One Year Price Chart

October 14, 2014

Student Transportation Inc.

STB NASDAQ
Buy
Transportation & Logistics

Analysis of Sales/Earnings
Lowering Estimates for Student Transportation; Maintain Buy
We are updating our model to more accurately reflect the $80 million in
operating leases announced by the company for FY2015 in their F4Q14
conference call. As a result of the relatively affordable rates the company was
able to secure, the company opted to lock in the leases to fund their
maintenance capital expenditures for next year as well as some substantial
growth. The company noted that approximately $40.5 million of the operating
leases was attributable to maintenance capex, while the remainder was for
growth.
The companys fleet is now approximately 20% leased, after the additional
operating leases are considered. As well, 5% of the fleet is managed, where the
municipality owns the assets that the company operates. The remainder is
owned by the company. The company noted, however, that they have debt
covenants tied to EBITDA, so the amount of the fleet they are able to lease is
essentially capped (operating leases, of course, have the effect of increasing
operating expenses and decreasing depreciation & amortization, leading to a
lower EBITDA marginall else equal).
Lowering Estimates: The leases should be a margin headwind for the
company, and the company estimated that impact to be a 1.3% to 1.4% from
just the incremental operating leases (before considering lower D&A). As a
result, our FY2015, FY2016, and FY2017 EPS estimate decrease from $0.07,
$0.10, and $0.13 to $0.04, $0.08, and $0.09, respectively. A switch from capital
to operating leases, in itself, does not largely impact the companys cash flow
other than to shift the impact from financing outflows to operating outflows.
However, the total amount was larger than we had modeled for financed capex,
and as such our cash flow is reduced. A similar reduction in net debt, however,
reduces the negative impact to equity value for the company.
Maintain Buy: After incorporating the changes detailed above, our 12-month
fair value estimate reduces slightly, from $7.00 to $6.60. This currently provides
19.1% upside potential over the coming year when the companys 9.3%
dividend yield is included. That is enough upside, in our view, to maintain our
Buy rating on the companys common shares.

John G. Larkin, CFA

Brady Cox
John Engstrom
Stifel Equity Trading Desk

jglarkin@stifel.com
coxbr@stifel.com
engstromj@stifel.com

I N C O M E
Changes
Rating
Target Price
FY15E EPS
FY16E EPS
FY15E Revenue
FY16E Revenue

L I S T

Previous

Current

$7.00
$0.07
$0.10

$586.4

Buy
$6.60
$0.04
$0.08
$552.4
$588.3

Price (10/13/14):
$6.01
52-Week Range:
$7 $6
Market Cap.(mm):
489.0
Shr.O/S-Diluted (mm):
81.4
Enterprise Val. (mm):
$752.0
Avg Daily Vol (3 Mo):
79,596
LT Debt/Total Cap.:
63.3%
Net Cash/Share:
$0.13
Book Value/Share:
$1.95
Dividend($ / %)
$0.56 / 9.3%
S&P Index
1,874.74
Dividend assumes CAD and USD trade at
parity.
EPS

2014A

2015E

2016E

Q1

$(0.11)

$(0.11)

$(0.11)

Q2

0.04

0.04

0.05

Q3

0.01

0.03

0.04

Q4

0.06

0.07

0.08

$(0.01)A

$0.04

$0.08

NM

NM

75.1x

FY Jun
P/E
Revenue

2014A

2015E

2016E

FY Jun

$489.5A

$552.4

$588.3

EV/Rev

1.5x

1.4x

1.3x

(443) 224-1315
(443) 224-1319
(443) 224 1356
(800) 424-8870

Stifel does and seeks to do business with companies covered in its research reports. As a result, investors should be
aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should
consider this report as only a single factor in making their investment decision.

All relevant disclosures and certifications appear on pages 7 - 8 of this report.

Student Transportation Inc. (STB)

October 14, 2014

Target Price Methodology/Risks

Our 12-month target price of $6.60 is derived by taking the average of two
methodologies: dividend discount model and discounted free cash flow-to-equity.
Our DDM divides the current annual dividend of C$0.56 by the calculated cost of
equity of 8.0% to arrive at a $7.00 implied price per share (assumes CAD/USD at
parity). For the DCF-to-equity methodology, we forecasted FCFE and discounted it
to May 2014 at the cost of equity to arrive at an implied value per share of $6.76;
we subtract one annual dividend to arrive at a $6.20 target price.
In addition to general market and macroeconomic risks, risks include the company's
ability to service and renew existing contracts, maintain its fleet operations, pass
along increased transportation costs in long-term contracts, fairly price and
integrate future acquisitions/conversions, maintain its current payout structure, and
execute geographic expansions. Larger demographic trends of sustained
decreased natality rates could reduce the need for school-related transportation. A
further increase to the outstanding share count from the dividend re-investment
program, a decrease in DRIP participants, or an additional equity capital raise could
strain the monthly dividend.
Company Description
Student Transportation Inc. is the third largest provider of school bus transportation
services in North America, conducting operations through wholly-owned operating
subsidiaries. The company has become a leading school bus transportation
company, aggregating operations through the consolidation of existing providers,
targeted bid-ins and conversion of in-house operations in the fragmented industry.
The company currently provides school bus transportation services in Ontario,
Canada and the following U.S. states: California, Connecticut, Florida, Illinois,
Maine, Minnesota, New Hampshire, New Jersey, New York, Pennsylvania, Rhode
Island, Texas, Vermont, Washington, and Wisconsin.

Page 2

Student Transportation Inc. (STB)

October 14, 2014

Equity Comps - Transportation

Comparative Valuation Matrix
(figures in $US millions, except per share amounts)
Closing
Price
Company name (Ticker)

Rating

10/13/2014

Equity value as a multiple of

Diluted
S/O

Market
cap.

Total
Debt

Cash &
equiv.

TEV

(a)

Earnings per Share

(b)
(b)
(b)
2013A
2014E
2015E

Enterprise value as a multiple of

Book

TTM

2014E

TTM

value

Revenue

EBITDA

EBITDA

TTM
(c)
EBITDAR

1.4x

NM

11.0x

7.6x

2.0x

9.2x

9.6x

8.7x

TTM

TTM

TTM

TTM

EBIT

ROA

ROE

ROIC

PEG
(d)
ratio

Div.

