Bright Scholar Announces Unaudited Financial Results for the Third Fiscal Quarter of FY2020
FOSHAN,China,July 23,2020 -- Bright Scholar Education Holdings Limited ("Bright Scholar," the "Company," "we" or "our") (NYSE: BEDU),a global premier education service company,today announced its unaudited financial results for the third fiscal quarter ended May 31,2020.
Third Fiscal Quarter Ended May 31,2020 Financial Highlights
(in comparison to the same period ofthelast fiscal year):
RMB in million
Except EPS and %
Nine Months
Ended May 31,2020
Nine Months
Ended May 31,2019
YoY
% Change
Revenue
2,714.4
1,851.4
46.6%
Gross Profit
1,072.3
764.9
40.2%
Gross Margin
39.5%
41.3%
(1.8%)
Operating Income
479.6
345.0
39.0%
Operating Margin
17.7%
18.6%
(0.9%)
Net Income
312.8
300.9
4.0%
Net Margin
11.5%
16.3%
(4.8%)
Adjusted Gross Profit (1)
1,105.2
778.7
41.9%
Adjusted Gross Margin (1)
40.7%
42.1%
(1.4%)
Adjusted Operating Income (2)
500.5
403.9
23.9%
Adjusted Operating Margin (2)
18.4%
21.8%
(3.4%)
Adjusted Net Income (3)
333.6
359.8
(7.3%)
Adjusted Net Margin (3)
12.3%
19.4%
(7.1%)
Adjusted EBITDA (4)
669.4
487.6
37.3%
Adjusted EBITDA Margin (4)
24.7%
26.3%
(1.6%)
Basic and Diluted Earnings per Share
2.62
2.38
10.1%
Adjusted Basic and Diluted Earnings per Share (5)
2.79
2.86
(2.4%)
______________________________________________________________________________________________
1. Adjusted gross profit/(loss) is defined as gross profit/(loss) excluding amortization of intangible assets. Adjusted gross margin is defined as adjusted gross profit/(loss) divided by revenue.
2. Adjusted operating income/(loss) is defined as operating income/(loss) excluding share-based compensation expense and amortization of intangible assets. Adjusted operating margin is defined as adjusted operating income/(loss) divided by revenue.
3. Adjusted net income/(loss) is defined as net income/(loss) excluding share-based compensation expense and amortization of intangible assets. Adjusted net margin is defined as adjusted net income/(loss) divided by revenue.
4. Adjusted EBITDA is defined as net income/(loss) excluding interest income/(expense),net; income tax expense/benefit; depreciation and amortization,and share-based compensation expense. Adjusted EBITDA margin is defined as adjusted EBITDA divided by revenue.
5. Adjusted basic and diluted earnings per share is defined as adjusted net income/(loss) attributable to ordinary shareholders (net income/(loss) to ordinary shareholders excluding share-based compensation expense and amortization of intangible assets) divided by the weighted average number of basic and diluted ordinary shares or American depositary shares (each an "ADS"),each representing one Class A ordinary share of the Company,on an as-converted basis.
For more information on these adjusted financial measures,please see the section captioned under "Non-GAAP Financial Measures" and the tables captioned "Reconciliations of GAAP and Non-GAAP Results" set forth at the end of this release.
BUSINESS PERFORMANCE HIGHLIGHTS
(in comparison to the same period of the last fiscal year)
Domestic K-12 Schools
The domestic K-12 schools comprise our international schools,bilingual schools and kindergartens in China.
The average number of students increased by 9.2% for the third fiscal quarter and 10.6% for the nine-month period.
Revenue amounted to RMB434.8 million and accounted for 58.9% of total revenue in the third fiscal quarter. For the nine-month period,revenue increased by 3.7% to RMB1,552.1 million and accounted for 57.1% of total revenue.
For the third fiscal quarter,gross margin was 43.1% compared to 48.3%,and operating margin was 27.0% compared to 37.8%. For the nine-month period,gross margin was 42.3% compared to 42.3%,and operating margin was 28.8% as compared to 28.8%.
Overseas Schools
The overseas schools comprise our overseas schools including Bournemouth,St. Michael's,Bosworth and CATS.
The average number of students was 3,219 for the third fiscal quarter and 3,246 for the nine-month period.
Revenue amounted to RMB210.4 million and accounted for 28.5% of total revenue for the third fiscal quarter. For the nine-month period,revenue amounted to RMB766.8 million and accounted for 28.2% of total revenue for the same period.
For the third fiscal quarter,gross margin was 29.9% and operating margin was 5.1%. For the nine-month period,gross margin was 36.7% and operating margin was 9.5%.
Complementary Education Services
The complementary education services comprise language training,overseas study counselling,career counselling,study tours and camps and others.
Revenue amounted to RMB94.2 million and accounted for 12.6% of total revenue. For the nine-month period,revenue increased by 23.1% to RMB395.5 million,and accounted for 14.7% of total revenue.
For the third fiscal quarter,gross margin increased from 30.5% to 44.4%,and operating margin increased from (10.3%) to 14.7%. For the nine-month period,gross margin was 33.8% compared to 37.6%,and operating margin was 10.0% compared to 14.1%.
