10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 4, 2020

OR

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ................................ to ...............................................

Commission File Number 001-36267

BLUE BIRD CORPORATION

(Exact name of registrant as specified in its charter)

Delaware                                 46-3891989

(State or other jurisdiction of incorporation or organization)                (I.R.S. Employer Identification No.)

3920 Arkwright Road, 2nd Floor, Macon, Georgia 31210

(Address of principal executive offices)

(Zip Code)

(478) 822-2801

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.0001 par value	BLBD	NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated Filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At August 7, 2020, 27,048,404 shares of the registrant’s common stock, $0.0001 par value, were outstanding.

BLUE BIRD CORPORATION

FORM 10-Q

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION	2
Item 1. Financial Statements (Unaudited).	2
Condensed Consolidated Balance Sheets	2
Condensed Consolidated Statements of Operations	3
Condensed Consolidated Statements of Comprehensive Income	4
Condensed Consolidated Statements of Cash Flows	5
Condensed Consolidated Statements of Stockholders' Deficit	6
Notes to Condensed Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	29
Item 4. Controls and Procedures.	29
PART II – OTHER INFORMATION	30
Item 1. Legal Proceedings.	30
Item 1A. Risk Factors.	30
Item 6. Exhibits.	32
SIGNATURES	33

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

BLUE BIRD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands of dollars, except for share data)	July 4, 2020			September 28, 2019
Assets
Current assets
Cash and cash equivalents	$	12,538		$	70,959
Accounts receivable, net	13,694			10,537
Inventories	155,717			78,830
Other current assets	9,459			11,765
Total current assets	$	191,408		$	172,091
Property, plant and equipment, net	104,667			100,058
Goodwill	18,825			18,825
Intangible assets, net	52,404			54,720
Equity investment in affiliate	11,946			11,106
Deferred tax assets	3,882			3,600
Finance lease right-of-use assets	5,790			4,638
Other assets	1,133			375
Total assets	$	390,055		$	365,413
Liabilities and Stockholders' Deficit
Current liabilities
Accounts payable	$	95,538		$	102,266
Warranty	8,123			9,161
Accrued expenses	15,638			28,697
Deferred warranty income	8,448			8,632
Finance lease obligations	1,032			716
Other current liabilities	13,425			10,310
Current portion of long-term debt	9,900			9,900
Total current liabilities	$	152,104		$	169,682
Long-term liabilities
Revolving credit facility	$	45,000		$	—
Long-term debt	166,467			173,226
Warranty	12,705			13,182
Deferred warranty income	13,597			15,413
Deferred tax liabilities	792			168
Finance lease obligations	4,870			3,921
Other liabilities	13,251			12,108
Pension	43,197			45,524
Total long-term liabilities	$	299,879		$	263,542
Guarantees, commitments and contingencies (Note 6)
Stockholders' deficit
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 0 shares issued at July 4, 2020 and September 28, 2019	$	—		$	—
Common stock, $0.0001 par value, 100,000,000 shares authorized, 27,048,404 and 26,476,336 shares outstanding at July 4, 2020 and September 28, 2019, respectively	3			3
Additional paid-in capital	88,930			84,271
Accumulated deficit	(45,405		)	(45,649		)
Accumulated other comprehensive loss	(55,174		)	(56,154		)
Treasury stock, at cost, 1,782,568 shares at July 4, 2020 and September 28, 2019	(50,282		)	(50,282		)
Total stockholders' deficit	$	(61,928	)	$	(67,811	)
Total liabilities and stockholders' deficit	$	390,055		$	365,413

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

BLUE BIRD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Nine Months Ended
(in thousands of dollars except for share data)	July 4, 2020			June 29, 2019			July 4, 2020			June 29, 2019
Net sales	$	189,181		$	308,774		$	597,810		$	675,342
Cost of goods sold	168,099			266,992			531,259			588,496
Gross profit	$	21,082		$	41,782		$	66,551		$	86,846
Operating expenses
Selling, general and administrative expenses	17,793			20,996			58,146			61,197
Operating profit	$	3,289		$	20,786		$	8,405		$	25,649
Interest expense	(2,406		)	(3,369		)	(9,961		)	(10,241		)
Interest income	27			—			27			9
Other income (expense), net	181			(410		)	555			(1,034		)
Income (loss) before income taxes	$	1,091		$	17,007		$	(974	)	$	14,383
Income tax (expense) benefit	(765		)	(3,248		)	378			(2,833		)
Equity in net income of non-consolidated affiliate	960			842			840			1,158
Net income	$	1,286		$	14,601		$	244		$	12,708
Earnings per share:
Basic weighted average shares outstanding	27,027,731			26,451,107			26,784,404			26,449,751
Diluted weighted average shares outstanding	27,080,015			26,720,110			26,980,480			26,788,306
Basic earnings per share	$	0.05		$	0.55		$	0.01		$	0.48
Diluted earnings per share	$	0.05		$	0.55		$	0.01		$	0.47

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

BLUE BIRD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended				Nine Months Ended
(in thousands of dollars)	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Net income	$	1,286	$	14,601	$	244	$	12,708
Other comprehensive income, net of tax
Net change in defined benefit pension plan	327		524		980		1,572
Total other comprehensive income	$	327	$	524	$	980	$	1,572
Comprehensive income	$	1,613	$	15,125	$	1,224	$	14,280

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

BLUE BIRD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019
Cash flows from operating activities
Net income	$	244		$	12,708
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	10,728			7,406
Non-cash interest expense	3,560			2,172
Share-based compensation	4,105			3,146
Equity in net income of non-consolidated affiliate	(840		)	(1,158		)
(Gain) loss on disposal of fixed assets	(100		)	50
Deferred taxes	32			500
Amortization of deferred actuarial pension losses	1,289			2,068
Foreign currency hedges	—			109
Changes in assets and liabilities:
Accounts receivable	(3,157		)	(16,162		)
Inventories	(76,887		)	(83,355		)
Other assets	2,480			(5,014		)
Accounts payable	(3,115		)	42,429
Accrued expenses, pension and other liabilities	(16,644		)	15,988
Total adjustments	$	(78,549	)	$	(31,821	)
Total cash used in operating activities	$	(78,305	)	$	(19,113	)
Cash flows from investing activities
Cash paid for fixed assets	$	(16,724	)	$	(30,154	)
Proceeds from sale of fixed assets	150			—
Total cash used in investing activities	$	(16,574	)	$	(30,154	)
Cash flows from financing activities
Borrowings under the revolving credit facility	$	45,000		$	25,000
Borrowings under the senior term loan	—			50,000
Repayments under the senior term loan	(7,425		)	(7,425		)
Principal payments on finance leases	(854		)	—
Cash paid for debt issuance costs	(935		)	—
Cash paid for employee taxes on vested restricted shares and stock option exercises	(3,568		)	(622		)
Proceeds from exercises of warrants	4,240			1,499
Tender offer repurchase of common stock and preferred stock	—			(50,370		)
Total cash provided by financing activities	$	36,458		$	18,082
Change in cash and cash equivalents	(58,421		)	(31,185		)
Cash and cash equivalents, beginning of period	70,959			60,260
Cash and cash equivalents, end of period	$	12,538		$	29,075
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest paid, net of interest received	$	6,616		$	7,916
Income tax paid, net of tax refunds	(1,668		)	2,431
Non-cash investing and financing activities:
Changes in accounts payable for capital additions to property, plant and equipment	$	(3,613	)	$	(1,307	)
Cashless exercise of stock options	5,246			295
Right-of-use assets obtained in exchange for finance lease obligations	1,942			—
Right-of-use assets obtained in exchange for operating lease obligations	—			8,040
Conversion of preferred stock into common stock	—			9,264

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

BLUE BIRD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

(Unaudited)

	Three Months Ended
(in thousands of dollars, except for share data)	Common Stock						Convertible Preferred Stock									Treasury Stock
	Shares	Par Value		Additional Paid-In-Capital			Shares	Amount		Accumulated Other Comprehensive Loss			Accumulated Deficit			Shares	Amount			Total Stockholders' Deficit
Balance, April 4, 2020	27,027,272	$	3	$	87,408		—	$	—	$	(55,501	)	$	(46,691	)	1,782,568	$	(50,282	)	$	(65,063	)
Restricted stock activity	—	—		(255		)	—	—		—			—			—	—			(255		)
Stock option activity	21,132	—		—			—	—		—			—			—	—			—
Share-based compensation expense	—	—		1,777			—	—		—			—			—	—			1,777
Net income	—	—		—			—	—		—			1,286			—	—			1,286
Other comprehensive income, net of tax	—	—		—			—	—		327			—			—	—			327
Balance, July 4, 2020	27,048,404	$	3	$	88,930		—	$	—	$	(55,174	)	$	(45,405	)	1,782,568	$	(50,282	)	$	(61,928	)
Balance, March 30, 2019	26,440,663	$	3	$	81,889		—	$	—	$	(37,379	)	$	(71,842	)	1,782,568	$	(50,261	)	$	(77,590	)
Warrant exercises	17,750	—		204			—	—		—			—			—	—			204
Stock option activity	2,043	—		(20		)	—	—		—			—			—	—			(20		)
Share-based compensation expense	—	—		1,095			—	—		—			—			—	—			1,095
Tender offer share repurchases	—	—		21			—	—		—			—			—	(21		)	—
Net income	—	—		—			—	—		—			14,601			—	—			14,601
Other comprehensive income, net of tax	—	—		—			—	—		524			—			—	—			524
Balance, June 29, 2019	26,460,456	$	3	$	83,189		—	$	—	$	(36,855	)	$	(57,241	)	1,782,568	$	(50,282	)	$	(61,186	)

6

	Nine Months Ended
(in thousands of dollars, except for share data)	Common Stock							Convertible Preferred Stock											Treasury Stock
	Shares		Par Value		Additional Paid-In-Capital			Shares		Amount			Accumulated Other Comprehensive Loss			Accumulated Deficit			Shares	Amount			Total Stockholders' Deficit
Balance, September 28, 2019	26,476,336		$	3	$	84,271		—		$	—		$	(56,154	)	$	(45,649	)	1,782,568	$	(50,282	)	$	(67,811	)
Warrant exercises	368,712		—		4,240			—		—			—			—			—	—			4,240
Restricted stock activity	94,724		—		(1,623		)	—		—			—			—			—	—			(1,623		)
Stock option activity	108,632		—		(1,945		)	—		—			—			—			—	—			(1,945		)
Share-based compensation expense	—		—		3,987			—		—			—			—			—	—			3,987
Net income	—		—		—			—		—			—			244			—	—			244
Other comprehensive income, net of tax	—		—		—			—		—			980			—			—	—			980
Balance, July 4, 2020	27,048,404		$	3	$	88,930		—		$	—		$	(55,174	)	$	(45,405	)	1,782,568	$	(50,282	)	$	(61,928	)
Balance, September 29, 2018	27,259,262		$	3	$	70,023		93,000		$	9,300		$	(38,427	)	$	(69,235	)	—	$	—		$	(28,336	)
Adoption of new revenue recognition standard (ASC 606) adjustment	—		—		—			—		—			—			(714		)	—	—			(714		)
Warrant exercises	130,385		—		1,499			—		—			—			—			—	—			1,499
Restricted stock activity	51,195		—		(596		)	—		—			—			—			—	—			(596		)
Stock option activity	2,567		—		(26		)	—		—			—			—			—	—			(26		)
Share-based compensation expense	—		—		3,077			—		—			—			—			—	—			3,077
Tender offer share repurchases	(1,782,568	)	—		(52		)	(364	)	(36		)	—			—			1,782,568	(50,282		)	(50,370		)
Preferred stock conversion	799,615		—		9,264			(92,636	)	(9,264		)	—			—			—	—			—
Net income	—		—		—			—		—			—			12,708			—	—			12,708
Other comprehensive income, net of tax	—		—		—			—		—			1,572			—			—	—			1,572
Balance, June 29, 2019	26,460,456		$	3	$	83,189		—		$	—		$	(36,855	)	$	(57,241	)	1,782,568	$	(50,282	)	$	(61,186	)

The accompanying notes are an integral part of these consolidated financial statements.

7

BLUE BIRD CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of Business and Basis of Presentation

Nature of Business

Blue Bird Body Company, a wholly-owned subsidiary of Blue Bird Corporation, was incorporated in 1958 and has manufactured, assembled and sold school buses to a variety of municipal, federal and commercial customers since 1927. The majority of Blue Bird’s sales are made to an independent distributor network, which in turn sells buses to ultimate end users. We are headquartered in Macon, Georgia. References in these notes to financial statements to “Blue Bird”, the “Company,” “we,” “our,” or “us” refer to Blue Bird Corporation and its wholly-owned subsidiaries, unless the context specifically indicates otherwise.

COVID-19

During our third quarter of fiscal 2020, the novel coronavirus known as "COVID-19" continued to spread throughout the world, perpetuating a global pandemic. The pandemic materially impacted our third quarter of fiscal 2020 results causing lower customer orders for both buses and bus parts, supply disruptions, higher rates of absenteeism among our hourly production workforce and a temporary shutdown of manufacturing. The continuing development and fluidity of the pandemic precludes any prediction as to the ultimate severity of the adverse impacts on our business, financial condition, results of operations, and liquidity. A prolonged economic downturn resulting from the continuing pandemic would likely have a material adverse impact on our financial results.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company transactions and accounts have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and Article 8 of Regulation S-X. The Company’s fiscal year ends on the Saturday closest to September 30 with its quarters consisting of thirteen weeks in most years. In fiscal year 2020, there is a total of 53 weeks. The third quarters of fiscal 2020 and 2019 both included 13 weeks. The nine month periods in fiscal 2020 and 2019 included 40 and 39 weeks, respectively.

In the opinion of management, all adjustments considered necessary for a fair presentation of financial results have been made. Such adjustments consist of only those of a normal recurring nature. Operating results for any interim period are not necessarily indicative of the results that may be expected for the entire year. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

The Condensed Consolidated Balance Sheet data as of September 28, 2019 was derived from the Company’s audited financial statements but does not include all disclosures required by generally accepted accounting principles. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes for the fiscal year ended September 28, 2019 as set forth in the Company's 2019 Form 10-K filed on December 12, 2019.

Use of Estimates and Assumptions

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions. At the date of the financial statements, these estimates and assumptions affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities, and during the reporting period, these estimates and assumptions affect the reported amounts of revenues and expenses. For example, significant management judgments are required in determining excess, obsolete, or unsalable inventory, allowance for doubtful accounts, potential impairment of long-lived assets, goodwill and intangibles, the accounting for self-insurance reserves, warranty reserves, pension obligations, income taxes, environmental liabilities and contingencies. Future events, including the extent and duration of COVID-19 related economic impacts, and their effects cannot be predicted with certainty, and, accordingly, the Company’s accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the Company’s condensed consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. The Company evaluates and updates its assumptions and estimates on an ongoing basis and may employ outside experts to assist in the Company’s evaluations. Actual results could differ from the estimates that the Company has used.

2. Summary of Significant Accounting Policies and Recently Issued Accounting Standards

The Company’s significant accounting policies are described in the Company’s 2019 Form 10-K, filed with the SEC on December 12, 2019. Our senior management has reviewed these significant accounting policies and related disclosures and determined that there were no significant changes in our critical accounting policies in the nine months ended July 4, 2020, except as follows (and as discussed in the Recently Adopted Accounting Standards section of this Note 2):

Amortization of Deferred Pension Losses

Historically, the Company has amortized deferred losses from our frozen defined benefit pension plan accounted for under ASC 715, Compensation - Retirement Benefits, over the expected remaining employment period of the participants who remained employed with the Company. ASC 715 states that if all or almost all of a plan's participants are inactive, the average remaining life expectancy of the inactive participants shall be used to amortize the unrecognized net gain or loss instead of the average remaining service period of active plan participants. In the first quarter of 2020, the ratio of active (employed) to inactive participants in our plan declined to less than 10%, a figure we believe meets the definition of almost all participants as inactive. Accordingly, we have changed the amortization period from approximately seven years in 2019 to approximately 23 years in 2020. Future amortization periods (remaining life expectancy) will be determined based on the participant and actuarial data at that time.

Recently Adopted Accounting Standards

ASU 2018-02 – In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220). This ASU provides guidance on a reclassification from accumulated other comprehensive income ("AOCI") to retained earnings for the effect of the tax rate change resulting from the Tax Cuts and Jobs Act (H.R.1) (the "Tax Act"). The amendments eliminate the stranded tax effects resulting from the Tax Act and will improve the usefulness of information reported to financial statement users. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. We adopted this ASU, in the first quarter of fiscal 2020, and did not elect to reclassify the income tax effects of the Tax Act from AOCI to retained earnings. We use a specific identification approach to release the income tax effects in AOCI.

ASU 2019-12 – In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the process for calculating interim (intraperiod) income taxes and the accounting for deferred tax liabilities for foreign equity-method investments, among other simplifications. We have early adopted this standard effective the first quarter of fiscal 2020. The impacts of adopting this standard were not material to us.

Recently Issued Accounting Standards

ASU 2020-04 – On March 12, 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, providing temporary guidance to ease the potential burden in accounting for reference rate reform primarily resulting from the discontinuation of LIBOR, which is currently expected to occur on December 31, 2021. The amendments in ASU 2020-04 are elective and apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued. An entity may elect to apply the amendments prospectively from March 12, 2020 through December 31, 2022. Our debt and derivative agreements currently reference LIBOR. Contract language is expected to be incorporated into these agreements to address the transition to an alternative reference rate. We are currently evaluating the impact this ASU may have on our consolidated financial statements.

3. Supplemental Financial Information

Inventories

The following table presents the components of inventories at the dates indicated:

(in thousands of dollars)	July 4, 2020		September 28, 2019
Raw materials	$	108,041	$	60,033
Work in process	29,790		16,663
Finished goods	17,886		2,134
Total inventories	$	155,717	$	78,830

8

Product Warranties

The following table reflects activity in accrued warranty cost (current and long-term portions combined) for the periods presented:

	Three Months Ended						Nine Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019			July 4, 2020			June 29, 2019
Balance at beginning of period	$	21,398		$	21,520		$	22,343		$	22,646
Add current period accruals	1,947			3,358			6,076			7,196
Current period reductions of accrual	(2,517		)	(2,358		)	(7,591		)	(7,322		)
Balance at end of period	$	20,828		$	22,520		$	20,828		$	22,520

Extended Warranties

The following table reflects activity in deferred warranty income (current and long-term portions combined), for the sale of extended warranties of two to five years, for the periods presented:

	Three Months Ended						Nine Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019			July 4, 2020			June 29, 2019
Balance at beginning of period	$	22,948		$	22,901		$	24,045		$	23,191
Add current period deferred income	1,769			2,880			5,058			6,686
Current period recognition of income	(2,672		)	(2,196		)	(7,058		)	(6,292		)
Balance at end of period	$	22,045		$	23,585		$	22,045		$	23,585

The outstanding balance of deferred warranty income in the table above is considered a "contract liability", and represents a performance obligation of the Company that we satisfy over the term of the arrangement but for which we have been paid in full at the time the warranty was sold. We expect to recognize $2.3 million of the outstanding contract liability during the remainder of fiscal 2020, $7.8 million in fiscal 2021, and the remaining balance thereafter.

Self-Insurance

The following table reflects our total accrued self-insurance liability, comprised of workers' compensation and health insurance related claims, at the dates indicated:

(in thousands of dollars)	July 4, 2020		September 28, 2019
Current portion	$	2,732	$	2,933
Long-term portion	1,794		1,775
Total accrued self-insurance	$	4,526	$	4,708

The current and long-term portions of the accrued self-insurance liability are reflected in accrued expenses and other liabilities, respectively, on the Condensed Consolidated Balance Sheets.

Shipping and Handling Revenues

Shipping and handling revenues were $3.9 million and $6.0 million for the three months ended July 4, 2020 and June 29, 2019, respectively, and $11.5 million and $12.5 million for the nine months ended July 4, 2020 and June 29, 2019, respectively. The related cost of goods sold was $3.4 million and $5.3 million for the three months ended July 4, 2020 and June 29, 2019, respectively, and $10.0 million and $11.0 million for the nine months ended July 4, 2020 and June 29, 2019, respectively.

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Pension Expense

Components of net periodic pension benefit cost were as follows for the periods presented:

	Three Months Ended						Nine Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019			July 4, 2020			June 29, 2019
Interest cost	$	1,237		$	1,512		$	3,711		$	4,535
Expected return on plan assets	(1,846		)	(1,905		)	(5,538		)	(5,714		)
Amortization of prior loss	430			689			1,289			2,068
Net periodic benefit cost	$	(179	)	$	296		$	(538	)	$	889
Amortization of prior loss, recognized in other comprehensive income	430			689			1,289			2,068
Total recognized in net periodic pension benefit cost and other comprehensive income	$	(609	)	$	(393	)	$	(1,827	)	$	(1,179	)

Derivative Instruments

We are charged variable rates of interest on our indebtedness outstanding under the Amended Credit Agreement (defined below) which exposes us to fluctuations in interest rates. On October 24, 2018, the Company entered into a four-year interest rate collar with a $150.0 million notional value with an effective date of November 30, 2018. The collar was entered into in order to partially mitigate our exposure to interest rate fluctuations on our variable rate debt. The collar establishes a range where we will pay the counterparty if the three-month LIBOR rate falls below the established floor rate of 1.5%, and the counterparty will pay us if the three-month LIBOR rate exceeds the ceiling rate of 3.3%. The collar settles quarterly through the termination date of September 30, 2022. No payments or receipts are exchanged on the interest rate collar contracts unless interest rates rise above or fall below the contracted ceiling or floor rates. During the three-months ended July 4, 2020, the three-month LIBOR rate fell below the established floor, which required an immaterial payment to the counterparty.

Changes in the interest rate collar fair value are recorded in interest expense as the collar does not qualify for hedge accounting. At July 4, 2020, the fair value of the interest rate collar contract was $(4.2) million and is included in "other current liabilities" on the Condensed Consolidated Balance Sheets. The fair value of the interest rate collar is a Level 2 fair value measurement, based on quoted prices of similar items in active markets.

Equity Investment in Affiliate

The Company holds a 50% equity interest in Micro Bird Holdings, Inc. (“Micro Bird”), and accounts for Micro Bird under the equity method of accounting. The carrying amount of the equity method investment is adjusted for the Company’s proportionate share of net earnings and losses and any dividends received. At July 4, 2020 and September 28, 2019, the carrying value of the Company's investment was $11.9 million and $11.1 million, respectively.

In recognizing the Company’s 50% portion of Micro Bird net income, the Company recorded $0.8 million and $1.2 million in Equity in net income of non-consolidated affiliate for the nine months ended July 4, 2020 and June 29, 2019, respectively. Summarized unaudited financial information for these periods for Micro Bird is as follows:

	Nine Months Ended
(in thousands of dollars)	July 4, 2020		June 29, 2019
Revenues	$	58,883	$	86,364
Gross profit	7,318		9,961
Operating income	1,557		3,717
Net income	1,103		2,409

4. Debt

On May 7, 2020, the Company entered into a Second Amendment which amended the Credit Agreement, dated as of December 12, 2016 (the “Credit Agreement”, as amended by that certain First Amendment to Credit Agreement, dated as of September 13, 2018 (the “First Amendment”), and as further amended by the Second Amendment, the “Amended Credit Agreement”). The Second Amendment provided

10

for an aggregate lender commitment of $41.9 million of additional revolving commitments bringing the total revolving commitments to $141.9 million. The revolving commitments under the Amended Credit Agreement mature on September 13, 2023, which is the fifth anniversary of the effective date of the First Amendment. The interest rate pricing grid remained unchanged, but the LIBOR floor was amended from 0% to 0.75%. We incurred $0.9 million in fees related to the amendment. The fees were capitalized to other assets on the Consolidated Balance Sheets and are amortized on a straight-line basis to interest expense until maturity of the agreement.

