RYB Education, Inc. Reports Fourth Quarter and Full Year 2020 Financial Results
RYB Education, Inc. (RYB) reported its unaudited financial results for Q4 and the full year ended December 31, 2020, showing significant impacts from COVID-19. Q4 net revenues decreased by 7.2% to $47.1 million, while gross profit increased by 21.0% to $11.9 million. Net income attributable to shareholders surged to $9.3 million from $0.2 million in Q4 2019. However, full-year net revenues were down 40% to $109.7 million, and the net loss expanded to $37.3 million. For Q1 2021, RYB anticipates revenues between $35 million and $36 million, a growth of approximately 102%-108% year-over-year.
- Q4 net income attributable to ordinary shareholders was $9.3 million, up from $0.2 million in Q4 2019.
- Gross profit for Q4 2020 increased by 21.0% to $11.9 million.
- RYB expects Q1 2021 net revenues between $35 million and $36 million, a year-over-year increase of approximately 102% to 108%.
- All directly operated facilities resumed normal operations by the end of Q4 2020.
- Full-year net revenues decreased by 40% to $109.7 million compared to 2019.
- Full-year net loss attributable to ordinary shareholders increased to $37.3 million from $2.4 million in 2019.
- Impairment loss on goodwill amounted to $8.5 million for 2020.
BEIJING, May 9, 2021 /PRNewswire/ -- RYB Education, Inc. ("RYB" or the "Company") (NYSE: RYB), a leading early childhood education service provider in China, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2020.
Impacts from COVID-19
Throughout the majority of the year, the COVID-19 pandemic caused significant disruptions to and had broad ramifications on the Company's services and operations. In 2020, the Company temporarily closed its facilities in China from late January to late May. In late May, with the effective control of COVID-19 and easing guidelines and guidance from local governments, our facilities began a phased reopening. The Company took and continues to take prompt actions to combat the challenges, such as in-school health protocols, stringent cost control measures, and supportive measures for franchisees. By the end of the fourth quarter of 2020, all of the Company's directly operated kindergartens and directly operated play-and-learn centers in both China and Singapore had re-opened. Over
Fourth Quarter 2020 Operational and Financial Summary
- Number of students enrolled at directly operated facilities was 34,011 as of December 31, 2020, compared with 30,806 as of December 31, 2019.
- Net revenues decreased by
7.2% to$47.1 million , compared with$50.7 million for the fourth quarter of 2019. - Gross profit increased by
21.0% to$11.9 million , compared with$9.9 million for the fourth quarter of 2019. - Net income attributable to ordinary shareholders of RYB for the fourth quarter of 2020 was
$9.3 million , compared with$0.2 million for the fourth quarter of 2019. Adjusted net income attributable to ordinary shareholders1 of RYB for the fourth quarter of 2020 was$10.0 million , compared with$1.1 million for the fourth quarter of 2019. - Cash used in operating activities was
$2.1 million in the fourth quarter of 2020, compared with$9.3 million cash used in operating activities for the fourth quarter of 2019.
Full Year 2020 Financial Summary
- Net revenues were
$109.7 million , compared with$182.3 million for 2019. - Gross loss was
$7.2 million , compared with a gross profit of$26.7 million for 2019. - Net loss attributable to ordinary shareholders of RYB for 2020 was
$37.3 million , compared with$2.4 million for 2019. Adjusted net loss attributable to ordinary shareholders2 of RYB for 2020 was$34.4 million , compared with adjusted net income of$1.4 million for 2019.
"In the fourth quarter of 2020, our directly operated kindergartens continued their reopening, and all had resumed normal operations by the end of the quarter. We were pleased to see an increase in the number of students enrolled in our directly operated kindergartens compared to the same quarter of last year, as a result of the effective control of COVID-19 and our dedicated efforts in re-ramping our facilities. Additionally, the vast majority of our franchised play-and-learn centers have resumed operations with our continued supports," said Ms. Yanlai Shi, Co-founder, Director and Chief Executive Officer of RYB. "We have also continued our efforts in our integrated online-merge-offline services by further enhancing our management and service system of kindergarten, developing a pilot management system for play-and-learn centers, and enhancing the variety of services to our extended offerings and to at-home educational content.
