Nord Anglia Education Reports Second Quarter FY2015 Financial Results

HONG KONG, April 16, 2015 /PRNewswire/ -- Nord Anglia Education, Inc. (NYSE: NORD), the world's leading premium schools organization, today announced financial results for the second quarter of fiscal 2015, the three month period ended February 28, 2015.

Second quarter FY2015 highlights (compared to second quarter FY2014):

• Full time equivalent students (FTEs) increased 31.6% from 17,069 to 22,470
• Revenue increased 20.0 % (25.2% on a constant currency basis) from $136.8 million to $164.2 million
• Revenue from premium schools increased 21.2% (26.4% on a constant currency basis) from $132.8 million to $161.0 million
• Adjusted EBITDA increased 13.5% (16.8% on a constant currency basis) from $42.7 million to $48.4 million
• Adjusted Net Income increased from $12.6 million to $24.9 million
• Adjusted EPS increased from $0.17 to $0.25

Year to date February 28, 2015 highlights (compared to year to date February 28, 2014):

• Full time equivalent students (FTEs) increased 24.6% from 17,003 to 21,185
• Revenue increased 17.1% (20.9% on a constant currency basis) from $271.9 million to $318.3 million
• Revenue from premium schools increased 18.3% (22.2% on a constant currency basis) from $263.3 million to $311.5 million
• Adjusted EBITDA increased 12.9% (15.5% on a constant currency basis) from $81.4 million to $91.8 million
• Adjusted Net Income increased from $23.4 million to $45.9 million
• Adjusted EPS increased from $0.30 to $0.47

"We generated strong financial and operating results for the second quarter of fiscal 2015," commented Andrew Fitzmaurice, Nord Anglia Education CEO. "We have expanded our presence in Southeast Asia with the addition of the market-leading British International Schools Group in Vietnam. Our network now stands at 35 schools in 14 countries and student enrollment has grown to over 23,700.

"We are committed to offering every student exceptional learning opportunities which inspire their ambitions and support them to achieve success in all aspects of their education. Our recently announced collaboration with The Juilliard School is a reflection of this commitment. The Juilliard-Nord Anglia Performing Arts program not only offers our students exceptional music, drama and dance education, but also fosters the development of key transferable skills which will support their learning across the whole curriculum."

"We are pleased with our progress since listing Nord Anglia Education on the NYSE 12 months ago. We have added eight schools to our network, six through acquisitions and two new greenfield campuses whilst continuing to generate strong organic growth. We have consolidated our leadership in the premium schools market and are identifying higher numbers of opportunities for new greenfield sites and acquisitions."

Second quarter FY2015 results

Our average FTEs in the three months ended February 28, 2015 were 22,470 a 31.6% increase over the average FTEs in the three months ended February 28, 2014 of 17,069.  Average capacity and utilization were 31,888 seats and 70%, respectively, in the second quarter of fiscal 2015 compared to 21,737 seats and 79%, respectively, in the same period of 2014.

Revenue increased by $27.4 million to $164.2 million in the second quarter of fiscal 2015 from $136.8 million in the same period of fiscal 2014.  This increase was due to growth in FTEs and tuition fee increases at our schools and the impact of our acquisitions in Singapore, Cambodia and Vietnam.

Our gross profit margin decreased slightly to 41.5% in the second quarter of fiscal 2015 from 42.0% in the same period of fiscal 2014, largely due to the impact of stronger growth in the lower margin ME/SEA region and the adverse impact of the loss-making schools opened in Dubai and Aubonne, partly offset by price increases in excess of our cost inflation.

Adjusted EBITDA increased by $5.7 million to $48.4 million (29.5% Adjusted EBITDA margin) in the second quarter of fiscal 2015 from $42.7 million (31.2% Adjusted EBITDA margin) in the same period in fiscal 2014 due to growth in FTEs, tuition fee increases and the impact of the Singapore, Cambodia and Vietnam acquisitions. The increase was less than the revenue increase primarily due to the adverse impact of the loss-making greenfield schools opened in Dubai and Aubonne in September 2014.

Adjusted net income increased to $24.9 million in the second quarter of fiscal 2015 from $12.6 million in the second quarter of fiscal 2014 due to the increase in Adjusted EBITDA and the reduction in interest expense following the refinancing at the time of our IPO in March 2014.

Balance Sheet and Cash Flow

During the six months ended February 28, 2015, net cash used in operating activities was $66.5 million compared to $68.0 million for the same period in fiscal 2014. Cash used in investing activities increased from $14.3 million for the six months ended February 28, 2014 to $19.7 million for the same period in fiscal 2015.  During the six months ended February 28, 2015, we invested $24.1 million in capital expenditure, reflecting the impact of the increase in the number of schools following our acquisitions in Singapore, Cambodia and Vietnam as well as refurbishment expenditure on our new school in Hong Kong and the fit-out costs of our new schools in Aubonne and Dubai, which opened in September 2014. Net cash from financing activities was $29.3 million in the six months ended February 28, 2015 compared to $10.8 million in the same period in 2014. Cash and cash equivalents as of February 28, 2015 were $97.3 million, compared to $102.9 million as of February 28, 2014.

On March 2, 2015, we acquired a 90% interest in The British International Schools Group in Vietnam, comprising four schools, bringing our network to 35 premium schools. In connection with the acquisition and for general corporate purposes, we incurred $150 million of incremental loans under our existing secured term loan facility.

Fiscal 2015 Outlook

Nord Anglia Education is reiterating its 2015 guidance for Revenue, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS as set out in the table below:

The Company continues to expect diluted weighted average shares of approximately 98 million.

Change in Accounting Policy

As previously reported, Nord Anglia Education received a comment from the SEC in respect of the company's annual report on form 20-F for the fiscal year ended August 31, 2014 requesting the company to revise its presentation of cost of sales to include property-related costs, depreciation and amortization rather than classifying such items as expenses.  Nord Anglia Education has changed its accounting policy for expenses in respect of Premium School land and building operating leases and depreciation charges arising from tangible assets owned by Premium Schools. These expenses are now treated as a direct cost and are included in cost of sales. Previously, such expenses were recognized as part of selling and administrative expenses. Please refer to the reconciliation table for Adjusted Cost of Sales and Adjusted Gross Profit included elsewhere in this press release. The Group considers this new policy to be more in line with market practice and will apply this policy to retrospective comparative periods. This change does not affect revenue, operating profit, profit for the period, earnings per share, adjusted EBITDA, adjusted net income or adjusted earnings per share and does not affect the financial covenants under the company's senior secured term loan facility. The SEC has notified us that it has completed its review of the company's annual report.  For additional information, see Nord Anglia Education's report on form 6-K filed with the SEC on the date hereof. 

Conference Call 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:

An audio replay of the conference call will be available through April 23, 2015 via the investor relations section of nordangliaeducation.com or by dialling the following:

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 is the world's leading international operator of premium schools, serving students from kindergarten through the end of secondary school (K-12). We teach over 23,700 students at our 35 premium schools in China, Europe, the Middle East and Southeast Asia and North America. 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: [email protected]

Kevin Doherty
Managing Director, Investor Relations - Solebury Communications Group LLC
Tel: +1 203 428 3233
Email: [email protected]

Media:
Sarah Doyle
Head of Brand - Nord Anglia Education
Tel: +852 3951 1144
Email: [email protected]

NORD ANGLIA EDUCATION, INC.
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:

NORD ANGLIA EDUCATION, INC.
SUPPLEMENTARY FINANCIAL INFORMATION

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

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 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.     

SOURCE Nord Anglia Education, Inc.

Related Links

http://www.nordangliaeducation.com