First High-School Education Group Announces Fourth Quarter and Fiscal Year 2020 Unaudited Financial Results

Rhea-AI Summary

First High-School Education Group (NYSE: FHS) reported its financial results for Q4 and FY 2020 on April 5, 2021. Q4 revenues reached RMB163.6 million, up 36.2% YoY, while net income soared 94.6% to RMB47.0 million. For FY 2020, total revenues were RMB445.8 million, an increase of 32.5%, with net income rising 155.3% to RMB80.9 million. The company also noted a significant enrollment increase of 21.8% to 25,867 students. Looking ahead, FHS projects FY 2021 revenues between RMB770 million to RMB820 million, indicating a growth of 73% to 84% YoY.

Positive

• Q4 revenues of RMB163.6 million, up 36.2% YoY.
• Full year revenues of RMB445.8 million, up 32.5% YoY.
• Q4 net income increased 94.6% to RMB47.0 million.
• Full year net income soared 155.3% to RMB80.9 million.
• Student enrollments rose 21.8% to 25,867.

Negative

• None.

--Fourth Quarter Revenues of RMB163.6 million, up 36.2% year-over-year
--Fourth Quarter Net Income of RMB47.0million, up 94.6% year-over-year
--Full Year Revenues of RMB445.8 million, up 32.5% year-over-year
--Full Year Net Income of RMB80.9 million, up 155.3% year-over-year
--Full Year Student Enrollments of 25,867, up 21.8% year-over-year 

KUNMING, China, April 5, 2021 /PRNewswire/ -- First High-School Education Group Co., Ltd. ("First High-School Education Group" or the "Company") (NYSE: FHS), the largest operator of private high schools in Western China and the third largest operator in China^[1], today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2020.

Fourth Quarter 2020 Financial and Operational Highlights

• Total revenues were RMB163. 6 million (US$25.1 million), an increase of 36.2 % from RMB120.1 million in the fourth quarter of 2019.
• Gross profit was RMB67.2 million (US$10.3million), an increase of 52.0% from RMB44.2 million in the fourth quarter of 2019.
• Income from operations was RMB60.4 million (US$9.3 million), an increase of 116.0% from RMB28.0 million in the fourth quarter of 2019.
• Net income was RMB47.0 million (US$7.2 million), an increase of 94.6% from RMB24.1 million in the fourth quarter of 2019.
• Adjusted net income^[2] (Non-GAAP) was RMB47.0 million (US$7.2 million), an increase of 94.6% from RMB24.1 million in the fourth quarter of 2019.

Fiscal Year 2020 Financial and Operational Highlights

• Total revenues were RMB445.8 million (US$68.3 million), an increase of 32.5% from RMB336.5 million in 2019.
• Gross profit was RMB158.6 million (US$24.3 million), an increase of 51.7 % from RMB104.5 million in 2019.
• Income from operations was RMB99.7 million (US$15.3 million), an increase of 155.5% from RMB39.0 million in 2019.
• Net income was RMB80.9 million (US$12.4 million), an increase of 155.3% from RMB31.7 million in 2019.
• Adjusted net income^[2] (Non-GAAP) was RMB80.9 million (US$12.4 million), an increase of 99.1% from RMB40.5 million in 2019.
• The total number of students enrolled as of December 31, 2020 was 25,867, an increase of 21.8% from 21,236 as of December 31, 2019.

[1] In terms of student enrollment as of December 31, 2019, according to an industry report commissioned by First High-School Education Group and prepared by China Insights Industry Consultancy Limited.

[2] Adjusted net income is a non-GAAP measure. See "Non-GAAP measure" in this press release. A reconciliation of the Company's most directly comparable GAAP measure to historical non-GAAP financial measure has been provided in the tables captioned "Reconciliation of GAAP to Non-GAAP Measure" included at the end of this press release, and investors are encouraged to review the reconciliation.

