Student Transportation Announces Fiscal 2010 First Quarter Results

Student Transportation Announces Fiscal 2010 First Quarter Results

Barrie, ON (November 12, 2009) – Student Transportation Inc. (“ST” or the “Company”) (TSX: STB) today reported financial results for the first quarter of fiscal year 2010, ended September 30, 2009. All financial results are reported in U.S. dollars except as otherwise noted.

“Our results for the first quarter of fiscal year 2010 were in line with our internal expectations and indicative of the growth we have secured for the full fiscal year. As usual, the first quarter results reflect the seasonality of the school bus industry,” said Denis J. Gallagher, Chairman and Chief Executive Officer. “As previously discussed, we have already secured a 15 percent increase in annualized school bus transportation revenue for the current fiscal year in connection with the new organic growth from contract bid-wins, school district conversions and the acquisition of Jordan Transportation completed in September 2009.”

ST’s reported net loss for the first quarter improved to ($3.0 million) or ($0.05) per common share compared to a net loss of ($6.1 million) or ($0.14) per common share for the first quarter of the previous year. Revenue is typically lower during the first quarter due to schools not being in session during the summer months. Revenues for the quarter were $37.4 million, slightly less than last year’s $38.3 million due entirely to a $2.3 million decline in revenue from the non core oil and gas portfolio which was anticipated based on the decline in world wide commodity prices. While the results of the oil and gas portfolio have been negatively impacted by the lower commodity prices, we offset those through lower fuel pricing in the core school transportation business. “All but 3 percent of the company’s revenues come from school bus operations and we are locked in for good fuel contracts on the school bus operations side again this fiscal year starting in mid September,” Gallagher noted.

While schools are not in session during the summer months, the company still incurs operating expenses during these offseason summer months in anticipation of the start up of the school year in early to mid September. In addition, the company funds a significant portion of its replacement capital expenditures during this same time period. Thus the company historically incurs operating losses and negative cash flows during the first quarter of the fiscal year based on these factors.

Gallagher continued, “We anticipate being in our steady, predictable revenue and cash flow position as the school year progresses. The Jordan acquisition is already integrated and is operating as part of the Student Transportation of America (“STA”) family and off to a great start. We also experienced successful start-ups of all operations across the board, including two of our largest contracts with Duval County, Florida and the Los Angeles Unified School Districts, both new bid-wins. In addition, we completed two successful conversions of district run fleets as well.”

The 2010 first quarter includes higher offseason costs compared to the prior year due to the necessary start up costs for the new contracts. In addition, year over year school transportation revenue reflects three to four fewer school days in the first quarter of fiscal 2010 due to the timing of the Labour Day holidays in each period, which evens out over the full school year.

The Company’s cash available for distributions* for the quarter was a negative $9.9 million and distributions paid amounted to $6.8 million (C$7.9million). Net cash used in operations was $10.7 million for the quarter. The subsequent quarters of the fiscal year typically generate excess cash, as schools are in session and due to the fact that the majority of replacement capital expenditures have already been purchased. Due to this historical seasonality, the Company views distributable cash on an annualized basis which for fiscal 2009 was calculated at a 72 percent pay-out ratio.

Subsequent Events

On October 26, 2009 the company announced it closed the offering of 7.5% convertible subordinated unsecured debentures for total gross proceeds of C$45 million. The net proceeds from the offering will be used to fund redemption of 14% subordinated notes and for general corporate purposes.

Student Transportation’s interim financial statements, notes to financial statements and management’s discussion and analysis are available at or at the Company’s website at


Founded in 1997, Student Transportation Inc. (ST) is North America’s third-largest and fastest-growing provider of school bus transportation services, operating more than 6,300 vehicles. ST’s family of local companies delivers safe, reliable and cost-effective transportation solutions to school districts throughout the U.S. and Canada. Services are delivered by drivers, dispatchers, maintenance technicians, terminal managers and others who are caring members of their local communities. For more information, please visit

* Non-GAAP Measures

EBITDAR is a non-GAAP financial measure, but management believes it is useful in measuring STA’s performance. Readers are cautioned that this measure should not be construed as an alternative to net income or loss or other comparable measures determined in accordance with GAAP as an indicator of the Company’s performance or as a measure of its liquidity and cash flow. The Company’s method of calculating non-GAAP measures may differ from the methods used by other issuers and accordingly, the Company’s non-GAAP measures may not be comparable to similarly titled measures used by other issuers.

Cash available for distributions is a non-GAAP measure, and is not intended to be representative of cash flow or results of operations determined in accordance with GAAP. Investors are cautioned that cash available for distribution, as calculated by the Company, is unlikely to be comparable to similar measures used by other issuers.

Forward-Looking Statements

Certain statements in this news release are “forward-looking statements” within the meaning of applicable securities laws, which reflect the expectations of management regarding, among other matters, ST’s revenues, expense levels, cost of capital, financial leverage, seasonality, liquidity, profitability of new businesses acquired or secured through bids, borrowing availability, ability to renew or refinance various loan facilities as they become due, ability to execute ST’s growth strategy and cash distributions, as well as their future growth, results of operations, performance and business prospects and opportunities. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plans” or “continue” or similar expressions, and the negative forms thereof, suggesting future outcomes or events.

These forward-looking statements reflect ST’s current expectations regarding future events and operating performance and speak only as of the date of this news release. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not, or the times at or by which, such performance or results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the inability of ST to control its operating expenses, its significant capital expenditures, its reliance on certain key personnel, the possibility that a greater number of its employees will join unions, its acquisition strategy, its inability to achieve our business objectives, significant competition in its industry, rising insurance costs, new governmental laws and regulations, its lack of insurance coverage for certain losses, environmental requirements, seasonality of its industry, its inability to maintain letters of credit and performance bonds and the termination of certain of its contracts for reasons beyond its control. Material factors and assumptions that were relied upon in making the forward-looking statements include contract and customer retention, current and future expense levels, availability of quality acquisition, bid and conversion opportunities, current borrowing availability and financial ratios, as well as current and historical results of operations and performance. Although the forward-looking statements contained in this news release are based upon what ST believes to be reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward-looking statements, and the differences may be material. These forward-looking statements are made as of the date of this news release and ST assumes no obligation to update or revise them to reflect new events or circumstances, other than as required by applicable law.


Student Transportation Inc.

Denis J. Gallagher

Chairman and CEO

Patrick J. Walker

Executive VP and CFO

Keith P. Engelbert

Director of Investor Relations

(732) 280-4200

(732) 280-4213 (FAX)