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 condensed consolidated financial statements as of and for the three
months ended December 31, 2022 and January 1, 2022 and related notes appearing
in Part I, Item 1 of this Quarterly Report on Form 10-Q ("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.

               Special Note Regarding Forward-Looking Statements

This Report 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," "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
include or 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.
•future impacts resulting from Russia's invasion of Ukraine, which include or
could include, among other effects:
•disruption in global commodity and other markets;
•supply shortages and supplier financial risk, especially from suppliers
providing inventory that is dependent on resources originating from either of
these countries; and
•negative impacts to manufacturing operations resulting from inventory cost
volatility or the supply chain due to shutdowns or other disruptions in
operations.

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
                                       17
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risks and uncertainties, our actual results or performance may be materially different than those expressed or implied by these forward-looking statements.



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 ("SEC"),
specifically the sections titled "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Company's 2022
Form 10-K, filed with the SEC on December 12, 2022. 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 2022 Form 10-K, filed with the
SEC on December 12, 2022.

                             Available Information

We are subject to the reporting and information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), 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 Report. 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 in the
United States of America ("U.S."), 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 powered product offerings 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 U.S. 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 U.S. Government, state governments, and authorized dealers in
certain limited foreign countries.

Throughout this Report, we refer to the fiscal year ending September 30, 2023 as
"fiscal 2023," the fiscal year ended October 1, 2022 as "fiscal 2022" and the
fiscal year ended October 2, 2021 as "fiscal 2021." There will be or were 52
weeks in fiscal 2023, fiscal 2022 and fiscal 2021. The first quarters of fiscal
2023 and fiscal 2022 both included 13 weeks.

Impacts of COVID-19 and Subsequent Supply Chain Constraints on Our Business



Beginning in our second quarter of the fiscal year that ended October 3, 2020
("fiscal 2020"), the novel coronavirus known as "COVID-19" began to spread
throughout the world, resulting in a global pandemic. The pandemic triggered a
significant downturn in global commerce as early as February 2020 and the
challenging market conditions continued into the early months of calendar year
2021. Countermeasures taken to address the COVID-19 pandemic included virtual
and hybrid schooling in many jurisdictions throughout the U.S. and Canada. The
uncertainty of when and how schools would open materially affected demand within
the Type C and Type D school bus industry in the second half of the Company's
fiscal 2020.

While demand for school buses remained suppressed during the first half of
fiscal 2021 as a result of the continuing impact of the COVID-19 pandemic, it
strengthened substantially during the second half of the fiscal year as COVID-19
vaccines were administered and many jurisdictions began preparing for a return
to in-person learning environments for the new school year that began in
mid-August to early September 2021. However, during the second half of fiscal
2021, the Company, and automotive industry as a whole, began experiencing
significant supply chain constraints resulting from, among others, labor
shortages due to the 'great resignation;' the lack of maintenance on, and
acquisition of, capital assets during the extended COVID-19 global lockdowns;
significant increased demand for consumer products containing certain materials
required for the production of vehicles, such as microchips, as consumers spent
stimulus and other funds on items for their homes; etc. These supply chain
disruptions have had a significant adverse impact our operations and results due
to higher purchasing costs, including freight costs incurred to expedite receipt
of critical components, increased manufacturing inefficiencies and our inability
to complete the production of buses to fulfill sales orders primarily during the
latter half of fiscal 2021 and most of fiscal 2022. Specifically, management
estimates that the sale of approximately 2,000 units was deferred from fiscal
2021 into fiscal 2022 as a result of the shortage of critical components that
prevented the Company from initiating
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or completing, as applicable, the production process for certain units that were otherwise scheduled to be delivered to customers during the year. Including these units, the Company's backlog exceeded 4,200 units as of October 2, 2021.



Although there were pockets of COVID-19 outbreaks in the U.S. throughout fiscal
2022, most school systems maintained partial or full in-person learning
environments for the entirety of the school year. Accordingly, new bus orders
during fiscal 2022 remained extremely robust, primarily due to pent-up demand
resulting from the cumulative effect of the COVID-19 pandemic when many school
systems conducted virtual learning (i.e., approximately January 2020 through
June 2021). This strong demand, when coupled with an already challenged global
supply chain for automotive parts that continued from fiscal 2021 but that was
further impacted, including continuing escalating inventory purchase costs, by
additional stress resulting from Russia's invasion of Ukraine in February 2022
(see further discussion below) and several complete shutdowns in China as a
result of widespread COVID-19 outbreaks, resulted in the Company's order backlog
continuing to grow during fiscal 2022, exceeding 5,000 units as of October 1,
2022 (only minimal sales orders were canceled during the fiscal year as a result
of continued delays in our production process).