Mr. Shaowei Zhang, Chairman and Chief Executive Officer of First High-School Education Group commented: "In March 2021, First High-School Education Group was successfully listed on the New York Stock Exchange, which marked a significant milestone for us. We raised capital for growth and significantly raised our visibility. As a newly public company, we are delighted to report strong results with impressive financial and operational performance. We continue to expand our operations and drive strong top-line and bottom-line growth. As of December 31, 2020, we have developed a network of 19 schools and enrolled nearly 26,000 students in China."

"Despite temporary disruptions and short-term impact on our business caused by the COVID-19 pandemic, we experienced the fastest growth rate among the top 20 operators of private high schools in China^[3]. With our unwavering mission to become a leader and innovator in the private high school education sector in China, we are committed to accelerate our expansion into new geographical markets. We believe we are well-positioned to capture the enormous and sustainable demand for high quality private high school education in China, with our highly scalable and asset-light business model and superior education quality," Mr. Zhang concluded.

Mr. Lidong (Ben) Zhu, Chief Financial Officer of First High-School Education Group commented: "We got off to a great start as a public company. Total revenues increased by 32.5% from RMB336.5 million in 2019 to RMB445.8 million in 2020; net income increased by 155.3% from RMB31.7 million in 2019 to RMB80.9 million in 2020; and adjusted net income^[2] (Non-GAAP) increased by 99.1% from RMB40.5 million in 2019 to RMB80.9 million in 2020. When the outbreak of COVID-19 first appeared, we regarded the safety and health of all our students and employees as top priority. To reduce the risk of infection and contain the virus spread, we implemented a series of control measures, including body temperature monitoring of our students and staff and periodical sanitization of school facilities. We also expanded our online education service during the COVID-19 pandemic and provided online tri-teacher lectures for our students from different locations within our school network. As a result of above countermeasures, our financial and operation performance were not materially affected by COVID-19 and conversely, we successfully opened five new high schools in five new cities in Yunnan province and one tutorial school in Guizhou province. These solid results demonstrated the soundness of our growth strategy and our outstanding execution capabilities. Leveraging our highly scalable and asset-light business model, we aim to further expand our school operations to areas outside of Yunnan province, such as Sichuan province, Chongqing and Shaanxi province, in collaboration with third parties, including local real estate developers. Looking ahead, we will continue to drive rapid growth by further expanding our operations and enhancing the quality of our education services, which will enable us to emerge as an industry leader."

[3] According to an industry report commissioned by First High-School Education Group and prepared by China Insights Industry Consultancy Limited, First High-School Education Group experienced the fastest growth rate with a CAGR of 77.3% in terms of high school student enrollment and with a CAGR of 41.4% in terms of the number of high schools from December 31, 2015 to December 31, 2019, among top 20 operators of private high schools in China.

Fourth Quarter 2020 Financial Results

Total Revenues

Total revenues were RMB163.6 million (US$25.1 million), an increase of 36.2 % from RMB120.1 million in the fourth quarter of 2019.

Revenues from customers were RMB148.0 million (US$22.7 million), an increase of 37.2% from RMB107.8 million in the fourth quarter of 2019. The increase was primarily driven by (1) higher student enrollment due to the opening of new schools and the increased number of students enrolled in our existing schools; and (2) the increased income from management services provided to the various vendors of student catering services as more schools opened.

Revenues from government cooperative agreements were RMB15.6 million (US$2.4 million), an increase of 26.8% from RMB12.3 million in the fourth quarter of 2019, primarily driven by the increased number of students enrolled under government cooperative programs.

Cost of revenues 

Cost of revenues were RMB96.3 million (US$14.8 million), an increase of 26.9% from RMB75.9 million in the fourth quarter of 2019. The increase was primarily due to the increased staff cost in line with the increased student enrollments and the opening of new schools.

Gross profit

Gross profit was RMB67.2 million (US$10.3 million), an increase of 52.0% from RMB44.2 million in the fourth quarter of 2019.

