Hello all and welcome to Blue Bird's Fiscal 2024 Third Quarter Earnings Conference Call. My name is Lydia and I'll be your operator today. After the prepared remarks there'll be an opportunity to ask questions. I'll now hand you over to Mark Benfield, head of investor relations, to begin. Please go ahead.

Thank you and welcome to Blue Bird's fiscal 2024 third quarter earnings conference call. The audio for our call is webcast live on blue-bird.com under the investor relations tab. You can access the supporting slides on our website by clicking on the presentations box on the IR landing page. Our comments today include forward-looking statements that are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters we have noted on the two slides and in our filings with the SEC. Blue Bird disclaims any obligation to update the information in this call. This afternoon you will hear from Blue Bird CEO Phil Horlock and CFO Razvan Radulescu. Then we will take some questions. So let's get started. Phil?

Thanks Mark and good afternoon to everyone on our call today. It's great to be here and to share with you our results for our fiscal 2024 third quarter. You'll recall that on our last earnings call we reported an all-time record profit for a second quarter. Well, I'm very pleased to tell you that our momentum has not slowed down at all, with the Blue Bird team doing a fantastic job in delivering a third quarter profit that is an all-time record for any quarter in our history. That surpasses our previous quarterly record that we achieved in the first quarter of this year. Razvan will be taking you through the details of our financial results shortly. So let me get started with the key takeaways for the third quarter on slide six. As the headline says, we recorded the best ever profit for a quarter. I am particularly proud of this achievement after breaking profit records in each of the past two quarters and we have much more to come. Regarding the first line in the box, I'm very pleased to report that we achieved an outstanding adjusted EBITDA margin of 14.5% in the third quarter. That's more than 4 percentage points higher than a year ago. And once again, we're increasing our guidance on all three metrics that we provide and we're also increasing our long-term financial outlook as Razvan will show you later. As we look at the drivers for this terrific progress in Q3, it really is about maintaining and delivering the plan we laid out last year, which focuses on making significant improvements across every piece of our business. Market demand for school buses continues to be very strong. Our quarter-end backlog of firm orders for Blue Bird buses stood at just over 5,200 units. That's a little more than at the same time last year. But importantly, our net orders for Blue Bird buses through the first three quarters of this year were 10% higher than for the same period last year. Now, that's a great endorsement of the strength of the industry and the customer demand for Blue Bird's buses. And this bodes well for pricing, production stability, and profit margins. Now, while supply chain issues are undoubtedly easing, as we have reported throughout this year, we do have select constraints on a couple of chassis components across the truck and bus industry that are limiting industry production and deliveries. But we're very engaged with those constrained suppliers, and with additional capacity being added in the balance of this calendar year, we should see some easing of those constraints as it moves through the end of this year and into 2025. Every bus we are selling today and those in our order backlog reflect current pricing, and we are priced competitively, which we can tell from our quote win rate and our incoming orders. This is an entirely different Blue Bird bus revenue and gross margin structure compared with just a year ago, with bus prices up significantly. On the EV front, thanks largely to the first round of $1 billion of funding from the EPA's unprecedented $5 billion Clean School Bus Program, our third quarter delivers electric buses, we're again over 200 units, and nearly 40% more than last year, and represented 9% of our unit sales for the quarter. And we ended the quarter with a record backlog of EV buses. This is particularly impressive as we're approaching the end of deliveries for the first round of the Clean School Bus Program, and are just beginning to see orders from the second and third round of the EPA's program. These will really impact fiscal '25 and fiscal '26, and I will cover this timing of deliveries in more detail a little later. We also maintained our very strong mix of alternative powered vehicles and further strengthened our leadership position in this segment. The higher margins and higher owner loyalty from these products contributed to our profit improvement in the third quarter. We are continuing to invest back into the business by selectively upgrading facilities and installing lean manufacturing processes, and we are enhancing the plant working environment. Through the efforts of the best workforce in the business, strong leadership, lean process improvements, and just sheer hard work, we have been achieving some of the best manufacturing performance the company has ever seen. Bottom line, we are performing extremely well in a strong market. We are delivering a rich mix of higher margin alternative powered vehicles, we are priced competitively and appropriately for today's economic environment, and manufacturing efficiencies are improving. As a result of all these accomplishments, we achieved an outstanding third quarter adjusted EBITDA of $48 million, with a margin of 14.5%. Now let's take a closer look at the financial and key operating highlights for the third quarter on slide seven. As I have said on previous earnings calls, our present year financial performance is transformed from a year ago with many record highs reported. We sold 2,151 buses in the third quarter fiscal '24, which is very slightly above last year. However, those unit sales drove a strong third quarter net revenue of $333 million, which is a very impressive 13% increase over last year. So with essentially flat volume compared with a year ago, up by only 14 buses, and net revenue of 13%, the impact of higher pricing and a rich mix of EVs is clearly evident in the revenue growth. Our record third quarter adjusted EBITDA of $48 million