Ambow Education Announces First Quarter 2019 Financial Results

BEIJING, June 5, 2019 /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 period ended March 31, 2019.

First Quarter 2019 Financial Highlights

  • Net revenues for the first quarter of 2019 increased by 6.0% to US$17.7 million from US$16.7 million in the same period of 2018. This increase was due primarily to higher student enrollment for the 2018-2019 academic year.
  • Gross profit for the first quarter of 2019 slightly increased to US$5.8 million from US$5.6 million in the same period of 2018. Gross profit margin was 32.8%, compared with 33.5% for the first quarter of 2018.
  • Operating expenses for the first quarter of 2019 increased by 27.1% to US$8.9 million from US$7.0 million for the same period of 2018. The increase of operating expenses was primarily due to the additional investments to set up education-to-employment service centers.
  • Net loss attributable to ordinary shareholders was US$3.5 million, or US$0.08 per basic and diluted share, compared with a net loss of US$1.1 million, or US$0.03 per basic and diluted share, for the first quarter of 2018. The first quarter is always a traditionally soft quarter for the Company due to school closures for winter break.
  • As of March 31, 2019, Ambow maintained strong cash resources of US$48.3 million, comprised of cash and cash equivalents of US$23.3 million, short-term investments of US$20.9 million, and restricted cash of US$4.1 million.
  • As of March 31, 2019, the Company's deferred revenue balance was US$22.1 million, representing a 22.1% increase from US$18.1 million as of December 31, 2018, mainly attributable to the tuition and course fees collected in the K-12 business segment for the 2018-2019 academic year, the increase in deferred revenue collected from our service centers and the tuition fees collected at Bay State College for the spring semester of 2019.

"2019 will be a transformational year for Ambow, we're excited over our 2019 outlook and the opportunities afforded to us in the cross-border education market. Combining the momentum of the last 12 months; from going public to the launches of a college cross-border program and mutual credit recognition alliance between Chinese and U.S. colleges, we have the necessary infrastructure in place to further our mission, which is to address critical demands in the education market and bridge the gaps between higher education and career aspirations of students," noted Dr. Jin Huang, Ambow's President and Chief Executive Officer.

"We continue to strengthen capabilities in the education technology and service space, and expand our international reach through a series of agreements and program launches including: the signing of a collaborative agreement with ITU to jointly develop a cross-border U.S. master's degree curriculum and a partnership with GCQA to establish a credit recognition alliance between Chinese and U.S. colleges. We are pleased to have set a good foundation in order to build up progressive developments for the year ahead," concluded Dr. Huang.

The Company's first quarter 2019 financial and operating results can also be found on its Form 6-K filed with the U.S. Securities and Exchange Commission at www.sec.gov.

Adoption of ASC 842 Leases

On February 25, 2016, the FASB issued ASU 2016-02, Leases. The new standard creates Topic 842, Leases, in the FASB Accounting Standard Codification and supersedes FASB ASC 840, Leases. It requires a lessee to recognize the assets and liabilities that arise from operating and finance leases. Accordingly a lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset ("ROU asset") representing its right to use the underlying asset for the lease term. We adopted this guidance in the first quarter of 2019 using the modified retrospective approach, and elected the optional transition method that permits adoption of the new standard prospectively, as of the effective date, without adjusting comparative periods presented. Adoption of the standard resulted in the recognition of US$5.7 million of operating lease ROU asset current, US$0.1 million of finance lease ROU asset current, US$15.0 million of operating lease ROU asset non-current, US$0.9 million of finance lease ROU asset non-current, US$5.0 million of operating lease liabilities current, and US$16.9 million of operating lease liabilities non-current on the consolidated balance sheet as of March 31, 2019 at adoption related to classrooms, dormitories, service campus and centers, and other operational and office space.

