Student Transportation announces fiscal 2010 second quarter results
BARRIE, ON, Feb. 16 /CNW/ - Student Transportation Inc. ("ST" or the "Company") (TSX: STB) today reported financial results for the second quarter of fiscal year 2010, ended December 31, 2009. All financial results are reported in U.S dollars, except as otherwise noted.
"We are very pleased with the operating results for the second quarter of fiscal 2010," said Denis J. Gallagher, Chairman and Chief Executive Officer. "Revenues increased 18.5 percent while EBITDAR increased 40 percent from the same period last year. Growth secured for fiscal 2010 became more visibly evident in the second quarter reflecting a full quarter of school operations, and we experienced lower fuel costs across all of our regions." Gallagher added, "Results for the first half of fiscal 2010 are well in line with our internal expectations, as we began to cover the offseason costs of the first quarter with a full quarter of operations for school transportation during the second quarter."
Second quarter revenue increased to $74.3 million from $62.7 million and EBITDAR* improved to $19.3 million from $13.8 million for the comparable period last year. ST reported net income for the second quarter of $1.3 million or $0.02 net income per common share compared to the net loss of $9.2 million or $0.22 net loss per common share reported for the same period last year. The net income for the current year quarter included a $3.7 million loss ($1.9 million of which was a non cash loss) on the extinguishment of the 14 percent subordinated notes which were recently called and were associated with the company's former Income Participating Security ("IPS") structure as well as $0.6 million in unrealized gains on derivative contracts while the net loss for the same period last year reflected $9.7 million in unrealized losses on derivative contracts. The unrealized gain/loss on derivative contracts relates to the Company's currency contracts and the fuel hedge contract which expired December 31, 2009.
"Our prior year second quarter results were negatively impacted by unrealized losses on currency contracts resulting from the weakening of the Canadian dollar, combined with the unrealized loss of entering into the fuel hedges at the beginning of last fiscal year," said Gallagher. "This fiscal year, the Canadian dollar has strengthened, resulting in a swing to unrealized gains on currency contracts. With the expiration of the fuel hedge and the fuel "lock ins" secured at the beginning of the current fiscal year, we should see a continuation of the favourable fuel expense trend realized to date if market fuel prices remain in the current price range."
The Company issued C$51.7 million in 7.5 percent convertible unsecured debentures during October and November 2009, with net proceeds primarily used to fund the redemption of the 14 percent subordinated notes and for general corporate purposes. On December 21, 2009, the Company redeemed for cash all of the outstanding 14 percent subordinated notes, which had a principal balance of $36.4 million (C$38.7 million). The redemption price totalled $38.5 million (C$41.0 million), including a 5 percent redemption premium and accrued interest to the date of redemption.
"The redemption of the remaining 14 percent subordinated notes officially brings the IPS structure to an end for Student Transportation. The refinancing and redeeming of the 14 percent subordinated notes with 7.5 percent convertible debentures will save the Company approximately C$2.0 million in annual cash flow", Gallagher noted.
"Looking forward, we continue to remain active in several acquisition, bid and conversion opportunities," Gallagher concluded. "As reported in the first quarter, we have already secured a 15 percent increase in annualized school bus transportation revenue for fiscal 2010 with the new organic growth from contract bid-wins, school district conversions and the Jordan Transportation acquisition completed in September 2009. We are reviewing additional potential acquisitions that will fit into our regional structure immediately, along with reviewing bids and conversions for school district contracts that would start next school year."