was $19 million above last year. That's almost 70% higher, and well above the $25 million to $35 million general guidance range for quarterly profits that we showed at our last earnings call. And finally, while adjusted free cash flow for the quarter was slightly negative, that was more than explained by significant sales to the national fleets, where we provide extended payment terms. We won this business earlier in fiscal '24, and these units were delivered late in the third quarter and are now being paid for in the fourth quarter. They are recognized as receivables in Q3. Overall, we had exceptional third quarter financial results and achieved transformational improvements over last year. We are on a great trajectory. On the right-hand side of the slide, you can see some of the operating highlights for the business. As I mentioned earlier, demand continues to be very strong, with our firm order backlog at the end of the third quarter worth about $775 million in revenue, reflecting a backlog of over 5,200 buses. That's almost seven months of firm order backlog at our current sales rate. We raised prices considerably over the last two years, and the average third quarter selling price per bus in fiscal '24 was an outstanding 13% higher than a year ago. That's about a $17,000 increase in average selling price per bus. Part sales totaled $25 million in Q3, representing a strong 6% growth over last year, and that's also consistent with the growth we saw in the first half of '24. Turning to alternative powered buses, they represented about 59% of our total unit sales in the third quarter, and we are running at a very strong 60% of sales mix through the first nine months of the fiscal year. We continue to be the clear leader in this space. No other major school bus manufacturer comes even close to those numbers. EV buses are part of that alternative power mix, and in the third quarter, EV bookings increased by 38% over last year. Once again, we sold over 200 EVs in a quarter. That represents a very strong mix at 9% of our total sales, compared with 7% in last year's third quarter. Additionally, we left the quarter with a record Q3 backlog of 567 EVs, which is a very strong 11% share of our total backlog. Now, that's worth more than $180 million in revenue and an impressive 17% higher than the backlog we had at the end of the second quarter. Clearly, we're benefiting substantially from the first year of funding from the EPA's $5 billion Clean School Bus Program. I'll cover later the status of the second year of this program, which comprises of two rounds, and we expect significant orders and deliveries from those two rounds in fiscal '25 and fiscal '26. On the labor front, I am really pleased with the outcome of our first collective bargaining agreement with the United Steelworkers Union, which now represents our hourly employees and was completed in just less than a year. Razvan will summarize the details of the program a little later, but this is truly a win-win for Blue Bird and for our employees, and we look forward to a collaborative and stable partnership that benefits all. In regard to future investment expansion plans, I'm very excited with being awarded an $80 million grant by the Department of Energy to increase EV and overall production of our Type D bus, allowing us to expand single-shift capacity of school buses from 10,000 buses annually to 14,000 buses. I will cover the significant growth initiative in more detail a little later. And finally, on the back of our third quarter results, we are once again raising full-year guidance for adjusted EBITDA, net sales revenue, and adjusted free cash flow. Most notably, we're increasing adjusted EBITDA at the midpoint of range by $20 million, with guidance now at $175 million for the full year. That represents a really strong margin of 13.3%, which is now standing 5.5 percentage points higher than last year. This is our sixth quarter in succession that we have beaten and raised our guidance, with the expected outcome being record full-year results in fiscal '24. In fact, at midpoint of guidance, we are now at double the profit we achieved in 2023, which was a then-record. Importantly, too, we have raised our longer-term margin outlook from 14% to 15% as we continue to solidify and build on our recent operating and financial performance. With an all-time quarterly record profit in the third quarter, reflecting a 14.5% adjusted EBITDA margin, I'm incredibly proud of our team's accomplishments. Let me now walk you through the highlights of our plans for the $80 million DOE grant that we were awarded just last month. Turning on to slide eight. Blue Bird is one of 11 companies to be awarded a grant by the DOE under the MESC program. That is the Manufacturing and Energy Supply Chain's Office of the DOE. Awards were based on converting a facility that produced combustion engine-based products to one that produces EV products. In our case, we're converting our former Wanderlodge RV production site. The grant award of $80 million represents 50% of the capital required to build a 600,000-square-foot Type D and EV production facility located right across the street from our existing plant. So the total investment is around $160 million, with Blue Bird funding the other 50%. The build-out will span around two years, with production launch expected by the end of '26 or early '27. Adding this facility would raise our total production capacity to around 14,000 buses on one shift and would provide for increased volume upside for the commercial chassis production when needed. The new plant would create approximately 400 new jobs, and the project includes a number of community benefits. The project generates a great return on investment with a projected IRR of 28% and payback less than two years after start of production. Now, grant deployment is subject to finalized contract negotiations with the DOE through December this year, which are underway today, and final board approval. We are very excited about the opportunities that this award presents as another pillar for our long-term profitable growth outlook. We will apprise you of our progress at our next earnings call. I'd now like to hand it over to Razvan to walk through our fiscal '24 third quarter financial results and updated guidance in more detail. We'll also be providing our first look at guidance for fiscal '25. Over to you, Razvan.

