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Ambow Education Announces First Quarter 2019 Financial Results

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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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