Q4 2023 Blue Bird Corp Earnings Call
Participants
Mark R. Benfield; Executive Director of Profitability & IR; Blue Bird Corporation
Phil Horlock; CEO & Director; Blue Bird Corporation
Razvan Radulescu; CFO, Principal Financial & Principal Accounting Officer; Blue Bird Corporation
Eric Andrew Stine; Research Division - Senior Research Analys; Craig-Hallum Capital Group LLC
Michael Shlisky; MD & Senior Research Analyst; D.A. Davidson & Co., Research Division
Craig Edward Irwin; MD & Senior Research Analys; ROTH MKM Partners, LLC, Research Division
Presentation
Operator
So everyone, thank you for attending bluebird Corporation's fiscal 2023 Fourth Quarter and Full Year Earnings Call. My name is Sarah, and I'll be your moderator today. All lines will be muted during the prepared remarks from our management team with an opportunity for questions.
And answers. At the end. If you'd like to ask a question, press star one on your telephone keypad. I would now like to pass the conference over to our host, Mark Benfield, Head of Investor Relations. Please proceed.
Mark R. Benfield
Thank you, and welcome to Blue Bird's Fiscal 2023 Fourth Quarter and Full Year Earnings Conference Call. The audio for our call is webcast live on blue dash bird.com under the Investor Relations tab. You can access the supporting slides on our website by clicking on the presentation box on the IR website.
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 following few slides and in our filings with the SEC. Blue Bird disclaims any obligation to update the information in this call.
This afternoon, you'll hear from bluebird CEO, Phil Horlock, and CFO, Razvan Radulescu have already last year. They will take some questions. Let's get started.
Phil Horlock
So well, thank you, Mark, and good afternoon, everybody. First, let me say the Bluebird team has done a fantastic job and delivering continued improved results as we have moved through each quarter in 2023, as you'll see shortly and rather than section, the fourth quarter was no exception to that where we achieved outstanding financial performance for the full year, we delivered record financial results across the board, well ahead of the transformational plan that we outlined just a year ago following a very tough year in fiscal 2022.
So let's get started with the key takeaways for the full year on Slide 6. As the headline says, we achieved record full year financial results in fiscal 2023, and we beat guidance every quarter, including the fourth quarter. In fact, as Razvan will show you in just a few minutes the full quarter was an all-time record profit for any quarter in bluebird's history with an exceptional adjusted EBITDA margin of 13%. As we look at the drivers for this terrific progress in fiscal 2023. It really is about making significant improvements across our entire business throughout the year. Market demand for school buses continues to be very strong and the backlog for bluebird school buses was at a very healthy 4,600 units at the end of the fourth quarter. This bodes well for pricing, production stability and profit margins.
Now while supply chain constraints are easing, there are select constraints across the industry, which is still limiting industry production and deliveries. But we are very engaged with those constraints, suppliers with on-site supported their plants, and we are managing the situation very well on that point. The evidence is clear with our bus deliveries in 2023 being 25% higher than last year. I'm pleased to tell you that legacy price backlog, which hurts us in fiscal 2022 and in the first quarter this year, is now fully behind us as a reminder, we define as legacy price units as those are contractual price levels prior to October 21. Every bus in our order backlog now reflects current pricing and will price competitively, which we can tell from our quote, win rate and incoming orders. This is an entirely different Blue Bird bus revenue structure compared with a year ago.
On the EV front, thanks largely to the first phase of funding of $1 billion from the EPA's unprecedented $5 billion clean school bus program. We had nearly 600 EVs in our firm backlog at the end of the fiscal year and full year deliveries more than doubled from a year ago with $4 billion still to go. This program has really accelerated the adoption of electric school buses. As we have done for many years, we again increased our sales mix of alternative powered vehicles and strengthen our leadership position even further higher margins and higher on a load from these products contributed to our profit improvement in fiscal 2023. We also reinvested back into the business by selectively upgrading facilities and processes, enhancing the plant working environment and adding electric bus capacity for our new EV production center through the efforts of the best workforce in the business, strong leadership, lean process improvements and sheer hard work. We have been achieving some of the best manufacturing performance the company has ever achieved bottom line. We're performing extremely well in a strong market. We're delivering a greater mix of higher-margin alternative powered vehicles. We are priced competitively and appropriately for today's economic environment and financial results are at an all-time record level.
Now let's take a closer look at the financial and business highlights for the full year on slide 7, I wanted to start by saying that our full year financial performance is transformed from a year ago with many record highs achieved. We sold over 8,500 buses in fiscal '23, which is a substantial 25% or almost 1,700 buses above last year. Those unit sales drove full year net revenue of $1.13 billion. That's an all-time net sales record for Blue Bird and an exceptional 41% higher than a year ago. Full year adjusted EBITDA of $88 million is another all-time record for bluebird. That's $103 million higher than last year and $50 million above the midpoint of guidance that we set at our last earnings call.
