Ambow Education Announces Second Quarter 2020 Financial Results
BEIJING,Sept.15,2020 -- 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 six-month periods ended June 30,2020.
Dr. Jin Huang,Ambow's President and Chief Executive Officer,said,"Sincevarious measures that the Chinese government implemented to constrain the COVID-19 outbreak were gradually relaxed during the second quarter,the majority of our schools,tutoring centers and training offices reopened with operations gradually returning to normalcy. As such,our second quarter financial performance significantly improved on a quarter-over-quarter basis,highlighted by a 2,600 basis points increase in Gross Margin. We maintained healthy operating efficiency and profitability with a positive net income in the first half of 2020,demonstrating our capability to navigate the dynamic market during the unprecedented challenging times. Striving for increasing enrollment across all Ambow programs while also deploying stringent cost controls,we are confident in our ability to drive profitable growth and strengthen our leadership position in the career enhancement market in China."
"Amid pandemic-related and broad-based economic challenges,we remain focused on delivering high quality educational technologies and services to address personalized learning needs in a dynamic learning environment. With the outbreak of COVID-19,the integration of technology into education was further accelerated,which has significantly boosted the demand for online-based education from both students and professionals. To enhance the learning and teaching experience in the COVID-19 environment,Ambow rolled out its next-generation online-to-offline education SaaS platform,Huanyujun Education Hub,which is equipped with our proprietary technologies including hologram live streaming,AI and IoT,all of which are built on our cloud-based infrastructure. Simultaneously drawing upon our extensive educational resources and assets spanning the globe,we believe this mobile-based platform is uniquely positioned to exploit the booming trend in the e-learning industry across a wide spectrum of educational scenarios," concluded Dr. Huang.
Second Quarter 2020 Financial Highlights
Net revenues for the second quarter of 2020 decreased by 8.7% to US$22.0 million from US$24.1 million in the same period of 2019. The decrease was primarily due to a reduction in the recognition of deferred revenue in the period as a result of the one-month extension of spring semester 2020 at the Company's K-12 schools,which used to concluded at the end of June,and fewer services provided at the Company's tutoring centers and training offices as a result of social distance and counter measures to COVID-19. This was partially offset by revenue from NewSchool of Architecture and Design,LLC ("NewSchool"),acquired in the first quarter of 2020.
Gross profit for the second quarter of 2020 decreased by 14.1% to US$8.5 million from US$9.9 million in the same period of 2019. Gross profit margin was 38.6%,compared with 41.1% for the second quarter of 2019. The decrease in gross profit and margin was mainly attributable to the decrease in net revenues.
Operating expenses for the secondquarter of 2020 slightly increased by 1.2% to US$8.5 million from US$8.4 million for the same period of 2019.
Net income attributable to ordinary shareholders was US$0.7 million,or US$0.02 per basic and diluted share,compared with a net income of US$1.3 million,or US$0.03 per basic and diluted share,for the second quarter of 2019.
As of June 30,2020,Ambow maintained strong cash resources of US$27.2 million,comprised of cash and cash equivalents of US$13.9 million and short-term investments of US$13.3 million.
First Six Months 2020 Financial Highlights
Net revenues for the first six months of 2020 decreased by 15.9% to US$34.8 million from US$41.4 million in the same period of 2019. The decrease was primarily due to due to a reduction in the recognition of deferred revenue in the period as a result of an one-month extension of spring semester 2020 at the Company's K-12 schools,which used to conclude at the end of June,and fewer services provided at the Company's tutoring centers and training offices,as operations during the period were temporarily suspended due to the outbreak of COVID-19. This was partially offset by revenue from NewSchool,acquired in the period.
Gross profit for the first six months of 2020 decreased by 34.6% to US$10.2 million from US$15.6 million in the same period of 2019. Gross profit margin was 29.3%,compared with 37.7% for the first six months of 2019. The decrease in gross profit and margin was mainly attributable to the decrease of net revenues.
Operating expenses for the first six months of 2020 decreased by 8.7% to US$15.7 million from US$17.2 million for the same period of 2019. The decrease was primarily attributable to lower expenditures due to the temporary suspension of operations at schools and tutoring centers in the period as part of the national pandemic containment effort,as well as stringent expense controls to improve operating efficiency.
