Bright Scholar Announces Unaudited Financial Results for the First Fiscal Quarter of Fiscal 2024
- 7.6% increase in revenue
- 13.1% improvement in gross profit
- 14.8% increase in operating income
- 40.9% increase in net income
- 28.4% increase in revenue from Overseas Schools segment
- 12.8% increase in revenue from Complementary Education Services segment
- 26.4% decrease in revenue from Domestic Kindergartens & K-12 Operation Services segment
- None.
Insights
The reported financial performance of Bright Scholar Education Holdings Limited reflects a positive trajectory in revenue and profitability metrics during the first fiscal quarter. A 7.6% year-over-year revenue increase, coupled with substantial improvements in gross profit (13.1%), operating income (14.8%) and net income (40.9%), suggests the company is effectively capitalizing on market opportunities and driving operational efficiencies. Particularly noteworthy is the robust recovery in the Overseas Schools segment, which saw a 28.4% increase in revenue. This segment's performance is critical as it constitutes a significant portion of the company's total revenue (44.2%), indicating a strategic focus on international education services could be a lever for future growth.
Adjustments to financial measures, such as adjusted EBITDA and adjusted net income, provide investors with a clearer picture of the company's core operational performance by excluding non-cash charges like amortization of intangible assets. However, it is essential to note that while these adjustments are helpful for comparison purposes, they are non-GAAP measures and may not be directly comparable to similarly titled measures reported by other companies.
The company's management commentary underscores a commitment to strategic transformation, aiming for sustainable revenue growth and improved cash flow. Investors should monitor how the execution of this strategy impacts the company's financial health and market position, particularly in the competitive global education sector.
Bright Scholar's increased gross margin and operating margin indicate a successful implementation of cost control measures and operational optimizations. The education industry often faces high fixed costs and variable revenue streams, making these improvements particularly significant. The company's diversified portfolio, with a mix of overseas schools, complementary education services and domestic kindergarten & K-12 operations, allows it to mitigate risks associated with demand fluctuations in different market segments.
However, the reported 26.4% decrease in revenue from the Domestic Kindergartens & K-12 Operation Services segment raises concerns. It suggests a potential shift in the domestic market or operational challenges that need to be addressed. This decline contrasts with the growth in other segments and could indicate shifting consumer preferences or increased competition in the domestic market.
The strategic focus on high-growth, high-return businesses is a common approach in the education sector to capitalize on lucrative market segments while phasing out less profitable ones. Bright Scholar's emphasis on enhancing its financial standing and margin expansion is a prudent strategy in an industry where scale can significantly impact profitability.
Bright Scholar's financial results, particularly the increase in basic and diluted earnings per share (43.8%) and adjusted basic and diluted earnings per ADS (37.1%), are promising indicators for investors. These metrics reflect not only the company's current profitability but also its potential for delivering shareholder value. The strong performance in net income, which outpaced revenue growth, suggests that the company is not just growing its top line but is also becoming more efficient in translating revenues into profits.
The financial health of the company appears stable, with cash and cash equivalents and restricted cash totaling RMB521.6 million. However, the slight decrease from RMB567.2 million as of the previous quarter warrants attention to ensure it is not indicative of a negative cash flow trend. As the company moves forward with its restructuring and growth initiatives, maintaining a solid cash position will be crucial for funding investments and sustaining operations.
Investors should also consider the impact of foreign exchange rates on the company's financials, as Bright Scholar operates in a global market. The convenience translation provided in the report helps contextualize the RMB figures in U.S. dollars, but it is important to remember that exchange rate fluctuations can affect the company's reported earnings and financial position when translated into different currencies.
