Blue Bird Corp. experienced a sharp decline in its stock price on Tuesday, falling 9.6% to $65.75 in afternoon trading on the Nasdaq. The drop came after the school-bus manufacturer disclosed in a new SEC filing that it expects to record a material non-cash pension settlement charge in its fiscal third quarter, which ends June 27.
The company announced that its Blue Bird Body Company unit has entered into an agreement with Pacific Life to transfer approximately $94 million in pension liabilities through group annuity contracts. This transaction will affect 2,044 participants in the frozen defined-benefit pension plan. Defined-benefit plans, which provide fixed monthly payments to retirees, expose sponsors to investment and actuarial risks. Blue Bird emphasized that the move will not alter the amount of future benefits or monthly payments for participants.
According to the filing, the pension liabilities will be settled and transferred using plan assets, with no additional cash contribution required from Blue Bird. This follows a separate $13 million in lump-sum payments made in April. The non-cash charge will impact the company's accounting results but not its immediate cash flow.
The stock's decline was steeper than that of broader market indices and peer companies. The SPDR S&P 500 ETF fell about 0.4%, while the iShares Russell 2000 ETF, which tracks smaller U.S. firms, slipped roughly 0.8%. Among vehicle manufacturers, Wabash National saw minimal movement, while Oshkosh declined about 1.6%, still well behind Blue Bird's drop.
Tuesday's selloff came less than two weeks after Blue Bird raised its fiscal 2026 guidance and received analyst upgrades. The company had reported strong fiscal second-quarter results, with net sales of $352.6 million, net income of $29.3 million, and adjusted EBITDA of $50.8 million. CEO John Wyskiel described the quarter as "another outstanding quarterly result," citing strong operations, tariff management, and demand for alternative-powered buses. Blue Bird delivered 201 electric-powered buses in the quarter and holds a firm backlog of more than 900 EV buses.
CFO Razvan Radulescu highlighted the company's "very strong position," with full-year 2026 net revenue expected to be roughly $1.75 billion and adjusted EBITDA around $245 million. Following the earnings release, analysts at Needham and BTIG raised their price targets. Needham increased its target to $86 from $78, maintaining a Buy rating, while BTIG raised its target to $80 from $65, also keeping a Buy call.
Despite the positive fundamentals, market focus may shift to how the pension charge, along with the integration of Micro Bird and tariff impacts, will affect reported earnings. Blue Bird noted that the exact amount of the pension charge will be determined after actuaries recalculate benefit obligations and value plan assets, leaving the final figure open.