2014E

Yield

FCF Yld

Passenger Transportation
Student Transportation Inc. (STB)
Stifel Transportation Average

Buy

6.01

81.4

489.0

273.9

10.9

752.0

9,817.3

1,676.6

389.2

11,146.5

NM
21.6x

NM
20.7x

NM
16.4x

3.1x
3.5x

(a) Total Enterprise Value = Market Capitalization of Equity + Total Debt - Cash + Market Value of Minority Interest
(b) Stifel estimates for those rated and First Call mean estimates for unrated securities
(c) Enterprise value adjusted to include the capitalization of off balance sheet operating leases with lease expense (or rent expense) being added back to EBITDA for the valuation multiple calculation
(d) 2014E P/E divided by First Call mean or Stifel estimated long-term growth rate
Excludes non-recurring items
Calculations may vary due to rounding
Source: Company data , First Call, and Stifel estimates

Page 3

NM
14.7x

-0.2%

-0.6%

2.4%

NM

9.3%

-2.0%

6.0%

17.8%

11.3%

1.6

1.0%

3.4%

Student Transportation Inc. (STB)

October 14, 2014

John Larkin, CFA / jglarkin@stifel.com

Brady Cox / coxbr@stifel.com

Student Transportation Income Statement

(figures in $ millions, except per share amounts)
Fiscal year end June 30
2005A
Gross revenues
% change y/y

2006A

2007A

2008A

2009A

2010A

2011A

2012A

2013A

Sept
1QA

FY 2014
Dec
Mar
2QA
3QA

Jun
4QA

2014A

Sept
1QE

FY 2015
Dec
Mar
2QE
3QE

Jun
4QE

2015E

Sept
1QE

FY 2016
Dec
Mar
2QE
3QE

Jun
4QE

2016E

2017E

62.7
NA

133.0

168.1
26.4%

205.2
22.0%

227.9
11.1%

267.2
17.2%

305.3
14.3%

369.0
20.9%

423.7
14.8%

73.1
18.7%

135.5
13.6%

138.3
14.8%

142.6
16.6%

489.5
15.5%

81.9
12.0%

153.1
13.0%

157.6
14.0%

159.7
12.0%

552.4
12.8%

87.2
6.5%

163.1
6.5%

167.9
6.5%

170.1
6.5%

588.3
6.5%

626.5
6.5%

43.8
6.1
0.0
0.0
8.8
3.2
0.0
0.0
61.9
98.7%

95.4
12.8
0.9
0.0
15.0
6.2
0.0
0.0
130.3
98.0%

122.3
17.1
1.9
0.0
18.6
5.9
0.0
0.0
165.7
98.6%

146.4
21.2
1.4
0.0
22.9
2.6
0.0
0.0
194.5
94.8%

163.2
23.5
2.0
0.0
26.0
2.7
4.5
0.0
221.8
97.3%

187.7
28.7
2.0
0.0
29.9
2.8
0.0
0.0
251.0
94.0%

222.6
31.4
2.5
0.8
31.9
3.4
0.0
0.0
292.6
95.9%

271.2
38.5
3.6
0.9
37.1
3.4
0.0
0.0
354.8
96.1%

315.0
42.4
3.3
0.0
41.9
4.2
0.0
0.0
406.8
96.0%

65.6
10.9
0.7
0.1
4.6
1.0
0.0
0.0
82.9
113.3%

99.0
11.6
2.6
0.0
13.4
0.9
0.0
0.0
127.5
94.0%

104.8
12.4
0.7
0.2
13.9
0.8
0.0
0.0
132.8
96.0%

103.7
11.7
0.0
0.0
14.6
0.8
0.0
0.0
130.8
91.8%

373.1
46.7
3.9
0.3
46.4
3.6
0.0
0.0
474.0
96.8%

74.8
12.4
0.9
0.0
3.2
1.1
0.0
0.0
92.5
112.9%

114.5
14.4
0.0
0.0
12.6
1.4
0.0
0.0
142.9
93.3%

118.9
15.2
0.7
0.0
13.0
1.5
0.0
0.0
149.4
94.8%

116.4
14.2
0.0
0.0
12.7
1.4
0.0
0.0
144.8
90.7%

424.7
56.3
1.7
0.0
41.6
5.5
0.0
0.0
529.6
95.9%

77.2
13.1
0.8
0.0
5.8
1.2
0.0
0.0
98.1
112.4%

116.8
15.4
1.2
0.0
16.3
1.5
0.0
0.0
151.4
92.8%

122.0
16.5
1.3
0.0
16.9
1.6
0.0
0.0
158.3
94.3%

117.8
15.3
1.2
0.0
17.5
1.5
0.0
0.0
153.4
90.2%

433.9
60.4
4.5
0.0
56.6
5.8
0.0
0.0
561.1
95.4%

461.6
64.2
4.8
0.0
60.2
6.2
0.0
0.0
596.9
95.3%

EBIT
% margin

0.8
1.3%

2.7
2.0%

2.4
1.4%

10.7
5.2%

6.1
2.7%

16.1
6.0%

12.7
4.1%

14.2
3.9%

16.9
4.0%

(9.8)
-13.3%

8.1
6.0%

5.5
4.0%

11.7
8.2%

15.5
3.2%

(10.6)
-12.9%

10.3
6.7%

8.2
5.2%

14.8
9.3%

22.7
4.1%

(10.8)
-12.4%

11.7
7.2%

9.6
5.7%

16.7
9.8%

27.2
4.6%

29.6
4.7%

EBITDA
% margin

12.9
20.6%

23.9
17.9%

26.9
16.0%

36.2
17.6%

34.8
15.3%

48.9
18.3%

47.9
15.7%

54.8
14.9%

63.0
14.9%

(4.1)
-5.7%

22.4
16.5%

20.2
14.6%

27.1
19.0%

65.5
13.4%

(6.2)
-7.6%

24.3
15.8%

22.7
14.4%

29.0
18.2%

69.8
12.6%

(3.9)
-4.4%

29.6
18.2%

28.1
16.7%

35.7
21.0%

89.5
15.2%

95.9
15.3%

Interest expense
5.7
13.3
Foreign currency loss (gain)
0.0
0.0
Unrealized (gain) loss on forward contracts
(1.0)
(4.3)
Unrealized re-measurement (gain) loss on 6.25% convertible debentures
0.0
0.0
Non-cash loss on 6.25% convertible debentures conversion feature
0.0
0.0
Other expense, net
0.1
0.1

15.8
0.0
(1.5)
0.0
0.0
(0.6)

13.5
0.0
0.1
0.0
10.7
(2.0)

10.4
0.0
7.7
0.0
1.3
(5.8)

10.5
0.0
(3.1)
0.0
3.7
0.1

14.4
(4.6)
0.5
(0.6)
0.0
1.0

15.3
(0.9)
1.8
3.0
1.0
0.8

14.3
(0.2)
0.7
(0.1)
(1.1)
(2.7)

3.8
0.3
(0.4)
0.0
(0.4)
0.7

3.9
(0.0)
0.3
0.0
0.0
(0.6)