Reconciliation of Net Income and EBITDAR
(in 000's of US$)
Year over Year - Q2 Year over Year - YTD
-------------------- ---------------------
Three Months Ended Six Months Ended
-------------------- ---------------------
12/31/09 12/31/08 12/31/09 12/31/08
-------- -------- -------- --------
Net income (loss) $ 1,312 $ (9,201) $ (1,691) $(15,260)
Add back:
Provision for (recovery of)
income taxes 695 (3,418) (1,045) (7,390)
Loss on extinguishment of debt 3,680 - 3,680 1,316
Other (income) loss, net (147) (895) 390 (1,706)
Unrealized (gain) loss on
derivative contracts (602) 9,660 (5,422) 13,274
Non-cash stock compensation 280 1,026 780 1,940
Interest expense 3,046 2,718 5,514 5,625
Amortization expense 702 627 1,373 1,334
Depreciation and depletion
expense 8,736 7,784 11,988 10,904
Impairment of goodwill (oil
and gas unit) - 4,455 - 4,455
Operating lease expense 1,608 1,061 2,144 1,415
--------- --------- --------- ---------
EBITDAR $ 19,310 $ 13,817 $ 17,711 $ 15,907
--------- --------- --------- ---------
--------- --------- --------- ---------
Reconciliation of Cash Flow Provided by Operations and Cash Available
for Distributions
(in 000's of US$)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
12/31/09 12/31/08 12/31/09 12/31/08
-------- -------- -------- --------
Cash flows provided by
(used in) operating
activities $ 7,646 $ 7,410 $ (3,082) $ 2,232
Adjustments:
Changes in non-cash
working capital items 7,106 3,532 12,944 8,607
Changes in non-cash other
assets and liabilities 111 3 100 37
Non-operating cash flows 663 (266) 1,340 (248)
Proceeds on sale of
properties 1,698 - 1,698 -
Cash interest expense 2,779 2,531 5,049 5,261
-------------------- --------------------
Subtotal 20,003 13,210 18,049 15,889
Less:
Interest expense (other
than noncash and 14%
subordinated notes) (1,642) (1,413) (2,675) (2,780)
Dividends on Class
B-Series Two common
shares (158) (165) (312) (311)
Repurchase of Class
B-Series Two common
shares (94) (756) (94) (756)
Cash taxes paid (71) (129) (596) (567)
Maintenance capital
expenditures, net (362) (367) (6,586) (4,345)
-------------------- --------------------
Cash Available for
Distributions US$ $ 17,676 $ 10,380 $ 7,785 $ 7,130
-------------------------- --------------------
-------------------------- --------------------
Cash Available for
Distributions $Cdn $ 20,705 $ 12,506 $ 9,112 $ 8,430
-------------------------- --------------------
-------------------------- --------------------
Total Distributions - US$
Interest on
subordinated notes US$ $ 737 $ 1,105 $ 1,841 $ 2,259
Dividends on IPS
common shares US$ $ 1,163 $ 1,163 $ 2,327 $ 2,370
Dividends on common
shares US$ $ 4,437 $ 3,772 $ 8,947 $ 7,692
-------------------------- --------------------
Total Distributions US$ $ 6,337 $ 6,040 $ 13,115 $ 12,321
-------------------------- --------------------
-------------------------- --------------------
Total Distributions $Cdn $ 7,423 $ 7,277 $ 15,350 $ 14,568
-------------------------- --------------------
-------------------------- --------------------
Student Transportation's interim financial statements, notes to financial statements and management's discussion and analysis will be available at www.sedar.com or at the Company's website at www.rideSTA.com.
Conference Call & Webcast
Management will host a conference call and live audio webcast to discuss ST's performance for the second quarter of fiscal year 2010 at 11 a.m. (ET) on February 17, 2010. The call may be accessed by dialing 1-877-353-9586 (Canada & USA) or 403-532-8075 (International) and enter the passcode 47507 followed by the number sign. A rebroadcast will be available until May 17, 2010 at 12 a.m. To access the rebroadcast, please visit www.rideSTA.com or dial 1-877-245-4531 (Canada & USA) or dial 403-205-4531 (International) and enter passcode 256015 followed by the number sign.
Profile
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 www.rideSTA.com.
* Non-GAAP Measures
EBITDAR is a non-GAAP financial measure, but management believes it is
useful in measuring ST'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.
For further information: INVESTOR CONTACTS: Student Transportation Inc., 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: [email protected]; Website: www.rideSTA.com
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