FOSHAN,
FINANCIAL PERFORMANCE HIGHLIGHTS
First Fiscal Quarter Ended November 30, 2023
(in comparison to the same quarter of the last fiscal year):
RMB in million Except EPS and % | First Fiscal Quarter Ended November 30, 2023 | First Fiscal Quarter Ended November 30, 2022 | YoY % Change |
Revenue | 572.7 | 532.5 | 7.6 % |
Gross Profit | 203.4 | 179.8 | 13.1 % |
Gross Margin | 35.5 % | 33.8 % | 1.7 % |
Operating Income | 74.5 | 64.9 | 14.8 % |
Operating Margin | 13.0 % | 12.2 % | 0.8 % |
Net Income for the quarter | 59.2 | 42.0 | 40.9 % |
Adjusted Gross Profit (1) | 206.8 | 183.6 | 12.6 % |
Adjusted Operating Income (2) | 77.8 | 68.7 | 13.3 % |
Adjusted Net Income (3) for the quarter | 61.9 | 45.0 | 37.3 % |
Adjusted EBITDA (4) for the quarter | 90.8 | 90.1 | 0.8 % |
Basic and Diluted Earnings per Share | 0.46 | 0.32 | 43.8 % |
Adjusted Basic and Diluted Earnings per Share (5) for the quarter | 0.48 | 0.35 | 37.1 % |
Basic and Diluted Earnings per ADS | 1.84 | 1.28 | 43.8 % |
Adjusted Basic and Diluted Earnings per ADS (6) for the quarter | 1.92 | 1.40 | 37.1 % |
______________________________________________________________________________________________
1. Adjusted gross profit is defined as gross profit excluding amortization of intangible assets. |
2. Adjusted operating income is defined as operating income excluding amortization of intangible assets. |
3. Adjusted net income is defined as net income excluding amortization of intangible assets, and tax effect of amortization of intangible assets. |
4. Adjusted EBITDA is defined as net income excluding interest income/(expense), net, income tax expense/benefit, and depreciation and amortization. |
5. Adjusted basic and diluted earnings per share is defined as adjusted net income attributable to ordinary shareholders (net income attributable to ordinary shareholders excluding amortization of intangible assets, and tax effect of amortization of intangible assets) divided by the weighted average number of basic and diluted ordinary shares. |
6. Adjusted basic and diluted earnings per American depositary share ("ADS") is defined as adjusted net income attributable to ADS shareholders (net income attributable to ADS shareholders excluding amortization of intangible assets, and tax effect of amortization of intangible assets) divided by the weighted average number of basic and diluted ADSs. |
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. |
Overseas Schools (CATS Global Schools)
CATS Global Schools included 3 Stafford House locations in
- For the first fiscal quarter, revenue amounted to
RMB252.9 million , representing a28.4% increase compared toRMB196.9 million in the same fiscal quarter last year, and accounted for44.2% of the total revenue.
Complementary Education Services
The complementary education services business comprised language training, overseas study counselling, career counselling, study tour and camps as well as international contest training and others.
- For the first fiscal quarter, revenue amounted to
RMB210.0 million , representing a12.8% increase compared toRMB186.2 million for the same fiscal quarter last year, and accounted for36.7% of the total revenue.
Domestic Kindergartens & K-12 Operation Services
The domestic kindergartens & K-12 operation services business comprises of for-profit kindergartens and operation services for students of the domestic K-12 schools including catering and procurement services.
- For the first fiscal quarter, revenue amounted to
RMB109.8 million , representing a26.4% decrease compared toRMB149.4 million for the same fiscal quarter last year, and accounted for19.1% of the total revenue.
KEY EVENTS
1. Senior Management Appointments
On Jan. 18, 2024, the Company announced changes and appointments in its management. Mr. Robert Ruolei Niu succeeded Mr. Tim Hongru Zhou and was appointed as the new Chief Executive Officer having previously served as Chief Financial Officer, while Mr. Tim Hongru Zhou continues to serve as chairman of the Board of directors (the "Board") of the Company. After previously serving as finance director, Ms. Cindy Hui Zhang succeeded Mr. Robert Ruolei Niu and was appointed as the Chief Financial Officer.