Gross margin was 41.1%, compared with 36.8% in the fourth quarter of 2019. The increased gross margin was primarily due to synergies from school expansion and better operating efficiency.

Net operating expenses

Net operating expenses were RMB6.8 million (US$1.0 million), a decrease of 58.1% from RMB16.3 million in the fourth quarter of 2019.

• Selling and marketing expenses were RMB1.5 million (US$0.2 million), an increase of 55.4 % from RMB1.0 million in the fourth quarter of 2019.
• General and administrative expenses were RMB11.1 million (US$1.7 million), a decrease of 42.5% from RMB19.4 million in the fourth quarter of 2019. The decrease was primarily due to certain non-recurring office building maintenance expenses and discretionary bonus expenses occurred in 2019 while no such events occurred in the same period of 2020.
• Government grants were RMB5.8 million (US$0.9 million), an increase of 43.0% from RMB4.1 million in 2019, primarily due to the increased government subsidies, which was in line with the increase in student enrollments and the opening of new schools.

Income from operations

Income from operations was RMB60.4 million (US$9.3 million), an increase of 116.0% year-over-year from RMB28.0 million in the fourth quarter of 2019.

Net income

Net income was RMB47.0 million (US$7.2 million), an increase of 94.6% from RMB24.1 million in the fourth quarter of 2019.

Adjusted net income^[2](Non-GAAP)

Adjusted net income was RMB47.0 million (US$7.2million), an increase of 94.6% from RMB24.1 million in the fourth quarter of 2019.

Cash and restricted cash 

As of December 31, 2020, the Company had cash and restricted cash of RMB208.4 million (US$31.9 million), compared with RMB153.4 million as of December 31, 2019.

Fiscal Year 2020 Financial Results

Total revenues

Total revenues were RMB445.8 million (US$68.3 million), an increase of 32.5% from RMB336.5 million in 2019.

Revenues from customers were RMB404.6 million (US$62.0 million), an increase of 31.0% from RMB308.7 million in 2019. The increase was primarily driven by (1) higher student enrollment due to the opening of new schools and the increased number of students enrolled in our existing schools; and (2) the increased income from management services provided to the various vendors of student catering services as more schools opened.

Revenues from government cooperative agreements were RMB41.3 million (US$6.3 million), an increase of 48.4% from RMB27.8 million in 2019, primarily driven by the increased number of students enrolled under government cooperative programs.

Cost of revenues

Cost of revenues were RMB287.2 million (US$44.0 million), an increase of 23.8% from RMB232.0 million in 2019. The increase was primarily due to the increased staff cost along with the more student enrollments and the opening of new schools.

Gross profit

Gross profit was RMB158.6 million (US$24.3 million), an increase of 51.7% from RMB104.5 million in 2019.

Gross margin was 35.6%, compared with 31.1 % in 2019. The increased gross margin was primarily due to synergies from school expansion and better operating efficiency.

Net operating expenses 

Net operating expenses were RMB58.9 million (US$9.0 million), a decrease of 10.1% from RMB65.5 million in 2019.

• Selling and marketing expenses were RMB7.6 million (US$1.2 million), an increase of 57.7% from RMB4.8 million in 2019. The increase was primarily due to the increased expenses in brand promotion and marketing activities in relation to the opening of new schools.
• General and administrative expenses were RMB60.5 million (US$9.3 million), an increase of 5.6% from RMB57.3 million in 2019. The increase was mainly due to increased professional service fees and business travel expenses.
• Government grants were RMB9.2 million (US$1.4 million), an increase of 39.0% from RMB 6.6 million in 2019, primarily due to the increased government subsidies, which was in line with the increase in our student enrollment and new schools opened.
• Donation was nil compared to RMB10.0 million in 2019.

Income from operations

Income from operations was RMB99.7 million (US$15.3 million), an increase of 155.5 % from RMB39.0 million in 2019.

Net income 

Net income was RMB80.9 million (US$12.4 million), an increase of 155.3% from RMB31.7 million in 2019.

