in fiscal 2025. The increase in unit price for thefirst quarter of fiscal 2026 compared to the same period in fiscal 2025 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 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.

Current wording

Parts sales decreased $0.3 million, or 1.2%, for the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025. This small decrease is primarily attributed to slight variations due to product and channel mix that were slightly larger than price increases that were implemented to offset increases in inventory costs.

Previous 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.

Current wording

Cost of goods sold. Total cost of goods sold was $261.9 million for the first quarter of fiscal 2026, an increase of $8.3 million, or 3.3%, compared to $253.6 million for the first quarter of fiscal 2025. As a percentage of net sales, total cost of goods sold improved from 80.8% to 78.6%, 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. The improvement was also impacted by product and customer mix changes.

Previous 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.

Current wording

Bus segment cost of goods sold increased $8.4 million, or 3.5%, for the first quarter of fiscal 2026 compared to the same period in fiscal 2025. The increase was primarily driven by a 3.3% increase in the average cost of goods sold per unit for thefirst quarter of fiscal 2026 compared to thefirst quarter of fiscal 2025, as well as the 0.2% increase in units booked. The increase in average cost of goods sold per unit 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 second half of fiscal 2025 and (b) ongoing supply chain disruptions that resulted in higher purchase costs for components. The increase was also impacted by customer and product mix changes.

Previous 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.

Current wording

The $0.1 million, or 1.0%, decrease in Parts segment cost of goods sold for the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025 was primarily due to slight variations due to product and channel mix that were slightly larger than increased product costs driven by inflationary pressures and tariffs.

Previous 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.

Current wording

Operating profit. Operating profit was $37.7 million for the first quarter of fiscal 2026, an increase of $4.6 million compared to operating profit of $33.0 million for the first quarter of fiscal 2025. Profitability was positively impacted by an increase of $10.9 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 $6.3 million in selling, general and administrative expenses, primarily due to an increase in (a) research and development expense and (b) labor costs.

Previous 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.

Current wording

Interest expense. Interest expense was $1.6 million for thefirst quarter of fiscal 2026, a decrease of $0.3 million, or 18.2%, compared to $1.9 million for thefirst quarter of fiscal 2025. The decrease was primarily attributable to a decrease in the stated term loan interest rate from 6.4% at December 28, 2024 to 5.9% at December 27, 2025, as well as lower outstanding borrowings in thefirst quarter of fiscal 2026 compared to thefirst quarter of fiscal 2025.

Previous 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.

Current wording

Other (expense) income, net. Other expense, net was $0.2 million for thefirst quarter of fiscal 2026, a decrease of $3.1 million, or 107.2%, compared to $2.9 million of other income, net for the same period in fiscal 2025.

Previous 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.

Current wording

During thefirst quarter of fiscal 2026, the Company recorded net periodic pension expense of approximately $0.2 million compared with net periodic pension income of $0.4 million for the same period in fiscal 2025.

Previous 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.

Current 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 such sales during the first quarter of fiscal 2026. The proceeds from this sale was recorded in other (expense) income, net in the Condensed Consolidated Statements of Operations as this transaction is not indicative of our normal revenue generating activities.

Previous 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.

Current wording

Income taxes. Income tax expense was $9.1 million for the first quarter of fiscal 2026 compared to $8.7 million for the same period in fiscal 2025.

Previous 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.

Current wording

Adjusted EBITDA. Adjusted EBITDA was $50.1 million, or 15.0% of net sales, for the first quarter of fiscal 2026, an increase of $4.3 million, or 9.4%, compared to $45.8 million, or 14.6% of net sales, for the first quarter of fiscal 2025. 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 $0.2 million and $0.3 million for the nine months ended June 28, 2025 and June 29, 2024, respectively, 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.

Current wording

(1) Includes $0.2 million and $0.1 million for the three months ended December 27, 2025 and December 28, 2024, respectively, 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 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.

