What happened
School bus manufacturer Blue Bird (NASDAQ: BLBD) reported quarterly results that came in ahead of expectations, and raised its guidance for the year. The company's turnaround appears to be ahead of schedule, and investors reacted by sending shares up as much as 40% on Friday morning.
So what
Blue Bird makes most of the buses that get about 25 million U.S. children to school every day, but the stock has received a failing grade through much of the last three years. Blue Bird shares lost nearly 75% of their value from the start of 2021 to the end of last year due to sluggish operating results.
That appears to now be in the past. Blue Bird earned $0.22 per share in its fiscal second quarter (ending April 1) on revenue of $299.8 million, easily surpassing expectations for $0.08 per share in earnings on sales of $249.5 million.
"I am incredibly proud of the progress that the team has made and we are finally seeing the results of all the hard work in the financials," CEO Matthew Stevenson said in a statement. "The team has been executing on a rigorous plan for over 18 months to improve operations, reduce fixed costs, and recover economics through pricing."
Now what
Blue Bird ended the quarter with a backlog of nearly 5,800 buses worth about $775 million. The company raised its full-year guidance for revenue of "just over $1.1 billion," ahead of Wall Street's $1.02 billion estimate.
The company also now expects to generate earnings before interest, taxes, depreciation, and amortization (EBITDA) of $55 million to $65 million for the year, up from previous guidance for $40 million to $46 million, and free cash flow of $30 million to $40 million. The long-term goal is $2 billion in annual revenue at an adjusted EBITDA margin of at least 12%.
It is going to take some time to get to those goals, but Blue Bird's results suggest the company is heading down the right road. Investors are climbing on board, sending the shares surging after the report.
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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