And finally, adjusted free cash flow for the year was $121 million. That's an extraordinary increase of $144 million over last year and another all-time cash flow record for bluebird. Overall, these were outstanding full year results and transformational gains from last year, although not shown on this slide, it's worth pointing out that in the second half of fiscal 2023, we achieved an adjusted EBITDA of $70 million, representing a margin of 12% it's clear. We have great momentum going into fiscal '24.
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 strong with our firm order backlog at fiscal year-end with over $670 million in revenue, we raised prices considerably over the past two years and the average full year selling price per bus in fiscal '23 was 15% higher than a year ago. Parts sales were just shy of $100 million, another Blue Bird record and up 27% year-over-year. The increasing average age of buses on the road is having a material positive impact on our aftermarket business. And we gained market share.
Turning to alternative powered buses, they represented a record 62% of our full year unit sales, and that's a four percentage point increase compared with last year. We continue to be the clear leader in this space. No other school bus manufacturer comes close to that number. Now, EV buses were part of that mix growth with bookings more than doubling from last year. Additionally, we left the year with nearly 600 firm EV orders in our backlog, which is around a 12% share of our total backlog was approximately $180 million in revenue clearly were benefiting substantially from the $1 billion funding from the first phase of the EPA's $5 billion clean school bus program.
And last on our EV business, we did launch an all new extended range battery in the second half of the year, providing around a 30% increase in range on a single charge over our standard battery. That's an expected range of about 130 miles, which is a terrific value offering for our customers by meeting the sweet spot for daily school bus use from an operation standpoint. A great example of Lean manufacturing is improved throughput. Looking at the time taken from initially set to give a bus chassis to receiving payment for the complete finished books. We cut that from 40 days to 20 days in fiscal 23. Incidentally, we've been running at around 16 days in the first quarter fiscal 24. That's a great performance by our operations team. And finally, we beat full-year guidance reporting record net sales, record adjusted EBITDA and a record adjusted free cash flow for fiscal 2023. We finished the year incredibly strong with a 13% adjusted EBITDA margin in the fourth quarter, and I'm very proud of our accomplishments. I would now like to hand it over to Razvan to walk through our fiscal 23 financial results in more detail.
In addition, we will be providing our updated fiscal 2024 guidance which had an adjusted EBITDA margin of 10% is substantially higher than what we showed you in our last earnings call over to your Razvan.
Razvan Radulescu
Thanks, Phil, and good afternoon. So it's my pleasure to share with you the financial highlights from Blue Bird's Fiscal 2023 fourth quarter and full year record results. Quarter-end is based on a close date of September 30, 2023, whereas the prior year was based on a close date of October 1, 2022, we will file the 10-K today December 11, after market close. Our 10-K includes additional material and disclosures regarding our business and financial performance. We encourage you to read the 10-K 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 9 is a summary of the fourth quarter and full year record results for fiscal 2023. It was another outstanding operating quarter for bluebird with somewhat limited supply chain challenges and with an increased number of higher margin units driving both our top line and our bottom-line results. We significantly beat the adjusted EBITDA quarterly guidance provided in the last earnings call, and in fact, we delivered the best quarter ever for bluebird with 13% adjusted EBITDA margin. The team pushed hard and continue doing a fantastic job and generated 2,116 unit sales volume, which was 100 units or 5% higher than prior year. Record consolidated net revenue of $303 million was $45 million or 17% higher than prior year, driven by a higher number of units, higher parts sales, improved mix of electric buses and pricing actions that to close significantly in this quarter. As expected, the adjusted free cash flow was very strong at $35 million and $6million higher than the prior year fourth quarter.
This performance was driven by the increased profitability combined with strong working capital management and support our great liquidity position at the end of this quarter, which was $163 million. Adjusted EBITDA for the quarter was a record $41 million, driven by our high volume of now profitable buses, increased car sales and margins, partly offset by increased labor costs.
Looking quickly at the total year, we are very proud by the team's performance in recording the best year ever for our company in several top line and bottom-line aspect. And with all the 8,514 units sold for approximately 2,500 units less than the prior best year of 2019. And this is despite the transitional nature of our fiscal 23, Q1 results, which includes is still a large portion of our backlog, low margin boxes. Our full-year performance was outstanding for both the top-line and the bottom-line all-time record, $1.13 billion in revenues, all-time record, adjusted EBITDA of $88 million, an all-time record, adjusted free cash flow of $121 million.