Thanks, Phil, and good afternoon. It's my pleasure to share with you the financial highlights from Blue Bird's fiscal 2024 third quarter record results. The quarter end is based on a close date of June 29, 2024, whereas the prior year was based on a close date of July 1, 2023. We will file the 10-Q today, August 7, after market close. Our 10-Q includes additional material and disclosures regarding our business and financial performance. We encourage you to read the 10-Q and the important disclosures that it contains. The appendix attached to today's presentation includes reconciliations of differences between GAAP and non-GAAP measures mentioned on this call, as well as other important disclaimers. Slide 10 is a summary of the fiscal '24 third quarter and year-to-date record results. It was another outstanding operating quarter for Blue Bird, with somewhat limited and very well-managed supply chain and labor challenges, and with high margin units driving both our top line and our bottom line results. We significantly beat the adjusted EBITDA general quarterly guidance provided in the last earnings call, and in fact, we delivered the best quarter ever for Blue Bird, with $48.2 million adjusted EBITDA margin. Additionally, on a year-to-date basis, we tripled the results of last year for a new record year-to-date of $141.6 million. The team continued to push hard and did again a fantastic job and generated 2,151 unit sales volume, which was just above prior year Q3 volumes, but with more complex Type D and a higher number of EBITDA buses. Record Q3 consolidated net revenue of $333 million was $39 million or 13% higher than prior year, driven by a slightly higher number of units, higher part sales, improved mix of Type D and electric buses, and pricing actions that continued to materialize also in this quarter as expected. Adjusted EBITDA was an all-time quarterly record of $48 million, driven by high margins, increased part sales and margins, partly offset by increased labor and material costs. The adjusted free cash flow was negative $4 million, a $46 million reduction versus the prior year's third quarter. This was due to increased investment in working capital, mainly finished goods and accounts receivables, as we sold a larger number of buses to fleets and GSA in this quarter. We expect many of these units to turn into cash by the end of fiscal '24. Our liquidity position at the end of this quarter was also at a record Q3 level, with $232 million, and we had close to zero net debt position. On a year-to-date basis, in nine months, we generated revenues close to $1 billion, tripled the prior year-to-date adjusted EBITDA result to $142 million, and we delivered significant steps forward on our profitable growth path. Moving on to slide 11, as mentioned before by Phil, our backlog at the end of Q3 has grown and continues to be very strong at over 5,200 units, including over 11% EVs. Breaking down the Q3 record $333 million in revenue into our two business segments, the bus net revenue was $308 million, up by $38 million versus prior year. Our average bus revenue per unit increased from $127,000 to $143,000, or 13%, which was largely the result of pricing actions taken over the past year, as well as a higher mix of Type D and electric buses. EV sales in Q3 were also strong at 204 units, or 56 more than last year, a 38% increase year-over-year. Part revenue for the quarter was $25 million, representing a growth of $1 million, or 5%, compared to the already very strong prior year level. This great performance was in part due to increased demand for our parts as the fleet is still aging, as well as supply chain driven pricing actions and throughput improvements. Growth margin for the quarter was a record 20.8%, or 5.3 percentage points higher than last year, due to our sustained operational performance and our pricing overtaking the inflationary cost in the last four quarters. In fiscal '24 Q3, adjusted net income was a record $31 million, double the level of the prior year, a $16 million improvement year-over-year. Adjusted EBITDA of $48 million, or 14.5%, was up compared with the prior year by $19 million, an increase of over 4 percentage points. Slide 12 shows the walk from fiscal '23 Q3 adjusted EBITDA to the fiscal '24 Q3 results. Starting on the left, the $29.7 million, the impact of the bus segment gross profit in total was $22.3 million, split between volume and pricing effects, net of material cost increases of $25 million, offset by labor cost increases of negative $2.7 million. The favorable development in the parts segment gross profit was $1.2 million, driven by higher sales at very good margins, as mentioned earlier in the call. These great improvements were slightly offset by increases in our other expenses and fixed costs, mainly engineering and personnel related, of negative $5 million, as discussed in the last earnings call. The sum of all the above-mentioned developments drives our record fiscal '24 Q3 reported adjusted EBITDA results of $48.2 million, or 14.5%. Moving on to slide 13, we have extremely positive developments year-over-year also on the balance sheet. We ended the quarter with $88 million in cash and reduced our debt significance by $39 million over the last four quarters. In fact, our net debt position was once again close to zero at the end of this quarter. Our liquidity was very strong at $232 million at the end of fiscal '24 Q3, a $98 million increase compared to a year ago. The operating cash flow was $1 million in this quarter, driven by an improvement in operations and margins, offset by an increase in finished goods and account receivables due to the large number of fleet and GSA units built this quarter. For the fleet and the government GSA units, the working capital flow is different than the dealer business in two main ways. First, the buses are in finished goods inventory for an additional two weeks to six weeks, while they are transported and inspected for delivery before they get into customer hands, which is when we recognize the sale. Second, fleet and GSA buses generally have longer payment terms than our dealer business, which could be 30 days or more, depending on the contract. A detailed comparison chart of these flows is available in the appendix of today's presentation. Slide 14 shows the sustainable results achieved by our team over the last four quarters, generating over $180 million in adjusted EBITDA, or 14%. Our revenues have been consistently above $300 million every