Ambow Education Announces Third Quarter 2020 Financial Results

BEIJING, Dec. 17, 2020 /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 and nine-month periods ended September 30, 2020.

"While our business continued to be impacted by COVID-19-related macro headwinds during the third quarter of 2020, I am pleased to report that after a solid start to the new fall semester, revenue from the K-12 schools segment increased 18.8% year-over-year. Encouragingly, deferred revenue related to tuition and course fees and our education service platform increased 12.4% to US$37.9 million from the year-ago period and reached its highest level since 2015, reflecting the resilience of our business. Supported by ample cash resources and a healthy balance sheet, our core strength and fundamentals remain solid across our key segments," noted Dr. Jin Huang, Ambow's President and Chief Executive Officer. "We are excited that in September we won the bid for a Technical and Vocational Education and Training (TVET) Center project that is financially supported by the Asian Development Bank as a part of its inclusive growth project in Ziyang City of Sichuan Province. This achievement demonstrates our exceptional capabilities and leading position in the vocational and technical education sector."

"We continued to execute our key strategies to pursue more balanced growth, while providing high quality educational services that better engage students against the challenging backdrop of the COVID-19 environment. Leveraging our 20-year proven track record in curriculum development, professional training, job placement and education technology innovation, we are making massive progress in building out our online-to-offline education SaaS platform, Huanyujun Education Hub. We have gradually started rolling out Amazon Web Services (AWS) and Cisco-authorized certification and training courses on the Huanyujun Education Hub, which is already supported by our cutting-edge educational solutions such as Ambow Panorama Digital Teaching System and Ambow Cloud Platform. We believe these best-in-class educational services and course offerings will broaden our appeal to a wider student base as they pursue professional certifications for their technology careers."

"Going forward, we will maintain our strategic efforts to enrich our educational service offerings, optimize operating efficiencies, and increase student enrollments and engagement. We remain confident that our efforts will support the long-term sustainability of our overall business," concluded Dr. Huang.

Third Quarter 2020 Financial Highlights

  • Net revenues for the third quarter of 2020 decreased by 6.2% to US$16.6 million from US$17.7 million in the same period of 2019. The decrease was primarily from fewer services provided at the Company's tutoring centers, training offices and college campuses. This was partially offset by the increase in the revenue from K-12 schools driven by higher enrollment and the revenue from NewSchool of Architecture and Design, LLC ("NewSchool"), acquired in the first quarter of 2020.
  • Gross profit for the third quarter of 2020 decreased by 77.8% to US$1.0 million from US$4.5 million in the same period of 2019. Gross profit margin was 6.0%, compared with 25.4% for the third quarter of 2019. The decreases in gross profit and margin were mainly attributable to the decrease in net revenues from CP&CE Programs.
  • Operating expenses for the third quarter of 2020 decreased by 3.4% to US$14.0 million from US$14.5 million for the same period of 2019. The decrease was primarily attributable to stringent expense controls to improve operating efficiency, and partially offset by operating expenses related to NewSchool.
  • Net loss attributable to ordinary shareholders was US$12.5 million, or US$0.29 per basic and diluted share, compared with a net loss of US$10.2 million, or US$0.23 per basic and diluted share, for the third quarter of 2019.
  • As of September 30, 2020, Ambow maintained strong cash resources of US$44.0 million, comprised of cash and cash equivalents of US$12.7 million and short-term investments of US$31.3 million.
  • As of September 30, 2020, the Company's deferred revenue balance was US$37.9 million, representing a 59.9% increase from US$23.7 million as of December 31, 2019, mainly attributable to the tuition and fees collected at K-12 schools for the fall semester of the 2020-2021 academic year, and deferred revenue collected from our colleges for the fall semester of 2020.