Term debt consisted of the following at the dates indicated:

(in thousands of dollars)	July 4, 2020		September 28, 2019
2023 term loan, net of deferred financing costs of $2,458 and $3,124, respectively	$	176,367	$	183,126
Less: current portion of long-term debt	9,900		9,900
Long-term debt, net of current portion	$	166,467	$	173,226

Term loans are recognized on the Condensed Consolidated Balance Sheets at the unpaid principal balance, and are not subject to fair value measurement; however, given the variable rates on the loans, the Company estimates that the unpaid principal balance approximates fair value. If measured at fair value in the financial statements, the term loans would be classified as Level 2 in the fair value hierarchy. At July 4, 2020 and September 28, 2019, $178.8 million and $186.3 million, respectively, were outstanding on the term loans.

At July 4, 2020 and September 28, 2019, the stated interest rates on the term loans were 2.8% and 4.4%, respectively. At July 4, 2020 and September 28, 2019, the weighted-average annual effective interest rates for the term loans were 4.1% and 5.0%, respectively, which includes amortization of the deferred financing costs.

At July 4, 2020, $45.0 million in borrowings were outstanding on the Revolving Credit Facility and $6.9 million of Letters of Credit were outstanding; therefore, the Company would have been able to borrow $90.0 million on the revolving line of credit.

Interest expense on all indebtedness was $2.4 million and $3.4 million for the three months ended July 4, 2020 and June 29, 2019, respectively, and $10.0 million and $10.3 million for the nine months ended July 4, 2020 and June 29, 2019, respectively.

The schedule of remaining principal payments through maturity for total debt is as follows:

(in thousands of dollars)
Year	Principal Payments
2020	$	2,475
2021	9,900
2022	14,850
2023	196,600
Total remaining principal payments	$	223,825

5. Income Taxes

Income tax provisions for interim periods are based on estimated annual income tax rates, adjusted to reflect the effects of any significant infrequent or unusual items which are required to be discretely recognized within the current interim period. The effective tax rates in the periods presented are largely based upon the forecast pre-tax earnings mix and allocation of certain expenses in various taxing jurisdictions where the Company conducts its business, primarily the United States. In periods where our operating income approximates or is equal to break-even, the effective tax rates for quarter-to-date and full-year periods may not be meaningful due to discrete period items.

On March 27, 2020 the President of the United States signed the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") into law. While the CARES Act has broad income tax implications for many companies, it did not have a material impact on our reported income tax accounts.

Three Months

The effective tax rate for the three-month period ended July 4, 2020 was 70.1%, which differed from the statutory federal income tax rate of 21%. The difference is mainly due to discrete period tax expense from prior year tax return adjustments and normal tax rate items, such as the benefit from federal and state tax credits (net of valuation allowance), which were partially offset by net non-deductible compensation expenses and other tax adjustments.

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The effective tax rate for the three-month period ended June 29, 2019 was 19.1%, which differed from the statutory federal tax rate of 21%. The difference is mainly due to normal tax rate benefit items, such as federal and state tax credits (net of valuation allowance), which were partially offset by non-deductible share-based compensation expenses and other tax adjustments.

Nine Months

The effective tax rate for the nine-month period ended July 4, 2020 was 38.8% and differed from the statutory federal tax rate of 21%. The difference is mainly due to a net discrete period tax benefit from share-based compensation expenses, but also due to normal tax rate items, such as the benefit from federal and state tax credits (net of valuation allowance), which were partially offset by net non-deductible compensation expenses and other tax adjustments.

The effective tax rate for the nine-month period ended June 29, 2019 was 19.7% and differed from the statutory federal income tax rate of 21%. The difference is mainly due to normal tax rate benefit items, primarily federal and state tax credits (net of valuation allowance), which were partially offset by non-deductible share-based compensation expenses and other tax adjustments.

6. Guarantees, Commitments and Contingencies

Litigation

At July 4, 2020, the Company had a number of product liability and other cases pending. Management believes that, considering the Company’s insurance coverage and its intention to vigorously defend its positions, the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial statements.

Environmental

The Company is subject to a variety of environmental regulations relating to the use, storage, discharge and disposal of hazardous materials used in its manufacturing processes. Failure by the Company to comply with present and future regulations could subject it to future liabilities. In addition, such regulations could require the Company to acquire costly equipment or to incur other significant expenses to comply with environmental regulations. The Company is currently not involved in any material environmental proceedings and therefore management believes that the resolution of pending environmental matters will not have a material adverse effect on the Company’s financial statements.

Guarantees

In the ordinary course of business, we may provide guarantees for certain transactions entered into by our dealers. At July 4, 2020, we had a $3.0 million guarantee outstanding which relates to a guarantee of indebtedness for a term loan with remaining maturity up to 2.5 years. The $3.0 million represents the estimated maximum amount we would be required to pay upon default of all guaranteed indebtedness, and we believe the likelihood of required performance to be remote. At July 4, 2020, $0.3 million was included in other current liabilities on our Condensed Consolidated Balance Sheets for the estimated fair value of the guarantee.    

Lease Commitments

We have operating and finance leases for office and/or warehouse space and for equipment. Our leases have remaining terms of 4.4 to 7.4 years.

7. Segment Information

We manage our business in two operating segments: (i) the Bus segment, which includes the manufacturing and assembly of buses to be sold to a variety of customers across the United States, Canada and in international markets; and (ii) the Parts segment, which consists primarily of the purchase of parts from third parties to be sold to dealers within the Company’s network. The tables below present segment net sales and gross profit for the periods presented:

Net sales

	Three Months Ended				Nine Months Ended
(in thousands of dollars)	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Bus (1)	$	180,592	$	292,166	$	554,061	$	626,441
Parts (1)	8,589		16,608		43,749		48,901
Segment net sales	$	189,181	$	308,774	$	597,810	$	675,342

(1) Parts segment revenue includes $0.8 million and $1.0 million for the three months ended July 4, 2020 and June 29, 2019, respectively, and $3.2 million and $2.5 million for the nine months ended July 4, 2020 and June 29, 2019, respectively, related to inter-segment sales of parts that was eliminated by the Bus segment upon consolidation.

Gross profit

	Three Months Ended				Nine Months Ended
(in thousands of dollars)	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Bus	$	18,079	$	35,996	$	50,884	$	69,653
Parts	3,003		5,786		15,667		17,193
Segment gross profit	$	21,082	$	41,782	$	66,551	$	86,846

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The following table is a reconciliation of segment gross profit to consolidated income (loss) before income taxes for the periods presented:

	Three Months Ended						Nine Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019			July 4, 2020			June 29, 2019
Segment gross profit	$	21,082		$	41,782		$	66,551		$	86,846
Adjustments:
Selling, general and administrative expenses	(17,793		)	(20,996		)	(58,146		)	(61,197		)
Interest expense	(2,406		)	(3,369		)	(9,961		)	(10,241		)
Interest income	27			—			27			9
Other income (expense), net	181			(410		)	555			(1,034		)
Income (loss) before income taxes	$	1,091		$	17,007		$	(974	)	$	14,383

Sales are attributable to geographic areas based on customer location and were as follows for the periods presented:

	Three Months Ended				Nine Months Ended
(in thousands of dollars)	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
United States	$	175,433	$	286,499	$	544,176	$	629,668
Canada	13,429		21,639		49,331		43,499
Rest of world	319		636		4,303		2,175
Total net sales	$	189,181	$	308,774	$	597,810	$	675,342

8. Revenue

The following table disaggregates revenue by product category for the periods presented:

	Three Months Ended				Nine Months Ended
(in thousands of dollars)	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Diesel buses	$	88,299	$	135,246	$	278,698	$	335,553
Alternative fuel buses (1)	80,975		141,939		245,766		260,340
Other (2)	11,583		15,486		30,931		32,061
Parts	8,324		16,103		42,415		47,388
Net sales	$	189,181	$	308,774	$	597,810	$	675,342

(1) Includes buses sold with any fuel source other than diesel (e.g. gasoline, propane, CNG, electric).

(2) Includes shipping and handling revenue, extended warranty income, surcharges, chassis, and bus shell sales.

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9. Earnings Per Share

The following table presents the earnings per share computation for the periods presented:

	Three Months Ended				Nine Months Ended
(in thousands except for share data)	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Numerator:
Net income	$	1,286	$	14,601	$	244	$	12,708
Denominator:
Weighted-average common shares outstanding	27,027,731		26,451,107		26,784,404		26,449,751
Weighted-average dilutive securities, restricted stock	50,769		94		135,792		29,149
Weighted-average dilutive securities, warrants	—		150,292		—		178,290
Weighted-average dilutive securities, stock options	1,515		118,617		60,284		131,116
Weighted-average shares and dilutive potential common shares	27,080,015		26,720,110		26,980,480		26,788,306
Earnings per share:
Basic earnings per share	$	0.05	$	0.55	$	0.01	$	0.48
Diluted earnings per share	$	0.05	$	0.55	$	0.01	$	0.47

(1) Potentially dilutive securities representing 0.4 million and 0.3 million shares of common stock were excluded from the computation of diluted earnings per share for the three and nine months ended July 4, 2020, respectively, as their effect would have been anti-dilutive.

10. Accumulated Other Comprehensive Loss

The following table provides information on changes in accumulated other comprehensive loss for the periods presented:

	Three Months Ended						Nine Months Ended
(in thousands of dollars)	Defined Benefit Pension Plan			Total			Defined Benefit Pension Plan			Total
July 4, 2020
Beginning Balance	$	(55,501	)	$	(55,501	)	$	(56,154	)	$	(56,154	)
Amounts reclassified from other comprehensive loss and included in earnings	430			430			1,289			1,289
Total other comprehensive income, before taxes	430			430			1,289			1,289
Income tax expense	(103		)	(103		)	(309		)	(309		)
Ending Balance July 4, 2020	$	(55,174	)	$	(55,174	)	$	(55,174	)	$	(55,174	)
June 29, 2019
Beginning Balance	$	(37,379	)	$	(37,379	)	$	(38,427	)	$	(38,427	)
Amounts reclassified from other comprehensive loss and included in earnings	689			689			2,068			2,068
Total other comprehensive income, before taxes	689			689			2,068			2,068
Income tax expense	(165		)	(165		)	(496		)	(496		)
Ending Balance June 29, 2019	$	(36,855	)	$	(36,855	)	$	(36,855	)	$	(36,855	)

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of financial condition and results of operations of the Company should be read in conjunction with the Company’s unaudited financial statements for the three and nine months ended July 4, 2020 and June 29, 2019 and related notes appearing in Part I, Item 1 of this Report. Our actual results may not be indicative of future performance. This discussion and analysis contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those discussed or incorporated by reference in the sections of this Report titled “Special Note Regarding Forward-Looking Statements” and “Risk Factors”. Actual results may differ materially from those contained in any forward-looking statements. Certain monetary amounts, percentages and other figures included in this Report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated, may not be the arithmetic aggregation of the percentages that precede them.

We refer to the fiscal year ended September 28, 2019 as “fiscal 2019”. We refer to the quarter ended July 4, 2020 as the “third quarter of fiscal 2020” and we refer to the quarter ended June 29, 2019 as the “third quarter of fiscal 2019”. The third quarters of fiscal 2020 and 2019 both included 13 weeks. The nine month periods in fiscal 2020 and 2019 included 40 and 39 weeks, respectively.

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Report”) of Blue Bird Corporation (“Blue Bird” or the “Company”) contains forward-looking statements intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. Except as otherwise indicated by the context, references in this Report to “we,” “us” and “our” are to the consolidated business of the Company. All statements in this Report, including those made by the management of the Company, other than statements of historical fact, are forward-looking statements. These forward-looking statements are based on management’s estimates, projections and assumptions as of the date hereof and include the assumptions that underlie such statements. Forward-looking statements may contain words such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “estimate,” “project,” “forecast,” “seek,” “target,” “anticipate,” “believe,” “estimate,” “predict,” “potential” and “continue,” the negative of these terms, or other comparable terminology. Examples of forward-looking statements include statements regarding the Company’s future financial results, research and development results, regulatory approvals, operating results, business strategies, projected costs, products, competitive positions, management’s plans and objectives for future operations, and industry trends. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for our business. Specifically, forward-looking statements may include statements relating to:

• the future financial performance of the Company;

• negative changes in the market for Blue Bird products;

• expansion plans and opportunities;

• challenges or unexpected costs related to manufacturing;

• future impacts from the novel coronavirus pandemic known as "COVID-19", and any other pandemics, public health crises, or epidemics, on capital markets, manufacturing and supply chain abilities, consumer and customer demand, school system operations, workplace conditions, and any other unexpected impacts, which could include, among other effects:

◦ disruption in global financial and credit markets;

◦ supply shortages and supplier financial risk, especially from our single-source suppliers impacted by the pandemic;

◦ negative impacts to manufacturing operations or the supply chain from shutdowns or other disruptions in operations;

◦ negative impacts on capacity and/or production in response to changes in demand due to the pandemic, including possible cost containment actions;

◦ financial difficulties of our customers impacted by the pandemic;

◦ reductions in market demand for our products due to the pandemic; and

◦ potential negative impacts of various actions taken by federal, state and/or local governments in response to the pandemic.

These forward-looking statements are based on information available as of the date of this Report (or, in the case of forward-looking statements incorporated herein by reference, as of the date of the applicable filed document), 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. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different than those expressed or implied by these forward-looking statements.

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Any expectations based on these forward-looking statements are subject to risks and uncertainties and other important factors, including those discussed in the reports we file with the Securities and Exchange Commission (the “SEC”), specifically the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s 2019 Form 10-K, filed with the SEC on December 12, 2019. Other risks and uncertainties are and will be disclosed in the Company’s prior and future SEC filings. The following information should be read in conjunction with the financial statements included in the Company’s 2019 Form 10-K, filed with the SEC on December 12, 2019.

Available Information

We are subject to the reporting and information requirements of the Securities Exchange Act of 1934, as amended, and as a result are obligated to file annual, quarterly, and current reports, proxy statements, and other information with the SEC. We make these filings available free of charge on our website (http://www.blue-bird.com) as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC. Information on our website does not constitute part of this Quarterly Report on Form 10-Q. In addition, the SEC maintains a website (http://www.sec.gov) that contains our annual, quarterly, and current reports, proxy and information statements, and other information we electronically file with, or furnish to, the SEC.

Executive Overview

Blue Bird is the leading independent designer and manufacturer of school buses. Our longevity and reputation in the school bus industry have made Blue Bird an iconic American brand. We distinguish ourselves from our principal competitors by dedicating our focus to the design, engineering, manufacture and sale of school buses, and related parts. As the only principal manufacturer of chassis and body production specifically designed for school bus applications, Blue Bird is recognized as an industry leader for school bus innovation, safety, product quality/reliability/durability, efficiency, and lower operating costs. In addition, Blue Bird is the market leader in alternative to diesel fuel applications with its propane-powered, gasoline-powered, compressed natural gas (“CNG”)-powered, and all-electric-powered school buses.

Blue Bird sells its buses and parts through an extensive network of United States and Canadian dealers that, in their territories, are exclusive to Blue Bird on Type C and Type D school buses. Blue Bird also sells directly to major fleet operators, the United States Government, state governments, and authorized dealers in a number of foreign countries.

Impact of COVID-19 on Our Business

During our third fiscal quarter of 2020, the novel coronavirus known as "COVID-19" continued to spread throughout the world, perpetuating a global pandemic. The pandemic had triggered a significant downturn in global commerce as early as February 2020 and the challenging market conditions are expected to continue for an extended period of time. In early April, in an effort to contain the spread of COVID-19, maintain the well-being of our employees and stakeholders, address the reduced demand from our customers and be responsive and efficient with supply chain constraints, we closed our manufacturing facilities for two weeks and requested our office employees to work from home. In late April, we successfully restarted manufacturing operations and have continued to manufacture buses since that time without further material disruption. While we have not experienced any pervasive COVID-19 illnesses to date, if we were to experience some form of outbreak within our facilities, we would take all appropriate measures to protect the health and safety of our employees, which could include another temporary halt in production.

The pandemic has resulted, and is likely to continue to result, in significant economic disruption and has adversely affected our business. It will continue to adversely impact our business for the remainder of our fiscal year 2020 and perhaps beyond. Significant uncertainty exists concerning the magnitude of the impact and duration of the COVID-19 pandemic and its impact on the overall U.S and global economy. While the global market downturn, closures and limitations on movement are expected to be temporary, the duration of any demand reductions, production and supply chain disruptions, and related financial impacts, cannot be estimated at this time.

The full impacts from COVID-19 on the Company's financial results in fiscal year 2020 are uncertain as we continue to monitor and assess the level of future customer demand, the ability of school boards to make timely decisions, the ability of suppliers to resume and maintain operations, the ability of our employees to continue to work, and our ability to maintain continuous production for the remaining portion of our fiscal year. A prolonged economic downturn would likely have a material adverse impact on our sales and financial results beyond fiscal 2020. See PART II, Item 1A. Risk Factors, of this Quarterly Report for a discussion of the material risks we believe we face particularly related to the COVID-19 pandemic.

The Company has taken actions to control spending and improve liquidity, including minor headcount rationalization and an increase in the revolving credit facility from $100.0 million to $141.9 million with a Second Amendment to the Credit Agreement. Further detail and discussion of this amendment can be found in the "Liquidity and Capital Resources" section of this Item 2. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Quarterly Report on Form 10-Q. Even with adequate liquidity, we are evaluating and considering further actions to reduce costs and spending across our organization to be responsive to potential

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longer-term impacts of business interruption from the pandemic. Our actions may include reducing hiring activities, limiting discretionary spending, limiting spending on capital investment projects or other steps necessary to preserve adequate liquidity. We will continue to actively monitor the situation and may need to take further actions required by federal, state or local authorities or enact measures we determine are in the best interests of our employees, customers, suppliers and shareholders. For further details and discussion about our liquidity, refer to the following "Liquidity and Capital Resources" section of this Item 2. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Estimates, Recent Accounting Pronouncements

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Blue Bird evaluates its estimates on an ongoing basis, based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.

The Company’s accounting policies that we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described in the Company’s 2019 Form 10-K, filed with the SEC on December 12, 2019 under the caption “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates,” which description is incorporated herein by reference. Our senior management has reviewed these critical accounting policies and related disclosures and determined that there were no significant changes in our critical accounting policies during the nine months ended July 4, 2020, except as follows:

Amortization of Deferred Pension Losses

Historically, the Company has amortized deferred losses from our frozen defined benefit pension plan accounted for under ASC 715, Compensation - Retirement Benefits, over the expected remaining employment period of the participants who remained employed with the Company. ASC 715 states that if all or almost all of a plan's participants are inactive, the average remaining life expectancy of the inactive participants shall be used to amortize the unrecognized net gain or loss instead of the average remaining service period of active plan participants. In the first quarter of 2020, the ratio of active (employed) to inactive participants in our plan declined to less than 10%, a figure we believe meets the definition of almost all participants as inactive. Accordingly, we have changed the amortization period from approximately seven years in 2019 to approximately 23 years in 2020. Future years will be determined based on the participant data at that time.

Recent Accounting Pronouncements

See Note 2 of Notes to Condensed Consolidated Financial Statements (Unaudited) included in Part I, Item 1 of this Report for a discussion of new and recently adopted accounting pronouncements.

Factors Affecting Our Revenues

Our revenues are driven primarily by the following factors:

• Property tax revenues. Property tax revenues are one of the major sources of funding for school districts, and therefore new school buses. Property tax revenues are a function of land and building prices, relying on assessments of property value by state or county assessors and millage rates voted by the local electorate.

• Student enrollment and delivery mechanisms for learning. Increases or decreases in the number of school bus riders have a direct impact on school district demand. Due to the COVID-19 pandemic and evolving protocols for social distancing and public health concerns, the future form of educational delivery is uncertain, and increased remote learning could reasonably be expected to decrease the number of school bus riders.

• Revenue mix. We are able to charge more for certain of our products (e.g., Type C propane-powered school buses, Type D buses, and buses with higher option content) than other products. The mix of products sold in any fiscal period can directly impact our revenues for the period.

• Strength of the dealer network. We rely on our dealers, as well as a small number of major fleet operators, to be the direct point of contact with school districts and their purchasing agents. An effective dealer is capable of expanding revenues within a given school district by matching that district’s needs to our capabilities, offering options that would not otherwise be provided to the district.

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• Pricing. Our products are sold to school districts throughout the United States and Canada. Each state and each Canadian province has its own set of regulations that governs the purchase of products, including school buses, by their school districts. We and our dealers must navigate these regulations, purchasing procedures, and the districts’ specifications in order to reach mutually acceptable price terms. Pricing may or may not be favorable to us, depending upon a number of factors impacting purchasing decisions.

• Buying patterns of major fleets. Major fleets regularly compete against one another for existing accounts. Fleets are also continuously trying to win the business of school districts that operate their own transportation services. These activities can have either a positive or negative impact on our sales, depending on the brand preference of the fleet that wins the business. Major fleets also periodically review their fleet sizes and replacement patterns due to funding availability as well as the profitability of existing routes. These actions can impact total purchases by fleets in a given year.

• Seasonality. Historically, our sales have been subject to seasonal variation based on the school calendar with the peak season during our third and fourth fiscal quarters. Sales during the third and fourth fiscal quarters were typically greater than the first and second fiscal quarters due to the desire of municipalities to have any new buses that they order available to them at the beginning of the new school year. With the COVID-19 pandemic impact on school systems and the uncertainty surrounding in-person schooling schedules and duration, seasonality has become unpredictable. Seasonality and variations from historical seasonality have impacted the comparison of results between fiscal periods.

Factors Affecting Our Expenses and Other Items

Our expenses and other line items on our unaudited Condensed Consolidated Statements of Operations are principally driven by the following factors:

• Cost of goods sold. The components of our cost of goods sold consist of material costs (principally powertrain components, steel and rubber, as well as aluminum and copper), labor expense, and overhead. Our cost of goods sold may vary from period to period due to changes in sales volume, efforts by certain suppliers to pass through the economics associated with key commodities, design changes with respect to specific components, design changes with respect to specific bus models, wage increases for plant labor, productivity of plant labor, delays in receiving materials and other logistical problems, and the impact of overhead items such as utilities.

• Selling, general and administrative expenses. Our selling, general and administrative expenses include costs associated with our selling and marketing efforts, engineering, centralized finance, human resources, purchasing, information technology services, and other administrative matters and functions. In most instances, other than direct costs associated with sales and marketing programs, the principal component of these costs is salary expense. Changes from period to period are typically driven by the number of our employees, as well as by merit increases provided to experienced personnel.

• Interest expense. Our interest expense relates to costs associated with our debt instruments and reflects both the amount of indebtedness and the interest rate that we are required to pay on our debt. Interest expense also includes unrealized gains or losses from interest rate hedges, if any, as well as expenses related to debt guarantees, if any.

• Income taxes. We make estimates of the amounts to recognize for income taxes in each tax jurisdiction in which we operate. In addition, provisions are established for withholding taxes related to the transfer of cash between jurisdictions and for uncertain tax positions taken.

• Other income (expense), net. This includes periodic pension expense as well as gains or losses on foreign currency, if any. Other immaterial amounts not associated with operating expenses may also be included here.

• Equity in net income of non-consolidated affiliate. We include in this line item our 50% share of net income or loss from our investment in Micro Bird, our unconsolidated Canadian joint venture.

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

This filing includes the following non-GAAP financial measures: “Adjusted EBITDA”, “Adjusted EBITDA Margin”, and “Free Cash Flow.” Management views these metrics as a useful way to look at the performance of our operations between periods and to exclude decisions on capital investment and financing that might otherwise impact the review of profitability of the business based on present market conditions.

Adjusted EBITDA is defined as net income prior to interest income, interest expense including the component of 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, depreciation and amortization including the component of 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, and disposals, as adjusted to add back certain charges that we may record each year,

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such as stock-compensation expense, as well as non-recurring 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. We believe these expenses and non-recurring charges are not considered an indicator of ongoing company 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 and Adjusted EBITDA margin are useful to investors in evaluating our performance because the measures consider the performance of our operations, excluding decisions made with respect to capital investment, financing, and other non-recurring charges as outlined in the preceding paragraph. We believe the non-GAAP metrics 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 and Adjusted EBITDA margin should not be considered as alternatives to net income 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 that Adjusted EBITDA and Adjusted EBITDA margin 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 and Adjusted EBITDA margin 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 and Adjusted EBITDA margin 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 and GAAP results, including providing a reconciliation to GAAP results, to enable investors to perform their own analysis of our operating results.

