Ambow Education Announces Third Quarter 2019 Financial Results

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December 12, 2019 9:00 AM EST

BEIJING, Dec. 12, 2019 /PRNewswire/ -- Ambow Education Holding Ltd. ("Ambow" or the "Company") (NYSE American: AMBO), a leading national provider of educational and career enhancement services in China, today announced its unaudited financial and operating results for the three-month and nine-month periods ended September 30, 2019.

"We are pleased with the topline growth during this quarter. Both of our primary revenue streams, K-12 Schools and College Preparation & Continuing Education, showed 26% and 13% year-over-year increases, respectively. Furthermore our deferred revenue related to tuition and course fees and our education service platform increased 86.2% to US$33.7 million from the prior year period. As we move towards closing out fiscal 2019, we shall continue to explore innovation in our educational services portfolio, invest in new technology to build up our education service platforms, and roll out our cross-border university platform across the U.S. and China. At the same time we are making efforts to optimize and synergize resources and expenditures throughout the Company. Looking forward, we believe we are positioning Ambow to remain a leading provider of educational and career enhancement services inside China as well as a transformational cross-border leader in assisting career colleges and universities by addressing five key challenges across: curriculum development, retaining qualified faculty, practical training, job placement and international cooperation," noted Dr. Jin Huang, Ambow's President and Chief Executive Officer.

"As a leading innovator in the robust Chinese education market, Ambow continues to expand its brand presence and market positioning through the buildout of our powerful and modern learning platform. During the third quarter, the Company hosted a forum on innovation and international resource sharing across Chinese and foreign higher education, in Beijing. The International Education Expo allowed Ambow to promote its cross-border education model which not only benefits international students seeking higher education opportunities but also the institutions that fall under the credentialing standards as maintained by Global Career Quality Assurance (GCQA). In terms of initiatives and partnerships for the advancement of new technology curriculums in China, Ambow has recently partnered with Hebei Agricultural University and Beijing University of Agriculture to jointly design and build a Big Data engineering lab and Internet of Things (IoT) lab respectively, whose value proposition is in driving development of higher education initiatives which prepare students for the new technology-driven economy of today," concluded Dr. Huang.

Third Quarter 2019 Financial Highlights

  • Net revenues for the third quarter of 2019 increased by 12.7% to US$17.7 million from US$15.7 million in the same period of 2018. This increase was mainly driven by higher student enrollment.
  • Gross profit for the third quarter of 2019 increased by 4.7% to US$4.5 million from US$4.3 million in the same period of 2018. Gross profit margin was 25.4%, compared with 27.4% for the third quarter of 2018. The decrease in gross profit margin was primarily due to additional investments in new programs and new technology deployment.
  • Operating expenses for the third quarter of 2019 increased by 141.7% to US$14.5 million from US$6.0 million for the same period of 2018. The increase of operating expenses was primarily due to more marketing activities to promote student enrollment, additional investments in new programs and new technology deployment, increase in staff compensation and an impairment loss of goodwill and intangible assets in US$5.4 million recorded in the third quarter.
  • Net loss attributable to ordinary shareholders was US$10.2 million, or US$0.23 per basic and diluted share, compared with a net loss of US$1.8 million, or US$0.04 per basic and diluted share, for the third quarter of 2018.
  • As of September 30, 2019, Ambow maintained strong cash resources of US$43.9 million, comprised of cash and cash equivalents of US$18.4 million and short-term investments of US$25.5 million.
  • As of September 30, 2019, the Company's deferred revenue balance was US$33.7 million, representing an 86.2% increase from US$18.1 million as of December 31, 2018, mainly attributable to the tuition and course fees collected in the K-12 business segment for the 2019-2020 academic year, deferred revenue collected from our education service platforms and the tuition fees collected for the fall semester of 2019.

