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Blue Bird Reports Fiscal 2022 Second Quarter Results; Focused on Electric Vehicle Growth and Process Improvement; Challenging Business Environment; Revising FY2022 Guidance

Net Sales of $207.7M and GAAP Net Loss of $12.1M;

Firm Order Backlog of Record 6,600+ units;

Electric Type C & D Bus Backlog of nearly 360 units;

Adjusted EBITDA of $(10.7)M with 1,931 Buses Sold

Blue Bird Corporation (“Blue Bird”) (Nasdaq: BLBD), the leader in electric and low-emission school buses, announced today its fiscal 2022 second quarter results. GAAP net loss for the quarter of $12.1 million was $11.5 million higher than the same FY2021 fiscal period. Adjusted EBITDA for the quarter was $(10.7) million, $18.2 million below prior year level. Order backlog remains strong at a record 6,600 buses, worth approximately $700 million.

 

Highlights

 

(in millions except Unit Sales and EPS data)

Three Months Ended

April 2, 2022

 

B/(W)

2021

 

Six Months Ended

April 2, 2022

 

B/(W)

2021

Unit Sales

 

1,931

 

 

 

442

 

 

 

3,080

 

 

 

336

 

GAAP Measures:

 

 

 

 

 

 

 

Revenue

$

207.7

 

 

$

43.0

 

 

$

336.9

 

 

$

41.8

 

Net Income

$

(12.1

)

 

$

(11.5

)

 

$

(16.2

)

 

$

(14.0

)

Diluted Earnings per Share

$

(0.38

)

 

$

(0.36

)

 

$

(0.54

)

 

$

(0.46

)

Non-GAAP Measures1:

 

 

 

 

 

 

 

Adjusted EBITDA

$

(10.7

)

 

$

(18.2

)

 

$

(7.1

)

 

$

(20.4

)

Adjusted Net Loss

$

(10.1

)

 

$

(11.5

)

 

$

(12.1

)

 

$

(13.6

)

Adjusted Diluted Loss per Share

$

(0.31

)

 

$

(0.36

)

 

$

(0.40

)

 

$

(0.45

)

1 Reconciliation to relevant GAAP metrics shown below

Blue Bird faced a challenging second quarter marked by supply chain disruptions and inflationary pressures exacerbated by Russia’s war in Ukraine and COVID lockdowns in China. The continued rise in raw material, freight, and labor costs, as well shortages on a number of key components drove increased costs to manufacture the units in the quarter, the majority of which were ordered nearly a year ago and were delayed due to supply chain constraints. Blue Bird consciously chose to honor pricing on those units in the quarter to preserve long-standing franchised dealer and customer relationships.

Blue Bird continued to implement its multi-source supplier strategy for a number of critical components successfully addressing supply chain issues that had previously impacted production. However, new supply chain issues emerged amid geo-political global upheaval. Blue Bird again brought its pricing in line with expected cost increases. The Company has implemented price increases totaling more than 25% over the past 10 months and expects that pricing to catch up with costs in the latter half of the fiscal year.

As an employee-centric organization, Blue Bird continued to invest in its workforce and workplace upgrades to further improve safety, quality, cost and delivery. In addition, the company is finalizing a transformation of its leadership team and filled two key leadership positions in the quarter with seasoned industry veterans, including new top executives for electrification and global supply chain management. Blue Bird also advanced its Lean Transformation initiatives with efforts starting to show material improvements in the quarter in the areas of efficiency, quality, cost, and throughput. Many of these improvements are being overshadowed by the difficult supply chain environment.

Blue Bird continues to stay focused on capitalizing on significant growth opportunities in the areas of electric commercial chassis and the growing demand for electric school buses accelerated by the Clean School Bus Rebate Program.

The Company unveiled this week a flexible electric commercial chassis at the 2022 Advanced Clean Transportation (ACT) Expo. Blue Bird will expand its product reach beyond its core school transportation market to start serving the dynamic commercial vehicle sector. "We are combining our first-rate chassis-building capabilities with our technology leadership in electric zero-emission transportation solutions,” said Matthew Stevenson, President and CEO of Blue Bird Corporation. “Blue Bird showcased at ACT Expo a flexible Class 5-6 electric chassis which will enable a broad range of zero-emission vehicles, including last-mile delivery step vans, motorhomes, and other specialty vehicles. With a market size of more than 30,000 units we will effectively double our total addressable market.”