Shortages of key components during the second half of fiscal 2021 and most of
fiscal 2022 hindered the Company's ability to complete the production of buses
to fulfill sales orders, which had a significant, adverse impact on the
Company's revenues during these periods. The Company has also experienced
significant increased purchase costs for many of its raw materials as a result
of supply chain disruptions over these same periods and continuing into the
first quarter of fiscal 2023 that have negatively impacted the gross profit it
recognized on sales. In response, beginning in July 2021 and continuing
throughout fiscal 2022, the Company announced a number of sales price increases
that apply to new sales orders and partially applied to backlog orders that were
both intended to mitigate the impact of rising purchase costs on our operations
and results. Additionally, during fiscal 2022, the Company began including price
escalation provisions when bidding on contracts so that it can consider economic
fluctuations between the bid date and the contract date to determine whether
increased costs should be passed along to customers. Most of these price
increases were generally not realized in the first half of fiscal 2022 as sales
recorded during such quarters related to the backlog of orders that existed
prior, and therefore were not subject, to the price increases. While they began
to impact sales and gross profit in the latter half of fiscal 2022, such impact
did not offset the significant continued increase in the Company's production
costs, resulting in further deterioration of the Company's gross profit during
the second half of fiscal 2022 and continuing into the first quarter of fiscal
2023 as it produced and sold the oldest units included in the backlog as of the
end of fiscal 2022. However, they are expected to have a positive impact on
sales and gross profit during the remainder of fiscal 2023 as the Company
fulfills sales orders (i) from the backlog existing as of the end of fiscal 2022
and (ii) that are taken during fiscal 2023, both of which contained, or will
contain, most or all of the cumulative sales prices increases that have been
announced since July 2021.

New bus orders during the first quarter of fiscal 2023 remained extremely
robust, primarily due to a combination of (i) pent-up demand resulting from the
cumulative effect of the COVID-19 pandemic when many school systems conducted
virtual learning and (ii) the challenged global supply chain for automotive
parts that hindered the school bus industry's ability to produce and sell buses
during the latter half of fiscal 2021 and most of fiscal 2022. Accordingly, the
Company's backlog remained in excess of 5,000 units as of December 31, 2022
despite it selling almost 2,000 units during the first quarter of fiscal 2023
that were included in the backlog that existed as of October 1, 2022.

In general, management believes that supply chain disruptions could continue in
future periods and could materially impact our results if we are unable to i)
produce during quarters having higher sales volumes and/or ii) pass along rising
costs to our customers. Additionally, although 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 COVID-19 pandemic and subsequent supply chain constraints have resulted, and
could to continue to result, in significant economic disruption and have
adversely affected our business. They could continue to adversely impact our
business for the remainder of fiscal 2023 and perhaps beyond. Significant
uncertainty exists concerning the magnitude of the impact and duration of any
future COVID-19 outbreaks and their potential impact on the overall economy,
both within the U.S and globally. Accordingly, the magnitude and duration of any
demand reductions, production and supply chain disruptions, and related
financial impacts on our business cannot be estimated at this time.

The impacts from the COVID-19 pandemic and subsequent supply chain constraints
on the Company's business and operations during the second half of fiscal 2020
and continuing through the first quarter of fiscal 2023 negatively affected our
revenues, gross profit, income and cash flows. We continue to monitor and assess
the level of future customer demand, the ability of school boards to maintain
normal in-person learning in the foreseeable future, the ability of suppliers to
resume and/or maintain operations and to provide parts and supplies in
sufficient quantities to meet our production needs, the ability of our employees
to continue to work, and our ability to maintain continuous production during
the remainder of fiscal 2023 and beyond. See PART I, Item 1.A. "Risk Factors,"
of our 2022 Form 10-K, filed with the SEC on December 12, 2022, for a discussion
of the material risks we believe we face particularly related to the COVID-19
pandemic and subsequent supply chain constraints.

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Impact of Russia's Invasion of Ukraine on Our Business



On February 24, 2022, Russian military forces launched a large-scale invasion of
Ukraine. While the Company has no assets or customers in either of these
countries, this military conflict has had a significant negative impact on the
Company's operations, cash flows and results during fiscal 2022 and continuing
into the first quarter of fiscal 2023, primarily in an indirect manner since the
Company does not sell to customers located in, or source goods directly from,
either country.

Specifically, Ukraine has historically been a large exporter of ferroalloy
materials used in the manufacture of steel and the disruption in the supply of
these minerals resulted in a significant increase in the price of steel from
$1,057 per ton the third week of February 2022 to as high as $1,492 per ton the
third week of April 2022 before finally decreasing to an average of $1,078 per
ton the last two weeks of June and continuing to decline to $791 and $664 per
ton the last weeks in September and December 2022, respectively (source: sheet
prices published by the CRU Index every Wednesday that provide price
benchmarking in North America for U.S. Midwest Domestic Hot-Rolled Coil Steel).
While the Company has generally mitigated its direct exposure to steel prices by
executing fixed price purchase contracts (generally purchased one quarter in
advance) for the majority of the significant amount of steel used in the
manufacture of school bus bodies, many suppliers from which the Company
purchases components containing steel increased the price that they charge the
Company to acquire such inventory, primarily on a lagged basis, during the
latter half of fiscal 2022 and continuing into the first quarter of fiscal 2023.
These inventory costs impact gross profit when school buses are sold and cash
flows when the related invoices are paid.

