Nord Anglia Education Reports First Quarter FY2016 Financial Results

Jan 26, 2016, 06:01 ET from Nord Anglia Education, Inc.

HONG KONG, Jan. 26, 2016 /PRNewswire/ -- Nord Anglia Education, Inc. (NYSE: NORD), the world's leading premium schools organization, today announced financial results for the first quarter of fiscal 2016, the three month period ended November 30, 2015.

First quarter FY2016 highlights (compared to first quarter FY2015):

  • Average full time equivalent students (FTEs) increased 72.1% from 19,899 to 34,255
  • Revenue increased 60.9% (68.0% on a constant currency basis) from $151.6 million to $244.0 million
  • Revenue from premium schools increased 64.1% (71.3% on a constant currency basis) from $148.0 million to $242.9 million
  • Adjusted EBITDA increased 56.6% (64.3% on a constant currency basis) from $40.9 million to $64.1 million
  • Adjusted Net Income increased 36.7% from $19.2 million to $26.3 million
  • Adjusted EPS increased 28.4% from $0.20 to $0.25

"We are pleased to report strong financial and operating results for the first quarter of fiscal 2016," said Andrew Fitzmaurice, Nord Anglia Education CEO. "These results are based upon our continued organic growth and ability to identify and integrate accretive acquisitions.  We are pleased with the way the year is progressing, in particular our organic enrollment growth and trends in enquiries and visits, and are reiterating our previous guidance," Fitzmaurice continued.

"In line with our growth strategy of two to three new greenfield schools per year, we are on track to open our new state of the art campus in Houston and our first dual curriculum school in Shanghai for Chinese nationals in September 2016.  We have also recently announced a second campus for our school in Bangkok scheduled to open in September 2017."

First quarter FY2016 results

Our average FTEs in the three months ended November 30, 2015 were 34,255, a 72.1% increase over the average FTEs in the three months ended November 30, 2014 of 19,899.  Average capacity and utilization were 48,998 seats and 69.9%, respectively, in the first quarter of fiscal 2016 compared to 26,587 seats and 74.8%, respectively, in the same period of fiscal 2015.

Revenue increased by $92.4 million to $244.0 million in the first quarter of fiscal 2016 from $151.6 million in the same period of fiscal 2015.  This increase was due primarily to higher revenues from premium schools, partly offset by the impact of the strengthening US dollar on our premium schools revenue and a decrease in other revenue.

Gross profit increased $37.1 million to $96.0 million for the first quarter of fiscal 2016 from $58.9 million for the same period in 2015. Our gross profit margin increased to 39.4% in the first quarter of fiscal 2016 from 38.9% in the same period of fiscal 2015.

Adjusted EBITDA increased by $23.2 million to $64.1 million (26.3% Adjusted EBITDA margin) in the first quarter of fiscal 2016 from $40.9 million (27.0% Adjusted EBITDA margin) in the same period in fiscal 2015 due to growth in FTEs, tuition fee increases and the impact of the acquisitions in Switzerland, China, Vietnam, the United States and Mexico. The Adjusted EBITDA increase was less than the revenue increase primarily due to the adverse impact of the operating costs associated with the new school opened in Chicago in September 2015.

Adjusted net income increased to $26.3 million in the first quarter of fiscal 2016 from $19.2 million in the first quarter of fiscal 2015.

Balance Sheet and Cash Flow

During the three months ended November 30, 2015, net cash used in operating activities was $61.8 million compared to $28.2 million for the same period in fiscal 2015.  This increase was primarily due to an increase of $21.7 million in cash used in operations from the larger scale of the organization, $3.9 million in financing expenses in connection with the schools acquired at the end of fiscal 2015 and increased interest paid of $13.1 million for the three months ended November 30, 2015 compared to $6.5 million for the three months ended November 30, 2014.

Cash used in investing activities increased from $16.7 million for three months ended November 30, 2014 to $56.0 million for the three months ended November 30, 2015. This increase was primarily due to a $27.9 million final consideration payment for the acquisition of six schools in China, Mexico, Switzerland and the United States and capital expenditures of $28.7 million.

Net cash provided from financing activities was $66.6 million in the three months ended November 30, 2015 compared to $14.4 million in the same period in 2015.  Cash and cash equivalents (net of a bank overdraft on our notional pooling accounts) as of November 30, 2015 were $170.4 million, compared to $131.7 million as of November 30, 2014.