Our measure of “Free Cash Flow” is used in addition to and in conjunction with results presented in accordance with GAAP and free cash flow should not be relied upon to the exclusion of GAAP financial measures. Free cash flow reflects 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 minus cash paid for fixed assets and acquired intangible assets. We use free cash flow, and ratios based on the 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. In limited circumstances in which proceeds from sales of fixed or intangible assets exceed purchases, free cash flow would exceed cash flow from operations. However, since we do not anticipate being a net seller of fixed or intangible assets, we expect free cash flow to be less than operating cash flows.

Our Segments

We manage our business in two operating segments, which are also our reportable segments: (i) the Bus segment, which involves the design, engineering, manufacture and sales of school buses and extended warranties; and (ii) the Parts segment, which includes the sales of replacement bus parts. Financial information is reported on the basis that it is used internally by the chief operating decision maker (“CODM”) in evaluating segment performance and deciding how to allocate resources to segments. The President and Chief Executive Officer of the Company has been identified as the CODM. Management evaluates the segments based primarily upon revenues and gross profit.

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Consolidated Results of Operations for the Three Months Ended July 4, 2020 and June 29, 2019:

	Three Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019
Net sales	$	189,181		$	308,774
Cost of goods sold	168,099			266,992
Gross profit	$	21,082		$	41,782
Operating expenses
Selling, general and administrative expenses	17,793			20,996
Operating profit	$	3,289		$	20,786
Interest expense	(2,406		)	(3,369		)
Other income (expense), net	181			(410		)
Income before income taxes	$	1,091		$	17,007
Income tax expense	(765		)	(3,248		)
Equity in net income of non-consolidated affiliate	960			842
Net income	$	1,286		$	14,601
Other financial data:
Adjusted EBITDA	$	12,481		$	29,041
Adjusted EBITDA margin	6.6		%	9.4		%

The following provides the results of operations of Blue Bird’s two reportable segments:

(in thousands of dollars)	Three Months Ended
Net Sales by Segment	July 4, 2020		June 29, 2019
Bus	$	180,592	$	292,166
Parts	8,589		16,608
Total	$	189,181	$	308,774
Gross Profit by Segment
Bus	$	18,079	$	35,996
Parts	3,003		5,786
Total	$	21,082	$	41,782

Net sales. Net sales were $189.2 million for the third quarter of fiscal 2020, a decrease of $119.6 million, or 38.7%, compared to $308.8 million for the third quarter of fiscal 2019. The decrease in net sales is attributed to the COVID-19 pandemic which caused the unplanned and abrupt increase in remote learning arrangements as school districts remain unsure of how schooling will be administered in the fall of 2020 and beyond.

Bus sales decreased $111.6 million, or 38.2%, reflecting a decrease in units booked, which was partially offset by higher sales prices per unit. Bus volumes reflect the timing of orders. In the third quarter of fiscal 2020, 1,948 units were booked compared to 3,420 units booked for the same period in fiscal 2019. The decrease is mainly attributed to lower orders due to the uncertainties caused by the COVID-19 pandemic. The 8.5% increase in unit price for the third quarter of fiscal 2020 compared to the same period in fiscal 2019 mainly reflects pricing actions taken in fiscal 2019 to partially offset commodity costs, as well as product and customer mix changes.

Parts sales decreased $8.0 million, or 48.3%, for the third quarter of fiscal 2020 compared to the third quarter of fiscal 2019, as we had lower sales volume, mainly from lower school bus units in operation due to early school closures caused by the COVID-19 pandemic. Stay at home orders and school closures reduced bus repair and maintenance activities due to less bus use.

Cost of goods sold. Total cost of goods sold was $168.1 million for the third quarter of fiscal 2020, a decrease of $98.9 million, or 37.0%, compared to $267.0 million for the third quarter of fiscal 2019. As a percentage of net sales, total cost of goods sold increased from 86.5% to 88.9%.

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Bus segment cost of goods sold decreased $93.7 million, or 36.6%, for the third quarter of fiscal 2020 compared to the same period in fiscal 2019, which aligned with the decrease in sales volume noted above. The average cost of goods sold per unit for the third quarter of fiscal 2020 was 11.4% higher compared to the third quarter of fiscal 2019 due to increases in manufacturing costs from several COVID-19 related factors including absenteeism amongst our hourly workforce and supply disruptions, each of which created manufacturing inefficiencies and higher costs.

The $5.2 million, or 48.4%, decrease in parts segment cost of goods sold for the third quarter of fiscal 2020 compared to the third quarter of fiscal 2019 aligned with the decrease in sales volume noted above.

Operating profit. Operating profit was $3.3 million for the third quarter of fiscal 2020, a decrease of $17.5 million, compared to operating profit of $20.8 million for the third quarter of fiscal 2019. Profitability was negatively impacted by a decrease of $20.7 million in gross profit as outlined in the revenue and cost of goods sold discussion. This was partially offset by a decrease of $3.2 million in selling, general and administrative expenses as we have taken actions to control spending during the pandemic.

Interest expense. Interest expense was $2.4 million for the third quarter of fiscal 2020, a decrease of $1.0 million, or 28.6%, compared to $3.4 million for the third quarter of fiscal 2019. The decrease was primarily attributed to lower interest rates and a lower average borrowing level on the senior term debt.

Income taxes. We recorded income tax expense of $0.8 million for the third quarter of fiscal 2020, compared to income tax expense of $3.2 million for the same period in fiscal 2019.

The effective tax rate for the three-month period ended July 4, 2020 was 70.1%, which differed from the statutory federal income tax rate of 21%. The difference is mainly due to discrete period tax expense from prior year tax return adjustments and normal tax rate items, such as the benefit from federal and state tax credits (net of valuation allowance), which were partially offset by net non-deductible compensation expenses and other tax adjustments. The rate is also disproportionately impacted by the discrete items due to near break-even pretax book income.

The effective tax rate for the three-month period ended June 29, 2019 was 19.1%, which differed from the statutory federal tax rate of 21%. The difference is mainly due to normal tax rate benefit items, such as federal and state tax credits (net of valuation allowance), which were partially offset by non-deductible share-based compensation expenses and other tax adjustments.

Adjusted EBITDA. Adjusted EBITDA was $12.5 million, or 6.6% of net sales, for the third quarter of fiscal 2020, a decrease of $16.6 million, or 57.0%, compared to $29.0 million, or 9.4% of net sales, for the third quarter of fiscal 2019. The decrease in Adjusted EBITDA is primarily result of a decrease of $20.7 million in gross profit, mainly from lower sales volumes due to the COVID-19 pandemic as well as higher manufacturing costs. The decrease was partially offset by lower adjusted selling, general and administrative expenses.

The following table sets forth a reconciliation of net income to adjusted EBITDA for the periods presented:

	Three Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019
Net income	$	1,286		$	14,601
Adjustments:
Interest expense, net (1)	2,466			3,472
Income tax expense	765			3,248
Depreciation, amortization, and disposals (2)	3,861			2,750
Operational transformation initiatives	339			679
Share-based compensation	1,808			1,101
Product redesign initiatives	1,071			3,075
Restructuring charges	364			—
Costs directly attributed to the COVID-19 pandemic (3)	521			—
Other	—			115
Adjusted EBITDA	$	12,481		$	29,041
Adjusted EBITDA margin (percentage of net sales)	6.6		%	9.4		%

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(1) Includes $0.1 million for both fiscal periods, 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 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 costs incurred for third party cleaning services and personal protective equipment for our employees.

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Consolidated Results of Operations for the Nine Months Ended July 4, 2020 and June 29, 2019:

	Nine Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019
Net sales	$	597,810		$	675,342
Cost of goods sold	531,259			588,496
Gross profit	$	66,551		$	86,846
Operating expenses
Selling, general and administrative expenses	58,146			61,197
Operating profit	$	8,405		$	25,649
Interest expense	(9,961		)	(10,241		)
Interest income	27			9
Other income (expense), net	555			(1,034		)
(Loss) income before income taxes	$	(974	)	$	14,383
Income tax benefit (expense)	378			(2,833		)
Equity in net income of non-consolidated affiliate	840			1,158
Net income	$	244		$	12,708
Other financial data:
Adjusted EBITDA	$	32,778		$	48,459
Adjusted EBITDA margin	5.5		%	7.2		%

The following provides the results of operations of Blue Bird’s two reportable segments:

(in thousands of dollars)	Nine Months Ended
Net Sales by Segment	July 4, 2020		June 29, 2019
Bus	$	554,061	$	626,441
Parts	43,749		48,901
Total	$	597,810	$	675,342
Gross Profit by Segment
Bus	$	50,884	$	69,653
Parts	15,667		17,193
Total	$	66,551	$	86,846

Net sales. Net sales were $597.8 million for the nine months ended July 4, 2020, a decrease of $77.5 million, or 11.5%, compared to $675.3 million for the nine months ended June 29, 2019. The decrease in net sales is attributed to the COVID-19 pandemic during our second and third fiscal quarters which caused an unplanned and abrupt increase in remote learning arrangements as school districts remain unsure of how schooling will be administered in the fall of 2020 and beyond.

Bus sales decreased $72.4 million, or 11.6%, reflecting a decrease in units booked and higher sales prices per unit. In the nine months ended July 4, 2020, 6,002 units were booked compared to 7,291 units booked for the same period in fiscal 2019. The decrease is mainly attributed to lower orders due to the uncertainties caused by the COVID-19 pandemic. The average net sales price per unit for the nine months ended July 4, 2020 was 7.4% higher than the price per unit for the nine months ended June 29, 2019. The increase in unit price mainly reflects pricing actions taken in fiscal 2019 to partially offset commodity costs, as well as product and customer mix changes.

Parts sales decreased $5.2 million, or 10.5%, for the nine months ended July 4, 2020 compared to the nine months ended June 29, 2019, as we had lower sales volume, mainly from lower school bus units in operation due to early school closures caused by the COVID-19 pandemic. Stay at home orders and school closures reduced bus repair and maintenance activities due to less bus use.

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Cost of goods sold. Total cost of goods sold was $531.3 million for the nine months ended July 4, 2020, a decrease of $57.2 million, or 9.7%, compared to $588.5 million for the nine months ended June 29, 2019. As a percentage of net sales, total cost of goods sold increased from 87.1% to 88.9%.

Bus segment cost of goods sold decreased $53.6 million, or 9.6%, for the nine months ended July 4, 2020 compared to the nine months ended June 29, 2019. The average cost of goods sold per unit for the nine months ended July 4, 2020 was 9.8% higher compared to the nine months ended June 29, 2019 due to increases in manufacturing costs in our third fiscal quarter from several COVID-19 related factors including absenteeism amongst our hourly workforce and supply disruptions, each of which created manufacturing inefficiencies and higher costs.

The $3.6 million, or 11.4%, decrease in parts segment cost of goods sold for the nine months ended July 4, 2020 compared to the nine months ended June 29, 2019 aligns with the decrease in sales volume noted above.

Operating profit. Operating profit was $8.4 million for the nine months ended July 4, 2020, a decrease of $17.2 million compared to an operating profit of $25.6 million for the nine months ended June 29, 2019. Profitability was negatively impacted by a decrease of $20.3 million in gross profit, which was partially offset by a decrease of $3.1 million in selling, general and administrative expenses as we have taken actions to control spending during the pandemic.

Interest expense. Interest expense was $10.0 million for the nine months ended July 4, 2020, a decrease of $0.3 million, or 2.7%, compared to $10.2 million for the nine months ended June 29, 2019. Lower interest expense from lower borrowing rates in the nine months ended July 4, 2020 compared to the prior period were offset by the impact of an increase of $1.9 million in mark to market charges due to changes in the fair value of our interest rate hedge.

Income taxes. Income tax benefit was $0.4 million for the nine months ended July 4, 2020, compared to income tax expense of $2.8 million for the same period in fiscal 2019.

The effective tax rate for the nine-month period ended July 4, 2020 was 38.8%, which differed from the 2019 statutory federal income tax rate of 21%. The difference is mainly due to a net discrete period tax benefit from share-based compensation expenses, but also due to normal tax rate items, such as the benefit from federal and state tax credits (net of valuation allowance), which were partially offset by net non-deductible compensation expenses and other tax adjustments. The rate is also disproportionately impacted by the discrete items due to near break-even pretax book income.

The effective tax rate for the nine-month period ended June 29, 2019 was 19.7% and differed from the transitional 2018 statutory federal income tax rate of 21%. The difference is mainly due to normal tax rate benefit items, primarily federal and state tax credits (net of valuation allowance), which were partially offset by non-deductible share-based compensation expenses and other tax adjustments.

Adjusted EBITDA. Adjusted EBITDA was $32.8 million or 5.5% of net sales for the nine months ended July 4, 2020, a decrease of $15.7 million, or 32.4%, compared to $48.5 million or 7.2% of net sales for the nine months ended June 29, 2019. The decrease in Adjusted EBITDA is primarily the result of a decrease of $20.3 million in gross profit, mainly from lower sales volumes due the COVID-19 pandemic as well as higher manufacturing costs. The decrease was partially offset by lower adjusted selling, general and administrative expenses.

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The following table sets forth a reconciliation of net income to adjusted EBITDA for the periods presented:

	Nine Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019
Net income	$	244		$	12,708
Adjustments:
Interest expense, net (1)	10,213			10,542
Income tax (benefit) expense	(378		)	2,833
Depreciation, amortization, and disposals (2)	11,215			7,990
Operational transformation initiatives	3,218			4,193
Foreign currency hedges	—			109
Share-based compensation	4,105			3,146
Product redesign initiatives	3,163			6,876
Restructuring charges	364			—
Costs directly attributed to the COVID-19 pandemic (3)	628			—
Other	6			62
Adjusted EBITDA	$	32,778		$	48,459
Adjusted EBITDA margin (percentage of net sales)	5.5		%	7.2		%

(1) Includes $0.3 million for both fiscal periods 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 $0.5 million for both 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 costs incurred for third party cleaning services and personal protective equipment for our employees.

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Liquidity and Capital Resources

The Company’s primary sources of liquidity are cash generated from its operations, available cash and cash equivalents and borrowings under its credit facility. At July 4, 2020, the Company had $12.5 million of available cash (net of outstanding checks) and $90.0 million of additional borrowings available under the revolving line of credit portion of its secured credit facility. The Company’s revolving line of credit is available for working capital requirements, capital expenditures and other general corporate purposes.

On May 7, 2020, the Company entered into a Second Amendment which amended the Credit Agreement, dated as of December 12, 2016 (the “Credit Agreement”, as amended by that certain First Amendment to Credit Agreement, dated as of September 13, 2018 (the “First Amendment”), and as further amended by the Second Amendment, the “Amended Credit Agreement”). The Second Amendment provided $41.9 million in additional revolving commitments bringing the total revolving commitments to $141.9 million. The revolving commitments under the Amended Credit Agreement will mature on September 13, 2023, which is the fifth anniversary of the effective date of the First Amendment. The interest rate pricing grid remained unchanged, but the LIBOR floor was amended from 0% to 0.75%.

Detailed descriptions of the Company’s original Credit Agreement dated December 12, 2016 and its Amended Credit Agreement dated September 13, 2018 are set forth under “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 28, 2019, filed with the Securities and Exchange Commission on December 12, 2019.

At July 4, 2020, the Borrower (as defined, Blue Bird Body Company, a subsidiary of the Company) and the guarantors under the Amended Credit Agreement were in compliance with all covenants.

Short-Term and Long-Term Liquidity Requirements

Our ability to make principal and interest payments on borrowings under our credit facilities and our ability to fund planned capital expenditures will depend on our ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, regulatory and other conditions.

During our third quarter of fiscal 2020, the novel coronavirus known as "COVID-19" continued to spread throughout the world, perpetuating a global pandemic. The pandemic materially impacted our third quarter of fiscal 2020 results causing lower customer orders for both buses and parts, supply disruptions, higher rates of absenteeism among our hourly production workforce, and a temporary shutdown of manufacturing. The continuing development and fluidity of the pandemic precludes any prediction as to the ultimate severity of the adverse impacts on our business, financial condition, results of operations, and liquidity. A prolonged economic downturn resulting from the continuing pandemic would likely have a material adverse impact on our financial results. See PART II, Item 1A. Risk Factors, of this Quarterly Report for a discussion of the material risks we believe we face particularly related to the COVID-19 pandemic.

The pandemic could cause a severe contraction in our profits and/or liquidity which could lead to issues complying with our Credit Facility covenants. Our primary financial covenant is our Total Net Leverage Ratio. Our Total Net Leverage Ratio is defined as the ratio of (a) consolidated net debt to (b) consolidated EBITDA, which includes certain add-backs that are not reflected in the definition of Adjusted EBITDA appearing in the Company’s periodic filings on Form 10-K or Form 10-Q, at the end of each fiscal quarter for the consecutive four fiscal quarter period most recently then ending. We may need to seek amendment for covenant relief or even refinance the debt to a "covenant lite" or "no covenant" structure. We cannot assure our investors that we would be successful in amending or refinancing the existing debt. An amendment or refinancing of our existing debt could lead to higher interest rates and possible up front expenses not included in our historical financial statements.

On March 27, 2020 the President of the United States signed the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") into law. The CARES Act, among other things, includes provisions related to the deferment of employer-side social security payments (the Employer Payroll Tax Payment Deferral Provision). We have elected to defer these payments that would otherwise be due and payable through December 31, 2020. A 50% minimum payment of the deferred amount is due on December 31, 2021 with the remainder due by December 31, 2022. We estimate between $4.0 and $6.0 million in payments could be delayed. We also have and expect to defer contributions to our defined benefit pension plan of approximately $3.2 million for fiscal 2020. The delayed contribution payments are due on January 1, 2021.

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Seasonality

Historically, our business has been highly seasonal with school districts buying their new schools buses so that they will be available for use on the first day of the school year, typically in mid-August to early September. This has resulted in our third and fourth fiscal quarters becoming our two busiest quarters, the latter ending on the Saturday closest to September 30. Our quarterly results of operations, cash flows, and liquidity have been and are likely to be impacted by the seasonal patterns. Working capital has historically been a significant use of cash during the first fiscal quarter and a significant source of cash generation in the fourth fiscal quarter with planned shutdowns during our first fiscal quarter. With the COVID-19 pandemic impact on school systems and the uncertainty surrounding in-person schooling schedules and duration, seasonality and working capital trends have become unpredictable. Seasonality and variations from historical seasonality have impacted the comparison of working capital and liquidity results between fiscal periods.

Cash Flows

The following table sets forth general information derived from our Condensed Consolidated Statements of Cash Flows:

	Nine Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019
Cash and cash equivalents at beginning of period	$	70,959		$	60,260
Total cash used in operating activities	(78,305		)	(19,113		)
Total cash used in investing activities	(16,574		)	(30,154		)
Total cash provided by financing activities	36,458			18,082
Change in cash and cash equivalents	$	(58,421	)	$	(31,185	)
Cash and cash equivalents at end of period	$	12,538		$	29,075

Total cash used in operating activities

Cash flows used in operating activities totaled $78.3 million for the nine months ended July 4, 2020, as compared to $19.1 million of cash flows used in operating activities for the nine months ended June 29, 2019. The $59.2 million increase in cash used was primarily attributed to a $12.5 million reduction in net income and a negative $50.3 million difference (use of cash) in the impacts of changes in accrued expenses and working capital period over period. The changes were partially offset by increased non-cash components of net income in the nine months ended July 4, 2020 compared to the prior period.

Total cash used in investing activities

Cash flows used in investing activities totaled $16.6 million for the nine months ended July 4, 2020, as compared to $30.2 million of cash flows used in investing activities for the nine months ended June 29, 2019. The $13.6 million decrease was due to a reduction of spending on manufacturing assets as the new paint facility was completed in fiscal 2019, and the delay of certain projects due to the COVID-19 pandemic.

Total cash provided by financing activities

Cash flows provided by financing activities totaled $36.5 million for the nine months ended July 4, 2020, as compared to $18.1 million of cash flows provided by financing activities for the nine months ended June 29, 2019. The $18.4 million increase was primarily attributed to a $20.0 million increase in borrowings under the revolving credit facility and a $2.7 million increase in cash proceeds from warrant exercises. The increases were partially offset by $0.9 million in fees paid for the Second Amendment to the Credit Agreement, $0.9 million in finance lease payments, as well as an increase of $2.9 million in cash paid for employee taxes on vested restricted shares and stock option exercises.

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Free cash flow

Management believes the non-GAAP measurement of free cash flow, defined as net cash used in operating activities less cash paid for fixed assets, fairly represents the Company’s ability to generate surplus cash that could fund activities not in the ordinary course of business. See “Key Non-GAAP Measures We Use to Evaluate Our Performance”. The following table sets forth the calculation of free cash flow for the periods presented:

	Nine Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019
Net cash used in operating activities	$	(78,305	)	$	(19,113	)
Cash paid for fixed assets	(16,724		)	(30,154		)
Free cash flow	$	(95,029	)	$	(49,267	)

Free cash flow for the nine months ended July 4, 2020 was $45.8 million lower than the nine months ended June 29, 2019, primarily due to a $59.2 million increase in cash used in operating activities, partially offset by a decrease of $13.4 million in cash paid for fixed assets.

Off-Balance Sheet Arrangements

We had outstanding letters of credit totaling $6.9 million at July 4, 2020, the majority of which secure our self-insured workers compensation program, the collateral for which is regulated by the State of Georgia.

We had a $3.0 million guarantee outstanding at July 4, 2020 which relates to a guarantee of indebtedness for a term loan with a remaining maturity up to 2.5 years. The $3.0 million represents the estimated maximum amount we would be required to pay upon default of all guaranteed indebtedness, and we believe the likelihood of required performance to be remote.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have not been any material changes to our interest rate risks, commodity risks or currency risks previously disclosed in Part II, Item 7A of the Company’s 2019 Form 10-K.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company maintains a system of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) that are designed to provide reasonable assurance that information required to be disclosed in its reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including, as appropriate, the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Based on their evaluations, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of July 4, 2020.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the fiscal quarter ended July 4, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Items required under Part II not specifically shown below are not applicable.

Item 1. Legal Proceedings.

Blue Bird is engaged in legal proceedings in the ordinary course of its business. Although no assurances can be given about the final outcome of pending legal proceedings, at the present time management does not believe that the resolution or outcome of any of Blue Bird’s pending legal proceedings will have a material adverse effect on its financial condition, liquidity or results of operations.

Item 1A. Risk Factors.

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors discussed in Part I, Item 1A of the Company's 2019 Form 10-K. Such risk factors are expressly incorporated herein by reference, and could materially adversely affect our business, financial condition, cash flows or future results. The risks described in the 2019 Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, cash flows and/or operating results.

The risk factor below is an update to our 2019 Form 10-K.

The current COVID-19 pandemic has had, and other public health crises, epidemics or pandemics could have, a material adverse effect on our business, results of operations, financial condition, and cash flows, particularly resulting from supply chain disruptions, reductions in demand for our products, disruptions or other developments negatively impacting our workforce or workplace conditions, and/or reduced access to capital markets and reductions in liquidity.

During our second fiscal quarter of 2020, the novel coronavirus known as "COVID-19" spread throughout the world creating a global pandemic and continued to spread in our third quarter of fiscal 2020. The pandemic has, among other impacts:

• triggered a significant downturn in capital markets;

• caused significant disruptions in global supply chains;

• significantly altered global consumer demand;

• halted global manufacturing operations resulting from plant shut-downs; and

• changed global workplace conditions resulting from "shelter-in-place" orders and "work from home" employer policies.