"Despite disruptions and short-term impact from the COVID-19 pandemic,Bright Scholar's performance during the third fiscal quarter has demonstrated our continued progress in executing our growth strategy and highlighted the resilience of our underlying business," said Jerry He,Executive Vice Chairman of Bright Scholar. "The revenue for the quarter was RMB739.4 million,representing a year-over-year increase of 6.7%. Our net income was RMB68.0 million,which was negatively impacted by the mandatory closure of our schools,kindergartens and learning centers. For the nine-month period,the revenue was RMB2,714.4 million,representing a year-over-year increase of 46.6%. The adjusted gross profit,adjusted operating income,adjusted EBITDA increased by 41.9%,23.9% and 37.3% year-over-year,respectively."
"In these challenging times,we could not be more pleased with the resilience of demand for our domestic K-12 education services," said Wanmei Li,Chief Executive Officer of Domestic K-12 School business. "In comparison to the third quarter and nine months of the last fiscal year,the average student enrolment increased by 9.2% and 10.6% year-over-year,respectively."
"Our students continued to achieve remarkable academic outcomes." Ms. Li continued,"As of May 22,2020,93.6% of students in the 2020 graduating class of our international schools in China have received offers from the top 50 institutions including 6 offers from Oxbridge,4 offers from University of Chicago,and 12 offers from UC Berkeley. Our collaboration with Country Garden remains very strong. As of the release date,we have entered into agreements with Country Garden and other partners to add 61 kindergartens and 8 schools to our school network with a total capacity of approximately 35,500 students in China."
"Since COVID-19 outbreak in January 2020,Complementary Education Service adjusted its business strategy promptly,moving some of the services online.The pandemic is now effectively under control in China,as people resume work and normal life,the class resumption rate of some business units has reached nearly 80%," said Zi Chen,Chief Executive Officer of Complementary Education Services. "While the full impact of this global pandemic remains uncertainand as such we will focus on the markets of whichthe epidemic has been contained,especially domestic market,to expand our business." Mr. Chen continued,"It's very important for us to seize the opportunity in this summer,and we will launch new products and services to strengthen our competitive market position."
"As a student-centered company,Bright Scholar has continuously been evolving to meet the changing needs of our students as we all navigate the unprecedented situation of COVID-19," Mr. He continued. "While these changes present challenges in the short term,we are focused on the significant opportunities presented to us by new technology and learning behaviour."
"In the quarter,we advanced two strategic initiatives to capitalize on these opportunities. Earlier in May,we announced the acquisition of 51% equity interests in Linstitute (the "institute"). The institute provides high-quality and outcome-focused online training services including Academic Olympiad,a comprehensive selection of academic courses,as well as other world-wide recognized international courses. In June,we announced the launch of our virtual "Future Global School" (the "virtual school") with online-merge-offline (OMO) model,which will be in operation from the beginning of FY21. The virtual school will deliver high quality international curriculums through an interactive and intelligent Learning Management System. It creates a new blended learning experience combining the best of classroom and online education that offers human connection between teachers and the students around the world. The expansion of our service offerings in utilizing technology to enhance access to high quality education will further strengthen our market leadership in the face of the pandemic as we usher a new age of learning."
Mr. He concluded,"While the pandemic is causing uncertainty and near-term impact,our revenue and profits continued to grow in the first 3 fiscal quarters and our long-term goals and strategy remain unchanged. We expect most of our business will bounce back stronger post COVID-19. Key secular megatrends driving our business remain intact and we remain committed to balancing operational discipline with continued investments in key strategic areas to drive long term growth."
"Our prudent financial management enabled us to have the financial flexibility to continue to invest in our business and return value to our shareholders. The Board of Directors has approved and declared a cash dividend of US$0.12 per ADS."
UNAUDITED FINANCIAL RESULTS FOR THE THIRDFISCAL QUARTER ENDEDMAY 31,2020
Revenue
Revenue
Third Fiscal Quarter
Ended May 31,2020
Third Fiscal Quarter
Ended May 31,2019
YoY
% Change
(RMB in million)
(% of Total Revenue)
(RMB in million)
(% of Total Revenue)
Domestic K-12 Schools
434.8
58.9%
578.4
83.5%
(24.8%)
International Schools
242.9
32.9%
225.9
32.6%
7.6%
Bilingual Schools
185.5
25.1%
195.1
28.2%
(4.9%)
Kindergartens
6.4
0.9%
157.4
22.7%
(96.0%)
Overseas Schools
210.4
28.5%
17.2
2.5%
1,126.6%
Complementary Education
94.2
12.6%
97.2
14.0%
(3.2%)
Total
739.4
100.0%
692.8
100.0%
6.7%
Revenue for the quarter was RMB739.4 million,representing a 6.7% increase from RMB692.8 million for the same period of the last fiscal year.The changes in revenue is primarily contributed by an increase in overseas schools revenue,which was acquired in July 2019,partially offset by the decreased revenue in kindergartens due to the temporary mandatory closure of schools.
Cost of Revenue
Cost of revenue for the quarter wasRMB447.4 million,representing a 19.4% increase fromRMB374.8 millionfor the same period of the last fiscal year.