Fiscal 2016 Outlook

Nord Anglia Education is reiterating its fiscal 2016 outlook for Revenue, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS:


FY16 Guidance

Revenue

$850 - $870 million

Adjusted EBITDA

$215 - $225 million

Adjusted Net Income

$70 - $75 million

Adjusted Diluted EPS

$0.67 - $0.72


We expect diluted weighted average shares of approximately 104.5 million.

Conference Call and Webcast Details

Nord Anglia Education will host an investor conference call today at 8:00 am ET.  Interested parties are invited to listen to the conference call by dialling in using the following numbers:

United States Toll Free:

877.407.0784

International:

201.689.8560 

An audio replay of the conference call will be available through February 2, 2016 by dialling the following:

United States Toll Free:

877.870.5176

International:

858.384.5517

Replay Conference ID:

13627856

A live webcast of the conference call will be available via the investor relations section of nordangliaeducation.com and will be archived on the website.

Forward-Looking Statements

This press release includes statements that express our current opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, "forward looking statements".  These forward looking statements can generally be identified by the use of forward-looking terminology, including the terms "believe," "expect," "may," "will," "should," "seek," "project," "approximately," "intend," "plan," "estimate" or "anticipate," or, in each case, their negatives or other variations or comparable terminology.  These forward-looking statements include all matters that are not historical facts.  They appear in a number of places throughout this press release and include statements regarding our intentions, beliefs or current expectations concerning among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate.

By their nature, forward-looking statements relate to events that involve risks and uncertainties or that depend on circumstances that may or may not occur in the future.  We believe that these risks and uncertainties include, but are not limited to, those under "Risk Factors" in our most recent Annual Report on Form 20-F filed with the SEC.

Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition, liquidity, prospects, growth, strategies and the development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this press release.  In addition, even if our results of operations, financial condition, liquidity, prospects, growth strategies and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods.  Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements.  Any forward-looking statement that we make in this press release speaks only as of the date of such statement, and we undertake no obligation to update any forward-looking statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments.

Non-GAAP Supplemental Financial Measures

We use EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Ordinary Share, Adjusted Cost of Sales and Adjusted Gross Profit as supplemental financial measures of our operating performance. We define EBITDA as (loss)/profit for the period plus income tax expense, net financing (expense)/income, exceptional items, impairment of goodwill, amortization and depreciation, and we define Adjusted EBITDA as EBITDA adjusted for the items set forth in the reconciliation table elsewhere in this press release. We define Adjusted Net Income as Adjusted EBITDA adjusted for the items in the reconciliation table elsewhere in this press release. We define Adjusted Earnings per Ordinary share as Adjusted Net Income divided by the weighted average ordinary shares outstanding for the period.  We define Adjusted Cost of Sales as cost of sales excluding Premium School land and building operating lease costs and depreciation charges arising from tangible assets owned by Premium Schools, and we define Adjusted Gross Profit as revenue less Adjusted Cost of Sales.  EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Ordinary Share, Adjusted Cost of Sales and Adjusted Gross Profit are not standard measures under IFRS. These measures should not be considered in isolation or construed as alternatives to cash flows, net income, earnings per ordinary share or any other measure of financial performance or as indicators of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities. We may incur expenses similar to the adjustments in this presentation in the future and certain of these items could be recurring. EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Ordinary Share, Adjusted Cost of Sales and Adjusted Gross Profit presented herein may not be comparable to similarly titled measures presented by other companies.  Nord Anglia Education is not able to provide a reconciliation of projected non-GAAP financial measures to expected reported results due to the uncertainty of the reported line items referred to above.  

About Nord Anglia Education, Inc.

Nord Anglia Education (NYSE: NORD) is the world's leading premium schools organisation. Our 42 international schools are located in China, Europe, the Middle East and Southeast Asia and North America. Together, they educate more than 34,750 students from kindergarten through to the end of secondary education.  We are driven by one unifying philosophy – we are ambitious of our students, our people and our family of schools. Our schools deliver a high quality education through a personalized approach enhanced with unique global opportunities to enable every student to succeed. We primarily operate in geographic markets with high foreign direct investment, large expatriate populations and rising disposable income. We believe that these factors contribute to high demand for premium schools and strong growth in our business.  Nord Anglia Education is headquartered in Hong Kong SAR, China. Our website is www.nordangliaeducation.com.

