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Student Transportation Inc. (STB)
F3Q 2014 Earnings Conference Call
May 08, 2014 11:00 AM ET
Patrick Gallagher - Marketing & Communications Manager
Denis Gallagher - CEO
Pat Walker - EVP and CFO
Theoni Pilarinos - Raymond James
Brady Cox - Stifel
Previous Statements by STB
» Student Transportation Management Discusses Q2 2014 Results - Earnings Call Transcript
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» Student Transportation Management Discusses Q4 2013 Results - Earnings Call Transcript
» Student Transportation Management Discusses Q3 2013 Results - Earnings Call Transcript
Good morning, everyone, and thank you for joining us to discuss the third quarter’s fiscal 2014 results which ended March 31, 2014. Joining me today on the call are Denis Gallagher, Chief Executive Officer and Pat Walker, Executive Vice President and Chief Financial Officer.
Yesterday, the earnings release, MD&A and financials were disseminated. The release, MD&A and financials are accessible on SEDAR, EDGAR and our website at ridestbus.com. In addition to our standard disclaimer about forward-looking statements, please also note that all figures are in U.S. dollars, unless otherwise specified. I will also remind you that this conference call is being webcast live.
And with that, I'll turn the call over to Denis Gallagher.
Thank you, Patrick. Good morning, everyone, and thanks again for joining us. As you can imagine, similar to a lot of transportation companies are operating results for the third quarter of 2014 were impacted by the extreme weather conditions of this past winter.
The polar vortex that left a big portion of students in North America in the deep freeze during November and December worsened January and February and continued into the first part of March causing school cancellations and delayed starts across many of our operating areas.
As a result our deferred revenue totaled $17.2 million at the end of the third quarter. As I said in prior years we can predict how many days we will operate based on our school contracts but we can’t predict in which months those days will fall.
What it different than most others and good news for us is as we have seen historically, we will recover nearly all of those contracted days and generally about half of that revenue falls through our adjusted EBITDA line.
We’re also working very hard to reduce other costs and increase new revenues to make up for the higher than normal labor, fuel and maintenance cost caused by this record breaking winner. March did however prove to a bright spot in than otherwise chilly quarter.
Despite some of the lingering school closings in the first part of the month, operating results for March met our internal expectations and significantly outpaced the revenue and adjusted EBITDA percentage increases achieved for the third quarter and for the first nine months of fiscal 2014.
Pat Walker, our CFO will review our completed financial results for the third quarter and year-to-date positions for 2014 in details in a few minutes but first let me just give you a brief overview. Revenue for our third quarter increased to $138 million from $120 million in the third quarter of fiscal 2013. Adjusted EBITDA for the quarter was $26.7 million compared to $25.9 million recorded for the same period last year and includes about $3.5 million of additional associated costs for the severe winter.
I must say though, that while we did not choose to incur the weather related cost, we did so to ensure the continued safe operation of our fleets for our school listed customers, our students and our parents. Our company as you know has built a reputation on safety and reliability and that’s what our customers count on.
So while we have incurred winter storms, hurricanes, floods and fire storms in the past, this year was doozy. However, it’s our job to -- despite these hard conditions to make sure our busses start in subzero temperatures, our drivers are ready to go if needed and our terminals are operational regardless of the weather. We don’t get back the extra cost associated with the increased fuel cost, snow removal, driver mechanic overtime, but we have been working hard to reduce other expenses to minimize those hits and we’re doing a good job of that.
Net income for the third quarter was $2.6 million compared to $1.8 recorded last year due to the reporting of a bargain [ph] gain on the purchase of certain assets. While we look at the first nine months of fiscal 2014 and add the number of snow and cold weather days that we made back up, the numbers are tracking well with our internal expectations.
So revenue for the first nine months, not inclusive of the deferred days of fiscal 2014 increased to $346.9 million from $301.4 million and adjusted EBITDA was $56.2 million from credits of $50.8 million for the first nine months of the prior fiscal year.
On a very positive note, we were able to close the acquisition of certain assets from Atlantic Express California operations on February 10, 2014. As previously reported Atlantic Express’ parent company filed for bankruptcy protection and we were able to acquire their California school bus assets under an agreement that was approved by the bankruptcy court.
It did include 425 vehicles and several school contracts which were included as part of the same deal at very favorable rates. The acquisition resulted in a non-cash bargain gain during the quarter as the price paid was lower than the fair market value of the assets we purchased.