First Nine Months 2019 Financial Highlights

  • Net revenues for the first nine months of 2019 increased by 8.7% to US$57.4 million from US$52.8 million in the same period of 2018. This increase was mainly driven by higher student enrollment.
  • Gross profit for the first nine months of 2019 decreased by 2.0% to US$19.5 million from US$19.9 million in the same period of 2018. Gross profit margin was 34.0%, compared with 37.7% for the nine months of 2018. The decrease in gross profit margin was primarily due to additional investments in new programs and new technology deployment.
  • Operating expenses for the first nine months of 2019 increased by 63.2% to US$31.0 million from US$19.0 million for the same period of 2018. The increase of operating expenses was primarily due to more marketing activities to promote student enrollment, additional investments in new programs and new technology deployment, increase in staff compensation and an impairment loss of goodwill and intangible assets in US$5.4 million recorded in the third quarter of 2019.
  • Net loss attributable to ordinary shareholders was US$12.3 million, or US$0.28 per basic and diluted share, compared with a net income of US$2.0 million, or US$0.05 per basic and diluted share, for the first nine months of 2018.

The Company's third quarter and first nine months of 2019 financial and operating results can also be found on its Form 6-K filed with the U.S. Securities and Exchange Commission at www.sec.gov.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all amounts translated from RMB to U.S. dollars for the third quarter and first nine months of 2019 are based on the effective exchange rate of 7.1477 as of September 30, 2019; all amounts translated from RMB to U.S. dollars for the third quarter and first nine months of 2018 are based on the effective exchange rate of 6.8680 as of September 28, 2018; all amounts translated from RMB to U.S. dollars as of December 31, 2018 are based on the effective exchange rate of 6.8755 as of December 31, 2018. The exchange rates were according to the middle rate as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.

About Ambow Education Holding Ltd.

Ambow Education Holding Ltd. is a leading national provider of educational and career enhancement services in China, offering high-quality, individualized services and products. With its extensive network of regional service hubs complemented by a dynamic proprietary learning platform and distributors, Ambow provides its services and products to students in 30 out of the 31 provinces and autonomous regions within China.

Follow us on Twitter: @Ambow_Education

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements.  Among other things, the outlook and quotations from management in this announcement, as well as Ambow's strategic and operational plans, contain forward-looking statements. Ambow may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statements, including but not limited to the following: the Company's goals and strategies, expansion plans, the expected growth of the content and application delivery services market, the Company's expectations regarding keeping and strengthening its relationships with its customers, and the general economic and business conditions in the regions where the Company provides its solutions and services. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and Ambow undertakes no duty to update such information, except as required under applicable law.

For investor and media inquiries please contact:

Ambow Education Holding Ltd.Tel: +86-10-6206-8000

The Piacente Group | Investor RelationsTel: +1-212-481-2050 or +86-10-6508-0677E-mail: [email protected] 

 

 

AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except for share and per share data)

As of September 30,

As of December 31,

2019

2018

US$

RMB

RMB

ASSETS

Current assets:

Cash and cash equivalents

18,454

131,902

211,436

Restricted cash

-

-

30,072

Short term investments, available for sale

15,559

111,209

47,208

Short term investments, held to maturity

9,933

71,000

70,000

Accounts receivable, net

4,069

29,087

18,132

Amounts due from related parties

334

2,384

1,105

Prepaid and other current assets, net

19,246

137,567

134,770

Loan receivable, current

-

-

42,677

Total current assets

67,595

483,149

555,400

Non-current assets:

Property and equipment, net

21,182

151,403

165,933

Land use rights, net

248

1,770

1,804

Intangible assets, net

7,949

56,815

92,412

Goodwill

8,252

58,986

73,166

Deferred tax assets, net

1,837

13,130

10,240

Operating lease right-of-use asset

35,412

253,111

-

Finance lease right-of-use asset

923

6,600

-

Other non-current assets, net

10,201

72,914

11,264

Total non-current assets

86,004

614,729

354,819

Total assets

153,599

1,097,878

910,219

LIABILITIES

Current liabilities:

Deferred revenue  *

33,735

241,130

124,250

Accounts payable  *

1,634

11,682

13,583

Accrued and other liabilities  *

26,503

189,438

256,325

Borrowing from third party, current 

-

-

41,179

Income taxes payable  *

29,982

214,305

207,114

Amounts due to related parties  *

356

2,543

2,696

Operating lease liability, current  *

7,511

53,687

-

Total current liabilities

99,721

712,785

645,147

Non-current liabilities:

Consideration payable for acquisitions

185

1,322

1,322

Other non-current liabilities

-

-

979

Operating lease liability, non-current  *

29,337

209,692

-

Total non-current liabilities

29,522

211,014

2,301

Total liabilities

129,243

923,799

647,448

EQUITY

Preferred shares

(US$ 0.003 par value;1,666,667 shares authorized, nil issued and outstanding as of December 31, 2018 and September 30, 2019) 

-

-

-

Class A Ordinary shares

(US$0.003 par value; 66,666,667 and 66,666,667 shares authorized, 38,756,289and 38,804,032 shares issued andoutstanding as of December 31, 2018 and September 30, 2019, respectively)

102

729

728

Class C Ordinary shares

(US$0.003 par value; 8,333,333 and 8,333,333 shares authorized, 4,708,415 and 4,708,415shares issued and outstanding as of December 31, 2018 and September 30, 2019, respectively)

13

90

90

Additional paid-in capital

490,858

3,508,504

3,507,123

Statutory reserve

2,819

20,149

20,149

Accumulated deficit

(470,029)

(3,359,627)

(3,271,838)

Accumulated other comprehensive income

810

5,787

8,305

Total Ambow Education Holding Ltd.'s equity

24,573

175,632

264,557

Non-controlling interests

(217)

(1,553)

(1,786)

Total equity

24,356

174,079

262,771

Total liabilities and equity

153,599

1,097,878

910,219

*  All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets.

 

 

AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(All amounts in thousands, except for share and per share data)

Attributable to Ambow Education Holding Ltd.'s Equity  

 Class A Ordinary

Class C Ordinary

Additional

Retained

Earnings

Accumulated

other

Non-

shares

shares

paid-in

Statutory

(Accumulated

comprehensive

controlling

Total

Shares

Amount

Shares

Amount

capital

reserves

deficit)

income

Interest

Equity

RMB

RMB

RMB

RMB

RMB

RMB

RMB

RMB

Balance as of January 1,     2019

38,756,289

728

4,708,415

90

3,507,123

20,149

(3,271,838)

8,305

(1,786)

262,771

Share-based compensation

-

-

-

-

872

-

-

-

-

872

Issuance of ordinary shares

    for restricted stock award

28,646

1

-

-

(1)

-

-

-

-

-

Foreign currency translation

-

-

-

-

-

-

-

(2,428)

-

(2,428)

    adjustment

Unrealized gain on    investment, net of income

    taxes

-

-

-

-

-

-

-

75

-

75

Net loss

-

-

-

-

-

-

(23,756)

-

(93)

(23,849)

Balance as of March 31,     2019

38,784,935

729

4,708,415

90

3,507,994

20,149

(3,295,594)

5,952

(1,879)

237,441

Share-based compensation

-

-

-

-

266

-

-

-

-

266

Issuance of ordinary shares

    for restricted stock award

19,097

0

-

-

(0)

-

-

-

-

-

Foreign currency translation

-

-

-

-

-

-

-

(746)

-

(746)

    adjustment

Unrealized gain on

-

-

-

-

-

-

-

173

-

173

    investment, net of income

    taxes

Addition of noncontrolling    interests resulting from    new subsidiaries

-

-

-

-

-

-

-

-

502

502

Net income/(loss)

-

-

-

-

-

-

8,778

-

(180)

8,598

Balance as of June 30,     2019

38,804,032

729

4,708,415

90

3,508,260

20,149

(3,286,816)

5,379

(1,557)

246,234

Share-based compensation

-

-

-

-

244

-

-

-

-

244

Foreign currency translation

-

-

-

-

-

-

-

(93)

-

(93)

    adjustment

Unrealized gain on

-

-

-

-

-

-

-

501

-

501

    investment, net of income

    taxes

Net (loss)/income

-

-

-

-

-

-

(72,811)

-

4

(72,807)

Balance as of    September 30, 2019

38,804,032

729

4,708,415

90

3,508,504

20,149

(3,359,627)

5,787

(1,553)

174,079

Balance as of January 1,

    2018

34,206,939

640

4,708,415

90

3,456,307

20,036

(3,316,715)