The Clean School Bus Rebate Program is part of the Bipartisan Infrastructure Law (BIL), which allocates $5B in funding for electric and low-emission school buses and supporting infrastructure. The U.S. Environmental Protection Agency (EPA) recently announced its 2022 Clean School Bus Rebate Program which earmarks the first $500M for the replacement of diesel-powered student transportation with electric and low-emission school buses. The EPA plans to accept online applications starting this month and notify applicants by October 2022. Selected school districts are required to order electric or low-emission school buses by April 2023 to qualify for the rebates. The EPA will provide up to $375,000 per electric bus.

Added Stevenson: “Blue Bird remains committed to further grow its share of electric and low-emission school buses in North America.” “Blue Bird is the proven technology leader for zero-emission electric school buses. We anticipate scaling up our electric vehicle production capacity to 4,000 vehicles a year by 2024 to meet increasing demand. Blue Bird continues to transform the transportation industry.”

2022 Guidance Revised

“The previously anticipated recovery in the supply base in the second half of the fiscal year has been delayed due primarily to Russia’s war in Ukraine and to COVID-related lockdowns in China,” said Razvan Radulescu, CFO of Blue Bird Corporation. “We still expect to see gradual relief beginning in fiscal Q4 as fully-priced orders begin to be delivered, however it is unclear how the supply disruptions will trend. Given what we have seen in the recent months, we are revising our guidance for fiscal 2022 to Net Revenue of $800-900M, Adj. EBITDA of $20-30M and Adj. Free Cash Flow of $15-25M.”

Fiscal 2022 Second Quarter Results

Net Sales

Net sales were $207.7 million for the second quarter of fiscal 2022, an increase of $43.0 million, or 26.1%, from prior year period. Bus unit sales were 1,931 units for the quarter compared with 1,489 units for the same period last year, contributing to a $38.2 million increase. This was largely due to a return to in-person learning and increased demand, partially offset by constraints in the Company's ability to produce and deliver buses due to shortages of critical components. Additionally, there was an increase of $4.8 million in parts segment sales, primarily attributed to (a) more schools offering in-person learning during the 2021/2022 school year when compared with the 2020/2021 school year, which increased school bus units in operation and thus increased bus repair and maintenance activities and (b) pricing actions taken by management to offset increases in purchased part costs.

Gross Profit

Second quarter gross profit of $3.2 million represented a decrease of $15.3 million from the second quarter of last year. The decrease was primarily driven by increases in manufacturing costs attributable to both a) supply chain disruptions that resulted in higher purchase costs for components and freight and b) increased manufacturing inefficiencies resulting from the shortage of certain critical components that required more off-line labor to produce buses. Gross profit margin declined 9.7 points to 1.5%.

Net Loss

Net loss was $12.1 million for the second quarter of fiscal 2022, which was $11.5 million higher than the same period last year. The increase was primarily driven by the $15.3 million decrease in net profit. Also contributing was an increase of $2.5 million in SG&A, which was largely a result of increases in professional services related to operational transformational initiatives, increases in R&D, and increases in payroll. These increases were partially offset by a $6.9 million increase in income tax benefit.

Adjusted Net (Loss) Income

Adjusted Net (Loss) Income was $(10.1) million, representing a decrease of $11.5 million compared with the same period last year. This decrease is primarily due to the $11.5 million increase in net loss.

Adjusted EBITDA

Adjusted EBITDA was $(10.7) million, which was a decrease of $18.2 million compared with the second quarter last year. This decrease is primarily due to the $17.7 million increase in loss before income taxes.

Conference Call Details

Blue Bird will discuss its second quarter 2022 results in a conference call at 4:30 PM ET today. Participants may listen to the audio portion of the conference call either through a live audio webcast on the Company's website or by telephone. The slide presentation and webcast can be accessed via the Investor Relations portion of Blue Bird's website at www.blue-bird.com.