Adjusted net income^[2](Non-GAAP)

Adjusted net income was RMB80.9 million (US$12.4 million), an increase of 99.1% from RMB40.5 million in 2019.

Business Outlook

For the full fiscal year 2021, the Company expects total revenues to be between RMB770.0 million to RMB820.0 million, representing an increase of 73% to 84% on a year- over- year basis. This outlook reflects the Company's current and preliminary views on the market and operational conditions, and the outlook ranges for fiscal year 2021 reflect a number of assumptions that are subject to change based on uncertainties.  

Conference Call

First High-School Education Group's management will hold an earnings conference call on Tuesday, April 6, 2021, at 8:00 AM U.S. Eastern Time (8:00 PM April 6, 2021, Beijing/Hong Kong Time). Please dial in 15 minutes before the conference is scheduled to begin using below numbers.

International	1-412-317-6061
United States	1-888-317-6003
Hong Kong	800-963976
Mainland China	4001-206115
Passcode	5120108

A telephone replay of the conference call may be accessed by phone at the following numbers until April 13, 2021.

International	1-412-317-0088
United States	1-877-344-7529
Replay Access Code	10153700

A live and archived webcast of the conference call will be available on the company's investors relations website at https://ir.diyi.top/

About First High-School Education Group

First High-School Education Group is the largest operator of private high schools in Western China and the third largest operator in China^[1]. First High-School Education Group has a network of 19 schools, offering 14 high school programs, seven middle school programs and four tutorial school programs for Gaokao repeaters, as of December 31, 2020. All of schools of the Company are strategically located in Western China. The Company aspires to become a leader and innovator of private high school education in China. For more information, please visit https://ir.diyi.top/. 

Forward-Looking Statements

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 U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, the Company's business plans and development, which can be identified by terminology such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control, which may cause the Company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.

Statement Regarding Preliminary Unaudited Financial Information

The unaudited financial information set out in this earnings release is preliminary and subject to potential adjustments. Adjustments to the consolidated financial statements may be identified when audit work has been performed for the Company's year-end audit, which could result in significant differences from this preliminary unaudited financial information.

Non-GAAP measure

The Company has provided in this press release financial information that has not been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. The Company considers and uses one non-GAAP measure, adjusted net income, as a supplemental measure to review and assess its operating performance. Adjusted net income enables the Company's management to assess the Company's operating results without considering the impact of non-cash charges, including share-based compensation expenses, and without considering the impact of donation expenses and transaction costs in relation to previous financing activities. The Company also believes that the use of the non-GAAP measure facilitate investors' assessment of its operating performance.

The presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. Adjusted net income is a non-GAAP measure. See "Non-GAAP measure" in this press release. A reconciliation of the Company's most directly comparable GAAP measure to historical non-GAAP financial measure has been provided in the tables captioned "Reconciliation of GAAP to Non-GAAP Measure" included at the end of this press release, and investors are encouraged to review the reconciliation.

Exchange Rate

The Company's business is primarily conducted in China and all of the revenues are denominated in Renminbi ("RMB"). This announcement contains translations of certain RMB amounts into U.S. dollars ("USD" or "US$") at specified rates solely for the convenience of the readers. Unless otherwise noted, all translations from RMB to USD are made at the rate of RMB 6.5250 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on December 31, 2020. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on December 31, 2020, or at any other rate.

