AMBOW EDUCATION HOLDING LTD. Ambow Education Announces Second Quarter 2021 Financial Results
BEIJING, September 20, 2021 -- Ambow Education Holding Ltd. ('Ambow' or the 'Company') (NYSE American: AMBO), a leading cross-border career educational and technology service provider, today announced its unaudited financial and operating results for the three-month and six-month periods ended June 30, 2021.
'In the second quarter of 2021, we remained focused on technology-driven educational and career enhancement services, embracing the national strategy of improving collaborative and coordinated development across education, talents and industry and promoting high-quality economic growth,' noted Dr. Jin Huang, Ambow's President and Chief Executive Officer. 'We're pleased to report solid financial performance and further improved operating efficiency in the second quarter, highlighted by a 10.8% year-over-year growth in net revenues and an increase in gross margin of 530 basis points year-over-year to 44.1%.'
'Additionally, during the quarter, we made a number of strides that helped to expand our role as a leading innovator in the Chinese career education market. Building on our 20-year proven track record in the vocational and technical education sector, in June we cooperated with Nanchang Vocational University, one of the 15 first batch of undergraduate vocational education pilot schools in China, to co-found the Smart Manufacturing Modern Industrial College, underscoring China's pilot program for the integration between industry and education. Meanwhile, we formed a strategic cooperation with the Talent Exchange Center of the Ministry of Industry and Information Technology to strengthen international communication in various information technology-related disciplines. More excitingly, in July we launched an open education platform, OOOK, which incorporates our in-house developed technologies, enabling teachers to provide high-quality, cross-device live and recorded courses with immersive and interactive learning experiences. Notably, with its groundbreaking technology and solutions, OOOK won the '2021 Best Product Technology Innovation' award at the 10th Annual China Finance Summit.'
'Moving into the second half of 2021, we remain committed to delivering innovative educational products and services that will be at the forefront of the industry by continuingly capitalizing on technology trends. We are confident that our strategic efforts will continue to drive the long-term growth of our overall business,' concluded Dr. Huang.
Second Quarter 2021 Financial Highlights
| ● | Net revenues for the second quarter of 2021 increased by 10.8% to RMB 172.3 million (US$ 26.7 million) from RMB 155.5 million (US$ 22.0 million) in the same period of 2020. The increase was primarily due to the full business recovery from the impact of the COVID-19 pandemic. |
| ● | Gross profit for the second quarter of 2021 increased by 25.7% to RMB 75.9 million (US$ 11.8 million) from RMB 60.4 million (US$ 8.5 million) in the same period of 2020. Gross profit margin was 44.1%, compared with 38.8% for the first second quarter of 2020. The increases in gross profit and margin were mainly attributable to faster growth of net revenues in the period. |
| ● | Operating expenses for the second quarter of 2021 decreased by 7.8% to RMB 55.6 million (US$ 8.6 million) from RMB 60.3 million (US$ 8.5 million) in the same period of 2020. The decrease was primarily attributable to stringent expense controls to improve operating efficiency. |
| ● | Operating income for the second quarter of 2021 was RMB 20.3 million (US$ 3.1 million), compared to operating income of RMB 0.1 million (US$ 0.02 million) in the same period of 2020. |
| ● | Net income attributable to ordinary shareholders was RMB 22.4 million (US$ 3.5 million), or RMB 0.48 (US$ 0.07) per basic and diluted share, compared with a net income of RMB 4.8 million (US$ 0.7 million), or RMB 0.11 (US$ 0.02) per basic and diluted share, in the same period of 2020. |