Additionally, Russia has historically been a large global exporter of oil and
many countries have ceased buying Russian oil in protest of the invasion and to
comply with sanctions imposed by the U.S. and many European countries.
Accordingly, the disruption in the supply of oil has significantly impacted the
price of goods refined from oil, such as diesel fuel, which increased from
$4.055 per gallon the week ending February 21, 2022 to as high as $5.810 per
gallon the week ending June 20, 2022, before decreasing slightly throughout the
remainder of our fiscal 2022 to $4.889 per gallon the week ending September 26,
2022 and fluctuating within a range from $5.341 and $4.537 per gallon during our
first quarter of fiscal 2023 (source: U.S Energy Information Administration -
Weekly U.S. No 2 Diesel Retail Prices). These increases have significantly
impacted the Company both as a result of the price that suppliers charge the
Company to acquire inventory (since diesel fuel impacts their cost of acquiring
the inventory used in producing their goods) and the price that the Company pays
for freight to deliver the inventory that it acquires. Additionally, such
increases are generally implemented with very little lag so that they impact the
purchase cost of inventory and cash flows on an almost real-time basis.

Finally, both countries have large quantities of other minerals that impact commodity costs, such as rubber and resin, among others, and the disruption caused by the ongoing military conflict has increased the cost and/or decreased the supply of components containing these materials, further impacting an already challenged global supply chain for automotive parts.

Russia's invasion of Ukraine has resulted, and is likely to continue to result,
in significant economic disruption and has adversely affected our business.
Specifically, it has contributed to higher inventory purchase costs, including
freight costs, that negatively impacted the gross profit recognized on sales
during the latter part of fiscal 2022 and continuing into the first quarter of
fiscal 2023. Because peace negotiations do not appear to be productive and
because Russia has announced its intention to continue military operations in
Ukraine in the immediate term, we currently believe that this matter will
continue to adversely impact our business for the remainder of fiscal 2023 and
perhaps beyond. Significant uncertainty exists concerning the magnitude of the
impact and duration of the ongoing military conflict and its impact on the
overall economy, both within the U.S. and globally. Accordingly, the duration of
any production and supply chain disruptions, and related financial impacts,
cannot be estimated at this time.

Critical Accounting Policies and Estimates, Recent Accounting Pronouncements



The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America ("U.S. GAAP") requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent 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 2022 Form 10-K, filed with the SEC on December 12,
2022, 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 three months ended December 31, 2022.
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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. Evolving protocols for public health concerns and/or continued
technological advancements could shift the future form of educational delivery
away from in-person learning on a more permanent basis, with increased remote
learning reasonably 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, electric-powered 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.

•Pricing. Our products are sold to school districts throughout the U.S. 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. Additionally, in
certain cases, prices originally quoted with dealers and school districts may
have become less favorable, or more unfavorable, to us given increasing
inventory costs between the time the sales order was contractually agreed upon
and the bus is built and delivered as a result of ongoing supply chain
disruptions and general inflationary pressures.

•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 are 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 impacting the
demand for Company products and the impact of the subsequent supply chain
constraints hindering the Company's ability to produce and sell buses,
seasonality has become unpredictable. Seasonality and variations from historical
seasonality have impacted the comparison of results between fiscal periods.

•Inflation. As discussed previously above, supply chain disruptions developing
subsequent to the COVID-19 pandemic and, more recently, Russia's invasion of
Ukraine, have significantly increased our inventory purchase costs, including
freight costs incurred to expedite receipt of critical components, reflected in
cost of goods sold during the latter half of fiscal 2021, all of fiscal 2022 and
continuing into the first quarter of fiscal 2023. In response, the Company
announced several sales price increases that apply to new sales orders and
partially applied to backlog orders that were both intended to mitigate the
impact of rising purchase costs on our operations and results. Most of these
price increases were generally not realized in the first half of fiscal 2022 as
sales recorded during such quarters related to the backlog of orders that
existed prior, and therefore were not subject, to the price increases. While
they began to impact sales and gross profit in the latter half of fiscal 2022,
such impact did not offset the significant continued increase in the Company's
production costs, resulting in further deterioration of the Company's gross
profit during the second half of fiscal 2022 and continuing into the first
quarter of fiscal 2023 as it produced and sold the oldest units included in the
backlog as of the end of fiscal 2022. However, they are expected to have a
positive impact on sales and gross profit during the remainder of fiscal 2023 as
the Company fulfills sales orders (i) from the
                                       21
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backlog existing as of the end of fiscal 2022 and (ii) that are taken during fiscal 2023, both of which contained, or will contain, most or all of the cumulative sales prices increases that have been announced since July 2021.