6,876

(1,275)

165,959

Share-based compensation

-

-

-

-

616

-

-

-

-

616

Issuance of ordinary shares

    for restricted stock award

30,187

1

-

-

(1)

-

-

-

-

-

Foreign currency translation

-

-

-

-

-

-

-

3,276

-

3,276

    adjustment

Unrealized gain on

   investment, net of income   taxes

-

-

-

-

-

-

-

64

-

64

Deregistration of    subsidiaries

-

-

-

-

-

-

-

-

(9)

(9)

Net (loss)/income

-

-

-

-

-

-

(7,062)

-

93

(6,969)

Balance as of March 31,    2018

34,237,126

641

4,708,415

90

3,456,922

20,036

(3,323,777)

10,216

(1,191)

162,937

Share-based compensation

-

-

-

-

618

-

-

-

-

618

Issuance of ordinary shares

    for restricted stock award

30,187

0

-

-

(0)

-

-

-

-

-

Issuance of ordinary shares

    on IPO

4,140,000

80

-

-

46,047

-

-

-

-

46,127

Foreign currency translation    adjustment

-

-

-

-

-

-

-

(1,523)

-

(1,523)

Unrealized gain on    investment, net of income    taxes

-

-

-

-

-

-

-

69

-

69

Buy-outs of noncontrolling    interests

-

-

-

-

(2,619)

-

-

-

(1,885)

(4,504)

Deregistration of    subsidiaries

-

-

-

-

-

-

-

-

(41)

(41)

Net income/(loss)

-

-

-

-

-

-

33,312

-

(143)

33,169

Balance as of June 30,    2018

38,407,313

721

4,708,415

90

3,500,968

20,036

(3,290,465)

8,762

(3,260)

236,852

Share-based compensation

-

-

-

-

655

-

-

-

-

655

Issuance of ordinary shares    for restricted stock award

29,355

0

-

-

(0)

-

-

-

-

-

Foreign currency translation    adjustment

-

-

-

-

-

-

-

(501)

-

(501)

Unrealized gain on    investment, net of income    taxes

-

-

-

-

-

-

-

(114)

-

(114)

Buy-outs of noncontrolling    interests

-

-

-

-

-

-

-

-

1

1

Net (loss)/income

-

-

-

-

-

-

(12,413)

-

89

(12,324)

Balance as of    September 30, 2018

38,436,668

721

4,708,415

90

3,501,623

20,036

(3,302,878)

8,147

(3,170)

224,569

 

 

 

AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands, except for share and per share data)

For the nine months ended September 30,

For the three months ended September 30,

2019

2019

2018

2019

2019

2018

US$

RMB

RMB

US$

RMB

RMB

NET REVENUES

 Educational program and    services

57,273

409,367

356,429

17,730

126,729

107,227

Intelligent program and     services

167

1,193

6,034

(24)

(173)

251

Total net revenues

57,440

410,560

362,463

17,706

126,556

107,478

COST OF REVENUES

 Educational program and     services

(37,138)

(265,454)

(220,991)

(13,002)

(92,934)

(76,723)

Intelligent program and     services

(814)

(5,818)

(5,188)

(155)

(1,109)

(1,266)

Total cost of revenues

(37,952)

(271,272)

(226,179)

(13,157)

(94,043)

(77,989)

GROSS PROFIT

19,488

139,288

136,284

4,549

32,513

29,489

Operating expenses:

Selling and marketing

(5,705)

(40,778)

(31,967)

(2,183)

(15,607)

(12,740)

General and administrative

(19,658)

(140,510)

(96,872)

(6,732)

(48,116)

(27,717)

Research and development

(218)

(1,555)

(1,647)

(152)

(1,087)

(820)

Impairment loss

(5,422)

(38,754)

-

(5,422)

(38,754)

-

Total operating expenses

(31,003)

(221,597)

(130,486)

(14,489)

(103,564)

(41,277)

OPERATING (LOSS) INCOME

(11,515)

(82,309)

5,798

(9,940)

(71,051)

(11,788)

OTHER INCOME (EXPENSES)

