Ambow Education Announces Third Quarter 2020 Financial Results
BEIJING, Dec. 17, 2020 /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 nine-month periods ended September 30, 2020.
"While our business continued to be impacted by COVID-19-related macro headwinds during the third quarter of 2020, I am pleased to report that after a solid start to the new fall semester, revenue from the K-12 schools segment increased 18.8% year-over-year. Encouragingly, deferred revenue related to tuition and course fees and our education service platform increased 12.4% to US$37.9 million from the year-ago period and reached its highest level since 2015, reflecting the resilience of our business. Supported by ample cash resources and a healthy balance sheet, our core strength and fundamentals remain solid across our key segments," noted Dr. Jin Huang, Ambow's President and Chief Executive Officer. "We are excited that in September we won the bid for a Technical and Vocational Education and Training (TVET) Center project that is financially supported by the Asian Development Bank as a part of its inclusive growth project in Ziyang City of Sichuan Province. This achievement demonstrates our exceptional capabilities and leading position in the vocational and technical education sector."
"We continued to execute our key strategies to pursue more balanced growth, while providing high quality educational services that better engage students against the challenging backdrop of the COVID-19 environment. Leveraging our 20-year proven track record in curriculum development, professional training, job placement and education technology innovation, we are making massive progress in building out our online-to-offline education SaaS platform, Huanyujun Education Hub. We have gradually started rolling out Amazon Web Services (AWS) and Cisco-authorized certification and training courses on the Huanyujun Education Hub, which is already supported by our cutting-edge educational solutions such as Ambow Panorama Digital Teaching System and Ambow Cloud Platform. We believe these best-in-class educational services and course offerings will broaden our appeal to a wider student base as they pursue professional certifications for their technology careers."
"Going forward, we will maintain our strategic efforts to enrich our educational service offerings, optimize operating efficiencies, and increase student enrollments and engagement. We remain confident that our efforts will support the long-term sustainability of our overall business," concluded Dr. Huang.
*Third Quarter 2020 Financial Highlights*
· *Net revenues* for the third quarter of 2020 decreased by 6.2% to US$16.6 million from US$17.7 million in the same period of 2019. The decrease was primarily from fewer services provided at the Company's tutoring centers, training offices and college campuses. This was partially offset by the increase in the revenue from K-12 schools driven by higher enrollment and the revenue from NewSchool of Architecture and Design, LLC ("NewSchool"), acquired in the first quarter of 2020.
· *Gross profit* for the third quarter of 2020 decreased by 77.8% to US$1.0 million from US$4.5 million in the same period of 2019. Gross profit margin was 6.0%, compared with 25.4% for the third quarter of 2019. The decreases in gross profit and margin were mainly attributable to the decrease in net revenues from CP&CE Programs.
· *Operating expenses *for the third quarter of 2020 decreased by 3.4% to US$14.0 million from US$14.5 million for the same period of 2019. The decrease was primarily attributable to stringent expense controls to improve operating efficiency, and partially offset by operating expenses related to NewSchool.
· *Net loss attributable to ordinary shareholders *was US$12.5 million, or US$0.29 per basic and diluted share, compared with a net loss of US$10.2 million, or US$0.23 per basic and diluted share, for the third quarter of 2019.
· As of September 30, 2020, Ambow maintained strong cash resources of US$44.0 million, comprised of cash and cash equivalents of US$12.7 million and short-term investments of US$31.3 million.
· As of September 30, 2020, the Company's deferred revenue balance was US$37.9 million, representing a 59.9% increase from US$23.7 million as of December 31, 2019, mainly attributable to the tuition and fees collected at K-12 schools for the fall semester of the 2020-2021 academic year, and deferred revenue collected from our colleges for the fall semester of 2020.
*First Nine Months 2020 Financial Highlights*
· *Net revenues* for the first nine months of 2020 decreased by 8.0% to US$52.8 million from US$57.4 million in the same period of 2019. The decrease was primarily from fewer boarding and other ancillary services provided for K-12 schools as result of temporary COVID-19-related campus closures in the first half of 2020, and fewer services provided at the Company's tutoring centers, training offices and college campuses. This was partially offset by the revenue from NewSchool which was acquired in the period.
· *Gross profit* for the first nine months of 2020 decreased by 40.5% to US$11.6 million from US$19.5 million in the same period of 2019. Gross profit margin was 22.0%, compared with 34.0% for the first nine months of 2019. The decreases in gross profit and margin were mainly attributable to the decrease in net revenues from CP&CE Programs.