The pandemic materially impacted our third quarter of fiscal 2020 results causing lower customer orders for both buses and bus parts, supply disruptions, and absenteeism among our hourly production workforce. The continuing development and fluidity of the pandemic precludes any prediction as to the ultimate severity of the adverse impacts on our business, financial condition, results of operations, or liquidity, but we have already experienced reduced orders and enacted a manufacturing plant shut-down for the first two weeks of our third quarter in fiscal 2020. A prolonged economic downturn resulting from the continuing pandemic would likely have a material adverse impact on our business, financial condition, results of operations, and liquidity. At the present time, we consider the following areas to be the most significant material risks to our business resulting from the current pandemic:

Supply Chain Disruptions

We rely on specialist suppliers, some of which are single-source suppliers, for critical components (including but not limited to engines, transmissions and axles) and replacement of any of these components with like parts from another supplier normally requires engineering and testing resources, which entail costs and take time. We also currently rely on a limited number of single-source suppliers and/or have limited alternatives for important bus parts such as diesel engines and emission components, propane and gasoline engines including powertrains, control modules, steering systems, seats, specialty resins, and other key components. In addition to protecting our employees' health, our plant shut-down was partially due to the potential for an inability to obtain critical components from our suppliers due to COVID-19. Future delays or interruptions in the supply chain due to the COVID-19 pandemic expose us to the following risks which would likely significantly increase our costs and/or impact our ability to meet customer demand:

• we or our third-party suppliers may lose access to critical services and components, resulting in an interruption in the manufacture, assembly, and delivery or shipment of our products;

• we or our third-party suppliers may not be able to respond to unanticipated changes in customer orders;

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• we or our suppliers may have excess or inadequate inventory of materials and components;

• we or our third-party suppliers may be subject to price fluctuations due to the pandemic and a lack of long-term supply arrangements for key components;

• we may experience delays in delivery by our third-party suppliers due to changes in demand from us or their other customers;

• fluctuations in demand for products that our third-party suppliers manufacture for others may affect their ability or willingness to deliver components to us in a timely manner;

• we may not be able to find new or alternative components or reconfigure our products and manufacturing processes in a timely manner if the necessary components become unavailable; and

• our third-party suppliers may encounter financial hardships unrelated to our demand, which could inhibit their ability to fulfill our orders and meet our requirements.

Reductions in demand for buses and bus parts

The school bus market is predominantly driven by long-term trends in the level of spending by states, municipalities, and independent contractors. Demand for school buses is further influenced by overall acquisition priorities of municipalities, availability of school bus financing, student population changes, school district busing policies, price and other competitive factors, fuel prices and environmental regulations. In response to the pandemic, many school systems in North America canceled in-person schooling for the remainder of the 2019-2020 school year. The cancellations disrupted the seasonal order pattern for school buses. There remains uncertainty as to when traditional in-person schooling will resume, but we do know that many school systems have already declared that they will not hold in person classes for the fall of 2020. Uncertainty in the form of learning (e.g. a reduction of in-person to more remote arrangements) may lead to a reduction in bus orders until a degree of normalcy returns to the manner in which K-12 education is provided. Anticipated delays in the start of the 2020-2021 school year will likely impact at least the near-term demand for our buses. Reductions in bus orders would negatively impact revenues in our Bus segment. A reduction in bus usage will likely reduce the demand for maintenance and replacement parts, which would negatively impact revenues in our Parts segment.

Disruptions or other developments negatively impacting our workforce or workplace conditions

Almost all U.S. states, including Georgia where our headquarters and manufacturing facilities are located, have issued “shelter-in-place” orders, quarantines, executive orders and similar government orders, restrictions and recommendations for their residents to control the spread of COVID-19. Many of these orders have been and may continue to be re-issued at or after their expiration, and future orders may introduce broader restrictions. Such orders, restrictions and recommendations, and the perception that additional orders, restrictions or recommendations could occur, have resulted in widespread closures of businesses not deemed “essential,” work stoppages, interruptions, slowdowns and delays, work-from-home policies and travel restrictions. While our business has been deemed essential by the State of Georgia, we have employed remote work policies when and where possible to be responsive to the health risks that may impact our employees. Given the nature of our business, we do not have the ability to manufacture a bus without our on-site manufacturing personnel. While we have not experienced any pervasive COVID-19 illnesses to date, if we were to experience some form of outbreak within our facilities, we would take all appropriate measures to protect the health and safety of our employees, which could include a temporary halt in production. Any extended production halt or diminution in production capacity would likely have a negative impact on our ability to fulfill orders and thus negatively impact our revenues.

Reduced profitability and liquidity, resulting in possible restructuring of our credit facilities, and/or inadequate access to credit and capital markets

The COVID-19 pandemic has materially adversely impacted global commercial activity and has contributed to significant volatility in financial markets. The pandemic continues to have a materially adverse impact on economic and market conditions, and may result in an extended period of global economic slowdown and significant disruptions in global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.

The continuing pandemic could cause a more severe contraction in our profits and/or liquidity which could lead to issues complying with the financial covenants in our credit facility. Our primary financial covenant is our Total Net Leverage Ratio. Our Total Net Leverage Ratio is defined as the ratio of (a) consolidated net debt to (b) consolidated EBITDA, which includes certain add-backs that are not reflected in the definition of Adjusted EBITDA appearing in the Company’s periodic filings on Form 10-K or Form 10-Q, at the end of each fiscal quarter for the consecutive four fiscal quarter period most recently then ending. We may need to seek amendment for covenant relief or even refinance the debt to a "covenant light" or "no covenant" structure. We cannot assure our investors that we would be successful in amending or refinancing our existing debt. An amendment or refinancing of our existing debt could lead to higher interest rates and possible up front expenses not included in our historical financial statements.

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Item 6. Exhibits.

The following Exhibits are filed with this Report:

Exhibit No.    Description                                                

3.1 The registrant’s Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K, filed by the registrant with the SEC on February 26, 2015).

3.2 Bylaws of Blue Bird Corporation (incorporated by reference to the Company’s Form S-1, filed with the SEC on December 20, 2013).

10.1* Retirement Agreement, dated as of May 30, 2020, between Blue Bird Corporation and Phillip Tighe.

10.2* Consulting Agreement, dated as of May 30, 2020, between Blue Bird Corporation and Phillip Tighe.

10.3* Offer Letter, dated as of April 28, 2020, between Blue Bird Corporation and Jeffery L. Taylor.

10.4* Severance Agreement, dated as of May 1, 2020, between Blue Bird Corporation and Jeffery L. Taylor.

10.5 Second Amendment to Credit Agreement, dated as of May 7, 2020 by and among the Company, School Bus Holdings, Inc. and certain of its subsidiaries, including Blue Bird Body Company as the borrower, Bank of Montreal, as Administrative Agent and certain other financial institutions party thereto (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed by the Company on May 8, 2020).

31.1* Chief Executive Officer’s Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.

31.2* Chief Financial Officer’s Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.

32.1* Chief Executive Officer and Chief Financial Officer joint Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*^ XBRL Instance Document

101.SCH*^ XBRL Taxonomy Extension Schema Document

101.CAL*^ XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*^ XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*^ XBRL Taxonomy Extension Label Linkbase Document

101.PRE*^ XBRL Taxonomy Extension Presentation Linkbase Document

104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

†† Management contract or compensatory plan or arrangement.

^ In accordance with Regulation S-T, XBRL (Extensible Business Reporting Language) related information in Exhibit No. 101 to this Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Blue Bird Corporation
Dated:	August 13, 2020	/s/ Philip Horlock
		Philip Horlock
		Chief Executive Officer
Dated:	August 13, 2020	/s/ Jeffery Taylor
		Jeffery Taylor
		Chief Financial Officer

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EX-10.1

Exhibit 10.1

RETIREMENT AGREEMENT

This Retirement Agreement (“Agreement”), dated as of May 30, 2020, sets forth the mutual agreement of Blue Bird Corporation, a Delaware corporation (the “Company”), and Phillip Tighe (“Executive”) regarding Executive’s retirement from the Company.

1.Executive’s Retirement; Consultancy. Executive agrees to retire from and terminate his employment with the Company under the terms and conditions described in this Agreement. Executive’s termination of employment with the Company will be deemed a voluntary retirement by Executive, and treated as such by the Company.

a.Retirement. Executive’s retirement will be effective and his employment with the Company and any related entity(ies) will terminate on June 30, 2020 (the “Termination Date”).

b.Chief Financial Officer Transition. Executive will continue to serve as the Company’s Chief Financial Officer until May 31, 2020, or if later, until a successor Chief Financial Officer is appointed by the Company and assumes such role (the “Transition Date”). During the period from the Transition Date through the Termination Date, Executive will support the transition to the new Chief Financial Officer and perform such other duties as are assigned to him by the Company’s Chief Executive Officer.

c.Consultancy. The Company and Executive will enter into a Consulting Agreement, substantially in the form attached hereto as Exhibit A, to be effective immediately following the Termination Date.

2.Base Salary and Benefits Through the Termination Date. Except as otherwise provided in this Agreement, Executive will continue to receive base salary and will continue to be eligible to participate in and to be entitled to all other compensation and benefits under the Company’s plans, programs, agreements and policies applicable to him as a Company employee, through the Termination Date, consistent with the Company’s payroll and benefits practices and procedures.

3.Annual Bonus. If Executive signs this Agreement and does not revoke it during the Revocation Period (defined in paragraph 16), and except as otherwise provided in paragraph 5, Executive will be eligible to participate in the Company’s Annual Management Incentive Plan (“MIP”) to the extent described in this paragraph 3.

a.Fiscal Year 2020 Annual Bonus. For the Company’s fiscal year ending in 2020, Executive will be eligible for a bonus under the MIP based on his current target bonus amount (i.e., 100% of his annual base salary) under the MIP, adjusted for the MIP payment percentage approved by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) for the levels of the Company’s achievement of financial performance targets for such fiscal year and Executive’s individual performance, determined as if his employment had continued through the end of the fiscal year for purposes of the MIP. Notwithstanding the foregoing, if and to the extent that the Compensation Committee modifies the terms applicable to annual bonus awards under the MIP for the fiscal year ending in 2020, or replaces the MIP terms with an alternative arrangement(s) for some or all participants for such 2020 annual bonuses, this paragraph 3 will be subject to such modified MIP terms or to the terms of such alternative arrangement(s), as applicable to Executive, in determining the amount of Executive’s annual bonus, if any, for the fiscal year ending in 2020. An annual bonus determined in accordance with this paragraph 3 would be paid to Executive in cash at the same time as payouts pursuant to the MIP (or payouts pursuant to an alternative arrangement, if applicable) are made to other MIP (or other arrangement) executive participants for fiscal year 2020. For the avoidance of doubt, Executive will be eligible for a bonus payment with respect to the Company’s fiscal year ending in 2020 only if the Compensation Committee approves payouts pursuant to the MIP for the fiscal year based on Company performance (or approves a payout amount pursuant to an alternate arrangement as described in this paragraph 3, if applicable).

b.Section 409A. Annual bonus payment amounts described in this paragraph 3, if any, shall be administered consistent with the requirements for the short-term deferral exception under Section 409A of the Internal Revenue Code of 1986, as amended, and regulations thereunder (“Section 409A”), as described in Treas. Reg. Section 1.409A-1(b)(4) and, accordingly, shall be paid no later than March 15, 2021.

4.Long Term Incentive Plan. If Executive signs this Agreement and does not revoke it during the Revocation Period (defined in paragraph 16), and except as otherwise provided in paragraph 5, effective upon the Termination Date vesting of all of Executive’s awards under the Amended and Restated 2015 Omnibus Equity Incentive Plan (the “LTIP”) that are otherwise unvested at the Termination Date will be accelerated, and all such awards will be immediately fully vested, as follows:

Exhibit 10.1

a.Stock Options. All such unvested stock options will be fully and freely exercisable beginning on the Termination Date, subject to the applicable terms and conditions described in the LTIP and related award documents, and will remain exercisable for five years after Executive’s Termination Date; provided that, in no event may any such stock options be exercised later than the end of the maximum (10-year) term of the options described in the LTIP.

b.Restricted Stock Units, etc. All such unvested restricted stock units or other awards to Executive under the LTIP (other than stock options) will, upon such accelerated vesting on Executive’s Termination Date, be paid to Executive, in cash or shares of Company common stock under the terms of the LTIP or related award documents, as soon as practicable following the Termination Date.

c.Section 409A. Stock options under the LTIP described in this paragraph 4 shall be administered consistent with the requirements for the Section 409A exception applicable to certain stock rights, as described in Treas. Reg. Section 1.409A-1(b)(5). Restricted Stock Units described in this paragraph 4 shall be administered consistent with the requirements for the short-term deferral exception under Section 409A described in Treas. Reg. Section 1.409A-1(b)(4) and, accordingly, shall be paid no later than March 15, 2021.

5.Continued Employment; Early Termination of Executive’s Employment; Forfeiture of Retirement Incentives. During the period of Executive’s continued employment through the Termination Date, Executive will act in good faith and in a professional manner.

a.Termination for Violation of Terms; Voluntary Termination by Executive; Forfeiture of Benefits. If the Compensation Committee determines, in good faith, that Executive has materially violated any of the terms of this Agreement, the provisions of any employment or similar agreement, confidentiality, noncompetition and/or nonsolicitation or similar agreement regarding restrictive covenants, or other agreement with the Company, or a Company code of conduct or other Company written policy generally applicable to employees of Executive’s level and position, while a Company employee, the Company may terminate Executive’s employment after giving Executive written notice, a reasonable opportunity to cure, and Executive has failed to cure, and in such event the date of such termination will be Executive’s Termination Date for purposes of this Agreement. If Executive voluntarily resigns before the Termination Date described in paragraph 1, his Termination Date for purposes of this Agreement will be the effective date of such resignation. Upon any early Termination Date described in this paragraph 5.a., Executive (i) will not be eligible to receive any additional amounts described in this Agreement, including without limitation any further base salary amounts under paragraph 2 of this Agreement and annual bonus payment amounts under paragraph 3, and (ii) will forfeit any further rights or entitlements to accelerated vesting of LTIP awards under paragraph 4 of this Agreement, including without limitation any right to exercise stock options and any entitlement to a distribution with respect to restricted stock units described in paragraph 4, all such amounts and entitlements to be forfeited immediately upon such early Termination Date. Executive’s rights, if any, to any benefit under the Company’s health and welfare or retirement plans, or to any equity grants, will be governed by the applicable plan, program, policy or equity agreement.

b.Other Early Termination by Company; Executive’s Death or Disability; Acceleration of Retirement Incentives. If Executive’s employment is terminated by the Company before the Termination Date described in paragraph 1, for any reason other than a termination in connection with a violation by Executive of the terms of any agreement with the Company as described in paragraph 5.a., or if Executive’s employment is terminated before the Termination Date described in paragraph 1 upon Executive’s death or disability, the date of such employment termination will be Executive’s Termination Date for purposes of this Agreement. Upon any such early termination under this paragraph 5.b., (i) Executive (or his estate, in the event of Executive’s death) will be entitled to a lump-sum cash payment equal to the amount of his base salary that would have been paid to him pursuant to paragraph 2 had Executive’s employment not been terminated early, and (ii) Executive will be entitled to accelerated vesting of all of Executive’s unvested awards under the LTIP, and related treatment, as described in paragraph 4, as of the early Termination Date. The cash payment described in clause (i) of this paragraph 5.b. will be paid within 60 days after the early Termination Date described in this paragraph 5.b., and the accelerated vesting and related treatment of Executive’s unvested LTIP awards will be effective immediately on such early Termination Date.

6.Complete Release.

a.Release. Executive hereby fully releases the Company and all of its owners, partners, shareholders, predecessors, successors, assigns, agents, directors, officers, employees, representatives, attorneys, subsidiaries, joint ventures, and affiliates (and agents, directors, officers, employees, representatives, and attorneys of such subsidiaries and affiliates) (collectively, “Released Parties”), from any and all known or unknown claims or demands he may have against any of them. Executive expressly waives any and all claims, whether asserted on an individual or class action

Exhibit 10.1

basis, against the Released Parties including but not limited to all claims arising out of any contract, express or implied, and whether executory or not, any covenant of good faith and fair dealing, express or implied, any tort (whether intentional or negligent, including claims arising out of the negligence or gross negligence by the Released Parties and claims of express or implied defamation by the Released Parties), and any federal, state, or other governmental statute, regulation, or ordinance, including, without limitation, those relating to qui tam, employment discrimination, termination of employment, payment of wages or provision of benefits, Title VII of the Civil Rights Act of 1964 as amended, the Civil Rights Act of 1991, the Americans with Disabilities Act, the Genetic Information Nondiscrimination Act, the Employee Retirement Income Security Act, the Family and Medical Leave Act, the Fair Labor Standards Act, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act (“OWBPA”), the Uniformed Services Employment and Reemployment Rights Act (“USERRA”), the Worker Adjustment and Retraining Notification (“WARN”) Act, the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), and the Occupational Safety and Health Act (“OSHA”). Executive further releases any and all claims that he may have under State law and any other claim under Federal law. Executive represents that he has not assigned to any other person any of such claims and that he has the full right to grant this release. Notwithstanding any other provision herein, the Company and Executive agree that Executive is not waiving any claims that may arise in the future under the Age Discrimination in Employment Act.

This release does not include and will not preclude: (a) claims by Executive for benefits under the Company’s retirement, deferred compensation or health and welfare benefit plans; (b) rights to defense, indemnification and contribution, if any, from the Company for actions taken by Executive in the course and scope of his employment with the Company and its parents, subsidiaries and/or affiliates; and/or (c) rights arising under or to enforce the terms of this Agreement.

b.Final Release. On or about the Termination Date, the Company will provide to Executive a release agreement having substantially the same terms and scope as the release terms described in this Agreement. Such final release will also have a consideration period of at least 21 days, and a revocation period of at least seven days after such final release is signed by Executive. If Executive signs and does not revoke the final release during its revocation period, the final release will constitute an “Effective Final Release,” and the Company will provide Executive with the treatment, payments and benefits described in this Agreement, subject to the other terms and conditions described in this Agreement.

7.Release of Unknown Claims. For the purpose of implementing a full and complete release, Executive expressly acknowledges that the release that he gives in this Agreement is intended to include in its effect, without limitation, claims that he did not know or suspect to exist in his favor at the time of the effective date of this Agreement, regardless of whether knowledge of such claims, or the facts upon which they might be based, would materially have affected the settlement of this matter, and that the consideration given under the Agreement was also for the release of those claims and contemplates the extinguishment of any such unknown claims.

8.No Severance Pay or Benefits. Executive agrees and acknowledges that, except as expressly set forth in this Agreement, Executive is not entitled to receive from the Company any payments or benefits including but not limited to severance pay or benefits in any form, or any perquisites or property of any type, after the Termination Date (other than payments in accordance with Executive’s rights, if any, to benefits under the Company’s health and welfare or retirement plans and similar arrangements). Executive expressly waives any and all rights to severance pay, benefits or similar amounts or entitlements, under the terms of any Company plan or program, or pursuant to the terms of any understanding or agreement between the parties set forth in any employment, severance or similar agreement, offer letter, term sheet or otherwise, including but not limited to the Severance Agreement, dated as of May 10, 2012, between the parties to this Agreement.

9.Section 409A Compliance. Payments and benefits payable pursuant to this Agreement are intended either to be exempt from Section 409A, e.g., as payments that would fall within the “short‐term deferral period” within the meaning of Treasury Regulation Section 1.409A‐1(b)(4), to the extent available, or to comply with the provisions of Section 409A. This Agreement shall be interpreted to avoid any penalty or sanctions under Section 409A. Accordingly, all provisions herein, or incorporated by reference, shall be construed and interpreted to the maximum extent permitted to be exempt from or compliant with Section 409A and, if necessary, any such provision shall be deemed amended to comply with Section 409A and regulations thereunder. In connection therewith:

a.It is intended that each installment of the payments and benefits hereunder shall be treated as a separate “payment” for purposes of Section 409A.

b.To the extent that payments and benefits under this Agreement are deferred compensation subject to Section 409A and are contingent upon Executive’s taking any employment‐related action, including without limitation execution (and non‐revocation) of another agreement, such as a release agreement, and the period within which such

Exhibit 10.1

action(s) may be taken by Executive would begin in one calendar year and expire in the following calendar year, then such amounts or benefits shall be paid in such following calendar year.

c.If as of the Termination Date, Executive is a “specified employee” (within the meaning of Section 409A(a)(2)(B) or any successor provision thereto), then with regard to any payment or provision of benefit that is subject to Section 409A as deferred compensation and is due upon or as a result of Executive’s “separation from service,” notwithstanding any contrary provision under this Agreement, such payment or benefit shall not be made or provided, to the extent making or providing such payment or benefit would result in additional taxes or interest under Section 409A, until the date with is the earlier of (A) expiration of the six‐month period measured from such “separation from service,” and (B) the date of Executive’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this section (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to Executive in a lump‐sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them in this Agreement.

d.While this Agreement is intended to be exempt from or compliant with Section 409A, the Company neither makes nor has made any representation, warranty or guarantee of any federal, state or local tax consequences of Executive’s entitlements under this Agreement, including, but not limited to, under Section 409A.

10.Compensation Paid. Executive represents, warrants, and agrees that all forms of compensation and other monies, including paychecks, paid to Executive by the Company to date have been accurately calculated, have represented the proper amounts due to Executive, and have been based on the Company’s merit‐based compensation system. The consideration set forth in paragraphs 3 and 4 of this Agreement is consideration for the complete release and the Effective Final Release and is in excess of what Executive is entitled to receive. If Executive or someone on Executive’s behalf claims any entitlement to further compensation from the Company, Executive agrees that the Company is entitled to full offset of the amounts set forth in this Agreement.

11.Employment and Other Agreements. Executive agrees and acknowledges that, except as otherwise expressly provided in this Agreement with regard to severance pay, benefits or similar amounts, the provisions of agreements that Executive previously entered into with the Company, and that are intended to survive Executive’s termination, including but not limited to any restrictive covenant or similar agreements, will remain in full force and effect. In connection therewith, Executive reaffirms Executive’s intent to comply with all post‐employment obligations of Executive to the Company under such agreements.

12.Successors. This Agreement shall be binding upon Executive and the Company and their heirs, representatives, executors, administrators, successors, insurers, and assigns, and shall inure to the benefit of each and all of them and to their heirs, representatives, executors, administrators or assigns.

13.Applicable Law and Venue. THIS AGREEMENT SHALL BE INTERPRETED IN ALL RESPECTS BY THE INTERNAL LAWS OF THE STATE OF GEORGIA, AND THE VENUE FOR THE RESOLUTION OF ANY DISPUTES (LOCATION OF ANY LAWSUIT) SHALL BE SOLELY IN THE STATE AND FEDERAL COURTS IN GEORGIA.

14.Severability. The fact that one or more paragraphs (or portion thereof) of this Agreement may be deemed invalid or unenforceable by any court shall not invalidate the remaining paragraphs or portions of such paragraphs of this Agreement.

15.Certain Acknowledgments. Executive acknowledges that he is signing this Agreement voluntarily with full knowledge of its contents. If Executive decides not to sign this Agreement, the Company will not retaliate against Executive. Executive is not relying on any promise or representation not specifically and explicitly made in this Agreement. This Agreement may not be amended or modified except by a written agreement signed by Executive and an authorized officer of the Company. Executive understands that any changes that the parties agree to make to this Agreement after it has been presented to Executive, whether such changes are material or non‐material, will not extend the amount of time Executive has to consider the Agreement.

16.Consideration and Revocation Periods. Executive understands that he may take up to 21 days following Executive’s receipt of this Agreement to consider this Agreement. Executive understands that he may use as much or as little of this period as Executive chooses before signing the Agreement. Executive is advised to consult with an attorney before signing this Agreement. If Executive accepts this Agreement, Executive must sign it and return it to the

Exhibit 10.1

Chief Administrative Officer on or before the expiration of the 21‐day period. By signing this Agreement, Executive acknowledges that Executive was afforded a period of at least 21 days from the date the Company’s proposal was presented to Executive in which to consider it. In addition, Executive understands that Executive has a period of seven days following the date of signing this Agreement within which to revoke this Agreement (the “Revocation Period”). To revoke this Agreement, Executive understands that Executive must provide written notification of revocation to the Chief Administrative Officer within seven days from the date Executive signed it.