Net income attributable to ordinary shareholders was US$1.5 million,or US$0.04 per basic and diluted share,compared with a net loss of US$2.2 million,or US$0.05 per basic and diluted share,for the first six months of 2019.
The Company's secondquarter and first half 2020 financial and operating results can also be found on its Form 6-K filed with the U.S. Securities and Exchange Commission atwww.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 second quarter and first half of 2020 are based on the effective exchange rate of 7.0651as of June 30,2020; all amounts translated from RMB to U.S. dollars for the second quarter and first half of 2019 are based on the effective exchange rate of 6.8650as of June 28,2019; all amounts translated from RMB to U.S. dollars as of December 31,2019 are based on the effective exchange rate of 6.9618as 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 June 30,
As of December 31,
2020
2019
US$
RMB
RMB
ASSETS
Current assets:
Cash and cash equivalents
13,935
98,455
157,600
Restricted cash
2,004
14,160
-
Short term investments,available for sale
11,160
78,849
57,487
Short term investments,held to maturity
2,123
15,000
31,000
Accounts receivable,net
2,914
20,589
17,939
Amounts due from related parties
1,030
7,274
2,318
Prepaid and other current assets,net
21,721
153,464
133,296
Total current assets
54,887
387,791
399,640
Non-current assets:
Property and equipment,159
149,489
157,463
Land use rights,net
246
1,737
1,759
Intangible assets,net
8,515
60,156
56,607
Goodwill
8,678
61,313
60,353
Deferred tax assets,net
636
4,497
10,195
Operating lease right-of-use asset
42,476
300,100
257,361
Finance lease right-of-use asset
870
6,150
6,450
Other non-current assets,net
12,419
87,743
70,971
Total non-current assets
94,999
671,185
621,159
Total assets
149,886
1,058,976
1,020,799
LIABILITIES
Current liabilities:
Short-term borrowings
1,473
10,409
-
Deferred revenue *
16,328
115,358
165,111
Accounts payable *
1,561
11,047
14,718
Accrued and other liabilities *
27,428
193,780
192,957
Income taxes payable,current *
26,787
189,253
180,715
Amounts due to related parties *
525
3,706
1,971
Operating lease liability,current *
8,254
58,314
53,512
Total current liabilities
82,356
581,867
608,984
Non-current liabilities:
Income taxes payable,non-current *
4,785
33,803
32,152
Operating lease liability,non-current *
36,954
261,087
216,067
Total non-current liabilities
41,739
294,890
248,219
Total liabilities
124,095
876,757
857,203
EQUITY
Preferred shares
(US$0.003 par value;1,666,667 shares authorized,
nil issued and outstanding as of
December31,2019 and June 30,2020)
-
-
-
Class A Ordinary shares
(US$0.003 par value; 66,667 and
66,38,858,199
and 38,883,199 shares issued and
outstanding as of December31,2019 and
June 30,respectively)
103
731
730
Class C Ordinary shares
(US$0.003 par value; 8,333,333 and 8,333
shares authorized,4,708,415 and 4,415
shares issued and outstanding as of
December31,
respectively)
13
90
90
Additional paid-in capital
496,698
3,509,224
3,508,745
Statutory reserve
667
4,712
20,185
Accumulated deficit
(473,608)
(3,346,090)
(3,371,815)
Accumulated other comprehensive income
2,115
14,941
6,341
Total Ambow Education Holding Ltd.'s equity
25,988
183,608
164,276
Non-controlling interests
(197)
(1,389)
(680)
Total equity
25,791
182,219
163,596
Total liabilities and equity
149,799
* All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of
consolidating these VIEs do not represent additional claims on the Company's general assets.
