Student Transportation Delivers Record Fiscal 2008 Year-End Results

Student Transportation Delivers Record Fiscal 2008 Year-End Results

Highlights:


  • Continued Strong growth

  • New Strategic Equity Investor

  • Fuel and Currency protection increased


Toronto (September 22, 2008) – Student Transportation of America Ltd. (“STA” or the “Company”) (TSX: STB, STB.UN) today reported financial results for fiscal year ended June 30, 2008.  A separate press release was filed for the fourth quarter results.  All financial results are reported in U.S. dollars and compared to the same period last year except as otherwise noted.

Revenue increased 22 percent year over year to $205.2 million for fiscal 2008 compared to $168.1 million. EBITDAR* for the fiscal year rose 32.5 percent to $40.1 million, resulting in a 19.5 percent margin compared to $30.3 million or 17.7 percent margin for fiscal year 2007.

Net loss for fiscal year 2008 amounted to $7.0 million down from $7.1 million for fiscal year 2007.  The net loss for fiscal 2008 resulted primarily from a $10.7 million “non-cash” book loss on the redemption of $43.3 million of subordinated notes that were extinguished as a result of the September 2007 exchange offer. The net loss for fiscal 2008 also included $6.9 million of interest paid to IPS note holders as part of their distributions which is recorded as interest expense.

The Company generated cash available for distributions* of $27 million for the fiscal year ended June 30, 2008.  Distributions paid during the fiscal year totalled $22.3 million (C$ 25.2 million).  Net cash provided by operations was $22.4 million for the fiscal year ended June 30, 2008.

“We are extremely pleased with our operating performance and financial results for the past year”, said Denis J. Gallagher, STA Chairman and Chief Executive Officer. “We had a very good, safe and successful year. We are now transporting over 500,000 students to and from school each day which is a public trust we take ever so seriously. Revenue is up consistent with our growth strategy, operating cash flows increased substantially, we achieved significant margin improvement over fiscal 2007 and we positioned ourselves for another great year. Our balance sheet is strong and we have debt capacity to take advantage of various opportunities in the marketplace. We continued our strategic regional growth plan, significantly increasing our Canadian operations with two important acquisitions during fiscal 2008 that created natural hedges for currency and fuel protection along with winning approximately $10 million of new annual contracts in our U.S operations for fiscal 2009”.

“Additionally we brought on board a significant new investor as part of a $60 million common share Private Placement Offering. Long-time investors simultaneously demonstrated continued confidence and commitment by increasing their equity investments in STA. Clearly, these sophisticated investors appreciate our ability to weather various business cycles, see the long-term consistency in our contracted operations and value our very attractive, stable dividends. As we continue to concentrate on our business and growth plans we will work to improve communications to individual investors and retail brokers about STA’s operations and business model”, Gallagher added.

STA’s overall performance this past year enabled the company to continue its program of growth through acquisitions, bids and conversions. The Company significantly increased its Canadian cash flows with two strategic acquisitions, Elliot Coach Lines and Canadex Resources Limited, boosting Canadian cash flows 214 percent on an annualized basis.  

“The Canadex acquisition, which closed just prior to the significant spike in oil and gas prices this past winter, was one of the best deals we have completed in our history.  Combined with the Elliot acquisition, it gave us significant growth in the Ontario school bussing market while the energy portfolio included as part of the acquisition provided us with the best natural fuel hedge we could have put in place during the fiscal year,” Gallagher said. “The results of the integration of both companies have been fantastic and the portfolio of non-operating oil and natural gas properties clearly exceeded our expectations.”

The company said it has maintained its contract renewal rate since inception, in the 95% range and has secured increases at CPI or above in most cases in connection with contract renewals for the 2008-2009 school year. New contract routes awarded for the 2008-2009 school year have been added in all of the company’s operating regions expanding a key strategy of regional density.

Subsequent Events

On July 15, 2008, Student Transportation of Canada (“STC”), an operating subsidiary of STA, established its first foothold in South-western Ontario when it announced the acquisition of London-based school bus operator Elgie Bus Lines Limited. Elgie is STC’s ninth acquisition in Canada and STA’s 33rd overall, increasing total Canadian operations to more than 1,200 vehicles and nearly C$50 million in annualized Canadian revenues which provides a natural hedge to currency fluctuations.

In an effort to simplify its capital structure the Company continued its transition to a common share security and recently completed a second exchange offer which has resulted in the extinguishment of approximately 63 percent of the original principal amount of outstanding subordinated notes prior to the company’s two exchange offers. The remaining notes outstanding are callable in December 2009 at $4.04 each.

In September 2008, the Company entered into a series of commodity transactions to reduce its exposure to fluctuations in market fuel prices.  Combined with the fuel protection and mitigation clauses included in the Company’s contracts, the company now has overall contract fuel protection for the 2008-2009 school year at approximately 80 percent.

STA’s financial statements, notes to financial statements and management’s discussion and analysis are available at www.sedar.com or at the Company’s website www.rideSTA.com.

Conference Call & Webcast

Management will host a conference call and live audio webcast to discuss STA’s performance for the fourth quarter of fiscal year 2008 at 11 a.m. (ET) on September 23, 2008. The call may be accessed at by dialling 1-888-205-4499 or 416-883-7132 and enter the passcode 37614#. The webcast will be subsequently archived at www.rideSTA.com. A taped rebroadcast will be available until 12 a.m. September 30, 2008 and can be accessed by dialling 1-877-245-4531 and enter passcode 672536#.

Annual Meeting of Investors

STA will hold its Annual General Meeting on Thursday, November 13, 2008 at 2 p.m (ET) at the Le Méridien King Edward Hotel, the Windsor Ballroom at 37 King Street East in Toronto. The meeting will also be webcast live at STA’s web site at www.rideSTA.com.

Profile

Founded in 1997, Student Transportation is the fourth-largest provider of school bus transportation services in North America, conducting operations through local operating subsidiaries. Student Transportation has become a leading school bus transportation company by aggregating operations through the consolidation of existing providers and conversion of in-house operations and currently operates more than 5,400 school vehicles in North America. For more information, please visit www.rideSTA.com.

* 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, STA’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 STA’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 STA’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 STA 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 the number of Notes acquired pursuant to the Exchange Offer, 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 STA 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 STA assumes no obligation to update or revise them to reflect new events or circumstances, other than as required by applicable law.

INVESTOR CONTACTS:    

Student Transportation of America Ltd.

Denis J. Gallagher

Chairman and CEO

(732) 280-4200

Patrick J. Walker

Executive VP and CFO

(732) 280-4200

Keith P. Engelbert

Director of Investor Relations

(732) 280-4200

(732) 280-4213 (FAX)

Email: kengelbert@rideSTA.com

Website: www.rideSTA.com

MEDIA CONTACT:

Lynette Viviani

973-968-7929 office

973-534-1004 mobile

lviviani@ridesta.com