  • Webcast participants should log on and register at least 15 minutes prior to the start time on the Investor Relations homepage of Blue Bird’s website at http://investors.blue-bird.com. Click the link in the events box on the Investor Relations landing page.
  • Participants desiring audio only should dial 1-844-826-3035 or 1-412-317-5195

A replay of the webcast will be available approximately two hours after the call concludes via the same link on Blue Bird’s website.

About Blue Bird Corporation

Blue Bird (NASDAQ: BLBD) is recognized as a technology leader and innovator of school buses since its founding in 1927. Our dedicated team members design, engineer and manufacture school buses with a singular focus on safety, reliability, and durability. Blue Bird buses carry the most precious cargo in the world – the majority of 25 million children twice a day – making us the most trusted brand in the industry. The company is the proven leader in low- and zero-emission school buses with more than 20,000 propane, natural gas, and electric powered buses in operation today. Blue Bird is transforming the student transportation industry through cleaner energy solutions. For more information on Blue Bird's complete product and service portfolio, visit www.blue-bird.com. For Blue Bird's line of emission-free electric buses, visit www.bluebirdelectricbus.com.

Key Non-GAAP Financial Measures We Use to Evaluate Our Performance

This press release includes the following non-GAAP financial measures “Adjusted EBITDA,” "Adjusted EBITDA Margin," "Adjusted Net Income," "Adjusted Diluted Earnings per Share," “Free Cash Flow” and “Adjusted Free Cash Flow”. Adjusted EBITDA and Free Cash Flow are financial metrics that are utilized by management and the board of directors to determine (a) the annual cash bonus payouts, if any, to be made to certain members of management based upon the terms of the Company’s Management Incentive Plan, and (b) whether the performance criteria have been met for the vesting of certain equity awards granted annually to certain members of management based upon the terms of the Company’s Omnibus Equity Incentive Plan. Additionally, consolidated EBITDA, which is an adjusted EBITDA metric defined by our Amended Credit Agreement that could differ from Adjusted EBITDA discussed above as the adjustments to the calculations are not uniform, is used to determine the Company's ongoing compliance with several financial covenant requirements, including being utilized in the denominator of the calculation of the Total Net Leverage Ratio. Accordingly, management views these non-GAAP financial metrics as key for the above purposes and as a useful way to evaluate the performance of our operations as discussed further below.

Adjusted EBITDA is defined as net income or loss prior to interest income; interest expense including the component of operating lease expense (which is presented as a single operating expense in selling, general and administrative expenses in our GAAP financial statements) that represents interest expense on lease liabilities; income taxes; and depreciation and amortization including the component of operating lease expense (which is presented as a single operating expense in selling, general and administrative expenses in our GAAP financial statements) that represents amortization charges on right-of-use lease assets; as adjusted for certain non-cash charges or credits that we may record on a recurring basis such as stock-compensation expense and unrealized gains or losses on certain derivative financial instruments; net gains or losses on the disposal of assets as well as certain charges such as (i) significant product design changes; (ii) transaction related costs; (iii) discrete expenses related to major cost cutting initiatives; or (iv) costs directly attributed to the COVID-19 pandemic. While certain of the charges that are added back in the Adjusted EBITDA calculation, such as transaction related costs and operational transformation and major product redesign initiatives, represent operating expenses that may be recorded in more than one annual period, the significant project or transaction giving rise to such expenses is not considered to be indicative of the Company’s normal operations. Accordingly, we believe that these, as well as the other credits and charges that comprise the amounts utilized in the determination of Adjusted EBITDA described above, should not be used in evaluating the Company’s ongoing annual operating performance. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of net sales. Adjusted EBITDA and Adjusted EBITDA Margin are not measures of performance defined in accordance with GAAP. The measures are used as a supplement to GAAP results in evaluating certain aspects of our business, as described below.

We believe that Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Diluted Earnings per Share are useful to investors in evaluating our performance because the measures consider the performance of our ongoing operations, excluding decisions made with respect to capital investment, financing, and certain other significant initiatives or transactions as outlined in the preceding paragraph. We believe the non-GAAP measures offer additional financial metrics that, when coupled with the GAAP results and the reconciliation to GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business.

