School bus contractor Student Transportation Inc. said it overcame driver shortage and severe weather throughout the year to grow gross profits by over 6 percent and expanded Adjusted EBITDA during fiscal year 2017.
The results were released Wednesday evening ahead of a revenue call with investors set for Thursday morning.
“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,” commented Denis Gallagher, chairman and CEO of STI.
STI operates Student Transportation of America in the U.S. as well as Student Transportation of Canada in addition to the SafeStop bus location and arrival app and a managed services group.
Gallagher said that total revenues for fiscal 2017 increased to $637.3 million, up from $600.2 million compared to the prior year and in alignment with estimates. Meanwhile, Adjusted EBITDA was $125.6 million compared to $117.1 million for fiscal 2016, which he said increased the company’s margin to 19.7 percent. Net income was $0.08 per share for the year, adjusted for the non-cash write-down on STI’s sales in June of its oil and gas portfolio.
“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,” Gallagher added.
Meanwhile, fourth quarter revenue was $172.8 million with Adjusted EBITDA of $39.2 million. The company said the quarter’s net income of $4.3 million, or $0.05 per share, was in line with expectations.
Gallagher said that driver retention was STI’s number one challenge over the past fiscal year, mirroring the issues experienced across the school bus industry.
“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,” he explained. “Our fleet management team along with deployment of new technologies helped us address shortages as we delivered more students with fewer vehicles.”
For example, he said STI removed over 300 vehicles from the fleet during the fiscal year, which he called “a tremendous accomplishment that will improve our efficiency and lower replacement cost for fiscal 2018.” He added that the company began fiscal year 2018 “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.”
Recent severe weather including Hurricanes Harvey and Irma as well as tornados, snow and ice storms created operational issues for STI locations, added wage costs and lost revenue days. He called these challenges an “unprecedented situation for our industry.”
Gallagher also said the SafeStop app for parents saw its users double for the third year in a row to over 22,000, and STI’s Managed Services Group contributed $12 million in revenue for the year in only its second year of operation in providing customers with safety, culture, technology and fleet services.