Moving on to Slide 10. As mentioned before by feel, our backlog at the end of Q4 continues to be very strong at approximately 4,600 units. And with all of these units at current price levels, breaking down the record Q4. $303 million in revenue into our two business segments. The bus net revenue was $278 million, up by $42 million versus prior year. Our average bus revenue per unit increased from $117 million to $131 million or 12%, which was largely the result of pricing actions taken over the past 18 months as well as a higher mix of electric buses. Ev sales in Q4 were also at a record level of 171 units or 51 more than last year for 43% increase year-over-year. Parts revenue for the quarter was $25 million, representing a growth of $4 million or 17% compared to the prior year. This extraordinary performance was in part due to increased demand for our part of the fleet is aging as well as supply chain driven pricing actions and throughput improvements.
Gross margin for the quarter was a record 16.5% or approximately 18 percentage points higher than last year due to our improved operational performance and our pricing catching up with the inflationary costs over the last 18 plus months.
In fiscal 23, Q4 adjusted net income was $21 million or $43 million higher than last year. Adjusted EBITDA of $41 million or 13% was up compared with prior year by $57 million and 20 percentage points. Adjusted diluted earnings per share of $0.66 was up by $1.32 versus the prior year. Moving on to slide 11 and for the remaining of this presentation, we will focus on the full year results.
Breaking down the $1.13 billion in revenue into our two business segments. The bus net revenue crossed the $1 billion mark at $1.035 billion, up by $311 million versus prior year. Our average bus revenue per unit increased from $106 million to $122 million or 15%, which was largely the result of pricing actions taken over the past 18 months as well as a higher mix of electric buses EV sales for the year were at a record level of 546 units, which is 277 more than last year, four more than doubled parts revenue for the year was $98 million, representing a growth of $21 million or 27% compared to the prior year. This extraordinary performance was in part due to increased parts. Demand of the fleet is aging, as well as supply chain driven pricing actions throughout the year and throughput improvements.
Gross margin for the year, including the low margin units from Q1. It was approximately 12% or 8 percentage points higher than last year due to our improved operational performance and our pricing catching up with the inflationary costs in fiscal 23, adjusted net income was $35 million or $71 million higher than last year. Adjusted EBITDA of $88 million or 8% was up compared with prior year by $103 million and 10 percentage points. Adjusted diluted earnings per share of $1.7 was up $2.22 versus the prior year.
In summary, our operating performance and financial results demonstrated in this year and particularly in the last two quarters, our clear evidence that our business transformation has been very successful and it sets a solid base for our future performance towards our goal of sustained profitable growth with adjusted EBITDA margins of 10% plus in the short time normal year, and we found more supply chain normalization followed by 12% plus in the medium to long term.
Moving on to slide 12, we have extremely positive development year-over-year also on the balance sheet. We ended the year with almost $80 million in cash and reduced our debt significantly by $40 million over the last four quarters. Our liquidity is very strong at a record $163 million at the end of fiscal 23 with a zero balance on our revolver. The improvements in operating cash flow and adjusted free cash flow were primarily driven by improved operations and margin and were supported also by improvements in trade working capital. Additionally, we had at the end of the year of $19 million in prepaid revenues from phase one of the APA clean school bus program with more to come in the future.
Moving to slide 13, at the end of November 2023, we refinanced our credit facility significant better terms with a five-year maturity date through November 2020. A new structure consists of a $100 million term loan with 5% per year amortization and our new revolver line of credit of $150 million.
We would like to thank BMO co-led, the syndication process, the other joint lead arrangers including Bank of America and the other lender participating banks for their support and confidence into our future strategies. Covenants and extended maturity of our loan provide bluebird with both flexibility and stability as our business grows profitably, and we continue to lead the school bus industry in the alternative fuel space.
Slide 14 shows the magnitude of the business transformation and results achieved by our team over the last year, we went from arguably the worst year ever to the best year ever with over $100 million adjusted EBITDA improvements year over year record revenue up 40% and approximately doubling our EV sales and record adjusted free cash flow. And we achieved this was approximately 2,500 less units than the prior best year of 2019, which demonstrates our much lower break-even point we operate under right now.
Slide 16 shows the walk from fiscal 22 adjusted EBITDA for the fiscal 23 results starting on the left of negative $15 million. The impact of the bus segment gross profit in total was $86 million, split between volume and pricing effects, net of material cost increases of $66 million and operational improvements of $20 million. The operational improvements consists of year-over-year manufacturing efficiency improvements and lower operating costs. Favorable development in the past segment gross profit of $17 million, driven by higher sales and improved margins.
As mentioned earlier in the call. Moving on our JV, MicroPort had an outstanding year and their best year ever as well, coming from a net income loss last year to a record result, the year-over-year improvement was $12 million. Additionally, we updated our adjusted EBITDA add-backs to include now due to immateriality our portion of the JV, interest taxes, depreciation, and amortization of approximately $5 million in absolute terms and year-over-year as last year netted to under $100,000. These improvements were fully offset by increases in our other expenses and fixed costs, mainly personnel related of negative $17 million as we started to reinvest into our business and our teams during fiscal 23. The sum total of all of the above-mentioned developments drives our record fiscal 23 reported adjusted EBITDA result of $88 million or 8%.