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) including freight costs, 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, fluctuations in freight costs, 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, along with 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, and changes in the
fair value of interest rate derivatives not designated in hedge accounting
relationships, 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 expense/income, net. This balance includes periodic pension expense or
income as well as gains or losses on foreign currency, if any. Other immaterial
amounts not associated with operating expenses may also be included in this
balance.

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

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



The condensed consolidated financial statements included in this Report in Item
1. "Financial Statements (Unaudited)" are prepared in conformity with U.S. GAAP.
This Report also includes the following financial measures that are not prepared
in accordance with U.S. GAAP ("non-GAAP"): "Adjusted EBITDA;" "Adjusted EBITDA
Margin;" and "Free Cash Flow." Adjusted EBITDA and Free Cash Flow are financial
metrics that are utilized by management and the board of directors to determine
(a) the annual cash bonus payouts, if any, to be made to certain members of
management based upon the terms of the Company's Management Incentive Plan, and
(b) whether the performance criteria have been met for the vesting of certain
equity awards granted annually to certain members of management based upon the
terms of the Company's Omnibus Equity Incentive Plan. Additionally, consolidated
EBITDA, which is an adjusted EBITDA metric defined by our Amended Credit
Agreement (defined below) that could differ from Adjusted EBITDA discussed above
as the adjustments to the calculations are not uniform, is used to determine the
Company's ongoing compliance with several financial covenant requirements,
including being utilized in the denominator of the calculation of the Total Net
Leverage Ratio ("TNLR"), as and when applicable, which is also utilized in
determining the interest rate we pay on borrowings under our Amended Credit
Agreement (defined below). Accordingly, management views these non-GAAP
financial metrics as key for the above purposes and as a useful way to evaluate
the performance of our operations as discussed further below.

Adjusted EBITDA is defined as net income or loss prior to interest income;
interest expense including the component of operating lease expense (which is
presented as a single operating expense in selling, general and administrative
expenses in our U.S. GAAP financial statements) that represents interest expense
on lease liabilities; income taxes; and depreciation and amortization including
the component of operating lease expense (which is presented as a single
operating expense in selling, general and administrative expenses in our U.S.
GAAP financial statements) that represents amortization charges on right-of-use
lease assets; as adjusted for certain non-cash charges or credits that we may
record on a recurring basis such as share-based compensation expense and
unrealized gains or losses on certain derivative financial instruments; net
gains or losses on the disposal of assets as well as certain charges such as (i)
significant product design changes; (ii) transaction related costs; (iii)
discrete expenses related to major cost cutting and/or operational
transformation initiatives; or (iv) costs directly attributed to the COVID-19
pandemic. While certain of the charges that are
                                       22
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added back in the Adjusted EBITDA calculation, such as transaction related costs
and operational transformation and major product redesign initiatives, represent
operating expenses that may be recorded in more than one annual period, the
significant project or transaction giving rise to such expenses is not
considered to be indicative of the Company's normal operations. Accordingly, we
believe that these, as well as the other credits and charges that comprise the
amounts utilized in the determination of Adjusted EBITDA described above, should
not be used in evaluating the Company's ongoing annual operating performance.

We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of net
sales. Adjusted EBITDA and Adjusted EBITDA Margin are not measures of
performance defined in accordance with U.S. GAAP. The measures are used as a
supplement to U.S. 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 ongoing operations, excluding decisions made with respect to
capital investment, financing, and certain other significant initiatives or
transactions as outlined in the preceding paragraphs. We believe the non-GAAP
measures offer additional financial metrics that, when coupled with the U.S.
GAAP results and the reconciliation to U.S. 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 or loss as an indicator of our performance or as
alternatives to any other measure prescribed by U.S. 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 certain other significant initiatives or
transactions, (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 U.S. GAAP results, including providing a
reconciliation to U.S. GAAP results, to enable investors to perform their own
analysis of our ongoing operating results.

Our measure of Free Cash Flow is used in addition to and in conjunction with
results presented in accordance with U.S. GAAP and it should not be relied upon
to the exclusion of U.S. GAAP financial measures. Free Cash Flow reflects an
additional way of evaluating our liquidity that, when viewed with our U.S. GAAP
results, provides a more complete understanding of factors and trends affecting
our cash flows. We strongly encourage investors to review our financial
statements and publicly-filed reports in their entirety and not to rely on any
single financial measure.