"Our company experienced unprecedented challenges in 2020 attributable to the COVID-19 pandemic. Since the outbreak, the government imposed various strict measures to contain the spread of COVID-19. In accordance with these requirements, we acted promptly and decisively to adjust our operations. Looking ahead, we will continue to stay on track to deliver integrated quality education services and products to our students and families and continue to strengthen the safety management supervision of facilities and the implementation of code of conduct of our staff. We firmly believe in our long-term growth potential and look forward to regaining momentum once operations across our business fully stabilize. Despite fluid changes in market conditions, our commitment to creating and bringing value to families and society remains firm," concluded Ms. Shi.
Mr. Hao Gu, Chief Financial Officer of RYB, added, "With the recovery of operations across business in the fourth quarter of 2020, the company's revenues returned to similar levels close to the same period in 2019. As the process of conversion of some directly operated kindergartens continued, there are a higher percentage of inclusive kindergartens in our directly operated kindergartens currently. Thus, there was a slight decrease in revenues from our directly operated kindergartens compared to the same period last year. However, we see a significant increase in our profit margin of the directly operated facilities. Looking back at the year of 2020, the ongoing impact of COVID-19 pandemic on the company's operations and business lasted for more than half a year. By cutting expenses and reducing costs reasonably, streamlining team structure and adjusting personnel, the company successfully overcome the challenges brought by the COVID-19 pandemic and maintained a healthy cash position by the end of the year. In 2021, the company will continue to promote streamlined and refined operations, focusing on providing quality education and improving the company's profitability. We also will hone our operational capabilities and strengthen our abilities in providing management and operational services to third-party facility operators. We look forward to having increasingly diversified sources of revenues by creating a unique online-merge-offline business model."
Fourth Quarter 2020 Financial Results
Net Revenues
Net revenues for the fourth quarter of 2020 decreased by
Service revenues for the fourth quarter of 2020 decreased by
Product revenues for the fourth quarter of 2020 decreased by
Cost of Revenues
Cost of revenues for the fourth quarter of 2020 was
Gross Profit and Gross Margin
Gross profit for the fourth quarter of 2020 increased by
Gross margin for the fourth quarter of 2020 was
Operating Expenses
Total operating expenses for the fourth quarter of 2020 were
Selling expenses for the fourth quarter of 2020 were
General and administrative ("G&A") expenses for the fourth quarter of 2020 were
Impairment loss on long-lived asset was
Operating Income
Operating income for the fourth quarter of 2020 was
Net Income/loss
Net income attributable to ordinary shareholders of RYB for the fourth quarter of 2020 was
Basic and diluted net income per American depositary share ("ADS") attributable to ordinary shareholders of RYB for the fourth quarter of 2020 were
Adjusted basic and diluted net income per ADS attributable to ordinary shareholders4 of RYB for the fourth quarter of 2020 were
EBITDA5 for the fourth quarter of 2020 was
Operating Cash Flow
Cash used in operating activities was
Full Year of 2020 Financial Results
Net Revenues
Net revenues for the full year of 2020 were
Services revenues for the full year of 2020 were
Product revenues for the full year of 2020 were
Cost of Revenues
Cost of revenues for the full year of 2020 was
Gross Profit/loss
Gross loss for the full year of 2020 was
Operating Expenses
Total operating expenses for the full year of 2020 were
Selling expenses were
G&A expenses for the full year of 2020 were
Impairment loss on goodwill was
Impairment loss on long-lived asset was
Operating Income/loss
Operating loss for the full year of 2020 was
Impairment loss on long-term investment
Impairment loss on long-term investment for the full year of 2020 was
Net Income/loss
Net loss attributable to ordinary shareholders of RYB for the full year of 2020 was
Basic and diluted net loss per ADS attributable to ordinary shareholders of RYB for the full year of 2020 were both
Adjusted basic and diluted net loss per ADS attributable to ordinary shareholders of RYB for the full year of 2020 were both
EBITDA for the full year of 2020 was a loss of
Balance Sheet
As of December 31, 2020, the Company had total cash and cash equivalents of
Outlook
For the first quarter of 2021, the Company's management currently expects:
- Net revenues to be between
For the full year of 2021, the Company's management currently expects:
- Net revenues to be between
The above outlook is based on the current market conditions and reflects the Company management's current and preliminary estimates of market and operating conditions, customer demand and foreign exchange environment, which are all subject to change.