· *Operating expenses *for the first nine months of 2020 decreased by 1.9% to US$30.4 million from US$31.0 million for the same period of 2019. The decrease was primarily attributable to lower expenditures due to the temporary suspension of operations at training offices and tutoring centers in the period as a part of the national pandemic containment efforts, as well as stringent expense controls to improve operating efficiency, and partially offset by NewSchool's operating expenses.
· *Net loss attributable to ordinary shareholders *was US$10.9 million, or US$0.25 per basic and diluted share, compared with a net loss of US$12.3 million, or US$0.28 per basic and diluted share, for the first nine months of 2019.
On October 5, 2020, the Company completed a registered direct offering of 1,507,538 American Depositary Shares ("ADSs", representing 3,015,076 Class A Ordinary Shares), at a purchase price of $3.98 per ADS. The Company also issued to investors registered warrants to purchase up to an aggregate amount of 603,016 ADSs (representing 1,206,032 Class A Ordinary Shares). Net proceeds from this offering were approximately US$5.2 million.
The Company's financial and operating results for the third quarter and first nine months of 2020 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 third quarter and first nine months of 2020 are based on the effective exchange rate of 6.7896 as of September 30, 2020; all amounts translated from RMB to U.S. dollars for the third quarter and first nine months of 2019 are based on the effective exchange rate of 7.1477 as of September 30, 2019; all amounts translated from RMB to U.S. dollars as of December 31, 2019 are based on the effective exchange rate of 6.9618 as of December 31, 2019. 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 15 out of the 34 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: ambow@tpg-ir.com
*AMBOW EDUCATION HOLDING LTD.*
*UNAUDITED CONSOLIDATED BALANCE SHEETS*
*(All amounts in thousands, except for share and per share data)*
*As of September 30,*
*As of December 31, *
*2020*
*2019*
*US$*
*RMB*
*RMB*
*ASSETS*
*Current assets:*
Cash and cash equivalents
12,677
86,072
157,600
Restricted cash
2,006
13,621
-
Short term investments, available for sale
26,898
182,629
57,487
Short term investments, held to maturity
4,419
30,000
31,000
Accounts receivable, net
3,616
24,549
17,939
Amounts due from related parties
907
6,159
2,318
Prepaid and other current assets, net
23,150
157,177
133,296
Total current assets
73,673
500,207
399,640
*Non-current assets:*
Property and equipment, net
21,603
146,678
157,463
Land use rights, net
254
1,726
1,759
Intangible assets, net
8,168
55,458
56,607
Goodwill
3,787
25,710
60,353
Deferred tax assets, net
538
3,653
10,195
Operating lease right-of-use asset
38,704
262,787
257,361
Finance lease right-of-use asset
884
6,000
6,450
Other non-current assets, net
12,429
84,388
70,971
Total non-current assets
86,367
586,400
621,159
*Total assets*
160,040
1,086,607
1,020,799
*LIABILITIES*
*Current liabilities:*
Short-term borrowings *
2,948
20,013
-
Deferred revenue *
37,906
257,368
165,111
Accounts payable *
2,284
15,500
14,718
Accrued and other liabilities *
27,277
185,203
192,957
Income taxes payable, current *
27,060
183,729
180,715
Amounts due to related parties *
718
4,876
1,971
Operating lease liability, current *
7,459
50,642
53,512
Total current liabilities
105,652
717,331
608,984
*Non-current liabilities:*
Income taxes payable, non-current *
5,094
34,589
32,152
Operating lease liability, non-current *
34,723
235,756
216,067
Total non-current liabilities
39,817
270,345
248,219
*Total liabilities*
145,469
987,676
857,203
*EQUITY*
*Preferred shares*
(US$ 0.003 par value;1,666,667 shares authorized, nil issued and outstanding as of December 31, 2019 and September 30, 2020)
-
-
-
*Class A O**rdinary shares*
(US$0.003 par value; 66,666,667 and 66,666,667 shares authorized, 38,858,199 and 38,895,700 shares issued and outstanding as of December 31, 2019 and September 30, 2020, respectively)
108
731
730
*Class C O**rdinary shares*
(US$0.003 par value; 8,333,333 and 8,333,333 shares authorized, 4,708,415 and 4,708,415 shares issued and outstanding as of December 31, 2019 and September 30, 2020, respectively)
13
90
90
Additional paid-in capital
516,868
3,509,330
3,508,745
Statutory reserve
620
4,210
20,185
Accumulated deficit
(505,202)
(3,430,122)
(3,371,815)
Accumulated other comprehensive income
2,420
16,429
6,341
*Total Ambow Education Holding Ltd.'s equity *
14,827
100,668
164,276
Non-controlling interests
(256)
(1,737)
(680)
*Total equity*
14,571
98,931
163,596
*Total liabilities and equity*
160,040
1,086,607
1,020,799
* All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of
consolidating these VIEs do not represent additional claims on the Company's general assets.