Current wording

(2) Includes $0.6 million and $0.4 million for the three months ended December 27, 2025 and December 28, 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

The Company’s primary sources of liquidity are cash generated from its operations, available cash and cash equivalents and borrowings under its revolving credit facility. At June 28, 2025, the Company had $173.1 million of available cash (net of outstanding checks) and $141.7 million of additional borrowings available under the revolving line of credit portion of its credit facility. The Company’s revolving line of credit is available for working capital requirements, capital expenditures and other general corporate purposes.

Current wording

The Company’s primary sources of liquidity are cash generated from its operations, available cash and cash equivalents and borrowings under its revolving credit facility. At December 27, 2025, the Company had $241.7 million of available cash (net of outstanding checks) and $141.7 million of additional borrowings available under the revolving line of credit portion of its credit facility. The Company’s revolving line of credit is available for working capital requirements, capital expenditures and other general corporate purposes.

Previous wording

To increase our liquidity in future periods, we could pursue raising additional capital via an equity or debt offering utilizing a currently effective "shelf" registration statement. However, we can offer no assurance that we would be successful in raising this additional capital, which could also lead to increased expense and larger up-front fees when compared with our historical financial statements.

Current wording

To increase our liquidity in future periods, we could pursue raising additional capital via an equity or debt offering utilizing a currently effective "automatic shelf" registration statement. However, we can offer no assurance that we would be successful in raising this additional capital, which could also lead to increased expense and larger up-front fees when compared with our historical financial statements.

Previous wording

Cash flows provided by operating activities totaled $111.1 million for the nine months ended June 28, 2025, an increase of $55.3 million from the $55.8 million of cash flows provided by operating activities during the nine months ended June 29, 2024.

Current wording

Cash flows provided by operating activities totaled $36.6 million for the three months ended December 27, 2025, an increase of $10.2 million from the $26.4 million of cash flows provided by operating activities during thethree months ended December 28, 2024.

Previous wording

The increase primarily resulted from the effect of net changes in operating assets and liabilities that positively impacted operating cash flows by $62.7 million during the nine months ended June 28, 2025 when compared with the nine months ended June 29, 2024. The primary drivers in this category were favorable changes in accounts receivable and accounts payable of $59.4 million and $17.3 million, respectively, that were partially offset by an unfavorable change in inventory of $14.0 million, as follows:

Current wording

The increase primarily resulted from (i) the $2.0 million increase in net income and (ii) the effect of net changes in operating assets and liabilities that positively impacted operating cash flows by $3.4 million, both during the three months ended December 27, 2025 when compared with the three months ended December 28, 2024. The primary drivers in the changes in operations assets and liabilities were favorable changes in inventories and accrued expenses, pension and other liabilities of $33.9 million and $28.9 million, respectively, that were partially offset by an unfavorable changes in accounts receivable and accounts payable of $35.2 million and $23.6 million, respectively, as follows:

Previous wording

•There was an increase in accounts payable (a source of cash) and a larger net increase in inventory (a use of cash) during the nine months ended June 28, 2025 when compared with the nine months ended June 29, 2024. These changes were driven by an increase in the volume of buses we are producing in fiscal 2025 when compared with fiscal 2024 as well as an increase in the cost of procuring inventory that is attributable to inflationary pressures resulting from ongoing supply chain disruptions and the imposition of tariffs beginning during the third quarter of fiscal 2025. Finally, during the third quarter of fiscal 2025, we elected to strategically acquire larger quantities of certain critical components that have longer lead times and could impact our production schedule in future periods if not manufactured by our suppliers and delivered to us in a timely manner, with no similar activity in the third quarter of fiscal 2024.

Current wording

•We had a larger increase in the balance of our inventory during the first quarter of fiscal 2025 when compared with the first quarter of fiscal 2026 (that resulted in a significant decrease in the use of cash when comparing periods). Specifically, the bus orders that we produced during the first quarter of fiscal 2025 contained a larger mix of units for certain customers, primarily fleet and specific governmental customers, for which the sales cycle is longer when compared with sales to dealers, resulting in increases in all categories of inventories (raw material, work in process and finished goods) as of December 28, 2024 when compared with December 27, 2025. Additionally, at the end of the first quarter of fiscal 2025, we elected to strategically acquire larger quantities of certain critical components that have longer lead times and could impact our production schedule in future periods if not manufactured by our suppliers and delivered to us in a timely manner when compared with similar activity in the first quarter of fiscal 2026.