Gross Profit,Gross Margin and Adjusted Gross Profit
Gross Profit
Third Fiscal Quarter
Ended May 31,2019
YoY
% Change
(RMB in million)
(Margin %)
(RMB in million)
(Margin %)
Domestic K-12 Schools
187.4
43.1%
279.5
48.3%
(33.0%)
International Schools
127.3
52.4%
109.9
48.7%
15.9%
Bilingual Schools
94.9
51.1%
88.5
45.4%
7.1%
Kindergartens
(34.8)
(547.2%)
81.1
51.5%
(143.0%)
Overseas Schools
62.8
29.9%
8.9
51.4%
612.3%
Complementary Education
41.8
44.4%
29.6
30.5%
40.8%
Total
292.0
39.5%
318.0
45.9%
(8.2%)
Gross profit for the quarter was RMB292.0 million,as compared to RMB318.0 million for the same period of the last fiscal year. Gross margin was 39.5% for the quarter,as compared to 45.9% for the same period of the last fiscal year.
Adjusted gross profit for the quarter was RMB302.9 million,as compared to RMB324.2 million for the same period of the last fiscal year. Adjusted gross margin was 41.0% for the quarter,as compared to 46.8% for the same period of the last fiscal year.
Selling,General and Administrative Expensesand Adjusted SG&A Expenses(6)
SG&A Expenses
Third Fiscal Quarter
Ended May 31,2019
YoY
% Change
(RMB in
million)
(% of Total
Revenue)
(RMB in
million)
(% of Total
Revenue)
Domestic K-12 Schools
70.3
9.6%
61.4
8.9%
14.5%
International Schools
36.0
4.9%
19.4
2.8%
85.4%
Bilingual Schools
21.1
2.9%
22.7
3.3%
(7.2%)
Kindergartens
13.2
1.8%
19.3
2.8%
(31.6%)
Overseas Schools
60.7
8.2%
11.2
1.6%
440.9%
Complementary Education
28.5
3.8%
41.0
5.9%
(30.7%)
Unallocated Corporate Expenses(7)
6.8
0.9%
38.4
5.5%
(82.3%)
Total
166.3
22.5%
152.0
21.9%
9.4%
Adj. SG&A Expenses(6)
Third Fiscal Quarter
Ended May 31,2019
YoY
% Change
(RMB in
million)
(% of Total
Revenue)
(RMB in m
illion)
(% of Total
Revenue)
Domestic K-12 Schools
69.2
9.4%
58.8
8.4%
17.9%
International Schools
36.2
4.9%
19.0
2.7%
90.5%
Bilingual Schools
20.4
2.8%
21.6
3.1%
(5.4%)
Kindergartens
12.6
1.7%
18.2
2.6%
(30.4%)
Overseas Schools
60.7
8.2%
11.2
1.6%
440.9%
Complementary Education
28.3
3.8%
40.5
5.8%
(30.1%)
Unallocated Corporate Expenses (8)
40.4
5.5%
24.9
3.7%
61.7%
Total
198.6
26.9%
135.4
19.5%
46.7%
______________________________________________________________________________________________
6. Adjusted SG&A expenses is defined as selling,general and administrative expenses excluding share-based compensation expense.
7. Unallocated corporate expenses are mainly from headquarter,including staff cost,share-based compensation expense and other office expenses.
8. Adjusted unallocated corporate expenses is defined as unallocated corporate expenses excluding share-based compensation expense.
Total SG&A expenses for the quarter were RMB166.3 million,representing a 9.4% increase from RMB152.0 million for the same period of the last fiscal year. Adjusted SG&A expenses for the quarter were RMB198.6 million,representing a 46.7% increase from RMB135.4 million for the same period of the last fiscal year.
Operating Income,Operating Income Margin and Adjusted Operating Income
Operating Income
Third Fiscal Quarter
Ended May 31,2019
YoY
% Change
(RMB in million)
(Margin %)
(RMB in million)
(Margin %)
Domestic K-12 Schools
117.5
27.0%
218.4
37.8%
(46.2%)
International Schools
91.8
37.8%
90.5
40.1%
1.3%
Bilingual Schools
74.0
39.9%
65.7
33.7%
12.6%
Kindergartens
(48.3)
(757.7%)
62.2
39.5%
(177.7%)
Overseas Schools
10.6
5.1%
(2.4)
(14.0%)
541.7%
Complementary Education
13.8
14.7%
(10.0)
(10.3%)
238.2%
Unallocated Corporate Expenses
(5.7)
-
(39.2)
-
85.3%
Total
136.2
18.4%
166.8
24.1%
(18.4%)
Operating income for the quarter was RMB136.2 million,as compared to RMB166.8 million for the same period of the last fiscal year. Operating margin was 18.4% for the quarter,as compared to 24.1% for the same period of the last fiscal year.
Adjusted operating income for the quarter was RMB114.7 million,as compared to RMB189.6 million for the same period of the last fiscal year. Adjusted operating margin was 15.5% for the quarter,as compared to 27.4% for the same period of the last fiscal year.