Conference Call
Management will host an earnings conference call at 8:00 a.m. Eastern Time on Monday, May 10, 2021 (8:00 p.m. Beijing Time on May 10, 2021). Listeners may access the call by dialing:
United States (toll free): | 1-888-346-8982 |
International: | 1-412-902-4272 |
China (toll free): | 400-120-1203 |
Hong Kong (toll free): | 800-905-945 |
Participants should dial-in at least 10-15 minutes before the scheduled start time and ask to be connected to the RYB Education, Inc. conference call.
A telephone replay will be available approximately one hour after the call until May 17, 2021 by dialing:
United States (toll free): | 1-877-344-7529 |
International: | 1-412-317-0088 |
Replay Access Code: | 10156434 |
Additionally, a live and archived webcast of the conference call will be available at http://ir.rybbaby.com.
About RYB Education, Inc.
Founded on the core values of ''Care'' and ''Responsibility,'' ''Inspire'' and ''Innovate,'' RYB Education, Inc. is a leading early childhood education service provider in China. Since opening its first play-and-learn center in 1998, the Company has grown and flourished with the mission to provide high-quality, individualized and age-appropriate care and education to nurture and inspire each child for his or her betterment in life. During its two decades of operating history, the Company has built "RYB" into a well-recognized education brand and helped bring about many new educational practices in China's early childhood education industry. RYB's comprehensive early childhood education solutions meet the needs of children from infancy to 6 years old through structured courses at kindergartens and play-and-learn centers, as well as at-home educational products and services.
For more information, please visit http://ir.rybbaby.com
Use of Non-GAAP Financial Measures
We use EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, and adjusted basic and diluted net income per ADS, each a non-GAAP financial measure, in evaluating our operating results and for financial and operational decision-making purposes.
EBITDA is defined as net income excluding depreciation, amortization, and income tax expenses; adjusted EBITDA is defined as net income excluding depreciation, amortization, income tax expenses, and share-based compensation expenses; adjusted operating income is defined as operating income excluding share-based compensation expenses; adjusted net income attributable to ordinary shareholders is defined as net income attributable to ordinary shareholders excluding share-based compensation expenses and changes of redeemable non-controlling interests; and adjusted basic and diluted net income per ADS attributable to ordinary shareholders are defined as basic and diluted net income per ADS attributable to ordinary shareholders excluding share-based compensation expenses and changes of redeemable non-controlling interests.
We believe that EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, and adjusted basic and diluted net income per ADS, help identify underlying trends in our business that could otherwise be distorted by the effect of certain expenses that we include in income from operations and net income. We believe that EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, and adjusted basic and diluted net income per ADS, provide useful information about our operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making.
EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, and adjusted basic and diluted net income per ADS, should not be considered in isolation or construed as an alternative to net income or any other measure of performance or as an indicator of our operating performance. Investors are encouraged to review the historical adjusted financial measures to the most directly comparable GAAP measures. EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, and adjusted basic and diluted net income per ADS, presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.