quarter, partially due to pricing realizations, combined with a strong increase in EV sales versus last year. We have beat and raised our conservative guidance for the last six quarters in a row due to the outstanding execution of our plans by our team, and despite the still difficult supply chain environment with select suppliers. The last four quarters have been in the 13% to 15% adjusted EBITDA range, demonstrating that we are delivering now consistently double-digit performance at best-in-class levels. Finally, it is important to note that our pricing curve has been ahead of our costing curve in the last four quarters, preparing us for the significant investments lined up for 2025 and the contractual inflation factors expected ahead of us, some of which already impacted our margins in fiscal '24 Q3 as expected. Before we talk about the updated guidance for fiscal '24 and our updated mid- and long-term outlook, on slide 15, we wanted to share with you the results of our year-long negotiations with the USW on our first collective bargaining agreement. Overall, we believe we have achieved the win-win result, which makes Blue Bird an even more attractive place to work in middle Georgia and will give us the talented and stable workforce required for our profitable growth plan. We have now a three-year contract from June 2024 to June 2027, with approximately 1,500 people in scope. The average wage increase in the first year is 12%, followed by 4% in year 2 and another 4% in year 3. We are also introducing profit sharing at 4% of net income once certain thresholds for profitability are met each year. We also strengthened the company's 401k contributions for the employees. In total, the increased cost equals approximately 1% of the company revenues on a run rate basis, and we intend to pass this to our customers over time through pricing action. In Q3, we recorded a number of one-time expenses, including the ratification bonus of $750 per employee paid in June and the true-up of our profit-sharing accruals. In summary, we believe our CBA provides us with the necessary workforce and stability to continue to grow profitably in the years to come. On slide 16, we want to share with you our updated fiscal '24 guidance. We are increasing our revenue to $1.315 billion, and we are significantly increasing our adjusted EBITDA by $20 million to $175 million, or 13%, with a range of $170 million to $180 million. This is an increase of 100% over the prior year record results, doubling our prior best year ever. We are reducing our EV sales outlook for the year by about 100 units due to the timing of EPA orders and requested delivery timing. Phil will cover this in more detail in the outlook. Given this and cost factor headwinds anticipated in Q4, we expect in the last quarter revenues of $300 million to $330 million and increased adjusted EBITDA in the range of $30 million to $40 million, or 10% to 12%. Moving to slide 17, in summary, we are forecasting a significant improvement year-over-year, with revenue up 16% to over $1.3 billion, adjusted EBITDA in the range of $170 million to $180 million, and adjusted free cash flow of $80 million to $90 million, in line with our typical target of approximately 50% of adjusted EBITDA. As a reminder, we are moving from accelerated filer to a large accelerated filer status at the end of fiscal year 2024, which will reduce our form 10-K filing requirements from 75 days to 60 days. As a result, we plan to file our 10-K and hold our fiscal year and earnings call on Monday, November 25, 2024, as announced in the last earnings call. On slide 18, we wanted to give you a first look at fiscal '25, in terms of preliminary guidance. We have a number of both tailwinds and headwinds, and we maintain a cautious stance, yet maybe a bit less conservative than in the prior years. As tailwinds, we have strong demands, stable pricing, and still very high industry backlog. We have now the only propane fuel school bus in the industry, with clean fuel and best-in-class total cost of ownership. We are also leading in the EV segment, with close to 2,000 buses on the road, and the orders from Round 2 and Round 3 of the EPA Clean School Bus Program will significantly improve our sales mix in the second half of fiscal '25. As headwinds, supply chain is still fragile at times, while improving overall, and we have made great progress in removing bottlenecks for some key components. The material costs and supplier inflation pressures are still present. And finally, we expect still relatively low EV production and sales to the first half of fiscal '25, as the infrastructure plans are being worked on, and with many customers requesting EV delivery before school starts in the summer of 2025. While it's still very early, we are modeling the range of scenarios as follows. Units in the range of 9,000 units to 9,500 units. EV sales in the range of 1,000 units to 1,300 units, back and loaded in the second half. Revenues in the $1.4 billion to $1.5 billion, or approximately 10% increase over fiscal '24, also back and loaded. And adjusted EBITDA of approximately 13%, and in the range of $180 million to $200 million, approximately 10% year-over-year improvement. We'll provide more insight into fiscal '25 during our next earnings call on November 25th. On slide 19, we wanted to also update you on our raised long-term outlook and our expected path to get there. Looking at fiscal '24 updated guidance, through hard work from all our teams and great execution of our strategy, we already delivered way ahead of schedule the 13% adjusted EBITDA margin we had highlighted in the past as our long-term aspiration. Therefore, today we are raising the bar again for our outlook as follows. Fiscal '25 shows $190 million and 13%-plus adjusted EBITDA margin, and replaces the previous short-term outlook. Looking to the medium-term, in fiscal '26 or fiscal '27, our EV growth and operational improvements on one shift with the existing plan can support volumes of up to 10,000 units, including EVs of 2,500 units, generating revenues of $1.6 billion, and with adjusted EBITDA of $225 million or 14%. Beyond 2027, our long-term target remains to drive profitable growth, now to even higher levels, towards $1.85 billion to $2 billion in revenue, comprising of 11,000 units to 12,000 units, of which 4,000 to 5,000 RVs, and generate EBITDA of $270 million to $300 million, or 14.5% to 15%, at best-in-class levels. We are incredibly excited about Blue Bird's future.