4.4
(0.2)
0.2
0.0
(0.2)
0.5

4.6
0.3
(0.8)
0.0
(0.0)
1.0

16.6
0.4
(0.7)
0.0
(0.7)
1.7

4.6
0.0
0.0
0.0
0.0
0.0

4.5
0.0
0.0
0.0
0.0
0.0

4.3
0.0
0.0
0.0
0.0
0.0

17.6
0.0
0.0
0.0
0.0
0.0

4.4
0.0
0.0
0.0
0.0
0.0

4.3
0.0
0.0
0.0
0.0
0.0

4.0
0.0
0.0
0.0
0.0
0.0

16.4
0.0
0.0
0.0
0.0
0.0

16.6
0.0
0.0
0.0
0.0
0.0

Operating expenses:
Cost of operations
General and administrative
Non-cash stock compenstion
Acquisition expenses
Depreciation and depletion expense
Amortization expense
Impairment of goodwill
(Gain) loss on sale of fixed assets
Total operating expenses
Operating ratio

4.1
0.0
0.0
0.0
0.0
0.0

3.8
0.0
0.0
0.0
0.0
0.0

Profit before tax

% margin

(4.0)
-6.4%

(6.4)
-4.8%

(11.3)
-6.7%

(11.6)
-5.7%

(7.4)
-3.3%

5.0
1.9%

2.0
0.7%

(6.8)
-1.8%

6.1
1.4%

(13.7)
-18.7%

4.5
3.3%

0.7
0.5%

6.7
4.7%

(1.7)
-0.4%

(14.7)
-17.9%

5.7
3.7%

3.7
2.3%

10.5
6.6%

5.2
0.9%

(14.6)
-16.7%

7.4
4.5%

5.3
3.1%

12.7
7.5%

10.8
1.8%

13.0
2.1%

Tax rate

35.6%

42.3%

38.7%

39.9%

8.6%

45.5%

24.8%

71.9%

36.6%

35.8%

36.0%

25.9%

29.5%

63.8%

38.0%

38.0%

38.0%

38.0%

38.0%

38.0%

38.0%

38.0%

38.0%

38.0%

38.0%

Income before minority interest

Minority interest
Net income (loss) from continuing operations
Extraordinary item (net of tax)
Net income
% margin

(2.6)
0.0
(2.6)
0.0
(2.6)
-4.1%

(3.7)
0.2
(3.9)
0.0
(3.9)
-2.9%

(6.9)
0.2
(7.1)
0.0
(7.1)
-4.2%

(7.0)
0.0
(7.0)
0.0
(7.0)
-3.4%

(6.8)
0.0
(6.8)
0.0
(6.8)
-3.0%

2.7
0.0
2.7
0.0
2.7
1.0%

1.5
0.0
1.5
0.0
1.5
0.5%

(1.9)
0.0
(1.9)
4.2
2.3
0.6%

3.9
0.0
3.9
0.0
3.9
0.9%

(8.8)
0.0
(8.8)
0.0
(8.8)
-12.0%

2.9
0.0
2.9
0.0
2.9
2.1%

0.6
0.0
0.6
2.0
2.6
1.9%

4.7
0.0
4.7
0.0
4.7
3.3%

(0.6)
0.0
(0.6)
2.0
1.4
0.3%

(9.1)
0.0
(9.1)
0.0
(9.1)
-11.1%

3.5
0.0
3.5
0.0
3.5
2.3%

2.3
0.0
2.3
0.0
2.3
1.4%

6.5
0.0
6.5
0.0
6.5
4.1%

3.2
0.0
3.2
0.0
3.2
0.6%

(9.0)
0.0
(9.0)
0.0
(9.0)
-10.4%

4.6
0.0
4.6
0.0
4.6
2.8%

3.3
0.0
3.3
0.0
3.3
1.9%

7.9
0.0
7.9
0.0
7.9
4.6%

6.7
0.0
6.7
0.0
6.7
1.1%

8.1
0.0
8.1
0.0
8.1
1.3%

12.7
12.7

15.1
15.1

21.5
21.5

32.2
32.2

43.3
43.3

55.1
65.1

57.8
73.6

66.1
84.1

79.4
94.0

81.9
99.6

82.3
103.8

82.6
104.0

83.3
104.6

83.9
105.1

84.4
105.6

84.9
106.1

84.1
105.3

85.4
99.7

85.8
100.1

86.3
100.6

86.8
101.1

86.1
100.4

87.9
102.3

NM
NA
NM
NA
($0.39)
NA
($0.39)
NA

($0.26)
NA
($0.26)
NA
($0.49)
24.4%
($0.49)
24.4%

($0.03)
NM
$0.03
NM
$0.05
NM
$0.10
NM

$0.05
NM
$0.05
42.9%
$0.03
NM
$0.03
NM

$0.01
-69.0%
$0.03
45.6%
($0.11)
1.1%
($0.11)
1.1%

$0.06
-31.5%
$0.06
-31.5%
$0.04
17.9%
$0.04
17.9%

($0.11)
1.1%
($0.11)
1.1%
$0.03
299.9%
$0.03
-14.9%

$0.04
17.9%
$0.04
17.9%
$0.07
26.3%
$0.07
26.3%

$0.03
299.9%
$0.03
-14.9%
($0.11)
-2.8%
($0.11)
-2.8%

$0.07
26.3%
$0.07
26.3%
$0.05
23.1%
$0.05
23.1%

$0.04
NM
$0.04
120.2%
$0.04
NM
$0.04
NM

($0.11)
-2.8%
($0.11)
-2.8%
$0.04
40.6%
$0.04
40.6%

$0.05
23.1%
$0.05
23.1%
$0.08
16.5%
$0.08
16.5%

$0.04
40.6%
$0.04
40.6%
($0.11)
2.2%
($0.11)
2.2%

$0.08
16.5%
$0.08
16.5%
$0.06
8.6%
$0.06
8.6%

$0.08
103.7%
$0.08
103.7%
$0.07
NM
$0.07
NM

$0.09
18.3%
$0.09
18.3%

Average shares outstanding - basic

Average shares outstanding - diluted
1

EPS - diluted (continuing operations)

% change y/y
EPS - diluted
% change y/y
CY EPS - diluted (continuing operations)
% change y/y
CY EPS - diluted
% change y/y