2. 2024 Share Incentive Plan
On Jan. 19, 2024, the Board approved the 2024 Share Incentive Plan (the "2024 Plan") which is effective on the same date. Employees, directors and consultants are eligible to receive Share Awards. The purpose of the Plan, through the granting of Share Awards, is to help the Company to secure and retain services of eligible award recipients provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliates and provide means by which the eligible recipients may benefit from increases in value of the ordinary shares.
MANAGEMENT COMMENTARY
"I consider it an honour to lead Bright Scholar, a premier education service company with abundant market opportunities due to its global presence and network. Additionally, our resilient business model, supported by a diversified portfolio of enterprises adds further strength to our position." Bright Scholar's recently appointed Chief Executive Officer, Mr. Robert Roulie Niu, said. "We kicked off fiscal year 2024 with a solid start, making significant strides in revitalizing our businesses. It is particularly evident in the ongoing recovery of our business and operations in
"The recovery of Overseas School business remained the strongest, marked by a
"Our consistent advancement reflects the strength of our diversified business portfolio, underscored by significant progress in operational optimizations and cost efficiencies. These strategic changes and improvements play a central role in our ongoing transformation efforts, aimed at shaping a portfolio of businesses geared towards sustainable revenue growth, enhanced EBITDA and solid cashflow. In conclusion, we have made substantial headway in driving our strategic agenda forward, unwavering in our commitment to accelerate the restructuring of our business portfolio. Our focus remains on nurturing high-growth, high-return businesses while bolstering our financial standing through margin expansion, strengthening our balance sheet, and enhancing cash flows. Our overarching goal is to establish a position of strength, providing ample room to pursue scalable business expansion with sustainable profitability well into fiscal year 2025 and beyond. We firmly believe that this marks a pivotal step in driving forward-looking value creation for our stakeholders in the long term." Mr. Niu concluded.
UNAUDITED FINANCIAL RESULTS for THE FIRST FISCAL QUARTER ENDED NOVEMBER 30, 2023
Revenue
Revenue for the first fiscal quarter was
Overseas Schools: Revenue contribution for the first fiscal quarter was
Complementary Education Services: Revenue contribution for the first fiscal quarter was
Domestic Kindergartens & K-12 Operation Services: Revenue contribution for the first fiscal quarter was
Cost of Revenue
Cost of revenue for the first fiscal quarter was
Gross Profit, Gross Margin and Adjusted Gross Profit
Gross profit for the first fiscal quarter was
Adjusted gross profit for the first fiscal quarter was
Selling, General and Administrative Expenses
Total SG&A expenses for the first fiscal quarter were
Operating Income, Operating Margin and Adjusted Operating Income
Operating income for the first fiscal quarter was
Adjusted operating income for the first fiscal quarter was
Net Income and Adjusted Net Income
Net income for the first fiscal quarter was
Adjusted net income for the first fiscal quarter was
Earnings per ordinary share/ADS and Adjusted Earnings per ordinary share/ADS
Basic and diluted net earnings per ordinary share attributable to ordinary shareholders for the first fiscal quarter were
Adjusted basic and diluted net earnings per ordinary share attributable to ordinary shareholders for the first fiscal quarter were
Basic and diluted net earnings per ADS attributable to ADS holders for the first fiscal quarter were
Adjusted basic and diluted net earnings per ADS attributable to ADS holders for the first fiscal quarter were
Adjusted EBITDA
Adjusted EBITDA for the first fiscal quarter was
Cash and Working Capital
As of November 30, 2023, the Company's cash and cash equivalents and restricted cash were
Conference Call
BEDU's management will host a conference call at 8:00 am US Eastern Time (9:00 pm
To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time:
Mainland China: | 4001-201203 |
800-905945 | |
1-888-346-8982 | |
International: | 1-412-902-4272 |
*No passcode is needed for the call. Please request to join Bright Scholar Education Holdings Ltd. call as you dial in.
The Company will also broadcast a live audio webcast of the conference call. The webcast will be available at http://ir.brightscholar.com/.
