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Bright Scholar Announces Unaudited Financial Results for the Third Fiscal Quarter of FY2020

Cision

9M Revenue Up 46.6% and Operating Income Up 39.0%

Declared a Cash Dividend of US$0.12 per ADS

FOSHAN, China , July 22, 2020 /PRNewswire/ -- Bright Scholar Education Holdings Limited ("Bright Scholar," the "Company," "we" or "our") (NYSE: BEDU), a global premier education service company, today announced its unaudited financial results for the third fiscal quarter ended May 31, 2020 .

Third Fiscal Quarter Ended May 31, 2020 Financial Highlights 

(in comparison to the same period of the last fiscal year):

RMB in million

Except EPS and %

Third Fiscal Quarter

Ended May 31, 2020

Third Fiscal Quarter

Ended May 31, 2019

YoY

% Change

Revenue

739.4

692.8

6.7%

Gross Profit

292.0

318.0

(8.2%)

Gross Margin

39.5%

45.9%

(6.4%)

Operating Income

136.2

166.8

(18.4%)

Operating Margin

18.4%

24.1%

(5.7%)

Net Income

68.0

137.4

(50.5%)

Net Margin

9.2%

19.8%

(10.6%)





Adjusted Gross Profit (1)

302.9

324.2

(6.6%)

Adjusted Gross Margin (1)

41.0%

46.8%

(5.8%)

Adjusted Operating Income (2)

114.7

189.6

(39.5%)

Adjusted Operating Margin (2)

15.5%

27.4%

(11.9%)

Adjusted Net Income (3)

46.6

160.2

(70.9%)

Adjusted Net Margin (3)

6.3%

23.1%

(16.8%)

Adjusted EBITDA (4)

164.5

220.9

(25.5%)

Adjusted EBITDA Margin (4)

22.2%

31.9%

(9.7%)





Basic and Diluted Earnings per Share

0.64

1.13

(43.4%)

Adjusted Basic and Diluted Earnings per Share (5)

0.46

1.32

(65.2%)

 

Nine Months Ended May 31, 2020 Financial Highlights 

(in comparison to the same period of the last fiscal year):

RMB in million

Except EPS and %

Nine Months

Ended May 31, 2020

Nine Months

Ended May 31, 2019

YoY

% Change

Revenue

2,714.4

1,851.4

46.6%

Gross Profit

1,072.3

764.9

40.2%

Gross Margin

39.5%

41.3%

(1.8%)

Operating Income

479.6

345.0

39.0%

Operating Margin

17.7%

18.6%

(0.9%)

Net Income

312.8

300.9

4.0%

Net Margin

11.5%

16.3%

(4.8%)





Adjusted Gross Profit (1)

1,105.2

778.7

41.9%

Adjusted Gross Margin (1)

40.7%

42.1%

(1.4%)

Adjusted Operating Income (2)

500.5

403.9

23.9%

Adjusted Operating Margin (2)

18.4%

21.8%

(3.4%)

Adjusted Net Income (3)

333.6

359.8

(7.3%)

Adjusted Net Margin (3)

12.3%

19.4%

(7.1%)

Adjusted EBITDA (4)

669.4

487.6

37.3%

Adjusted EBITDA Margin (4)

24.7%

26.3%

(1.6%)





Basic and Diluted Earnings per Share

2.62

2.38

10.1%

Adjusted Basic and Diluted Earnings per Share (5)

2.79

2.86

(2.4%)

______________________________________________________________________________________________

1.   Adjusted gross profit/(loss) is defined as gross profit/(loss) excluding amortization of intangible assets. Adjusted gross margin is defined as adjusted gross profit/(loss) divided by revenue.

2.   Adjusted operating income/(loss) is defined as operating income/(loss) excluding share-based compensation expense and amortization of intangible assets. Adjusted operating margin is defined as adjusted operating income/(loss) divided by revenue.

3.   Adjusted net income/(loss) is defined as net income/(loss) excluding share-based compensation expense and amortization of intangible assets. Adjusted net margin is defined as adjusted net income/(loss) divided by revenue.

4.   Adjusted EBITDA is defined as net income/(loss) excluding interest income/(expense), net; income tax expense/benefit; depreciation and amortization, and share-based compensation expense. Adjusted EBITDA margin is defined as adjusted EBITDA divided by revenue.

5.   Adjusted basic and diluted earnings per share is defined as adjusted net income/(loss) attributable to ordinary shareholders (net income/(loss) to ordinary shareholders excluding share-based compensation expense and amortization of intangible assets) divided by the weighted average number of basic and diluted ordinary shares or American depositary shares (each an "ADS"), each representing one Class A ordinary share of the Company, on an as-converted basis.


For more information on these adjusted financial measures, please see the section captioned under "Non-GAAP Financial Measures" and the tables captioned "Reconciliations of GAAP and Non-GAAP Results" set forth at the end of this release.