First Nine Months 2020 Financial Highlights

  • Net revenues for the first nine months of 2020 decreased by 8.0% to US$52.8 million from US$57.4 million in the same period of 2019. The decrease was primarily from fewer boarding and other ancillary services provided for K-12 schools as result of temporary COVID-19-related campus closures in the first half of 2020, and fewer services provided at the Company's tutoring centers, training offices and college campuses. This was partially offset by the revenue from NewSchool which was acquired in the period.
  • Gross profit for the first nine months of 2020 decreased by 40.5% to US$11.6 million from US$19.5 million in the same period of 2019. Gross profit margin was 22.0%, compared with 34.0% for the first nine months of 2019. The decreases in gross profit and margin were mainly attributable to the decrease in net revenues from CP&CE Programs.
  • Operating expenses for the first nine months of 2020 decreased by 1.9% to US$30.4 million from US$31.0 million for the same period of 2019. The decrease was primarily attributable to lower expenditures due to the temporary suspension of operations at training offices and tutoring centers in the period as a part of the national pandemic containment efforts, as well as stringent expense controls to improve operating efficiency, and partially offset by NewSchool's operating expenses.
  • Net loss attributable to ordinary shareholders was US$10.9 million, or US$0.25 per basic and diluted share, compared with a net loss of US$12.3 million, or US$0.28 per basic and diluted share, for the first nine months of 2019.

On October 5, 2020, the Company completed a registered direct offering of 1,507,538 American Depositary Shares ("ADSs", representing 3,015,076 Class A Ordinary Shares), at a purchase price of $3.98 per ADS. The Company also issued to investors registered warrants to purchase up to an aggregate amount of 603,016 ADSs (representing 1,206,032 Class A Ordinary Shares). Net proceeds from this offering were approximately US$5.2 million.

The Company's financial and operating results for the third quarter and first nine months of 2020 can also be found on its Form 6-K filed with the U.S. Securities and Exchange Commission at www.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 third quarter and first nine months of 2020 are based on the effective exchange rate of 6.7896 as of September 30, 2020; all amounts translated from RMB to U.S. dollars for the third quarter and first nine months of 2019 are based on the effective exchange rate of 7.1477 as of September 30, 2019; all amounts translated from RMB to U.S. dollars as of December 31, 2019 are based on the effective exchange rate of 6.9618 as 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 September 30,


As of December 31,





2020


2019





US$


RMB


RMB


ASSETS









Current assets:









Cash and cash equivalents



12,677


86,072


157,600


Restricted cash



2,006


13,621


-


Short term investments, available for sale



26,898


182,629


57,487


Short term investments, held to maturity



4,419


30,000


31,000


Accounts receivable, net



3,616


24,549


17,939


Amounts due from related parties



907


6,159


2,318


Prepaid and other current assets, net



23,150


157,177


133,296


Total current assets



73,673


500,207


399,640


Non-current assets:









Property and equipment, net



21,603


146,678


157,463


Land use rights, net



254


1,726


1,759


Intangible assets, net



8,168


55,458


56,607


Goodwill



3,787


25,710


60,353


Deferred tax assets, net



538


3,653


10,195


Operating lease right-of-use asset



38,704


262,787


257,361


Finance lease right-of-use asset



884


6,000


6,450


Other non-current assets, net



12,429


84,388


70,971


Total non-current assets



86,367


586,400


621,159











Total assets



160,040


1,086,607


1,020,799











LIABILITIES









Current liabilities:









Short-term borrowings  *



2,948


20,013


-


Deferred revenue  *



37,906


257,368


165,111


Accounts payable  *



2,284


15,500


14,718


Accrued and other liabilities  *



27,277


185,203


192,957


Income taxes payable, current  *



27,060


183,729


180,715


Amounts due to related parties  *



718


4,876


1,971


Operating lease liability, current  *



7,459


50,642


53,512


Total current liabilities



105,652


717,331


608,984


Non-current liabilities:









Income taxes payable, non-current  *



5,094


34,589


32,152


Operating lease liability, non-current  *



34,723


235,756


216,067


Total non-current liabilities



39,817


270,345


248,219











Total liabilities



145,469


987,676


857,203











EQUITY









Preferred shares









(US$ 0.003 par value;1,666,667 shares
  authorized, nil issued and outstanding as of
  December 31, 2019 and September 30,
  2020) 