Well, thanks, Razvan. As usual, that was a great explanation of our quarterly results and our forward-year outlook. Let's move on to slide 21. I covered this slide in our two prior earnings calls, so I won't spend much time on it today as our priorities and our strategy are unchanged, as they should be. The chart on the left illustrates the three priorities that continue to drive us, taking care of our employees, delighting our customers and our dealers, and delivering profitable growth. The chart on the right provides more texture around the specific strategies that we are pursuing that both align with our priorities and drive our forward-year growth plans. At the center is our ultimate objective, to drive sustained, profitable growth. As you look at the margin accomplishments in fiscal '23, we transformed the business from losses in fiscal '22 to record profitability in '23, achieving a full-year margin of 8%. For fiscal '24, we just increased our full-year earnings guidance, midpoint of range, to a 13% adjusted EBITDA margin. Then over the next few years, we plan to grow the margin to 14% and then to 15% and beyond. Following these core strategies has been key to our margin transformation and will continue to drive our forward-year plans. On this point, we have highlighted our leadership and safety strategy on this slide in recognition of the significant move we announced just a couple of months ago to make three-point seatbelts a standard feature on all of our Type C and Type D school buses. This will take effect in the fourth quarter of this calendar year, and we will be the first school bus manufacturer to provide three-point seatbelts as standard equipment. Now we are following this with the standardization of a driver's airbag in mid-2025 on our Type C bus, with a Type D bus coming a little later. We will be first to market with this safety feature, and both actions show our commitment to the safety of our children and the safety of our drivers. We intend to lead, and we have many more safety initiatives in our product development pipeline that will differentiate us. Let's now turn to slide 22 and look at the latest status of federal funding for clean school buses, which is so important in helping us accelerate the adoption of electric and propane vehicles in fiscal '24 and beyond. As a reminder, we are just starting the second year of this bipartisan five-year program, which provides $5 billion of funding for electric and propane-powered school buses. There is still over $4 billion to be deployed after the first year of funding. The second year, which is referred to by the EPA as a 2023 program, provides for two more rounds of funding, totaling almost $2 billion. That's close to a $1 billion more than was anticipated and appears to be an acceleration by the EPA to deploy the $5 billion in total funding. As the left chart shows, Round 2 awards for the 2023 grant program are confirmed at $965 million. In fact, that's a $565 million increase from the original plan due to the high level of grant applications submitted. Now, about 2,700 electric and propane buses were awarded these grants earlier this year, which cover Type A, Type C, and Type D school buses, and the winners will have until April '26 to take delivery of their buses using these awards. Looking now at the middle chart, immediately after announcing the Round 2 award results, the EPA announced its Round 3 rebate program, which is also part of the 2023 program, totaling $940 million, and again, about $500 million more than had been anticipated due to the sheer volume of applications. Approximately 3,600 school buses will be awarded these rebates, which covers all body types again, and the winners will have until June '26 to take delivery of these buses. So, in total, rounds two and three will help to fund around 6,300 EV and propane-powered buses, and virtually all this is ahead of us in terms of orders and deliveries. Now, our expectation is that Blue Birds should win approximately 30% of these bus orders, totaling around 1,900 buses with deliveries in fiscal '25 and fiscal '26. Now, with the deadline of bus deliveries from these two rounds being as late as June 2026, significant deliveries likely won't begin until the second quarter of the 2025 calendar year, as end customers deal first with finalizing their charging and utility infrastructure needs prior to ordering. However, the EPA's timing plan indicates that purchased orders for the Round 3 rebates must be placed by year-end 2024, so we are expecting an order surge late this calendar year. Finally, looking at the right-hand chart, at our last earnings poll, I introduced the 2024 Clean Heavy Duty Vehicles Program, which amounts to $932 million. Now, this is funded by the Inflation Reduction Act, and the great news is that 70% of that EV funding is being allocated to school buses. That's up to $650 million of additional funding to accelerate the adoption of EV school buses, and that's beyond the $5 billion from the EPA's Clean School Bus Program. Now we estimate that orders from this program should total around 2,300 EV school buses. Awards should be announced in February 2025, with the winners coming until January 2027 to take delivery of their buses. The EPA's focus on school buses is great news for our industry, great news for our customers, and great news for our school children, with school buses recognized as having the perfect duty cycle for EV adoption. So, let me now wrap up the earnings call and our outlook for the business on slide 23. Razvan took you through the raised guidance of fiscal '24, and I'm showing you some of those key metrics at the midpoint of guidance here. Our volume outlook of 8,800 buses is 3% over fiscal '23. Net revenue at $1.3 billion will be a new record for Blue Bird, up 15% from fiscal '23. Adjusted EBITDA guidance of $175 million is double the $88 million profit we made last year, which was a record at that time. Importantly, we are planning on a 13% EBITDA margin in fiscal '24, up 5.5 percentage points from fiscal '23, which is several years ahead of the plan we had been sharing with you just a couple of years ago. We have confidence in achieving this margin after recording an impressive 14% adjusted EBITDA margin in the first three quarters of fiscal '24. Now, it should be noted that the first nine months did benefit from an exceptional mix of EVs at 9% of unit sales, within a strong total mix of alternative fuel vehicles at 60% of sales. The extended time granted by the EPA for customers to deploy buses from the new Round 2 and Round 3 funding awards has slowed the recent pace of orders and is impacting deliveries late in fiscal '24. Consequently, we have lowered our forecast for EV bookings this year from 800 buses to 700 buses. This is purely due to order timing, with these 100 deliveries now being moved from fiscal '24 to fiscal '25 and still represents a healthy 28% growth over the last year. As I mentioned earlier, however, we do expect an order surge towards the end of this year, as Round 3 rebate bus orders must be submitted by December '24, per the EPA's timing plan. As you can see on the right chart, there is a lot of pent-up demand following the low interest sales in 2020, 2021, and 2022, and the bus fleet has aged by a couple of years over that period. ACT is forecasting a compound annual industry growth rate of 7% from the end of fiscal '23 through fiscal '27, and that's great news for our business and great news for our profit outlook. With residual supply chain challenges still impacting the auto industry, the ability to build all these units near term is not a given, but clearly the demand is there. After executing a substantial transformation across our business, the company is performing exceptionally well. We'll continue to improve operating performance and look forward to sustained profitable growth in the robust market ahead. You will recall that just a couple of years ago, our stated long-term objective was to achieve a 12% EBITDA margin. Well, with guidance for fiscal '24 now reflecting a margin of 13%, we have updated our long-term outlook to reflect an EBITDA margin at least 2 percentage points higher than this year at 15%. I want to thank our nearly 2,000 employees for all their hard work and dedication in delivering an all-time record profit in the third quarter, as well as our outstanding dealer partners who are critical to our success. Now, before I pass it back to our moderator for the Q&A session, I would like to move to slide 24 and briefly cover the CEO and chairman transition plan that we announced after market close today. After 14 years of CEO Blue Bird, I will be stepping down at the end of this fiscal year. It's been an honor and a privilege to lead this great company for so long and to work with the best team in the business. Now, I'm very pleased to confirm that our president, Britton Smith, will be taking over from me as CEO with his appointment effective September 29, which is the start of our new fiscal year. We have been working together on a very thorough transition plan over the past year, with Britton taking on increasing responsibilities during that time. Britton will be joining the board immediately and I will also be staying on the board. I have to say, this is how a leadership transition should be run. Promoting from within with a leader who knows the business and ensuring continuity. Also, transitioning is our Chairman. After almost nine years in the seat, Kevin Penn is stepping down and will be succeeded by Doug Grimm, effective immediately. Now, Doug knows our company very well, having been on the board since 2017 and will be a great success for Kevin, who will be staying on the board as a Director. From a personal standpoint, I'd like to thank Kevin for all the support he has given me during my time as CEO and for the great friendship we have built over those years. Again, the Chairman transition couldn't be better, coming from within the board and ensuring continuity.