On slide 16, you can see once again, the spot market development for steel prices after the reduction in the second half of calendar year 22, they started to increase again all the way through the end of May, and this did offset a portion of our pricing realization for the remainder of calendar year 2023. The next few months show some easing for the UAW strike resolution with the major auto manufacturers created upward pricing pressure into the market. The future, however, indicates some flattening in the next few months. However, please keep in mind that we have already put in place a comprehensive steel buying strategy, and we are entering into future locked contracts for steel prices with certain tonnages up to 12 months forward minimizing our exposure and margin risk in the backlog.
Before we talk about the updated guidance for fiscal 24 and our improved long-term outlook on Slide 17, we wanted to share with you some significant investments that we are planning to start in fiscal 24 to ensure our profitable growth strategy is successful. Our engineering expenses planned for fiscal 24 are double the level of fiscal 23 as we start the integration work of the next generation of four gas and propane engines for the next level of emission regulations. Additionally, we continue to evolve our EV offering and planned new product safety enhancement features.
Finally, we will continue to ramp up our investment in bringing to market the commercial EV chassis by the end of calendar 2024. We are also planning to triple our capital investments into capacity expansion, production facility, upgrade quality improvements and our supply chain capability and tooling. What is our target of 50 buses per day for approximately 12,000 buses per year. On the people side, we experienced inflationary pressures both externally from our supply base and internally, and we continue to provide competitive benefits to our employees. We are also launching our complexity reduction initiative, and we will begin the upgrade of our ERP system as well as modernization or business intelligence and financial planning and analysis tools. All this cost combined can add up to approximately 2% of our revenues in fiscal 24 and beyond.
On to slide 18, this is the last earnings call in which we will present this picture as it was necessary in the past to provide transparency to our pricing journey and consumption of the old backlog however, we are happy to reiterate that we are now past all of the old backlog units with fixed pricing from fiscal 21. Orders for production schedule is now fall into fiscal 2042 with some orders Type D, for example, going already into fiscal 25 has shown in the page before supply chain and labor, inflationary cost pressures still exist and we are investing heavily into our products and manufacturing capabilities given our significant backlog, we announced for fiscal 24 another mid-year price increase of $2,500 per botnet for new orders received after April first, 2024 cover expected inflationary costs and other investments. This is in addition to the prior price increase of $2,500 we took for order starting on October first, 2023.
On slide 19, we want to share with you our updated fiscal 24 guidance. As a reminder, we are continuing to take a more transparent and conservative approach also this year, but it is still a somewhat uncertain supply chain environment we are facing. However, we have improved already all the other business levers that we could address, but now demonstrated by our very strong fiscal 23 Q3 and Q4 actual results.
Looking forward to fiscal 24, we are increasing our revenue to a range of $1.15 billion to $1.25 billion. And we are significantly increasing our adjusted EBITDA margins for $115 million or 10% with a range of $105 million to $125 million due to supply chain volatility. At this point, we are only providing general quarterly ranging with every quarter expected to have revenue between $275 million to $325 million, adjusted EBITDA in the range of $25 million to 35 million for 9% to 11% will provide further updates in mid-February after we close Q1 and gather further insights into our supply chain capabilities to support our strong backlog and Easynet.
Moving to Slide 20. In summary, we are forecasting a significant improvement year over year with revenue up 6% to approximately $1.2 billion. Adjusted EBITDA in the range of $105 million to $125 million and adjusted free cash flow of $50 million to $60 million, in line with our typical target of approximately 50% of adjusted EBITDA.
On slide 21, we wanted to also update you on our improving long-term outlook. We are very happy about the results of our business transformation as demonstrated by our fiscal 23 Q3 and Q4 actual results and our increased fiscal 24 guidance. The 10% adjusted EBITDA margin is firmly now into our updated new normal year. And once the supply chain further normalizes, we expect to sell 9,500 units, including 1,500 units easy and generated $135 million of adjusted EBITDA from $1.35 billion in revenue.
Looking to the medium term, our AV 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 $1.5 billion to $1.75 billion, with adjusted EBITDA of $165 million to $210 million for 11% to 12%. Our long-term target remains to drive profitable growth towards approximately $2 billion in revenue comprising gone up to 12,000 units of which up to 5,000 are EV and generate EBITDA in excess of $250 million, but 12.5% plus we are incredibly excited about bluebird future.
And now I'll turn it back over to Phil to further expand on the.
