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Ambow Education Announces First Quarter 2020 Financial Results

·13 mins read

BEIJING, July 9, 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 period ended March 31, 2020.

"Against the backdrop of the unprecedented COVID-19 pandemic, our goal of empowering learning and teaching through technology has never been more relevant," said Dr. Jin Huang, Ambow's President and Chief Executive Officer. "With our strategic efforts to invest in technological advancements and educational service innovation, we remain committed to providing our learners with high-quality educational resources, ensuring a superior online education experience across our platform. For instance, we launched live streaming classes that are embedded with various interactive tools that dramatically enhance the engagement between students and teachers on our learning platform. We also introduced online practice training and career planning programs to help undergraduates and employees better prepare themselves in an increasingly challenging job market. By leveraging our leading position and strong network in the career enhancement services market, in collaboration with 6,000 enterprises, we organized online job fairs that enabled remote interviews, extending extra exposure for undergraduates seeking jobs."

Dr. Huang continued, "The outbreak of COVID-19 since the beginning of this year has adversely impacted the entire education industry. Our first quarter 2020 revenue performance was negatively impacted as a result of the suspension of our K-12 schools and offline tutoring services due to quarantine measures. With daily life in China gradually returning to normal since April, our schools reopened in April with the health and safety of our students and faculty a paramount priority. We are confident in our ability to navigate through the dynamic markets and capitalize on the elevated opportunities presented by the accelerated adoption of online education around the world."

"I am also pleased that we made another significant addition to our portfolio of international assets in the first quarter as we completed the acquisition of NewSchool of Architecture and Design, LLC ("NewSchool"), a San Diego-based higher learning institution. This acquisition underlines Ambow's vision to roll out a cross-border educational service platform, bringing unique learning and career advancement opportunities to students," concluded Dr. Huang.

First Quarter 2020 Financial Highlights

  • Net revenues for the first quarter of 2020 decreased by 28.2% to US$12.7 million from US$17.7 million in the same period of 2019. The decrease was primarily due to fewer services provided at the Company's K-12 schools and tutoring centers as operations during the quarter were temporarily suspended due to the outbreak of COVID-19, partially offset by revenue from NewSchool, acquired in the period.

  • Gross profit for the first quarter of 2020 decreased by 72.4% to US$1.6 million from US$5.8 million in the same period of 2019. Gross profit margin was 12.6%, compared with 32.8% for the first quarter of 2019. The decrease in gross profit and margin was mainly attributable to the decrease of net revenues.

  • Operating expenses for the first quarter of 2020 decreased by 19.1% to US$7.2 million from US$8.9 million for the same period of 2019. The decrease was primarily attributable to less expenditures due to the temporary suspension of operations at schools and tutoring centers in the period as part of the national pandemic containment effort, and stringent expense controls to improve operating efficiency.

  • Net income attributable to ordinary shareholders in the first quarter of 2020 was US$0.8 million, or US$0.02 per basic and diluted share, compared with a net loss of US$3.5 million, or US$0.08 per basic and diluted share, for the first quarter of 2019.

  • As of March 31, 2020, Ambow maintained strong cash resources of US$30.4 million, comprised of cash and cash equivalents of US$14.2 million and short-term investments of US$16.2 million.

  • As of March 31, 2020, the Company's deferred revenue balance was US$23.9 million, representing a slight increase compared with US$23.7 million as of December 31, 2019. Due to the temporary suspension of school operations to contain COVID-19, the Company postponed tuition and fee collection in its K-12 schools during the first quarter which led to the lower-than-usual increase in deferred revenue.

The Company's first-quarter 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 first quarter of 2020 are based on the effective exchange rate of 7.0808 as of March 31, 2020; 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 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 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
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 March 31,


As of December 31,





2020


2019





US$


RMB


RMB


ASSETS









Current assets:









Cash and cash equivalents



14,210


100,619


157,600


Restricted cash



2,001


14,170


-


Short term investments, available for sale



14,785


104,692


57,487


Short term investments, held to maturity



1,412


10,000


31,000


Accounts receivable, net



3,174


22,472


17,939


Amounts due from related parties



317


2,246


2,318


Prepaid and other current assets, net



22,542


159,618


133,296


Total current assets



58,441


413,817


399,640


Non-current assets:









Property and equipment, net



21,976


155,606


157,463


Land use rights, net



247


1,748


1,759


Intangible assets, net



8,695


61,567


56,607


Goodwill



8,659


61,313


60,353


Deferred tax assets, net



538


3,811


10,195


Operating lease right-of-use asset



42,809


303,120


257,361


Finance lease right-of-use asset



890


6,300


6,450


Other non-current assets, net



11,900


84,261


70,971


Total non-current assets



95,714


677,726


621,159











Total assets



154,155


1,091,543


1,020,799











LIABILITIES









Current liabilities:









Deferred revenue *



23,858


168,933


165,111


Accounts payable *



1,781


12,615


14,718


Accrued and other liabilities *



28,059


198,681


192,957


Income taxes payable, current *



26,507


187,691


180,715


Amounts due to related parties *



278


1,971


1,971


Operating lease liability, current *



8,018


56,774


53,512


Total current liabilities



88,501


626,665


608,984


Non-current liabilities:









Income taxes payable, non-current *



4,564


32,315


32,152


Operating lease liability, non-current *



37,158


263,109


216,067


Total non-current liabilities



41,722


295,424


248,219











Total liabilities



130,223


922,089


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 March 31, 2020)



-


-


-


Class A Ordinary shares









(US$0.003 par value; 66,666,667 and
66,666,667 shares authorized, 38,858,199
and 38,870,699 shares issued and
outstanding as of December 31, 2019 and
March 31, 2020, respectively)



103


730


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 March 31, 2020,
respectively)



13


90


90


Additional paid-in capital



495,563


3,508,983


3,508,745


Statutory reserve



2,851


20,185


20,185


Accumulated deficit



(475,422)


(3,366,370)


(3,371,815)


Accumulated other comprehensive income



978


6,928


6,341


Total Ambow Education Holding Ltd.'s equity



24,086


170,546


164,276


Non-controlling interests



(154)


(1,092)


(680)


Total equity



23,932


169,454


163,596


Total liabilities and equity



154,155


1,091,543


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 AND COMPREHENSIVE INCOME (LOSS)

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




For the three months ended March 31,



2020


2020


2019



US$


RMB


RMB








NET REVENUES







Educational program and services


12,748


90,267


118,185

Intelligent program and services


2


12


461

Total net revenues


12,750


90,279


118,646

COST OF REVENUES







Educational program and services


(10,936)


(77,433)


(78,197)

Intelligent program and services


(183)


(1,298)


(1,858)

Total cost of revenues


(11,119)


(78,731)


(80,055)








GROSS PROFIT


1,631


11,548


38,591

Operating expenses:







Selling and marketing


(1,490)


(10,549)


(14,088)

General and administrative


(5,536)


(39,201)


(45,618)

Research and development


(160)


(1,131)


(168)

Total operating expenses


(7,186)


(50,881)


(59,874)








OPERATING LOSS


(5,555)


(39,333)


(21,283)








OTHER INCOME (EXPENSES)







Interest income


281


1,990


388

Foreign exchange gain (loss), net


4


26


(31)

Other income, net


199


1,406


660

Gain from deregistration of subsidiaries


-


-


1,279

Gain on the bargain purchase


5,688


40,273


-

Gain on sale of investment available for sale


74


526


279

Total other income


6,246


44,221


2,575








INCOME (LOSS) BEFORE INCOME TAX
AND NON-CONTROLLING INTEREST


691


4,888


(18,708)

Income tax benefit (expense)


104


739


(5,141)








NET INCOME (LOSS)


795


5,627


(23,849)

Less: Net loss attributable to non-controlling
interest


(58)


(412)


(93)








NET INCOME (LOSS) ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS


853


6,039


(23,756)








NET INCOME (LOSS)


795


5,627


(23,849)








OTHER COMPREHENSIVE INCOME, NET
OF TAX







Foreign currency translation adjustments


61


433


(2,428)

Unrealized gains on short term investments







Unrealized holding gains arising during period


62


441


280

Less: reclassification adjustment for gains
included in net income


41


287


205

Other comprehensive income/(loss)


83


587


(2,353)








TOTAL COMPREHENSIVE INCOME
LOSS)


878


6,214


(26,202)

Net income (loss) per share - basic and diluted


0.02


0.14


(0.55)








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


43,570,918


43,570,918


43,474,571

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





















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


Discussion of Segment Operations


(All amounts in thousands)





For the three months ended March 31,



2020


2020


2019



US$


RMB


RMB



(All amounts in thousands)

NET REVENUES







K-12 Schools

5,849


41,411


63,793


CP&CE Programs

6,901


48,868


54,853


Total net revenues

12,750


90,279


118,646


COST OF REVENUES







K-12 Schools

(4,721)


(33,429)


(42,296)


CP&CE Programs

(6,398)


(45,302)


(37,759)


Total cost of revenues

(11,119)


(78,731)


(80,055)


GROSS PROFIT







K-12 Schools

1,128


7,982


21,497


CP&CE Programs

503


3,566


17,094


Total gross profit

1,631


11,548


38,591


Cision
Cision

View original content:http://www.prnewswire.com/news-releases/ambow-education-announces-first-quarter-2020-financial-results-301090729.html

SOURCE Ambow Education Holding Ltd.