Following the earnings conference call, an archive of the call will be available by dialing:
United States Toll Free: | 1-877-344-7529 |
International: | 1-412-317-0088 |
Replay Passcode: | 7587259 |
Replay End Date: | February 13, 2024 |
CONVENIENCE TRANSLATION
The Company's reporting currency is Renminbi ("RMB"). However, periodic reports made to shareholders will include current period amounts translated into U.S. dollars using the prevailing exchange rates at the balance sheet date, for the convenience of readers. Translations of balances in the condensed consolidated balance sheets, and the related condensed consolidated statements of operations, and cash flows from RMB into
NON-GAAP FINANCIAL MEASURES
In evaluating our business, we consider and use certain non-GAAP measures, including primarily adjusted EBITDA, adjusted net income/(loss), adjusted gross profit/(loss), adjusted operating income/(loss), adjusted net earnings/(loss) per share attributable to ordinary shareholders/ADS holders basic and diluted as supplemental measures to review and assess our operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with
We incur amortization expense of intangible assets related to various acquisitions that have been made in recent years. These intangible assets are valued at the time of acquisition and are then amortized over a period of several years after the acquisition. We believe that exclusion of these expenses allows greater comparability of operating results that are consistent over time for the Company's newly-acquired and long-held business as the related intangibles do not have significant connection to the growth of the business. Therefore, we provide exclusion of amortization of intangible assets to define adjusted gross profit, adjusted operating income/(loss), adjusted net income/(loss), and adjusted net earnings/(loss) per share attributable to ordinary shareholders/ADS holders, basic and diluted.
We present the non-GAAP financial measures because they are used by our management to evaluate our operating performance and formulate business plans. Such non-GAAP measures include adjusted EBITDA, adjusted net income/(loss), adjusted gross profit/(loss), adjusted operating income/(loss), adjusted net earnings/(loss) per share attributable to ordinary shareholders/ADS holders basic and diluted. Non-GAAP financial measures enable our management to assess our operating results without considering the impact of non-cash charges, including depreciation and amortization and without considering the impact of non-operating items such as interest income/(expense), net; income tax expense/benefit; amortization of intangible assets and tax effect of amortization of intangible assets. We also believe that the use of these non-GAAP measures facilitates investors' assessment of our operating performance.
The non-GAAP financial measures are not defined under
About Bright Scholar Education Holdings Limited
Bright Scholar is a global premier education service company, which primarily provides quality international education to global students and equip them with the critical academic foundation and skillsets necessary to succeed in the pursuit of higher education.
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the
IR Contact:
Email: BEDU.IR@gcm.international
Media Contact:
Email: media@brightscholar.com
Phone: +86-757-2991-6814
BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED | |||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(Amounts in thousands) | |||||||
As of | |||||||
August 31, | November 30, | ||||||
2023 | 2023 | ||||||
RMB | RMB | USD | |||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | 537,325 | 492,661 | 69,039 | ||||
Restricted cash | 28,261 | 28,639 | 4,013 | ||||
Short term investment | - | 9,951 | 1,394 | ||||
