Student Transportation Reports Third Quarter Results

Student Transportation Reports Third Quarter Results

Highlights:

  • Revenue for the quarter was up 23% over the same period last year, to US $49 million.
  • EBITDA* for the quarter was up 16 % over the same period last year to US $10.4 million, for a margin of 21.2% while net loss for the quarter improved to $0.2 million from $0.4 million for the same period last year.
  • Completed first common share private placement offering raising C $20 million

Toronto, ON, May 10, 2007 – Student Transportation of America Ltd. ("STA" or the "Company") (TSX: STB.UN) today reported the financial results for its third quarter of fiscal year 2007, ended March 31, 2007. All financial results are reported in U.S. dollars, except as otherwise noted.

For the third quarter, revenue totalled $49.2 million, up from $39.9 million for the same period last year and EBITDA* rose to $10.4 million from $9.0 million in the same period in fiscal 2006.

STA's reported net loss for the three month period ended March 31, 2007 of $0.2 million or $0.01 per common share which includes $2.4 million of interest paid during the quarter to Unitholders on the subordinated notes portion of the IPS units.

For the quarter, the Company generated cash available for distributions* of C $11.1 million and paid out distributions of C $5.8 million. Net cash provided by operations amounted to $7.7 million for the three month period ended March 31, 2007. As stated previously, due to the seasonality of the business and schools not being in operation during the majority of the first quarter, the Company views distributable cash on an annualized basis.

"This was a good quarter for us resulting in double-digit growth of revenue and EBITDA compared to the same quarter last year as a result of our growth strategy of acquisitions, bids and conversions," said Denis J. Gallagher, Chairman and Chief Executive Officer. "During the quarter, we strengthened our balance sheet by paying down debt with the net proceeds of a completed C $20 million offering of our common shares."

The Company said revenue for the quarter was slightly less than anticipated by $1.1 million, and estimates a corresponding effect on EBITDA of approximately 50%, due to schools in several of STA's regions experiencing closures during the winter months due to poor weather conditions. An unexpected teachers' strike in Pennsylvania also resulted in two weeks of school closures in that region. The Company stated higher costs associated with its Riverside California operation have continued and expect them to continue through the balance of the school year.

"Historically we get to recover most of the revenue caused by factors such as weather and teacher strikes, although it is not certain we will recoup the full amount. We are confident that the cost issues at Riverside will be resolved and continue to believe that this contract will contribute to the Company's long term growth," said Gallagher. "We are also pleased that our recently renewed insurance program came in with a lower fixed cost due to our outstanding safety performance. We also have agreed to extend our vehicle leasing program through fiscal year 2008 at approximately the same 6 per cent fixed rates for our replacement capital expenditures"

For the nine months ended March 31, 2007, revenue totalled $122.3 million, up from $95.1 million for the same nine month period last year and EBITDA* rose to $19.7 million from $17.7 million in the same nine month period in fiscal 2006. STA's reported net loss for the nine month period ended March 31, 2007 was $8.8 million or $0.42 per common share which includes $7.2 million of interest paid to Unitholders on the subordinated notes portion of the IPS units.

STA's interim financial statements, notes to financial statements and management's discussion and analysis are available at www.sedar.com or at the Company's investor web site www.sta-ips.com.

Conference Call & Webcast

Management will host a conference call and live audio webcast to discuss STA's performance for the third quarter of fiscal year 2007 at 10 a.m. (ET) on May 11, 2007. The call may be accessed at by dialing 1-866-838-4337 or 416-849-9305. The webcast will be subsequently archived at www.sta-ips.com. A taped rebroadcast will be available until 12 a.m. May 18, 2007 and can be accessed by dialing 416-915-1035 or 1-866-245-6755 and quoting passcode 247132#.

Profile

STA is neither a Trust nor a Partnership and each Income Participating Security ("IPS") Unitholder holds two separate securities consisting of one Canadian qualified common share of STA Ltd. and Cdn $3.847 principal amount of 14 per cent subordinated notes of STA ULC, a wholly-owned subsidiary of STA Ltd. The IPSs are listed on the Toronto Stock Exchange under the symbol STB.UN while the common shares and subordinated notes are listed separately under the symbols STB and STB.DB respectively.

The Issuer is the fifth-largest provider of school bus transportation services in North America, conducting operations through local operating subsidiaries. The Issuer has become a leading school bus transportation company by aggregating operations through the consolidation of existing providers and conversion of in-house operations and currently operates more than 4,000 school vehicles in North America. For more information, please visit www.sta-ips.com.

* Non-GAAP Measures

EBITDA 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.

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 the Issuer's and Company's results of operations, expense levels, seasonality, cash flows, performance, liquidity, borrowing availability, financial ratios, ability to execute the Company'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", "could", "plans" or "continue" or similar expressions suggesting future outcomes or events. These forward looking statements reflect the Company's current expectations regarding anticipated future events, results, circumstances, performance or expectations 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 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

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

Keith P. Engelbert
Director of Investor Relations
Phone: (732) 280-4200
Fax: (732) 280-4213
kengelbert@sta-ips.com