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income and Adjusted Diluted Earnings per Share should not be considered as alternatives to net income or GAAP earnings per share as an indicator of our performance or as alternatives to any other measure prescribed by GAAP as there are limitations to using such non-GAAP measures. Although we believe the non-GAAP measures may enhance an evaluation of our operating performance based on recent revenue generation and product/overhead cost control because they exclude the impact of prior decisions made about capital investment, financing, and other expenses, (i) other companies in Blue Bird’s industry may define Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Diluted Earnings per Share differently than we do and, as a result, they may not be comparable to similarly titled measures used by other companies in Blue Bird’s industry, and (ii) Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Diluted Earnings per Share exclude certain financial information that some may consider important in evaluating our performance.

We compensate for these limitations by providing disclosure of the differences between Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Diluted Earnings per Share and GAAP results, including providing a reconciliation to GAAP results, to enable investors to perform their own analysis of our operating results.

Our measures of “Free Cash Flow” and "Adjusted Free Cash Flow" are used in addition to and in conjunction with results presented in accordance with GAAP and free cash flow and adjusted free cash flow should not be relied upon to the exclusion of GAAP financial measures. Free cash flow and adjusted free cash flow reflect an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. We strongly encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

We define Free Cash Flow as total cash provided by/used in operating activities as adjusted for net cash paid for the acquisition of fixed assets and intangible assets. We use Free Cash Flow, and ratios based on Free Cash Flow, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe it is a more conservative measure of cash flow since purchases of fixed assets and intangible assets are a necessary component of ongoing operations.

Forward Looking Statements

This press release includes forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for our business. Specifically, forward-looking statements include statements in this press release regarding guidance, seasonality, product mix and gross profits and may include statements relating to:

  • Inherent limitations of internal controls impacting financial statements
  • Growth opportunities
  • Future profitability
  • Ability to expand market share
  • Customer demand for certain products
  • Economic conditions (including tariffs) that could affect fuel costs, commodity costs, industry size and financial conditions of our dealers and suppliers
  • Labor or other constraints on the Company’s ability to maintain a competitive cost structure
  • Volatility in the tax base and other funding sources that support the purchase of buses by our end customers
  • Lower or higher than anticipated market acceptance for our products
  • Other statements preceded by, followed by or that include the words “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions

These forward-looking statements are based on information available as of the date of this press release, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. The factors described above, as well as risk factors described in reports filed with the SEC by us (available at www.sec.gov), could cause our actual results to differ materially from estimates or expectations reflected in such forward-looking statements.

 

BLUE BIRD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(in thousands of dollars, except for share data)

April 2, 2022

 

October 2, 2021

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

14,867

 

 

$

11,709

 

Accounts receivable, net

 

11,203

 

 

 

9,967

 

Inventories

 

155,675

 

 

 

125,206

 

Other current assets

 

12,872

 

 

 

9,191

 

Total current assets

$

194,617

 

 

$

156,073

 

Property, plant and equipment, net

 

103,006

 

 

 

105,482

 

Goodwill

 

18,825

 

 

 

18,825

 

Intangible assets, net

 

48,438

 

 

 

49,443

 

Equity investment in affiliate

 

12,802

 

 

 

14,817

 

Deferred tax assets

 

13,540

 

 

 

4,413

 

Finance lease right-of-use assets

 

4,737

 

 

 

5,486

 

Other assets

 

1,947

 

 

 

1,481

 

Total assets

$

397,912

 

 

$

356,020

 

Liabilities and Stockholders' Equity (Deficit)

 

 

 

Current liabilities

 

 

 

Accounts payable

$

111,915

 

 

$

72,270

 

Warranty

 

6,816

 

 

 

7,385

 

Accrued expenses

 

19,632

 

 

 

12,267

 

Deferred warranty income

 

7,262

 

 

 

7,832

 

Finance lease obligations

 

1,353

 

 

 

1,327

 

Other current liabilities

 

4,638

 

 

 

8,851

 

Current portion of long-term debt

 

17,325

 

 

 