($0.33)
28.1%
($0.33)
28.1%
($0.28)
-42.5%
($0.28)
-42.5%

($0.22)
-34.5%
($0.22)
-34.5%
($0.32)
13.5%
($0.32)
13.5%

($0.16)
-27.5%
($0.16)
-27.5%
$0.15
-147.9%
$0.15
-147.9%

$0.05
-131.2%
$0.05
-131.2%
$0.03
-81.8%
$0.03
-81.8%

$0.03
-46.4%
$0.03
-46.4%
($0.09)
NM
($0.09)
NM

81.5
94.8
($0.11)
8.1%
($0.11)
8.1%
$0.01
-69.0%
$0.03
45.6%

$0.04
-5.5%
$0.04
-5.5%
$0.06
-31.5%
$0.06
-31.5%

(1) For certain periods, the EPS calculation excludes the conversion of convertible debentures as they are anti-dilutive, thus EPS is based off of the basic shares outstanding.
Source: Company data and Stifel estimates

Page 4

82.1
100.6
($0.01)
-115.8%
$0.02
-64.6%
($0.00)
NM
$0.02
NM

Student Transportation Inc. (STB)

October 14, 2014

John Larkin, CFA / jglarkin@stifel.com
Brady Cox / coxbr@stifel.com

Student Transportation Balance Sheet

(figures in $ millions, except per share amounts)
Fiscal year end June 30
2005A

2006A

2007A

2008A

2009A

2010A

2011A

2012A

2013A

Sept
1QA

ASSETS
Current assets
Cash and cash equivalents
Accounts receivable, less allowances
Inventory
Prepaid Expenses
Other current assets
Total current assets

1.7
9.5
1.1
3.5
0.6
16.5

7.7
12.2
1.6
6.0
3.5
30.9

4.0
15.0
1.6
9.0
3.6
33.2

3.5
19.7
2.2
11.1
4.6
41.2

0.6
18.1
2.1
12.9
2.1
35.7

4.8
24.9
2.2
13.0
3.2
48.2

3.7
30.8
2.9
6.6
4.6
48.6

5.0
35.5
3.3
12.7
4.8
61.2

6.9
41.0
3.3
7.7
3.5
62.4

Land
Buildings
Transportation equipment
Leasehold improvements
Other machinery and equipment
Total property and equipment
Less accumulated depreciation
Property and equipment, net

0.2
0.2
68.2
0.2
0.9
69.7
(8.8)
60.9

0.2
0.2
116.8
0.3
1.3
118.9
(23.3)
95.5

0.2
0.2
127.2
0.5
1.7
129.8
(38.6)
91.2

2.6
2.8
166.8
0.8
2.8
175.9
(55.4)
120.5

3.4
3.5
195.9
1.0
4.1
207.9
(75.4)
132.5

2.8
2.4
227.9
1.2
5.5
239.7
(93.1)
146.6

2.8
3.1
260.3
1.5
7.0
274.6
(110.7)
164.0

4.7
5.1
334.0
3.8
9.2
356.7
(137.2)
219.5

5.3
5.3
352.7
5.1
14.1
382.5
(164.7)
217.8

248.9

7.5
0.0
0.9
48.9
44.0
178.7

7.9
0.0
4.0
51.7
64.1
254.2

7.5
0.0
4.7
47.5
73.9
258.0

2.7
16.0
3.6
53.9
98.9
336.7

2.1
16.9
0.0
53.9
94.0
335.2

1.7
16.2
0.6
58.7
103.8
375.8

15.9
7.0
0.1
68.7
125.8
430.1

16.6
7.2
0.0
74.6
142.7
521.8

17.1
7.5
0.0
69.8
138.3
512.8

0.9
6.6
0.0
0.4
0.0
7.9

1.6
12.4
0.0
2.5
0.0
16.5

1.3
13.5
0.0
2.3
0.0
17.1

1.7
16.7
2.0
0.3
0.0
20.6

1.2
20.5
2.1
0.6
0.0
24.3

1.2
27.7
4.2
0.8
0.0
33.8

1.8
24.4
0.0
35.8
0.0
62.1

1.0
37.5
0.0
0.6
0.0
39.1

Long-term debt
Foreign currency exchange contracts
Asset retirement obligation
Future income tax liability
Class B-Series Two and Three common share liability
Other liabilities
Minority interest

85.7
0.0
0.0
27.0
0.0
0.0
6.3

106.9
0.0
0.0
32.5
0.0
0.0
7.4

123.2
0.0
0.0
24.9
2.2
0.0
0.0

111.5
0.0
0.3
29.4
3.4
0.0
0.0

95.0
1.6
0.6
29.4
2.3
0.1
0.0

143.0
0.0
0.8
32.2
2.4
0.3
0.0

161.6
0.0
0.7
36.4
2.0
10.8
0.0

Common stock
Equity component of convertible debentures
Accumulated deficit
Accumulated other comprehensive loss
Total stockholders' equity

57.5
0.0
(5.6)
(0.2)
51.7

112.1
0.0
(16.3)
(4.9)
90.8

128.0
0.0
(34.1)
(3.4)
90.5

236.3
0.0
(58.8)
(6.0)
171.5

276.9
0.0
(86.4)
(8.6)
181.9

281.5
0.8
(112.8)
(6.1)
163.4

Other assets
Oil and gas interests, net
Foreign currency exchange contracts
Other intangible assets, net
Goodwill
Total assets

LIABILITIES AND EQUITY

Current liabilities
Accounts payable
Accrued expenses and other current liabilities
Income taxes payable
Current portion of long-term debt
Other current liabilities
Total current liabilities