For further information, please contact:

Investors:
Vanessa Cardonnel
Corporate Finance and Investor Relations Director - Nord Anglia Education
Tel: +852 3951 1130
Email: vanessa.cardonnel@nordanglia.com

Kevin Doherty
Managing Director, Investor Relations - Solebury Communications Group LLC
Tel: +1 203 428 3233
Email: kdoherty@soleburyir.com

Media:
Sarah Doyle
Head of Brand - Nord Anglia Education
Tel: +852 3951 1144
Email: sarah.doyle@nordanglia.com 

 

NORD ANGLIA EDUCATION, INC.


CONDENSED CONSOLIDATED INCOME STATEMENT


(Unaudited)


(in $ millions, except share data)






Three Months Ended November 30,




2015


2014


Revenue

244.0


151.6


Cost of sales

(148.0)


(92.7)


Gross profit

96.0


58.9








Selling, general and administrative expenses

(31.0)


(30.2)


Depreciation

(0.2)


(0.2)


Amortization

(4.6)


(2.9)


Other losses

(0.2)


-


Exceptional expenses

(2.4)


(0.7)


Total expenses

(38.4)


(34.0)








Operating profit

57.6


24.9







Finance income

1.0


0.8


Finance expense

(16.6)


(7.2)


Net finance expense

(15.6)


(6.4)








Profit before income tax

42.0


18.5


Income tax expense

(9.1)


(5.3)


Profit for the period

32.9


13.2







Profit attributable to:





-       Owners of the parent

32.4


13.2


-       Non-controlling interest

0.5


-


Profit for the period

32.9


13.2








Earnings per ordinary share(1) (in dollars)





        Basic

0.31


0.14


        Diluted

0.31


0.13








(1)

Earnings per ordinary share is calculated by dividing profit for the period by the weighted
average ordinary shares outstanding for the period. For the three months ended
November 30, 2015 the basic and diluted weighted average ordinary shares outstanding
were 104.1 million and 104.2 million ordinary shares, respectively. For the three months
ended November 30, 2014 the basic and diluted weighted average ordinary shares
outstanding were 97.7 million and 97.8 million ordinary shares, respectively.

 


NORD ANGLIA EDUCATION, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

(in $ millions)








November 30,


August 31,

2015

2015






Non-current assets





Property, plant and equipment


449.9


449.7

Intangible assets


1,386.9


1,415.5

Investments in joint ventures and associates


0.5


0.5

Trade and other receivables


40.6


37.9

Deferred tax assets


71.1


70.4



1,949.0


1,974.0






Current assets





Tax receivable


0.1


1.2

Trade and other receivables


148.4


131.1

Cash and cash equivalents (excluding bank overdrafts)


246.8


317.0



395.3


449.3

Total assets


2,344.3


2,423.3






Current liabilities





Trade and other payables


(123.9)


(170.9)

Other interest-bearing loans and borrowings


(156.3)


(98.3)

Finance lease liabilities


(3.7)


(3.7)

Deferred revenue


(428.9)


(518.8)

Provisions for other liabilities and charges


(0.0)


(0.0)

Current tax liabilities


(8.6)


(2.9)



(721.4)


(794.6)






Non-current liabilities





Other interest-bearing loans and borrowings


(1,051.6)


(1,066.3)

Derivative financial instruments


(3.2)


(3.0)

Finance lease liabilities


(41.7)


(44.6)

Other payables


(57.2)


(45.7)

Deferred revenue


(23.7)


(27.4)

Retirement benefit obligations


(42.0)


(46.6)

Provisions for other liabilities and charges


(1.7)


(1.7)

Deferred tax liabilities


(113.1)


(114.1)



(1,334.2)


(1,349.4)






Total liabilities


(2,055.6)


(2,144.0)






Net assets


288.7


279.3

Equity attributable to equity holders of the parent





Share capital


1.0


1.0

Share premium


735.4


735.2

Other reserves


6.9


6.9

Currency translation reserve


(77.6)


(53.7)

Shareholders' deficit


(380.9)


(414.0)



284.8


275.4

Non-controlling interest


3.9


3.9

Total shareholders' funds


288.7


279.3

 


NORD ANGLIA EDUCATION, INC.