14,850

 

Total current liabilities

$

168,941

 

 

$

124,782

 

Long-term liabilities

 

 

 

Revolving credit facility

$

 

 

$

45,000

 

Long-term debt

 

139,612

 

 

 

149,573

 

Warranty

 

10,169

 

 

 

11,165

 

Deferred warranty income

 

11,152

 

 

 

12,312

 

Deferred tax liabilities

 

3,813

 

 

 

3,673

 

Finance lease obligations

 

3,853

 

 

 

4,538

 

Other liabilities

 

12,104

 

 

 

14,882

 

Pension

 

20,690

 

 

 

22,751

 

Total long-term liabilities

$

201,393

 

 

$

263,894

 

Stockholders' equity (deficit)

 

 

 

Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 0 shares outstanding at April 2, 2022 and October 2, 2021

$

 

 

$

 

Common stock, $0.0001 par value, 100,000,000 shares authorized, 31,990,860 and 27,205,269 shares outstanding at April 2, 2022 and October 2, 2021, respectively

 

3

 

 

 

3

 

Additional paid-in capital

 

172,191

 

 

 

96,170

 

Accumulated deficit

 

(49,982

)

 

 

(33,753

)

Accumulated other comprehensive loss

 

(44,352

)

 

 

(44,794

)

Treasury stock, at cost, 1,782,568 shares at April 2, 2022 and October 2, 2021

 

(50,282

)

 

 

(50,282

)

Total stockholders' equity (deficit)

$

27,578

 

 

$

(32,656

)

Total liabilities and stockholders' equity (deficit)

$

397,912

 

 

$

356,020

 

 

BLUE BIRD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three Months Ended

 

Six Months Ended

(in thousands of dollars except for share data)

April 2, 2022

 

April 3, 2021

 

April 2, 2022

 

April 3, 2021

Net sales

$

207,659

 

 

$

164,698

 

 

$

336,882

 

 

$

295,132

 

Cost of goods sold

 

204,502

 

 

 

146,205

 

 

 

317,528

 

 

 

262,171

 

Gross profit

$

3,157

 

 

$

18,493

 

 

$

19,354

 

 

$

32,961

 

Operating expenses

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

19,858

 

 

 

17,361

 

 

 

38,091

 

 

 

32,051

 

Operating loss

$

(16,701

)

 

$

1,132

 

 

$

(18,737

)

 

$

910

 

Interest expense

 

(2,491

)

 

 

(2,334

)

 

 

(5,573

)

 

 

(4,264

)

Interest income

 

 

 

 

 

 

 

 

 

 

1

 

Other income, net

 

744

 

 

 

422

 

 

 

1,480

 

 

 

1,065

 

Loss on debt modification

 

 

 

 

 

 

 

(561

)

 

 

(598

)

Loss before income taxes

$

(18,448

)

 

$

(780

)

 

$

(23,391

)

 

$

(2,886

)

Income tax benefit

 

7,415

 

 

 

483

 

 

 

9,177

 

 

 

1,004

 

Equity in net loss of non-consolidated affiliate

 

(1,114

)

 

 

(322

)

 

 

(2,015

)

 

 

(351

)

Net loss

$

(12,147

)

 

$

(619

)

 

$

(16,229

)

 

$

(2,233

)

 

 

 

 

 

 

 

 

Loss per share:

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

31,981,073

 

 

 

27,118,452

 

 

 

30,039,240

 

 

 

27,089,342

 

Diluted weighted average shares outstanding

 

31,981,073

 

 

 

27,118,452

 

 

 

30,039,240

 

 

 

27,089,342

 

Basic loss per share

$

(0.38

)

 

$

(0.02

)

 

$

(0.54

)

 

$

(0.08

)

Diluted loss per share

$

(0.38

)

 

$

(0.02

)

 

$

(0.54

)

 

$

(0.08

)

 

BLUE BIRD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Six Months Ended

(in thousands of dollars)

April 2, 2022

 

April 3, 2021

Cash flows from operating activities

 

 

 

Net loss

$

(16,229

)

 

$

(2,233

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Depreciation and amortization

 

6,678

 

 

 