Net Income and Adjusted Net Income
Net income for the quarter wasRMB68.0 million,as compared to RMB137.4 million for the same period of the last fiscal year.
Adjusted net income for the quarter was RMB46.6 million,as compared to RMB160.2 million for the same period of the last fiscal year.
Earnings per ordinary share/ADS and Adjusted Earnings per ordinary share/ADS
Basic and diluted net income per ordinary share/ADS attributable to ordinary shareholders/ADS holders for the quarter wereRMB0.64 andRMB0.64,respectively,as compared to earnings per share of RMB1.13 and RMB1.13,for the same period of the last fiscal year.
Adjusted basic and diluted net income per ordinary share/ADS attributable to ordinary shareholders/ADS holders for the quarter wereRMB0.46 andRMB0.46,as compared to earnings per share of RMB1.32 and RMB1.32,for the same period of the last fiscal year.
Adjusted EBITDA
Adjusted EBITDA for the quarter was RMB164.5 million,as compared to RMB220.9 million for the same period of the last fiscal year.
UNAUDITED FINANCIAL RESULTSFOR THE NINE MONTHS ENDEDMAY 31,2020
Revenue
Revenue
Nine Months
Ended May 31,2019
YoY
% Change
(RMB in million)
(% of Total Revenue)
(RMB in million)
(% of Total Revenue)
Domestic K-12 Schools
1,552.1
57.1%
1,496.9
80.9%
3.7%
International Schools
695.5
25.6%
590.7
31.9%
17.7%
Bilingual Schools
573.2
21.1%
519.6
28.1%
10.3%
Kindergartens
283.4
10.4%
386.6
20.9%
(26.7%)
Overseas Schools
766.8
28.2%
33.3
1.8%
2,204.4%
Complementary Education
395.5
14.7%
321.2
17.3%
23.1%
Total
2,714.4
100.0%
1,851.4
100.0%
46.6%
Revenue for the period was RMB2,representing a 46.6% increase from RMB1,851.4 million for the same period of the last fiscal year.
Cost of Revenue
Cost of revenue for the period wasRMB1,642.1 million,representing a 51.1% increase fromRMB1,086.6 millionfor the same period of the last fiscal year.
Gross Profit,Gross Margin and Adjusted Gross Profit
Gross Profit
Nine Months
Ended May 31,2019
YoY
% Change
(RMB in million)
(Margin %)
(RMB in million)
(Margin %)
Domestic K-12 Schools
657.3
42.3%
633.1
42.3%
3.8%
International Schools
321.5
46.2%
252.2
42.7%
27.5%
Bilingual Schools
253.2
44.2%
205.9
39.6%
23.0%
Kindergartens
82.6
29.1%
175.0
45.3%
(52.8%)
Overseas Schools
281.2
36.7%
11.0
32.9%
2,467.3%
Complementary Education
133.8
33.8%
120.8
37.6%
10.7%
Total
1,072.3
39.5%
764.9
41.3%
40.2%
Gross profit for the period was RMB1,072.3 million,representing a 40.2% increase from RMB764.9 million for the same period of the last fiscal year. Gross margin was 39.5% for the period,as compared to 41.3% for the same period of the last fiscal year.
Adjusted gross profit for the period was RMB1,105.2 million,representing a 41.9% increase from RMB778.7 million for the same period of the last fiscal year. Adjusted gross margin was 40.7% for the period,as compared to 42.1% for the same period of the last fiscal year.
Selling,General and Administrative Expensesand Adjusted SG&A Expenses(6)
SG&A Expenses
Nine Months
Ended May 31,2019
YoY
% Change
(RMB in
million)
(% of Total
Revenue)
(RMB in
million)
(% of Total
Revenue)
Domestic K-12 Schools
213.2
7.8%
205.8
11.2%
3.6%
International Schools
85.3
3.1%
71.9
3.9%
18.6%
Bilingual Schools
74.1
2.7%
75.0
4.1%
(1.2%)
Kindergartens
53.8
2.0%
58.9
3.2%
(8.7%)
Overseas Schools
216.8
8.0%
14.5
0.8%
1,398.8%
Complementary Education
96.4
3.6%
83.4
4.5%
15.5%
Unallocated Corporate Expenses(7)
82.1
3.0%
128.2
6.9%
(36.0%)
Total
608.5
22.4%
431.9
23.4%
40.9%
Adj. SG&A Expenses(6)
Nine Months
Ended May 31,2019
YoY
% Change
(RMB in
million)
(% of Total
Revenue)
(RMB in
million)
(% of Total
Revenue)
Domestic K-12 Schools
209.4
7.7%
198.1
10.7%
5.7%
International Schools
85.0
3.1%
70.7
3.8%
20.3%
Bilingual Schools
72.2
2.7%
71.7
3.9%
0.6%
Kindergartens
52.2
1.9%
55.7
3.0%
(6.1%)
Overseas Schools
216.8
8.0%
14.5
0.8%
1,398.8%
Complementary Education
95.4
3.5%
79.5
4.3%
20.0%
Unallocated Corporate Expenses (8)
99.0
3.6%
94.8
5.1%
4.3%
Total
620.6
22.8%
386.9
20.9%
60.4%
______________________________________________________________________________________________
6. Adjusted SG&A expenses is defined as selling,share-based compensation expense and other office expenses.
8. Adjusted unallocated corporate expenses is defined as unallocated corporate expenses excluding share-based compensation expense.
