Ambow Education Announces Second Quarter 2019 Financial Results

News provided by

Ambow Education Holding Ltd.

Sep 09, 2019, 09:00 ET

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 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 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.

SOURCE Ambow Education Holding Ltd.