Nord Anglia Education Reports Third Quarter FY2014 Financial Results

HONG KONG, July 16, 2014 /PRNewswire/ -- Nord Anglia Education, Inc. (NYSE: NORD), the world's leading premium schools organization, today announced financial results for the three months ended May 31, 2014, the third quarter of fiscal 2014.

Third quarter FY2014 highlights (compared to third quarter FY2013):

• Revenue increased 54.9% from $89.4 million to $138.5 million
• Revenue from premium schools increased 61.1% from $83.0 million to $133.7 million
• Adjusted EBITDA increased 60.6% from $28.0 million to $45.0 million
• Adjusted Net Income increased from $2.9 million to $14.7 million

Nine months ended May 31, 2014 highlights (compared to nine months ended May 31, 2013):

• Revenue increased 53.2% from $268.0 million to $410.5 million
• Revenue from premium schools increased 60.4% from $247.5 million to $397.0 million
• Adjusted EBITDA increased 57.4% from $80.4 million to $126.5 million
• Adjusted Net Income increased from $18.2 million to $38.3 million

"We are pleased to report strong operating and financial results for the third quarter of fiscal 2014, which demonstrate the continuing success of our organization," said Andrew Fitzmaurice, Nord Anglia Education CEO. "Our focus on delivering outstanding educational quality enables students to achieve academic, social and personal success and our students' standardized examination results continue to exceed UK and global averages.  We have recently received our students' International Baccalaureate Diploma results for 2014 and our average diploma score has risen again, to 33.7 points from 33.0 points in 2013, which is significantly ahead of the global average of 29.8 points."

"We continue to strengthen our market leading position as we execute our growth strategy, and the acquisition of Northbridge International School Cambodia on July 10, 2014 is the most recent example of this.  In June, we also celebrated the ground breaking of the British School of Chicago's second campus, which is scheduled to open in September 2015 with 1,100 seats of capacity.  We are now looking forward to the start of the new school year in September 2014 and are particularly excited about the opening of our two new greenfield schools in Hong Kong and Dubai," Fitzmaurice continued. 

Third quarter FY2014 results

Revenue increased by $49.1 million to $138.5 million in the third quarter of fiscal 2014 from $89.4 million in the same period in fiscal 2013.  This increase was due to increases in full time equivalent students (FTEs) and tuition fees at our existing schools and the impact of our acquisitions in China, Europe, the Middle East, South East Asia and North America.  

Our gross profit margin increased to 55.9% in the third quarter of fiscal 2014 from 54.1% in same period of fiscal 2013, largely due to the impact of tuition fee increases in excess of cost inflation and increased FTEs within our schools.

Adjusted EBITDA increased by $17.0 million to $45.0 million in the third quarter of fiscal 2014 from $28.0 million in the same period in fiscal 2013.  Adjusted net income increased by $11.8 million to $14.7 million in the third quarter of fiscal 2014 from $2.9 million in the same period in fiscal 2013.

The average FTEs in the three months ended May 31, 2014 were 17,653, a 78.0% increase over the average FTEs in the three months ended May 31, 2013 of 9,920.  Average capacity and utilization was 22,237 seats and 79% in the three months ended May 31, 2014 compared to 12,503 seats and 79% in the three months ended May 31, 2013.

Balance Sheet and Cash Flow

During the nine months ended May 31, 2014, net cash used in operating activities was $74.7 million compared to $45.5 million for the same period in fiscal 2013, with the larger outflow primarily being due to an increase in interest paid (up $31.8 million).  Cash used in investing activities decreased from $105.6 million for the nine months ended May 31, 2013 to $40.2 million for the same period in fiscal 2014.  During the nine months ended May 31, 2014, we invested $15.5 million (net of cash acquired) for the acquisition of subsidiaries and $25.0 million in capital expenditure, including on the refurbishment of our new school in Hong Kong and maintenance capital expenditure at our other schools.  Net cash provided by financing activities was $81.0 million in the nine months ended May 31, 2014.  Cash and cash equivalents as at May 31, 2014, was $138.2 million compared to $124.0 million as at May 31, 2013.

On March 31, 2014, we used the proceeds from our initial public offering and the issuance of a new $515.0 million senior secured term loan to discharge all obligations under the indentures governing our 10.25% senior secured notes and our 8.50%/9.50% PIK toggle notes, both of which were fully repaid as of April 14, 2014.  Going forward, the refinancing will contribute to significant interest savings of approximately $41.0 million per year.

FY2014 Business Outlook

We are reiterating certain targets regarding our fiscal 2014 expectations, which reflect our results through May 31, 2014:

• Overall revenue in fiscal 2014 in the range of $468-$472 million
• Adjusted EBITDA in fiscal 2014 in the range of $125-$127 million

In addition, for the full fiscal year 2014, we estimate that our pro forma diluted weighted average shares will be approximately 97.9 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/Canada Toll Free: 877 407 0784
International: +1 201 689 8560                            

An audio replay of the conference call will be available through July 30, 2014 by dialling the following:

United States/Canada Toll Free: 877 870 5176
International: +1 858 384 5517
Replay Conference ID: 13585711

A live webcast of the conference call will be available via the investor relations section of www.nordanglia.com and will be archived on the website for a limited time immediately following the call.  A copy of this press release is also available on the web site.

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 registration statement on Form F-1 filed with the SEC.  These statements include, among other things, statements relating to: our future market opportunities; our goals and strategies; our competitive strengths; our future results of operations and financial condition; our future business developments; and our acquisition and expansion strategy.

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 and liquidity, 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 and liquidity, and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this report, 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 and Adjusted Net Income 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 plus any loss/(gain) on disposal of PP&E, management fees paid to our sponsor, foreign exchange (gains)/losses, the EBITDA losses attributable to our loss-making start-up schools and share based payments.  Adjusted EBITDA excludes EBITDA losses attributable to loss-making start-up schools that have been open less than three years.  We consider this a more directly comparable supplemental financial measure for evaluating the performance of our business.  We define Adjusted Net Income as Adjusted EBITDA less depreciation, net financing expense, income tax expense and tax adjustments for the impact of the exclusion of exceptional items and amortization in calculating Adjusted Net Income.  Please refer to "Nord Anglia Education, Inc. Supplemental Financial Information" below for further detail. 

EBITDA, Adjusted EBITDA and Adjusted Net Income are not standard measures under IFRS.  EBITDA, Adjusted EBITDA and Adjusted Net Income should not be considered in isolation or construed as alternatives to cash flows, net income 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. EBITDA, Adjusted EBITDA and Adjusted Net Income presented herein may not be comparable to similarly titled measures presented by other companies. 

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 18,500 FTEs at our 29 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.nordanglia.com.

For further information, please contact:

Investors:
Vanessa Cardonnel 
Corporate Finance and Investor Relations Director - Nord Anglia Education 
Tel: +852 3977 0791 
Email: [email protected]

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

Media:
Sarah Doyle
Communications Manager – Nord Anglia Education
Tel: +852 3977 0798
Email: [email protected]

We use EBITDA, Adjusted EBITDA and Adjusted Net Income 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. EBITDA, Adjusted EBITDA and Adjusted Net Income are not standard measures under IFRS. EBITDA, Adjusted EBITDA and Adjusted Net Income should not be considered in isolation or construed as alternatives to cash flows, net income 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 and Adjusted Net Income presented herein may not be comparable to similarly titled measures presented by other companies. Adjusted EBITDA excludes EBITDA losses attributable to loss-making start-up schools that have been open less than three years. We consider this a more directly comparable supplemental financial measure for evaluating the performance of our schools.

SOURCE Nord Anglia Education, Inc.