Nasdaq: BLBD Blue Bird Corporation Investor Presentation June 2020
Agenda Business Summary School Bus Industry Overview Blue Bird Highlights Financial Overview 2
Business Summary ❖ Founded in 1927, Blue Bird product development, manufacturing, fabrication and headquarters located in Middle Georgia ❖ Only pure-play school bus manufacturer ➢ Product-focused and purpose-built ➢ Most recognized school bus brand ❖ High barriers to entry ➢ Highly specialized/custom product ➢ Relationship-driven with exclusive, franchised dealer network ➢ Highly seasonal market ❖ Strong free cash flow generation ➢ Typically operating with negative working capital over the year ➢ Only build to firm orders ➢ Low ongoing capital requirements ❖ Broadest range of product with gas, diesel, propane, CNG and electric offerings ❖ Undisputed leader in alternative fuels – the fastest growing segment of the school bus market ➢ Exclusive partnerships with Ford and ROUSH CleanTech ➢ Approx. 50% of Blue Bird sales are non-diesel ❖ Transformational Initiatives underway, supporting Adj. EBITDA Margin growth to 10% ➢ Significant company-wide cost reductions, led by material costs ➢ All-new, robotic paint facility ➢ Efficiency gains from industrial engineering work ➢ Major product changes, addressing features, quality and cost Iconic brand with high barriers to entry and strong free cash flow model 3
School Bus Industry Overview 4
School Bus Industry Products Type C Buses Type D FE Buses (Conventional) (Front Engine, Transit-Style) Seating Capacity: 36-83 Seating Capacity: 54-90 Fuel Types: Diesel, Propane, CNG, Fuel Type: Diesel Gasoline, Electric (2019) Type D RE Buses Type A Buses (Rear Engine, Transit-Style) Seating Capacity: 10-30 Fuel Types: Diesel, Propane, Gasoline, Seating Capacity: 66-84 Fuel Types: Diesel, CNG, Electric (2018) Electric (2018) Blue Bird offers most expansive range, from 10 to 90 passengers with multiple body and engine choices 5
Industry Highlights OEMs Blue Bird Thomas 590,000 IC School Bus Customers Attractive Industry Attributes ~3,400 High barriers to entry Contractors Highly specialized product Complex state and customer requirements ~10,000 Dealer and service network Customer relationship driven business Demand Drivers School Population of school age children increasing Districts Increasing average age of existing fleet Relatively Clear Funding Sources Property taxes are primary source of funding; volume tracks housing prices Safe and reliable transportation for over 26 million students each day 6
Type C & D School Bus Industry 40,000 37,641 35,000 35,000 Mean: 30,800 30,000 25,000 23,821 20,000 15,000 New School Bus Registrations Long Term Average Source: R.L. Polk New Registrations, based on Type C/D school buses registered during BB fiscal year ❖ Industry average size is 30,800 new units annually based on RL Polk registrations ❖ Total fleet of school buses is ~590,000 units and average age is about 11 years ❖ Industry size is driven by: 1. Number of school age children Age of existing fleet – most states set 15 years as a replacement target 2. 3. Average ridership per bus Funding – primarily from property tax 4. FY2020 industry expected to be ~30k – 31k units due to COVID-19 impact on new bus orders 7
Fleet Age Profile Supports Industry Levels ~590k School Buses on the Road as of the end of FY2017 40,000 180k / 30% 300k / 52% 110k / 19% 35,000 15years and under 10 years 10-14 years older 30,000 School Buses in Operation Average age of the 25,000 590k+ Unit Fleet is 20,000 approx. 11 years 15,000 10,000 5,000 - - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 Age ~290K buses in service for more than 10 years supports high annual replacement volume. Additional funds and demand for alternative fuels further supports industry levels 8 Source: R.L. Polk Registrations, based on Type C/D school bus fleet at the end of BB fiscal year
Type C and Diesel Dominate; Alt. Fuels Growing Rapidly FY2012 FY2018 Type C Type D RE Type D FE Type C Type D RE Type D FE 6% 5% 7% Bus-Type 8% 85% 89% Alt. Fuels Diesel Alt. Fuels Diesel 4% 38% mix for Fuel-Type Blue Bird 17% 83% 96% Type C dominant body type; diesel buses were 83% of FY2018 sales; alt. fuel growth 4X since FY2012 9 Source: R.L. Polk New Registrations, based on Type C/D school buses registered during BB fiscal year
Blue Bird Highlights 10