Phil Horlock
Thanks, Razvan, let's move on now to Slide 23. Now we've shown a chart on the left before, which illustrates the three priorities, the drivers, taking care of our employees, delighting our customers and our dealers, and delivering profitable growth. The new chart on the right provides more texture around the specific strategies that we are pursuing that both align with our priorities and drive our 5-year growth plans at the center is our ultimate objective to drive sustained profitable growth.
As you look at accomplishments in fiscal 23, we transformed the business from losses to record profitability. Fiscal 24, we have increased our earnings guidance to reflect a 10% adjusted EBITDA margin that over the next couple of years, we plan to grow the margin to 11% to 12%. Our core strategy focus on delivering these financial goals and are spelled out in this chart, shown at the top of this chart, leadership in safety, both in the workplace and with our products, is paramount to us. Specifically with our products, we seek to differentiate ourselves providing more value to our customers. Our buses are purpose-built from the ground up for transporting children safely with many unique features that no one else has in the industry, another derivative of a truck chassis like most of our competitors and our customers understand the value of this delivering the best and broadest range of products and features and leading quality. Durability and alternative power are the cornerstone of our product planning and development being competitive in costs through lean manufacturing and efficient throughput strong supplier relationships and smart product design are essential to compete in a business where competitive bids are mandatory. And after the sale, we need to provide great service and ensure the highest possible vehicle uptime throughout the 15 years or more that our buses need to run. This means partnering with our exclusive dealer network that covers every corner of the United States and Canada on an average tenure of 31 years. Our dedicated Blue Bird dealers know how to service our customers. Frankly, you can't make it in the school bus business. We had a fully capable dealer network that can reach more than 10,000 school districts that operate their own bus fleets and 3,400 independent owner-operators of school buses. Following these core strategies have been key to our transformation and will continue to drive our 5-year plans.
The next two slides highlight a couple of key initiatives that will help us accelerate adoption of EV and propane vehicles in fiscal 2024 and beyond.
Let's turn to slide 24 and look at the latest impact of the federal government's clean school bus funding program. As a reminder, we're in the 2nd year of this five-year program, which provides $5 billion of funding for electric and propane public school buses. We still have a $4 billion available after the first round of funding round to provide $40 million in grants and applications for this round close at the end of August this year is expected around 1,000 buses and associated charging infrastructure will be funded by this grant program. And we expect the grant awards to be made in the first quarter of 24 calendar year with the help of our in-house grant writing team bluebird supported enough well-qualified applications supported by the 1,000 buses. So we should be well positioned to capitalize on this opportunity in addition, a third round of funding was announced late this year, providing a further $500 million in rebates for electric and propane bus purchases. The application process is well underway, and awards are expected to be made in the second quarter of 24 calendar year. In total, both of these funding initiatives should support up to 2,500 electric and propane school buses and associated infrastructure, which is great for the industry and in particular, great for bluebird.
Continuing on this theme of accelerating adoption of Blue Bird electric school buses.
Slide 25 shows our latest initiative that we announced late last week. We have formed an exclusive joint venture with generate capital who is a leading sustainable investment and operating company focused on infrastructure transition. Our new venture called Clean bus solutions will provide electric school buses and charging infrastructure as a service to bluebird customers for an affordable monthly fee over the lifetime of the service. This turnkey service eliminates a typical high upfront cost for school district and paying for an electric bus when grants are limited and handle the entire charging infrastructure process, including installation. This recurring revenue business should accelerate adoption of Blue Bird electric buses by school district and will be a great new sales tool for our dealers. We will keep you posted on progress throughout the coming year as clean bus solutions begins to transact business.
So let me now wrap up the prepared remarks on our outlook for the business on slide 26, there's not much more I can say on our fiscal 23 results, other than we achieved record results across every metric on which we provide guidance and it was a transformational improvement from fiscal 2022 rather than so we've raised guidance for fiscal 24, and I'm showing you some of those key metrics at the midpoint of guidance on this slide, we have been prudent on our bookings outlook, all increasing volume by 3% over fiscal 23 at this time, as we still deal with select supply chain issues, but we did manage them very well in fiscal 23. And if we can build more in fiscal 24, we will just as we did last year, net revenue, $1.2 billion will be a new record for bluebird, up 6% from fiscal 23. Adjusted EBITDA guidance of $115 million is more than 30% higher than the record $88 million we delivered in fiscal 23. Importantly, we are planning on a 10% EBITDA margin in fiscal 24, up 2 percentage points from fiscal 23, which is a couple of years ahead of the plan that we have been sharing with you. We have confidence in achieving this margin after recall to get 12% adjusted EBITDA margin in the second half of fiscal 23.