 

BUSINESS PERFORMANCE HIGHLIGHTS

(in comparison to the same period of the last fiscal year)

Domestic K-12 Schools

The domestic K-12 schools comprise our international schools, bilingual schools and kindergartens in China .

  • The average number of students increased by 9.2% for the third fiscal quarter and 10.6% for the nine-month period.
  • Revenue amounted to RMB434.8 million and accounted for 58.9% of total revenue in the third fiscal quarter. For the nine-month period, revenue increased by 3.7% to RMB1,552.1 million and accounted for 57.1% of total revenue.
  • For the third fiscal quarter, gross margin was 43.1% compared to 48.3%, and operating margin was 27.0% compared to 37.8%. For the nine-month period, gross margin was 42.3% compared to 42.3%, and operating margin was 28.8% as compared to 28.8%.

Overseas Schools

The overseas schools comprise our overseas schools including Bournemouth, St. Michael's, Bosworth and CATS.

  • The average number of students was 3,219 for the third fiscal quarter and 3,246 for the nine-month period.
  • Revenue amounted to RMB210.4 million and accounted for 28.5% of total revenue for the third fiscal quarter. For the nine-month period, revenue amounted to RMB766.8 million and accounted for 28.2% of total revenue for the same period.
  • For the third fiscal quarter, gross margin was 29.9% and operating margin was 5.1%. For the nine-month period, gross margin was 36.7% and operating margin was 9.5%.

Complementary Education Services 

The complementary education services comprise language training, overseas study counselling, career counselling, study tours and camps and others.

  • Revenue amounted to RMB94.2 million and accounted for 12.6% of total revenue. For the nine-month period, revenue increased by 23.1% to RMB395.5 million , and accounted for 14.7% of total revenue.
  • For the third fiscal quarter, gross margin increased from 30.5% to 44.4%, and operating margin increased from (10.3%) to 14.7%. For the nine-month period, gross margin was 33.8% compared to 37.6%, and operating margin was 10.0% compared to 14.1%.

"Despite disruptions and short-term impact from the COVID-19 pandemic, Bright Scholar's performance during the third fiscal quarter has demonstrated our continued progress in executing our growth strategy and highlighted the resilience of our underlying business," said Jerry He , Executive Vice Chairman of Bright Scholar. "The revenue for the quarter was RMB739.4 million , representing a year-over-year increase of 6.7%. Our net income was RMB68.0 million , which was negatively impacted by the mandatory closure of our schools, kindergartens and learning centers. For the nine-month period, the revenue was RMB2,714.4 million , representing a year-over-year increase of 46.6%. The adjusted gross profit, adjusted operating income, adjusted EBITDA increased by 41.9%, 23.9% and 37.3% year-over-year, respectively."

"In these challenging times, we could not be more pleased with the resilience of demand for our domestic K-12 education services," said Wanmei Li , Chief Executive Officer of Domestic K-12 School business.  "In comparison to the third quarter and nine months of the last fiscal year, the average student enrolment increased by 9.2% and 10.6% year-over-year, respectively."

"Our students continued to achieve remarkable academic outcomes." Ms. Li continued, "As of May 22, 2020 , 93.6% of students in the 2020 graduating class of our international schools in China have received offers from the top 50 institutions including 6 offers from Oxbridge, 4 offers from University of Chicago , and 12 offers from UC Berkeley. Our collaboration with Country Garden remains very strong. As of the release date, we have entered into agreements with Country Garden and other partners to add 61 kindergartens and 8 schools to our school network with a total capacity of approximately 35,500 students in China ."

"Since COVID-19 outbreak in January 2020 , Complementary Education Service adjusted its business strategy promptly, moving some of the services online. The pandemic is now effectively under control in China , as people resume work and normal life, the class resumption rate of some business units has reached nearly 80%," said Zi Chen , Chief Executive Officer of Complementary Education Services. "While the full impact of this global pandemic remains uncertain and as such we will focus on the markets of which the epidemic has been contained, especially domestic market, to expand our business." Mr. Chen continued, "It's very important for us to seize the opportunity in this summer, and we will launch new products and services to strengthen our competitive market position."

"As a student-centered company, Bright Scholar has continuously been evolving to meet the changing needs of our students as we all navigate the unprecedented situation of COVID-19," Mr. He continued. "While these changes present challenges in the short term, we are focused on the significant opportunities presented to us by new technology and learning behaviour." 

