Student Transportation Reports Fiscal 2008 First Quarter Results

Student Transportation Reports Fiscal 2008 First Quarter Results

Progressed with simplification of capital structure and increased regional density in Ontario

Toronto, Ontario, November 14, 2007 – Student Transportation of America Ltd. (TSX: STB, STB.UN) (“STA”) today reported financial results for the first quarter of fiscal 2008 ended September 30, 2007. All financial results are reported in U.S. dollars except as otherwise noted.

First Quarter Summary:

  • $2.0 million increase in revenue resulted in lower quarterly EBITDAR loss compared to same period last year
  • $12.6 million net loss reflects $10.7 million non cash book loss on redemption of $43.3 million in sub debt resulting from completed exchange offer
  • Successfully completed exchange offer in quarter with redemption of C $45.8 million in debt
  • Student Transportation Canada subsidiary closed sixth acquisition
  • STA’s first quarter results reflect the seasonality of the school bus industry. Revenue is typically lower during the first quarter due to schools not being in session during the summer months. Accordingly, the first quarter results are not considered to be indicative of the Company’s annual results.

    During the first quarter, the Company completed a successful exchange offer in which C $45.8 million or 51% of aggregate principal amount of subordinated notes of STA ULC were tendered.
    As a result of the exchange, the Company has a majority of common shares outstanding versus IPS units and has reduced its total debt by approximately C $45.8 million.

    First quarter revenue totalled $28.1 million, up from $26.1 million for the same period last year and EBITDAR* improved to ($0.1) million from ($0.4) million in the same period of fiscal 2007.

    STA’s reported net loss for the quarter was $12.6 million or $0.48 per common share for the first quarter of fiscal 2008. Net loss for the first quarter of fiscal 2007 was $6.1 million or $0.30 per common share. The fiscal 2008 first quarter loss includes a $10.7 million non cash book loss on the $43.3 million of subordinated notes that were extinguished as a result of the completed exchange offer detailed above. The quarter’s net loss also includes $2.0 million of interest paid during the quarter to IPS note holders as part of their distributions and non cash expense items such as non cash stock compensation expense, amortization of deferred financing costs, depreciation and amortization expense.

    For the quarter, the Company’s cash available for distributions* was a negative C $6.6 million and distributions paid amounted to C $6.0 million. Net cash used in operations was $6.7 million for the first quarter. As stated previously, the Company historically generates a loss and negative operating cash flows in this quarter, reflecting the seasonality of the business during the summer season break combined with capital expenditures occurring in the first quarter of the fiscal year. 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.

    “Our first quarter performance reflects the typical seasonal fluctuations that occur in the school bus industry. It is important to note that this is not indicative of results for a full fiscal year and that each of our subsequent quarters are expected to generate excess cash,” said Denis J. Gallagher, Chairman and Chief Executive Officer.

    Mr. Gallagher added, “The two most significant events in the quarter were the successful completion of our exchange offer and our acquisition of Elliot Coach Lines in Guelph, Ontario. The exchange offer furthers our strategy of simplifying our capital structure and building common share liquidity. It will also result in significant cash interest savings over the next few years. The Elliot acquisition builds our regional density in Canada – which is a priority region for STA – and also increases our Canadian dollar cash flows.”

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

    Annual Meeting of Investors

    STA will hold its Annual General Meeting on Wednesday, November 14, 2007 at 2 p.m. ET at the TSX Gallery located at The Exchange Tower at 130 King Street West in Toronto. Following the formal meeting, there will be a presentation by management and a brief question and answer session for shareholders, analysts, and institutional investors. The meeting will also be webcast live at STA’s web site at


    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 transportation and management company by aggregating operations through the consolidation of existing providers and conversion of in-house operations and currently operates more than 4,500 school vehicles in North America. 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. EBITDAR represents earnings before interest, taxes, depreciation, amortization, operating lease expense, severance expense and non cash items such as unrealized gain / loss on foreign currency exchange contracts, non cash stock compensation expense, and other income / loss.

    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

    This news release contains “forward-looking statements” within the meaning of applicable securities laws, which reflects the expectations of management regarding STA’s results of operations, expense levels, cost of capital, financial leverage, seasonality, cash flows, performance, liquidity, borrowing availability, financial ratios, ability to execute the STA’s growth strategy and cash distributions. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “track”, “targeted”, “estimate”, “anticipate”, “believe”, “should”, “plans” or “continue” or similar expressions suggesting future outcomes or events. These forward looking statements reflect STA’s current expectations regarding anticipated future events, results, circumstances, performance or expectations, including the acquisition of notes under the Exchange Offer, that are not historical facts. Forward looking statements involve significant risks and uncertainties, and 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 which or by the performance or results will be achieved. A number of factors could cause our actual results to differ materially from the results discussed, expressed or implied in any forward-looking statement made by us or on our behalf, including, but not limited to, the acquisition of less than a significant number of notes under the Exchange Offer and the factors discussed under “Risk Factors” in our Annual Information Form. These forward looking statements are made as of the date of this news release and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

    For more information contact:

    Denis J. Gallagher
    Chairman and Chief Executive Officer
    Phone: (732) 280-4200
    Fax: (732) 280-4213

    Keith P. Engelbert
    Director of Investor Relations
    Phone: (732) 280-4200
    Fax: (732) 280-4213

    Patrick J. Walker
    Chief Financial Officer
    Phone (732) 280-4200
    Fax: (732) 280-4213