| ● | As of June 30, 2021, Ambow maintained strong cash resources of RMB 257.7 million (US$ 39.9 million), comprised of cash and cash equivalents of RMB 168.4 million (US$ 26.1 million), short-term investments of RMB 87.6 million (US$ 13.5 million) and restricted cash of RMB 1.7 million (US$ 0.3 million). |
First Six Months 2021 Financial Highlights
| ● | Net revenues for the first six months of 2021 increased by 22.9% to RMB 301.9 million (US$ 46.8 million) from RMB 245.7 million (US$ 34.8 million) in the same period of 2020. The increase was primarily due to the full business recovery from the impact of the COVID-19 pandemic and higher revenue contribution from our new U.S. business. |
| ● | Gross profit for the first six months of 2021 increased by 67.5% to RMB 120.6 million (US$ 18.7 million) from RMB 72.0 million (US$ 10.2 million) in the same period of 2020. Gross profit margin was 39.9%, compared with 29.3% in the same period of 2020. The increases in gross profit and margin were mainly attributable to faster growth of net revenues in the period. |
| ● | Operating expenses for the first six months of 2021 slightly increased by 3.9% to RMB 115.4 million (US$ 17.9 million) from RMB 111.1 million (US$ 15.7 million) in the same period of 2020. |
| ● | Operating income for the six months of 2021 was RMB 5.2 million (US$ 0.8 million), compared to operating loss of RMB 39.2 million (US$ 5.5 million) in the same period of 2020. |
| ● | Net income attributable to ordinary shareholders was RMB 8.1 million (US$ 1.3 million), or RMB 0.17 (US$ 0.03) per basic and diluted share, compared with a net income of RMB 10.8 million (US$ 1.5 million), or RMB 0.25 (US$ 0.04) per basic and diluted share, in the same period of 2020. Excluding the one-time gain from bargain purchase of NewSchool of Architecture and Design, LLC of RMB 40.3 million (US$ 5.7 million), net loss for the first six months of 2020 was RMB 29.5 million (US$ 4.2 million) or RMB 0.68 (US$ 0.10) per basic and diluted share. |
The Company's financial and operating results for the second quarter and first half of 2021 can also be found on its Current Report on Form 6-K to be furnished with the U.S. Securities and Exchange Commission at www.sec.gov.
Regulatory Policy Update
The Standing Committee of the National People's Congress promulgated an amendment to the Implementation Rules of the Law for Promoting Private Education on April 7, 2021, which has been effective since September 1, 2021 (the 'Implementation Rules'). The Implementation Rules stipulated, among other provisions, that (1) sponsors of private schools may choose to establish schools as either non-profit or for-profit schools, but nine-year compulsory education schools cannot be operated as for-profit schools; (2) foreign-invested enterprises established in China and social organizations whose actual controllers are foreign parties shall not sponsor, participate in or actually control private schools that provide compulsory education; (3) group-based education organizations shall not control non-profit private schools through mergers and acquisitions, franchise agreements and contractual arrangements; and (4) related party transactions entered into by private schools shall be open, fair and just, and shall not harm national interests, school interests, or student or teacher interests. The Company is assessing the impact of the Implementation Rules and formulating different scenarios as compliance measures.
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 2021 are based on the effective exchange rate of 6.4566 as of June 30, 2021; 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 7.0651 as of June 30, 2020; all amounts translated from RMB to U.S. dollars as of December 31, 2020 are based on the effective exchange rate of 6.5250 as of December 31, 2020. 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. Fluctuations in financial highlights are based on RMB amounts.
About Ambow Education Holding Ltd.
Ambow Education Holding Ltd. is a leading cross-border career educational and technology service provider, 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 China and United States of America.