If the foregoing accurately sets forth Executive’s agreement with the Company, please signify by signing below and returning this Agreement in its entirety to the Chief Administrative Officer on or before close of business on the 21st day after this Agreement was first presented to you. If the Company has not received a signed copy of this Agreement by that time, the offer reflected in this Agreement will automatically terminate and expire without further notice from the Company.

[Signatures on next page]

Exhibit 10.1

For Executive as of the Date of Agreement:

/s/ Phillip Tighe

Signature

Phillip Tighe

Print Name

For Blue Bird Corporation as of the Date of Agreement:

/s/ Tom Roberts

Signature

Tom Roberts

Print Name

Chief Administrative Officer

Title

EXHIBIT A

CONSULTING AGREEMENT

EX-10.2

Exhibit 10.2

CONSULTING AGREEMENT

This CONSULTING AGREEMENT (this “Agreement”), dated as of May 30, 2020, is entered into by and between Phillip Tighe (“Consultant”), and Blue Bird Corporation, a Delaware corporation (“Company”).

BACKGROUND

A.    In recognition of Consultant’s skills, expertise and knowledge, and particularly his experience with Company and in the industry, most recently having served as Company’s Chief Financial Officer prior to his retirement, and his intimate knowledge of Company’s business, financial affairs, practices and policies, Company desires to retain Consultant as an independent contractor to provide certain consulting and advisory services for a period of time.

B.    Consultant desires to provide such services to Company on the terms and conditions described in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises and conditions contained herein, and other good and valuable consideration, the adequacy of which the parties hereby acknowledge, the parties hereto agree as follows:

AGREEMENT

1.Engagement of Consultant. Company hereby engages Consultant, and Consultant hereby accepts such engagement, upon the terms and conditions described in this Agreement, beginning July 1, 2020 (the “Engagement Date”).

2.Term of Agreement. The term of this Agreement will begin on the Engagement Date and will continue until May 31, 2021, except as otherwise provided in this Agreement. The parties may agree in writing to terminate this Agreement earlier, or to extend the term of Agreement, at any time. Notwithstanding the foregoing, the term of this Agreement may be terminated by Consultant at any time upon fifteen (15) days’ prior written notice to Company. The period from the Engagement Date until the termination of the term of this Agreement will be referred to as the “Term.”

3.Consultant’s Services. Consultant shall provide consulting and advisory services to Company during the Term, as reasonably requested by Company, on matters with respect to which Consultant’s experience and expertise may be deemed helpful to Company. Such services may include, without limitation, providing assistance, advice and counsel as requested by Company from time to time with respect to and in connection with Company’s transition to a new Chief Financial Officer; Consultant’s presence at Company’s headquarters location to consult with, advise and otherwise assist Company management or its Board of Directors; participation in meetings (telephonic or in person) with Company personnel and/or others, at Company’s headquarters or elsewhere; and reviewing and/or assisting in preparation of reports, documents, information, filings or other similar papers. Consultant agrees to provide such services promptly and professionally. Company agrees to provide Consultant with such support as Company deems to be reasonably necessary for Consultant to perform the consulting and advisory services under this Agreement, including without limitation the use of office space on Company’s premises and any necessary administrative or secretarial support when Consultant is required to be present at Company’s headquarters location.

4.Time Commitment. Consultant agrees to be available to provide a substantial level of services to or for the benefit of Company pursuant to this Agreement, and Consultant acknowledges that his presence at Company’s headquarters location for a considerable amount of time could be required in connection with such services. Accordingly, Consultant agrees not to accept other employment, engage in business or provide consulting or similar services other than to Company during the Term, except to the extent that such activities would not be contrary to the provisions of this Agreement (and the terms of any other agreement between Consultant and Company) and would not materially interfere with Consultant’s performance of the consulting services under this Agreement.

5.Compensation. In consideration of the consulting and advisory services to be rendered by Consultant pursuant to this Agreement, Company shall pay Consultant at the monthly rate of $33,333.33, such amount to be paid promptly following the end of each month.

6.Reimbursement of Expenses. With prior approval of Company, Consultant shall be entitled to reimbursement for reasonable business expenses Consultant incurs in connection with the services provided to Company under this Agreement including, without limitation, all reasonable travel-related expenses incurred on Company’s behalf, e.g., in connection with travel from Consultant’s residence to Company’s headquarters location.

Exhibit 10.2

7.Relationship. The parties stipulate and agree that Consultant is an independent contractor and not an employee with respect to the services to be performed hereunder. Notwithstanding any provision hereof to the contrary, nothing in this Agreement shall be construed as giving Company primary direction or control over the judgment of Consultant as to the time, location, manner or method in which he performs the services hereunder. This Agreement describes the work to be performed by Consultant, but does not reserve to Company primary direction or control in the time, location, manner or method in which such services are to be performed. This Agreement sets forth the goals of the relationship and standards to be satisfied by Consultant, but does not create the relationship of an employer and employee. Consultant shall have full discretion and authority regarding the manner in which he performs the services described in this Agreement, without further notice, consent or approval of any party, except as otherwise expressly provided in this Agreement. Neither party will hold Consultant out to the public as an employee or agent of Company or as having authority to bind Company. Consultant will not be eligible for any employee benefits of any type whatsoever provided under Company plans, policies or programs with respect to services provided pursuant to this Agreement, and will not be subject to or eligible under any employment policies relating to common law employees (regardless of the status of Consultant for tax or other purposes).

8.Violations of Agreement; Other Company Agreements and Policies; Rules and Regulations. Consultant agrees to comply with all Company policies, programs, arrangements and agreements to which he is subject or a party, and any rules and regulations that may apply with respect to Consultant’s work. If Company determines that Consultant has materially violated any of the terms of this Agreement, or of any other Company policy, program, arrangement or agreement, including without limitation the provisions of any employment or similar agreement, confidentiality, noncompetition and/or nonsolicitation or similar agreement regarding restrictive covenants, or other agreement with Company, or a Company code of conduct or other Company written policy generally applicable to executive employees, or applicable rule or regulation, while a Company employee or during the Term, Company may terminate this Agreement after giving Consultant written notice, and a reasonable opportunity to cure. Upon any such early termination, Consultant will not be eligible to receive any additional amounts of compensation under this Agreement.

9.Withholding; Taxes. Consultant and Company agree that Consultant is not an employee for federal or state tax purposes. Consultant acknowledges that Company shall not withhold from the amounts payable to Consultant hereunder, any amounts for federal or state income taxes, social security payments, or other withholdings. Consultant agrees to report all income derived from Company pursuant to this Agreement to the appropriate federal, state and local agencies and to pay all taxes owing with respect to same.

10.Section 409A Compliance. Amounts payable pursuant to this Agreement are intended either to be exempt from Section 409A of the Internal Revenue Code of 1986, as amended, and regulations thereunder (“Section 409A”), to the extent an exemption(s) is available, or to comply with the provisions of Section 409A. This Agreement shall be interpreted to avoid any penalty or sanctions under Section 409A. Accordingly, all provisions herein, or incorporated by reference, shall be construed and interpreted to the maximum extent permitted to be exempt from or compliant with Section 409A and, if necessary, any such provision shall be deemed amended to comply with Section 409A and regulations thereunder. In connection therewith:

a.It is intended that each installment of the payments hereunder shall be treated as a separate “payment” for purposes of Section 409A.

b.If as of Consultant’s employment termination date from Company, Consultant is a “specified employee” (within the meaning of Section 409A(a)(2)(B) or any successor provision thereto), then with regard to any payment or provision of benefit that is subject to Section 409A as deferred compensation and is due upon or as a result of Consultant’s “separation from service,” notwithstanding any contrary provision under this Agreement, such payment or benefit shall not be made or provided, to the extent making or providing such payment or benefit would result in additional taxes or interest under Section 409A, until the date with is the earlier of (A) expiration of the six‐month period measured from such “separation from service,” and (B) the date of Consultant’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this section (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to Consultant in a lump‐sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them in this Agreement.

c.While this Agreement is intended to be exempt from or compliant with Section 409A, Company neither makes nor has made any representation, warranty or guarantee of any federal, state or local tax consequences of Consultant’s entitlements under this Agreement, including, but not limited to, under Section 409A.

11.Worker’s Compensation and Unemployment Insurance. Consultant is not entitled to worker’s compensation benefits or unemployment compensation benefits provided by Company. If required by law, Consultant shall maintain worker’s compensation insurance.

Exhibit 10.2

12.Governing Law and Venue. This Agreement shall be interpreted in all respects by the internal laws of the State of Georgia, and the venue for the resolution of any disputes (location of any lawsuit) shall be solely in the state and federal courts in Georgia.

13.Company Documents, Information, or Property. Consultant agrees that, on or before the Termination Date, Consultant will have returned to the Company any and all documents relating to the Company or its business operations (and any and all copies thereof, whether in paper form or electronic form), computer equipment, badges, credit cards, and any other Company property in Consultant’s possession or control.

14.Waiver. The waiver by either party of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach by such other party.

15.Assignment. Neither Company nor Consultant shall make or purport to make any assignment or other transfer of this Agreement or any of the rights granted to it or him under this Agreement without the prior written consent of the other party, and no such assignment or transfer shall be effective without consent of such other party.

16.Severability. If any part of this Agreement, for any reason, is declared invalid by an arbitrator or a court of competent jurisdiction, such decision or determination will not affect the validity of any remaining portion, and such remaining portion will remain in force and effect as if this Agreement had been executed with the invalid portion eliminated; but at the same time, the provision declared invalid will not be invalidated in its entirety, but will be observed and performed by the parties to the extent such provision is valid and enforceable.

17.Section Headings. Section and other headings contained in this Agreement are for reference purposes only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof.

18.Complete Agreement. This Agreement constitutes the entire agreement between Company and Consultant and supersedes all previous and contemporaneous written and oral agreements regarding services to be provided during the Term, and no other representations, statements, inducements, negotiations or commitments, oral or written, with respect to Consultant’s engagement that are not contained in this Agreement will be binding upon the parties. Any subsequent alteration or modification to this Agreement must be made in writing and signed by both parties.

19.Counterparts. This Agreement may be executed in separate counterparts, each of which shall be deemed an original and both of which shall constitute one agreement, and the signature of either party to a counterpart shall be deemed to be a signature to, and may be appended to, the other counterpart.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

CONSULTANT:

/s/ Phillip Tighe

Phillip Tighe

COMPANY:

/s/ Tom Roberts

By: Tom Roberts

Title: Chief Administrative Officer

EX-10.3

Exhibit 10.3

April 28, 2020

Dear Jeff,

Blue Bird is pleased to confirm our offer of employment as outlined in this Letter Agreement.

Your Position

Upon Board approval, you will be appointed Chief Financial Officer, effective June 1, 2020. As we have discussed, your employment will begin on May 1, 2020. You will report to Phil Horlock, President and Chief Executive Officer.

Salary

Your annual salary will be $450,000, payable on the 10^th and 25^th of each month.

Bonus

You will be eligible to participate in the annual Blue Bird Management Incentive Bonus Plan (“MIP”) with a target of 75% of your base salary. Funding of the MIP is based on achievement of financial metrics approved by the Compensation Committee. The Compensation Committee has discretion to substantially increase the payout of the MIP bonus if the Company’s performance exceeds the target financial metrics. For the current fiscal year, you will be eligible to participate in the MIP on a pro rata basis based on your start date.

Equity Awards

You will be eligible to participate in Blue Bird’s annual Long-Term Incentive Equity Plan (“LTI”) with a target of 75% of your base salary. The Compensation Committee reviews Your LTI Awards will be a mix of stock options (25%) and restricted stock units (75%). The LTI Awards vest annually in equal tranches over three years and are subject to a performance vesting requirement established by the Board. The Compensation Committee will review recommendations for the FY2021 LTI Awards in December.

Sign-on LTI Award

On your start date you will receive a special LTI Award of 7,500 stock options and 7,500 RSUs (“Sign-on LTI Award’). The first tranche of the Sign-on LTI Award will vest on December 11, 2020, the date on which the first tranche of the Company’s fiscal year 2020 LTI Awards vest, and will not be subject to a performance vesting component. The remaining tranches of the Sign-on LTI Award will vest in accordance with the terms of the Company’s fiscal year 2020 LTI Awards. The exercise price of the stock options will be based on the grant date, which will be your start date.

Exhibit 10.3

Severance

If you are terminated without cause, you will be eligible to receive up to 12 months of base salary and continued group health insurance. This severance benefit is subject to the terms of our standard severance agreement, a copy of which has been provided to you.

Withholding

All pay, incentives and other compensation shall be subject to applicable withholdings for federal, state and local taxes and shall be payable in accordance with State and Federal law and the Company’s regular payroll policies.

Your Benefits

While employed by the Company, you may be entitled to participate in certain benefit plans. Benefits details and eligibility requirements are available in Human Resources. Employees are eligible for benefits after 90 days of continuous service as of their date of hire.

• Medical benefits through Blue Cross/Blue Shield

• Pharmacy benefits administered by CVS/Caremark

• Optional Dental coverage is offered through Delta Dental

• Optional vision coverage is offered by Blue Cross Blue Shield

• Flexible Spending Accounts and Dependent Care options

• Life insurance and AD&D are administered by MetLife

• The Blue Bird 401(k) Plan is administered by MassMutual Financial

• Annual auto allowance of $11,760.

To ensure that there is no coverage gap in your group medical insurance, Blue Bird will provide reimbursement for your COBRA coverage, net of your normal monthly contribution, until you become eligible for coverage under Blue Bird’s plans.

Expense Reimbursement

You shall be entitled to receive reimbursement for all appropriate traveling and other business expenses incurred by you in connection with your duties under this Agreement, in accordance with the policies of the Company in effect from time to time.

Relocation

Our offer includes temporary corporate housing arrangements for six months, move of household goods to your final home in Georgia, and a one-time payment of $50,000.00 to help with any other relocation related expenses. This will be administered through relocation assistance company, Lexicon. We will send you additional information separately. As discussed, our expectation is that you will move to the Macon area within one year of your start date.

Employment at Will

Notwithstanding anything in this Letter Agreement to the contrary, your employment by the Company will be at will and may be terminated at any time, subject to the Company’s generally applicable employment policies.

Amendment or Termination of Plans or Practices

The Company continues to reserve the right to modify, amend or terminate any of the employee benefit plans or practices described in these materials. In all cases, the plan rules are the exclusive source for determining rights and benefits under a benefit or compensation plan and those plans shall govern if there is conflict with these materials.

Exhibit 10.3

E-Verify

As a federal contractor, we are required to verify the eligibility of all new hires to the Department of Homeland Security utilizing the E-Verify website. As such, you will be required to provide to the Company documentary evidence of your identity and eligibility for employment in the United States. Such documentation must be provided to us within three (3) business days from your date of hire, or our employment relationship with you may be terminated. If you are unsure what documents are acceptable, please contact me prior to your start date for the current list.

Disclosure, Confidentiality, Non-Compete and Non-Solicitation

If you have not already done so, we ask that you disclose to the Company any and all agreements relating to your prior employment that may affect your eligibility to be employed by the Company or limit the manner in which you may be employed. It is the Company’s understanding that any such agreements will not prevent you from performing the duties of your position and you represent that such is the case. Moreover, you agree that, during the term of your employment with the Company, you will not engage in any other employment, occupation, consulting or other business activity directly related to the business in which the Company is now involved or becomes involved during the term of your employment, nor will you engage in any other activities that conflict with your obligations to the Company. Similarly, you agree not to bring any third-party confidential information to the Company, including that of your former employer, and that in performing your duties for the Company you will not in nay way utilize any such information.

We look forward to welcoming you at Blue Bird. To accept our offer, please email a signed copy of this letter to felix.lin@blue-bird.com.

Sincerely,

/s/ Felix Lin

Felix Lin

Vice President - HR and External Affairs

Blue Bird Corporation

/s/ Jeffery L. Taylor	April 29, 2020
Jeffrey L. Taylor	Date

EX-10.4

Exhibit 10.4

SEVERANCE AGREEMENT

THIS SEVERANCE AGREEMENT (this "Agreement") is made and entered into as of this 1st day of May, 2020, by and between Blue Bird Corporation (the "Company") and Jeffery L. Taylor (the "Employee") (the "Company" and the "Employee," collectively, the "Parties," each a "Party").

WHEREAS, the Employee is employed by the Company as Chief Financial Officer; and

WHEREAS, the Parties wish to set forth the terms and conditions of any future termination of the Employee's employment with the Company;

NOW, THEREFORE, in consideration of the mutual promises contained herein, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. Effective Date; Term. This Agreement shall be effective as of the date hereof and shall

remain effective until the end of the Severance Period (the "Term").

2. Eligibility for Severance Benefits. The Employee shall receive the benefits provided for in

Section 3 herein ("Severance Benefits") provided that:

a. the Employee's employment with the Company is terminated by the Company without Cause (as defined below) a "Qualifying Termination"; and

b. the Employee has complied and continues to comply with the restrictions and obligations set forth in Section 7 herein; and

c. the Employee signs, and does not revoke, a valid general release of all

claims against the Company and its parents, subsidiaries, Affiliates (as defined in Section 7(a) herein), successors and assigns, and all such entities' respective current and former directors, officers, shareholders, members, partners, employees and agents in a form reasonably acceptable to the Company (the "Release"); and

d. the Employee has not breached any of the provisions of the Release or

any provisions of this Agreement, as determined by the Company.

e. the Employee has not entered into a subsequent employment relationship. It is required that the Employee advise the Company in the event during the Severance period if they have accepted and the date that they began other employment. The paid severance will terminate at this point.

For the purposes of this Agreement, "Cause" means, as determined by the Company, (i) conviction of or plea of nolo contendere to a felony by the Employee; (ii) acts of dishonesty by the Employee resulting or intending to result in personal gain or enrichment at the expense of the Company or its parents, subsidiaries or Affiliates; (iii) the Employee's material breach of any agreement between the Company and the Employee or other Company policies as may be in effect from time to time, as amended from time to time; (iv) conduct by the Employee in connection with his or her duties that is fraudulent, unlawful or grossly negligent, including, but not limited to, acts of discrimination; (v) engaging in personal conduct by the Employee (including but not limited to employee harassment or discrimination, the use or possession at work of any illegal controlled substance) which seriously discredits or damages the Company or its parents, subsidiaries or Affiliates; (vi) continuing failure by the Employee to adequately perform his or her duties or continuing inattention to such duties; or (vii) breach of the Employee's restrictions and obligations set forth in Section 7 herein before the Termination Date.

3. Severance Benefits. In the event of a Qualifying Termination in which the Employee satisfies the conditions set forth in Section 2, the Employee shall receive as of the effective date of the termination of the Employee's employment with the Company (the "Termination Date") the following Severance Benefits:

a. Continued payment of Base Salary as in effect on the Termination Date

Exhibit 10.4

for a period of twelve (12) months after the Termination Date (the "Severance Period") (such continued payments, "Severance Payments"); and

b. reimbursement of the cost of continuation coverage of group health

coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA") from the Termination Date until the earlier of (i) the last day of the Severance Period, or (ii) the date the Employee becomes eligible for group health benefits under a plan, policy or program of a subsequent employer, or (iii) the end of the Employee's eligibility period under COBRA; provided that the Employee is eligible for and elects such continuation coverage, and subject to the terms of the plan and applicable law. During any remaining period of continuation coverage, the Employee shall be responsible for the entire cost of such continuation coverage.

No other amounts (including, without limitation, any unpaid bonuses or amounts under any other severance plan, policy or arrangement) or benefits shall be payable or owed to the Employee upon or after the Termination Date, unless otherwise provided for under this Agreement or as otherwise may be required by law.

4. Payment of Severance Benefits. Severance Payments shall be made to the

Employee in twelve (12) equal monthly installments, commencing on the first day of the month following the effective date of the Release. Notwithstanding the foregoing, the Employee shall not be entitled to any Severance Benefits upon or after the Termination Date if the Employee has breached any of the covenants contained in Section 7. If the Company determines that the Employee has breached any of the provisions of the Release or any provisions of this Agreement after the Termination Date, in addition to any other remedies it may have, the Company shall not be liable to the Employee for any Severance Benefits that remain to be paid or provided to the Employee as of the date of the Company's determination that the Employee has breached any such provision. Furthermore, the Employee will immediately return to the Company any such Severance Benefits previously received under this Agreement upon such a breach, and, in the event of such breach, the Company will have no obligation to pay any Severance Benefits that otherwise remain payable.

5. Other Compensation and Benefits. In addition to any amounts received by the

Employee pursuant to Section 3, upon termination of the Employee's employment with the Company the Employee shall also be entitled to: (i) the Employee's accrued but unpaid Base Salary to the Termination Date and any employee benefits the Employee may be entitled to pursuant to the employee benefit plans of the Company; (ii) the unpaid portion of any bonus, if any, relating to the calendar year prior to the calendar year of the Employee's termination of employment, payable on the earlier of (x) thirty days after the approval by the Board of the consolidated financial statements of the Company, and (y) the date on which the Company pays annual bonuses to other similarly situated employees of the Company; (iii) reimbursement for all appropriate business expenses incurred by the Employee in connection with his or her employment by the Company in accordance with the policies of the Company as in effect from time to time that are incurred but not yet reimbursed to the Employee through the Termination Date; and (iv) in the event of a Qualifying Termination, payment for accrued unused vacation days, payable in accordance with Company policy.

6. Tax Withholding. The Company is authorized to withhold from any benefit provided or payment due hereunder, the amount of withholding taxes due under any federal, state or local authority in respect of such benefit or payment and to take such other action as may be necessary in the opinion of the Board to satisfy all obligations for the payment of such withholding taxes.