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," "confident" and similar statements. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. 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 statement, including but not limited to the following: the Company's brand recognition and market reputation; student enrolment in the Company's teaching facilities; the Company's growth strategies; its future business development, results of operations and financial condition; trends and competition in China's early childhood education market; changes in its revenues and certain cost or expense items; the expected growth of the Chinese early childhood education market; Chinese governmental policies relating to the Company's industry and general economic conditions in China. Further information regarding these and other risks is included in the Company's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and the Company undertakes no obligation to update any forward-looking statement, except as required under applicable law.
For investor and media inquiries, please contact:
In China:
RYB Education, Inc.
Investor Relations
E-mail: ir@rybbaby.com
The Piacente Group, Inc.
Yang Song
Tel: +86 (10) 6508-0677
E-mail: ryb@tpg-ir.com
In the United States:
The Piacente Group, Inc.
Brandi Piacente
Tel: +1-212-481-2050
E-mail: ryb@tpg-ir.com
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||
(in thousands of U.S. dollars) | ||
As of | ||
December 31, | December 31, | |
Current assets: | ||
Cash and cash equivalents | 53,454 | 68,728 |
Term deposits | - | 1,005 |
Accounts receivable, net | 1,844 | 2,804 |
Inventories | 5,773 | 7,256 |
Prepaid expenses and other current assets | 8,927 | 10,279 |
Loan receivables | 107 | 1,149 |
Amounts due from related parties | - | 349 |
Total current assets | 70,105 | 91,570 |
Non-current assets: | ||
Restricted cash | 1,127 | 710 |
Property, plant and equipment, net | 47,638 | 50,142 |
Goodwill | 46,147 | 52,687 |
Intangible assets, net | 14,179 | 17,700 |
Long-term investment | 217 | 5,237 |
Deferred tax assets | 21,168 | 18,161 |
Other non-current assets | 14,438 | 16,484 |
Operating lease right-of-use assets | 87,472 | 83,403 |
Total assets | 302,491 | 336,094 |
Liabilities | ||
Current liabilities: | ||
Prepayments from customers, current portion | 4,145 | 5,904 |
Accrued expenses and other current liabilities | 54,406 | 56,472 |
Income tax payable | 18,592 | 14,929 |
Operating lease liabilities, current portion | 16,856 | 16,399 |
Deferred revenue, current portion | 34,351 | 31,993 |
Long-term debt, current portion | 7 | 87 |
Amounts due to related parties | - | 124 |
Total current liabilities | 128,357 | 125,908 |
Non-current liabilities: | ||
Prepayments from customers, non-current portion | 4,024 | 2,508 |
Deferred revenue, non-current portion | 1,726 | 5,531 |
Other non-current liabilities | 12,519 | 11,034 |
Deferred income tax liabilities | 1,890 | 3,384 |
Operating lease liabilities, non-current portion | 76,308 | 71,012 |
Total liabilities | 224,824 | 219,377 |
Mezzanine equity | ||
Redeemable non-controlling interests | 9,988 | 8,801 |
Equity | ||
Ordinary shares | 29 | 29 |
Treasury stock | (10,321) | (12,000) |
Additional paid-in capital | 141,094 | 139,843 |
Statutory reserve | 4,652 | 4,060 |
Accumulated other comprehensive (loss)/ income | (1,468) | 141 |
Accumulated deficit | (71,837) | (33,553) |
Total RYB Education, Inc. shareholders' equity | 62,149 | 98,520 |
Non-controlling interest | 5,530 | 9,396 |