Total SG&A expenses for the period were RMB608.5 million,representing a 40.9% increase from RMB431.9 million for the same period of the last fiscal year. Adjusted SG&A expenses for the period were RMB620.6 million,representing a 60.4% increase from RMB386.9 million for the same period of the last fiscal year.
Operating Income,Operating Income Margin and Adjusted Operating Income
Operating Income
Nine Months
Ended May 31,2019
YoY
% Change
(RMB in million)
(Margin %)
(RMB in million)
(Margin %)
Domestic K-12 Schools
446.5
28.8%
431.3
28.8%
3.5%
International Schools
236.7
34.0%
182.2
30.8%
29.9%
Bilingual Schools
179.8
31.4%
131.3
25.3%
36.9%
Kindergartens
30.0
10.6%
117.8
30.4%
(74.5%)
Overseas Schools
72.9
9.5%
(3.5)
(10.6%)
2,177.1%
Complementary Education
39.5
10.0%
45.3
14.1%
(12.9%)
Unallocated Corporate Expenses
(79.3)
-
(128.1)
-
38.0%
Total
479.6
17.7%
345.0
18.6%
39.0%
Operating income for the period was RMB479.6 million,representing a 39.0% increase from RMB345.0 million for the same period of the last fiscal year.Operating margin was 17.7% for the period,as compared to 18.6% for the same period of the last fiscal year.
Adjusted operating income for the period was RMB500.5 million,representing an 23.9% increase from RMB403.9 million for the same period of the last fiscal year. Adjusted operating margin was 18.4% for the period,as compared to 21.8% for the same period of the last fiscal year.
Net Income and Adjusted Net Income
Net income for the period wasRMB312.8 million,representing a 4.0% increase as compared to RMB300.9 million for the same period of the last fiscal year.
Adjusted net income for the period was RMB333.6 million,as compared to RMB359.8 million for the same period of the last fiscal year.
Earnings per ordinary share/ADS and Adjusted Earnings per ordinary share/ADS
Basic and diluted net income per ordinary share/ADS attributable to ordinary shareholders/ADS holders for the period wereRMB2.62 andRMB2.62,as compared to earnings per share of RMB2.38 and RMB2.38,for the same period of the last fiscal year.
Adjusted basic and diluted net income per ordinary share/ADS attributable to ordinary shareholders/ADS holders for the period wereRMB2.79 andRMB2.79,as compared to earnings per share of RMB2.86 and RMB2.86,for the same period of the last fiscal year.
Adjusted EBITDA
Adjusted EBITDA for the period was RMB669.4 million,representing a 37.3% increase from RMB487.6 million for the same period of the last fiscal year.
Cash and Working Capital
As of May 31,the Company's cash and cash equivalents and restricted cash were RMB2,092.0 million (US$293.2 million),as compared to RMB2,433.4 million as of February 29,2020. As of May 31,we also have short-term investments of RMB1,966.1 million (US$275.6 million). For the nine months ended May 31,the Company's capital expenditure was approximately RMB107.3 million,up 2.1% compared to the same period of the last fiscal year.
REAFFIRMS REVISED GUIDANCE FOR FISCAL YEAR ENDING AUGUST 31,2020
The Company reaffirms its revised guidance for the 2020 fiscal year and expects its revenue to be in a range of RMB3.37 billion and RMB3.47 billionfor the 2020 fiscal year,representing a year-over-year growth of 31% to 35%,and its average student enrolment to be between approximately 51,800 and 52,800,representing a year-over-year increase of 11% to 13%.
This guidance is based on the current market and operating conditions and reflects the Company's current and preliminary estimates of such market and operating conditions and market demand,which are all subject to change.
Conference Call
BEDU's management will host a conference call at8:00 am US Eastern Time (8:00 pm Beijing/Hong Kong Time) on July 23,2020 to discuss itsquarterlyresults and recent business activities.
To participate in the conference call,please dial the following number five to ten minutes prior to the scheduled conference call time:
Mainland China:
4001-201-203
Hong Kong:
852-301-84992
United States:
1-888-346-8982
Canada Toll Free:
1-855-669-9657
International:
1-412-902-4272
*No passcode is required for the call. Please request to join Bright Scholar Education Holdings Ltd.'s call as you dial in.
The Company will also broadcast a live audio webcast of the conference call. The webcast will be available athttp://ir.brightscholar.com/.