2.0
51.0
3.5
12.9
7.7
77.0

FY 2014
Dec
Mar
2QA
3QA

3.3
43.8
3.6
9.6
9.4
69.8

Jun
4QA

Sept
1QE

FY 2015
Dec
Mar
2QE
3QE

Jun
4QE

Sept
1QE

FY 2016
Dec
Mar
2QE
3QE

Jun
4QE

2017E

4.6
57.3
3.7
9.6
13.8
89.1

10.9
44.0
3.9
9.6
8.5
76.9

1.0
54.4
4.0
13.0
8.2
80.6

2.0
55.5
4.5
12.9
9.0
84.0

2.0
63.9
4.5
15.0
10.2
95.6

1.0
50.3
4.6
14.9
7.1
77.8

1.0
59.1
4.5
14.5
9.2
88.3

2.0
59.0
5.0
14.2
9.9
90.2

2.0
66.5
4.9
16.2
11.0
100.5

2.0
51.8
4.9
15.9
7.5
82.1

2.0
55.1
5.2
16.9
8.0
87.3

235.8

241.7

6.1
5.1
418.9
6.5
20.2
456.8
(225.5)
231.4

235.2

223.6

211.4

198.8

204.1

194.4

184.3

172.9

145.3

19.6
7.7
0.0
69.2
142.4
564.8

20.7
8.2
0.0
67.7
141.1
543.2

20.6
8.1
0.0
68.0
139.5
566.9

20.9
7.9
0.0
67.7
139.2
543.8

20.9
7.9
0.0
67.7
139.2
551.4

20.9
7.9
0.0
67.7
139.2
543.2

20.9
7.9
0.0
67.7
139.2
542.7

20.9
7.9
0.0
67.7
139.2
512.3

20.9
7.9
0.0
67.7
139.2
528.1

20.9
7.9
0.0
67.7
139.2
520.2

20.9
7.9
0.0
67.7
139.2
520.4

20.9
7.9
0.0
67.7
139.2
490.6

20.9
7.9
0.0
67.7
139.2
468.2

1.7
39.4
0.0
0.0
0.0
41.1

2.7
48.4
0.0
0.2
0.0
51.3

1.7
41.4
0.0
0.2
0.0
43.4

1.6
57.5
0.0
0.2
0.0
59.4

1.7
48.7
0.0
0.2
0.0
50.5

1.8
48.5
2.0
0.2
0.0
52.5

3.3
45.7
0.2
0.2
0.0
49.3

2.6
57.3
1.3
0.2
0.0
61.5

2.7
57.4
3.8
0.2
0.0
64.1

2.0
55.2
2.2
0.2
0.0
59.6

3.6
51.1
0.2
0.2
0.0
55.0

2.8
62.4
1.4
0.2
0.0
66.9

2.9
61.8
4.0
0.2
0.0
68.9

3.1
65.8
4.3
0.2
0.0
73.3

215.4
0.0
0.5
42.7
3.2
13.0
0.0

220.2
0.0
0.6
40.3
2.4
13.7
0.0

282.5
0.0
0.6
36.6
2.4
13.6
0.0

273.6
0.0
0.6
37.9
2.5
13.7
0.0

285.5
0.0
0.6
39.8
2.7
15.1
0.0

273.9
0.0
0.4
41.5
2.7
15.7
0.0

296.9
0.0
0.4
41.5
2.7
15.7

296.5
0.0
0.4
41.5
2.7
15.7

290.2
0.0
0.4
41.5
2.7
15.7

259.2
0.0
0.4
41.5
2.7
15.7

297.1
0.0
0.4
41.5
2.7
15.7

298.0
0.0
0.4
41.5
2.7
15.7

291.9
0.0
0.4
41.5
2.7
15.7

261.1
0.0
0.4
41.5
2.7
15.7

262.2
0.0
0.4
41.5
2.7
15.7

314.4
0.0
(149.7)
(8.1)
156.5

404.9
0.0
(191.3)
(5.7)
207.8

434.2
0.0
(231.9)
(7.9)
194.5

436.5
0.0
(251.6)
(7.0)
177.9

438.8
0.0
(259.7)
(7.5)
171.6

440.9
0.0
(270.8)
(6.2)
163.9

443.1
0.0
(276.9)
(7.1)
159.0

141.7

137.1

130.6

128.6

111.0

106.8

101.3

100.3

72.4

Total liabilities and stockholders' equity

178.7

254.2

258.0

336.7

335.2

375.8

430.1

521.8

512.8

564.8

543.2

566.9

543.8

551.4

543.2

542.7

512.3

528.1

520.2

520.4

490.6

468.2

Book value per share

Cash per share
Average age of receivables (days)
Net working capital
Current ratio
Total assets
Long-term debt
Total debt
Net debt (cash)
Debt / total book capitalization
Debt / TTM EBITDA
Debt / TTM EBIT
Stockholders' equity

$4.09
$0.13
29.8
8.5
2.1x
178.7
85.7
86.1
84.5
62.5%
3.9x
-24.0x
51.7

$5.46
$0.46
33.4
14.5
1.9x
254.2
106.9
109.4
101.7
54.6%
4.4x
-80.4x
90.8

$3.82
$0.17
33.9
16.1
1.9x
258.0
123.2
125.5
121.5
58.1%
4.6x
52.4x
90.5

$4.35
$0.09
29.0
20.5
2.0x
336.7
111.5
111.8
108.3
39.5%
3.9x
13.1x
171.5

$3.96
$0.01
30.1
11.4
1.5x
335.2
95.0
95.5
95.0
34.4%
3.2x
18.2x
181.9

$1.91
$0.06
33.2
14.3
1.4x
375.8
143.0
143.8
138.9
46.8%
3.1x
9.5x
163.4

$2.08
$0.05
35.1
(13.5)
0.8x
430.1
161.6
197.4
193.7
55.8%
4.3x
16.4x
156.5

$2.23
$0.05
35.2
22.1
1.6x
521.8
215.4
216.0
211.0
51.0%
3.7x
14.3x
207.8

$2.06
$0.07
33.5
21.2
1.5x
512.8
220.2
220.2
213.3
53.1%
3.5x
13.1x
194.5

$1.88
$0.02
57.3
25.7
1.5x
564.8
282.5
282.7
280.7
61.4%
3.9x
13.6x
177.9

$1.72
$0.03
31.9
26.4
1.6x
543.2
273.6
273.8
270.6
61.5%
4.3x
15.3x
171.6

$1.58
$0.04
33.4
29.7
1.5x
566.9
285.5
285.7
281.1
63.5%
4.4x
17.6x
163.9

$1.53
$0.10
32.4
26.3
1.5x
543.8
273.9
274.1
263.2
63.3%
4.3x #
18.0x
159.0

$1.36
$0.01
54.8
28.1
1.5x
551.4
296.9
297.1
296.1
67.7%
4.5x
19.4x
141.7

$1.30
$0.02
32.7
34.7
1.7x
543.2
296.5
296.7
294.7
68.4%
4.5x
17.6x
137.1

$1.24
$0.02
34.6
34.1
1.6x
542.7
290.2
290.4
288.4
69.0%
4.3x
15.0x
130.6

$1.21
$0.01
32.6
13.7
1.2x
512.3
259.2
259.4
258.4
66.9%
3.9x #
12.1x
128.6

$1.11
$0.01
57.2
28.7
1.5x
528.1
297.1
297.3
296.3
72.8%
3.9x
12.4x
111.0

$1.07
$0.02
33.1
35.1
1.6x
520.2
298.0
298.2
296.2
73.6%
3.8x
12.4x
106.8

$1.01
$0.02
34.1
33.6
1.5x
520.4
291.9
292.1
290.1
74.3%
3.6x
11.6x
101.3

$0.99
$0.02
31.7
13.2
1.2x
490.6
261.1
261.3
259.3
72.3%
3.1x
10.2x
100.3

$0.70
$0.02
31.7
14.0
1.2x
468.2
262.2
262.4
260.4
78.4%
2.9x
9.4x
72.4

Source: Company data and Stifel estimates

Page 5

Student Transportation Inc. (STB)