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 first quarter of 2019 are based on the effective exchange rate of 6.7112 as of March 29, 2019; all amounts translated from RMB to U.S. dollars for the first quarter of 2018 are based on the effective exchange rate of 6.2726 as of March 30, 2018; all amounts translated from RMB to U.S. dollars as of December 31, 2018 are based on the effective exchange rate of 6.8755 as of December 31, 2018. 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 30 out of the 31 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

Email: 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 March 31,



As of December 31,









2019



2018









US$



RMB



RMB



ASSETS

















Current assets:

















Cash and cash equivalents





23,311



156,447



211,436



Restricted cash





4,136



27,757



30,072



Short term investments, available for sale





7,496



50,308



47,208



Short term investments, held to maturity





13,410



90,000



70,000



Accounts receivable, net





2,523



16,932



18,132



Amounts due from related parties





235



1,577



1,105



Prepaid and other current assets, net





20,134



135,125



134,770



Loan receivable, current





6,359



42,677



42,677



Operating lease right-of-use asset, current





5,650



37,915



-



Finance lease right-of-use asset, current





89



600



-



Total current assets





83,343



559,338



555,400



Non-current assets:

















Property and equipment, net





23,245



156,005



165,933



Land use rights, net





267



1,793



1,804



Intangible assets, net





8,813



59,145



92,412



Goodwill





10,902



73,166



73,166



Deferred tax assets, net





1,346



9,038



10,240



Operating lease right-of-use asset, non-current





15,016



100,778



-



Finance lease right-of-use asset, non-current





939



6,300



-



Other non-current assets, net





2,594



17,408



11,264





















Total non-current assets





63,122



423,633



354,819





















Total assets





146,465



982,971



910,219





















LIABILITIES

















Current liabilities:

















Deferred revenue  *





22,131



148,523



124,250



Accounts payable  *





1,827



12,277



13,583



Accrued and other liabilities  *





27,121



181,881



256,325



Borrow from third party, current 





6,000



40,401



41,179



Income taxes payable  *





31,423



210,883



207,114



Amounts due to related parties  *





434



2,911



2,696



Operating lease liability, current  *





5,046



33,865



-



Total current liabilities





93,982



630,741



645,147



Non-current liabilities:

















Consideration payable for acquisitions





197



1,322



1,322



Other non-current liabilities





-



-



979



Operating lease liability, non-current  *





16,907



113,467



-





















Total non-current liabilities





17,104



114,789



2,301





















Total liabilities





111,086



745,530



647,448





















EQUITY

















Preferred shares

















(US$ 0.003 par value;1,666,667 shares authorized,

nil issued and outstanding as of December 31,

2018 and March 31, 2019) 





-



-



-



Class A Ordinary shares

















(US$0.003 par value; 66,666,667 and

     66,666,667 shares authorized, 38,756,289

     and 38,784,935 shares issued and

     outstanding as of December 31, 2018 and

     March 31, 2019, respectively)





109



729



728



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

     December 31, 2018 and March 31, 2019,

     respectively)





13



90



90



Additional paid-in capital





522,707



3,507,994



3,507,123



Statutory reserve





3,002



20,149



20,149



Accumulated deficit





(491,059)



(3,295,594)



(3,271,838)



Accumulated other comprehensive income





887



5,952



8,305



Total Ambow Education Holding Ltd.'s equity





35,659



239,320



264,557



Non-controlling interests





(280)



(1,879)



(1,786)



Total equity





35,379



237,441



262,771



Total liabilities and equity





146,465



982,971



910,219





















*  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 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, 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











































































































































































Balance as of January 1,

     2018







34,206,939







640







4,708,415







90







3,456,307







20,036







(3,316,715)





6,876









(1,275)







165,959



Share-based compensation







-







-







-







-







616







-







-





-









-







616



Issuance of ordinary shares

     for restricted stock award







30,187







1







-







-







(1)







-







-





-









-







-



Foreign currency translation

     adjustment







-







-







-







-







-







-







-





3,276









-







3,276



Unrealized gain on

     investment, net of income

     taxes







-







-







-







-







-







-







-





64









-







64



Deregistration of

     subsidiaries







-







-







-







-







-







-







-





-









(9)







(9)



