Ambow Education Announces Second Quarter 2020 Financial Results

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BEIJING, Sept. 15, 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 six-month periods ended June 30, 2020.

Dr. Jin Huang, Ambow’s President and Chief Executive Officer, said, “Since various 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 second quarter 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 second quarter 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 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 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 for the second quarter and first half of 2019 are based on the effective exchange rate of 6.8650 as 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 6.9618 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 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, net

21,159

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
      December 31, 2019 and June 30, 2020) 

Class A Ordinary shares

(US$0.003 par value; 66,666,667 and
      66,666,667 shares authorized, 38,858,199
      and 38,883,199 shares issued and
      outstanding as of December 31, 2019 and
      June 30, 2020, respectively)

103

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 June 30, 2020,
      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

149,886

1,058,976

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 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)

1,435

10,138

(15,251)

639

4,511

8,598

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

43,577,168

43,469,610

43,583,418

43,583,418

43,503,109

Weighted average shares used
      in calculating diluted net
      income (loss) per share

43,577,168

43,577,168

43,469,610

43,583,418

43,583,418

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

38,858,199

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

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

 

 

Discussion of Segment Operations

(All amounts in thousands)

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

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

34,783

245,742

284,004

22,004

155,463

165,358

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

(24,597)

(173,782)

(177,229)

(13,454)

(95,051)

(97,174)

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

10,186

71,960

106,775

8,550

60,412

68,184

 

 

Related Links :

http://www.ambow.com

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