Ambow Education Announces Second Quarter 2019 Financial Results

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September 9, 2019 9:00 AM EDT

BEIJING, Sept. 9, 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 six-month periods ended June 30, 2019.

"During the second quarter, we continued to deliver solid performance. Furthermore we are developing new programs and investing in new technology to serve our education service platforms. Moving into the second half of 2019, we are excited to continue integration efforts across our portfolio of international assets and partnerships. In building synergistic opportunities across the underserved cross-border education market, we are developing a platform that addresses deficiencies in the cross-border career oriented higher education landscape across the U.S. and China," noted Dr. Jin Huang, Ambow's President and Chief Executive Officer.

"We are pleased to announce that in June 2019, we entered into a Membership Interest Purchase Agreement with Laureate Education, to acquire 100% of the outstanding membership interest in NewSchool of Architecture and Design, LLC. NewSchool is a for-profit institution of higher education based in San Diego, California, that offers undergraduate and graduate degrees and non-degree certificates in Architecture, Design and Construction Management. The closing of this acquisition is subject to regulatory approvals. We shall continue to fortify Ambow's cross-border interest and capabilities in higher education and career enhancement services in the future," concluded Dr. Huang.

Second Quarter 2019 Financial Highlights

  • Net revenues for the second quarter of 2019 increased by 6.2% to US$24.1 million from US$22.7 million in the same period of 2018. This increase was mainly driven by higher student enrollment.
  • Gross profit for the second quarter of 2019 decreased by 8.3% to US$9.9 million from US$10.8 million in the same period of 2018. Gross profit margin was 41.1%, compared with 47.6% for the second quarter of 2018. The decrease was primarily due to additional investments in new programs and new technology deployment.
  • Operating expenses for the second quarter of 2019 increased by 23.5% to US$8.4 million from US$6.8 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.
  • Net income attributable to ordinary shareholders was US$1.3 million, or US$0.03 per basic and diluted share, compared with a net income of US$5.0 million, or US$0.13 per basic and US$0.12 per diluted share, for the second quarter of 2018.
  • As of June 30, 2019, Ambow maintained strong cash resources of US$40.3 million, comprised of cash and cash equivalents of US$21.6 million, short-term investments of US$14.6 million, and restricted cash of US$4.1 million.
  • As of June 30, 2019, the Company's deferred revenue balance was US$23.0 million, representing a 27.1% 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 summer semester of 2019.

First Six Months 2019 Financial Highlights

  • Net revenues for the first six months of 2019 increased by 7.5% to US$41.4 million from US$38.5 million in the same period of 2018. This increase was mainly driven by higher student enrollment.
  • Gross profit for the first six months of 2019 decreased by 3.1% to US$15.6 million from US$16.1 million in the same period of 2018. Gross profit margin was 37.7%, compared with 41.8% for the first six months of 2018. The decrease was primarily due to additional investments in new programs and new technology deployment.
  • Operating expenses for the first six months of 2019 increased by 27.4% to US$17.2 million from US$13.5 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.
  • Net loss attributable to ordinary shareholders was US$2.2 million, or US$0.05 per basic and diluted share, compared with a net income of US$4.0 million, or US$0.10 per basic and diluted share, for the first six months of 2018.

Ambow will participate in the upcoming BMO Capital Markets 19th Annual Back to School Conference to be held on Thursday, September 12, 2019 at the Grand Hyatt, New York. Dr. Jin Huang will participate in a fireside chat with analysts and investors at the conference, which will begin at approximately 2:00 PM ET on September 12.

