National Express trading 'slightly above' previous guidance

National Express said on Thursday that it had traded “slightly above” its previously guided base case ince the half-year, which had assumed revenue to be around 50% of pre-Covid-19 expectations until the end of August.

The FTSE 250 passenger transport operator said “tight” cost controls remained in-place, driving positive EBITDA and cash flow.

It also noted further contract wins, having been provisionally awarded an up-to nine year, 240 urban bus contract in Lisbon, Portugal, and a five-year paratransit contract for up to 75 vehicles, in California, United States.

National Express said its underlying liquidity position remained “strong”, broadly in line with the half-year position.

At its ALSA operation, National Express said it was benefitting from “very strong” customer relationships, and did not have any revenue risk in more than 40% of its contracts.

The proportion of contracts not at revenue would increase to 46% in 2021, with a full Casablanca network in operation.

Post lockdown, ALSA's revenue had grown back to 66% of last year, with the financial performance of the regional business having particularly improved over the last month, following “enhanced” agreements with contracting authorities.

ALSA was also provisionally awarded a seven-year, 240 urban bus contract in Lisbon, Portugal, worth €185m over the initial term.

In North America, the company said it was currently operating services on 65% of its school bus routes, through either a full 'traditional' or a 'hybrid' - a mix of in-school and at-home learning - arrangement.

Typically, hybrid arrangements involved students attending school for between two and four days per week.

In total, the company said it had agreements in place across school bus contracts that secured almost 70% of its pre-Covid revenue, which it expected to increase as it reached more agreements in the coming weeks.

Transit and shuttle performance varied by contract, but due to “strong” customer relationships, especially in its biggest contracts, the firm said it was securing between 65% and 80% of pre-Covid revenue, and expected to continue to do so for the rest of the year.

It won a $40m, five-year paratransit contract for up to 75 vehicles in Fresno, California, which it described as “asset-light”, with vehicles owned and facilities and fuel provided by the customer.

National Express said it was still expecting the increased interest from school boards to outsourcing their busing operations, and the financial challenges experienced by smaller operators, to provide further opportunities in the upcoming bid season.

In the UK, both of the company’s UK bus businesses continued to see “good” passenger growth in recent weeks.

In the West Midlands the firm said it was running 103% of last year's service and carrying 58% of the patronage, while in Dundee, it was operating 92% of last year's service and carrying 61% of the patronage.

In both businesses, costs were being underwritten by the relevant national transport authority, with the Department for Transport confirming that the West Midlands arrangements would remain in place “until a time when the funding is no longer needed”, while in Dundee, the current funding arrangement would be in place until at least November.

The firm said it had added further coach services where social distancing restrictions still enabled a commercial expansion in the network, and had been “encouraged” to see continued high demand for those services we are running.

“We continue to be pleased that our strong customer relationships are sustaining high levels of revenue during the pandemic's on-going uncertainty,” said interim group chief executive officer Chris Davies.

“This robust revenue collection and on-going tight cost control is underpinning positive EBITDA and cash flow projections.”

“We remain resolutely optimistic about the longer term opportunities for the group."

At 0941 BST, shares in National Express Group were up 5.35% at 131.69p.