Following the earnings conference call,an archive of the call will be available by dialling:
United States:
1-877-344-7529
International:
1-412-317-0088
Canada Toll Free:
855-669-9658
Replay Passcode:
10145838
Replay End Date:
July 30,2020
CONVENIENCE TRANSLATION
TheCompany's business is primarily conducted in China and the significant majority of revenuegeneratedare denominated in Renminbi ("RMB"). However,periodic reports made to shareholders will include current period amounts translated into U.S.dollars using the prevailingexchange rates at the balance sheet date,for the convenience of readers. Translations of balances in the condensedconsolidated balance sheets,and the related condensed consolidatedstatements of operations,and cash flows from RMB into U.S. dollars as of and for the quarter and nine-month period ended May 31,2020 are solely for the convenience of the readers and were calculated at the rate of US$1.00=RMB7.1348,representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on May 29,2020. No representation is made that the RMB amounts could have been,or could be,converted,realized or settled into US$ at that rate on May 29,2020 or at any other rate.
NON-GAAP FINANCIAL MEASURES
In evaluating our business,we consider and use certain non-GAAP measures,including primarily adjusted EBITDA,adjusted net income/(loss),adjusted gross profit/(loss),adjusted SG&A,adjusted operating income/(loss),adjusted net earnings per share attributable to ordinary shareholders basic and dilutedas supplemental measures to review and assess our operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. We define adjusted gross profit/(loss) as gross profit/(loss) excluding amortization of intangible assets and adjusted gross margin as adjusted gross profit/(loss) divided by revenue. We define adjusted EBITDA as net income/(loss) excluding interest income/(expense),net; income tax expense/benefit; depreciation and amortization; share-based compensation expense,and adjusted EBITDA margin as adjusted EBITDA divided by revenue. We define adjusted net income/(loss) as net income/(loss) excluding share-based compensation expense and amortization of intangible assets and adjusted net margin as adjusted net income/(loss) divided by revenue. We define adjusted SG&A as selling,general and administration expense excluding share-based compensation expense. We define adjusted operating income/(loss) as net operating income/(loss) excluding share-based compensation expense and amortization of intangible assets and adjusted operating margin as adjusted operating income/(loss) divided by revenue. Additionally,we define adjusted net earnings per share attributable to ordinary shareholders,basic and diluted,as adjusted net income/(loss) attributable to ordinary shareholders (net income/(loss) to ordinary shareholders excluding share-based compensation expense and amortization of intangible assets) divided by the weighted average number of basic and diluted ordinary shares or American depositary shares (each an "ADS"),on an as-converted basis.
We incur amortization expense of intangible assets related to various acquisitions that have been made in recent years. These intangible assets are valued at the time of acquisition and are then amortized over a period of several years after the acquisition. We believe that exclusion of these expenses allows greater comparability of operating results that are consistent over time for the Company's newly-acquired and long-held business as the related intangibles does not have significant connection to the growth of the business. Therefore,we provide additional exclusion ofamortization of intangible assetsto redefine adjusted operating income/(loss),and adjusted net earnings per share attributable to ordinary shareholders,basic and diluted.
We present the non-GAAP financial measures because they are used by our management to evaluate our operating performance and formulate business plans. Such non-GAAP measures include adjusted EBITDA,adjusted net earnings per share attributable to ordinary shareholders basic and diluted. Non-GAAP financial measures enable our management to assess our operating results without considering the impact of non-cash charges,including depreciation and amortization and share-based compensation expense,and without considering the impact of non-operating items such as interest income/(expense),net; income tax expense/benefit and share-based compensation expense andamortization of intangible assets.We also believe that the use of these non-GAAP measures facilitates investors' assessment of our operating performance.
The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using these non-GAAP financial measures is that they do not reflect all items of income and expense that affect our operations. Interest income/(expense),net; income tax expense/benefit; depreciation and amortization; and share-based compensation expense,have been and may continue to be incurred in our business and are not reflected in the presentation of these non-GAAP measures,including adjusted EBITDA or adjusted net income/(loss). Further,these non-GAAP measures may differ from the non-GAAP information used by other companies,including peer companies,and therefore their comparability may be limited.
About Bright ScholarEducation Holdings Limited
Bright Scholar is a global premier education service company,dedicated to providing quality international education to global students and equipping them with the critical academic foundation and skillsets necessary to succeed in the pursuit of higher education. Bright Scholar also complements its international offerings with Chinese government-mandated curriculum for students who wish to maintain the option of pursuing higher education in China. As of May 31,Bright Scholar operated 80 schools across ten provinces in China and eight schools overseas,covering the breadth of K-12 academic needs of its students. In the nine months ended May 31,Bright Scholar had an average of 51,970 students enrolled at its schools.
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934,as amended,and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include,without limitation,the Company's business plans and development,which can be identified by terminology such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks,uncertainties and other factors,all of which are difficult to predict and many of which are beyond the Company's control,which may cause the Company's actual results,performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks,uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement as a result of new information,future events or otherwise,except as required under law.