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, | |||||
2021 | 2020 | |||||
US$ | RMB | RMB | ||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | 26,086 | 168,424 | 118,821 | |||
Restricted cash | 256 | 1,650 | 824 | |||
Short-term investments, available for sale | 13,266 | 85,652 | 117,854 | |||
Short-term investments, held to maturity | 310 | 2,000 | 45,000 | |||
Accounts receivable, net | 3,289 | 21,234 | 20,972 | |||
Amounts due from related parties | 501 | 3,235 | 3,024 | |||
Prepaid and other current assets, net | 18,858 | 121,757 | 117,634 | |||
Total current assets | 62,566 | 403,952 | 424,129 | |||
Non-current assets: | ||||||
Property and equipment, net | 21,989 | 141,972 | 144,492 | |||
Land use rights, net | 262 | 1,693 | 1,715 | |||
Intangible assets, net | 8,403 | 54,252 | 54,808 | |||
Goodwill | 3,982 | 25,710 | 25,710 | |||
Deferred tax assets, net | 883 | 5,704 | 6,338 | |||
Operating lease right-of-use asset | 35,522 | 229,353 | 247,608 | |||
Finance lease right-of-use asset | 860 | 5,550 | 5,850 | |||
Other non-current assets | 21,805 | 140,786 | 139,067 | |||
Total non-current assets | 93,706 | 605,020 | 625,588 | |||
Total assets | 156,272 | 1,008,972 | 1,049,717 | |||
LIABILITIES | ||||||
Current liabilities: | ||||||
Short-term borrowings * | 3,020 | 19,498 | 10,000 | |||
Deferred revenue * | 21,106 | 136,274 | 163,699 | |||
Accounts payable * | 3,320 | 21,425 | 19,423 | |||
Accrued and other liabilities * | 31,473 | 203,207 | 209,590 | |||
Income taxes payable, current * | 28,669 | 185,105 | 184,638 | |||
Amounts due to related parties * | 429 | 2,771 | 2,543 | |||
Operating lease liability, current * | 7,620 | 49,198 | 53,702 | |||
Total current liabilities | 95,637 | 617,478 | 643,595 | |||
Non-current liabilities: | ||||||
Long-term borrowing | - | - | 9,594 | |||
Other non-current liabilities * | 47 | 304 | 292 | |||
Income taxes payable, non-current * | 5,316 | 34,322 | 34,763 | |||
Operating lease liability, non-current * | 32,196 | 207,877 | 220,319 | |||
Total non-current liabilities | 37,559 | 242,503 | 264,968 | |||
Total liabilities | 133,196 | 859,981 | 908,563 | |||
EQUITY | ||||||
Preferred shares | ||||||
(US$0.003 par value;1,666,667 shares authorized, nil issued and outstanding as of June 30, 2021 and December 31, 2020) | - | - | - | |||
Class A Ordinary shares | ||||||
(US$0.003 par value; 66,666,667 and 66,666,667 shares authorized, 41,948,276 and 41,923,276 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively) | 123 | 794 | 794 | |||
Class C Ordinary shares | ||||||
(US$0.003 par value; 8,333,333 and 8,333,333 shares authorized, 4,708,415 and 4,708,415 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively) | 14 | 90 | 90 | |||
Additional paid-in capital | 549,130 | 3,545,512 | 3,545,073 | |||
Statutory reserve | 652 | 4,210 | 4,210 | |||
Accumulated deficit | (528,302) | (3,411,035) | (3,419,146) | |||
Accumulated other comprehensive income | 1,844 | 11,907 | 12,101 | |||
Total Ambow Education Holding Ltd.'s equity | 23,461 | 151,478 | 143,122 | |||
Non-controlling interests | (385) | (2,487) | (1,968) | |||
Total equity | 23,076 | 148,991 | 141,154 | |||
Total liabilities and equity | 156,272 | 1,008,972 | 1,049,717 |
*All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets.