"In the quarter, we advanced two strategic initiatives to capitalize on these opportunities. Earlier in May, we announced the acquisition of 51% equity interests in Linstitute (the "institute"). The institute provides high-quality and outcome-focused online training services including Academic Olympiad, a comprehensive selection of academic courses, as well as other world-wide recognized international courses. In June, we announced the launch of our virtual "Future Global School" (the "virtual school") with online-merge-offline (OMO) model, which will be in operation from the beginning of FY21. The virtual school will deliver high quality international curriculums through an interactive and intelligent Learning Management System. It creates a new blended learning experience combining the best of classroom and online education that offers human connection between teachers and the students around the world. The expansion of our service offerings in utilizing technology to enhance access to high quality education will further strengthen our market leadership in the face of the pandemic as we usher a new age of learning." 

Mr. He concluded, "While the pandemic is causing uncertainty and near-term impact, our revenue and profits continued to grow in the first 3 fiscal quarters and our long-term goals and strategy remain unchanged. We expect most of our business will bounce back stronger post COVID-19. Key secular megatrends driving our business remain intact and we remain committed to balancing operational discipline with continued investments in key strategic areas to drive long term growth."

"Our prudent financial management enabled us to have the financial flexibility to continue to invest in our business and return value to our shareholders. The Board of Directors has approved and declared a cash dividend of US$0.12 per ADS."

UNAUDITED FINANCIAL RESULTS FOR THE THIRD  FISCAL QUARTER ENDED MAY 31, 2020  

Revenue

Revenue 

Third Fiscal Quarter 

Ended May 31, 2020

Third Fiscal Quarter

Ended May 31, 2019

YoY

% Change


(RMB in million)

(% of Total Revenue)

(RMB in million)

(% of Total Revenue)


Domestic K-12 Schools

434.8

58.9%

578.4

83.5%

(24.8%)

International Schools

242.9

32.9%

225.9

32.6%

7.6%

Bilingual Schools

185.5

25.1%

195.1

28.2%

(4.9%)

Kindergartens

6.4

0.9%

157.4

22.7%

(96.0%)

Overseas Schools

210.4

28.5%

17.2

2.5%

1,126.6%

Complementary Education

94.2

12.6%

97.2

14.0%

(3.2%)

Total

739.4

100.0%

692.8

100.0%

6.7%

Revenue for the quarter was RMB739.4 million , representing a 6.7% increase from RMB692.8 million for the same period of the last fiscal year. The changes in revenue is primarily contributed by an increase in overseas schools revenue, which was acquired in July 2019 , partially offset by the decreased revenue in kindergartens due to the temporary mandatory closure of schools.

Cost of Revenue

Cost of revenue for the quarter was RMB447.4 million, representing a 19.4% increase from RMB374.8 million for the same period of the last fiscal year.

Gross Profit, Gross Margin and Adjusted Gross Profit

Gross Profit

Third Fiscal Quarter 

Ended May 31, 2020

Third Fiscal Quarter

Ended May 31, 2019

YoY

% Change


(RMB in million)

(Margin %)

(RMB in million)

(Margin %)


Domestic K-12 Schools

187.4

43.1%

279.5

48.3%

(33.0%)

International Schools

127.3

52.4%

109.9

48.7%

15.9%

Bilingual Schools

94.9

51.1%

88.5

45.4%

7.1%

Kindergartens

(34.8)

(547.2%)

81.1

51.5%

(143.0%)

Overseas Schools

62.8

29.9%

8.9

51.4%

612.3%

Complementary Education

41.8

44.4%

29.6

30.5%

40.8%

Total

292.0

39.5%

318.0

45.9%

(8.2%)

Gross profit for the quarter was RMB292.0 million , as compared to RMB318.0 million for the same period of the last fiscal year. Gross margin was 39.5% for the quarter, as compared to 45.9% for the same period of the last fiscal year.

Adjusted gross profit for the quarter was RMB302.9 million , as compared to RMB324.2 million for the same period of the last fiscal year. Adjusted gross margin was 41.0% for the quarter, as compared to 46.8% for the same period of the last fiscal year.

Selling, General and Administrative Expenses and Adjusted SG&A Expenses  (6)

SG&A Expenses

Third Fiscal Quarter 

Ended May 31, 2020

Third Fiscal Quarter 

Ended May 31, 2019

YoY

% Change


(RMB in
million)

(% of Total
Revenue)

(RMB in
million)

(% of Total
Revenue)


Domestic K-12 Schools

70.3

9.6%

61.4

8.9%

14.5%

International Schools

36.0

4.9%

19.4

2.8%

85.4%

Bilingual Schools

21.1

2.9%

22.7

3.3%

(7.2%)

Kindergartens

13.2

1.8%

19.3

2.8%

(31.6%)

Overseas Schools

60.7

8.2%

11.2

1.6%

440.9%

Complementary Education

28.5

3.8%

41.0

5.9%

(30.7%)

Unallocated Corporate Expenses  (7)

6.8

0.9%

38.4

5.5%

(82.3%)

Total

166.3

22.5%

152.0

21.9%

9.4%

 