IR Contact:
GCM Strategic Communications
Email:BEDU.IR@gcm.international
Media Contact:
Email:media@brightscholar.com
Phone: +86-757-6683-2507
BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
As of
August 31,
May 31,
2019
2020
RMB
RMB
USD
ASSETS
Current assets
Cash and cash equivalents
3,246,995
1,000,978
140,295
Restricted cash
18,019
1,089,596
152,716
Short-term investments(1)
241,270
1,966,139
275,570
Accounts receivable
21,528
50,296
7,049
Amounts due from related parties
10,652
22,606
3,168
Other receivables,deposits and other assets
177,150
222,168
31,139
Inventories
26,234
29,596
4,148
Total current assets
3,741,848
4,381,379
614,085
Restricted cash - non current
-
1,400
195
Property and equipment,net
899,510
1,070,112
149,985
Land use rights,net
88,204
86,608
12,139
Intangible assets,net
552,011
573,365
80,362
Goodwill
2,090,078
2,236,832
313,510
Long-term investments
28,455
13,491
1,891
Prepayment for construction contract
5,251
1,528
214
Deferred tax assets,net
30,333
19,777
2,772
Deposit for acquisition
338,585
-
-
Other non-current assets
13,362
12,840
1,800
Operating lease right-of-use assets
-
1,988,949
278,767
Total non-current assets
4,045,789
6,004,902
841,635
TOTAL ASSETS
7,787,637
10,386,281
1,455,720
_____________________________________________________________________________________________
1. As of May 31,part of short-term investments principal are guaranteed by related parties of the Company.
BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS-CONTINUED
(Amounts in thousands)
As of
August 31,
2019
2020
RMB
RMB
USD
LIABILITIES AND EQUITY
Current liabilities
Accounts payable (including accounts payable of the consolidated
VIEs without recourse to Bright Scholar Education of RMB
32,842 and RMB 24,629 as of August 31,2019 and May 31,
2020,respectively)
94,295
100,639
14,105
Amounts due to related parties (including amounts due to related
parties of the consolidated VIEs without recourse to Bright
Scholar Education of RMB 76,117 and RMB 44,536 as of
August 31,respectively)
110,038
78,448
10,995
Accrued expenses and other current liabilities (including accrued
expenses and other current liabilities of the consolidated VIEs
without recourse to Bright Scholar Education of RMB 364,734
and RMB 336,045as of August 31,
respectively)
615,082
604,309
84,696
Short term loan (including short term loan of the consolidated VIEs
without recourse to Bright Scholar Education of nil and RMB
7,500 as of August 31,respectively)
50,000
938,611
131,554
Income tax payable (including income tax payable of the
consolidated VIEs without recourse to Bright Scholar Education
of RMB 50,968 and RMB 62,423 as of August 31,2019 and
May 31,respectively)
93,479
136,452
19,125
Contract liabilities (including contract liabilities of the consolidated
VIEs without recourse to Bright Scholar Education of RMB
1,157,774 and RMB 629,446 as of August 31,2019 and May
31,respectively)
1,529,137
754,673
105,774
Refund liabilities (including refund liabilities of the consolidated
VIEs without recourse to Bright Scholar Education of RMB
19,132 and RMB 145,503 as of August 31,respectively)
20,259
211,779
29,683
Operating lease liabilities (including operating lease liabilities of
the consolidated VIEs without recourse to Bright Scholar
Education of nil and RMB 33,023 as of August 31,respectively)
-
204,603
28,677
Total current liabilities
2,512,290
3,029,514
424,609
Non-current portion of deferred revenue (including non-current
portion of deferred revenue of the consolidated VIEs without
recourse to Bright Scholar Education of nil and RMB 1,700 as
of August 31,respectively)
-
3,201
449
Deferred tax liabilities,net (including deferred tax liabilities of the
consolidated VIEs without recourse to Bright Scholar Education
of RMB 35,895 and RMB 32,704 as of August 31,respectively)
53,689
58,427
8,189
Other non-current liability due to related parties (including non-
current liabilities due to related parties of the consolidated VIEs
without recourse to Bright Scholar Education of RMB 21,736
and RMB 21,326 as of August 31,
respectively)
21,736
21,326
2,989
Other non-current liability due to third parties (including non-
current liabilities due to third parties of the consolidated VIEs
without recourse to Bright Scholar Education of RMB 7,621
and RMB 11,254 as of August 31,
respectively)
10,654
12,983
1,820
Bonds payable
2,106,000
2,098,981
294,189
Long term loan (including long term loan of the consolidated VIEs
without recourse to Bright Scholar Education of nil and RMB
77,respectively)
-
77,500
10,862
Operating lease liabilities (including operating lease liabilities of
the consolidated VIEs without recourse to Bright Scholar
Education of nil and RMB 231,516 as of August 31,respectively)