AMBOW EDUCATION HOLDING LTD.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands,except for share and per share data)
For the six months ended June 30,
For the three months ended June 30,
2020
2020
2019
2020
2020
2019
US$
RMB
RMB
US$
RMB
RMB
NET REVENUES
Educational program and
services
34,771
245,659
282,638
21,994
155,392
164,453
Intelligent program and
services
12
83
1,366
10
71
905
Total net revenues
34,783
245,742
284,004
22,004
155,463
165,358
COST OF REVENUES
Educational program and
services
(24,391)
(172,324)
(172,520)
(13,431)
(94,891)
(94,323)
Intelligent program and
services
(206)
(1,458)
(4,709)
(23)
(160)
(2,851)
Total cost of revenues
(24,597)
(173,782)
(177,229)
(13,454)
(95,051)
(97,174)
GROSS PROFIT
10,186
71,960
106,775
8,550
60,412
68,184
Operating expenses:
Selling and marketing
(3,426)
(24,206)
(25,171)
(1,933)
(13,657)
(11,083)
General and administrative
(11,924)
(84,243)
(92,394)
(6,375)
(45,042)
(46,776)
Research and development
(382)
(2,698)
(468)
(222)
(1,567)
(300)
Total operating expenses
(15,732)
(111,147)
(118,033)
(8,530)
(60,266)
(58,159)
OPERATING (LOSS)
INCOME
(5,546)
(39,187)
(11,258)
20
146
10,025
OTHER INCOME
(EXPENSES)
Interest income
585
4,135
1,520
304
2,145
1,132
Foreign exchange gain,net
5
35
1
1
9
32
Other income (loss),net
220
1,552
186
21
146
(474)
Gain from deregistration of
subsidiaries
552
3,897
1,279
552
3,897
-
Gain on the bargain purchase
5,700
40,273
-
-
-
-
Gain on sale of investment
available for sale
149
1,056
419
75
530
140
Total other income
7,211
50,948
3,405
953
6,727
830
INCOME (LOSS) BEFORE
INCOME TAX AND NON-
CONTROLLING
INTEREST
1,665
11,761
(7,853)
973
6,873
10,855
Income tax expense
(230)
(1,623)
(7,398)
(334)
(2,362)
(2,257)
NET INCOME (LOSS)
1,435
10,138
(15,251)
639
4,511
8,598
Less: Net loss attributable to
non-controlling interest
(100)
(708)
(273)
(42)
(296)
(180)
NET INCOME (LOSS)
ATTRIBUTABLE TO
ORDINARY
SHAREHOLDERS
1,535
10,846
(14,978)
681
4,807
8,778
NET INCOME (LOSS)
1,598
OTHER
COMPREHENSIVE
INCOME,NET OF TAX
Foreign currency translation
adjustments
1,179
8,328
(3,174)
1,117
7,895
(746)
Unrealized gains on short term
investments
Unrealized holding gains
arising during period
133
940
700
71
499
420
Less: reclassification
adjustment for gains
included in net income
95
668
452
54
381
247
Other comprehensive income
(loss)
1,217
8,600
(2,926)
1,134
8,013
(573)
TOTAL
COMPREHENSIVE
INCOME (LOSS)
2,652
18,738
(18,177)
1,773
12,524
8,025
Net income (loss) per share -
basic
0.04
0.25
(0.34)
0.02
0.11
0.20
Net income (loss) per share -
diluted
0.04
0.25
(0.34)
0.02
0.11
0.20
Weighted average shares used
in calculating basic net
income (loss) per share
43,577,168
43,469,610
43,583,418
43,503,109
Weighted average shares used
in calculating diluted net
income (loss) per share
43,647,645
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
38,199
730
4,415
90
3,745
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 March31,870,699
730
4,983
20,366,370)
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 June30,199
731
4,224
4,712
(3,090)
14,941
(1,389)
182,219
Balance as of January 1,
2019
38,756,289
728
4,507,123
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 March31,784,935
729
4,994
20,295,594)
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 June30,804,032
729
4,260
20,286,816)
5,379
(1,557)
246,234
Discussion of Segment Operations
(All amounts in thousands)
For the six months ended June 30,
2020
2020
2019
2020
2020
2019
US$
RMB
RMB
US$
RMB
RMB
NET REVENUES
K-12 Schools
17,948
126,800
150,958
12,086
85,389
87,165
CP&CE Programs
16,835
118,942
133,046
9,918
70,074
78,193
Total net revenues
34,358
COST OF REVENUES
K-12 Schools
(10,550)
(74,542)
(90,093)
(5,820)
(41,113)
(47,797)
CP&CE Programs
(14,047)
(99,240)
(87,136)
(7,634)
(53,938)
(49,377)
Total cost of revenues
(24,174)
GROSS PROFIT
K-12 Schools
7,398
52,258
60,865
6,266
44,276
39,368
CP&CE Programs
2,788
19,702
45,910
2,284
16,136
28,816
Total gross profit
10,184