We define Free Cash Flow as total cash provided by/used in operating activities
as adjusted for net cash paid for the acquisition of fixed assets and intangible
assets. We use Free Cash Flow, and ratios based on Free Cash Flow, to conduct
and evaluate our business because, although it is similar to cash flow from
operations, we believe it is a more conservative measure of cash flow since
purchases of fixed assets and intangible assets are a necessary component of
ongoing operations. Accordingly, Free Cash Flow will 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 sale 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.
                                       23
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Consolidated Results of Operations for the Three Months Ended December 31, 2022
and January 1, 2022:

                                                                                 Three Months Ended
(in thousands of dollars)                                            

December 31, 2022         January 1, 2022
Net sales                                                            $        235,732          $      129,223
Cost of goods sold                                                            228,275                 113,026
Gross profit                                                         $          7,457          $       16,197
Operating expenses
Selling, general and administrative expenses                                   16,832                  18,233
Operating loss                                                       $         (9,375)         $       (2,036)
Interest expense                                                               (4,196)                 (3,082)

Other (expense) income, net                                                      (236)                    736
Loss on debt modification                                                        (537)                   (561)
Loss before income taxes                                             $        (14,344)         $       (4,943)
Income tax benefit                                                              2,981                   1,762
Equity in net income (loss) of non-consolidated affiliate                          69                    (901)

Net loss                                                             $        (11,294)         $       (4,082)
Other financial data:
Adjusted EBITDA                                                      $         (4,245)         $        3,599
Adjusted EBITDA margin                                                           (1.8) %                  2.8  %

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                 December 31, 2022       January 1, 2022
        Bus                                 $          213,249      $        112,437
        Parts                                           22,483                16,786
        Total                               $          235,732      $        129,223

Gross (Loss) Profit by Segment


        Bus                                 $           (3,731)     $          9,642
        Parts                                           11,188                 6,555
        Total                               $            7,457      $         16,197



Net sales. Net sales were $235.7 million for the first quarter of fiscal 2023,
an increase of $106.5 million, or 82.4%, compared to $129.2 million for the
first quarter of fiscal 2022. The increase in net sales is primarily due to
increased unit bookings, product and mix changes, as well as pricing actions
taken by management in response to increased inventory purchase costs.
Significant supply chain disruptions began limiting the availability of certain
critical components primarily beginning towards the end of the third quarter of
fiscal 2021 and continuing throughout fiscal 2022. However, by the end of the
first quarter of fiscal 2023, supply chain constraints began to improve
slightly, allowing for increased production relative to the first quarter of
fiscal 2022.

Bus sales increased $100.8 million, or 89.7%, reflecting a 70.3% increase in
units booked and a 11.4% increase in average sales price per unit. In the first
quarter of fiscal 2023, 1,957 units were booked compared to 1,149 units booked
for the same period in fiscal 2022. The increase in units sold was primarily due
to constraints in the Company's ability to produce and deliver buses due to
shortages of critical components in the first quarter of fiscal 2022. The 11.4%
increase in unit price for the first quarter of fiscal 2023 compared to the same
period in fiscal 2022 reflects pricing actions taken by management as well as
product and customer mix changes.

Parts sales increased $5.7 million, or 33.9%, for the first quarter of fiscal
2023 compared to the first quarter of fiscal 2022. This increase is primarily
attributed to pricing actions taken by management to offset increases in
purchased parts costs and increased inventory availability as supply chain
constraints began to improve slightly during the first quarter of fiscal 2023
relative to the first quarter of fiscal 2022.

                                       24
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Cost of goods sold. Total cost of goods sold was $228.3 million for the first
quarter of fiscal 2023, an increase of $115.2 million, or 102.0%, compared to
$113.0 million for the first quarter of fiscal 2022. As a percentage of net
sales, total cost of goods sold increased from 87.5% to 96.8%.

Bus segment cost of goods sold increased $114.2 million, or 111.1%, for the
first quarter of fiscal 2023 compared to the same period in fiscal 2022. The
increase was primarily driven by the 70.3% increase in units booked, in the
first quarter of fiscal 2023 compared to the same period in fiscal 2022. Also
contributing was increased inventory costs, as the average cost of goods sold
per unit for the first quarter of fiscal 2023 was 23.9% higher compared to the
first quarter of fiscal 2022, primarily due to increases in manufacturing costs
attributable to a) increased raw materials costs resulting from ongoing
inflationary pressures and b) ongoing supply chain disruptions that resulted in
higher purchase costs for components and freight.

The $1.1 million, or 10.4%, increase in parts segment cost of goods sold for the
first quarter of fiscal 2023 compared to the first quarter of fiscal 2022 was
primarily due to the increase in sales volume noted above, increased purchased
parts costs, driven by ongoing inflationary pressures and supply chain
disruptions, as well as slight variations due to product and channel mix.