*AMBOW EDUCATION HOLDING LTD.*
*UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS *
*(All amounts in thousands, except for share and per share data)*
*For the nine months ended September 30,*
*For the three months ended September 30,* *2020*
*2020*
*2019*
*2020*
*2020*
*2019* *US$*
*RMB*
*RMB*
*US$*
*RMB*
*RMB*
*NET REVENUES*
Educational program and services
52,742
358,098
409,367
16,560
112,439
126,729
Intelligent program and services
52
352
1,193
40
269
(173)
Total net revenues
52,794
358,450
410,560
16,600
112,708
126,556
*COST OF REVENUES*
Educational program and services
(40,898)
(277,683)
(265,454)
(15,518)
(105,359)
(92,934)
Intelligent program and services
(345)
(2,340)
(5,818)
(130)
(882)
(1,109)
Total cost of revenues
(41,243)
(280,023)
(271,272)
(15,648)
(106,241)
(94,043)
*GROSS PROFIT*
11,551
78,427
139,288
952
6,467
32,513
*Operating expenses:*
Selling and marketing
(5,576)
(37,861)
(40,778)
(2,011)
(13,655)
(15,607)
General and administrative
(18,739)
(127,230)
(140,510)
(6,331)
(42,987)
(48,116)
Research and development
(656)
(4,456)
(1,555)
(259)
(1,758)
(1,087)
Impairment loss
(5,405)
(36,699)
(38,754)
(5,405)
(36,699)
(38,754)
Total operating expenses
(30,376)
(206,246)
(221,597)
(14,006)
(95,099)
(103,564)
*OPERATING LOSS*
(18,825)
(127,819)
(82,309)
(13,054)
(88,632)
(71,051)
*OTHER INCOME (EXPENSES)*
Interest income
1,053
7,150
3,343
444
3,015
1,823
Foreign exchange gain (loss), net
5
31
46
(1)
(4)
45
Other income (loss), net
124
840
193
(105)
(712)
7
Gain from deregistration of subsidiaries
584
3,967
1,279
10
70
-
Gain on disposal of subsidiaries
111
752
-
111
752
-
Gain on the bargain purchase
5,932
40,273
-
-
-
-
Gain on sale of investment available for sale
365
2,477
422
209
1,421
3
Total other income
8,174
55,490
5,283
668
4,542
1,878
*LOSS BEFORE INCOME TAX AND NON- CONTROLLING INTEREST*
(10,651)
(72,329)
(77,026)
(12,386)
(84,090)
(69,173)
Income tax expense
(353)
(2,399)
(11,032)
(114)
(776)
(3,634)
*NET LOSS*
(11,004)
(74,728)
(88,058)
(12,500)
(84,866)
(72,807)
Less: Net(loss)/incomeattributable to non-controlling interest
(153)
(1,040)
(269)
(49)
(332)
4
*NET LOSS ATTRIBUTABLE TO ORDINARY SHAREHOLDERS*
(10,851)
(73,688)
(87,789)
(12,451)
(84,534)
(72,811)
*NET LOSS*
(11,004)
(74,728)
(88,058)
(12,500)
(84,866)
(72,807)
*OTHER COMPREHENSIVE INCOME, NET OF TAX*
Foreign currency translation adjustments
1,581
10,731
(3,267)
354
2,403
(93)
Unrealized gains on short term investments
Unrealized holding gains arising during period
224
1,518
1,238
85
578
538
Less: reclassification adjustment for gains included in net income
318
2,161
489
220
1,493
37
Other comprehensive income (loss)
1,487
10,088
(2,518)
219
1,488
408
*TOTAL COMPREHENSIVE LOSS*
(9,517)
(64,640)
(90,576)
(12,281)
(83,378)
(72,399)
Net loss per share – basic and diluted
(0.25)
(1.69)
(2.02)
(0.29)
(1.94)
(1.67)
Weighted average shares used in calculating basic and diluted net loss per share
43,583,448
43,583,448
43,496,848
43,595,871
43,595,871
43,512,447
*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, 2020*