Thank you. Our first question today comes from Mike Shlisky with D.A. Davidson. Please go ahead. Your line is open.

Good afternoon. Thank you for taking my question. Of course, Phil, congrats on your retirement.

Thanks, Mike.

Hey, there's a lot to cover here. Why don't I start with the question or two about the long-term guidance? Looking at what you're doing now, what your long-term guidance is, it implies almost $100 million worth of additional revenues, but EBITDA up about $125 million. That's less than 20% income margins, actually about 18%. This past quarter, you just did 50%, 5-0. I guess I would have expected more in EBITDA given the EV mix going forward, the 50% higher revenues on the top line in general. I'm sure the fixed cost base won't grow anywhere near that much. So, I guess I'm curious, I know you just put this guidance out, but do you think there's potential to go above 15% if you do in fact hit $2 billion and the EV mix plays out as you expect?

Yes, Mike, thanks for the question. This is Razvan. So, as Phil alluded in his comments, he mentioned 15% and beyond. And obviously, as we are executing on this journey, as we firm our plan for the future, we are going to look potentially at higher numbers. However, there are also factors that are part of this strategic long-term plan. We are modeling over time a lower price for the EV buses in conjunction with lower cost, which in the end will drive a lower margin per bus compared to what we are making today. And definitely, this will drive the adoption and increase the mix, which then goes hand-in-hand with our increased mix of EVs. So, we are working on that journey, and as we have more updates that we can give you, we'll be happy to share those with you at that time.

Okay, sure. On a somewhat similar note, looking at the 4Q outlook and given what you did in the first three quarters, just backing into it, you're suggesting that the revenues may be down from the 3Q that you just put up here. Outside the pandemic, does a lower 4Q than 3Q really have any precedent? Is it maybe just a mix, again, of the EVs being a little bit lower? Or, I'm having a hard time figuring out how you're going to have lower revenues just before school starts and everyone wants their deliveries than you did in the previous quarter?

Yeah. So, the fourth quarter, Mike, has one less work week than the third quarter because of the July 4 shutdown, which we put in place two years ago. So, there is less number of work days. However, this particular fourth quarter, as mentioned both by me and Phil, has a lower number of EV units by about 100, and definitely this drives significantly lower revenues given the average selling price for EV buses.

Got it, got it. Maybe one last one for me, and that's on the political environment. Can the EPA or other federal funding for buses be reversed or taken away starting on January 2025, if a certain candidate wins the Presidency or do you feel like what has been passed is passed and will be allocated? I'm just kind of trying to figure out whether there's any kind of risk to some of the EV programs that are out there today.

Yeah, Mike, well, it's Phil here. I mean, a lot of things can happen, obviously, but, you know, we look at it this way. I mean, those amounts have already been awarded. They've actually allocated them. So, the second round, I talked about, they've been allocated to customers. It's right out there. They know what they're getting. They just finalize their infrastructure plans. Remember, that was a bipartisan agreement in '21. Both parties, there was no objection to it. It went through pretty easily, and, you know, I think it was all around the fact talking about school children, school transportation. So, I think it'd be very difficult to, that's what we feel, very difficult for that to be reversed. There's so much support for it, and it's doing so much good for the environment for our children.