Operating loss. Operating loss was $9.4 million for the first quarter of fiscal
2023, an increase of $7.3 million, compared to operating loss of $2.0 million
for the first quarter of fiscal 2022. Profitability was negatively impacted by a
decrease of $8.7 million in gross profit as outlined in the revenue and cost of
goods sold discussions. Specifically, the ongoing increases in manufacturing
costs, when coupled with the fact that the Company produced and sold the oldest
units in the backlog existing at the end of fiscal 2022, many of which had
pricing from as early as fiscal 2021, resulted in the bus segment reporting
gross loss of $3.7 million during the first quarter of fiscal 2023. The decrease
in total gross profit was partially offset by a decrease of $1.4 million in
selling, general and administrative expenses, primarily due to a decrease in
share-based compensation expense as a result of the accelerated vesting of all
outstanding stock awards for two of the Company's former executives in
connection with their retirements during the first quarter of fiscal 2022,
without comparable expense in the first quarter fiscal 2023. Additionally,
selling, general and administrative expenses during the first quarter of fiscal
2023 benefited from actions taken by management to reduce labor costs and
certain discretionary spending to mitigate the significant adverse impact of
ongoing supply chain constraints on the Company's operations and results.

Interest expense. Interest expense was $4.2 million for the first quarter of
fiscal 2023, an increase of $1.1 million, or 36.1%, compared to $3.1 million for
the first quarter of fiscal 2022. The increase was primarily attributable to an
increase in the stated term loan interest rate from 6.0% at January 1, 2022 to
10.5% at December 31, 2022.

Income taxes. We recorded income tax benefit of $3.0 million and $1.8 million for the first quarters of fiscal 2023 and fiscal 2022, respectively.



The effective tax rate for the three months ended December 31, 2022 was 20.8%,
which aligned with the statutory federal income tax rate of 21% and is comprised
of normal tax rate items, including impacts from state taxes and federal and
state tax credits (net of valuation allowances), with discrete period items
having a nominal impact on the effective rate during the quarter.

The effective tax rate for the three months ended January 1, 2022 was 35.6%,
which differed from the statutory federal income tax rate of 21%. The difference
was mainly due to normal tax rate items, including impacts from state taxes and
federal and state tax credits (net of valuation allowances), which was partially
offset by discrete period tax expense resulting from net non-deductible
compensation expenses and other tax adjustments.

Adjusted EBITDA. Adjusted EBITDA was $(4.2) million, or (1.8)% of net sales, for
the first quarter of fiscal 2023, a decrease of $7.8 million, or 217.9%,
compared to $3.6 million, or 2.8% of net sales, for the first quarter of fiscal
2022. The decrease in Adjusted EBITDA primarily results from the $7.2 million
increase in net loss, as a result of the factors discussed above.

                                       25
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The following table sets forth a reconciliation of net loss to adjusted EBITDA
for the periods presented:
                                                                           Three Months Ended
(in thousands of dollars)                                       December 31, 2022         January 1, 2022
Net loss                                                       $        (11,294)         $       (4,082)
Adjustments:
Interest expense, net (1)                                                 4,289                   3,157
Income tax benefit                                                       (2,981)                 (1,762)
Depreciation, amortization, and disposals (2)                             3,815                   3,523
Operational transformation initiatives                                      800                       1
Share-based compensation                                                    589                   1,673
Product redesign initiatives                                                  -                     253
Restructuring and other charges                                               -                     246
Costs directly attributed to the COVID-19 pandemic (3)                        -                      29
Loss on debt modification                                                   537                     561

Adjusted EBITDA                                                $         (4,245)         $        3,599
Adjusted EBITDA margin (percentage of net sales)                           (1.8) %                  2.8  %




(1) Includes $0.1 million for both fiscal periods, representing interest expense
on operating 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 $0.4 million and $0.2 million for the three months ended
December 31, 2022 and January 1, 2022, respectively, representing amortization
charges on right-of-use lease assets, which are a component of lease expense and
presented as a single operating expense in selling, general and administrative
expenses on our Condensed Consolidated Statements of Operations.
(3) Primarily represents costs incurred for third party cleaning services and
personal protective equipment for our employees in response to the COVID-19
pandemic.
                                       26
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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 December 31, 2022, the Company had $5.7 million of available cash
(net of outstanding checks) and $78.7 million of additional borrowings available
under the revolving line of credit portion of its credit facility. The Company's
revolving line of credit is available for working capital requirements, capital
expenditures and other general corporate purposes.