As Ron pointed out, we are doubling our engineering work in fiscal 24 in support of new product programs, which is contained with our 10% margin outlook for fiscal 24. And finally, we're looking to grow unit sales to 900 buses in fiscal 24. That's a 65% increase over our 2023 sales. And as you can see on the right chart, there's a lot of pent-up demand following the launch. The sales in 2020, 21 and 22 and the bus fleet age by a couple of years. During that period, ACT is forecasting a compound annual growth rate of 10% through to 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 I can tell you one thing. The demand for these buses is clearly there after executing a substantial transformation across our business the Company's performing exceptionally well. As you can see by our financial results, we'll continue to improve operating performance and look forward to sustain profitable growth and a robust market ahead.
The future is incredibly bright for bluebird, and we are confident in achieving what had been a long-term goal of 12% EBITDA margin within the next couple of years.
I want to thank our nearly 2000 employees for all the hard work and dedication in delivering our record results in fiscal 23 and for transforming our company as well as our outstanding dealer body who are critical to our success.
That concludes our formal presentation today, and I'd like to hand it back to our moderator for the Q&A session.
Question and Answer Session
Operator
Thank you. If you'd like to ask a question, please press star followed by one on your telephone keypad. Tim is your question, press star followed by two. And if you're using a speakerphone, please pick up your handset before asking your question.
Our first question today comes from Eric Stine with Craig-Hallum. Please proceed.
Eric Andrew Stine
Health care.
Phil Horlock
Eric, can you?
Eric Andrew Stine
Hey, can you hear me also here really up. So good, very good on. We'll obviously great ended the year, 40 million in EBITDA and appreciate the fiscal 24 and the kind of high-level quarterly view. But maybe just talk about seasonality a little bit, obviously, historically very seasonal our business. Now you've got this big backlog you're working through plus you've got strong industry demand. So maybe in the context of that high level guidance that you have given per quarter, how should we think about seasonality throughout the year?
Phil Horlock
It's a great question. Eric is still here and obviously you're used to, as you've seen our report numbers over many years. And seasonality was also one issue we dealt with, I think right now with our backlog and with the pent-up demand, we have and the industry in general with dealing with the same issues, seasonality is really not something that is concerning us right now that the first quarter always be lower. We obviously have shutdowns, holidays, vacation plans around Thanksgiving and around the holiday season at Christmas time. So these obviously impacted with less with less days, obviously, especially in December. But I think overall when you look at us now that predictability of looking by quarter that we're not going to have anything like the seasonality we used to have is pretty for it's fairly consistent that's why the year just Q1 should be a little lower in a volume standpoint.
Eric Andrew Stine
Okay. That's helpful. And then with the you talked about clean bus solutions, I mean, you expect that to accelerate. And I would assume you're talking about affordable, but getting as close to what the cost of a diesel bus would be on a monthly basis for a school district. I mean, how do you I think in the slides you said you expect it to be 10% of sales here in the relative near term. I mean, how do you see that playing out? Do you think that school districts are looking at the clean school bus rebate program waiting to see if they get funding if they don't then they potentially go this route and possibly do it quickly as a way to say you have to really get buses on the road in a in a pretty rapid fashion?
Phil Horlock
Yes, I think that's the way we're looking at. Obviously, the grounds for the EPA problem. They have been terrific come in that help people really accelerate adoption and districts who otherwise would not have been able to afford a product have had a chance to get a terrific brand. But there's no question when you don't have grants or you have a limited grants and as I said before, the price of the levy broadly stable at three times the price of one with a combustion will spark engine ignition. It's a bit of a sticker shock as we say, in the auto industry. And so having this capability now instead of a big upfront capital expense, you can pay was column on affordable monthly fee over 12 years or 15 years or so of the lifetime of the product, makes it much more affordable and faster to adopt. That's the beauty of it for that $300,000 let's say, plus price of electric school bus. And when you plan a standard monthly fee over 50 years, you can afford a few a lot more of those buses right upfront to get to run them get used to them.
Now I do think at the end of the EPA grants through a five-year program that's been put out there. It's going to be that we expect obviously, a bunch of cost to come down significant reductions in the price of the platform. So the speed electric platform. And I think that's when you really will see the benefits of a program like this coming through because it will be much more attractive.
And the traditional upfront capital cost for school bus.
Eric Andrew Stine
Yes, got it. Very helpful.
And then last one for me. Just I mean, obviously, the margins, the price per box, I mean, all of that moving in the right direction and pretty quickly, I mean, but would you agree with the statement that really that is more and due to the price increases you've put through and that that's finally worked through backlog rather than the mix of electric buses. If I do my math, it looks like maybe electric made up 6% to 7% of the mix in fiscal 23 higher interest rates on your Thank you for the question?
Razvan Radulescu
Absolutely. The biggest impact comes from the numerous price increases we've put in place over the last almost 24 months now to keep up with the material cost inflation and really position our margins for the future. So yes, it is a smaller portion of that. But all the other boxes and especially the alternative power lines are what drives our extraordinary bus margins today.
