Nord Anglia Education Reports Third Quarter FY2016 Financial Results

HONG KONG, July 26, 2016 /PRNewswire/ -- Nord Anglia Education, Inc. (NYSE: NORD), the world's leading premium schools organization, today announced financial results for the third quarter of fiscal 2016, the three month period ended May 31, 2016.

Third quarter FY2016 highlights (compared to third quarter FY2015)

• Average full time equivalent students (FTEs) increased 47.5% to 35,309
• Revenue increased 49.4% on a reported basis and 53.0% on a constant currency basis to $253.8 million
• Adjusted EBITDA increased 39.9% on a reported basis and 44.3% on a constant currency basis to $69.9 million
• Adjusted Net Income increased 24.0% to $28.8 million
• Adjusted EPS increased 17.8% to $0.28

Year to date May 31, 2016 highlights (compared to year to date May 31, 2015)

• Revenue increased 52.8% on a reported basis and 58.3% on a constant currency basis to $741.3 million
• Adjusted EBITDA increased 45.0% on a reported basis and 51.1% on a constant currency basis to $201.3 million
• Adjusted Net Income increased 25.0% to $83.1 million
• Adjusted EPS increased 17.9% to $0.80

"We are pleased to report strong third quarter operating and financial results that show robust growth," said Andrew Fitzmaurice, Chief Executive Officer. "Our academic school year ends in June and we finished the 2015/2016 academic year with 35,327 full time equivalent students, generating organic in-year enrollment growth of 2.6% in line with our targeted increase of 2 - 4%.  During the quarter, we announced a new collaboration with the Massachusetts Institute of Technology to develop and implement a science, technology, engineering, visual arts and mathematics (STEAM) program for Nord Anglia Education's schools worldwide.  MIT is one of the world's pre-eminent education institutions and our students and teachers will derive enormous benefit from this collaboration. With our performing arts curriculum developed by The Juilliard School and this exciting new collaboration with MIT, we continue to place excellence at the core of our world class offering and position our schools at the forefront of innovative education."

Mr Fitzmaurice continued, "This is a very exciting time of year for Nord Anglia. During the summer break, we are adding over 5,000 seats of capacity for the 2016-17 academic year: we are expanding existing schools by approximately 1,950 seats, opening a new 2,250 seat school for Chinese nationals in Shanghai and moving the British International School Houston to a brand new state of the art campus, more than doubling the capacity of that school to 2,200 seats.  We are particularly encouraged by the initial demand we have experienced for the new school in China. Across our five regions, inquiries are up compared to this time last year and visits are either ahead or broadly in line on a like-for-like basis."

Third quarter FY2016 results

Average FTEs increased 47.5% to 35,309 in the three months ended May 31, 2016 ("Q3 FY2016") from 23,932 in the three months ended May 31, 2015 ("Q3 FY2015").  Average capacity and utilization were 49,402 seats and 71%, respectively, in Q3 FY2016 compared to 34,539 seats and 69%, respectively, in Q3 FY2015.

Revenue increased 49.4%, or $83.9 million, to $253.8 million in Q3 FY2016 from $169.9 million in Q3 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 53.0% in Q3 FY2016 from Q3 FY2015. Revenue per FTE increased 2.2% to $7,200 in Q3 FY2016 from $7,000 in Q3 FY2015.

Gross profit increased 48.7%, or $33.1 million, to $101.3 million in Q3 FY2016 from $68.2 million in Q3 FY2015. Gross profit margin was 39.9% for Q3 FY2016 compared to 40.1% for Q3 FY2015.

Selling, general and administrative expenses increased 71.1% to $48.5 million in Q3 FY2016 from $28.3 million in Q3 FY2015. The increase was primarily driven by increased operating costs associated with the acquisitions in 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 39.9%, or $20.0 million, to $69.9 million (27.5% Adjusted EBITDA margin) in Q3 FY2016 from $49.9 million (29.4% Adjusted EBITDA margin) in Q3 FY2015 due to growth in FTEs, tuition fee increases and the impact of the acquisitions in Switzerland, China, the United States and Mexico in fiscal 2015.  On a constant currency basis, Adjusted EBITDA increased 44.3% in Q3 FY2016 from Q3 FY2015. 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 the impact in the quarter of additional rent charge following the sale and leaseback of the Windermere Preparatory School property.

Net financing expense increased to $19.2 million in Q3 FY2016 from $9.0 million in Q3 FY2015. The increase was primarily attributable to increased debt incurred to fund the acquisitions in fiscal year 2015 and an unrealized loss of $2.0 million from the revaluation of the CHF 200 million bonds.

Adjusted Net Income increased to $28.8 million in Q3 FY2016 from $23.2 million in Q3 FY2015.

Balance Sheet and Cash Flow

During the nine months ended May 31, 2016, cash used in operating activities was $54.1 million compared to $25.1 million for the nine months ended May 31, 2015.  Cash generated from operations increased by $5.1 million from $9.2 million for the nine months ended May 31, 2015 to $14.3 million for the nine months ended May 31, 2016.  Payment of loan/bond expenses in connection with acquisitions in 2015 amounted to $5.0 million for the nine months ended May 31, 2016. Interest paid increased from $20.1 million to $44.5 million and tax paid increased from $14.2 million to $18.9 million for the nine months ended May 31, 2015 and May 31, 2016, respectively.

Cash generated from investing activities was $74.2 million for the nine months ended May 31, 2016 compared to cash used in investing activities of $139.5 million for the nine months ended May 31, 2015. The inflow for the nine months ended May 31, 2016 includes a $167.0 million inflow from the proceeds of the sale and leaseback transaction and a $33.6 million outflow for the acquisition of subsidiaries (net of cash acquired) including the final deferred payment for the Meritas acquisition.  The outflow for the nine months ended May 31, 2015 was primarily due to the acquisition of our schools in Vietnam for $108.9 million (net of cash acquired).  Capital expenditure increased $27.7 million from $32.3 million in the nine months ended May 31, 2015 to $60.0 million in the nine months ended May 31, 2016. This increase in capital expenditure reflects the impact of the increase in the number of schools following our acquisitions in Switzerland, China, the United States and Mexico.

Net cash generated from financing activities was $19.3 million in the nine months ended May 31, 2016 compared to $152.9 million in the same period in 2015.  Cash and cash equivalents (net of a bank overdraft on our notional pooling accounts) as of May 31, 2016 were $260.5 million, compared to $142.6 million as of May 31, 2015.

Fiscal 2016 Outlook

With only one quarter remaining in the company's fiscal year, Nord Anglia Education is tightening its fiscal 2016 outlook ranges for Revenue, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS.

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 August 2, 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:                                   13639469

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:
Connie Young
Communications Manager – Nord Anglia Education
Tel: +852 3951 1147
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 profit for the period plus income tax expense, net financing expense, exceptional items, other losses/(gains), 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