American automaker Blue bird, a specialist manufacturer of school buses, says it will complete its first purpose-built EV chassis by the end of the year, as the company hails its BEV mix hitting 10pc of its sales.
Management welcomed a record quarter for revenues and earnings, which CFO Razvan Radalescu attributed to "pricing realisation, combined with a quarter-by-quarter increase in EV mix, which is now at approximately 10pc of our sales".
"With record profits from revenue, I am very pleased to tell you that we achieved an all-time high adjusted Ebitda margin of 15pc in the first quarter, and we are increasing full year guidance once again," says CEO Phil Horlock.
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Blue Bird left the quarter with 420 firm EV orders in its backlog, which is around a 9pc share of its total backlog. According to Horlock, this translates to approximately $130mn in revenue.
Previously, the company was burnt by taking on too large an order backlog in 2022, as manufacturing costs spiralled beyond the price of purchases, diminishing the margin the company made on the vehicles. Horlock, however, assures that this time the company has learnt its lesson.
"All those low margin units have been sold. We sold 9pc 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," he says.
And available federal incentives are paying dividends in the commercial EV segment, with Horlock expecting Blue Bird to be amongst the biggest beneficiaries of the Clean School Bus funding programme, which aims to accelerate the adoption of electric and propane vehicles in fiscal year 2024 and beyond.
After available funding under the scheme was doubled in January following higher-than-expected applications, grants for over 2,700 buses were awarded.
"We expect Blue Bird buses to represent around 30pc of the ultimate orders, amounting to approximately 800 electric and propane school buses through this programme," Horlock says.
With the help of incentives, the school bus segment is growing into fertile ground for EV manufacturers, and Blue Bird is bullish about its future, which will only be strengthened if its purpose-built EV chassis can be ramped-up as planned.
"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 $1.5bn to $1.7bn, with adjusted Ebitda of $175mn to $200mn or 11.5pc to 12pc," says CFO Radalescu.
Ciaran has written about finance, politics and culture. He is passionate about e-mobility and what it means for our way of life.
Ciaran has a Masters in Ancient Philosophy from Oxford University.