Accounts receivable | 19,209 | 28,685 | 4,020 | ||||
Amounts due from related parties, net | 188,445 | 199,809 | 28,000 | ||||
Other receivables, deposits and other assets, net | 148,679 | 151,884 | 21,284 | ||||
Inventories | 5,480 | 5,160 | 723 | ||||
Total current assets | 927,399 | 916,789 | 128,473 | ||||
Restricted cash - non-current | 1,650 | 250 | 35 | ||||
Property and equipment, net | 414,225 | 393,780 | 55,182 | ||||
Intangible assets, net | 343,077 | 334,205 | 46,834 | ||||
Goodwill, net | 1,328,872 | 1,313,585 | 184,079 | ||||
Long-term investments, net | 36,070 | 36,253 | 5,080 | ||||
Prepayments for construction contracts | 1,711 | 712 | 100 | ||||
Deferred tax assets, net | 1,810 | 1,645 | 231 | ||||
Other non-current assets, net | 15,249 | 15,319 | 2,147 | ||||
Operating lease right-of-use assets - non current | 1,549,447 | 1,497,353 | 209,831 | ||||
Total non-current assets | 3,692,111 | 3,593,102 | 503,519 | ||||
TOTAL ASSETS | 4,619,510 | 4,509,891 | 631,992 |
BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED | |||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS-CONTINUED | |||||||
(Amounts in thousands) | |||||||
As of | |||||||
August 31, | November 30, | ||||||
2023 | 2023 | ||||||
RMB | RMB | USD | |||||
LIABILITIES AND EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | 105,193 | 143,015 | 20,042 | ||||
Amounts due to related parties | 311,451 | 300,867 | 42,162 | ||||
Accrued expenses and other current liabilities | 279,690 | 261,263 | 36,612 | ||||
Income tax payable | 99,367 | 96,213 | 13,483 | ||||
Contract liabilities - current | 541,683 | 441,860 | 61,920 | ||||
Refund liabilities - current | 17,572 | 16,962 | 2,377 | ||||
Operating lease liabilities - current | 125,447 | 124,897 | 17,502 | ||||
Total current liabilities | 1,480,403 | 1,385,077 | 194,098 | ||||
Non-current contract liabilities | 2,116 | 3,084 | 432 | ||||
Deferred tax liabilities, net | 42,093 | 40,957 | 5,740 | ||||
Operating lease liabilities - non current | 1,523,242 | 1,472,116 | 206,294 | ||||
Total non-current liabilities | 1,567,451 | 1,516,157 | 212,466 | ||||
TOTAL LIABILITIES | 3,047,854 | 2,901,234 | 406,564 | ||||
EQUITY | |||||||
Share capital | 8 | 8 | 1 | ||||
Additional paid-in capital | 1,697,370 | 1,697,370 | 237,860 | ||||
Statutory reserves | 20,155 | 20,155 | 2,824 | ||||
Accumulated other comprehensive income | 172,230 | 154,099 | 21,595 | ||||
Accumulated deficit | (473,154) | (418,462) | (58,641) | ||||
Shareholders' equity | 1,416,609 | 1,453,170 | 203,639 | ||||
Non-controlling interests | 155,047 | 155,487 | 21,789 | ||||
TOTAL EQUITY | 1,571,656 | 1,608,657 | 225,428 | ||||
TOTAL LIABILITIES AND EQUITY | 4,619,510 | 4,509,891 | 631,992 |
BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED | |||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||
(Amounts in thousands, except for shares and per share data) | |||||
Three Months Ended November 30, | |||||
2022 | 2023 | ||||
RMB | RMB | USD | |||
Revenue | 532,460 | 572,736 | 80,260 | ||
Cost of revenue | (352,630) | (369,298) | (51,751) | ||
Gross profit | 179,830 | 203,438 | 28,509 | ||
Selling, general and administrative expenses | (139,844) | (137,979) | (19,336) | ||
Other operating income | 24,931 | 9,055 | 1,269 | ||
Operating income | 64,917 | 74,514 | 10,442 | ||
Interest (expense)/income, net | (3,759) | 386 | 54 | ||
Investment (loss)/income | (1,463) | 995 | 139 | ||
Other income/(expenses) | 4,182 | (1,196) | (168) | ||
Income before income taxes and share of equity in (loss)/profit of unconsolidated | 63,877 | 74,699 | 10,467 | ||
Income tax expense | (21,670) | (15,672) | (2,196) | ||
Share of equity in (loss)/profit of unconsolidated affiliates | (183) | 183 | 26 | ||
Net income | 42,024 | 59,210 | 8,297 | ||