6,811

 

Non-cash interest expense

 

2,509

 

 

 

1,458

 

Share-based compensation

 

2,486

 

 

 

1,595

 

Equity in net loss of non-consolidated affiliate

 

2,015

 

 

 

351

 

Loss on disposal of fixed assets

 

12

 

 

 

21

 

Impairment of fixed assets

 

1,354

 

 

 

 

Deferred taxes

 

(9,127

)

 

 

(463

)

Amortization of deferred actuarial pension losses

 

581

 

 

 

931

 

Loss on debt modification

 

561

 

 

 

598

 

Changes in assets and liabilities:

 

 

 

Accounts receivable

 

(1,236

)

 

 

1,121

 

Inventories

 

(30,469

)

 

 

(35,437

)

Other assets

 

(3,072

)

 

 

1,363

 

Accounts payable

 

38,883

 

 

 

22,832

 

Accrued expenses, pension and other liabilities

 

(6,356

)

 

 

(10,146

)

Total adjustments

$

4,819

 

 

$

(8,965

)

Total cash used in operating activities

$

(11,410

)

 

$

(11,198

)

Cash flows from investing activities

 

 

 

Cash paid for fixed assets

$

(3,478

)

 

$

(7,007

)

Total cash used in investing activities

$

(3,478

)

 

$

(7,007

)

Cash flows from financing activities

 

 

 

Payments of revolving credit facility borrowings

$

(45,000

)

 

$

 

Principal payments of senior term loan borrowings

 

(7,425

)

 

 

(4,950

)

Principal payments of finance lease borrowings

 

(659

)

 

 

(765

)

Cash paid for debt costs

 

(2,468

)

 

 

(2,476

)

Proceeds from Private Placement

 

75,000

 

 

 

 

Cash paid for stock issuance costs

 

(202

)

 

 

 

Cash paid for repurchases of common stock in connection with employee stock award exercises

 

(1,503

)

 

 

(518

)

Cash received from employee stock option exercises

 

303

 

 

 

1,129

 

Total cash provided by (used in) financing activities

$

18,046

 

 

$

(7,580

)

Change in cash and cash equivalents

 

3,158

 

 

 

(25,785

)

Cash and cash equivalents, beginning of period

 

11,709

 

 

 

44,507

 

Cash and cash equivalents, end of period

$

14,867

 

 

$

18,722

 

 

 

 

 

Reconciliation of Net Loss to Adjusted EBITDA

 

 

Three Months Ended

 

Six Months Ended

(in thousands of dollars)

April 2, 2022

 

April 3, 2021

 

April 2, 2022

 

April 3, 2021

Net loss

$

(12,147

)

 

$

(619

)

 

$

(16,229

)

 

$

(2,233

)

Adjustments:

 

 

 

 

 

 

 

Interest expense, net (1)

 

2,563

 

 

 

2,422

 

 

 

5,720

 

 

 

4,434

 

Income tax benefit

 

(7,415

)

 

 

(483

)

 

 

(9,177

)

 

 

(1,004

)

Depreciation, amortization, and disposals (2)

 

3,622

 

 

 

3,591

 

 

 

7,145

 

 

 

7,267

 

Operational transformation initiatives

 

1,585

 

 

 

153

 

 

 

1,586

 

 

 

208

 

Share-based compensation

 

813

 

 

 

871

 

 

 

2,486

 

 

 

1,595

 

Product redesign initiatives

 

281

 

 

 

1,081

 

 

 

534

 

 

 

1,267

 

Restructuring and other charges

 

 

 

 

 

 

 

246

 

 

 

494

 

Costs directly attributed to the COVID-19 pandemic (3)

 

8

 

 

 

527

 

 

 

37

 

 

 

697

 

Loss on debt modification

 

 

 

 

 

 

 

561

 

 

 

598

 

Adjusted EBITDA

$

(10,690

)

 

$

7,543

 

 

$

(7,091

)

 

$

13,323

 

Adjusted EBITDA margin (percentage of net sales)

 

(5.1

) %

 

 

4.6

%

 

 

(2.1

) %

 

 

4.5

%

___________________

(1) Includes $0.1 million for both three month fiscal periods, and $0.1 million and $0.2 million for the six month fiscal periods ended April 2, 2022 and April 3, 2021, respectively, representing interest expense on lease liabilities, which are a component of lease expense and presented as a single operating expense in selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.