Eric Andrew Stine
All right.
Razvan Radulescu
Thank you.
Phil Horlock
Thanks, Eric.
Operator
Our next question today comes from Mike Shlisky with DA Davidson. Please proceed.
Michael Shlisky
Yes, hi, good afternoon and thanks for taking my questions. I wanted to wanted to talk first about how they're going to just touch first on the EV subsidies and EV programs for fiscal 24. And do you anticipate that bluebird will continue to kind of get its fair share if not greater and of where it was awarded this year's initiatives as and in the broader EV bus market in general?
Phil Horlock
Yes, I would yes, I would expect us to do to do very well and get our fair share, which we've got a good share to the first phase and I think we prepared very well for this. We have grant writers on our team who work with our school districts. They work with our customers. They work with our dealers to put together what I call really valid applications. I mean, when you when you're looking at a grant program, we are often asked him to look at the quality of that customer having attained materiality, I need an area that needs electric buses because of the pollution that might be in that area. And we've researched that very well gone through it. So we feel we feel confident of where we stand in terms of the applications we put forward the validity of those applications.
Michael Shlisky
And just to follow up there, have you found any of a large number or even a small number of the previous awards get postponed because the customer didn't have a charging infrastructure or other parts that were required, get the bus.
Phil Horlock
It's a good question. I heard I heard that some others have options, some folks out there have had no cancellations on a request. I can tell you this without two vehicle cancellations too, in total, not 20, not to customers with lots of applicant to vehicles because of a customer who was just concerned about. I couldn't get the infrastructure in place. The time you wanted it. And that's it, that's for us is that we've been, and we've been very successful in terms of putting our gram requests in highly validated highly qualified. So we feel good about that.
Got it.
Michael Shlisky
Whatever that wasn't mentioned was on the organized labor in your facility. So if you could update us on how discussions are going with your employees and what come if there is a date or a possible milestone you've got for us to a two a share today that? Thank you.
Phil Horlock
Okay. Well on I think it's pretty much the same that I said last quarter. Actually, we're collaborating well with the United Steel Workers were having very frequent negotiations. We're not we're not actually talking about the what I call the economic terms, it has been more brand, things like holidays and what do you do about grievance issues that might be out there, more of a typical account on economic factors. So as I said, going very well on a lot of good discussion and very professionally run. And I would say that I think the earliest we're going to be told we've seen a completion of this. I don't even have a date on it, but I think we're talking well into 24 before something might be finalized, let's say, media very regularly. We're very thorough. This is a ground-up program. I mean, you start literally from a blank sheet of paper and work through everything with United Steelworkers. And so I think sometime maybe towards middle of next year could be. But again, I'm not putting any timeframe on that. We'll just do it separately just unless thoroughly.
Razvan Radulescu
Okay, Phil, thanks very much.
Michael Shlisky
I appreciate the commentary I'll pass along.
Razvan Radulescu
Bye.
Operator
Our next question comes from Craig Irwin with ROTH MKM. Please proceed to.
Craig Edward Irwin
Good evening. Thanks for taking my questions for you guys.
Hi, you guys, you guys have really demonstrated leadership in alternative fuels over the last many years. And part of that is understanding the market. And today again, on this call, you've been really clear that the long-term adoption of EV school buses, the accelerating adoption is dependent on NAM, the ability to reduce our operating expenses, the cost of acquiring these buses for the school districts that are considering going electric, can you maybe share with us on your level of activity, your level of engineering focus on reducing the cost of EV school buses for your customers? And maybe if you can share opportunities you see as particularly right or having good near-term returns? And what's your vision for potential cost improvement over the next few years?
Phil Horlock
Okay. That's a great question, Craig. So obviously, you look at where we are. We buy a decision from Cummins, right? And they're a great partner of ours. We buyout drivetrain system from them includes the batteries with the controls, the control software system, the motors, the inverters, all the pieces, and we have a regular cadence with comments in terms of the products that we that we meet on going through hopefully to reduce design, lower cost things smarter and about the product itself. And I'm not putting numbers on the table that Lisa said we have we have a we have a great program with that will come to look at the resourcing sourcing alternatives, lower cost system, whether that includes batteries, the control motor itself you know, disagree with your developer e-axles down the road. I mean, these are all things we consider in collaboration with Cummins, and I think we're still at the early stages. I would say in terms of the LEV. capability, and we've been in since 2018 with Cummins as our partner. But I think there, I think down the road, you'll sort of look at as we're looking more and more battery suppliers, battery alternative cell providers because, frankly, what's happening less with one of our major battery supplies on Apple as well about a supplier out there who are who declared bankruptcy and was acquired by another company gives example, I think, of some of the fluxes going on there. So we're constantly looking at alternatives for stronger partners, better, better cost pounds, lower cost partners, more efficient partners. And we'll keep doing that. I think some things all the time this thing is probably bring a little bit more of this in house to as we get more scale on our business better. We're at the forefront of it. We're very collaborative with Cummins are a great partner to work with. And I think you see it to see the outcome in our results. I do think of this over the next few years, you definitely see in not only the battery costs coming down, but other components has more scale and the electrification of the school buses and trucks in general. And we want to capitalize on and be ready for it, hence what this generate capital venture. We've done clean bus solutions, again, trying to make it more affordable on a regular, predictable, monthly basis, taking what we call and society anxiety for infrastructure away from the customer, and we'll handle it for them and take care of it and make it much easier for them to adopt electric buses. And that's what we'll learn a lot from propane will Lenzie here the process, Craig, I know you know our business very well. You've known us a long time. One thing we did with propane was when we first entered that market. First of all, I get propane from the tank to any what trading do I need you have to explain and educate and train the drivers the customers about handle these vehicles. I think we do a good job in that regard.
