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Portfolio Update

Riding the Cheese

By Roger S. Conrad, on Sep. 23, 2016

Student Transportation (TSX: STB, NSDQ: STB) is always the last company in the Lifelong Income Portfolio to report earnings for the three months ended June 30 because that quarter marks the end of the school-bus operator’s fiscal year,

The company’s results tend to follow the school year, strengthening during the quarters when classes are in session and weakening during the summer recess. Accordingly, sequential comparisons don’t provide much insight into the company’s progress.

Happily, Student Transportations most recent results and guidance were well worth the wait for shareholders.

The company reported that its full-year revenue grew 8.2 percent compared with fiscal 2015, while its operating cash flow increased by 14.8 percent. Cost cutting drove the firm’s operating margins to 19.5 percent, an improvement of 110 basis points. Student Transportation’s dividend payout ratio also fell to 68.2 percent from 71.1 percent.

As for Student Transportation’s quarterly results, operating cash flow increased 9 percent from year-ago levels, excluding a non-cash impairment charge of US$1.6 million to write down oil and gas reserves that the company owns as a hedge against spikes in fuel costs.

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