-


-


-


Class A Ordinary shares









(US$0.003 par value; 66,666,667 and
  66,666,667 shares authorized, 38,858,199
  and 38,895,700 shares issued and
  outstanding as of December 31, 2019 and
  September 30, 2020, respectively)



108


731


730


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, 2019 and September 30,
  2020, respectively)



13


90


90


Additional paid-in capital



516,868


3,509,330


3,508,745


Statutory reserve



620


4,210


20,185


Accumulated deficit



(505,202)


(3,430,122)


(3,371,815)


Accumulated other comprehensive income



2,420


16,429


6,341


Total Ambow Education Holding Ltd.'s equity



14,827


100,668


164,276


Non-controlling interests



(256)


(1,737)


(680)


Total equity



14,571


98,931


163,596


Total liabilities and equity



160,040


1,086,607


1,020,799











*  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 nine months ended September 30,


For the three months ended September 30,


2020


2020


2019


2020


2020


2019


US$


RMB


RMB


US$


RMB


RMB













NET REVENUES












 Educational program and 
  services

52,742


358,098


409,367


16,560


112,439


126,729

Intelligent program and 
  services

52


352


1,193


40


269


(173)

Total net revenues

52,794


358,450


410,560


16,600


112,708


126,556

COST OF REVENUES












 Educational program and 
  services

(40,898)


(277,683)


(265,454)


(15,518)


(105,359)


(92,934)

Intelligent program and 
  services

(345)


(2,340)


(5,818)


(130)


(882)


(1,109)

Total cost of revenues

(41,243)


(280,023)


(271,272)


(15,648)


(106,241)


(94,043)













GROSS PROFIT

11,551


78,427


139,288


952


6,467


32,513

Operating expenses:












Selling and marketing

(5,576)


(37,861)


(40,778)


(2,011)


(13,655)


(15,607)

General and administrative

(18,739)


(127,230)


(140,510)


(6,331)


(42,987)


(48,116)

Research and development

(656)


(4,456)


(1,555)


(259)


(1,758)


(1,087)

Impairment loss

(5,405)


(36,699)


(38,754)


(5,405)


(36,699)


(38,754)

Total operating expenses

(30,376)


(206,246)


(221,597)


(14,006)


(95,099)


(103,564)













OPERATING LOSS

(18,825)


(127,819)


(82,309)


(13,054)


(88,632)


(71,051)













OTHER INCOME (EXPENSES)












Interest income

1,053


7,150


3,343


444


3,015


1,823

Foreign exchange gain (loss),
  net

5


31


46


(1)


(4)


45

Other income (loss), net

124


840


193


(105)


(712)


7

Gain from deregistration of
  subsidiaries

584


3,967


1,279


10


70


-

Gain on disposal of
  subsidiaries

111


752


-


111


752


-

Gain on the bargain purchase

5,932


40,273


-


-


-


-

Gain on sale of investment
  available for sale

365


2,477


422


209


1,421


3

Total other income

8,174


55,490


5,283


668


4,542


1,878

LOSS BEFORE INCOME
  TAX AND NON-
  CONTROLLING
  INTEREST

(10,651)


(72,329)


(77,026)


(12,386)


(84,090)


(69,173)

Income tax expense

(353)


(2,399)


(11,032)


(114)


(776)


(3,634)













NET LOSS

(11,004)


(74,728)


(88,058)


(12,500)


(84,866)


(72,807)

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

(153)


(1,040)


(269)


(49)


(332)


4













NET LOSS ATTRIBUTABLE
  TO ORDINARY
  SHAREHOLDERS

(10,851)


(73,688)


(87,789)


(12,451)


(84,534)


(72,811)













NET LOSS

(11,004)


(74,728)


(88,058)


(12,500)


(84,866)


(72,807)













OTHER
  COMPREHENSIVE
  INCOME, NET OF TAX












Foreign currency translation
    adjustments

1,581


10,731


(3,267)


354


2,403


(93)