October 14, 2014

John Larkin, CFA / jglarkin@stifel.com

Brady Cox / coxbr@stifel.com

Student Transportation Statement of Cash Flows

(figures in $ millions, except per share amounts)
Fiscal year end June 30
2005A

2006A

2007A

2008A

2009A

2010A

2011A

2012A

2013A

Sept
1QA

FY 2014
Dec
Mar
2QA
3QA

Jun
4QA

2014A

Sept
1QE

FY 2015
Dec
Mar
2QE
3QE

Jun
4QE

2015E

Sept
1QE

FY 2016
Dec
Mar
2QE
3QE

Jun
4QE

2016E

2017E

Operating Activities
Net income
(2.6)
(3.9)
Adjustments
Minority Interst
0.0
0.2
Deferred income taxes
(1.5)
(2.7)
Unrealized (gain) loss on forward contracts
(1.0)
(4.3)
Loss on subordinated notes extinguishment
0.0
0.0
Unrealized re-measurement (gain) loss on 6.25% convertible debentures
0.0
0.0
Unrealized foreign currency loss (gain)
0.0
0.0
Amortization of deferred financing costs
0.7
1.4
Non-cash stock compenstion
0.0
0.9
Gain on disposal of fixed assets
0.1
0.1
Gain on bargain purchase of businesses acquired
0.0
0.0
Depreciation and depletion expense
8.8
15.0
Amortization expense
3.2
6.2
Impairment of goodwill
0.0
0.0

(7.1)

(7.0)

(6.8)

2.7

1.5

2.3

3.9

(8.8)

2.9

2.6

4.7

1.4

(9.1)

3.5

2.3

6.5

3.2

(9.0)

4.6

3.3

7.9

6.7

8.1

0.2
(4.4)
(1.5)
0.0
0.0
0.0
1.6
1.9
(0.2)
0.0
18.6
5.9
0.0

0.0
(7.0)
0.1
10.8
0.0
0.0
0.7
1.4
(0.4)
0.0
22.9
2.6
0.0

0.0
(2.7)
7.7
1.4
0.0
0.0
0.7
2.0
(0.1)
0.0
26.0
2.7
4.5

0.0
(0.7)
(3.1)
3.7
0.0
0.0
1.1
2.0
(0.1)
0.0
29.9
2.8
0.0

0.0
(0.8)
0.5
0.0
(0.6)
0.0
2.9
2.5
(0.7)
0.0
31.9
3.4
0.0

0.0
(4.3)
1.8
1.0
3.0
0.0
1.7
3.6
(0.6)
(6.9)
37.1
3.4
0.0

0.0
1.0
0.7
(1.1)
(0.1)
(0.7)
2.2
3.3
(1.5)
0.0
41.9
4.2
0.0

0.0
(5.1)
(0.4)
(0.4)
0.0
0.2
0.3
0.7
(0.1)
0.0
4.6
1.0
0.0

0.0
1.5
0.3
0.0
0.0
(0.3)
0.4
2.6
(0.3)
0.0
13.4
0.9
0.0

0.0
0.4
0.2
(0.2)
0.0
0.4
0.5
0.7
(0.1)
(2.8)
13.9
0.8
0.0

0.0
3.3
(0.8)
(0.0)
0.0
0.1
0.5
0.0
0.0
0.0
14.6
0.8
0.0

0.0
0.1
(0.7)
(0.7)
0.0
0.4
1.6
3.9
(0.5)
(2.8)
46.4
3.6
0.0

0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
3.2
1.1
0.0

0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
12.6
1.4
0.0

0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
13.0
1.5
0.0

0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
12.7
1.4
0.0

0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
41.6
5.5
0.0

0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
5.8
1.2
0.0

0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
16.3
1.5
0.0

0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
16.9
1.6
0.0

0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
17.5
1.5
0.0

0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
56.6
5.8
0.0

0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
60.2
6.2
0.0

Changes in certain working capital items:

Accounts receivable
Prepaids, inventory and other current assets
Accounts payable
Accrued expenses and other current liabilities
Changes in other assets and liabilities
Total change in net working capital

4.2
0.5
(1.2)
0.0
0.0
3.5

0.9
(3.5)
0.7
1.6
0.2
(0.1)

(2.8)
(2.1)
(0.3)
(0.1)
0.4
(4.9)

(2.5)
(1.9)
0.3
2.4
(0.2)
(1.8)

1.2
(0.6)
(0.4)
0.1
(0.0)
0.3

(6.3)
0.7
(0.1)
8.9
0.1
3.4

(3.9)
(2.2)
0.4
(2.9)
(0.1)
(8.6)

3.6
(7.9)
(1.0)
(1.8)
0.0
(7.1)

(5.7)
3.3
0.8
0.2
(0.0)
(1.5)

(9.9)
(13.0)
0.9
9.0
(0.1)
(13.1)

6.9
4.2
(0.9)
(9.5)
0.3
1.0

(13.8)
(4.5)
(0.1)
12.1
1.8
(4.5)

13.5
3.8
0.0
(7.7)
0.6
10.2

(3.2)
(9.5)
(0.1)
3.9
2.5
(6.4)

(10.3)
(3.5)
0.3
(0.1)
2.0
(11.6)

(1.1)
(0.4)
(0.8)
(1.4)
(1.8)
(5.6)

(8.4)
(2.1)
(1.1)
11.0
1.2
0.6

13.6
0.0
3.1
0.2
2.4
19.4

(6.2)
(6.0)
1.4
9.8
3.8
2.7

(8.8)
0.5
(2.1)
(2.9)
(1.5)
(15.0)

0.1
(0.2)
(0.7)
(2.6)
(2.1)
(5.4)

(7.4)
(1.9)
(1.0)
10.6
1.3
1.5

14.7
0.3
3.5
(0.6)
2.6
20.4

(1.5)
(1.3)
(0.5)
4.5
0.2
1.5

(3.4)
(1.3)
(0.5)
4.2
0.3
(0.7)

Net cash provided by operations

11.3

12.8

10.1

22.4

35.5

41.7

32.1

34.9

52.1

(21.1)

22.3

11.8

33.4

46.4

(16.4)

11.9

17.3

40.1

53.0

(17.0)

17.0

23.3

47.3

70.5

73.7

Investing Activities
Capital expenditures, net
Acquisition of business
Proceeds on sale of equipment
Other

(2.0)
(132.2)
0.9
(8.9)

(22.5)
(43.4)
0.3
0.0

(11.5)
(10.1)
1.5
0.0

(28.3)
(64.1)
1.4
0.0

(36.5)
(12.5)
0.5
0.0

(36.6)
(16.6)
4.8
0.0

(13.5)
(53.3)
1.9
(0.8)