Net (loss)/income







-







-







-







-







-







-







(7,062)





-









93







(6,969)



Balance as of March 31,

     2018







34,237,126







641







4,708,415







90







3,456,922







20,036







(3,323,777)





10,126









(1,191)







162,937











































































































































































 

 

AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(All amounts in thousands, except for share and per share data)







For the three months ended March 31,





2019



2019



2018





US$



RMB



RMB















NET REVENUES













 Educational program and services



17,610



118,185



101,411

Intelligent program and services



69



461



3,368

Total net revenues



17,679



118,646



104,779

COST OF REVENUES













 Educational program and services



(11,652)



(78,197)



(68,076)

 Intelligent program and services



(277)



(1,858)



(1,426)

Total cost of revenues



(11,929)



(80,055)



(69,502)















GROSS PROFIT



5,750



38,591



35,277

Operating expenses:













Selling and marketing



(2,099)



(14,088)



(10,205)

General and administrative



(6,797)



(45,618)



(33,292)

Research and development



(25)



(168)



(443)

Total operating expenses



(8,921)



(59,874)



(43,940)















OPERATING LOSS



(3,171)



(21,283)



(8,663)















OTHER INCOME (EXPENSES)













Interest income



58



388



2,090

Foreign exchange gain (loss), net



(5)



(31)



14

Other income, net



98



660



214

Gain from deregistration of subsidiaries



191



1,279



2,797

Gain on sale of investment available for sale



42



279



298

Total other income



384



2,575



5,413















LOSS BEFORE INCOME TAX AND NON-

  CONTROLLING INTEREST



(2,787)



(18,708)



(3,250)

Income tax expense



(766)



(5,141)



(3,719)















NET LOSS



(3,553)



(23,849)



(6,969)

Less: Net (loss)/ income attributable to non-

      controlling interest



(14)



(93)



93















NET LOSS ATTRIBUTABLE TO

   ORDINARY SHAREHOLDERS



(3,539)



(23,756)



(7,062)















NET LOSS



(3,553)



(23,849)



(6,969)















OTHER COMPREHENSIVE INCOME, NET

   OF TAX













Foreign currency translation adjustments



(362)



(2,428)



3,276

Unrealized gains on short term investments













  Unrealized holding gains arising during period



42



280



207

  Less: reclassification adjustment for gains

  included in net income



31



205



143

Other comprehensive (loss)/income



(351)



(2,353)



3,340















TOTAL COMPREHENSIVE LOSS



(3,904)



(26,202)



(3,629)

 

Net loss per share - basic and diluted



(0.08)



(0.55)



(0.18)















Weighted average shares used in calculating

     basic and diluted net loss per share



43,474,571



43,474,571



38,925,752

 

 

Discussion of Segment Operations









For the three months ended March 31,





2019



2019



2018





US$



RMB



RMB





(All amounts in thousands)

NET REVENUES













K-12 Schools *

9,505



63,793



52,177



College Preparation & CE Programs  *

8,174



54,853



52,602



Total net revenues

17,679



118,646



104,779



COST OF REVENUES













K-12 Schools  *

(6,302)



(42,296)



(36,106)



College Preparation & CE Programs  *

(5,627)



(37,759)



(33,396)



Total cost of revenues

(11,929)



(80,055)



(69,502)



GROSS PROFIT













K-12 Schools  *

3,203



21,497



16,071



College Preparation & CE Programs  *

2,547



17,094



19,206



Total gross profit

5,750



38,591



35,277

















* Ambow previously had three reportable segments, including Better School, Better Job and Others for the years before 2019. In

2019, along with the shift of business development focus, Ambow changed its management approach in the way to organize

reportable segments to make operating decisions and assess performance. New reportable segments include K-12 schools and

College Preparation & CE Programs, which provide K-12 educational service and tutoring and vocational educational services

respectively.

 

 

Cision View original content:http://www.prnewswire.com/news-releases/ambow-education-announces-first-quarter-2019-financial-results-300862780.html

SOURCE Ambow Education Holding Ltd.

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