-
1,817,869
254,789
Total non-current liabilities
2,192,079
4,287
573,287
TOTAL LIABILITIES
4,704,369
7,119,801
997,896
______________________________________________________________________________________________
1. As of May 31,part of short-term investments principal are guaranteed by related parties of the Company.
As of
August 31,
2019
2020
RMB
RMB
USD
EQUITY
Share capital
8
8
1
Additional paid-in capital
2,105,189
1,160
275,573
Statutory reserves
64,945
64,945
9,103
Accumulated other comprehensive income
78,955
95,461
13,380
Accumulated retained earnings
472,339
784,078
109,895
Shareholders' equity
2,721,436
2,910,652
407,952
Non-controlling interests
361,832
355,828
49,872
Total equity
3,083,268
3,266,480
457,824
TOTAL LIABILITIES AND EQUITY
7,720
BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands,except for shares and per share data)
Three Months Ended May 31,
Nine Months Ended May 31,
2019
2020
2019
2020
RMB
RMB
USD
RMB
RMB
USD
Revenue
692,825
739,390
103,631
1,851,445
2,714,384
380,443
Cost of revenue
(374,784)
(447,427)
(62,711)
(1,086,561)
(1,642,122)
(230,157)
Gross profit
318,041
291,963
40,920
764,884
1,072,262
150,286
Selling,general and administrative expenses
(152,035)
(166,304)
(23,309)
(431,937)
(608,537)
(85,291)
Other operating income
815
10,497
1,471
12,007
15,883
2,226
Operating income
166,821
136,156
19,082
344,954
479,608
67,221
Interest income/(expense),net
10,081
(43,086)
(6,039)
32,290
(106,304)
(14,899)
Investment income
5,593
12,978
1,819
15,736
54,570
7,648
Other expenses
(2,376)
(2,546)
(356)
(5,803)
(2,676)
(375)
Income before income taxes and share of equity in loss of unconsolidated affiliates
180,119
103,502
14,506
387,177
425,198
59,595
Income tax expense
(42,672)
(35,477)
(4,972)
(86,276)
(112,168)
(15,721)
Share of equity in loss of unconsolidated affiliates
(33)
(19)
(3)
(17)
(252)
(35)
Net income
137,414
68,006
9,531
300,884
312,778
43,839
Net income/(loss) attributable to non-controlling
interests
761
(8,791)
(1,232)
7,861
(2,065)
(289)
Net income attributable to ordinary shareholders
136,653
76,797
10,763
293,023
314,843
44,128
Net earnings per share attributable to
ordinary shareholders
—Basic
1.13
0.64
0.09
2.38
2.62
0.37
—Diluted
1.13
0.64
0.09
2.38
2.62
0.37
Weighted average shares used in
calculating net earnings per ordinary share:
—Basic
120,901,587
119,981,400
119,400
122,908,466
120,331,525
120,525
—Diluted
121,010,564
119,996,539
120,525
BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Three Months Ended May 31,
2019
2020
2019
2020
RMB
RMB
USD
RMB
RMB
USD
Net cash (used in)/generated from operating activities
(78,206)
(211,310)
(29,617)
182,517
(111,576)
(15,639)
Net cash used in investing activities
(300,129)
(214,278)
(30,033)
(837,538)
(1,756,712)
(246,217)
Net cash (used in)/generated from financing activities
(124,658)
51,901
7,274
(467,221)
705,541
98,887
Effect of exchange rate changes on cash
37,175
32,223
4,516
15,241
(10,293)
(1,443)
Net change in cash and cash equivalents,
and restricted cash
(465,818)
(341,464)
(47,860)
(1,107,001)
(1,173,040)
(164,412)
Cash and cash equivalents,and restricted cash
at beginning of the period
2,522,898
2,433,438
341,066
3,164,081
3,265,014
457,618
Cash and cash equivalents,and restricted cash
at end of the period
2,057,080
2,091,974
293,206
2,206
Reconciliations of GAAP and Non-GAAP Results
(Amounts in thousands,
2019
2020
2019
2020
RMB
RMB
USD
RMB
RMB
USD
Gross profit
318,041
291,963
40,920
764,884
1,262
150,286
Add: Amortization of intangible assets
6,187
10,896
1,527
13,832
32,891
4,610
Adjusted gross profit
324,228
302,859
42,447
778,716
1,153
154,896
Operating income
166,821
136,156
19,082
344,954
479,608
67,221
Add: Share-based compensation expense
16,623
(32,336)
(4,532)
45,065
(12,037)
(1,687)
Add: Amortization of intangible assets
6,610
Adjusted operating income
189,631
114,716
16,077
403,851
500,462
70,144
Net income
137,414
68,006
9,531
300,884
312,778
43,839
Add: Share-based compensation expense
16,610
Adjusted net income
160,224
46,566
6,526
359,781
333,632
46,762
Net income attributable to ordinary shareholders
136,653
76,797
10,763
293,023
314,843
44,128
Add: Share-based compensation expense
16,610
Adjusted net income attributable to ordinary
shareholders
159,463
55,357
7,758
351,920
335,697
47,051
Net income
137,839
Less: Interest income/(expense),899)
Add: Income tax expense
42,672
35,477
4,972
86,276
112,168
15,721
Add: Depreciation and amortization
34,272
50,259
7,044
87,642
150,229
21,056
Add: Share-based compensation expense
16,687)
Adjusted EBITDA
220,900
164,492
23,054
487,577
669,442
93,828
Selling,general and administrative expenses
152,035
166,304
23,309
431,937
608,537
85,291
Less: Share-based compensation expense
16,687)
Adjusted selling,general and administrative expenses
135,412
198,640
27,841
386,872
620,574
86,978
Weighted averageshares used
in calculating earnings per ordinary share:
—Basic
120,525
—Diluted
121,525
Adjusted net earnings per share attributable
to ordinary shareholders
—Basic
1.32
0.46
0.06
2.86
2.79
0.39
—Diluted
1.32
0.46
0.06
2.86
2.79
0.39
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