WALL, N.J. — Student Transportation Inc. (“STI”)(TSX: STB), North America‘s third-largest provider of school bus transportation services, today announced it has completed three of the previously announced letters of intent and been awarded ten new contracts to provide pupil transportation beginning this school year. Still pending is the completion of a fourth acquisition, which the company expects to wrap up in the coming weeks.
Just days before the listing of its common stock on the NASDAQ Global Select Market(SM), the company said the acquisitions and new contract wins will add annualized revenues of over US$20 million. Funded through its existing credit facility, the acquisitions will be immediately accretive to shareholders of its common stock and are consistent with margins and purchase price multiples of previous acquisitions.
The acquisitions include two in Ontario, Canada — Schumacher Bus Lines in Schumacher and S & K Transportation Ltd. in Listowel, which are both tuck-ins to existing locations– and A & B Bus Company in Irwindale, California, which sits between the company’s L.A. and Riverside terminals. On completion of the fourth deal together they will add $7.5 million in annualized revenues.
“These acquisitions, while smaller in size, strengthen our existing operating locations by adding regional density and operating synergies to those areas,” said Denis J. Gallagher, chairman and chief executive officer. “We plan to continue the excellent service these companies have delivered and to provide our added value of expertise in safety, maintenance, technology and community service. Each of these operations has excellent drivers, top-notch maintenance and support staff, and customers who value safe and reliable local service. They will fit into our family nicely. Also, each of the new companies has some form of fuel protection clause in place, which is an important criteria for us when making an acquisition.”
Adding to the growth achieved through these acquisitions are new contract bid wins covering operations in New York, Vermont and New Hampshire and previously announced wins in Southern California, New Jersey, Rhode Island and Northern Ontario.
“Combined with our continued high rate of contract renewals, which are key ingredients of a successful growth company, we are well poised for another solid year in fiscal 2012 with year over year revenue growth of 12 percent and well within our historical average range of 15 percent. Our pipeline is full, but we continue to be disciplined and selective about our growth prospects. We are very careful where and how we grow,” Gallagher said.
In the $24 billion North American school transportation market over two thirds of school buses are still owned and operated by governmental agencies and school districts.
“What’s really exciting is the increased interest in the conversion of school district-owned operations. With federal and state funding shrinking, the operating efficiencies and cost savings that we provide are just too good for states and school districts to pass up. We have the capital to buy the fleets and give them immediate cash for keeping teachers in the classrooms and maintaining programs our children want and need. Once they cost and compare we’ll see many more opportunities to partner with these states and districts. It’s a shame that it is often a political matter instead of an education matter, but that will change; it takes time,” said Gallagher.
EDITORS NOTE: On Tuesday, September 6, 2011, STI’s senior management team will host the Opening Bell Ceremony to mark the company’s initial U.S. listing of its common stock on the NASDAQ Global Select Market(SM).