BARRIE, Ontario – Student Transportation Inc. (“ST” or the “Company”) (TSX: STB) today reported financial results for the first quarter of fiscal year 2010, ended September 30, 2009. All financial results are reported in U.S. dollars except as otherwise noted.
“Our results for the first quarter of fiscal year 2010 were in line with our internal expectations and indicative of the growth we have secured for the full fiscal year. As usual, the first quarter results reflect the seasonality of the school bus industry,” said Denis J. Gallagher, Chairman and Chief Executive Officer. “As previously discussed, we have already secured a 15 percent increase in annualized school bus transportation revenue for the current fiscal year in connection with the new organic growth from contract bid-wins, school district conversions and the acquisition of Jordan Transportation completed in September 2009.”
ST’s reported net loss for the first quarter improved to ($3.0 million) or ($0.05) per common share compared to a net loss of ($6.1 million) or ($0.14) per common share for the first quarter of the previous year. Revenue is typically lower during the first quarter due to schools not being in session during the summer months. Revenues for the quarter were $37.4 million, slightly less than last year’s $38.3 million due entirely to a $2.3 million decline in revenue from the non core oil and gas portfolio which was anticipated based on the decline in world wide commodity prices. While the results of the oil and gas portfolio have been negatively impacted by the lower commodity prices, we offset those through lower fuel pricing in the core school transportation business. “All but 3 percent of the company’s revenues come from school bus operations and we are locked in for good fuel contracts on the school bus operations side again this fiscal year starting in mid September,” Gallagher noted.
While schools are not in session during the summer months, the company still incurs operating expenses during these offseason summer months in anticipation of the start up of the school year in early to mid September. In addition, the company funds a significant portion of its replacement capital expenditures during this same time period. Thus the company historically incurs operating losses and negative cash flows during the first quarter of the fiscal year based on these factors.
Gallagher continued, “We anticipate being in our steady, predictable revenue and cash flow position as the school year progresses. The Jordan acquisition is already integrated and is operating as part of the Student Transportation of America (“STA”) family and off to a great start. We also experienced successful start-ups of all operations across the board, including two of our largest contracts with Duval County, Florida and the Los Angeles Unified School Districts, both new bid-wins. In addition, we completed two successful conversions of district run fleets as well.”
The 2010 first quarter includes higher offseason costs compared to the prior year due to the necessary start up costs for the new contracts. In addition, year over year school transportation revenue reflects three to four fewer school days in the first quarter of fiscal 2010 due to the timing of the Labour Day holidays in each period, which evens out over the full school year.
The Company’s cash available for distributions* for the quarter was a negative $9.9 million and distributions paid amounted to $6.8 million (C$7.9million). Net cash used in operations was $10.7 million for the quarter. 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 which for fiscal 2009 was calculated at a 72 percent pay-out ratio.