Sixth Amendment to the Credit Agreement



On November 21, 2022, BBBC (as "Borrower") executed a sixth amendment to the
Credit Agreement, dated as of December 12, 2016 ("Credit Agreement"); as amended
by the first amendment to the Credit Agreement, dated as of September 13, 2018
(the "First Amended Credit Agreement"), the second amendment to the Credit
Agreement, dated as of May 7, 2020 (the "Second Amended Credit Agreement"), the
third amendment to the Credit Agreement, dated as of December 4, 2020 (the
"Third Amended Credit Agreement"); the fourth amendment to the Credit Agreement,
dated as of November 24, 2021 (the "Fourth Amended Credit Agreement:); the fifth
amendment and limited waiver to the Credit Agreement, dated as of September 2,
2022 (the "Fifth Amended Credit Agreement"); and as further amended by the sixth
amendment (the "Sixth Amended Credit Agreement" and collectively, the "Amended
Credit Agreement"). The Sixth Amended Credit Agreement, among other things,
extends the maturity date for both the term loan and revolving credit facilities
from September 13, 2023 to December 31, 2024. The total revolving credit
facility commitment is reduced to an aggregate principal amount of
$90.0 million, of which $80.0 million is available for Borrower to draw, with
the remaining $10.0 million subject to written approval from the lenders, which,
once obtained, will be irrevocable. There was no change in the term loan
facility commitment; however, the Sixth Amended Credit Agreement requires
principal repayments approximating $5.0 million on a quarterly basis through
September 30, 2024, with the remaining balance due upon maturity. There were
$151.6 million of term loan borrowings outstanding on the sixth amendment
effective date.

The Sixth Amended Credit Agreement also provides for temporary amendments to
certain financial performance covenants during the period from the third
amendment effective date, December 4, 2020, through and including April 1, 2023
(the "Amended Limited Availability Period:), which will terminate on the date on
which the Company's TNLR, defined as the ratio of (a) consolidated net debt to
(b) consolidated EBITDA, for the two fiscal quarters most recently ended is each
less than 4.00x and no default or event of default has occurred and is
continuing. However, the Amended Limited Availability Period can re-occur upon a
default or event of default or if the TNLR for the immediately preceding fiscal
quarter is equal to or greater than 4.00x.

The minimum consolidated EBITDA that the Company is required to maintain during
the Amended Limited Availability Period is updated as set forth in the table
below (in millions):

                           Period                       Minimum Consolidated EBITDA

         Fiscal quarter ending July 1, 2023                        $50.0
         Fiscal quarter ending September 30, 2023                  $60.0



For purposes of complying with the above minimum consolidated EBITDA covenant,
the Company's consolidated EBITDA for the (i) two fiscal quarter period ending
July 1, 2023 is multiplied by 2 and (ii) three fiscal quarter period ending
September 30, 2023 is multiplied by 4/3.

The minimum liquidity (in the form of undrawn availability under the revolving
credit facility and unrestricted cash and cash equivalents) that the Company is
required to maintain at the end of each fiscal month during the Amended Limited
Availability Period is amended as set forth in the table below (in millions):

                            Period                                Minimum

Liquidity


  Sixth amendment effective date through December 30, 2023

$30.0





Additionally, the financial performance covenant requiring that school bus units
manufactured by the Company ("Units") not fall below certain pre-set thresholds
on a three month trailing basis ("Units Covenant") is amended for Units to be
calculated at the end of each applicable fiscal month on a cumulative basis,
with the minimum cumulative threshold that the Company is required to maintain
during the Amended Limited Availability Period amended as set forth in the table
below. The Units Covenant is triggered only if the Company's liquidity for the
most-recently ended fiscal month is less than $50.0 million during the Amended
Limited Availability Period:

                                       27
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                               Period                                         Minimum Units Manufactured
Period from October 2, 2022 and ending October 29, 2022                                   450
Period from October 2, 2022 and ending November 26, 2022                                  900
Period from October 2, 2022 and ending December 31, 2022                                 1,400
Period from October 2, 2022 and ending January 28, 2023                                  1,900
Period from October 2, 2022 and ending February 25, 2023                                 2,400
Period from October 2, 2022 and ending April 1, 2023                                     3,000



The Company is not required to comply with a maximum TNLR financial maintenance
covenant for any fiscal quarters from the sixth amendment effective date through
September 30, 2023, with the maximum threshold amended thereafter as follows:

                                                                                Maximum Total
                             Period

Net Leverage Ratio Fiscal Quarter ending December 30, 2023 through the fiscal quarter ending March 30, 2024

4.00:1.00


Fiscal quarter ending June 29, 2024 and thereafter

3.50:1.00

The pricing grid in the Amended Credit Agreement, which is based on the TNLR, is applicable to both term loan and revolving borrowings and is determined in accordance with the amended pricing matrix set forth below:



  Level                    Total Net Leverage Ratio                    ABR

Loans SOFR Loans


    I        Less than 2.00x                                             0.75%           1.75%

II Greater than or equal to 2.00x and less than 2.50x 1.00%

           2.00%

III Greater than or equal to 2.50x and less than 3.00x 1.25%

           2.25%

IV Greater than or equal to 3.00x and less than 3.25x 1.50%

           2.50%

V Greater than or equal to 3.25x and less than 3.50x 1.75%

           2.75%

VI Greater than or equal to 3.50x and less than 4.00x 2.00%

           3.00%

VII Greater than or equal to 4.00x and less than 4.50x 2.75%

           3.75%

VIII Greater than or equal to 4.50x and less than 5.00x 3.75%

           4.75%
    IX       Greater than 5.00x                                          4.75%           5.75%



