Ambow Education Announces Fourth Quarter and Full Year 2019 Financial Results

News provided by

Ambow Education Holding Ltd.

Apr 22, 2020, 16:35 ET

BEIJING, April 22, 2020  /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 audited financial and operating results for the fourth quarter and fiscal year ended December 31, 2019.

"We are pleased to conclude fiscal year 2019 with solid fourth quarter results," said Dr. Jin Huang, Ambow's President and Chief Executive Officer. "Throughout the year, we continued our efforts and investment in new technology advancement and innovative education service offerings to strengthen our leadership in the career enhancement services market and further develop our cross-border education service platform. Looking ahead, by continuing to build and integrate our robust portfolio of international assets and partnerships, we believe we are well positioned to capture the opportunities in the underserved cross-border career education market between the U.S. and China."

"We are closely monitoring the evolving situation brought about by the COVID-19 pandemic, and have taken numerous safeguarding measures to protect our employees and support the communities in which we operate. Notably, we have rolled out new initiatives to support the Chinese government's plan of moving classroom school learning online during this period of prolonged school closures. Leveraging our expertise in online education, strong technology capabilities, and best-of-breed educational content, we promptly launched a series of online class programs, including our VIP classes focused on Big Data and Internet of Things ("IoT") taught by leading professionals from around the world. We have also added new career planning classes to enhance the competitive skills and knowledge that will be required by students in the more challenging job market emerging from the global business downturn. These initiatives underline our mission, which is to address critical demands in the education market and bridge the gaps between higher education and the career aspirations of students," concluded Dr. Huang.

Fourth Quarter 2019 Financial Highlights

  • Net revenues for the fourth quarter of 2019 increased by 1.2% to US$24.9 million from US$24.6 million in the same period of 2018. This increase was mainly driven by higher student enrollment.
  • Gross profit for the fourth quarter of 2019 decreased by 3.6% to US$8.0 million from US$8.3 million in the same period of 2018. Gross profit margin was 32.1%, compared with 33.7% for the fourth quarter of 2018.
  • Operating expenses for the fourth quarter of 2019 increased by 47.8% to US$10.2 million from US$6.9 million for the same period of 2018. The increase of operating expenses was primarily due to a one-time bad debt expense recovery and reversal of US$2.9 million in the fourth quarter of 2018.
  • Net loss attributable to ordinary shareholders in the fourth quarter of 2019 was US$1.7 million, or US$0.04 per basic and diluted share, compared with a net income of US$4.5 million, or US$0.10 per basic and diluted share, for the fourth quarter of 2018.
  • As of December 31, 2019, Ambow maintained strong cash resources of US$35.3 million, comprised of cash and cash equivalents of US$22.6 million and short-term investments of US$12.7 million.
  • As of December 31, 2019, the Company's deferred revenue balance was US$23.7 million, representing a 30.9% increase from US$18.1 million as of December 31, 2018, mainly attributable to the tuition and fees collected in the K-12 segment for the 2019-2020 academic year and tuition collected from our education service platforms.

Fiscal Year 2019 Financial Highlights

  • Net revenues for fiscal year 2019 increased by 8.5% to US$83.9 million from US$77.3 million in 2018. This increase was mainly driven by higher student enrollment.
  • Gross profit for the fiscal year 2019 decreased by 0.4% to US$28.0 million from US$28.1 million in 2018. Gross profit margin was 33.4%, compared with 36.4% in 2018. The decrease in gross profit margin was primarily due to additional investments in new programs and new technology deployment.
  • Operating expenses for the fiscal year 2019 increased by 62.2% to US$42.0 million from US$25.9 million in 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 of US$5.6 million recorded in 2019, and a one-time bad debt expense recovery and reversal of US$2.9 million in 2018.
  • Net loss attributable to ordinary shareholders for the fiscal year 2019 was US$14.4 million, or US$0.33 per basic and diluted share, compared with a net income of US$6.5 million, or US$0.16 per basic and diluted share, in 2018.

The Company's fourth quarter and fiscal year 2019 financial and operating results can also be found on its Form 6-K and Form 20-F 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 fourth quarter and the twelve months of 2019 are based on the effective exchange rate of 6.9618 as of December 31, 2019; all amounts translated from RMB to U.S. dollars for the fourth quarter and the twelve months of 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 Relations
Tel: +1-212-481-2050 or +86-10-6508-0677
E-mail: [email protected] 

AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED BALANCE SHEETS

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












As of December 31,


As of December 31,




2019


2018




US$


RMB


RMB

ASSETS








Current assets:








Cash and cash equivalents



22,638


157,600


211,436

Restricted cash



-


-


30,072

Short term investments, available for sale



8,257


57,487


47,208

Short term investments, held to maturity



4,453


31,000


70,000

Accounts receivable, net



2,577


17,939


18,132

Amounts due from related parties



333


2,318


1,105

Prepaid and other current assets, net



19,147


133,296


134,770

Loan receivable, current



-


-


42,677

Total current assets



57,405


399,640


555,400

Non-current assets:








Property and equipment, net



22,618


157,463


165,933

Land use rights, net



253


1,759


1,804

Intangible assets, net



8,131


56,607


92,412

Goodwill



8,669


60,353


73,166

Deferred tax assets, net



1,464


10,195


10,240

Operating lease right-of-use asset



36,968


257,361


-

Finance lease right-of-use asset



926


6,450


-

Other non-current assets, net



10,194


70,971


11,264









Total non-current assets



89,223


621,159


354,819









Total assets



146,628


1,020,799


910,219









LIABILITIES








Current liabilities:








Deferred revenue  *



23,717


165,111


124,250

Accounts payable  *



2,113


14,718


13,583

Accrued and other liabilities  *



27,717


192,957


256,325

Borrowing from third party, current 



-


-


41,179

Income taxes payable, current  *



25,958


180,715


207,114

Amounts due to related parties  *



283


1,971


2,696

Operating lease liability, current  *



7,687


53,512


-

Total current liabilities



87,475


608,984


645,147

Non-current liabilities:








Consideration payable for acquisitions



-


-


1,322

Other non-current liabilities



-


-


979

Income taxes payable, non-current  *



4,618


32,152


-

Operating lease liability, non-current  *



31,036


216,067


-

Total non-current liabilities



35,654


248,219


2,301









Total liabilities



123,129


857,203


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 2019) 



-


-


-

Class A Ordinary shares








(US$0.003 par value; 66,666,667 and
66,666,667 shares authorized, 38,756,289
and 38,858,199 shares issued and
outstanding as of December 31, 2018 and
2019, respectively)



105


730


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 2019, respectively)



13


90


90

Additional paid-in capital



504,000


3,508,745


3,507,123

Statutory reserve



2,899


20,185


20,149

Accumulated deficit



(484,331)


(3,371,815)


(3,271,838)

Accumulated other comprehensive income



911


6,341


8,305

Total Ambow Education Holding Ltd.'s equity



23,597


164,276


264,557

Non-controlling interests



(98)


(680)


(1,786)

Total equity



23,499


163,596


262,771

Total liabilities and equity



146,628


1,020,799


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


Share-based compensation

-


-


-


-


244


-


-


-


-


244


Foreign currency translation
     adjustment

-


-


-


-


-


-


-


(93)


-


(93)


Unrealized gain on
     investment, net of income
     taxes

-


-


-


-


-


-


-


501


-


501


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


Share-based compensation

-


-


-


-


242


-


-


-


-


242


Issuance of ordinary shares
     for restricted stock award

54,167


1


-


-


(1)


-


-


-


-


-


Foreign currency translation
     adjustment

-


-


-


-


-


-


-


343


-


343


Appropriation to statutory
      reserves

-


-


-


-


-


36


(36)


-


-


-


Unrealized gain on
      investment, net of income
      taxes

-


-


-


-


-


-


-


211


-


211


Deregistration of
      subsidiaries

-


-


-


-


-


-


-


-


306


306


Noncontrolling interests
     from new subsidiaries

-

-


-


-


-


-


-


-


783


783


Net loss

-


-


-


-


-


-


(12,152)


-


(216)


(12,368)


Balance as of
      December 31, 2019

38,858,199


730


4,708,415


90


3,508,745


20,185


(3,371,815)


6,341


(680)


163,596























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

-


-


-


-


(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


Share-based compensation

-


-


-


-


6,232


-


-


-


-


6,232


Issuance of ordinary shares 
     for restricted stock award

319,621


7


-


-


(7)


-


-


-


-


-


Issuance of ordinary shares
     on IPO

-


-


-


-


(725)


-


-


-


-


(725)


Foreign currency translation
     adjustment

-


-


-


-


-


-


-


52


-


52


Appropriation to statutory
     reserves

-


-


-


-


-


113


(113)


-


-


-


Unrealized gain on
      investment, net of income
      taxes

-


-


-


-


-


-


-


106


-


106


Buy-outs of noncontrolling
     interests

-


-


-


-


-


-


-


-


3


3


Capital injection from
     minority shareholders

-


-


-


-


-


-


-


-


1,470


1,470


Net income/(loss)

-


-


-


-


-


-


31,153


-


(89)


31,064


Balance as of
     December 31, 2018

38,756,289


728


4,708,415


90


3,507,123


20,149


(3,271,838)


8,305


(1,786)


262,771


AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

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



For the years ended December 31,


For the three months ended December 31,


2019


2019


2018


2019


2019


2018


US$


RMB


RMB


US$


RMB


RMB













NET REVENUES












 Educational program and
      services

83,700


582,706


525,134


24,899


173,339


168,705

Intelligent program and
    services

173


1,203


6,374


1


10


340

Total net revenues

83,873


583,909


531,508


24,900


173,349


169,045

COST OF REVENUES












 Educational program and
     services

(55,106)