(48.6)
(60.9)
1.0
(0.9)

(41.8)
0.0
2.9
(0.4)

(30.4)
(5.5)
0.1
0.0

(3.3)
0.0
0.5
0.0

(2.0)
(17.2)
0.4
0.0

(2.0)
0.0
0.2
0.0

(37.8)
(22.8)
1.2
0.0

(8.2)
0.0
0.0
0.0

(2.4)
0.0
0.0
0.0

(2.4)
0.0
0.0
0.0

(1.6)
0.0
0.0
0.0

(14.5)
0.0
0.0
0.0

(12.2)
0.0
0.0
0.0

(8.2)
0.0
0.0
0.0

(8.4)
0.0
0.0
0.0

(7.7)
0.0
0.0
0.0

(36.4)
0.0
0.0
0.0

(38.8)
0.0
0.0
0.0

Net cash (used in) provided by investing activities

(142.2)

(65.6)

(20.1)

(91.0)

(48.5)

(48.4)

(65.7)

(109.5)

(39.4)

(35.8)

(2.8)

(18.9)

(1.9)

(59.4)

(8.2)

(2.4)

(2.4)

(1.6)

(14.5)

(12.2)

(8.2)

(8.4)

(7.7)

(36.4)

(38.8)

Cash available for (required by) financing

(130.9)

(52.8)

(10.0)

(68.7)

(12.9)

(6.7)

(33.6)

(74.5)

12.7

(56.9)

19.5

(7.1)

31.5

(13.0)

(24.6)

9.5

15.0

38.5

38.4

(29.2)

8.8

14.9

39.7

34.1

34.9

Common share/Convertible Debenture offerings

57.5
Expenses associated with convertible debenture offerings
0.0
Redemption of Class B Series Two and Three common shares0.0
Deferred financing costs
(7.0)
Repurchase/redemption of common stock
0.0
Dividends paid
(2.8)
Borrowings on credit facility
114.4
Payments on credit facility
(29.4)
Payments on seller debt
(0.1)
Net cash (used in) provided by financing activities
132.6

54.6
0.0
0.0
(2.2)
0.0
(7.3)
125.6
(111.3)
(0.5)
58.8

16.2
0.0
(8.7)
(1.6)
(0.3)
(11.1)
130.2
(115.5)
(2.0)
7.2

57.8
(0.6)
(0.3)
(1.0)
(0.4)
(17.3)
134.3
(101.7)
(3.0)
67.9

35.5
(0.6)
(0.9)
(0.1)
0.0
(20.5)
100.3
(103.6)
(0.2)
9.9

96.8
(4.9)
(40.7)
(0.3)
0.0
(24.3)
166.1
(179.7)
(1.1)
11.9

60.0
(3.0)
(1.8)
(1.8)
0.0
(25.4)
237.2
(233.7)
0.0
31.5

79.6
0.0
(1.5)
(0.8)
(0.6)
(28.3)
202.5
(175.2)
0.0
75.6

0.0
0.0
(1.8)
(0.8)
(2.5)
(34.5)
139.9
(110.8)
0.0
(10.6)

0.0
0.0
(0.2)
0.0
0.0
(8.7)
77.6
(16.8)
0.0
51.9

71.4
0.0
(0.2)
(3.5)
0.0
(8.8)
24.0
(101.2)
0.0
(18.2)

0.0
0.0
(0.2)
(0.0)
0.0
(8.5)
35.5
(18.3)
0.0
8.5

(71.4)
71.4
(0.7)
(0.0)
0.0
(8.2)
27.1
(43.4)
0.0
(25.3)

0.0
71.4
(1.3)
(3.6)
0.0
(34.1)
164.2
(179.7)
0.0
16.9

0.0
0.0
0.0
0.0
0.0
(8.3)
23.0
0.0
0.0
14.7

0.0
0.0
0.0
0.0
0.0
(8.1)
0.0
(0.4)
0.0
(8.5)

0.0
0.0
0.0
0.0
0.0
(8.7)
0.0
(6.2)
0.0
(15.0)

(50.0)
0.0
0.0
0.0
0.0
(8.5)
19.0
0.0
0.0
(39.5)

(50.0)
0.0
0.0
0.0
0.0
(33.7)
42.0
(6.6)
0.0
(48.3)

0.0
0.0
0.0
0.0
0.0
(8.6)
37.8
0.0
0.0
29.2

0.0
0.0
0.0
0.0
0.0
(8.8)
0.0
0.9
0.0
(7.8)

0.0
0.0
0.0
0.0
0.0
(8.8)
0.0
(6.1)
0.0
(14.9)

0.0
0.0
0.0
0.0
0.0
(8.8)
0.0
(30.8)
0.0
(39.7)

0.0
0.0
0.0
0.0
0.0
(34.9)
37.8
(36.0)
0.0
(33.1)

0.0
0.0
0.0
0.0
0.0
(36.0)
41.2
(40.1)
0.0
(34.9)

7.7
(2.8)
(0.9)

4.0
(0.7)
0.2

3.5
(3.0)
0.1

0.6
5.1
(0.8)

4.8
(2.1)
0.9

5.0
2.1
(0.1)

6.9
(5.1)
0.1

2.0
1.3
0.0

3.3
1.4
(0.1)

4.6
6.2
(0.0)

10.9
(9.9)
0.0

1.0
1.0
0.0

2.0
0.0
0.0

2.0
(1.0)
0.0

10.9
(9.9)
0.0

1.0
0.0
0.0

1.0
1.0
0.0

2.0
0.0
0.0

2.0
0.0
0.0

1.0
1.0
0.0

2.0
0.0
0.0

3.3

4.6

10.9

10.9

1.0

2.0

2.0

1.0

1.0

1.0

2.0

2.0

2.0

10.8
19.1
$0.19

1.7
9.8
$0.09

23.3
31.3
$0.30

(24.4)
8.6
$0.09

1.4
9.5
$0.09

6.2
15.0
$0.14

30.0
38.5
$0.36

4.8
38.4
$0.36

0.1
8.8
$0.09

6.1
14.9
$0.15

30.8
39.7
$0.39

Beginning cash balance

Net increase (decrease) in cash and equivalents
Effect of exchange rate changes on cash

0.0
1.7
0.0

Ending cash balance

1.7

Net Free cash flow (after dividends)

Free cash flow (before dividends)
Per share
Current share price
Net FCF yield (after dividends)
FCF yield (before dividends)
Dividend/FCF (before dividends)
CapEx, net/OCF

7.3
9.2
$0.73

1.7
6.0
0.0
7.7
(16.7)
(9.7)
($0.65)