7. Restrictions and Obligations of the Employee.

a. Confidentiality.

i. During the course of the Employee's employment by the Company, the Employee has had and will have access to certain trade secrets and confidential information relating to the Company, its parents and/or subsidiaries and/or the Affiliates (as defined below) of the Company, its parents and/or subsidiaries (the "Protected Parties") which is not readily available from sources outside the Company. For purposes of this Agreement, "Affiliate" means, any entity directly or indirectly controlling, controlled by or under common control with the Company and/or its parents and/or subsidiaries, respectively. The confidential and proprietary information and, in any material respect, trade secrets of the Protected Parties are among their most valuable assets, including but not limited to, their customer, supplier and vendor lists, databases, competitive

Exhibit 10.4

strategies, computer programs, frameworks, or models, their marketing programs, their sales, financial, marketing, training and technical information, their product development (and proprietary product data) and any other information, whether communicated orally, electronically, in writing or in other tangible forms concerning how the Protected Parties create, develop, acquire or maintain their products and, marketing plans, target their potential customers and operate their retail and other businesses. The Protected Parties invested, and continue to invest, considerable amounts of time and money in their process, technology, know-how, obtaining and developing the goodwill of their customers, their other external relationships, their data systems and data bases, and all the information described above (hereinafter collectively referred to as "Confidential Information"), and any misappropriation or unauthorized disclosure of Confidential Information in any form would irreparably harm the Protected Parties. The Employee acknowledges that such Confidential Information constitutes valuable, highly confidential, special and unique property of the Protected Parties. The Employee shall hold in a fiduciary capacity for the benefit of the Protected Parties all Confidential Information relating to the Protected Parties and their businesses, which shall have been obtained by the Employee during the Employee's employment by the Company and which shall not be or become public knowledge (other than by acts by the Employee or representatives of the Employee in violation of this Agreement). Except as required by law or an order of a court or governmental agency with jurisdiction, the Employee shall not, during the period the Employee is employed by the Company or at any time thereafter, disclose any Confidential information, directly or indirectly, to any person or entity for any reason or purpose whatsoever, nor shall the Employee use it in any way, except in the course of the Employee's employment with the Company and for the benefit of the Protected Parties or to enforce any rights or defend any claims hereunder or under any other agreement to which the Employee is a party, provided that such disclosure is relevant to the enforcement of such rights or defense of such claims and is only disclosed in the formal proceedings related thereto. The Employee shall take all reasonable steps to safeguard the Confidential information and to protect it against disclosure, misuse, espionage, loss and theft. The Employee understands and agrees that the Employee shall acquire no rights to any such Confidential information.

ii. All files, records, documents, drawings, specifications, data, computer programs, evaluation mechanisms and analytics and similar items relating thereto or to the Protected Parties' businesses, as well as all customer lists, specific customer information, compilations of product research and marketing techniques of the Protected Parties, whether prepared by the Employee or otherwise coming into the Employee's possession, shall remain the exclusive property of the Protected Parties, and the Employee shall not remove any such items from the premises of the Protected Parties, except in furtherance of the Employee's duties.

iii. It is understood that while employed by the Company the Employee will promptly disclose to it, and assign to it the Employee's interest in any invention, improvement or discovery made or conceived by the Employee, either alone or jointly with others, which arises out of the Employee's employment. At the Company's request and expense, the Employee will assist the Protected Parties during the period of the Employee's employment by the Company and thereafter in connection with any controversy or legal proceeding relating to such invention, improvement or discovery and in obtaining domestic and foreign patent or other protection covering the same.

iv. As requested by the Company and at the Company's expense,

from time to time and upon the termination of the Employee's employment with the Company for any reason, the Employee will promptly deliver to the Company all copies and embodiments, in whatever form, of all Confidential information in the Employee's possession or within his or her control (including, but not limited to, memoranda, records, notes, plans, photographs, manuals, notebooks, documentation, program listings, flow charts, magnetic media, disks, diskettes, tapes and all other materials containing any Confidential information) irrespective of the location or form of such material. If requested by the Company, the Employee will provide the Company with written confirmation that all such materials have been delivered to the Company as provided herein.

b. Non-Solicitation or Hire. During the Employee's employment with the

Exhibit 10.4

Company and for a period of one (1) year following the Employee's termination of employment for any reason, the Employee shall not directly or indirectly solicit or attempt to solicit or induce, directly or indirectly, (i) any party who is a customer of School Bus Holdings Inc. or any of its subsidiaries, or who was a customer of School Bus Holdings Inc. or any of its subsidiaries at any time during the twelve (12) month period immediately prior to the Termination Date, for the purpose of marketing selling or providing to any such party any services or products offered by or available from School Bus Holdings Inc. or any of its subsidiaries (provided that if the Employee intends to solicit any such party for any other purpose, he shall notify the Company of such intention and receive prior written approval from the Company), (ii) any supplier to School Bus Holdings Inc. or any of its subsidiaries to terminate, reduce or alter negatively its relationship with School Bus Holdings Inc. or any of its subsidiaries or in any manner interfere with any agreement or contract between School Bus Holdings Inc. or any of its subsidiaries and such supplier or (iii) any employee of School Bus Holdings Inc. or any of its subsidiaries or any person who was an employee of School Bus Holdings Inc. or any of its subsidiaries during the twelve (12) month period immediately prior to the date the Employee's employment terminates to terminate such employee's employment relationship with School Bus Holdings Inc. or any of its subsidiaries in order, in either case, to enter into a similar relationship with the Employee, or any other person or any entity in competition with the Business of School Bus Holdings Inc. or any of its subsidiaries.

c. Non-Competition. During the Employee's employment with the Company and for a period of one (1) year following the Employee's termination of employment for any reason, the Employee shall not, whether individually, as a director, manager, member, stockholder, partner, owner, employee, consultant or agent of any business, or in any other capacity, other than on behalf of School Bus Holdings Inc. or any of its subsidiaries, organize, establish, own, operate, manage, control, engage in, participate in, invest in, permit his or her name to be used by, act as a consultant or advisor to, render services for (alone or in association with any person, firm, corporation or business organization), or otherwise assist any person or entity that engages in or owns, invests in, operates, manages or controls any venture or enterprise which engages or proposes to engage in any business conducted by School Bus Holdings Inc. or any of its subsidiaries on the Termination Date or within twelve (12) months of the Employee's termination of employment with the Company in the geographic locations where School Bus Holdings Inc. or any of its subsidiaries, respectively engage or propose to engage in such business (the "Business"). Notwithstanding the foregoing, nothing in this Agreement shall prevent the Employee from owning for passive investment purposes not intended to circumvent this Agreement, less than five percent (5%) of the publicly traded common equity securities of any company engaged in the Business (so long as the Employee has no power to manage, operate, advise, consult with or control the competing enterprise and no power, alone or in conjunction with other affiliated parties, to select a director, manager, general partner, or similar governing official of the competing enterprise other than in connection with the normal and customary voting powers afforded the Employee in connection with any permissible equity ownership).

d. Non-disparagement. The Employee shall not at any time (whether during or after the Term) publish or communicate to any person or entity any Disparaging (as defined below) remarks, comments or statements concerning the Company, its parents, subsidiaries and/or Affiliates, and their respective present and former members, partners, directors, officers, shareholders, employees, agents, attorneys, successors and assigns. "Disparaging" remarks, comments or statements are those that impugn the character, honesty, integrity or morality or business acumen or abilities in connection with any aspect of the operation of business of the individual or entity being disparaged.

e. Property. The Employee acknowledges that all originals and copies of materials, records and documents generated by him or coming into his or her possession during his or her employment by the Company are the sole property of the Company ("Company Property"). During the Term, and at all times thereafter, the Employee shall not remove, or cause to be removed, from the premises of the Company or its parents, subsidiaries or Affiliates copies of any record, file, memorandum, document, computer related information or equipment, or any other item relating to the Business, except in furtherance of his or her duties. When the Employee's employment with the Company terminates, or upon request of the Company at any time, the Employee shall promptly deliver to the Company all copies of Company Property in his or her possession or control.

Exhibit 10.4

8. Remedies; Specific Performance. The Parties acknowledge and agree that the

Employee's breach or threatened breach of any of the restrictions set forth in Section 7 will result in irreparable and continuing damage to the Company and its parents, subsidiaries, and, as applicable, the Affiliates of the Company and its parents and subsidiaries, for which there may be no adequate remedy at law and that the Company and its parents and subsidiaries, and, as applicable, the Affiliates of the Company and its parents and subsidiaries, shall be entitled to equitable relief, including specific performance and injunctive relief as remedies for any such breach or threatened or attempted breach. The Employee hereby consents to the grant of an injunction (temporary or otherwise) against the Employee or the entry of any other court order against the Employee prohibiting and enjoining him from violating, or directing him to comply with any provision of Section 7. The Employee also agrees that such remedies shall be in addition to any and all remedies, including damages, available to the Company against him or her for such breaches or threatened or attempted breaches.

9. Severability. If any term, provision, covenant or restriction of this Agreement,

or any part thereof, is held by a court of competent jurisdiction of any foreign, federal, state, county or local government or any other governmental, regulatory or administrative agency or authority to be invalid, void, unenforceable or against public policy for any reason, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected or impaired or invalidated. The Employee acknowledges that the restrictive covenants contained in Section 7 are a condition of this Agreement and are reasonable and valid in temporal scope and in all other respects.

10. Judicial Modification. If any court of competent jurisdiction determines that any of the covenants in Section 7, or any part of any of them, is invalid or unenforceable (including, without limitation, because of the geographic or temporal scope of such provision), such covenant or part thereof shall apply to the maximum extent otherwise permitted at applicable law with such modifications as will be necessary to make it valid and enforceable.

11. Miscellaneous.

a. No Right to Employment. This Agreement does not create for the Employee any employment right. This Agreement is not a contract of employment and does not alter the employment at-will relationship. Either Party may terminate the employment relationship at any time for any reason.

b. Entire Agreement. This Agreement contains the entire agreement

between the Parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect thereto.

c. Waiver and Amendments. This Agreement may be amended, modified,

superseded, canceled, renewed or extended, and the terms and conditions hereof may be waived, only by a written instrument signed by the Parties or, in the case of a waiver, by the Party waiving compliance. No delay on the part of any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any right, power or privilege hereunder, nor any single or partial exercise of any right, power or privilege hereunder, preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder

d. Notices. Any notice or other communication required or which may be

given hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or express mail, postage prepaid or overnight mail and shall be deemed given when so delivered personally, telegraphed, telexed, or sent by facsimile transmission or, if mailed, four (4) days after the date of mailing or one (1) day after overnight mail, as follows:

i. If the Company, to:

Blue Bird Corporation

3920 Arkwright Road

Macon, GA 31210

Attention: Legal Department

ii. If the Employee, to the Employee's home address reflected in the Company's records.

Exhibit 10.4

e. Governing Law. This Agreement shall be governed and construed in

accordance with the laws of the State of Georgia applicable to agreements made and not to be performed entirely 'within such state, without regard to conflicts of laws principles.

f. Dispute Resolution and Venue. The Parties agree irrevocably to submit to the exclusive jurisdiction of the federal courts or, if no federal jurisdiction exists, the state courts, located in Macon, Georgia, for the purposes of any suit, action or other proceeding brought by any Party arising out of any breach of any of the provisions of this Agreement and hereby waive, and agree not to assert by way of motion, as a defense or otherwise, in any such suit, action, or proceeding, any claim that it is not personally subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that the provisions of this Agreement may not be enforced in or by such courts. In addition, the Parties agree to the waiver of a jury trial.

g. Assignability by the Company and the Employee. This Agreement, and the rights and obligations hereunder, may not be assigned by the Company or the Employee without written consent signed by the other Party; provided that the Company may assign the Agreement to any successor that continues the business of the Company.

h. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.

i. Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of terms contained herein.

j. Survival Sections 7, 8, 9, 10 and 11 of this Agreement shall survive after the Term.

IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound hereby, have executed this Agreement as of the day and year first above mentioned.

EMPLOYEE

/s/ Jeffery L. Taylor

Jeffery L. Taylor

BLUE BIRD CORPORATION

By: /s/ Tom Roberts

Name: Tom Roberts

Title: Chief Administrative Officer

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Philip Horlock, the Chief Executive Officer of Blue Bird Corporation (the “registrant”), certify that:

(1) I have reviewed this quarterly report on Form 10-Q of Blue Bird Corporation;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	August 13, 2020	/s/ Philip Horlock
		Philip Horlock
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffery Taylor, the Chief Financial Officer of Blue Bird Corporation (the “registrant”), certify that:

(1) I have reviewed this quarterly report on Form 10-Q of Blue Bird Corporation;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	August 13, 2020	/s/ Jeffery Taylor
		Jeffery Taylor
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Blue Bird Corporation (the “Company”) on Form 10-Q for the quarterly period ended July 4, 2020, as filed with the United States Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Philip Horlock, Chief Executive Officer of the Company, and Jeffery Taylor, Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	August 13, 2020	/s/ Philip Horlock
		Philip Horlock
		Chief Executive Officer
Dated:	August 13, 2020	/s/ Jeffery Taylor
		Jeffery Taylor
		Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Jul. 04, 2020	Aug. 07, 2020
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jul. 04, 2020
Document Transition Report	false
Entity File Number	001-36267
Entity Registrant Name	BLUE BIRD CORPORATION
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	46-3891989
Entity Address, Address Line One	3920 Arkwright Road
Entity Address, Address Line Two	2nd Floor
Entity Address, City or Town	Macon
Entity Address, State or Province	GA
Entity Address, Postal Zip Code	31210
City Area Code	478
Local Phone Number	822-2801
Title of 12(b) Security	Common stock, $0.0001 par value
Trading Symbol	BLBD
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		27,048,404
Entity Central Index Key	0001589526
Current Fiscal Year End Date	--10-03
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jul. 04, 2020	Sep. 28, 2019
Current assets
Cash and cash equivalents	$ 12,538	$ 70,959
Accounts receivable, net	13,694	10,537
Inventories	155,717	78,830
Other current assets	9,459	11,765
Total current assets	191,408	172,091
Property, plant and equipment, net	104,667	100,058
Goodwill	18,825	18,825
Intangible assets, net	52,404	54,720
Equity investment in affiliate	11,946	11,106
Deferred tax assets	3,882	3,600
Finance lease right-of-use assets	5,790	4,638
Other assets	1,133	375
Total assets	390,055	365,413
Current liabilities
Accounts payable	95,538	102,266
Warranty	8,123	9,161
Accrued expenses	15,638	28,697
Deferred warranty income	8,448	8,632
Finance lease obligations	1,032	716
Other current liabilities	13,425	10,310
Current portion of long-term debt	9,900	9,900
Total current liabilities	152,104	169,682
Long-term liabilities
Revolving credit facility	45,000	0
Long-term debt	166,467	173,226
Warranty	12,705	13,182
Deferred warranty income	13,597	15,413
Deferred tax liabilities	792	168
Finance lease obligations	4,870	3,921
Other liabilities	13,251	12,108
Pension	43,197	45,524
Total long-term liabilities	299,879	263,542
Guarantees, commitments and contingencies (Note 6)
Stockholders' deficit
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 0 shares issued at July 4, 2020 and September 28, 2019	0	0
Common stock, $0.0001 par value, 100,000,000 shares authorized, 27,048,404 and 26,476,336 shares outstanding at July 4, 2020 and September 28, 2019, respectively	3	3
Additional paid-in capital	88,930	84,271
Accumulated deficit	(45,405)	(45,649)
Accumulated other comprehensive loss	(55,174)	(56,154)
Treasury stock, at cost, 1,782,568 shares at July 4, 2020 and September 28, 2019	(50,282)	(50,282)
Total stockholders' deficit	(61,928)	(67,811)
Total liabilities and stockholders' deficit	$ 390,055	$ 365,413

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Jul. 04, 2020	Sep. 28, 2019
Statement of Financial Position [Abstract]
Preferred Stock, Par Value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Liquidation Preference, Value	$ 0	$ 0
Common Stock, Par Value (in dollars per share)	$ 0.0001	$ 0.0001
Common Stock, Shares Authorized	100,000,000	100,000,000
Common Stock, Shares Outstanding	27,048,404	26,476,336
Treasury Stock, Common, Shares	1,782,568	1,782,568

XML

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Income Statement [Abstract]
Net sales	$ 189,181	$ 308,774	$ 597,810	$ 675,342
Cost of goods sold	168,099	266,992	531,259	588,496
Gross profit	21,082	41,782	66,551	86,846
Operating expenses
Selling, general and administrative expenses	17,793	20,996	58,146	61,197
Operating profit	3,289	20,786	8,405	25,649
Interest expense	(2,406)	(3,369)	(9,961)	(10,241)
Interest income	27	0	27	9
Other income (expense), net	181	(410)	555	(1,034)
Income (loss) before income taxes	1,091	17,007	(974)	14,383
Income tax (expense) benefit	(765)	(3,248)	378	(2,833)
Equity in net income of non-consolidated affiliate	960	842	840	1,158
Net income	$ 1,286	$ 14,601	$ 244	$ 12,708
Earnings per share:
Basic weighted average shares outstanding	27,027,731	26,451,107	26,784,404	26,449,751
Diluted weighted average shares outstanding	27,080,015	26,720,110	26,980,480	26,788,306
Basic earnings per share (in dollars per share)	$ 0.05	$ 0.55	$ 0.01	$ 0.48
Diluted earnings per share (in dollars per share)	$ 0.05	$ 0.55	$ 0.01	$ 0.47

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Statement of Comprehensive Income [Abstract]
Net income	$ 1,286	$ 14,601	$ 244	$ 12,708
Other comprehensive income, net of tax
Net change in defined benefit pension plan	327	524	980	1,572
Total other comprehensive income	327	524	980	1,572
Comprehensive income	$ 1,613	$ 15,125	$ 1,224	$ 14,280

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Jul. 04, 2020	Jun. 29, 2019
Cash flows from operating activities
Net income	$ 244	$ 12,708
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	10,728	7,406
Non-cash interest expense	3,560	2,172
Share-based compensation	4,105	3,146
Equity in net income of non-consolidated affiliate	(840)	(1,158)
(Gain) loss on disposal of fixed assets	(100)	50
Deferred taxes	32	500
Amortization of deferred actuarial pension losses	1,289	2,068
Foreign currency hedges	0	109
Changes in assets and liabilities:
Accounts receivable	(3,157)	(16,162)
Inventories	(76,887)	(83,355)
Other assets	2,480	(5,014)
Accounts payable	(3,115)	42,429
Accrued expenses, pension and other liabilities	(16,644)	15,988
Total adjustments	(78,549)	(31,821)
Total cash used in operating activities	(78,305)	(19,113)
Cash flows from investing activities
Cash paid for fixed assets	(16,724)	(30,154)
Proceeds from sale of fixed assets	150	0
Total cash used in investing activities	(16,574)	(30,154)
Cash flows from financing activities
Borrowings under the revolving credit facility	45,000	25,000
Borrowings under the senior term loan	0	50,000
Repayments under the senior term loan	(7,425)	(7,425)
Principal payments on finance leases	(854)	0
Cash paid for debt issuance costs	935	0
Cash paid for employee taxes on vested restricted shares and stock option exercises	(3,568)	(622)
Proceeds from exercises of warrants	4,240	1,499
Tender offer repurchase of common stock and preferred stock	0	(50,370)
Total cash provided by financing activities	36,458	18,082
Change in cash and cash equivalents	(58,421)	(31,185)
Cash and cash equivalents, beginning of period	70,959	60,260
Cash and cash equivalents, end of period	12,538	29,075
Supplemental disclosures of cash flow information
Interest paid, net of interest received	6,616	7,916
Income tax paid, net of tax refunds	(1,668)	2,431
Non-cash investing and financing activities:
Changes in accounts payable for capital additions to property, plant and equipment	(3,613)	(1,307)
Cashless exercise of stock options	5,246	295
Right-of-use assets obtained in exchange for finance lease obligations	1,942	0
Right-of-use assets obtained in exchange for operating lease obligations	0	8,040
Conversion of preferred stock into common stock	$ 0	$ 9,264

XML

Consolidated Statement of Stockholders' Deficit Statement - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In-Capital	Convertible Preferred Stock	Accumulated Other Comprehensive Loss	Accumulated Deficit	Treasury Stock
Beginning Balance (in shares) at Sep. 29, 2018		27,259,262		93,000			0
Beginning Balance at Sep. 29, 2018	$ (28,336)	$ 3	$ 70,023	$ 9,300	$ (38,427)	$ (69,235)	$ 0
Warrant exercises (in shares)		130,385
Warrant exercises	1,499		1,499
Restricted stock activity (in shares)		51,195
Restricted stock activity	(596)		(596)
Stock option activity (in shares)		2,567
Stock option activity	(26)		(26)
Share-based compensation expense	3,077		3,077
Tender offer share repurchases (in shares)		1,782,568		364			1,782,568
Tender offer share repurchases	(50,370)		(52)	$ (36)			$ (50,282)
Preferred stock conversion (in shares)		799,615		92,636
Preferred stock conversion	0		9,264	$ (9,264)
Net income	12,708					12,708
Other comprehensive income, net of tax	1,572				1,572
Ending Balance (in shares) at Jun. 29, 2019		26,460,456		0			1,782,568
Ending Balance at Jun. 29, 2019	(61,186)	$ 3	83,189	$ 0	(36,855)	(57,241)	$ (50,282)
Beginning Balance (in shares) at Mar. 30, 2019		26,440,663		0			1,782,568
Beginning Balance at Mar. 30, 2019	(77,590)	$ 3	81,889	$ 0	(37,379)	(71,842)	$ (50,261)
Warrant exercises (in shares)		17,750
Warrant exercises	204		204
Stock option activity (in shares)		2,043
Stock option activity	(20)		(20)
Share-based compensation expense	1,095		1,095
Tender offer share repurchases	0		21				$ (21)
Net income	14,601					14,601
Other comprehensive income, net of tax	524
Other comprehensive income, net of tax	524				524
Ending Balance (in shares) at Jun. 29, 2019		26,460,456		0			1,782,568
Ending Balance at Jun. 29, 2019	(61,186)	$ 3	83,189	$ 0	(36,855)	(57,241)	$ (50,282)
Beginning Balance (in shares) at Sep. 28, 2019		26,476,336		0			1,782,568
Beginning Balance at Sep. 28, 2019	(67,811)	$ 3	84,271	$ 0	(56,154)	(45,649)	$ (50,282)
Warrant exercises (in shares)		368,712
Warrant exercises	4,240		4,240
Restricted stock activity (in shares)		94,724
Restricted stock activity	(1,623)		(1,623)
Stock option activity (in shares)		108,632
Stock option activity	(1,945)		(1,945)
Share-based compensation expense	3,987		3,987
Net income	244					244
Other comprehensive income, net of tax	980				980
Ending Balance (in shares) at Jul. 04, 2020		27,048,404		0			1,782,568
Ending Balance at Jul. 04, 2020	(61,928)	$ 3	88,930	$ 0	(55,174)	(45,405)	$ (50,282)
Beginning Balance (in shares) at Apr. 04, 2020		27,027,272		0			1,782,568
Beginning Balance at Apr. 04, 2020	(65,063)	$ 3	87,408	$ 0	(55,501)	(46,691)	$ (50,282)
Restricted stock activity (in shares)		0
Restricted stock activity	(255)		(255)
Stock option activity (in shares)		21,132
Stock option activity	0		0
Share-based compensation expense	1,777		1,777
Net income	1,286					1,286
Other comprehensive income, net of tax	327				327
Ending Balance (in shares) at Jul. 04, 2020		27,048,404		0			1,782,568
Ending Balance at Jul. 04, 2020	$ (61,928)	$ 3	$ 88,930	$ 0	$ (55,174)	$ (45,405)	$ (50,282)

XML

Nature of Business and Basis of Presentation

9 Months Ended

Jul. 04, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Business and Basis of Presentation

1. Nature of Business and Basis of Presentation

Nature of Business

Blue Bird Body Company, a wholly-owned subsidiary of Blue Bird Corporation, was incorporated in 1958 and has manufactured, assembled and sold school buses to a variety of municipal, federal and commercial customers since 1927. The majority of Blue Bird’s sales are made to an independent distributor network, which in turn sells buses to ultimate end users. We are headquartered in Macon, Georgia. References in these notes to financial statements to “Blue Bird”, the “Company,” “we,” “our,” or “us” refer to Blue Bird Corporation and its wholly-owned subsidiaries, unless the context specifically indicates otherwise.

COVID-19

During our third quarter of fiscal 2020, the novel coronavirus known as "COVID-19" continued to spread throughout the world, perpetuating a global pandemic. The pandemic materially impacted our third quarter of fiscal 2020 results causing lower customer orders for both buses and bus parts, supply disruptions, higher rates of absenteeism among our hourly production workforce and a temporary shutdown of manufacturing. The continuing development and fluidity of the pandemic precludes any prediction as to the ultimate severity of the adverse impacts on our business, financial condition, results of operations, and liquidity. A prolonged economic downturn resulting from the continuing pandemic would likely have a material adverse impact on our financial results.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company transactions and accounts have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and Article 8 of Regulation S-X. The Company’s fiscal year ends on the Saturday closest to September 30 with its quarters consisting of thirteen weeks in most years. In fiscal year 2020, there is a total of 53 weeks. The third quarters of fiscal 2020 and 2019 both included 13 weeks. The nine month periods in fiscal 2020 and 2019 included 40 and 39 weeks, respectively.

In the opinion of management, all adjustments considered necessary for a fair presentation of financial results have been made. Such adjustments consist of only those of a normal recurring nature. Operating results for any interim period are not necessarily indicative of the results that may be expected for the entire year. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

The Condensed Consolidated Balance Sheet data as of September 28, 2019 was derived from the Company’s audited financial statements but does not include all disclosures required by generally accepted accounting principles. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes for the fiscal year ended September 28, 2019 as set forth in the Company's 2019 Form 10-K filed on December 12, 2019.