Further, the pricing margins for levels VII though IX above are each increased
(x) by 0.25% if the aggregate revolving borrowings are equal to or greater than
$50.0 million and less than or equal to $80.0 million and (y) by 0.50% if the
aggregate revolving borrowings are greater than $80.0 million. On the sixth
amendment effective date, the interest rate was set at SOFR plus 5.75% and will
be adjusted, as applicable, for future fiscal quarter in accordance with the
amended pricing grid set forth above.

Finally, the Company is required to deliver to the administrative agent, on a quarterly basis, a projected consolidated balance sheet and consolidated statements of projected operations and cash flows containing the next four fiscal quarters.



Detailed descriptions of the Credit Agreement as well as the First, Second,
Third, Fourth, and Fifth Amended Credit Agreements 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 October 1, 2022, filed with the
SEC on December 12, 2022.

At December 31, 2022, the Borrower and the guarantors under the Amended Credit Agreement were in compliance with all covenants.


                                       28
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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. The adverse impacts from ongoing supply chain disruptions,
which were further exacerbated by Russia's invasion of Ukraine in February 2022,
materially impacted our operations and results during the second half of fiscal
2021 and all of fiscal 2022 due to higher purchasing costs, including freight
costs incurred to expedite receipt of critical components, increased
manufacturing inefficiencies and our inability to complete the production of
buses to fulfill sales orders. Towards the end of fiscal 2022 and continuing
throughout the first quarter of fiscal 2023, there were slight improvements in
the supply chain's ability to deliver the parts and components necessary to
support our production operations, resulting in increased (i) manufacturing
efficiencies and (ii) production of buses to fulfill sales orders during the
first quarter of fiscal 2023. However, the higher costs charged by suppliers to
procure inventory continued into the first quarter of fiscal 2023 and had a
significant adverse impact on our operations and results as such costs outpaced
the increases in sales prices that we charged for the buses that were sold
during the quarter, all of which were included in the backlog of fixed price
sales orders originating in fiscal 2021 and 2022 that carried forward into
fiscal 2023. The development and fluidity of ongoing or future supply chain
constraints preclude any prediction as to the ultimate severity of the adverse
impacts on our business, financial condition, results of operations, and
liquidity. See PART I, Item 1.A. "Risk Factors," of our 2022 Form 10-K, filed
with the SEC on December 12, 2022, for a discussion of the material risks we
believe we face particularly related to the COVID-19 pandemic and subsequent
supply chain constraints.

Future COVID-19 outbreaks and/or continuing supply chain constraints could cause
a more severe contraction in our profits and/or liquidity which could lead to
issues complying with our Amended Credit Agreement covenants. Our primary
financial covenants are (i) minimum consolidated EBITDA, which is an adjusted
EBITDA metric that could differ from Adjusted EBITDA appearing in the Company's
periodic filings on Form 10-K or Form 10-Q as the adjustments to the
calculations are not uniform, at the end of each fiscal quarter for the trailing
four fiscal quarter period most recently then ended for fiscal 2022 and at the
end of the third and fourth fiscal quarters of fiscal 2023 calculated on an
annualized basis; (ii) for fiscal 2022 through December 30, 2023, minimum
liquidity at the end of each fiscal month; (iii) when applicable during fiscal
2022 through April 1, 2023, minimum school bus units manufactured calculated on
a three month trailing basis at the end of each fiscal month for fiscal 2022 and
on a cumulative basis at the end of each fiscal month for the first and second
fiscal quarters of fiscal 2023; and (iv) beginning in the fiscal year ending
September 28, 2024 ("fiscal 2024") and thereafter, TNLR at the end of each
fiscal quarter. If we are not able to comply with such covenants, 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.

To increase our liquidity in future periods, we could pursue raising additional
capital via an equity or debt offering utilizing a currently effective "shelf"
registration statement. However, we cannot assure our investors that we would be
successful in raising this additional capital, which could also lead to
increased expense and larger up-front fees when compared with our historical
financial statements.

Seasonality

Historically, our business has been highly seasonal with school districts buying
their new school 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 representing our two busiest
quarters from a sales and production perspective, the latter ending on the
Saturday closest to September 30. Our quarterly results of operations, cash
flows, and liquidity have historically been, and are likely to be in future
periods, impacted by seasonal patterns. Working capital has historically been a
significant use of cash during the first fiscal quarter due to planned shutdowns
and a significant source of cash generation in the fourth fiscal quarter. With
the COVID-19 pandemic and subsequent supply chain constraints, 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.

                                       29

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