AMBOW EDUCATION HOLDING LTD.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(All amounts in thousands, except for share and per share data)
For the six months ended June 30, | For the three months ended June 30, | |||||||||||
2021 | 2021 | 2020 | 2021 | 2021 | 2020 | |||||||
US$ | RMB | RMB | US$ | RMB | RMB | |||||||
NET REVENUES | ||||||||||||
Educational program and services | 46,635 | 301,104 | 245,659 | 26,576 | 171,590 | 155,392 | ||||||
Intelligent program and services | 116 | 752 | 83 | 102 | 661 | 71 | ||||||
Total net revenues | 46,751 | 301,856 | 245,742 | 26,678 | 172,251 | 155,463 | ||||||
COST OF REVENUES | ||||||||||||
Educational program and services | (27,782) | (179,375) | (172,324) | (14,797) | (95,536) | (94,891) | ||||||
Intelligent program and services | (299) | (1,930) | (1,458) | (122) | (786) | (160) | ||||||
Total cost of revenues | (28,081) | (181,305) | (173,782) | (14,919) | (96,322) | (95,051) | ||||||
GROSS PROFIT | 18,670 | 120,551 | 71,960 | 11,759 | 75,929 | 60,412 | ||||||
Operating expenses: | ||||||||||||
Selling and marketing | (3,782) | (24,422) | (24,206) | (2,079) | (13,422) | (13,657) | ||||||
General and administrative | (13,220) | (85,357) | (84,243) | (5,949) | (38,412) | (45,042) | ||||||
Research and development | (868) | (5,602) | (2,698) | (582) | (3,757) | (1,567) | ||||||
Total operating expenses | (17,870) | (115,381) | (111,147) | (8,610) | (55,591) | (60,266) | ||||||
OPERATING INCOME (LOSS) | 800 | 5,170 | (39,187) | 3,149 | 20,338 | 146 | ||||||
OTHER INCOME (EXPENSES) | ||||||||||||
Interest income | 621 | 4,008 | 4,135 | 302 | 1,948 | 2,145 | ||||||
Foreign exchange gain (loss), net | 31 | 203 | 35 | (2) | (12) | 9 | ||||||
Other (loss) income, net | (183) | (1,180) | 1,552 | (37) | (240) | 146 | ||||||
Gain from deregistration of subsidiaries | 205 | 1,325 | 3,897 | 183 | 1,181 | 3,897 | ||||||
Gain on the bargain purchase | - | - | 40,273 | - | - | - | ||||||
Gain on sale of investment available for sale | 189 | 1,221 | 1,056 | 73 | 474 | 530 | ||||||
Total other income | 863 | 5,577 | 50,948 | 519 | 3,351 | 6,727 | ||||||
INCOME BEFORE INCOME TAX AND NON-CONTROLLING INTEREST | 1,663 | 10,747 | 11,761 | 3,668 | 23,689 | 6,873 | ||||||
Income tax expense | (489) | (3,155) | (1,623) | (236) | (1,526) | (2,362) | ||||||
NET INCOME | 1,174 | 7,592 | 10,138 | 3,432 | 22,163 | 4,511 | ||||||
Less: Net loss attributable to non-controlling interest | (80) | (519) | (708) | (43) | (277) | (296) | ||||||
NET INCOME ATTRIBUTABLE TO ORDINARY SHAREHOLDERS | 1,254 | 8,111 | 10,846 | 3,475 | 22,440 | 4,807 | ||||||
NET INCOME | 1,174 | 7,592 | 10,138 | 3,432 | 22,163 | 4,511 | ||||||
OTHER COMPREHENSIVE INCOME, NET OF TAX | ||||||||||||
Foreign currency translation adjustments | (65) | (417) | 8,328 | (82) | (532) | 7,895 | ||||||
Unrealized gains on short-term investments | ||||||||||||
Unrealized holding gains arising during period | 166 | 1,075 | 940 | 76 | 493 | 499 | ||||||
Less: reclassification adjustment for gains included in net income | 132 | 852 | 668 | 48 | 308 | 381 | ||||||
Other comprehensive (loss) income | (31) | (194) | 8,600 | (54) | (347) | 8,013 | ||||||
TOTAL COMPREHENSIVE INCOME | 1,143 | 7,398 | 18,738 | 3,378 | 21,816 | 12,524 | ||||||
Net income per share - basic and diluted | 0.03 | 0.17 | 0.25 | 0.07 | 0.48 | 0.11 | ||||||
Weighted average shares used in calculating basic and diluted net income per share | 46,642,280 | 46,642,280 | 43,577,168 | 46,648,495 | 46,648,495 | 43,583,418 |