Unrealized gains on short term
    investments












  Unrealized holding gains
    arising during period

224


1,518


1,238


85


578


538

  Less: reclassification
    adjustment for gains
    included in net income

318


2,161


489


220


1,493


37

Other comprehensive income
    (loss)

1,487


10,088


(2,518)


219


1,488


408













TOTAL
  COMPREHENSIVE
  LOSS

(9,517)


(64,640)


(90,576)


(12,281)


(83,378)


(72,399)













Net loss per share – basic and
  diluted

(0.25)


(1.69)


(2.02)


(0.29)


(1.94)


(1.67)













Weighted average shares used
  in calculating basic and
  diluted net loss per share

43,583,448


43,583,448


43,496,848


43,595,871


43,595,871


43,512,447

 


 

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


38,858,199


730


4,708,415


90


3,508,745


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


-


-


(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 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


-


(297)


4,510

Balance as of June 30,
  2020


38,883,199


731


4,708,415


90


3,509,224


4,712


(3,346,090)


14,941


(1,389)


182,219

Share-based compensation


-


-


-


-


239


-


-


-


-


239

Issuance of ordinary shares
  for restricted stock award


12,501


0


-


-


(0)


-


-


-


-


-

Foreign currency translation
  adjustment


-


-


-


-


-


-


-


2,403


-


2,403

Unrealized gain on
  investment, net of income
  taxes


-


-


-


-


-


-


-


(915)


-


(915)

Deregistration of subsidiary


-


-


-


-


-


-


-


-


(16)


(16)

Disposal of subsidiaries


-


-


-


-


(133)


(502)


502


-


-


(133)

Net loss


-


-


-


-


-


-


(84,534)


-


(332)


(84,866)

Balance as of
  September 30, 2020


38,895,700


731


4,708,415


90


3,509,330


4,210


(3,430,122)


16,429


(1,737)


98,931






















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

Share-based compensation


-


-


-


-


266


-


-


-


-


266

Issuance of ordinary shares
  for restricted stock award


19,097


0


-


-


(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 June 30,
  2019


38,804,032


729


4,708,415


90


3,508,260


20,149


(3,286,816)


5,379


(1,557)


246,234

Share-based compensation


-


-


-


-


244


-


-


-


-


244

Foreign currency translation
  adjustment


-


-


-


-


-


-


-


(93)


-


(93)

Unrealized gain on
  investment, net of income
   taxes


-


-


-


-


-


-


-


501


-


501

Net (loss) / income


-


-


-


-


-


-


(72,811)


-


4


(72,807)

Balance as of
  September 30, 2019


38,804,032


729


4,708,415


90


3,508,504


20,149


(3,359,627)


5,787


(1,553)


174,079

 

 

 

Discussion of Segment Operations

(All amounts in thousands)



For the nine months ended September 30,


For the three months ended September 30,


2020


2020


2019


2020


2020


2019


US$


RMB


RMB


US$


RMB


RMB













NET REVENUES












K-12 Schools

27,360


185,766


203,214


8,685


58,966


52,256

CP&CE Programs 

25,434


172,684


207,346


7,915


53,742


74,300

Total net revenues

52,794


358,450


410,560


16,600


112,708


126,556

COST OF REVENUES












K-12 Schools

(17,670)


(119,972)


(128,887)


(6,692)


(45,430)


(38,794)

CP&CE Programs 

(23,573)


(160,051)


(142,385)


(8,956)


(60,811)


(55,249)

Total cost of revenues

(41,243)


(280,023)


(271,272)


(15,648)


(106,241)


(94,043)

GROSS PROFIT












K-12 Schools

9,690


65,794


74,327


1,993


13,536


13,462

CP&CE Programs 

1,861


12,633


64,961


(1,041)


(7,069)


19,051

Total gross profit

11,551


78,427


139,288


952


6,467


32,513













 

Cision View original content:http://www.prnewswire.com/news-releases/ambow-education-announces-third-quarter-2020-financial-results-301194787.html

SOURCE Ambow Education Holding Ltd.

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