Use of Estimates and Assumptions

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions. At the date of the financial statements, these estimates and assumptions affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities, and during the reporting period, these estimates and assumptions affect the reported amounts of revenues and expenses. For example, significant management judgments are required in determining excess, obsolete, or unsalable inventory, allowance for doubtful accounts, potential impairment of long-lived assets, goodwill and intangibles, the accounting for self-insurance reserves, warranty reserves, pension obligations, income taxes, environmental liabilities and contingencies. Future events, including the extent and duration of COVID-19 related economic impacts, and their effects cannot be predicted with certainty, and, accordingly, the Company’s accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the Company’s condensed consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. The Company evaluates and updates its assumptions and estimates on an ongoing basis and may employ outside experts to assist in the Company’s evaluations. Actual results could differ from the estimates that the Company has used.

XML

Summary of Significant Accounting Policies and Recently Issued Accounting Standards

9 Months Ended

Jul. 04, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies and Recently Issued Accounting Standards

2. Summary of Significant Accounting Policies and Recently Issued Accounting Standards

The Company’s significant accounting policies are described in the Company’s 2019 Form 10-K, filed with the SEC on December 12, 2019. Our senior management has reviewed these significant accounting policies and related disclosures and determined that there were no significant changes in our critical accounting policies in the nine months ended July 4, 2020, except as follows (and as discussed in the Recently Adopted Accounting Standards section of this Note 2):

Amortization of Deferred Pension Losses

Historically, the Company has amortized deferred losses from our frozen defined benefit pension plan accounted for under ASC 715, Compensation - Retirement Benefits, over the expected remaining employment period of the participants who remained employed with the Company. ASC 715 states that if all or almost all of a plan's participants are inactive, the average remaining life expectancy of the inactive participants shall be used to amortize the unrecognized net gain or loss instead of the average remaining service period of active plan participants. In the first quarter of 2020, the ratio of active (employed) to inactive participants in our plan declined to less than 10%, a figure we believe meets the definition of almost all participants as inactive. Accordingly, we have changed the amortization period from approximately seven years in 2019 to approximately 23 years in 2020. Future amortization periods (remaining life expectancy) will be determined based on the participant and actuarial data at that time.

Recently Adopted Accounting Standards

ASU 2018-02 – In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220). This ASU provides guidance on a reclassification from accumulated other comprehensive income ("AOCI") to retained earnings for the effect of the tax rate change resulting from the Tax Cuts and Jobs Act (H.R.1) (the "Tax Act"). The amendments eliminate the stranded tax effects resulting from the Tax Act and will improve the usefulness of information reported to financial statement users. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. We adopted this ASU, in the first quarter of fiscal 2020, and did not elect to reclassify the income tax effects of the Tax Act from AOCI to retained earnings. We use a specific identification approach to release the income tax effects in AOCI.

ASU 2019-12 – In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the process for calculating interim (intraperiod) income taxes and the accounting for deferred tax liabilities for foreign equity-method investments, among other simplifications. We have early adopted this standard effective the first quarter of fiscal 2020. The impacts of adopting this standard were not material to us.

Recently Issued Accounting Standards

ASU 2020-04 – On March 12, 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, providing temporary guidance to ease the potential burden in accounting for reference rate reform primarily resulting from the discontinuation of LIBOR, which is currently expected to occur on December 31, 2021. The amendments in ASU 2020-04 are elective and apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued. An entity may elect to apply the amendments prospectively from March 12, 2020 through December 31, 2022. Our debt and derivative agreements currently reference LIBOR. Contract language is expected to be incorporated into these agreements to address the transition to an alternative reference rate. We are currently evaluating the impact this ASU may have on our consolidated financial statements.

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Supplemental Financial Information

9 Months Ended

Jul. 04, 2020

Condensed Financial Information [Abstract]

Supplemental Financial Information

3. Supplemental Financial Information

Inventories

The following table presents the components of inventories at the dates indicated:

(in thousands of dollars)	July 4, 2020		September 28, 2019
Raw materials	$	108,041	$	60,033
Work in process	29,790		16,663
Finished goods	17,886		2,134
Total inventories	$	155,717	$	78,830

Product Warranties

The following table reflects activity in accrued warranty cost (current and long-term portions combined) for the periods presented:

	Three Months Ended						Nine Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019			July 4, 2020			June 29, 2019
Balance at beginning of period	$	21,398		$	21,520		$	22,343		$	22,646
Add current period accruals	1,947			3,358			6,076			7,196
Current period reductions of accrual	(2,517		)	(2,358		)	(7,591		)	(7,322		)
Balance at end of period	$	20,828		$	22,520		$	20,828		$	22,520

Extended Warranties

The following table reflects activity in deferred warranty income (current and long-term portions combined), for the sale of extended warranties of two to five years, for the periods presented:

	Three Months Ended						Nine Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019			July 4, 2020			June 29, 2019
Balance at beginning of period	$	22,948		$	22,901		$	24,045		$	23,191
Add current period deferred income	1,769			2,880			5,058			6,686
Current period recognition of income	(2,672		)	(2,196		)	(7,058		)	(6,292		)
Balance at end of period	$	22,045		$	23,585		$	22,045		$	23,585

The outstanding balance of deferred warranty income in the table above is considered a "contract liability", and represents a performance obligation of the Company that we satisfy over the term of the arrangement but for which we have been paid in full at the time the warranty was sold. We expect to recognize $2.3 million of the outstanding contract liability during the remainder of fiscal 2020, $7.8 million in fiscal 2021, and the remaining balance thereafter.

Self-Insurance

The following table reflects our total accrued self-insurance liability, comprised of workers' compensation and health insurance related claims, at the dates indicated:

(in thousands of dollars)	July 4, 2020		September 28, 2019
Current portion	$	2,732	$	2,933
Long-term portion	1,794		1,775
Total accrued self-insurance	$	4,526	$	4,708

The current and long-term portions of the accrued self-insurance liability are reflected in accrued expenses and other liabilities, respectively, on the Condensed Consolidated Balance Sheets.

Shipping and Handling Revenues

Shipping and handling revenues were $3.9 million and $6.0 million for the three months ended July 4, 2020 and June 29, 2019, respectively, and $11.5 million and $12.5 million for the nine months ended July 4, 2020 and June 29, 2019, respectively. The related cost of goods sold was $3.4 million and $5.3 million for the three months ended July 4, 2020 and June 29, 2019, respectively, and $10.0 million and $11.0 million for the nine months ended July 4, 2020 and June 29, 2019, respectively.

Pension Expense

Components of net periodic pension benefit cost were as follows for the periods presented:

	Three Months Ended						Nine Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019			July 4, 2020			June 29, 2019
Interest cost	$	1,237		$	1,512		$	3,711		$	4,535
Expected return on plan assets	(1,846		)	(1,905		)	(5,538		)	(5,714		)
Amortization of prior loss	430			689			1,289			2,068
Net periodic benefit cost	$	(179	)	$	296		$	(538	)	$	889
Amortization of prior loss, recognized in other comprehensive income	430			689			1,289			2,068
Total recognized in net periodic pension benefit cost and other comprehensive income	$	(609	)	$	(393	)	$	(1,827	)	$	(1,179	)

Derivative Instruments

We are charged variable rates of interest on our indebtedness outstanding under the Amended Credit Agreement (defined below) which exposes us to fluctuations in interest rates. On October 24, 2018, the Company entered into a four-year interest rate collar with a $150.0 million notional value with an effective date of November 30, 2018. The collar was entered into in order to partially mitigate our exposure to interest rate fluctuations on our variable rate debt. The collar establishes a range where we will pay the counterparty if the three-month LIBOR rate falls below the established floor rate of 1.5%, and the counterparty will pay us if the three-month LIBOR rate exceeds the ceiling rate of 3.3%. The collar settles quarterly through the termination date of September 30, 2022. No payments or receipts are exchanged on the interest rate collar contracts unless interest rates rise above or fall below the contracted ceiling or floor rates. During the three-months ended July 4, 2020, the three-month LIBOR rate fell below the established floor, which required an immaterial payment to the counterparty.

Changes in the interest rate collar fair value are recorded in interest expense as the collar does not qualify for hedge accounting. At July 4, 2020, the fair value of the interest rate collar contract was $(4.2) million and is included in "other current liabilities" on the Condensed Consolidated Balance Sheets. The fair value of the interest rate collar is a Level 2 fair value measurement, based on quoted prices of similar items in active markets.

Equity Investment in Affiliate

The Company holds a 50% equity interest in Micro Bird Holdings, Inc. (“Micro Bird”), and accounts for Micro Bird under the equity method of accounting. The carrying amount of the equity method investment is adjusted for the Company’s proportionate share of net earnings and losses and any dividends received. At July 4, 2020 and September 28, 2019, the carrying value of the Company's investment was $11.9 million and $11.1 million, respectively.

In recognizing the Company’s 50% portion of Micro Bird net income, the Company recorded $0.8 million and $1.2 million in Equity in net income of non-consolidated affiliate for the nine months ended July 4, 2020 and June 29, 2019, respectively. Summarized unaudited financial information for these periods for Micro Bird is as follows:

	Nine Months Ended
(in thousands of dollars)	July 4, 2020		June 29, 2019
Revenues	$	58,883	$	86,364
Gross profit	7,318		9,961
Operating income	1,557		3,717
Net income	1,103		2,409

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Debt

9 Months Ended

Jul. 04, 2020

Debt Disclosure [Abstract]

Debt

4. Debt

On May 7, 2020, the Company entered into a Second Amendment which amended the Credit Agreement, dated as of December 12, 2016 (the “Credit Agreement”, as amended by that certain First Amendment to Credit Agreement, dated as of September 13, 2018 (the “First Amendment”), and as further amended by the Second Amendment, the “Amended Credit Agreement”). The Second Amendment provided

for an aggregate lender commitment of $41.9 million of additional revolving commitments bringing the total revolving commitments to $141.9 million. The revolving commitments under the Amended Credit Agreement mature on September 13, 2023, which is the fifth anniversary of the effective date of the First Amendment. The interest rate pricing grid remained unchanged, but the LIBOR floor was amended from 0% to 0.75%. We incurred $0.9 million in fees related to the amendment. The fees were capitalized to other assets on the Consolidated Balance Sheets and are amortized on a straight-line basis to interest expense until maturity of the agreement.

Term debt consisted of the following at the dates indicated:

(in thousands of dollars)	July 4, 2020		September 28, 2019
2023 term loan, net of deferred financing costs of $2,458 and $3,124, respectively	$	176,367	$	183,126
Less: current portion of long-term debt	9,900		9,900
Long-term debt, net of current portion	$	166,467	$	173,226

Term loans are recognized on the Condensed Consolidated Balance Sheets at the unpaid principal balance, and are not subject to fair value measurement; however, given the variable rates on the loans, the Company estimates that the unpaid principal balance approximates fair value. If measured at fair value in the financial statements, the term loans would be classified as Level 2 in the fair value hierarchy. At July 4, 2020 and September 28, 2019, $178.8 million and $186.3 million, respectively, were outstanding on the term loans.

At July 4, 2020 and September 28, 2019, the stated interest rates on the term loans were 2.8% and 4.4%, respectively. At July 4, 2020 and September 28, 2019, the weighted-average annual effective interest rates for the term loans were 4.1% and 5.0%, respectively, which includes amortization of the deferred financing costs.

At July 4, 2020, $45.0 million in borrowings were outstanding on the Revolving Credit Facility and $6.9 million of Letters of Credit were outstanding; therefore, the Company would have been able to borrow $90.0 million on the revolving line of credit.

Interest expense on all indebtedness was $2.4 million and $3.4 million for the three months ended July 4, 2020 and June 29, 2019, respectively, and $10.0 million and $10.3 million for the nine months ended July 4, 2020 and June 29, 2019, respectively.

The schedule of remaining principal payments through maturity for total debt is as follows:

(in thousands of dollars)
Year	Principal Payments
2020	$	2,475
2021	9,900
2022	14,850
2023	196,600
Total remaining principal payments	$	223,825

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Income Taxes

9 Months Ended

Jul. 04, 2020

Income Tax Disclosure [Abstract]

Income Taxes

5. Income Taxes

Income tax provisions for interim periods are based on estimated annual income tax rates, adjusted to reflect the effects of any significant infrequent or unusual items which are required to be discretely recognized within the current interim period. The effective tax rates in the periods presented are largely based upon the forecast pre-tax earnings mix and allocation of certain expenses in various taxing jurisdictions where the Company conducts its business, primarily the United States. In periods where our operating income approximates or is equal to break-even, the effective tax rates for quarter-to-date and full-year periods may not be meaningful due to discrete period items.

On March 27, 2020 the President of the United States signed the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") into law. While the CARES Act has broad income tax implications for many companies, it did not have a material impact on our reported income tax accounts.

Three Months

The effective tax rate for the three-month period ended July 4, 2020 was 70.1%, which differed from the statutory federal income tax rate of 21%. The difference is mainly due to discrete period tax expense from prior year tax return adjustments and normal tax rate items, such as the benefit from federal and state tax credits (net of valuation allowance), which were partially offset by net non-deductible compensation expenses and other tax adjustments.

The effective tax rate for the three-month period ended June 29, 2019 was 19.1%, which differed from the statutory federal tax rate of 21%. The difference is mainly due to normal tax rate benefit items, such as federal and state tax credits (net of valuation allowance), which were partially offset by non-deductible share-based compensation expenses and other tax adjustments.

Nine Months

The effective tax rate for the nine-month period ended July 4, 2020 was 38.8% and differed from the statutory federal tax rate of 21%. The difference is mainly due to a net discrete period tax benefit from share-based compensation expenses, but also due to normal tax rate items, such as the benefit from federal and state tax credits (net of valuation allowance), which were partially offset by net non-deductible compensation expenses and other tax adjustments.

The effective tax rate for the nine-month period ended June 29, 2019 was 19.7% and differed from the statutory federal income tax rate of 21%. The difference is mainly due to normal tax rate benefit items, primarily federal and state tax credits (net of valuation allowance), which were partially offset by non-deductible share-based compensation expenses and other tax adjustments.

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Guarantees, Commitments and Contingencies

9 Months Ended

Jul. 04, 2020

Commitments and Contingencies Disclosure [Abstract]

Guarantees, Commitments and Contingencies

6. Guarantees, Commitments and Contingencies

Litigation

At July 4, 2020, the Company had a number of product liability and other cases pending. Management believes that, considering the Company’s insurance coverage and its intention to vigorously defend its positions, the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial statements.

Environmental

The Company is subject to a variety of environmental regulations relating to the use, storage, discharge and disposal of hazardous materials used in its manufacturing processes. Failure by the Company to comply with present and future regulations could subject it to future liabilities. In addition, such regulations could require the Company to acquire costly equipment or to incur other significant expenses to comply with environmental regulations. The Company is currently not involved in any material environmental proceedings and therefore management believes that the resolution of pending environmental matters will not have a material adverse effect on the Company’s financial statements.

Guarantees

In the ordinary course of business, we may provide guarantees for certain transactions entered into by our dealers. At July 4, 2020, we had a $3.0 million guarantee outstanding which relates to a guarantee of indebtedness for a term loan with remaining maturity up to 2.5 years. The $3.0 million represents the estimated maximum amount we would be required to pay upon default of all guaranteed indebtedness, and we believe the likelihood of required performance to be remote. At July 4, 2020, $0.3 million was included in other current liabilities on our Condensed Consolidated Balance Sheets for the estimated fair value of the guarantee.    

Lease Commitments

We have operating and finance leases for office and/or warehouse space and for equipment. Our leases have remaining terms of 4.4 to 7.4 years.

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Segment Information

9 Months Ended

Jul. 04, 2020

Segment Reporting [Abstract]

Segment Information

7. Segment Information

We manage our business in two operating segments: (i) the Bus segment, which includes the manufacturing and assembly of buses to be sold to a variety of customers across the United States, Canada and in international markets; and (ii) the Parts segment, which consists primarily of the purchase of parts from third parties to be sold to dealers within the Company’s network. The tables below present segment net sales and gross profit for the periods presented:

Net sales

	Three Months Ended				Nine Months Ended
(in thousands of dollars)	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Bus (1)	$	180,592	$	292,166	$	554,061	$	626,441
Parts (1)	8,589		16,608		43,749		48,901
Segment net sales	$	189,181	$	308,774	$	597,810	$	675,342

(1) Parts segment revenue includes $0.8 million and $1.0 million for the three months ended July 4, 2020 and June 29, 2019, respectively, and $3.2 million and $2.5 million for the nine months ended July 4, 2020 and June 29, 2019, respectively, related to inter-segment sales of parts that was eliminated by the Bus segment upon consolidation.

Gross profit

	Three Months Ended				Nine Months Ended
(in thousands of dollars)	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Bus	$	18,079	$	35,996	$	50,884	$	69,653
Parts	3,003		5,786		15,667		17,193
Segment gross profit	$	21,082	$	41,782	$	66,551	$	86,846

The following table is a reconciliation of segment gross profit to consolidated income (loss) before income taxes for the periods presented:

	Three Months Ended						Nine Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019			July 4, 2020			June 29, 2019
Segment gross profit	$	21,082		$	41,782		$	66,551		$	86,846
Adjustments:
Selling, general and administrative expenses	(17,793		)	(20,996		)	(58,146		)	(61,197		)
Interest expense	(2,406		)	(3,369		)	(9,961		)	(10,241		)
Interest income	27			—			27			9
Other income (expense), net	181			(410		)	555			(1,034		)
Income (loss) before income taxes	$	1,091		$	17,007		$	(974	)	$	14,383

Sales are attributable to geographic areas based on customer location and were as follows for the periods presented:

	Three Months Ended				Nine Months Ended
(in thousands of dollars)	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
United States	$	175,433	$	286,499	$	544,176	$	629,668
Canada	13,429		21,639		49,331		43,499
Rest of world	319		636		4,303		2,175
Total net sales	$	189,181	$	308,774	$	597,810	$	675,342

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Revenue

9 Months Ended

Jul. 04, 2020

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer

8. Revenue

The following table disaggregates revenue by product category for the periods presented:

	Three Months Ended				Nine Months Ended
(in thousands of dollars)	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Diesel buses	$	88,299	$	135,246	$	278,698	$	335,553
Alternative fuel buses (1)	80,975		141,939		245,766		260,340
Other (2)	11,583		15,486		30,931		32,061
Parts	8,324		16,103		42,415		47,388
Net sales	$	189,181	$	308,774	$	597,810	$	675,342

(1) Includes buses sold with any fuel source other than diesel (e.g. gasoline, propane, CNG, electric).

(2) Includes shipping and handling revenue, extended warranty income, surcharges, chassis, and bus shell sales.

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Earnings Per Share

9 Months Ended

Jul. 04, 2020

Earnings Per Share [Abstract]

Earnings Per Share

9. Earnings Per Share

The following table presents the earnings per share computation for the periods presented:

	Three Months Ended				Nine Months Ended
(in thousands except for share data)	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Numerator:
Net income	$	1,286	$	14,601	$	244	$	12,708
Denominator:
Weighted-average common shares outstanding	27,027,731		26,451,107		26,784,404		26,449,751
Weighted-average dilutive securities, restricted stock	50,769		94		135,792		29,149
Weighted-average dilutive securities, warrants	—		150,292		—		178,290
Weighted-average dilutive securities, stock options	1,515		118,617		60,284		131,116
Weighted-average shares and dilutive potential common shares	27,080,015		26,720,110		26,980,480		26,788,306
Earnings per share:
Basic earnings per share	$	0.05	$	0.55	$	0.01	$	0.48
Diluted earnings per share	$	0.05	$	0.55	$	0.01	$	0.47

(1) Potentially dilutive securities representing 0.4 million and 0.3 million shares of common stock were excluded from the computation of diluted earnings per share for the three and nine months ended July 4, 2020, respectively, as their effect would have been anti-dilutive.

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Accumulated Other Comprehensive Loss

9 Months Ended

Jul. 04, 2020

Equity [Abstract]

Accumulated Other Comprehensive Loss

10. Accumulated Other Comprehensive Loss

The following table provides information on changes in accumulated other comprehensive loss for the periods presented:

	Three Months Ended						Nine Months Ended
(in thousands of dollars)	Defined Benefit Pension Plan			Total			Defined Benefit Pension Plan			Total
July 4, 2020
Beginning Balance	$	(55,501	)	$	(55,501	)	$	(56,154	)	$	(56,154	)
Amounts reclassified from other comprehensive loss and included in earnings	430			430			1,289			1,289
Total other comprehensive income, before taxes	430			430			1,289			1,289
Income tax expense	(103		)	(103		)	(309		)	(309		)
Ending Balance July 4, 2020	$	(55,174	)	$	(55,174	)	$	(55,174	)	$	(55,174	)
June 29, 2019
Beginning Balance	$	(37,379	)	$	(37,379	)	$	(38,427	)	$	(38,427	)
Amounts reclassified from other comprehensive loss and included in earnings	689			689			2,068			2,068
Total other comprehensive income, before taxes	689			689			2,068			2,068
Income tax expense	(165		)	(165		)	(496		)	(496		)
Ending Balance June 29, 2019	$	(36,855	)	$	(36,855	)	$	(36,855	)	$	(36,855	)

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Subsequent Event	9 Months Ended
	Jul. 04, 2020
Subsequent Events [Abstract]
Subsequent Event	<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;">11. Subsequent Event</font></div></div>

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Nature of Business and Basis of Presentation (Policies)

9 Months Ended

Jul. 04, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company transactions and accounts have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and Article 8 of Regulation S-X. The Company’s fiscal year ends on the Saturday closest to September 30 with its quarters consisting of thirteen weeks in most years. In fiscal year 2020, there is a total of 53 weeks. The third quarters of fiscal 2020 and 2019 both included 13 weeks. The nine month periods in fiscal 2020 and 2019 included 40 and 39 weeks, respectively.

In the opinion of management, all adjustments considered necessary for a fair presentation of financial results have been made. Such adjustments consist of only those of a normal recurring nature. Operating results for any interim period are not necessarily indicative of the results that may be expected for the entire year. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

The Condensed Consolidated Balance Sheet data as of September 28, 2019 was derived from the Company’s audited financial statements but does not include all disclosures required by generally accepted accounting principles. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes for the fiscal year ended September 28, 2019 as set forth in the Company's 2019 Form 10-K filed on December 12, 2019.

Use of Estimates and Assumptions

Use of Estimates and Assumptions

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions. At the date of the financial statements, these estimates and assumptions affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities, and during the reporting period, these estimates and assumptions affect the reported amounts of revenues and expenses. For example, significant management judgments are required in determining excess, obsolete, or unsalable inventory, allowance for doubtful accounts, potential impairment of long-lived assets, goodwill and intangibles, the accounting for self-insurance reserves, warranty reserves, pension obligations, income taxes, environmental liabilities and contingencies. Future events, including the extent and duration of COVID-19 related economic impacts, and their effects cannot be predicted with certainty, and, accordingly, the Company’s accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the Company’s condensed consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. The Company evaluates and updates its assumptions and estimates on an ongoing basis and may employ outside experts to assist in the Company’s evaluations. Actual results could differ from the estimates that the Company has used.

Amortization of Deferred Pension Losses

Amortization of Deferred Pension Losses

Historically, the Company has amortized deferred losses from our frozen defined benefit pension plan accounted for under ASC 715, Compensation - Retirement Benefits, over the expected remaining employment period of the participants who remained employed with the Company. ASC 715 states that if all or almost all of a plan's participants are inactive, the average remaining life expectancy of the inactive participants shall be used to amortize the unrecognized net gain or loss instead of the average remaining service period of active plan participants. In the first quarter of 2020, the ratio of active (employed) to inactive participants in our plan declined to less than 10%, a figure we believe meets the definition of almost all participants as inactive. Accordingly, we have changed the amortization period from approximately seven years in 2019 to approximately 23 years in 2020. Future amortization periods (remaining life expectancy) will be determined based on the participant and actuarial data at that time.