*38,858,199*
*730*
*4,708,415*
*90*
*3,508,745*
*20,185*
*(3,372,409)*
*6,341*
*(680)*
*163,002*
Share-based compensation
-
-
-
-
238
-
-
-
-
238
Issuance of ordinary shares for restricted stock award
12,500
-
-
(0)
-
-
-
-
-
Foreign currency translation adjustment
-
-
-
-
-
-
-
433
-
433
Unrealized gain on investment, net of income taxes
-
-
-
-
-
-
-
154
-
154
Net income/(loss)
-
-
-
-
-
-
6,039
-
(412)
5,627
*Balance as of March 31, 2020*
*38,870,699*
*730*
*4,708,415*
*90*
*3,508,983*
*20,185*
*(3,366,370)*
*6,928*
*(1,092)*
*169,454*
Share-based compensation
-
-
-
-
242
-
-
-
-
242
Issuance of ordinary shares for restricted stock award
12,500
1
-
-
(1)
-
-
-
-
-
Foreign currency translation adjustment
-
-
-
-
-
-
-
7,895
-
7,895
Unrealized gain on investment, net of income taxes
-
-
-
-
-
-
-
118
-
118
Deregistration of subsidiaries
-
-
-
-
-
(15,473)
15,473
-
-
-
Net income/(loss)
-
-
-
-
-
-
4,807
-
(297)
4,510
*Balance as of June 30, 2020*
*38,883,199*
*731*
*4,708,415*
*90*
*3,509,224*
*4,712*
*(3,346,090)*
*14,941*
*(1,389)*
*182,219*
Share-based compensation
-
-
-
-
239
-
-
-
-
239
Issuance of ordinary shares for restricted stock award
12,501
-
-
(0)
-
-
-
-
-
Foreign currency translation adjustment
-
-
-
-
-
-
-
2,403
-
2,403
Unrealized gain on investment, net of income taxes
-
-
-
-
-
-
-
(915)
-
(915)
Deregistration of subsidiary
-
-
-
-
-
-
-
-
(16)
(16)
Disposal of subsidiaries
-
-
-
-
(133)
(502)
502
-
-
(133)
Net loss
-
-
-
-
-
-
(84,534)
-
(332)
(84,866)
*Balance as of September 30, 2020*
*38,895,700*
*731*
*4,708,415*
*90*
*3,509,330*
*4,210*
*(3,430,122)*
*16,429*
*(1,737)*
*98,931*
*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)
-
-
-
-
-
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*
Share-based compensation
-
-
-
-
244
-
-
-
-
244
Foreign currency translation adjustment
-
-
-
-
-
-
-
(93)
-
(93)
Unrealized gain on investment, net of income taxes
-
-
-
-
-
-
-
501
-
501
Net (loss) / income
-
-
-
-
-
-
(72,811)
-
4
(72,807)
*Balance as of September 30, 2019*
*38,804,032*
*729*
*4,708,415*
*90*
*3,508,504*
*20,149*
*(3,359,627)*
*5,787*
*(1,553)*
*174,079*
*Discussion of Segment Operations*
*(All amounts in thousands)*
*For the nine months ended September 30,*
*For the three months ended September 30,* *2020*
*2020*
*2019*
*2020*
*2020*
*2019* *US$*
*RMB*
*RMB*
*US$*
*RMB*
*RMB*
*NET REVENUES*
K-12 Schools
27,360
185,766
203,214
8,685
58,966
52,256
CP&CE Programs
25,434
172,684
207,346
7,915
53,742
74,300
Total net revenues
52,794
358,450
410,560
16,600
112,708
126,556
*COST OF REVENUES*
K-12 Schools
(17,670)
(119,972)
(128,887)
(6,692)
(45,430)
(38,794)
CP&CE Programs
(23,573)
(160,051)
(142,385)
(8,956)
(60,811)
(55,249)
Total cost of revenues
(41,243)
(280,023)
(271,272)
(15,648)
(106,241)
(94,043)
*GROSS PROFIT*
K-12 Schools
9,690
65,794
74,327
1,993
13,536
13,462
CP&CE Programs
1,861
12,633
64,961
(1,041)
(7,069)
19,051
Total gross profit
11,551
78,427
139,288
952
6,467
32,513
Related Links :
http://www.ambow.com