For Investor and Media Inquiries Please Contact:

In China:
First High-School Education Group
Lillian Liu
Tel: +86-13062818313
E-mail: liuyi@longspringedu.com

The Blueshirt Group
Ms. Susie Wang
Phone: +86 138-1081-7475
Email: susie@blueshirtgroup.com

In the United States:
The Blueshirt Group
Ms. Julia Qian
Phone: +1 973-619-3227
Email: Julia@blueshirtgroup.com

 

 

 

	First High-School Education Group Co., Ltd. Unaudited Condensed Consolidated Statements of Comprehensive Income (All amounts in thousands, except share data and per share data, or otherwise noted)
			Years Ended December 31,
			2019		2020		2020
			RMB		RMB		US$
Revenues
Revenue from customers			308,715		404,562		62,002
Revenue from government cooperative agreements			27,804		41,272		6,325
Total revenues			336,519		445,834		68,327
Cost of revenues			(231,993)		(287,233)		(44,020)
Gross profit			104,526		158,601		24,307
Operating expenses and income
	Selling and marketing expenses		(4,834)		(7,625)		(1,169)
	General and administrative expenses		(57,284)		(60,475)		(9,268)
	Government grants		6,606		9,185		1,408
	Donation		(10,000)		-		-
Income from operations			39,014		99,686		15,278
Other income (expenses):
	Interest income		983		1,155		177
	Interest expense		(1,407)		(5,368)		(58)
	Change in fair value of contingent consideration		(1,144)		(379)		(823)
	Foreign currency exchange loss, net		(169)		(469)		(72)
	Others, net		(217)		1,699		260
Income before income taxes			37,060		96,324		14,762
Income tax expenses			(5,370)		(15,404)		(2,361)
Net income			31,690		80,920		12,401
Attributable to
Shareholders of the Company			31,604		80,819		12,386
Non-controlling interests			86		101		15
Foreign currency translation adjustments, net of tax			-		144		22
Comprehensive income			31,690		81,064		12,423
Attributable to
Shareholders of the Company			31,604		80,963		12,408
Non-controlling interests			86		101		15
Earnings per ordinary share
Basic and diluted			RMB0.45		RMB1.15		US$0.18
Weighted average number of ordinary share outstanding
Basic and diluted			70,488,700		70,488,700		70,488,700

 

 

 

	First High-School Education Group Co., Ltd. Unaudited Condensed Consolidated Statements of Comprehensive Income (All amounts in thousands, except share data and per share data, or otherwise noted)
			Three Months Ended December 31,
			2019		2020		2020
			RMB		RMB		US$
Revenues
Revenue from customers			107,831		147,973		22,678
Revenue from government cooperative agreements			12,292		15,589		2,389
Total revenues			120,123		163,562		25,067
Cost of revenues			(75,886)		(96,327)		(14,763)
Gross profit			44,237		67,235		10,304
Operating expenses and income
	Selling and marketing expenses		(961)		(1,493)		(229)
	General and administrative expenses		(19,369)		(11,132)		(1,706)
	Government grants		4,072		5,821		892
Income from operations			27,979		60,431		9,261
Other income (expenses):
	Interest income		588		422		65
	Interest expense		(506)		(3,583)		(549)
	Change in fair value of contingent consideration		(205)		-		-
	Foreign currency exchange gain/(loss), net		146		(718)		(110)
	Others, net		(858)		938		144
Income before income taxes			27,144		57,490		8,811
Income tax expenses			(3,008)		(10,516)		(1,612)
Net income			24,136		46,974		7,199
Attributable to
Shareholders of the Company			24,050		46,928		7,192
Non-controlling interests			86		46		7
Foreign currency translation adjustments, net of tax			-		144		22
Comprehensive income			24,136		47,118		7,221
Attributable to
Shareholders of the Company			24,050		47,072		7,214
Non-controlling interests			86		46		7
Earnings per ordinary share
Basic and diluted			RMB0.34		RMB0.67		US$0.10
Weighted average number of ordinary share outstanding
Basic and diluted			70,488,700		70,488,700		70,488,700

 

 

 

