Student Transportation Inc. Reports Fourth Quarter & Fiscal Year 2017 Results
BARRIE, Ontario, Sept. 20, 2017 (GLOBE NEWSWIRE) — Student Transportation Inc. (TSX:STB) (NASDAQ:STB) (“STI” or “the Company”) today announced financial results for the fourth quarter and fiscal year ended June 30, 2017. All financial results are reported in U.S. dollars except as otherwise noted.
“We were very pleased with our continued steady performance in fiscal 2017,” said Denis J. Gallagher, STI Chairman and CEO. “We grew our top line revenues by just over six percent and expanded our Adjusted EBITDA* and margin, despite significant challenges this past year created by driver shortages and severe weather conditions. Investments we have been making in our people, along with developing creative approaches and applying new technologies helped offset these headwinds by lowering costs and increasing efficiencies. Revenue for fiscal 2017 increased to $637.3 million from $600.2 million compared to the prior year and was in line with our stated full year estimates. Our Adjusted EBITDA* was $125.6 million compared to $117.1 million for fiscal 2016 increasing our margin to 19.7 percent in fiscal 2017. Adjusted for the non-cash write-down on the previously announced sale of the Company’s portfolio in oil and gas assets net income was $0.08 per share for the year. Reported net income for the full fiscal year was $6.5 million or $0.07 per share, up from $6.0 million or $0.06 per share reported for last year after a higher than usual stated tax effect.”
Revenue for the fourth quarter of fiscal 2017 was $172.8 million with Adjusted EBITDA of $39.2 million. Net income for the fourth quarter was $4.3 million or $0.05 per share in line with expectations.
“Driver retention and recruitment was our number one issue this past year,” said Gallagher. “We will continue the focus on our family culture and initiatives to enhance employee retention and recruiting which helped mitigate driver shortages across the majority of our operations this year, but some areas were impacted. Our fleet management team along with deployment of new technologies helped us address shortages as we delivered more students with fewer vehicles. This past year we were able to remove over 300 vehicles from the fleet which is a tremendous accomplishment that will improve our efficiency and lower replacement cost for fiscal 2018. We started this new fiscal 2018 school year better prepared than last year with drivers returning and full staffing in place in practically all locations and several new location start ups which have gone very well.”
Gallagher said severe weather across North America also created operational issues and lost revenue days for STI in fiscal 2017, hitting a few markets harder than others. “Floods, tornados, snow and ice storms across the U.S. and Canada resulted in some lost revenue when several state and local governments for the first time chose not to have students make up certain days. This was an unprecedented situation for our industry and resulted in added costs for wages, fuel and snow removal that were not historically recovered,” he said.
“On the positive side, fuel costs remained low and had a positive impact on our business in fiscal 2017 and we experienced steady growth across all our lines of business last year,” Gallagher continued. “In our core contracted yellow school bus markets, our regional and local teams continue to execute our organic growth strategy, planting flags in new markets and building regional density. We serviced customers in nine new markets in fiscal 2017 and won key new contracts for the current school year. Among those is a new 10-year agreement with our existing customer in Duval County, Florida, which doubles the size of our fleet and makes them our new largest customer. We were well prepared for the recent hurricane and had no issues with securing our assets and everyone is safe and back to school. Just after the close of the fiscal year, we further strengthened our focus and appointed our COO Patrick Vaughan as President of the School Transportation Group. In this first quarter we announced the closing of an acquisition of a new company in Annapolis, Maryland with over 100 vehicles and $8.5 million in new revenues with long term contracts which is a great family business.
“Our asset-light Managed Services Group (MSG) also posted strong growth this past year and continued to leverage our core competencies of safety, culture, technology and fleet services for a wide variety of customers. MSG contributed some $12 million of revenue in fiscal 2017, their second full year of operations up from $3 million last year. MSG’s management, consulting, safety, training and routing experts don’t just diagnose problems, they develop real solutions. SafeStop also expanded its reach in 2017 with new contracts and partnerships inside and outside of the school transportation industry. The number of SafeStop users doubled for the third year in a row to well over 22,000 and we expect that will rise very quickly as SafeStop has proven to be the best in class product. We’ve only just begun to realize the opportunities available to our Managed Services Group, where we’re predicting top-line growth of 25 percent next year,” Gallagher added.
The Company recently 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 second quarter of fiscal 2018. That marks the 156th consecutive monthly dividend announced since the Company became public in 2004. 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 | Year over Year | |||||||||||||||||||
| (Amounts in 000’s) | Three Months Ended | Twelve Months Ended | ||||||||||||||||||
| 6/30/17 | 6/30/16 | 6/30/17 | 6/30/16 | |||||||||||||||||
| Net income | $ | 4,263 | $ | 6,278 | $ | 6,460 | $ | 6,037 | ||||||||||||
| Add back: | ||||||||||||||||||||
| Income tax expense | 3,406 | 3,011 | 4,666 | 2,838 | ||||||||||||||||
| Foreign currency loss (gain) | 121 | (140 | ) | 30 | 1,147 | |||||||||||||||
| Other expense (income) , net | 18 | (797 | ) | (946 | ) | (1,127 | ) | |||||||||||||
| Non-cash (gain) loss on US$ 6.25% Convertible | ||||||||||||||||||||
| Debentures conversion feature | – | (109 | ) | (190 | ) | 177 | ||||||||||||||
| Equity in net loss of unconsolidated investment | – | – | – | 11 | ||||||||||||||||
| Non-cash stock compensation | – | – | 5,802 | 3,967 | ||||||||||||||||
| Interest expense | 4,145 | 3,692 | 17,745 | 14,513 | ||||||||||||||||
| Impairment of oil and gas assets | – | 438 | 224 | 1,638 | ||||||||||||||||
| Amortization expense | 782 | 793 | 3,142 | 3,153 | ||||||||||||||||
| Depreciation and depletion expense | 14,092 | 14,281 | 47,256 | 48,008 | ||||||||||||||||
| Operating lease expense | 12,412 | 11,183 |
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