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


(Unaudited)


(in $ millions)






Three Months Ended

November 30,



2015


2014


Cash used in operations

(41.2)


(19.5)


Payment of loan/bond expenses

(3.9)


-


Interest paid

(13.1)


(6.5)


Tax paid

(3.6)


(2.2)


Net cash used in operating activities

(61.8)


(28.2)







Net cash used in investing activities

(56.0)


(16.7)







Net cash generated from financing activities

66.6


14.4







Net decrease in cash and cash equivalents

(51.2)


(30.5)







Cash and cash equivalents at beginning of the period

226.3


166.2







Exchange losses on cash and cash equivalents

(4.7)


(4.0)







Cash and cash equivalents at end of the period (including overdrafts)

170.4


131.7


Bank overdrafts

76.4


75.8


Cash and cash equivalents at the end of the period (excluding overdrafts)

246.8


207.5


 

KEY OPERATING DATA AND SUPPLEMENTARY FINANCIAL DATA

Key Operating Data

We use the following key operating metrics to manage our schools: full-time equivalent students ("FTEs"), capacity, utilization and revenue per FTE. We monitor FTEs on a weekly basis and the other operating metrics on a monthly, quarterly and annual basis, as we believe that they are the most reliable metrics for measuring the profitability of our schools. The table below sets out our key operating data for the periods indicated:


Three Months Ended

November 30,


2015


2014









Full-time equivalent students (average for the period)(1)




China

5,744


5,158

Europe

6,472


4,587

Middle East

5,282


4,176

South East Asia

7,321


3,195

North America

9,436


2,783

Total

34,255


19,899





Capacity (average for the period)(2)




China

8,926


7,756

Europe

8,617


6,084

Middle East

5,851


5,251

South East Asia

12,097


3,736

North America

13,507


3,760

Total

48,998


26,587





Utilization (average for the period)(3)




China

64%


67%

Europe

75%


75%

Middle East

90%


80%

South East Asia

61%


86%

North America

70%


74%

Total

 

70%


75%

Revenue per FTE (in $ thousands)(4)


China

9.6


10.2

Europe

9.7


8.6

Middle East

4.8


4.6

South East Asia

4.5


5.0

North America

7.0


7.6

Total

7.1


7.4





(1)

We calculate average FTEs for a period by dividing the total number of FTEs at each
calendar month end in the period by the number of calendar months in the period.

(2)

We calculate average capacity for a period as the total number of FTEs that can be
accommodated in a school based on its existing classrooms at each academic calendar
month divided by the number of months in such period.

(3)

We calculate utilization during a period as a percentage equal to the ratio of average FTEs
for the period divided by average capacity for the period.

(4)

We calculate revenue per FTE by dividing our revenue from our schools for the period by
the average FTEs for the period. 

 

Supplementary Financial Data




The following table sets forth certain supplementary financial data for the periods indicated.







$ millions

Three Months Ended

November 30,


% Variance









Constant



2015


2014


Reported


Currency


Revenue (segment)


















Premium Schools









     China

55.3


52.4


5.6%


8.9%


     Europe

63.0


39.3


60.1%


74.7%


     Middle East

25.2


19.3


30.2%


30.2%


     South East Asia

33.3


15.9


109.9%


129.0%


     North America

66.1


21.1


213.8%


213.8%


     Total Premium Schools

242.9


148.0


64.1%


71.3%


Other

1.1


3.6


(69.0%)


(67.7%)


Total Revenue

244.0


151.6


60.9%


68.0%











Adjusted EBITDA (segment)


















Premium Schools









     China

23.3


24.1


(3.5%)


(0.3%)


     Europe

15.7


7.7


104.7%


127.6%


     Middle East

5.5


3.4


62.6%


62.6%


     South East Asia

9.0


4.9


81.3%


100.6%


     North America

20.2


7.6


165.2%


165.2%


     Total Premium Schools

73.7


47.7


54.3%


61.1%


Other

(0.2)


0.6


(130.2%)


(134.0%)


Central and regional expenses

(9.4)


(7.4)