Craig Edward Irwin
Excellent. Excellent.
And then I guess others have tried this question. So I maybe will be a little a little more direct, right. You have the most experienced bid team out there facing the EPA. Right?
And you've demonstrated clear leadership in EV school buses. Do you expect to have a greater share of the $400 million in funding coming to customers that you support than what you saw on $1 billion that was handed out last year.
Phil Horlock
It's an interesting question, and I can tell you this. I'm not quite sure what's going to happen in the end, right? At the end, we don't select the actual folks we're going to get those grants. I mean the APAs for EPS, as I will tell you, I think we prepared extremely well for it. Just to reiterate, we sent in enough applications take the entire fund. So we think we can we do when we really well qualified our applicants. We didn't go in here with just a hey, let me just give you a free opportunity to have a bus that's a relatively low cost or no cost. We actually went thoroughly through every school district had one of our customers, some of them were conquest customers, new customers who wanted to move to bluebird. So I guess what I'm saying is great that the proof of the pudding will be in Leighton, right? When it shows up, but I feel confident we prepared as best we possibly could to get every opportunity to capitalize on this on these grounds.
Craig Edward Irwin
Okay. And then an adjacent question to that. I'm Congratulations on your collaboration with generate capital. Jigar Shah is also a visionary on clean tech finance and has executed impeccably and in as many different business ventures and do your competitors, the companies that have aspirations of leadership in the EV school bus market have access to the funding out of generate or would they need to go and find similar partners to set those up and offer that kind of financial support to some of these low-income disadvantaged communities that the President is really focused on.
Phil Horlock
I'm giving the opportunity to our of our venture would generate.
And or by the way, I agree with you fully Jigisha has a fantastic job at him several times over the years in different events, even prior to this joint venture here. But I will tell you that I think we are really well prepared on this as I look at it strongly.
And second, yes, I just thought I'd just like to turn the question I have explained, unlike my knowledge or Jigisha that just as you are doing, but I think here that I really think for us, we have the exclusive relationship was to generate capital. They want to work with us. They see our leadership in this space. There are they have they have fantastic access to things that we don't really access today in terms of tax credits, get into every single corner of utility, understanding better than we do around the price of electricity. And what it really means for customers.
So the answer to your question is quick.
We are the only ones who can do this deal with generate capital. And so we're very proud to have that unique relationship the goal for us now is to train our entire dealer network of what this is all about what it means a bunch. It gives them give a chance for all of our customers to get a zero-emission school bus as fast as possible.
Craig Edward Irwin
Great. Well, congratulations on fantastic performance. It's got to feel good to come back to some bluebirds to drive this level of success, if those.
Phil Horlock
Great. Thanks a lot, Craig, appreciate it. Solid team effort, though.
Thanks for absolutely Thank you for your questions.
Operator
There are currently no questions leading at this time. So I'll pass the conference back over to Phil Horlock for closing remarks.
Phil Horlock
And thanks to all of you joining us on the on the call today. We appreciate your interest in bluebird, and we look forward to updating you again on our progress next quarter because we always do, as you saw today, we've completed a significant transformation well ahead of schedule as it clearly showed in our record fiscal 23, fourth quarter and full year results. We have a really strong momentum going into fiscal 24 and consequently raised our fiscal 24 guidance significantly projecting a 10% adjusted EBITDA margin, which is two percentage points above what we achieved in fiscal 23. And we're confident in achieving an 11% to 12% margin within a couple of years as industry supply chain constraints continue to ease. So should you have any follow-up questions, please don't hesitate to contact our Head of Investor Relations, Mark Benfield, and thanks again, all of the Bluebird. Have a great evening, goodnight.
Operator
So conclude today's conference call. Thank you all for your participation. You may now disconnect your lines.