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 | ||||||||||
Accumulated | ||||||||||
Class A Ordinary | Class C Ordinary | Additional | 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, 2021 | 41,923,276 | 794 | 4,708,415 | 90 | 3,545,073 | 4,210 | (3,419,146) | 12,101 | (1,968) | 141,154 |
Share-based compensation | - | - | - | - | 219 | - | - | - | - | 219 |
Issuance of ordinary shares for restricted stock award | 12,500 | 0 | - | - | (0) | - | - | - | - | - |
Foreign currency translation adjustment | - | - | - | - | - | - | - | 115 | - | 115 |
Unrealized gain on investment, net of income taxes | - | - | - | - | - | - | - | 38 | - | 38 |
Net loss | - | - | - | - | - | - | (14,329) | - | (242) | (14,571) |
Balance as of March 31, 2021 | 41,935,776 | 794 | 4,708,415 | 90 | 3,545,292 | 4,210 | (3,433,475) | 12,254 | (2,210) | 126,955 |
Share-based compensation | - | - | - | - | 220 | - | - | - | - | 220 |
Issuance of ordinary shares for restricted stock award | 12,500 | 0 | - | - | (0) | - | - | - | - | - |
Foreign currency translation adjustment | - | - | - | - | - | - | - | (532) | - | (532) |
Unrealized gain on investment, net of income taxes | - | - | - | - | - | - | - | 185 | - | 185 |
Net income/(loss) | - | - | - | - | - | - | 22,440 | - | (277) | 22,163 |
Balance as of June 30, 2021 | 41,948,276 | 794 | 4,708,415 | 90 | 3,545,512 | 4,210 | (3,411,035) | 11,907 | (2,487) | 148,991 |
Balance as of January 1, 2020 | 38,858,199 | 730 | 4,708,415 | 90 | 3,508,745 | 20,185 | (3,371,815) | 6,341 | (680) | 163,596 |
Share-based compensation | - | - | - | - | 238 | - | - | - | - | 238 |
Issuance of ordinary shares for restricted stock award | 12,500 | 0 | - | - | (0) | - | - | - | - | - |
Foreign currency translation adjustment | - | - | - | - | - | - | - | 433 | - | 433 |
Unrealized gain on investment, net of income taxes | - | - | - | - | - | - | - | 154 | - | 154 |
Impact on adoption of ASC 326 | - | - | - | - | - | - | (594) | - | - | (594) |
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 | - | (296) | 4,511 |
Balance as of June 30, 2020 | 38,883,199 | 731 | 4,708,415 | 90 | 3,509,224 | 4,712 | (3,346,090) | 14,941 | (1,388) | 182,220 |
Discussion of Segment Operations
(All amounts in thousands)
For the six months ended June 30, | For the three months ended June 30, | |||||||||||
2021 | 2021 | 2020 | 2021 | 2021 | 2020 | |||||||
US$ | RMB | RMB | US$ | RMB | RMB | |||||||
NET REVENUES | ||||||||||||
K-12 Schools | 27,205 | 175,650 | 126,800 | 16,223 | 104,748 | 85,389 | ||||||
CP&CE Programs | 19,546 | 126,206 | 118,942 | 10,455 | 67,503 | 70,074 | ||||||
Total net revenues | 46,751 | 301,856 | 245,742 | 26,678 | 172,251 | 155,463 | ||||||
COST OF REVENUES | ||||||||||||
K-12 Schools | (15,161) | (97,886) | (74,542) | (8,100) | (52,297) | (41,113) | ||||||
CP&CE Programs | (12,920) | (83,419) | (99,240) | (6,819) | (44,025) | (53,938) | ||||||
Total cost of revenues | (28,081) | (181,305) | (173,782) | (14,919) | (96,322) | (95,051) | ||||||
GROSS PROFIT | ||||||||||||
K-12 Schools | 12,044 | 77,764 | 52,258 | 8,123 | 52,451 | 44,276 | ||||||
CP&CE Programs | 6,626 | 42,787 | 19,702 | 3,636 | 23,478 | 16,136 | ||||||
Total gross profit | 18,670 | 120,551 | 71,960 | 11,759 | 75,929 | 60,412 |
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Ambow Education Holding Ltd. published this content on 20 September 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 September 2021 12:11:01 UTC.
