Blue Bird Corporation (BLBD), which designs and manufactures school buses, reported an increase in earnings for the fourth quarter when the management’s aggressive cost-cutting efforts more than offset the impact of higher steel prices. Earnings, meanwhile, fell short of expectations. Benefitting from strong delivery growth, sales increased and surpassed analysts’ view.
A 6% growth in sales pushed up fourth-quarter adjusted earnings to $0.70 per share, which however came in below analysts’ forecast. Unadjusted profit attributable to shareholders more than doubled to $14.75 million and earnings per share surged 86% to $0.52. At $331.6 million, sales hit a record high and exceeded market estimates.
The bottom line was negatively impacted by higher raw material prices, mainly steel. A total of 3,757 bus units were sold during the three-month period, up 4% compared to the fourth quarter of 2017.
During the quarter, the management’s aggressive cost-cutting efforts more than offset the impact of higher steel prices
“We achieved significant structural cost reductions through our Transformational Initiatives to improve quality, reduce costs, and increase capacity. We expect continued gains in FY2019 from the implementation of these initiatives as well as the pricing we took to offset rapidly-increasing commodity costs late in FY2018,” said Blue Bird CEO Phil Horlock.
Looking ahead, Blue Bird expects revenues to be between $990 million and $1,025 million in fiscal 2019. Full-year adjusted EBITDA is forecast to be in the range of $80 million to 85 million and adjusted free cash flow in the $24-$28 million range. The management anticipates that the demand for school buses will increase in the coming years when institutions replace their existing fleets with new units.
Blue Bird shares closed the last trading session up 2.8% but remained below their long-term average. Currently, the stock is trading very close to the levels seen twelve months ago.