Okay, well, thanks for that answer, and again, congrats. I will leave it there.

Thanks, Mike.

Our next question comes from Craig Irwin with ROTH Capital Partners. Please go ahead.

Hey, guys. It's actually Andrew on for Craig, and Phil, congrats on the retirement. First question is on gross, yeah, first question on gross margins, you know, posted some really strong margins in the quarter with the strong revenue. You guys are still kind of seeing cost inflation, and you guys are engaged with your suppliers that are kind of seeing some constraints here. So, just any update you could provide on the cost inflation and kind of where you can see long-term margins going would be great?

I'll take this one. Regarding gross margins, we mentioned some of the challenges we anticipate facing in fiscal '25. We have just finalized a new collective bargaining agreement with the USW, which will reduce our revenues by about 1% on a run rate basis going forward. We also continue to experience inflation pressures from our suppliers related to material costs, driven by labor factors and the overall unstable economic environment. Consequently, both material and labor inflation will exert pressure on our margins. Simultaneously, we are regularly increasing our prices in the market to strike a balance between these factors. Currently, we have provided general guidance for fiscal '25 with a range, and we will be glad to offer more detailed insights in the next earnings call when we have greater visibility into our backlog for the entire fiscal year.

Great, thank you. Second one for me, I know we're kind of still early days in the chassis business, but I think you said last quarter you had one on the ground. We're engaging some customers there, so is there any kind of update now after the fiscal third quarter?

Not really, Andrew. I think what we said last quarter is still the same. We're in development mode now, developing a prototype. We have a prototype. We showed at the ACT show, big truck show, back in May. Well-received, well-recognized, a very active customer group come and walk through that and see that chassis. So, right now, our goal is that we want to get this product in the hands of customers later this year. We got several customers extremely interested. They want that product. They do their own validation test. They give feedback to us, and then we'll be looking into later into '25, getting a commercial product on the road for those customers. But I say we're very optimistic about it. We like what we're doing, and it's going to be a great chassis when it becomes the market, that's for sure.

Awesome. Well, it's great to hear. Congrats on the strong results, and I'll hop back in the queue.

Thank you.

Our next question comes from Chris Pierce with Needham. Please go ahead.

Hey, good afternoon, everyone. I just wanted to ask on the national fleet business, you're bump up in accounts receivable that we don't see in prior years, but admittedly, my model doesn't go back that far. So, I'm just curious, are you winning more business with these national fleets, and is EV and propane driving that, or are you winning your share of diesel engines as well? What's the right way to think about the national fleet business for Blue Bird?

Yeah. I mean, it's really all of the above. We are definitely participating more in national fleet business than we have recently. Propane has been a fantastic product for us this year. As we said before on prior earnings calls, our competitors don't have a propane product. It's a fantastic total cost of ownership vehicle for these fleet operators, and they know that. So, we've had great success there. Electric is the same thing, very excited about our product. I think the third thing is we have a very good delivery time versus the rest of the market in terms of getting products in customers' hands. And that's been great news for us, for fleets who want those products for school start. So, I think we've done very well with that. By the way, we intend to keep this business. This isn't a one-off event for us. I said this isn't a one-off year for us in that we've turned up the capability this year for us. We intend to retain this business going forward. It's good business for us.

You just addressed my follow-up question. I'm aware that one of the three companies in the market is currently struggling to deliver a diesel bus. I attended the ACT Expo recently and listened to a presentation from Cummins while also conversing with some competitors. Can you discuss your perspective on diesel emissions? I noticed that there seems to be less concern from other industry players, but I'm unsure how to interpret that due to my lack of recent industry insight. Do diesel emissions tend to tighten over time with everyone adapting, or is there something unique about the 2027 diesel emissions that boosts your confidence in the market share of alternative fuel buses?

It's absolutely the second one you raised there. In 2027, the emissions get very stringent on the requirements, such that it's very difficult for a diesel engine to meet it without a lot of hardware support. Very costly. It'll significantly increase the cost of a diesel engine. Now, our propane product today meets the 2027 emissions engine. Even our gasoline engine is quite a small part, I'll call it, trying to get there to meet the emissions requirements. Obviously, electric is zero emissions and fully meets all those requirements. Our competitors don't have a propane engine. They don't have a gasoline engine. All they have is a diesel engine and an electric vehicle. So I think you're going to get a different comment from them, and when I talk about our leadership, just to remind them, 60% of the vehicles that we sell today are non-diesel. That's quite a different story for our competitors. They're up at the 90% level of diesel sales, diesel mix for their business. So for them, it's quite a different story. For us, we're very excited about it. We're well-positioned for it. We have exclusive products in propane and gasoline, and even in electric we have exclusivity by default because we get it from Cummins, and they're the only ones that provide it by Cummins. So I think we're in a very good position.

Okay. I appreciate the detail. Talk soon.

Bye. Thank you.

Our next question comes from Eric Stine with Craig-Hallum. Please go ahead.

Hi, everyone. I've been on multiple calls jumping around, so I apologize if I repeat any questions. Just curious, you mentioned for Q4 that you're tempering your outlook for electric buses, just given some of the funding pushout or the dates being pushed out for the clean school bus funding. Wondering, have you given an update on the timing of the labor agreement? Is that also a reason for the EBITDA, I guess implied EBITDA guide to be down versus the first three quarters of the year?

