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Micro Bird Acquisition
 9 Months Ended
Jun. 27, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Business Combination
13. Micro Bird Acquisition

On April 1, 2026, the Company completed its acquisition of the remaining 50% of the outstanding voting common stock of Micro Bird pursuant to the terms of a Purchase Agreement dated February 15, 2026. Following the acquisition, the Company can directly offer customers a full suite of school bus models, including the Type A school buses produced by Micro Bird in its Drummondville, Quebec production facility, and can fully pursue the significant opportunity that the Company believes exists in the U.S. commercial bus market by offering existing and new customers buses manufactured at the production facility that Micro Bird recently opened in Plattsburgh, New York, which also currently produces a small number of Type A school buses. Prior to the acquisition date, the Company owned 50% of the outstanding voting stock of Micro Bird and accounted for it utilizing the equity method of accounting as discussed in further detail in Note 11, Equity Investment in Affiliates, above. As a result of the acquisition, Micro Bird is now a wholly-owned consolidated subsidiary of the Company, with the acquisition accounted for as a business combination.

The purchase consideration transferred by the Company to the former owners totaled $205.9 million, inclusive of preliminary customary adjustments related to working capital and net debt, and was comprised of (i) $63.0 million in cash, funded entirely with cash existing on the closing date, and (ii) 2,702,180 shares of exchangeable common stock of a newly-formed Canadian Company subsidiary that are substantially equivalent to, and exchangeable on a one-to-one basis for, shares of Company common stock. In addition, the former owners received one share of newly-created Company preferred stock with voting rights in Company common stock equivalent to the number of shares of exchangeable common stock outstanding at any time. The aggregate value of the above issued securities totaled $142.9 million on the closing date. Since, as discussed previously above, the combination of the exchangeable common stock and the voting preferred stock resulted in the holders having rights equivalent to those of holders of Company common stock, the aggregate value of the equity securities was estimated via reference to the number of shares of exchangeable common stock issued and the closing stock price of a share of Company common stock on April 1, 2026. However, such amount was adjusted for an estimated discount because the shares of exchangeable common stock, and the underlying shares of Company common stock for which such exchangeable shares may be redeemed on a one-to-one basis, were not registered and are legally restricted from being sold on a national securities exchange until the underlying shares of Company common stock are registered.

In connection with the acquisition, the Company remeasured the value of its previously held 50% equity investment to its acquisition date fair value of $196.1 million, which resulted in a $160.5 million gain that is reported within other income (expense), net on the Condensed Consolidated Statements of Operations since such amount is not indicative of the Company's normal earnings activities. The fair value of the previously held equity investment was determined using a market approach based on the cash and equity consideration exchanged for the newly acquired 50% equity interest, which was reduced for an estimated discount because the previous equity interest did not provide the Company the ability to control the activities that most significantly impacted Micro Bird's financial performance based on the shared powers of the joint venture partners.

The Company also separately acquired the Plattsburgh, New York real estate from the former owners for $15.4 million in cash, which was funded entirely with cash existing on the closing date. These assets were previously leased by Micro Bird and accordingly, were not part of the Company's original 50% equity investment or the additional 50% equity investment acquired as discussed above.

The following is a summary of the purchase consideration transferred:

(in thousands of dollars)
Purchase Consideration
Cash consideration transferred for the newly acquired interest$63,021 
Equity consideration transferred for the newly acquired interest142,878 
Fair value of the previously held interest196,095 
Total consideration transferred for the Micro Bird interest401,994 
Cash consideration transferred for the Plattsburgh, New York real estate15,369 
Total consideration transferred$417,363 

During the three and nine months ended June 27, 2026, the Company incurred approximately $4.9 million and $7.6 million of pretax costs, respectively, relating to this transaction, which are recorded in other income (expense), net on the Condensed Consolidated
Statements of Operations as they are not indicative of our normal operating activities. No similar costs were incurred in the corresponding periods of fiscal 2025.

Preliminary Fair Values of the Assets Acquired and the Liabilities Assumed

The Company allocated the purchase price based upon a preliminary assessment of the fair value of the assets acquired and the liabilities assumed on April 1, 2026. The preliminary fair values are based on management’s estimates and assumptions, using the best information available at the time of this filing. The final valuation and related allocation of the purchase price will be completed no later than 12 months after the closing date of the acquisition. The final acquisition accounting adjustments could be materially different and may include (1) changes in the allocations to the intangible assets as well as goodwill and (2) other changes to assets and liabilities, such as working capital. The preliminary allocation of the purchase price is as follows:
(in thousands of dollars)April 1, 2026
Assets acquired
Cash and cash equivalents$28,749 
Inventories145,104 
Other current assets14,924 
Property, plant and equipment45,613 
Finance lease right-of-use assets29,734 
Intangible assets137,599 
Total assets acquired$401,723 
Liabilities assumed
Accounts payable$16,457 
Accrued expenses9,171 
Other current liabilities3,043 
Long-term debt17,603 
Revolving credit facility112,015 
Finance lease obligations29,734 
Warranty11,168 
Deferred warranty income510 
Deferred tax liabilities27,427 
Other liabilities2,509 
Total liabilities assumed$229,637 
Fair value of net assets acquired$172,086 
Goodwill245,277 
Total consideration transferred$417,363 

Identified Intangible Assets

The estimated fair values of the acquired identified intangible assets and their estimated useful lives are as follows:

(in thousands of dollars)
Estimated Useful Life (in years)Estimated Fair Value
(in thousands of dollars)
Customer relationships15$130,000 
Engineering designs46,700 
In-process research & development5899 
Total intangible assets$137,599 

The customer relationships represent the value attributed to the dealer network that was estimated using a multi-period excess earnings method, which is a variation of the income approach. This method, which utilizes Level 3 inputs, calculates the present value of the incremental after-tax cash flows attributable to the intangible asset to estimate the fair value. The fair values of the engineering designs and in-process research & development were estimated using the cost approach. This valuation method is based on the premise that a buyer will not pay more for an asset than it would cost to build or acquire an equally desirable substitute and utilizes level 2 inputs in estimating fair value. The Company is continuing to assess the assumptions used in the estimated fair values described above, as well as the respective useful lives, which could result in changes to the provisional values.
Goodwill

Goodwill represents the excess of the purchase price over the net amount of the fair values assigned to assets acquired and liabilities assumed. The $245.3 million of goodwill recorded in connection with the acquisition is primarily attributable to the value that the Company expects to realize from the existing customer base as well as the significant opportunity that management believes exists in the U.S. commercial bus market, which Micro Bird recently entered in connection with opening its manufacturing facility in Plattsburgh, New York in the second half of 2025. Goodwill also includes an estimated $11.0 million value pertaining to Micro Bird's assembled workforce, which U.S. GAAP does not allow to be recorded as a separate identifiable asset in a business combination and therefore, must be subsumed into goodwill. The goodwill is fully attributable to, and was included within, the Company's Bus segment at June 27, 2026.

The following table summarizes the carrying amount of the Company's goodwill, including the goodwill arising from the Micro Bird acquisition discussed above, as of June 27, 2026:

(in thousands of dollars)
Goodwill, excluding goodwill arising from the Micro Bird acquisition$18,825 
Goodwill arising from the Micro Bird acquisition245,277 
Total goodwill$264,102 

Income Taxes

As the acquisition is accounted for as a business combination, deferred tax assets and liabilities were generally recognized on the differences between the fair value and the tax bases of the assets acquired and the liabilities assumed. However, none of the goodwill is expected to be deductible for income tax purposes, so no deferred tax liability was recognized on the difference between the book and tax bases of this asset.

Pro Forma Results of Operations

The following supplemental pro forma results of operations have been provided for illustrative purposes only and do not purport to be indicative of the actual results that would have been achieved by the combined companies for the periods presented or that may be achieved by the combined companies in the future. Future results may vary significantly from the results reflected in the following pro forma financial information because of future events and transactions, as well as other factors.

Three Months EndedNine Months Ended
(in thousands of dollars)June 27, 2026June 28, 2025June 27, 2026June 28, 2025
Revenues$517,160 $453,921 $1,396,098 $1,258,010 
Net income (1)32,117 34,009 92,161 78,568 
(1)    Net income for both the the three and nine months ended June 27, 2026 is reduced by the approximate $14.5 million non-cash, after-tax pension plan settlement loss discussed in further detail in Note 14, Defined Benefit Pension Plan Settlement and Termination, below.

The pro forma results of operations for each of the applicable periods have been prepared by combining the historical results of Blue Bird with the historical results of Micro Bird, which were adjusted for the preliminary fair values of the assets acquired and the liabilities assumed reflected above as if the acquisition date occurred on September 29, 2024, which was the first day of Blue Bird's fiscal 2025. These pro forma combined historical results were then modified for the following: adjustments to the amounts recorded as revenue by Micro Bird to conform with Blue Bird's accounting policies; an increase in depreciation expense for Micro Bird related to the net impact of adjusting acquired property and equipment, including the Plattsburgh, New York real estate that was separately acquired as discussed previously above, to the acquisition date fair value and modifying depreciable lives to conform with Blue Bird's accounting policies; an increase in amortization expense for Micro Bird due to the incremental intangible assets recorded in connection with the acquisition; an increase, in fiscal 2025, and decrease, in fiscal 2026, in cost of goods sold for Micro Bird related to the impact of adjusting acquired inventory to the acquisition date fair value; a decrease in equity in net income of non-consolidated affiliates for Blue Bird resulting from historically accounting for Micro Bird using the equity method in periods prior to the acquisition; a reclassification of transaction costs incurred by both Blue Bird and Micro Bird in fiscal 2026 to the first quarter of fiscal 2025; a decrease in other income for Blue Bird during fiscal 2026 relating to the gain recorded for the acquisition of Micro Bird as discussed previously above; a reduction of interest expense for Micro Bird and interest income for Blue Bird as a result of the cash that Blue Bird provided so that Micro Bird could repay all of its outstanding bank debt in connection with the acquisition; a reduction
of interest income for Blue Bird as a result of the cash consideration paid; and the income tax impact from the aforementioned pro forma adjustments, as applicable. The pro forma results of operations do not include any adjustments for any cost savings or other synergies that may result from the acquisition. As noted above, the pro forma results of operations do not purport to be indicative of the actual results that would have been achieved by the combined company for the periods presented or that may be achieved by the combined company in the future.

Micro Bird Results of Operations

The Company's Condensed Consolidated Statements of Operations include Micro Bird's results of operations as a wholly-owned consolidated subsidiary of the Company since the April 1, 2026 acquisition date. Micro Bird contributed $122.9 million and $7.4 million in total revenues and net income, respectively, for both the three and nine months ended June 27, 2026.