Recently Issued Accounting Standards and Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

ASU 2018-02 – In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220). This ASU provides guidance on a reclassification from accumulated other comprehensive income ("AOCI") to retained earnings for the effect of the tax rate change resulting from the Tax Cuts and Jobs Act (H.R.1) (the "Tax Act"). The amendments eliminate the stranded tax effects resulting from the Tax Act and will improve the usefulness of information reported to financial statement users. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. We adopted this ASU, in the first quarter of fiscal 2020, and did not elect to reclassify the income tax effects of the Tax Act from AOCI to retained earnings. We use a specific identification approach to release the income tax effects in AOCI.

ASU 2019-12 – In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the process for calculating interim (intraperiod) income taxes and the accounting for deferred tax liabilities for foreign equity-method investments, among other simplifications. We have early adopted this standard effective the first quarter of fiscal 2020. The impacts of adopting this standard were not material to us.

Recently Issued Accounting Standards

ASU 2020-04 – On March 12, 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, providing temporary guidance to ease the potential burden in accounting for reference rate reform primarily resulting from the discontinuation of LIBOR, which is currently expected to occur on December 31, 2021. The amendments in ASU 2020-04 are elective and apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued. An entity may elect to apply the amendments prospectively from March 12, 2020 through December 31, 2022. Our debt and derivative agreements currently reference LIBOR. Contract language is expected to be incorporated into these agreements to address the transition to an alternative reference rate. We are currently evaluating the impact this ASU may have on our consolidated financial statements.

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Supplemental Financial Information (Tables)

9 Months Ended

Jul. 04, 2020

Condensed Financial Information [Abstract]

Inventories

The following table presents the components of inventories at the dates indicated:

(in thousands of dollars)	July 4, 2020		September 28, 2019
Raw materials	$	108,041	$	60,033
Work in process	29,790		16,663
Finished goods	17,886		2,134
Total inventories	$	155,717	$	78,830

Product Warranties

The following table reflects activity in accrued warranty cost (current and long-term portions combined) for the periods presented:

	Three Months Ended						Nine Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019			July 4, 2020			June 29, 2019
Balance at beginning of period	$	21,398		$	21,520		$	22,343		$	22,646
Add current period accruals	1,947			3,358			6,076			7,196
Current period reductions of accrual	(2,517		)	(2,358		)	(7,591		)	(7,322		)
Balance at end of period	$	20,828		$	22,520		$	20,828		$	22,520

Extended Warranties

The following table reflects activity in deferred warranty income (current and long-term portions combined), for the sale of extended warranties of two to five years, for the periods presented:

	Three Months Ended						Nine Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019			July 4, 2020			June 29, 2019
Balance at beginning of period	$	22,948		$	22,901		$	24,045		$	23,191
Add current period deferred income	1,769			2,880			5,058			6,686
Current period recognition of income	(2,672		)	(2,196		)	(7,058		)	(6,292		)
Balance at end of period	$	22,045		$	23,585		$	22,045		$	23,585

Self-Insurance

The following table reflects our total accrued self-insurance liability, comprised of workers' compensation and health insurance related claims, at the dates indicated:

(in thousands of dollars)	July 4, 2020		September 28, 2019
Current portion	$	2,732	$	2,933
Long-term portion	1,794		1,775
Total accrued self-insurance	$	4,526	$	4,708

Pension Expense

Components of net periodic pension benefit cost were as follows for the periods presented:

	Three Months Ended						Nine Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019			July 4, 2020			June 29, 2019
Interest cost	$	1,237		$	1,512		$	3,711		$	4,535
Expected return on plan assets	(1,846		)	(1,905		)	(5,538		)	(5,714		)
Amortization of prior loss	430			689			1,289			2,068
Net periodic benefit cost	$	(179	)	$	296		$	(538	)	$	889
Amortization of prior loss, recognized in other comprehensive income	430			689			1,289			2,068
Total recognized in net periodic pension benefit cost and other comprehensive income	$	(609	)	$	(393	)	$	(1,827	)	$	(1,179	)

Summarized Financial Information

Summarized unaudited financial information for these periods for Micro Bird is as follows:

	Nine Months Ended
(in thousands of dollars)	July 4, 2020		June 29, 2019
Revenues	$	58,883	$	86,364
Gross profit	7,318		9,961
Operating income	1,557		3,717
Net income	1,103		2,409

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Debt (Tables)

9 Months Ended

Jul. 04, 2020

Debt Disclosure [Abstract]

Schedule of Term Debt Instruments

Term debt consisted of the following at the dates indicated:

(in thousands of dollars)	July 4, 2020		September 28, 2019
2023 term loan, net of deferred financing costs of $2,458 and $3,124, respectively	$	176,367	$	183,126
Less: current portion of long-term debt	9,900		9,900
Long-term debt, net of current portion	$	166,467	$	173,226

Schedule of Maturities of Long-term Debt

The schedule of remaining principal payments through maturity for total debt is as follows:

(in thousands of dollars)
Year	Principal Payments
2020	$	2,475
2021	9,900
2022	14,850
2023	196,600
Total remaining principal payments	$	223,825

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Segment Information (Tables)

9 Months Ended

Jul. 04, 2020

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

The tables below present segment net sales and gross profit for the periods presented:

Net sales

	Three Months Ended				Nine Months Ended
(in thousands of dollars)	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Bus (1)	$	180,592	$	292,166	$	554,061	$	626,441
Parts (1)	8,589		16,608		43,749		48,901
Segment net sales	$	189,181	$	308,774	$	597,810	$	675,342

(1) Parts segment revenue includes $0.8 million and $1.0 million for the three months ended July 4, 2020 and June 29, 2019, respectively, and $3.2 million and $2.5 million for the nine months ended July 4, 2020 and June 29, 2019, respectively, related to inter-segment sales of parts that was eliminated by the Bus segment upon consolidation.

Gross profit

	Three Months Ended				Nine Months Ended
(in thousands of dollars)	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Bus	$	18,079	$	35,996	$	50,884	$	69,653
Parts	3,003		5,786		15,667		17,193
Segment gross profit	$	21,082	$	41,782	$	66,551	$	86,846

Reconciliation of Operating Profit (Loss) from Segments to Consolidated

The following table is a reconciliation of segment gross profit to consolidated income (loss) before income taxes for the periods presented:

	Three Months Ended						Nine Months Ended
(in thousands of dollars)	July 4, 2020			June 29, 2019			July 4, 2020			June 29, 2019
Segment gross profit	$	21,082		$	41,782		$	66,551		$	86,846
Adjustments:
Selling, general and administrative expenses	(17,793		)	(20,996		)	(58,146		)	(61,197		)
Interest expense	(2,406		)	(3,369		)	(9,961		)	(10,241		)
Interest income	27			—			27			9
Other income (expense), net	181			(410		)	555			(1,034		)
Income (loss) before income taxes	$	1,091		$	17,007		$	(974	)	$	14,383

Revenue from External Customers by Geographic Areas

Sales are attributable to geographic areas based on customer location and were as follows for the periods presented:

	Three Months Ended				Nine Months Ended
(in thousands of dollars)	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
United States	$	175,433	$	286,499	$	544,176	$	629,668
Canada	13,429		21,639		49,331		43,499
Rest of world	319		636		4,303		2,175
Total net sales	$	189,181	$	308,774	$	597,810	$	675,342

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Revenue (Tables)

9 Months Ended

Jul. 04, 2020

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table disaggregates revenue by product category for the periods presented:

	Three Months Ended				Nine Months Ended
(in thousands of dollars)	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Diesel buses	$	88,299	$	135,246	$	278,698	$	335,553
Alternative fuel buses (1)	80,975		141,939		245,766		260,340
Other (2)	11,583		15,486		30,931		32,061
Parts	8,324		16,103		42,415		47,388
Net sales	$	189,181	$	308,774	$	597,810	$	675,342

(1) Includes buses sold with any fuel source other than diesel (e.g. gasoline, propane, CNG, electric).

(2) Includes shipping and handling revenue, extended warranty income, surcharges, chassis, and bus shell sales

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Earnings Per Share (Tables)

9 Months Ended

Jul. 04, 2020

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table presents the earnings per share computation for the periods presented:

	Three Months Ended				Nine Months Ended
(in thousands except for share data)	July 4, 2020		June 29, 2019		July 4, 2020		June 29, 2019
Numerator:
Net income	$	1,286	$	14,601	$	244	$	12,708
Denominator:
Weighted-average common shares outstanding	27,027,731		26,451,107		26,784,404		26,449,751
Weighted-average dilutive securities, restricted stock	50,769		94		135,792		29,149
Weighted-average dilutive securities, warrants	—		150,292		—		178,290
Weighted-average dilutive securities, stock options	1,515		118,617		60,284		131,116
Weighted-average shares and dilutive potential common shares	27,080,015		26,720,110		26,980,480		26,788,306
Earnings per share:
Basic earnings per share	$	0.05	$	0.55	$	0.01	$	0.48
Diluted earnings per share	$	0.05	$	0.55	$	0.01	$	0.47

(1) Potentially dilutive securities representing 0.4 million and 0.3 million shares of common stock were excluded from the computation of diluted earnings per share for the three and nine months ended July 4, 2020, respectively, as their effect would have been anti-dilutive.

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Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Jul. 04, 2020

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The following table provides information on changes in accumulated other comprehensive loss for the periods presented:

	Three Months Ended						Nine Months Ended
(in thousands of dollars)	Defined Benefit Pension Plan			Total			Defined Benefit Pension Plan			Total
July 4, 2020
Beginning Balance	$	(55,501	)	$	(55,501	)	$	(56,154	)	$	(56,154	)
Amounts reclassified from other comprehensive loss and included in earnings	430			430			1,289			1,289
Total other comprehensive income, before taxes	430			430			1,289			1,289
Income tax expense	(103		)	(103		)	(309		)	(309		)
Ending Balance July 4, 2020	$	(55,174	)	$	(55,174	)	$	(55,174	)	$	(55,174	)
June 29, 2019
Beginning Balance	$	(37,379	)	$	(37,379	)	$	(38,427	)	$	(38,427	)
Amounts reclassified from other comprehensive loss and included in earnings	689			689			2,068			2,068
Total other comprehensive income, before taxes	689			689			2,068			2,068
Income tax expense	(165		)	(165		)	(496		)	(496		)
Ending Balance June 29, 2019	$	(36,855	)	$	(36,855	)	$	(36,855	)	$	(36,855	)

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Summary of Significant Accounting Policies and Recently Issued Accounting Standards Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Jan. 04, 2020	Oct. 03, 2020	Sep. 28, 2019	Jul. 04, 2020	Apr. 04, 2020	Jun. 29, 2019	Mar. 30, 2019	Sep. 30, 2018	Sep. 29, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Percentage of active participants (less than)	10.00%
Amortization period of deferred pension losses			7 years
Adoption of new revenue recognition standard (ASC 606) adjustment			$ (67,811)	$ (61,928)	$ (65,063)	$ (61,186)	$ (77,590)		$ (28,336)
Accounting Standards Update 2014-09 | Cumulative Effect, Period of Adoption, Adjustment
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Adoption of new revenue recognition standard (ASC 606) adjustment								$ (714)
Scenario, Forecast | Subsequent Event
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Amortization period of deferred pension losses		23 years

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Supplemental Financial Information - Inventories (Details) - USD ($) $ in Thousands	Jul. 04, 2020	Sep. 28, 2019
Condensed Financial Information [Abstract]
Raw materials	$ 108,041	$ 60,033
Work in process	29,790	16,663
Finished goods	17,886	2,134
Total inventories	$ 155,717	$ 78,830

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Supplemental Financial Information - Product Warranty Rollforward (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance at beginning of period	$ 21,398	$ 21,520	$ 22,343	$ 22,646
Add current period accruals	1,947	3,358	6,076	7,196
Current period reductions of accrual	(2,517)	(2,358)	(7,591)	(7,322)
Balance at end of period	$ 20,828	$ 22,520	$ 20,828	$ 22,520

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Supplemental Financial Information - Extended Warranty Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Movement in Extended Product Warranty Accrual [Roll Forward]
Balance at beginning of period	$ 22,948	$ 22,901	$ 24,045	$ 23,191
Add current period deferred income	1,769	2,880	5,058	6,686
Current period recognition of income	(2,672)	(2,196)	(7,058)	(6,292)
Balance at end of period	$ 22,045	$ 23,585	$ 22,045	$ 23,585

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Supplemental Financial Information Remaining Performance Obligation (Details) $ in Millions	Jul. 04, 2020 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-05
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 2.3
Revenue, performance obligation, (in years)	3 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-09-29
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 7.8
Revenue, performance obligation, (in years)	1 year

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Supplemental Financial Information - Self Insurance (Details) - USD ($) $ in Thousands	Jul. 04, 2020	Sep. 28, 2019
Condensed Financial Information [Abstract]
Current portion	$ 2,732	$ 2,933
Long-term portion	1,794	1,775
Total accrued self-insurance	$ 4,526	$ 4,708

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Supplemental Financial Information - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Product Warranty Liability [Line Items]
Shipping and handling revenues	$ 189,181	$ 308,774	$ 597,810	$ 675,342
Minimum
Product Warranty Liability [Line Items]
Extended product warranty, period			2 years
Maximum
Product Warranty Liability [Line Items]
Extended product warranty, period			5 years
Shipping and Handling
Product Warranty Liability [Line Items]
Shipping and handling revenues	3,900	6,000	$ 11,500	12,500
Shipping and handling cost of goods sold	$ 3,400	$ 5,300	$ 10,000	$ 11,000

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Supplemental Financial Information - Pension Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Condensed Financial Information [Abstract]
Interest cost	$ 1,237	$ 1,512	$ 3,711	$ 4,535
Expected return on plan assets	(1,846)	(1,905)	(5,538)	(5,714)
Amortization of prior loss	430	689	1,289	2,068
Net periodic benefit cost	(179)	296	(538)	889
Amortization of prior loss, recognized in other comprehensive income	430	689	1,289	2,068
Total recognized in net periodic pension benefit cost and other comprehensive income	$ (609)	$ (393)	$ (1,827)	$ (1,179)

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Supplemental Financial Information Supplemental Financial Information - Derivative Instruments (Details) - USD ($) $ in Millions	Nov. 30, 2018	Jul. 04, 2020
Condensed Financial Information [Abstract]
Interest rate collar	4 years
Derivative, notional amount	$ 150.0
Floor interest rate	1.50%
Ceiling interest rate	3.30%
Fair value of interest rate contract		$ (4.2)

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Supplemental Financial Information Supplemental Financial Information - Equity Investment in Affiliate (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019	Sep. 28, 2019
Schedule of Equity Method Investments [Line Items]
Equity investment in affiliate	$ 11,946		$ 11,946		$ 11,106
Equity in net income of non-consolidated affiliate	$ 960	$ 842	$ 840	$ 1,158
Micro Bird Holdings Inc.
Schedule of Equity Method Investments [Line Items]
Equity interest in equity method investment (as a percent)	50.00%		50.00%
Equity investment in affiliate	$ 11,900		$ 11,900		$ 11,100
Equity in net income of non-consolidated affiliate			$ 800	$ 1,200

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Supplemental Financial Information Supplemental Financial Information - Summarized Financial Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Condensed Income Statements, Captions [Line Items]
Net sales	$ 189,181	$ 308,774	$ 597,810	$ 675,342
Gross profit	21,082	41,782	66,551	86,846
Operating income	3,289	20,786	8,405	25,649
Net income	$ 1,286	$ 14,601	244	12,708
Micro Bird Holdings Inc.
Condensed Income Statements, Captions [Line Items]
Net sales			58,883	86,364
Gross profit			7,318	9,961
Operating income			1,557	3,717
Net income			$ 1,103	$ 2,409

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Debt - Narrative (Details) - USD ($)			3 Months Ended		9 Months Ended
	May 07, 2020	Sep. 13, 2018	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019	Sep. 28, 2019
Debt Instrument [Line Items]
Interest expense			$ 2,400,000	$ 3,400,000	$ 10,000,000.0	$ 10,300,000
Senior Term Loan | Senior Credit Facility
Debt Instrument [Line Items]
Long-term line of credit			$ 178,800,000		$ 178,800,000		$ 186,300,000
Stated interest rate (as a percent)			2.80%		2.80%		4.40%
Weighted average effective interest rate (as a percent)			4.10%		4.10%		5.00%
Revolving Credit Facility | Line of Credit | Second Amendment to Credit Agreement
Debt Instrument [Line Items]
Additional revolving commitments by lender	$ 41,900,000
Maximum borrowing capacity	$ 141,900,000
Basis spread on variable rate (as a percent)	0.75%	0.00%
Capitalized debt fees	$ 900,000
Revolving Credit Facility | Line of Credit | Senior Revolving Credit Facility
Debt Instrument [Line Items]
Long-term line of credit			$ 45,000,000.0		$ 45,000,000.0
Letters of Credit | Line of Credit | Senior Revolving Credit Facility
Debt Instrument [Line Items]
Letters of credit, amount outstanding			6,900,000		6,900,000
Remaining borrowing capacity			$ 90,000,000.0		$ 90,000,000.0

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Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands	Jul. 04, 2020	Sep. 28, 2019
Debt Instrument [Line Items]
Current portion of long-term debt	$ 9,900	$ 9,900
Long-term debt	166,467	173,226
Senior Term Loan | 2023 Term Loan
Debt Instrument [Line Items]
Total debt	176,367	183,126
Deferred financing costs	$ 2,458	$ 3,124

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Debt - Maturity Schedule (Details) $ in Thousands	Jul. 04, 2020 USD ($)
Long-term Debt, Fiscal Year Maturity
2020	$ 2,475
2021	9,900
2022	14,850
2023	196,600
Total debt	$ 223,825

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Income Taxes (Details)	3 Months Ended		9 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Income Tax Disclosure [Abstract]
Effective tax rate (as a percent)	70.10%	19.10%	38.80%	19.70%
Statutory Federal income tax rate (as a percent)	21.00%	21.00%	21.00%	21.00%

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Guarantees, Commitments and Contingencies Gaurantees, Commitments and Contingencies - Narrative (Details) $ in Millions	9 Months Ended
	Jul. 04, 2020 USD ($)
Lessee, Lease, Description [Line Items]
Maximum exposure of guarantor	$ 3.0
Fair value of guarantees	$ 0.3
Remaining maturity on term loan on guarantee (up to)	2 years 6 months
Minimum
Lessee, Lease, Description [Line Items]
Operating lease term	4 years 4 months 24 days
Maximum
Lessee, Lease, Description [Line Items]
Operating lease term	7 years 4 months 24 days

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Segment Information (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 04, 2020 USD ($)	Jun. 29, 2019 USD ($)	Jul. 04, 2020 USD ($) segment	Jun. 29, 2019 USD ($)
Segment Reporting Information [Line Items]
Number of Operating Segments | segment			2
Net sales	$ 189,181	$ 308,774	$ 597,810	$ 675,342
Gross profit	21,082	41,782	66,551	86,846
United States
Segment Reporting Information [Line Items]
Net sales	175,433	286,499	544,176	629,668
Canada
Segment Reporting Information [Line Items]
Net sales	13,429	21,639	49,331	43,499
Rest of world
Segment Reporting Information [Line Items]
Net sales	319	636	4,303	2,175
Operating Segments
Segment Reporting Information [Line Items]
Gross profit	21,082	41,782	66,551	86,846
Operating Segments | Bus
Segment Reporting Information [Line Items]
Net sales	180,592	292,166	554,061	626,441
Gross profit	18,079	35,996	50,884	69,653
Operating Segments | Parts
Segment Reporting Information [Line Items]
Net sales	8,589	16,608	43,749	48,901
Gross profit	3,003	5,786	15,667	17,193
Intersegment Eliminations | Parts
Segment Reporting Information [Line Items]
Net sales	$ 800	$ 1,000	$ 3,200	$ 2,500

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Segment Information - Reconciliation of Segment Gross Profit (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment gross profit	$ 21,082	$ 41,782	$ 66,551	$ 86,846
Selling, general and administrative expenses	(17,793)	(20,996)	(58,146)	(61,197)
Interest expense	(2,406)	(3,369)	(9,961)	(10,241)
Interest income	27	0	27	9
Other income (expense), net	181	(410)	555	(1,034)
Income (loss) before income taxes	1,091	17,007	(974)	14,383
Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment gross profit	21,082	41,782	66,551	86,846
Segment Reconciling Items
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Selling, general and administrative expenses	(17,793)	(20,996)	(58,146)	(61,197)
Interest expense	(2,406)	(3,369)	(9,961)	(10,241)
Interest income	27	0	27	9
Other income (expense), net	$ 181	$ (410)	$ 555	$ (1,034)

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Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019	Apr. 04, 2020	Sep. 28, 2019	Mar. 30, 2019	Sep. 30, 2018	Sep. 29, 2018
Disaggregation of Revenue [Line Items]
Adoption of new revenue recognition standard (ASC 606) adjustment	$ (61,928)	$ (61,186)	$ (61,928)	$ (61,186)	$ (65,063)	$ (67,811)	$ (77,590)		$ (28,336)
Net sales	189,181	308,774	597,810	675,342
Diesel buses
Disaggregation of Revenue [Line Items]
Net sales	88,299	135,246	278,698	335,553
Alternative fuel buses
Disaggregation of Revenue [Line Items]
Net sales	80,975	141,939	245,766	260,340
Other
Disaggregation of Revenue [Line Items]
Net sales	11,583	15,486	30,931	32,061
Parts
Disaggregation of Revenue [Line Items]
Net sales	$ 8,324	$ 16,103	$ 42,415	$ 47,388
Accounting Standards Update 2014-09 | Cumulative Effect, Period of Adoption, Adjustment
Disaggregation of Revenue [Line Items]
Adoption of new revenue recognition standard (ASC 606) adjustment								$ (714)

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Earnings Per Share - Summary of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net income	$ 1,286	$ 14,601	$ 244	$ 12,708
Weighted-average common shares outstanding	27,027,731	26,451,107	26,784,404	26,449,751
Weighted-average dilutive securities, warrants	0	150,292	0	178,290
Weighted-average shares and dilutive potential common shares	27,080,015	26,720,110	26,980,480	26,788,306
Basic earnings per share	$ 0.05	$ 0.55	$ 0.01	$ 0.48
Diluted earnings per share	$ 0.05	$ 0.55	$ 0.01	$ 0.47
Restricted Stock [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Weighted-average dilutive securities	50,769	94	135,792	29,149
Options
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Weighted-average dilutive securities	1,515	118,617	60,284	131,116

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Earnings Per Share - Narrative (Details) - shares shares in Millions	3 Months Ended	9 Months Ended
	Jul. 04, 2020	Jul. 04, 2020
Earnings Per Share [Abstract]
Anti-dilutive securities excluded from computation of earnings per share (in shares)	0.4	0.3

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Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 04, 2020	Jun. 29, 2019	Jul. 04, 2020	Jun. 29, 2019
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance			$ (67,811)
Ending Balance	$ (61,928)		(61,928)
Defined Benefit Pension Plan
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance	(55,501)	$ (37,379)	(56,154)	$ (38,427)
Amounts reclassified from other comprehensive loss and included in earnings	430	689	1,289	2,068
Total amount recognized in other comprehensive loss	430	689	1,289	2,068
Income tax expense	(103)	(165)	(309)	(496)
Ending Balance	(55,174)	(36,855)	(55,174)	(36,855)
AOCI Attributable to Parent
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance	(55,501)	(37,379)	(56,154)	(38,427)
Amounts reclassified from other comprehensive loss and included in earnings	430	689	1,289	2,068
Total amount recognized in other comprehensive loss	430	689	1,289	2,068
Income tax expense	(103)	(165)	(309)	(496)
Ending Balance	$ (55,174)	$ (36,855)	$ (55,174)	$ (36,855)

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Subsequent Event (Details) - Second Amendment to Credit Agreement - Line of Credit - Revolving Credit Facility - USD ($)	May 07, 2020	Sep. 13, 2018
Subsequent Event [Line Items]
Additional revolving commitments by lender	$ 41,900,000
Maximum borrowing capacity	$ 141,900,000
Basis spread on variable rate (as a percent)	0.75%	0.00%
Capitalized debt fees	$ 900,000

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Label	Element	Value
Accounting Standards Update 2014-09 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Retained Earnings [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest	$ (714,000)