Adj. SG&A Expenses  (6)

Third Fiscal Quarter 

Ended May 31, 2020

Third Fiscal Quarter 

Ended May 31, 2019

YoY

% Change


(RMB in
million)

(% of Total
Revenue)

(RMB in m
illion)

(% of Total
Revenue)


Domestic K-12 Schools

69.2

9.4%

58.8

8.4%

17.9%

International Schools

36.2

4.9%

19.0

2.7%

90.5%

Bilingual Schools

20.4

2.8%

21.6

3.1%

(5.4%)

Kindergartens

12.6

1.7%

18.2

2.6%

(30.4%)

Overseas Schools

60.7

8.2%

11.2

1.6%

440.9%

Complementary Education

28.3

3.8%

40.5

5.8%

(30.1%)

Unallocated Corporate Expenses (8)

40.4

5.5%

24.9

3.7%

61.7%

Total

198.6

26.9%

135.4

19.5%

46.7%

______________________________________________________________________________________________

6.   Adjusted SG&A expenses is defined as selling, general and administrative expenses excluding share-based compensation expense.  

7.   Unallocated corporate expenses are mainly from headquarter, including staff cost, share-based compensation expense and other office expenses. 

8.   Adjusted unallocated corporate expenses is defined as unallocated corporate expenses excluding share-based compensation expense.

Total SG&A expenses for the quarter were RMB166.3 million , representing a 9.4% increase from RMB152.0 million for the same period of the last fiscal year. Adjusted SG&A expenses for the quarter were RMB198.6 million , representing a 46.7% increase from RMB135.4 million for the same period of the last fiscal year.

Operating Income, Operating Income Margin and Adjusted Operating Income

Operating Income

Third Fiscal Quarter 

Ended May 31, 2020

Third Fiscal Quarter 

Ended May 31, 2019

YoY

% Change


(RMB in million)

(Margin %)

(RMB in million)

(Margin %)


Domestic K-12 Schools

117.5

27.0%

218.4

37.8%

(46.2%)

International Schools

91.8

37.8%

90.5

40.1%

1.3%

Bilingual Schools

74.0

39.9%

65.7

33.7%

12.6%

Kindergartens

(48.3)

(757.7%)

62.2

39.5%

(177.7%)

Overseas Schools

10.6

5.1%

(2.4)

(14.0%)

541.7%

Complementary Education

13.8

14.7%

(10.0)

(10.3%)

238.2%

Unallocated Corporate Expenses

(5.7)

-

(39.2)

-

85.3%

Total

136.2

18.4%

166.8

24.1%

(18.4%)

Operating income for the quarter was RMB136.2 million , as compared to RMB166.8 million for the same period of the last fiscal year. Operating margin was 18.4% for the quarter, as compared to 24.1% for the same period of the last fiscal year.

Adjusted operating income for the quarter was RMB114.7 million , as compared to RMB189.6 million for the same period of the last fiscal year. Adjusted operating margin was 15.5% for the quarter, as compared to 27.4% for the same period of the last fiscal year.

Net Income and Adjusted Net Income    

Net income for the quarter was RMB68.0 million, as compared to RMB137.4 million for the same period of the last fiscal year.

Adjusted net income for the quarter was RMB46.6 million , as compared to RMB160.2 million for the same period of the last fiscal year. 

Earnings per ordinary share/ADS and Adjusted Earnings per ordinary share/ADS

Basic and diluted net income per ordinary share/ADS attributable to ordinary shareholders/ADS holders for the quarter were RMB0.64 and RMB0.64, respectively, as compared to earnings per share of RMB1.13 and RMB1.13 , respectively, for the same period of the last fiscal year.

Adjusted basic and diluted net income per ordinary share/ADS attributable to ordinary shareholders/ADS holders for the quarter were RMB0.46 and RMB0.46, respectively, as compared to earnings per share of RMB1.32 and RMB1.32 , respectively, for the same period of the last fiscal year.

Adjusted EBITDA

Adjusted EBITDA for the quarter was RMB164.5 million , as compared to RMB220.9 million for the same period of the last fiscal year.

UNAUDITED FINANCIAL RESULTS   FOR THE NINE M ONTHS ENDED  MAY 31, 2020

Revenue

Revenue 

Nine Months 

Ended May 31, 2020

Nine Months

Ended May 31, 2019

YoY

% Change


(RMB in million)

(% of Total Revenue)

(RMB in million)

(% of Total Revenue)


Domestic K-12 Schools

1,552.1

57.1%

1,496.9

80.9%

3.7%

International Schools

695.5

25.6%

590.7

31.9%

17.7%

Bilingual Schools

573.2

21.1%

519.6

28.1%

10.3%

Kindergartens

283.4

10.4%

386.6

20.9%

(26.7%)

Overseas Schools

766.8

28.2% ...