Net income attributable to non-controlling interests | 4,092 | 4,518 | 633 | ||
Net income attributable to ordinary shareholders | 37,932 | 54,692 | 7,664 | ||
Net income per share attributable to | |||||
ordinary shareholders | |||||
—Basic | 0.32 | 0.46 | 0.06 | ||
—Diluted | 0.32 | 0.46 | 0.06 | ||
Weighted average shares used in | |||||
calculating net income per ordinary share: | |||||
—Basic | 118,669,795 | 118,669,795 | 118,669,795 | ||
—Diluted | 118,669,795 | 118,669,795 | 118,669,795 | ||
Net income per ADS | |||||
—Basic | 1.28 | 1.84 | 0.24 | ||
—Diluted | 1.28 | 1.84 | 0.24 |
BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED | |||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||
(Amounts in thousands) | |||||
Three Months Ended November 30, | |||||
2022 | 2023 | ||||
RMB | RMB | USD | |||
Net cash used in operating activities | (26,667) | (23,679) | (3,318) | ||
Net cash generated from/(used in) investing activities | 16,337 | (17,685) | (2,478) | ||
Net cash used in financing activities | (5,334) | (1,887) | (264) | ||
Effect of exchange rate changes on cash and cash equivalents, and restricted | 13,398 | (2,435) | (342) | ||
Net change in cash and cash equivalents, and restricted cash | (2,266) | (45,686) | (6,402) | ||
Cash and cash equivalents, and restricted cash at beginning of the period | 857,784 | 567,236 | 79,489 | ||
Cash and cash equivalents, and restricted cash at end of the period | 855,518 | 521,550 | 73,087 |
BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED | |||||
Reconciliations of GAAP and Non-GAAP Results | |||||
(Amounts in thousands, except for shares and per share data) | |||||
Three Months Ended November 30, | |||||
2022 | 2023 | ||||
RMB | RMB | USD | |||
Gross profit | 179,830 | 203,438 | 28,509 | ||
Add: Amortization of intangible assets | 3,798 | 3,322 | 466 | ||
Adjusted gross profit | 183,628 | 206,760 | 28,975 | ||
Operating income | 64,917 | 74,514 | 10,442 | ||
Add: Amortization of intangible assets | 3,798 | 3,322 | 466 | ||
Adjusted operating income | 68,715 | 77,836 | 10,908 | ||
Net income | 42,024 | 59,210 | 8,297 | ||
Add: Amortization of intangible assets | 3,798 | 3,322 | 466 | ||
Add: Tax effect of amortization of intangible assets | (777) | (670) | (94) | ||
Adjusted net income | 45,045 | 61,862 | 8,669 | ||
Net income attributable to ordinary shareholders | 37,932 | 54,692 | 7,664 | ||
Add: Amortization of intangible assets | 3,798 | 3,322 | 466 | ||
Add: Tax effect of amortization of intangible assets | (777) | (670) | (94) | ||
Adjusted net income attributable to ordinary shareholders | 40,953 | 57,344 | 8,036 | ||
Net income | 42,024 | 59,210 | 8,297 | ||
Add: Interest expense/(income), net | 3,759 | (386) | (54) | ||
Add: Income tax expense | 21,670 | 15,672 | 2,196 | ||
Add: Depreciation and amortization | 22,599 | 16,293 | 2,283 | ||
Adjusted EBITDA | 90,052 | 90,789 | 12,722 | ||
Weighted average shares used | |||||
in calculating adjusted net income per ordinary share: | |||||
—Basic and Diluted | 118,669,795 | 118,669,795 | 118,669,795 | ||
Adjusted net income per share attributable | |||||
to ordinary shareholders | |||||
—Basic | 0.35 | 0.48 | 0.07 | ||
—Diluted | 0.35 | 0.48 | 0.07 | ||
Adjusted net income per ADS | |||||
—Basic | 1.40 | 1.92 | 0.28 | ||
—Diluted | 1.40 | 1.92 | 0.28 |
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SOURCE Bright Scholar Education Holdings Ltd.
FAQ
What were the financial highlights for Bright Scholar Education Holdings Limited's first fiscal quarter?
How did the Overseas Schools segment perform in the first fiscal quarter?
What was the revenue change for the Complementary Education Services segment in the first fiscal quarter?
What was the revenue change for the Domestic Kindergartens & K-12 Operation Services segment in the first fiscal quarter?