	First High-School Education Group Co., Ltd. Unaudited Condensed Consolidated Balance Sheets (All amounts in thousands, except share data and per share data, or otherwise noted)
			As of December 31,
	Assets		2019		2020		2020
			RMB		RMB		US$
Current assets
	Cash		153,418		148,756		22,798
	Restricted cash		-		59,600		9,134
	Accounts receivable, net of allowance for      doubtful accounts		7,687		30,903		4,736
	Amounts due from related parties		82,225		80,464		12,332
	Prepaid expenses and other current assets		21,803		53,450		8,192
	Total current assets		265,133		373,173		57,192
Property and equipment, net			136,431		142,407		21,825
Intangible assets, net			50,705		48,976		7,506
Goodwill			40,218		40,218		6,164
Deferred tax assets			6,567		12,274		1,881
Amounts due from related parties			5,600		500		77
Other non-current assets			10,707		18,524		2,839
	Total assets		515,361		636,072		97,484

 

 

			As of December 31,
	Liabilities and Equity/(Deficit)		2019		2020		2020
			RMB		RMB		US$
Current liabilities
	Contract liabilities		171,303		203,482		31,185
	Deferred revenue from governments		17,789		13,770		2,110
	Borrowings under financing arrangements		14,577		64,140		9,830
	Bank loan		-		46,637		7,148
	Accounts payable		11,207		8,064		1,236
	Accrued expenses and other payables		77,591		91,253		13,986
	Income tax payables		6,055		15,377		2,357
	Amounts due to related parties		113,359		218,996		33,563
	Total current liabilities		411,881		661,719		101,415
Contract liabilities			5,778		7,274		1,115
Deferred revenue from governments			4,032		12,370		1,896
Borrowings under financing arrangements			7,453		28,643		4,390
Other payables			3,686		9,607		1,472
Deferred tax liabilities			12,323		11,933		1,829
	Total liabilities		445,153		731,546		112,116
Equity/(Deficit)
	Ordinary shares (US$0.00001 par value;      5,000,000,000 shares authorized; and      70,488,700 shares issued and      outstanding as of December 31, 2019      and 2020, respectively) *		-		-		-
	Additional paid-in capital		221,791		64,128		9,828
	Statutory reserves		29,101		41,591		6,374
	Accumulated deficit		(180,770)		(201,524)		(30,885)
	Accumulated other comprehensive income		-		144		22
	Total equity/(deficit) attributable to the      shareholders of the Company		70,122		(95,661)		(14,661)
	Non-controlling interests		86		187		29
	Total equity/(deficit)		70,208		(95,474)		(14,632)
Commitments and contingencies			-
	Total liabilities and equity		515,361		636,072		97,484
	* Number of ordinary shares reflect on a retrospective basis the effect of shares issued in connection with the corporate restructuring in January 2021.

 

 

 

First High-School Education Group Co., Ltd. Reconciliation of GAAP to Non-GAAP Measure (All amounts in thousands)
	Three Months Ended December 31,			Years Ended December 31,
	2019	2020	2020	2019	2020	2020
	RMB	RMB	US$	RMB	RMB	US$
Reconciliation of net income to adjusted net income:
Net income	24,136	46,974	7,199	31,690	80,920	12,401
Add:
Share-based compensation expenses	—	—	—	—	—	—
Donation expenses	—	—	—	10,000	—	—
Transaction costs in   relation to previous   financing activities	—	—	—	322	—	—
Tax effects of adjustments **	—	—	—	(1,548)	—	—
Adjusted net income	24,136	46,974	7,199	40,464	80,920	12,401
**Tax effects were determined based upon the nature, as well as the jurisdiction, of each reconciliation adjustment at the respective applicable income tax rate.

 

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SOURCE First High-School Education Group Co., Ltd

FAQ

What were the financial results for FHS in Q4 2020?

FHS reported Q4 2020 revenues of RMB163.6 million and net income of RMB47.0 million.

How did FHS perform in FY 2020?

In FY 2020, FHS achieved revenues of RMB445.8 million and net income of RMB80.9 million.

What is the student enrollment growth for FHS?

FHS saw a 21.8% increase in student enrollments, totaling 25,867.

What guidance did FHS provide for FY 2021?

FHS expects total revenues for FY 2021 to be between RMB770 million to RMB820 million.