Dedicated Manufacturing Footprint Micro Bird JV Facility (Drummondville, Quebec, Canada) Micro Bird JV Facility Parts Distribution Center Parts Distribution Center (Drummondville, Quebec) (Delaware, Ohio) (Delaware, Ohio) Design, fabrication, and Electronically guided, houses Commentary assembly of Micro Bird by Commentary and distributes parts for current Girardin Type A buses and past models Blue Bird South and Assembly Corporate Office Size (Square Feet) 100,000 Size (square feet) 200,000 (Fort Valley, Georgia) Salaried Headcount 150 (Macon, Georgia) Salaried Headcount 4 Hourly Headcount 375 Hourly Headcount 26 Own / Lease Lease Own / Lease Lease Labor Unionized Labor Non-Unionized Volume / Capacity 3.1K Units / 3.9K Units Product Breadth 32,000 SKUs Blue Bird South Assembly (Fort Valley, Georgia) (Fort Valley, Georgia) Fabrication facility that Corporate Office Centralized manufacturing, Commentary manufactures parts for Type (Macon, Georgia) Commentary engineering, and C/D vehicles assembled at HQ support functions New headquarters in Commentary 2 nd Floor of Highridge Centre Size (square feet) 340,000 Size (square feet) 900,000 Salaried Headcount 11 Size (square feet) 50,000 Salaried Headcount 87 Hourly Headcount 305 Salaried Headcount 200 Hourly Headcount 1,631 Own / Lease Own Hourly Headcount 0 Own / Lease Own Labor Non-Unionized Own / Lease Lease Labor Non-Unionized Product Breadth 5,900 active SKUs Labor Non-Unionized Volume / Capacity 11.5K Units / 13K Units Two production centers – Type C & D in Fort Valley, Georgia and Type A in Drummondville, Quebec. Parts warehouse in Ohio 11
Leader in Key Attributes Our Customers Value Product Attributes Blue Competitor Competitor Ranked in Order of Bird A B Importance 1 #1 Safety -- -- #2 Quality, Reliability and -- -- Durability #3 Operating Costs -- -- ✓ #4 Acquisition Cost -- -- #5 How the Bus Drives -- -- Blue Bird viewed as the leader in four of the five top attributes – 2017 introduction of gasoline is game changer in Acquisition Cost 12 Source: Freedonia Custom Research, Inc. 9/4/2013 (study commissioned by Blue Bird) 1 Checkmarks/Corporate Logo indicate leadership in category
Our Exclusive Franchised Dealer Network More than 85% of Blue Bird dealers dedicated to bus sales and service 13
Alternative-Fuel Leadership Record Sales in FY2019 ▪ Full Year sales 21% above last year ▪ Record Full Year sales mix at 48% ▪ 54% sales mix achieved in 2H Up 21% ▪ Propane sales 41% above last year Opportunities ▪ VW mitigation funds ◦ 50 states have finalized mitigation plans ◦ Approximately $600M carved out for school buses; about $150M spent to date ◦ Only major OEM with all-electric and ultra- low NOx school buses available • Electric bus interest remains strong ▪ Less than 15% of customers have purchased alternative-fuel powered buses Blue Bird is the only OEM presently producing Ultra-Low NOx Propane, CNG and electric buses; uniquely placed to take advantage of VW mitigation funds 14
Iconic Brand: History of Industry Innovation 1991 – 1994 First Propane, CNG and Electric Blue Bird Buses Exclusive Exclusive ROUSH 2018 2012 2017 Partnership with CleanTech and Ford ROUSH CleanTech Gen 4 Low NOx and Ford Propane Launched Established to Launch Gen 3 Propane Vision and Exclusive ROUSH Micro Bird Electric All- 2007 CleanTech and Ford 2016 Gen 2 Propane American, Vision Vision Gasoline and Launched and Micro Bird Vision CNG Launched Industry pioneer introducing alternative-fueled powertrains 15
Broadest Range of Product Offerings NEW #1 #1 Type C & D Alternative Fuel Type D Rear Cummins Electric Engine #1 Alternative Type D Rear Engine Fuel #1 Traditional Type C Cummins ISL-G CNG Alternative Cummins ISB/ISL Diesel Type D Front Fuel #1 Engine Ford/ROUSH CNG Traditional Type C Alternative Cummins ISB Diesel Fuel Type C Traditional Ford/ROUSH Type C Propane Cummins ISB Diesel Value Ford/ROUSH Gasoline Broadest and most successful range; delivering electric buses 16
Financial Overview 17
Track Record of Growing Sales ($ in millions) Bus Net Sales Parts Net Sales Bus Units Sales $1,200 15,000 $1,025 $1,018 14,000 $991 $932 $62 $1,000 $66 $919 $60 13,000 $856 $56 $57 $777 1 $54 11,649 $800 12,000 11,317 $46 $11,017 10,616 $598 11,000 10,378 $600 $44 9,604 10,000 $963 $952 $931 $876 $862 8,654 $802 $400 9,000 $730 $554 8,000 $200 6,882 7,000 $- 6,000 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 ($ in thousands) Memo ASP: Bus $81 $84 $84 $83 $83 $82 $83 Only: Delivering solid revenue growth 1 Total does not sum precisely due to rounding 18
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