26.7%


28.9%


Adjusted EBITDA

64.1


40.9


56.6%


64.3%


Adjusted Net Income

26.3


19.2
















We use EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Ordinary Share, Adjusted Cost of Sales and Adjusted Gross Profit as supplemental financial measures of our operating performance. We define EBITDA as (loss)/profit for the period plus income tax expense, net financing (expense)/income, exceptional items, impairment of goodwill, amortization and depreciation, and we define Adjusted EBITDA as EBITDA adjusted for the items set forth in the table below. We define Adjusted Net Income as Adjusted EBITDA adjusted for the items in the table below.  We define Adjusted Earnings per Ordinary share as Adjusted Net Income divided by the weighted average ordinary shares outstanding for the period.  We define Adjusted Cost of Sales as cost of sales excluding Premium School land and building operating lease costs and depreciation charges arising from tangible assets owned by Premium Schools, and we define Adjusted Gross Profit as revenue less Adjusted Cost of Sales.  EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Cost of Sales and Adjusted Gross Profit are not standard measures under IFRS. EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Ordinary Share, Adjusted Cost of Sales and Adjusted Gross Profit should not be considered in isolation or construed as alternatives to cash flows, net income, earnings per ordinary share or any other measure of financial performance or as indicators of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities. We may incur expenses similar to the adjustments in this presentation in the future and certain of these items could be recurring. EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Ordinary Share, Adjusted Cost of Sales and Adjusted Gross Profit presented herein may not be comparable to similarly titled measures presented by other companies. 

 

Reconciliation of Adjusted Cost of Sales, Adjusted Gross Profit, EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS







(Unaudited)

Three Months Ended


November 30,


$ millions

2015


2014












Revenue

244.0


151.6


Cost of sales

(148.0)


(92.7)


  Rent Premium Schools

17.8


12.5


  Depreciation Premium Schools

11.8


7.4


Adjusted Cost of Sales

(118.4)


(72.8)


Adjusted Gross Profit 

125.6


78.8







Profit for the period

32.9


13.2


Income tax expense

9.1


5.3


Net financing expense

15.6


6.4


Exceptional items(1)

2.4


0.7


Other losses

0.2


-


Amortization

4.6


2.9


Depreciation

0.2


0.2


Depreciation in Cost of Sales

11.8


7.4


EBITDA

76.8


36.1







(Gain)/loss on disposal of property, plant and equipment

(0.0)


0.2


FX (gain)/loss(2)

(14.9)


4.0


Share based payments(3)

1.6


0.6


Greenfield pre-opening costs(4)

0.3


-


Rollout of Juilliard Program(5)

0.3


-


Adjusted EBITDA

64.1


40.9







Depreciation

(12.0)


(7.6)


Net financing expense

(15.6)


(6.4)


Income tax expense

(9.1)


(5.3)


Tax adjustments(6)

(0.6)


(2.4)


Non-controlling interest

(0.5)


-


Adjusted Net Income

26.3


19.2







Adjusted earnings per ordinary share(7) (in dollars)





Basic

0.25


0.20


Diluted

0.25


0.20







(1)

Exceptional expenses primarily relate to the acquisition of schools, including associated transaction and integration costs.

(2)

In the three months ended November 30, 2015, represents foreign currency translational gains primarily associated with our Swiss bonds and in the three months ended November 30, 2014, represents foreign currency translational losses primarily associated with our inter-company balances.

(3)

Represents non-cash charges associated with equity investments in our company by members of management.

(4)

Includes the pre-opening costs associated with the planned opening of various Greenfield schools.

(5)

Represents the costs associated with the initial roll-out of The Juilliard-Nord Anglia Performing Arts Program which commenced in ten schools in September 2015.

(6)

Represents the tax impact associated with the exclusion of certain costs including exceptional items and amortization in calculating Adjusted Net Income. The effective tax rate for the year used in calculating the tax impact is 26.6%, which is the estimated effective tax rate for fiscal 2016 excluding an unrealized FX gain of $14.5 million on the revaluation of the CHF200 million bonds outstanding in the three months ended November 30, 2015.

(7)

Adjusted earnings per ordinary share is calculated by dividing Adjusted Net Income for the period by the weighted average ordinary shares outstanding for the period.  For the three months ended November 30, 2015 the basic and diluted weighted average ordinary shares outstanding were 104.1 million and 104.2 million ordinary shares, respectively. For the three months ended November 30, 2014 the basic and diluted weighted average ordinary shares outstanding were 97.7 million and 97.8 million ordinary shares, respectively.

SOURCE Nord Anglia Education, Inc.



RELATED LINKS

http://www.nordangliaeducation.com