(2) Includes $0.2 million for both three month fiscal periods and $0.4 million for both six month fiscal periods, representing amortization charges on right-of-use lease assets, which are a component of lease expense and presented as a single operating expense in selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.

(3) Primarily represents costs incurred for third party cleaning services and personal protective equipment for our employees in response to the COVID-19 pandemic.

 

Reconciliation of Free Cash Flow to Adjusted Free Cash Flow

 

 

Three Months Ended

 

Six Months Ended

(in thousands of dollars)

April 2, 2022

 

April 3, 2021

 

April 2, 2022

 

April 3, 2021

Net cash used in operating activities

$

21,667

 

 

$

299

 

 

$

(11,410

)

 

$

(11,198

)

Cash paid for fixed assets

 

(1,908

)

 

 

(3,690

)

 

 

(3,478

)

 

 

(7,007

)

Free cash flow

$

19,759

 

 

$

(3,391

)

 

$

(14,888

)

 

$

(18,205

)

Cash paid for product redesign initiatives

 

281

 

 

 

1,081

 

 

 

534

 

 

 

1,267

 

Cash paid for operational transformation initiatives / Other

 

1,585

 

 

 

153

 

 

 

1,586

 

 

 

208

 

Cash paid for restructuring charges

 

 

 

 

 

 

 

246

 

 

 

494

 

Cash paid for costs directly attributed to COVID-19

 

8

 

 

 

527

 

 

 

37

 

 

 

697

 

Adjusted free cash flow

 

21,633

 

 

 

(1,630

)

 

 

(12,485

)

 

 

(15,539

)

 

Reconciliation of Net Loss to Adjusted Net (Loss) Income

 

 

Three Months Ended

 

Six Months Ended

(in thousands of dollars)

April 2, 2022

 

April 3, 2021

 

April 2, 2022

 

April 3, 2021

Net loss

$

(12,147

)

 

$

(619

)

 

$

(16,229

)

 

$

(2,233

)

Adjustments, net of tax benefit or expense (1)

 

 

 

 

 

 

 

Operational transformation initiatives

 

1,189

 

 

 

115

 

 

 

1,190

 

 

 

156

 

Product redesign initiatives

 

211

 

 

 

811

 

 

 

401

 

 

 

950

 

Share-based compensation

 

610

 

 

 

653

 

 

 

1,865

 

 

 

1,196

 

Restructuring charges

 

 

 

 

 

 

 

185

 

 

 

371

 

Costs directly attributed to the COVID-19 pandemic (2)

 

6

 

 

 

395

 

 

 

28

 

 

 

523

 

Loss on debt modification

 

 

 

 

 

 

 

421

 

 

 

449

 

Adjusted net (loss) income, non-GAAP

$

(10,132

)

 

$

1,355

 

 

 

(12,142

)

 

 

1,411

 

__________________

(1) Amounts are net of estimated statutory tax rates of 25%.

(2) Primarily costs incurred for third party cleaning services and personal protective equipment for our employees in response to the COVID-19 pandemic.

 

Reconciliation of Diluted EPS to Adjusted Diluted EPS

 

 

Three Months Ended

 

Six Months Ended

 

April 2, 2022

 

April 3, 2021

 

April 2, 2022

 

April 3, 2021

Diluted loss per share

$

(0.38

)

 

$

(0.02

)

 

$

(0.54

)

 

$

(0.08

)

One-time charge adjustments, net of tax benefit or expense

 

0.07

 

 

 

0.07

 

 

 

0.14

 

 

 

0.13

 

Adjusted diluted (loss) earnings per share, non-GAAP

$

(0.31

)

 

$

0.05

 

 

$

(0.40

)

 

$

0.05

 

Weighted average dilutive shares outstanding

 

32,311,549

 

 

 

27,330,267

 

 

 

30,317,464

 

 

 

27,357,778

 

 

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