(383,635)


(331,939)


(16,976)


(118,181)


(110,948)

Intelligent program and
      services

(755)


(5,259)


(6,204)


80


559


(1,016)

Total cost of revenues

(55,861)


(388,894)


(338,143)


(16,896)


(117,622)


(111,964)













GROSS PROFIT

28,012


195,015


193,365


8,004


55,727


57,081

Operating expenses:












Selling and marketing

(8,004)


(55,721)


(43,751)


(2,146)


(14,943)


(11,784)

General and administrative

(27,926)


(194,417)


(132,718)


(7,743)


(53,907)


(35,846)

Research and development

(545)


(3,793)


(1,513)


(321)


(2,238)


134

Impairment loss

(5,567)


(38,754)


-


-


-


-

Total operating expenses

(42,042)


(292,685)


(177,982)


(10,210)


(71,088)


(47,496)













OPERATING (LOSS)
INCOME

(14,030)


(97,670)


15,383


(2,206)


(15,361)


9,585













OTHER INCOME
   (EXPENSES)












Interest income

773


5,379


6,652


292


2,036


1,285

Foreign exchange gain, net

3


23


372


(3)


(23)


218

Other income, net

57


396


1,447


29


203


930

Gain from derecognition of
     liabilities

-


-


15,226


-


-


15,226

Gain on deregistration of
     subsidiaries

264


1,841


2,858


81


562


(362)

Gain from fair value change of
      contingent consideration
      payable

190


1,322


5,444


190


1,322


5,444

Gain on sale of investment
     available for sale

172


1,200


1,056


112


778


297

Total other income

1,459


10,161


33,055


701


4,878


23,038

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

(12,571)


(87,509)


48,438


(1,505)


(10,483)


32,623

Income tax expense

(1,855)


(12,917)


(3,498)


(271)


(1,885)


(1,559)













NET (LOSS) INCOME

(14,426)


(100,426)


44,940


(1,776)


(12,368)


31,064

Less: Net loss attributable to
     non-controlling interest

(70)


(485)


(50)


(31)


(216)


(89)













NET (LOSS) INCOME
   ATTRIBUTABLE TO
   ORDINARY
   SHAREHOLDERS

(14,356)


(99,941)


44,990


(1,745)


(12,152)


31,153













NET (LOSS) INCOME

(14,426)


(100,426)


44,940


(1,776)


(12,368)


31,064













OTHER
     COMPREHENSIVE
     INCOME, NET OF TAX












Foreign currency translation
     adjustments

(420)


(2,924)


1,304


49


343


52

Unrealized gains on short term
     investments












  Unrealized holding gains
     arising during period

294


2,046


776


116


808


330

  Less: reclassification
      adjustment for gains
     included in net income

156


1,086


651


86


597


224

Other comprehensive (loss)
      income

(282)


(1,964)


1,429


79


554


158













TOTAL
     COMPREHENSIVE
     (LOSS) INCOME

(14,708)


(102,390)


46,369


(1,697)


(11,814)


31,222













Net (loss) income per share -
     basic

(0.33)


(2.30)


1.09


(0.04)


(0.28)


0.72













Net (loss) income per share -
     diluted

(0.33)


(2.30)


1.08


(0.04)


(0.28)


0.71













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

43,505,175


43,505,175


41,342,597


43,529,884


43,529,884


43,255,473













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

43,505,175


43,505,175


41,671,763


43,529,884


43,529,884


43,589,336

Discussion of Segment Operations

(All amounts in thousands)



For the years ended December 31,


For the three months ended December 31,


2019


2019


2018


2019


2019


2018


US$


RMB


RMB


US$


RMB


RMB













NET REVENUES












K-12 Schools *

45,067


313,747


277,790


15,877


110,533


101,614

CP&CE Programs  *

38,806


270,162


253,718


9,023


62,816


67,431

Total net revenues

83,873


583,909


531,508


24,900


173,349


169,045

COST OF REVENUES












K-12 Schools  *

(28,306)


(197,064)


(178,645)


(9,793)


(68,177)


(69,958)

CP&CE Programs  *

(27,555)


(191,830)


(159,498)


(7,103)


(49,445)


(42,006)

Total cost of revenues

(55,861)


(388,894)


(338,143)


(16,896)


(117,622)


(111,964)

GROSS PROFIT












K-12 Schools  *

16,761


116,683


99,145


6,084


42,356


31,656

CP&CE Programs  *

11,251


78,332


94,220


1,920


13,371


25,425

Total gross profit

28,012


195,015


193,365


8,004


55,727


57,081













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

SOURCE Ambow Education Holding Ltd.