Nord Anglia Education Reports Second Quarter FY2016 Financial Results

HONG KONG, April 26, 2016 /PRNewswire/ -- Nord Anglia Education, Inc. (NYSE: NORD), the world's leading premium schools organization, today announced financial results for the second quarter of fiscal 2016, the three month period ended February 29, 2016.

Second quarter FY2016 highlights (compared to second quarter FY2015)

• Average full time equivalent students (FTEs) increased 54.6% to 34,737
• Revenue increased 48.7% on a reported basis and 54.9% on a constant currency basis to $243.5 million
• Adjusted EBITDA increased 40.3% on a reported basis and 45.6% on a constant currency basis to $67.3 million
• Adjusted Net Income increased 16.9% to $28.0 million
• Adjusted EPS increased 9.8% to $0.27

Year to date February 29, 2016 highlights (compared to year to date February 28, 2015)

• Revenue increased 54.6% on a reported basis and 61.2% on a constant currency basis to $487.5 million
• Adjusted EBITDA increased 47.8% on a reported basis and 54.2% on a constant currency basis to $131.4 million
• Adjusted Net Income increased 25.6% to $54.3 million
• Adjusted EPS increased 18.0% to $0.52

"We are pleased with our second quarter results and trends across the business," said Andrew Fitzmaurice, Chief Executive Officer. "Revenue and Adjusted EBITDA were ahead of last year by 55% and 48% respectively, driven by acquisitions and strong organic enrollment growth.  Our lead indicators of inquiries and visits remain positive and we are achieving in-year enrollment growth in line with our expectations. These results are made possible by our commitment to delivering the best possible education to our students around the world to support their academic, social and personal achievement." 

Mr Fitzmaurice continued, "The opening of our new bilingual school in Shanghai and new Houston campus in September 2016 and our new schools in Abu Dhabi and Bangkok in September 2017 are tracking to plan.  In particular we are very pleased with the demand trends for the new bilingual school in Shanghai opening in September 2016. 

"In early April, we announced a sale and leaseback transaction for three of our schools in the United States.  We are delighted to be partnering with W. P. Carey Inc. and look forward to working together to enhance and add capacity to all three campuses over the coming years.  The sale and leaseback of these schools is in line with our asset light model and will provide additional capital to support the continued execution of our long term growth strategy."

Second quarter FY2016 results

Average FTEs increased 54.6% to 34,737 in the three months ended February 29, 2016 ("Q2 FY2016") from 22,470 in the three months ended February 28, 2015 ("Q2 FY2015").  Average capacity and utilization were 49,057 seats and 71%, respectively, in Q2 FY2016 compared to 31,888 seats and 70%, respectively, in Q2 FY2015.

Revenue increased 48.7%, or $79.8 million, to $243.5 million in Q2 FY2016 from $163.7 million in Q2 FY2015.  This increase was due primarily to higher revenues from premium schools, partly offset by the impact of the strengthening United States Dollar ("USD") and a decrease in other revenue. On a constant currency basis, revenue increased 54.9% in Q2 FY2016 from Q2 FY2015. Revenue per FTE decreased 2.3% to $7,000 in Q2 FY2016 from $7,100 in Q2 FY2015. The decrease was driven by the negative currency translation impact of the strengthening USD.

Gross profit increased 45.8%, or $31.0 million, to $98.7 million in Q2 FY2016 from $67.7 million in Q2 FY2015. Gross profit margin decreased 80 basis points to 40.5% in Q2 FY2016 from 41.3% in Q2 FY2015 primarily due to the additional rent of our new school in Chicago and new employment related taxes in China.

Selling, general and administrative expenses increased 68.5% to $46.4 million in Q2 FY2016 from $27.5 million in Q2 FY2015. The increase was primarily driven by increased operating costs associated with the acquisitions in Vietnam, Switzerland, China, the United States and Mexico in fiscal 2015, as well as the new school opened in Chicago in September 2015.

Adjusted EBITDA increased 40.3%, or $19.3 million, to $67.3 million (27.6% Adjusted EBITDA margin) in Q2 FY2016 from $48.0 million (29.3% Adjusted EBITDA margin) in Q2 FY2015 due to growth in FTEs, tuition fee increases and the impact of the acquisitions in Vietnam, Switzerland, China, the United States and Mexico in fiscal 2015. 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 and new employment related taxes in China.

Net financing expense increased to $22.9 million in Q2 FY2016 from $6.9 million in Q2 FY2015. The increase was primarily attributable to increased debt incurred to fund the acquisitions in fiscal year 2015 and an unrealized loss of $6.0 million from the revaluation of the CHF 200 million bonds.

Adjusted Net Income increased to $28.0 million in Q2 FY2016 from $24.0 million in Q2 FY2015.

Balance Sheet and Cash Flow

During the six months ended February 29, 2016, cash used in operating activities was $61.9 million compared to $66.5 million for six months ended February 28, 2015.  Cash used in operations decreased by $32.9 million from $45.4 million for the six months ended February 28, 2015 to $12.6 million for the six months ended February 29, 2016 due to improved cash management initiatives.  Payment of loan/bond expenses amounted to $4.9 million for the six months ended February 29, 2016. Interest paid increased from $12.5 million to $31.9 million and tax paid increased from $8.6 million to $12.5 million for the six months ended February 28, 2015 and February 29, 2016, respectively.

Cash used in investing activities increased from $19.7 million for the six months ended February 28, 2015 to $70.0 million for the six months ended February 29, 2016. 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 $43.0 million.

Net cash generated from financing activities was $67.3 million in the six months ended February 29, 2016 compared to $29.3 million in the same period in 2015.  Cash and cash equivalents (net of a bank overdraft on our notional pooling accounts) as of February 29, 2016 were $155.1 million, compared to $97.3 million as of February 28, 2015.

Fiscal 2016 Outlook

Nord Anglia Education is updating its fiscal 2016 outlook for Revenue, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS.  These changes reflect the impact of the sale and leaseback transaction, currency movements, a lower contribution from learning services, increased interest expense as a result of cross currency swaps entered into in March and additional central and regional costs to manage future growth and compliance. 

For the full year fiscal 2016, the Company's new and previous guidance is as follows:

We expect diluted weighted average shares of approximately 104.1 million.

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:

United States Toll Free:                                 877.407.0784
International:                                                 201.689.8560                                     

An audio replay of the conference call will be available through May 3, 2016 via the investor relations section of nordangliaeducation.com or by dialling the following:

United States Toll Free:                                 877.870.5176
International:                                                 858.384.5517
Replay Conference ID:                                   13632501

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, anticipated school openings, 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 organization. Our 42 international schools are located in China, Europe, the Middle East, Southeast Asia and North America. Together, they educate more than 35,300 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: [email protected]

John Rouleau
Managing Director, Investor Relations – ICR
Tel: +1 203 682 8342
Email: [email protected]

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

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