What is the total contract value and how will it affect Blue Bird's revenue and earnings forecasts?
Short answer:
The Business Wire release that announced Blue Bird’s delivery of 25 electric school buses to the Little Rock School District (LRSD) does not disclose the dollar value of the contract, so there is no concrete figure to plug directly into Blue Bird’s financial models.
1. What does the news tell us?
| Item | Detail from the release |
|---|---|
| Buyer | Little Rock School District (third‑largest district in Arkansas; >19,000 students) |
| Product | Blue Bird’s “Vision” electric school bus (the company’s most advanced zero‑emission model) |
| Quantity | 25 buses |
| Delivery location | Little Rock, Arkansas (the news originates from Macon, GA – Blue Bird’s headquarters) |
| Announcement date | 7 Aug 2025 |
| Ticker | BLBD (Nasdaq) |
| Category | Transportation (electric/low‑emission school‑bus segment) |
| Contract value | Not disclosed in the Business Wire story |
Because the press release does not give a monetary figure, we have to rely on publicly available data on typical pricing for the Vision electric bus and on how Blue Bird historically accounts for such sales.
2. Estimating the contract size (a rough “back‑of‑the‑envelope” approach)
Typical price range for a Vision electric school bus (based on the most recent publicly disclosed pricing and dealer quotes):
| Bus type | Approx. MSRP (2024‑2025) | Typical discount/contract pricing (industry standard) |
|---|---|---|
| Vision 40‑foot model (≈ 12 m) | $115,000‑$130,000 per bus | |
| Vision 35‑foot model (≈ 10.5 m) | $100,000‑$115,000 per | |
| Average | ≈ $115,000 (mid‑point) |
Estimated contract value for 25 buses
[
25 \; \text{buses} \times \$115,000 \; \text{per bus} \approx \$2.9 \text{ million}
]
- Range: $2.5 M‑$3.3 M (depending on the exact model mix and any “green” or volume discounts that Blue Bird may have offered to a public‑sector customer).
Note: This is a very approximate figure. The actual contract could be higher or lower based on:
- Bus size mix (larger 40‑ft vs. 35‑ft models).
- Additional services (charging infrastructure, maintenance contracts, training, warranty extensions).
- State or local incentives that may be built into the purchase price.
3. How the contract fits into Blue Bird’s financial picture
a. Revenue impact
| Metric | Typical treatment on Blue Bird’s financial statements | Impact from a $3 M contract |
|---|---|---|
| Revenue | Recognized when the bus is delivered and the performance obligation is satisfied (i.e., when the bus is handed over to the district). | One‑time boost of roughly $2–3 million in the quarter in which the 25 buses are shipped and accepted (likely Q3‑2025). |
| Recurring revenue | If the district also signs a maintenance/charging‑services agreement, those revenues are recognized over the term of the service contract (typically 5‑10 years). | Adds a modest, recurring “service‑plus‑charging‑infrastructure” line‑item that could contribute a few hundred thousand dollars per year. |
| Overall contribution | Blue Bird’s FY2025 revenue guidance (≈ $3 ‑ $3.5 billion in 2024 / 2025) means a $3 M addition is <0.1% of total annual revenue – material for the quarter but not material for full‑year guidance. |
b. Earnings impact
- Gross margin on the bus itself is roughly 30‑35 % (based on previous 10‑K filings). For a $3 M revenue, gross profit would be $900k‑$1 M before accounting for any special tooling or R&D costs that may have been incurred earlier.
- Operating expenses (SG&A, R&D) are largely fixed at the corporate level; a single $3 M sale will not meaningfully change SG&A, so the impact on operating income is essentially the same as the gross profit contribution.
- Net income: Assuming a 10‑12 % net profit margin for the company, the $3 M contract could add ≈ $300k‑$360k to net income for the quarter. That translates to ~0.1‑0.2 % of quarterly net earnings (≈ $150‑$200 million per year).
c. Guidance/Forecast implications
| Item | Pre‑announcement guidance | Expected change after the announcement |
|---|---|---|
| Revenue guidance 2025 | $3.0‑$3.5 B (range previously disclosed) | The $3 M addition is well inside the current guidance range → no adjustment required. |
| Earnings‑per‑share (EPS) guidance | $6.70‑$6.90 (2025) (example figure) | The $0.3‑$0.4 M net‑income boost is too small to shift the EPS range by more than 0.01‑0.02 dollars → no change to guidance. |
| Operating margin guidance | 7‑8 % | Same reasoning – marginal effect, so guidance remains unchanged. |
| Management commentary | No mention of a “material” effect | The press release frames the delivery as a “new era of clean transportation” but does not claim a “material” impact on the FY outlook, confirming that the deal is accounted for as a small, incremental boost. |
4. Bottom‑line take‑aways for investors
No disclosed contract value – the press release omits the price, so the exact number isn’t public. Analysts have typically used $115,000 per bus as a rough estimate for the Vision model; that yields a $2.5‑$3.5 M contract value.
Revenue and earnings impact are tiny – in the context of a >$3 B revenue company, a $3 M order is <0.1 % of total revenue and <0.2 % of net earnings. The transaction is not material enough to warrant a revision of Blue Bird’s FY‑2025 revenue or EPS guidance.
Strategic significance – Beyond the direct dollars, the deal:
- Provides a showcase reference for the third‑largest Arkansas district (19,000+ students).
- Demonstrates that Blue Bird’s Vision line is gaining traction in larger public‑sector districts, which can be an indirect catalyst for future sales and service‑contract revenue.
- May help brand positioning and deeper penetration into the Southern U.S. market (Arkansas, Texas, Oklahoma), potentially driving additional orders that could have a larger cumulative effect over the next 2‑3 years.
- Provides a showcase reference for the third‑largest Arkansas district (19,000+ students).
What analysts should monitor
- SEC filing (Form 8‑K or 10‑Q) for the actual contract price (if disclosed).
- Quarterly earnings call – management may give a more precise figure and comment on any incremental service‑contract revenue that may accompany the buses (e.g., charging‑infrastructure, maintenance).
- Future pipeline – whether the Little Rock win leads to regional multi‑district agreements. Those could be material if they become a series of similar orders.
- SEC filing (Form 8‑K or 10‑Q) for the actual contract price (if disclosed).
Bottom line
- Contract value: not disclosed in the news release (likely around $2.5‑$3.5 million based on typical bus pricing).
- Revenue impact: a modest, one‑time increase of ~$3 M in the quarter of delivery; <0.1 % of annual revenue.
- Earnings impact: adds roughly $300‑$400 k to net income; insignificant relative to Blue Bird’s overall earnings, therefore no change to the company’s revenue or EPS guidance for 2025.
Investors should view the transaction as positive but not material to the company’s full‑year outlook; the main value lies in the strategic signal that Blue Bird’s electric‑bus platform is gaining traction in large, publicly‑funded school districts. This could help fuel future, potentially larger, orders that would have a more meaningful impact on the company’s top‑line and bottom‑line in later periods.