Previous wording

•A shift in our customer mix resulted in an increase in the accounts receivable balance towards the end of fiscal 2024, including at the end of the third quarter of fiscal 2024, when compared with the end of fiscal 2023. Specifically, we had a significant increase in fleet revenue towards the end of fiscal 2024 relating to school buses that were delivered to coincide with the start of the new school year, with such revenue representing the majority of sales we make on credit. During the nine months ended June 28, 2025, the accounts receivable balances relating to fiscal 2024 fleet revenue were collected, representing a significant cash inflow. There were no similar significant collections of fiscal 2023 accounts receivable balances during the nine months ended June 29, 2024.

Current wording

•A shift in our customer mix resulted in an increase in the accounts receivable balance towards the end of fiscal 2024, when compared with the end of fiscal 2025. Specifically, we had a significant increase in fleet revenue towards the end of fiscal 2024 relating to school buses that were delivered to coincide with the start of the new school year, with such revenue representing the majority of sales we make on credit. During the three months ended December 28, 2024, the accounts receivable balances relating to fiscal 2024 fleet revenue were collected, representing a significant cash inflow. As the accounts receivable balance at the end of fiscal 2025 was significantly lower than the balance at the end of fiscal 2024 due to a significant reduction in sales we made on credit at the end of each respective period, the amount of accounts receivable collected during the three months ended December 27, 2025 was significantly lower when compared with the same period in fiscal 2025.

Previous wording

Cash flows used in investing activities totaled $19.1 million for the nine months ended June 28, 2025 as compared to $10.1 million for the nine months ended June 29, 2024. The $8.9 million increase was primarily due to an increase in spending on fixed assets, as increasing recent profitability has allowed for more capital spending.

Current wording

Cash flows used in investing activities totaled $5.7 million for the three months ended December 27, 2025 as compared to $5.1 million for the three months ended December 28, 2024. The $0.6 million increase was primarily due to an increase in spending on fixed assets, as increasing recent profitability has allowed for more capital spending.

Previous wording

Cash flows used in financing activities totaled $46.7 million for the nine months ended June 28, 2025 as compared to $36.2 million for the nine months ended June 29, 2024, resulting in a $10.5 million increase between fiscal periods.

Current wording

Cash flows used in financing activities totaled $18.5 million for the three months ended December 27, 2025 as compared to $12.9 million for the three months ended December 28, 2024, resulting in a $5.6 million increase between fiscal periods.

Previous wording

During the first nine months of fiscal 2025, the Company purchased $39.0 million of common stock in connection with its share repurchase program with no similar activity in the same period in fiscal 2024. Additionally, there was a $4.1 million increase in purchases of Company common stock in connection with stock award exercises in the nine months ended June 28, 2025 when compared with the nine months ended June 29, 2024.

Current wording

During the first three months of fiscal 2026, the Company purchased an incremental $4.9 million of common stock in connection with its share repurchase programs when compared with the same period in fiscal 2025. Additionally, there was a $0.9 million increase in purchases of Company common stock in connection with stock award exercises in thethree months ended December 27, 2025 when compared with thethree months ended December 28, 2024. These increases were partially offset by a $0.5 million decrease in principal payments on financing leases, which expired in fiscal 2025 and accordingly, there was no similar activity in thethree months ended December 27, 2025.

Previous wording

Free Cash Flow for the nine months ended June 28, 2025 was $47.3 million higher than for the nine months ended June 29, 2024 due to a $55.3 million increase in net cash provided by operating activities that was partially offset by an $8.1 million increase in cash paid for fixed assets, both as discussed above.

Current wording

Free Cash Flow for the three months ended December 27, 2025 was $9.3 million higher than for the three months ended December 28, 2024 due to a $10.2 million increase in net cash provided by operating activities that was partially offset by an $0.9 million increase in cash paid for fixed assets, both as discussed above.