Ambow Education Announces Second Quarter 2020 Financial Results

Rhea-AI Summary

Ambow Education Holding Ltd. (AMBO) reported its unaudited financial results for Q2 and the first half of 2020, highlighting a second quarter revenue of $22.0 million, down 8.7% year-over-year. The gross profit decreased by 14.1% to $8.5 million, with a gross margin of 38.6%. For the first six months, net revenues fell 15.9% to $34.8 million, while gross profit dropped 34.6% to $10.2 million. Despite these declines, the company achieved a positive net income of $0.7 million in Q2 and $1.5 million in H1, showcasing resilience amid pandemic challenges.

Positive

• Achieved positive net income of $0.7 million in Q2 2020.
• Strong cash resources totaling $27.2 million as of June 30, 2020.
• Decreased operating expenses by 8.7% to $15.7 million in the first half of 2020.

Negative

• Net revenues decreased by 8.7% in Q2 and 15.9% in H1 2020.
• Gross profit declined by 14.1% in Q2 and 34.6% in H1 2020.
• Gross profit margin dropped to 29.3%, down from 37.7% in H1 2019.

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

 

 

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SOURCE Ambow Education Holding Ltd.

FAQ

What were Ambow Education's Q2 2020 financial results?

Ambow reported Q2 revenues of $22.0 million, an 8.7% decrease from the previous year, with a gross profit of $8.5 million.

How did Ambow's financial performance change in 2020 due to COVID-19?

The pandemic led to decreased revenues and profits due to extended school semesters and fewer services offered.

What is Ambow's net income for the first half of 2020?

Ambow reported a net income of $1.5 million for the first six months of 2020.

What were the main factors affecting Ambow's revenue in 2020?

Revenue was impacted by a one-month extension of the spring semester and reduced services due to COVID-19.

What is Ambow Education's stock symbol?

Ambow Education is listed under the stock symbol AMBO.