Student Transportation Inc. Reports Fiscal 2017 First Quarter Results

BARRIE, Ontario, Nov. 08, 2016 (GLOBE NEWSWIRE) — Student Transportation Inc., (“”STI”” or the “”Company””) (TSX:STB) (NASDAQ:STB) today reported financial results for the first quarter of fiscal year 2017, ended September 30, 2016. All financial results are reported in U.S. dollars except as otherwise noted. STI’s first quarter results reflect the normal seasonality of the school bus transportation industry. Accordingly, the first quarter results are not considered to be indicative of the Company’s annual results.

Revenue for the first quarter of fiscal 2017 increased nine percent year over year to $102.2 million from $93.4 million, while Adjusted EBITDA* came in at a positive $140,000 compared to a loss of ($2.3) million for the first quarter of fiscal year 2016. This is the first time the Company has reported positive Adjusted EBITDA in its first quarter which is historically affected by the July and August seasonality of the school year.

“”Our operating results for the first quarter of fiscal 2017 were in line with our internal expectations and we anticipate we will see positive results in future first quarters,”” said Denis J. Gallagher, Chief Executive Officer. “”As we previously noted, we anticipate an approximate seven percent increase in annualized revenue for the current fiscal year. The first quarter revenue increase results from the net new business secured for fiscal 2017 for both the contracted business and Managed Services Group, along with some price increases on our existing core contracted business. The contribution from these higher revenues offset the higher offseason costs associated with the usual start up of school operations and additional staff associated with the new contracts secured for the current fiscal year.””  

STI reported a net loss of $11.7 million or $0.13 per common share for the first quarter of fiscal year 2017 compared to the prior fiscal year first quarter net loss of $9.5 million or $0.10 per common share.

“”During the first quarter of fiscal 2017, we strengthened our balance sheet reflecting the repayment of our senior secured notes with a five year extension of, and an increase in the size of the senior credit facility. We also refinanced some of our subordinated debt with the early redemption of the US$ 6.25% convertible debentures with a similar sized Cdn$ 5.25% convertible debenture issuance lowering our future interest expense on this note. In connection with these first quarter refinancing’s, we recorded a non-cash write-off of $1.0 million in unamortized deferred financing costs that is included in interest expense and we recorded an additional $2.5 million in non-cash employee stock compensation expense related to the timing and termination of the EIP plan. We would normally expense those issuances under the EIP plan in the second and third quarters. These two non-cash charges for the first quarter when combined, increased the net loss per share by approximately $0.04. Adjusted for those charges, net loss per share for the quarter was approximately $0.09,”” stated Mr. Gallagher.

In July 2016, the Company entered into a Fourth Amended and Restated Credit Agreement, increasing commitments to $340 million from the previous level of $225 million and extending the maturity date to July 27, 2021. On September 1, 2016, the Company used drawings under the increased commitments in part to repurchase the US $35 million Senior Secured Notes that were set to mature on November 10, 2016.

In August 2016, the Company issued Cdn$ 5.25% convertible unsecured subordinated debentures due September 30, 2021 for net proceeds of $62.6 million (Cdn $80.8 million). The Company primarily used the net proceeds for the September 19, 2016 early redemption of approximately $60 million in US$ 6.25% convertible unsecured subordinated debentures that had a set maturity date of June 30, 2018.

“”We are off to our best start ever. We have had tailwinds of lower fuel and interest rates and some headwinds dealing with the tightening in driver recruiting affecting the entire transportation industry,”” added Mr. Gallagher. “”We are pleased to see our new innovation and technology groups working closely with our operations teams to increase efficiency which will lower our operating and capital costs and improve margins. We have some exciting new cost efficiency and growth initiatives in the queue that we have been working on as we stay ahead of the curve.””

The Company also announced that the Board of Directors, which reviews and approves the dividend on a quarterly basis in advance, has approved the monthly cash dividend of $0.03667 per common share through the end of the third quarter of fiscal 2017. The dividend, paid in U.S. dollars, is Canadian Dividend Tax Qualified and is a Qualified Dividend in the U.S.

Reconciliation of Net Income and Adjusted EBITDA *  
    Year over Year   
(Amounts in 000’s)   Three Months Ended  
     9/30/16     9/30/15   
Net loss   $ (11,716 )   $ (9,543 )  
Add back:          
Income tax benefit     (7,671 )     (5,594 )  
Foreign currency (gain) loss     (142 )     64    
Other expense (income), net     834       (1,122 )  
Non-cash gain on US$ 6.25% Convertible Debentures conversion feature     (190 )     (6 )  
Equity in net loss of unconsolidated investment           5    
Non-cash stock compensation     3,323       803    
Interest expense     5,609       3,709    
Impairment of oil and gas assets     224          
Amortization expense     791       788    
Depreciation and depletion expense     4,927       5,000    
Operating lease expense     4,151       3,550    
Adjusted EBITDA *   $ 140     $ (2,346 )  


Results of Operations  
    Three Months Ended  
    September 30  
      2016       2015    
Revenues   $ 102,176     $ 93,383    
Costs and expenses          
Cost of operations     89,203       85,084    
General and administrative     16,984       14,195    
Non-cash stock compensation     3,323       803    
Depreciation and depletion expense     4,927       5,000    
Amortization expense     791