Interest income

468

3,343

5,367

255

1,823

1,691

Foreign exchange gain, net

6

46

154

6

45

19

Other income (loss), net

27

193

517

1

7

(408)

Gain from deregistration of     subsidiaries

179

1,279

3,220

-

-

-

Gain on sale of investment     available for sale

59

422

759

-

3

275

Total other income

739

5,283

10,017

262

1,878

1,577

(LOSS) INCOME BEFORE     INCOME TAX AND NON-    CONTROLLING     INTEREST

(10,776)

(77,026)

15,815

(9,678)

(69,173)

(10,211)

Income tax expense

(1,543)

(11,032)

(1,939)

(508)

(3,634)

(2,113)

NET (LOSS) INCOME

(12,319)

(88,058)

13,876

(10,186)

(72,807)

(12,324)

Less: Net (loss) income     attributable to non-    controlling interest

(38)

(269)

39

1

4

89

NET (LOSS) INCOME     ATTRIBUTABLE TO     ORDINARY     SHAREHOLDERS

 

(12,281)

(87,789)

13,837

(10,187)

(72,811)

(12,413)

NET (LOSS) INCOME

(12,319)

(88,058)

13,876

(10,186)

(72,807)

(12,324)

OTHER     COMPREHENSIVE     INCOME, NET OF TAX

Foreign currency translation     adjustments

(457)

(3,267)

1,252

(13)

(93)

(501)

Unrealized gains on short term     investments

  Unrealized holding gains     arising during period

173

1,238

446

75

538

66

  Less: reclassification     adjustment for gains     included in net income

68

489

427

5

37

180

Other comprehensive (loss)     income

(352)

(2,518)

1,271

57

408

(615)

TOTAL     COMPREHENSIVE     (LOSS) INCOME

(12,671)

(90,576)

15,147

(10,129)

(72,399)

(12,939)

Net (loss) income per share -     basic

(0.28)

(2.02)

0.34

(0.23)

(1.67)

(0.29)

Net (loss) income per share -     diluted

(0.28)

(2.02)

0.34

(0.23)

(1.67)

(0.29)

Weighted average shares used     in calculating basic net     (loss) income per share

43,496,848

43,496,848

40,697,965

43,512,447

43,512,447

43,125,614

Weighted average shares used     in calculating diluted net     (loss) income per share

43,496,848

43,496,848

41,025,566

43,512,447

43,512,447

43,125,614

 

 

 

Discussion of Segment Operations(All amounts in thousands)

For the nine months ended September 30,

For the three months ended September 30,

2019

2019

2018

2019

2019

2018

US$

RMB

RMB

US$

RMB

RMB

NET REVENUES

K-12 Schools *

28,431

203,214

176,176

7,311

52,256

41,507

College Preparation & CE     Programs  *

29,009

207,346

186,287

10,395

74,300

65,971

Total net revenues

57,440

410,560

362,463

17,706

126,556

107,478

COST OF REVENUES

K-12 Schools  *

(18,032)

(128,887)

(108,687)

(5,427)

(38,794)

(32,041)

College Preparation & CE     Programs  *

(19,920)

(142,385)

(117,492)

(7,730)

(55,249)

(45,948)

Total cost of revenues

(37,952)

(271,272)

(226,179)

(13,157)

(94,043)

(77,989)

GROSS PROFIT

K-12 Schools  *

10,399

74,327

67,489

1,884

13,462

9,466

College Preparation & CE     Programs  *

9,089

64,961

68,795

2,665

19,051

20,023

Total gross profit

19,488

139,288

136,284

4,549

32,513

29,489

* Ambow previously had three reportable segments, including Better School, Better Job and Others for the years prior to 2019. In 2019, along with the shift of business development focus, Ambow changed its management approach to organize reportablesegments to make operating decisions and assess performance. New reportable segments include K-12 schools and College Preparation & CE Programs, which provide K-12 educational services and tutoring and vocational educational services, respectively.

 

 

Cision View original content:http://www.prnewswire.com/news-releases/ambow-education-announces-third-quarter-2019-financial-results-300973930.html

SOURCE Ambow Education Holding Ltd.


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