And then they’ve got until April 2026 as the endpoint which to install these buses in. And they’re going to work on charging stations first, it feels like to me, and we’re helping them. And we working on the chargers they need. But obviously, it could well push back a little bit when they want their buses. They’re not going to get buses before they know they got charging stations in place. And that’s the challenge now for all of us in this industry to help that and move it along. The fantastic news is EPA stepped up this round two and round three to $1.5 billion. We thought it was going to be $1 billion for the year. $1.5 billion for the year. Well, they have extended the timeframe. Now, like I said before, we’re going to do everything we can to accelerate our deployment because we like doing that.
I think it’s the right thing to do. And we’ll work with the charging guys that we work with and others, and we’ll work with our end customers too to help them.
Eric Stine: Maybe last one for me just on the Clean Bus Solutions joint venture. Just curious, early returns on that? And is that something where you would expect – do you see people waiting to see if the EPA, if they’re able to get either grants or rebates? If not, then they turn to the joint venture in that financing solution? Or do you think that that’s not necessarily the case and that people go that route regardless, just having a monthly cost that’s similar to diesel?
Phil Horlock: Yeah. I look at it this way. First of all, obviously, EPA grants are really exciting. We have 500,000 school buses on the road, and we’re talking about funding 4,300 with this next round. So there’s a huge appetite and huge oversubscription of school districts that want electric buses. That’s why they stepped up this $1 billion to $1.5 billion. So the EPA – there’s a big demand is what I’m saying. So definitely outside of this, outside of the EPA money, and there are other grants around, by the way, there are things called HVIP and TVIP in different states. But this Clean Bus Solutions gives a chance for really affordable – get rid of the upfront stick shock of an EV, get it installed in your business quickly, in your district quickly.
So we are very excited about that. So they go hand in hand frankly. Obviously, the EPA is such a tremendous opportunity to accelerate. But our Clean Bus Solutions activity too, we got a ton of interest in it from our dealers and their customers. And we’ll just keep working that through the year here and let you know when we get our transactions start hitting.
Operator: Our next question comes from Craig Irwin of ROTH-MKM.
Craig Irwin: Congratulations on the really strong quarter. Much deserved. Even coming into the quarter, there was quite a lot of interest around the gross margin trajectory. And you gave us just another really chunky number this quarter. Can you maybe talk a little bit about the retreat of your competition, the other major school bus OEMs retreating from the alternative fuel markets and how this could impact your gross margins? In the conventional business, the business where you’ve excelled over the last many years, does this impact the longer term potential margin trajectory for Blue Bird? And then, how should we be looking at EV mix and the impact on margins over the next couple of quarters? Is this may be part of the conservatism that you’re giving us in the forward guidance comments?
Phil Horlock: I don’t really like to comment on what our competition is doing. What I do know is that we bid together on state bids, we attend different conferences, and we’re there together and they’re no longer offering the product that we’re both offering, the propane and gasoline. They just got a diesel and electric offering as in the marketplace. All I can tell you is we picked a different competitor, right? We’re in our 13th – 14th year actually now with an exclusive with Ford and Roush, which is a pretty strong relationship we have. There was a company called PSI and they’re no longer offering it. So, I’d defer to them on why they did that. Obviously, it’s exciting for us. We are the leaders in this space. You look at our mix of old fuel vehicles, it’s been over 60%.
Old power, as they’re called, alternatives diesel for quite a while now. Our competition’s footprint has been quite different, even with that power train that they had. And so, yeah, we’re excited about the opportunity that brings because our propane we know is ultra-low emissions. It’s a great product. It gets a great rebate and a grant from the EPA fund to make it very attractive. There are other grants around to support it. It’s a terrific product along with our low maintenance gasoline product that’s super inexpensive to run. So, you put that together, we feel in good shape. I’m not going to commit on – I see big showgirls here. But I can tell you obviously, not surprisingly, we’re looking at who’s driving those buses today and what we can do for them.
So, that’s really important. If I can move to the EV mix side, it’s a difficult one to predict. Obviously, 10% mix in the first quarter, we got 10%, mix in our current backlog. We’re talking about 800 now on our volume of sort of 8,750, we’re looking at midpoint, or more like 9% in total for the year. And we’re just waiting to see – a big piece of that will be the EPA grants. So I’m just a little cautious on how quickly those awards, when they’re given, how quickly the audit is going to come in, how quickly we can build them [indiscernible]. And that’s driven by two, when do they want it and when can we build it? There are still constraints in the battery business. There’s no one battery manufacturer out there building packs that can say, I can build anything you want at whatever pace you want.
One recently dropped out, if you like. [indiscernible]. So, it doesn’t affect us. But nevertheless, it’s a sign of things that are happening in the industry. So I think we’ve been a little prudent right now and probably looking at – as I’ve laid out, 808 on 8,750, total volume, probably an 8% to 9% mix for the balance of the year. If we can build more, if we get more orders in, we certainly will because it’s a priority for us with the margins on those products, obviously, and customers who want the best product in the market. So that’s about where we are, Craig. I hope that answers your question.
Craig Irwin: My next question is around your expectations, you put in the presentation around the EPA Clean School Bus program, Round 2 and Round 3. The 30% win rate is dramatically lower than your long term share in the alternative fuels markets. And it really is mostly the same people, the same group at EPA that’s handling the awards, the vouchers for the adoption of EV school buses, these funding opportunities that are so important. You’ve done way better than 30% with them in the past. Can you maybe talk a little bit about whether or not you think that that EPA is under pressure to share this between different OEMs, if there’s maybe just factors in the market that you’re considering with knowledge of different programs and different commitments from customers? And why 30%, I guess is the question I’m asking you.
Phil Horlock: Why 30% is a target we put out there. There’s a lot of activity around this. And when you look at who’s bidding, we know it’s ourselves and our major competitors, IC and Thomas, [indiscernible], BYD, you know these guys, you cover them all, they’re all in there. Have they really penetrated our business of school buses significantly? Not the newer guys. If you look at it in totality, it is the big three, so to speak, right, who tends to get the bulk of the business. But I think, right now, I don’t see the EPA is targeting share in this. They’re not looking at it. When you look at the last grant round, while we got a lot of – this is the one I’m talking now, the 2023 grant that we called it Round A that was just announced.
We sort of know where we stand on that so far. A lot of fleet customers won some awards, and they’ll be choosing their own buses. A lot of school districts that we traditionally haven’t sold to got a lot of awards. Other fleet operators – and I’m talking about the likes of – we all know them, right? First Student, NEC, STA, they got awards. So, obviously, they haven’t selected which bus they’re going to use yet as such. So we’re being a little prudent, right? 30% is a good target to go for. Love to see us beat. We’re definitely beating it today looking at our market share. I can see where we are. But this is open to everybody to apply. And obviously, all these manufacturers are putting in applications. All these dealers are putting in applications and many end customers as possible are putting them in.
So we haven’t got this captive to ourselves. This is sort of broad network of all those districts and operators out there. What we’ve got to make sure is – we’ll try and do our best to make sure they pick our buses. That’s what we’re going to work on, but we put 30% out there as a target.
