Ambow Education Announces Second Quarter 2020 Financial Results

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













 

 

Cision View original content:http://www.prnewswire.com/news-releases/ambow-education-announces-second-quarter-2020-financial-results-301131011.html

SOURCE Ambow Education Holding Ltd.

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