4.0
(10.9)
(1.4)
($0.07)

3.5

0.6

4.8
(14.4)
5.1
$0.08

3.7
(4.9)
18.6
$0.25

3.7
1.1
0.2
5.0
(41.0)
(13.7)
($0.16)

6.9
(21.4)
10.3
$0.11

2.0
(60.1)
(51.5)
($0.54)

6.9
3.9
0.0

(32.9)
(24.6)
($0.24)

(37.8)
(29.2)
($0.29)

2.0
(0.8)
34.1
$0.34

2.0

(21.8)
(5.9)
($0.18)

(20.8)
(0.9)
($0.02)

(1.1)
34.9
$0.34

-11.3%
-3.1%

-8.0%
-0.4%

-3.7%
1.3%

-1.1%
4.2%

-8.1%
-2.7%

-3.8%
1.8%

-4.0%
1.4%

0.8%
6.1%

-0.1%
5.7%

-0.2%
5.7%

-291.7% -2245.3%
126.4%
102.6%

480.9%
87.9%

136.6%
42.0%

-206.5%
139.3%

336.8%
80.3%

396.3%
81.4%

87.5%
27.4%

102.4%
51.6%

103.2%
52.6%

$6.01
9.5%
12.1%

-18.4%
-10.7%

-8.5%
-1.1%

30.7%
17.9%

-75.2%
176.0%

-792.6%
113.8%

Source: Company data and Stifel estimates

Page 6

Student Transportation Inc. (STB)

October 14, 2014

Important Disclosures and Certifications

I, John G. Larkin, certify that the views expressed in this research report accurately reflect my personal views
about the subject securities or issuers; and I, John G. Larkin, certify that no part of my compensation was, is,
or will be directly or indirectly related to the specific recommendations or views contained in this research
report. For our European Conflicts Management Policy go to the research page at www.stifel.com.
Rating and Price Target History for: Student Transportation Inc. (STB) as of 10-13-2014
05/22/12
B:$7.3

09/28/12
B:$7.2

11/13/12
B:$7

05/13/13
B:$6.9

01/09/14
B:$7

8
7
6

Q3

Q1

Q2

2012

Q3

Q1

Q2

2013

Q3

Q1

Q2

Q3

2014

4
2015

Rating Key
B - Buy
H - Hold
S - Sell
I - Initiation
D - Dropped

UR - Under Review
NR - No Rating
NA - Not Applicable
RS - Rating Suspended

Created by BlueMatrix

For a price chart with our ratings and target price changes for STB go to
http://sf.bluematrix.com/bluematrix/Disclosure?ticker=STB
Student Transportation Inc. price chart reflects trading activity since shares began trading on NASDAQ.
Stifel expects to receive or intends to seek compensation for investment banking services from Student Transportation
Inc. in the next 3 months.
Stifel makes a market in the securities of Student Transportation Inc..
Stifel research analysts receive compensation that is based upon (among other factors) Stifel's overall investment
banking revenues.
Our investment rating system is three tiered, defined as follows:
BUY -For U.S. securities we expect the stock to outperform the S&P 500 by more than 10% over the next 12 months.
For Canadian securities we expect the stock to outperform the S&P/TSX Composite Index by more than 10% over the
next 12 months. For other non-U.S. securities we expect the stock to outperform the MSCI World Index by more than
10% over the next 12 months. For yield-sensitive securities, we expect a total return in excess of 12% over the next 12
months for U.S. securities as compared to the S&P 500, for Canadian securities as compared to the S&P/TSX
Composite Index, and for other non-U.S. securities as compared to the MSCI World Index.
HOLD -For U.S. securities we expect the stock to perform within 10% (plus or minus) of the S&P 500 over the next 12
months. For Canadian securities we expect the stock to perform within 10% (plus or minus) of the S&P/TSX Composite
Index. For other non-U.S. securities we expect the stock to perform within 10% (plus or minus) of the MSCI World
Index. A Hold rating is also used for yield-sensitive securities where we are comfortable with the safety of the dividend,
but believe that upside in the share price is limited.
SELL -For U.S. securities we expect the stock to underperform the S&P 500 by more than 10% over the next 12
months and believe the stock could decline in value. For Canadian securities we expect the stock to underperform the
S&P/TSX Composite Index by more than 10% over the next 12 months and believe the stock could decline in value.
For other non-U.S. securities we expect the stock to underperform the MSCI World Index by more than 10% over the

Page 7

Student Transportation Inc. (STB)

October 14, 2014

next 12 months and believe the stock could decline in value.

Of the securities we rate, 52% are rated Buy, 46% are rated Hold, and 2% are rated Sell.
Within the last 12 months, Stifel or an affiliate has provided investment banking services for 21%, 8% and 0% of the
companies whose shares are rated Buy, Hold and Sell, respectively.
Additional Disclosures
Student Transportation Inc. is on the Income Opportunity Ideas List. This Income Opportunity Ideas List represents
analysts best yield ideas, however is not intended to represent a model portfolio. This list offers what the analysts
believe are companies with solid fundamentals, a favorable valuation, and a current dividend of 2% or higher.
Please visit the Research Page at www.stifel.com for the current research disclosures and respective target price
methodology applicable to the companies mentioned in this publication that are within Stifel's coverage universe. For a
discussion of risks to target price please see our stand-alone company reports and notes for all Buy-rated stocks.
The information contained herein has been prepared from sources believed to be reliable but is not guaranteed by us
and is not a complete summary or statement of all available data, nor is it considered an offer to buy or sell any
securities referred to herein. Opinions expressed are subject to change without notice and do not take into account the
particular investment objectives, financial situation or needs of individual investors. Employees of Stifel or its affiliates
may, at times, release written or oral commentary, technical analysis or trading strategies that differ from the opinions
expressed within. Past performance should not and cannot be viewed as an indicator of future performance.
Stifel is a multi-disciplined financial services firm that regularly seeks investment banking assignments and
compensation from issuers for services including, but not limited to, acting as an underwriter in an offering or financial
advisor in a merger or acquisition, or serving as a placement agent in private transactions.
These materials have been approved by Stifel Nicolaus Europe Limited, authorized and regulated by the Financial
Conduct Authority (FCA) in the UK, in connection with its distribution to professional clients and eligible counterparties
in the European Economic Area. (Stifel Nicolaus Europe Limited home office: London +44 20 7557 6030.) No
investments or services mentioned are available in the European Economic Area to retail clients or to anyone in
Canada other than a Designated Institution. This investment research report is classified as objective for the purposes
of the FCA rules. Please contact a Stifel entity in your jurisdiction if you require additional information.

Additional Information Is Available Upon Request

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All rights reserved.

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