That's right. This is Razvan. I'll take that. So for Q4 guidance, in addition to having lower EV units, as mentioned several times by me and Phil in the prepared remarks, we have also the USW, which concluded in June. So we will have the full impact of the USW agreement starting to hit in Q4, and the run rate impact is about 1% of revenue. So indeed, there will be an impact for the run rate in Q4 from that.

Okay. Yep. See, there's an example of me asking a question that you'd already addressed. So sorry for that. Well, maybe this one. For fiscal '25, your run rate the last three quarters would put you above where you're guiding for fiscal '25, and I know the headwinds. Just curious, are you also being conservative on the EV side, simply because of what you talked about, even though you're going to see or expect an order pickup here before December of this year, but those buses likely wouldn't be deliveries for you until late fiscal '25 or early fiscal '26? Is that the right way to think about it?

Yes, Eric. So definitely, we will see lower EV volumes in the first half of fiscal '25, as we indicated, with a higher, more back loaded for the second half. We provided a range of guidance of 1,000 to 1,300. And as we said, going forward, we are becoming a bit less conservative in our guidance that we give. So right now, we feel pretty good about the ranges we preliminarily put out for fiscal '25, both in terms of units, EV, and revenues and EBITDA. But obviously, as things develop, we'll give you an update in the next earnings call, and we'll fine-tune the look for fiscal '25 then.

Our next question is from Sherif El-Sabbahy with Bank of America. Please go ahead.

Hi, good afternoon. Just given the significant balance sheet optionality that you now have, how should we think about capital allocation going forward?

Hi, Sharif, this is Razvan. So we outlined our capital allocation strategies two earnings calls ago. However, since then, we've been awarded the Department of Energy MESC grant for $80 million. And once it's approved by the board and finally negotiated with the DOE, we will fund $80 million over the next two years from that. So we will evaluate all the opportunities to deploy capital. This project has a great internal rate of return, so we have a great opportunity to deploy that for our long-term growth. But at the same time, we expect to continue to generate significant free cash flow. And as we fine-tune our capital allocation strategy, we'll give you an update in the next earnings call and probably the following as well.

You still there, Sharif?

Thank you. We have no further questions, so I'll turn the call back over to Phil Horlock for any closing comments.

Okay. Well, thank you, Lydia. And thanks to all of you for joining us on the call today. Before I close this earnings call for my final time, I'd like to summarize where I believe we are today, where we stand today and where we are going. Lydia, last year, you saw momentum growing throughout the year, profitability increasing as we moved through each of the quarters. And we've continued to be on the same path this year, delivering an impressive all-time quarterly record profit in the third quarter with a 14.5% margin. With this very strong base behind us, we've raised guidance for the sixth quarter in a row and guidance to a full year adjusted EBITDA of $175 million and a margin of 13.3%. And as I mentioned earlier, that's a full 5.5 percentage points above last year's then record profitability. In fact, it's worth pointing out and remembering and reminding us again that our absolute EBITDA is double last year's result, which was then a record for the company. And as we look to going forward from here, I mean, we've outlined a few of our full forward year financial plan, but I think it's worthwhile just reminding ourselves of the extremely favorable factors we have right now, these tailwinds we have that help and drive profitability and grow shareholder value that we're seeing right now. We think we'll see moving ahead. Number one, we've got an unprecedented backlog of firm orders and a strong market demand ahead of us with an aging bus fleet. That's shown by the ACT data and confirmed by all the industry experts that are out there. Supply chain constraints are easing, and we're seeing that a little bit, albeit there's still some way to go. And again, that's why you see the increase in trend on the ACT volume chart we showed you of the industry projections growing. Upcoming 2027 emission standards will definitely increase the need for alternative powered vehicles, and that is our sweet spot. We can deliver on that. Number four, we have strong bipartisan federal and state support and customer demand for electric buses. The demand is there. Look at the applications that we receive for Round 2 and Round 3 of these grants by customers who never had an electric bus before. They want electric powered buses. That's our sweet spot. Number five, we've been awarded a significant investment grant by the DOE that will allow us to increase our Type D EV production capacity, and importantly, our total capacity to 14,000 units on a single shift. That's a fantastic opportunity for us to improve our sales outlook in the forward years and obviously build very competitively as we move forward. And number six, the base we have, we're achieving record profits, record margins, record cash, and record liquidity today. And these are structural improvements we've made that will stay with us as a great baseline as we move forward. So with these very positive tailwinds, we provided our first look at guidance fiscal '25. We took EBITDA midpoint of range up to $190 million, and that's $15 million higher than fiscal '24. And we are confident in achieving a 14% margin within a couple of years as the industry supply chain constraints ease and then go on to 15% in the long term. Bottom line, I have to say that Blue Bird has never been stronger, and we have great momentum. So we appreciate your interest in Blue Bird, and Britton and Razvan look forward to updating you all again on our progress for the next earnings call. Should you have any follow-up questions, please don't hesitate to contact our Head of Investor Relations, Mark Benfield, and thanks again from all of us at Blue Bird. Have a great evening.

This concludes today's call. Thank you for joining. You may now disconnect your line.