The Company's second quarter and first half 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 second quarter and first half of 2019 are based on the effective exchange rate of 6.8650 as of June 28, 2019; all amounts translated from RMB to U.S. dollars for the second quarter and first half of 2018 are based on the effective exchange rate of 6.6171 as of June 29, 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 June 30,

As of December 31, 

2019

2018

US$

RMB

RMB

ASSETS

Current assets:

    Cash and cash equivalents

21,634

148,515

211,436

    Restricted cash

4,049

27,794

30,072

    Short term investments, available for sale

5,905

40,540

47,208

    Short term investments, held to maturity

8,740

60,000

70,000

    Accounts receivable, net

3,170

21,761

18,132

    Amounts due from related parties

354

2,430

1,105

    Prepaid and other current assets, net

19,540

134,145

134,770

    Loan receivable, current

-

-

42,677

    Operating lease right-of-use asset, current

6,095

41,841

-

    Finance lease right-of-use asset, current

87

600

-

Total current assets

69,574

477,626

555,400

Non-current assets:

    Property and equipment, net

22,354

153,460

165,933

    Land use rights, net

259

1,781

1,804

    Intangible assets, net

9,110

62,538

92,412

    Goodwill

13,189

90,543

73,166

    Deferred tax assets, net

2,072

14,225

10,240

    Operating lease right-of-use asset, non-current

14,324

98,331

-

    Finance lease right-of-use asset, non-current

896

6,150

-

    Other non-current assets, net

9,875

67,794

11,264

Total non-current assets

72,079

494,822

354,819

Total assets

141,653

972,448

910,219

LIABILITIES

Current liabilities:

    Deferred revenue  *

23,024

158,061

124,250

    Accounts payable  *

1,716

11,788

13,583

    Accrued and other liabilities  *

27,678

190,010

256,325

    Borrow from third party, current  

-

-

41,179

    Income taxes payable  *

30,931

212,341

207,114

    Amounts due to related parties  *

484

3,322

2,696

    Operating lease liability, current  *

5,079

34,864

-

Total current liabilities

88,912

610,386

645,147

Non-current liabilities:

    Consideration payable for acquisitions

193

1,322

1,322

    Other non-current liabilities

-

-

979

    Operating lease liability, non-current  *

16,680

114,506

-

Total non-current liabilities

16,873

115,828

2,301

Total liabilities

105,785

726,214

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 June 30, 2019) 

-

-

-

Class A Ordinary shares

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

106

729

728

Class C Ordinary shares

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

13

90

90

Additional paid-in capital

511,036

3,508,260

3,507,123

Statutory reserve

2,935

20,149

20,149

Accumulated deficit

(478,779)

(3,286,816)

(3,271,838)

Accumulated other comprehensive income

784

5,379

8,305

Total Ambow Education Holding Ltd.'s equity 

36,095

247,791

264,557

Non-controlling interests

(227)

(1,557)

(1,786)

Total equity

35,868

246,234

262,771

Total liabilities and equity

141,653

972,448

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

Retained

Accumulated

 Class A Ordinary

Class C Ordinary

Additional

Earnings

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      adjustment

-

-

-

-

-

-

-

(2,428)

-

(2,428)

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      adjustment

-

-

-

-

-

-

-

(746)

-

(746)

Unrealized gain on      investment, net of income      taxes

-

-

-

-

-

-

-

173

-

173

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

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      adjustment

-

-

-

-

-

-

-

3,276

-

3,276

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

-

-

-

-

(2619)

-

-

-

(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

 

 

AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

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

For the six months ended June 30,

For the three months ended June 30,

2019

2019

2018

2019

2019

2018

US$

RMB

RMB

US$

RMB

RMB

NET REVENUES

 Educational program and      services

41,171

282,638

249,202

23,955

164,453

147,791

Intelligent program and      services

199

1,366

5,783

132

905

2,415

Total net revenues

41,370

284,004

254,985

24,087

165,358

150,206

COST OF REVENUES

 Educational program and s     ervices

(25,130)

(172,520)

(144,268)

(13,740)

(94,323)

(76,192)

Intelligent program and      services

(686)

(4,709)

(3,922)

(415)

(2,851)

(2,496)

Total cost of revenues

(25,816)

(177,229)

(148,190)

(14,155)

(97,174)

(78,688)

GROSS PROFIT

15,554

106,775

106,795

9,932

68,184

71,518

Operating expenses:

Selling and marketing

(3,667)

(25,171)

(19,227)

(1,614)

(11,083)

(9,022)

General and administrative

(13,459)

(92,394)

(69,155)

(6,814)

(46,776)

(35,863)

Research and development

(68)

(468)

(827)

(44)

(300)

(384)

Total operating expenses

(17,194)

(118,033)

(89,209)

(8,472)

(58,159)

(45,269)

OPERATING (LOSS) INCOME

(1,640)

(11,258)

17,586

1,460

10,025

26,249

OTHER INCOME    (EXPENSES)

Interest income

221

1,520

3,676

165

1,132

1,586

Foreign exchange gain, net

-

1

135

5

32

121

Other income (loss), net

27

186

925

(69)

(474)

711

Gain from deregistration of      subsidiaries

186

1,279

3,220

-

-

423

Gain on sale of investment      available for sale

61

419

484

20

140

186

Total other income

495

3,405

8,440

121

830

3,027

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

(1,145)

(7,853)

26,026

1,581

10,855

29,276

Income tax (expense) benefit

(1,078)

(7,398)

174

(329)

(2,257)

3,893

NET (LOSS) INCOME

(2,223)

(15,251)

26,200

1,252

8,598

33,169

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

(40)

(273)

(50)

(26)

(180)

(143)

NET (LOSS) INCOME    ATTRIBUTABLE TO    ORDINARY    SHAREHOLDERS

(2,183)

(14,978)

26,250

1,278

8,778

33,312

NET (LOSS) INCOME

(2,223)

(15,251)

26,200

1,252

8,598

33,169

OTHER    COMPREHENSIVE    INCOME, NET OF TAX

Foreign currency translation      adjustments

(462)

(3,174)

1,753

(109)

(746)

(1,523)

Unrealized gains on short term      investments

  Unrealized holding gains      arising during period

102

700

380

61

420

173

  Less: reclassification      adjustment for gains      included in net income

66

452

247

36

247

104

Other comprehensive (loss)      income

(426)

(2,926)

1,886

(84)

(573)

(1,454)

TOTAL    COMPREHENSIVE    (LOSS) INCOME

(2,649)

(18,177)

28,086

1,168

8,025

31,715

Net (loss) income per share -      basic

(0.05)

(0.34)

0.67

0.03

0.20

0.83

Net (loss) income per share -      diluted

(0.05)

(0.34)

0.66

0.03

0.20

0.83

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

43,469,610

43,469,610

39,464,021

43,503,109

43,503,109

39,996,374

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

43,469,610

43,469,610

39,805,975

43,647,645

43,647,645

40,324,108

 

 

Discussion of Segment Operations

(All amounts in thousands)

For the six months ended June 30,

For the three months ended June 30,

2019

2019

2018

2019

2019

2018

US$

RMB

RMB

US$

RMB

RMB

NET REVENUES

K-12 Schools *

21,990

150,958

134,669

12,697

87,165

82,492

College Preparation & CE      Programs  *

19,380

133,046

120,316

11,390

78,193

67,714

Total net revenues

41,370

284,004

254,985

24,087

165,358

150,206

COST OF REVENUES

K-12 Schools  *

(13,123)

(90,093)

(76,646)

(6,962)

(47,797)

(40,540)

College Preparation & CE     Programs  *

(12,693)

(87,136)

(71,544)

(7,193)

(49,377)

(38,148)

Total cost of revenues

(25,816)

(177,229)

(148,190)

(14,155)

(97,174)

(78,688)

GROSS PROFIT

K-12 Schools  *

8,867

60,865

58,023

5,735

39,368

41,952

College Preparation & CE      Programs  *

6,687

45,910

48,772

4,197

28,816

29,566

Total gross profit

15,554

106,775

106,795

9,932

68,184

71,518

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

 

 

Cision View original content:http://www.prnewswire.com/news-releases/ambow-education-announces-second-quarter-2019-financial-results-300913886.html

SOURCE Ambow Education Holding Ltd.


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