Total equity | 67,679 | 107,916 |
Total liabilities, mezzanine equity and total equity | 302,491 | 336,094 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(in thousands of U.S. dollars, except share, ADS, per share and per ADS data) | ||||
Three Months Ended | Year Ended | |||
2020 | 2019 | 2020 | 2019 | |
Net revenues: | ||||
Services | 44,930 | 46,641 | 103,073 | 166,183 |
Products | 2,143 | 4,094 | 6,642 | 16,100 |
Total net revenues | 47,073 | 50,735 | 109,715 | 182,283 |
Cost of revenues: | ||||
Services | 33,722 | 39,094 | 113,285 | 147,669 |
Products | 1,420 | 1,783 | 3,616 | 7,865 |
Total cost of revenues | 35,142 | 40,877 | 116,901 | 155,534 |
Gross profit/(loss) | 11,931 | 9,858 | (7,186) | 26,749 |
Operating expenses | ||||
Selling expenses | 416 | 680 | 1,285 | 2,808 |
General and administrative expenses | 8,198 | 5,856 | 24,313 | 23,775 |
Impairment loss on goodwill | - | - | 8,454 | - |
Impairment loss on long-lived assets | 2,148 | - | 2,148 | - |
Total operating expenses | 10,762 | 6,536 | 36,200 | 26,583 |
Operating income/(loss) | 1,169 | 3,322 | (43,386) | 166 |
Interest income | 61 | 227 | 348 | 858 |
Government subsidy income | 1,601 | 109 | 4,591 | 499 |
Gain on disposal of subsidiaries | 216 | 211 | 96 | 492 |
Impairment (loss) on long-term investments | (519) | - | (2,432) | - |
Income/(loss) before income taxes | 2,528 | 3,869 | (40,783) | 2,015 |
Less: Income tax expense (benefit) | (8,298) | 3,008 | 215 | 3,541 |
Income/(loss) before gain/loss in equity | 10,826 | 861 | (40,998) | (1,526) |
Gain/(loss) from equity method investment | 39 | (203) | (185) | (664) |
Net income/(loss) | 10,865 | 658 | (41,183) | (2,190) |
Less: Net income /(loss) attributable to non- | 1,550 | 427 | (3,903) | 387 |
(Decrease) in redeemable non-controlling | - | - | - | (143) |
Net income/(loss) attributable to ordinary | 9,315 | 231 | (37,280) | (2,434) |
Net income/(loss) per share attributable to | ||||
Basic | 0.33 | 0.01 | (1.32) | (0.09) |
Diluted | 0.33 | 0.01 | (1.32) | (0.09) |
Net income/(loss) per ADS attributable to | ||||
Basic | 0.33 | 0.01 | (1.32) | (0.09) |
Diluted | 0.33 | 0.01 | (1.32) | (0.09) |
Weighted average shares used in calculating | ||||
Basic | 28,194,946 | 27,666,982 | 28,224,094 | 28,074,624 |
Diluted | 28,599,693 | 28,905,106 | 28,224,094 | 28,074,624 |
Note 1: Each ADS represents one Class A ordinary share. | ||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||
(in thousands of U.S. dollars) | ||||||||||
Three Months Ended | Year Ended December 31, | |||||||||
2020 | 2019 | 2020 | 2019 | |||||||
Net income/(loss) | 10,865 | 658 | (41,183) | (2,190) | ||||||
Other comprehensive income/(loss), net of tax | ||||||||||
Change in cumulative foreign currency | 1,089 | 2,659 | (1,036) | 269 | ||||||
Total comprehensive income/(loss) | 11,954 | 3,317 | (42,219) | (1,921) | ||||||
Less: Comprehensive income/(loss) | 2,143 | 874 | (3,330) | 289 | ||||||
Comprehensive income/(loss) attributable to | 9,811 | 2,443 | (38,889) | (2,210) | ||||||
RECONCILIATION OF GAAP AND NON-GAAP RESULTS | ||||
(in thousands of U.S. dollars, except share, ADS, per share and per ADS data) | ||||
Three Months Ended December 31, | Year Ended December 31, | |||
2020 | 2019 | 2020 | 2019 | |
Operating income/(loss) | 1,169 | 3,322 | (43,386) | 166 |
Share-based compensation expenses | 703 | 911 | 2,930 | 3,962 |
Adjusted operating income/(loss) | 1,872 | 4,233 | (40,456) | 4,128 |
Net income/(loss) attributable to ordinary | 9,315 | 231 | (37,280) | (2,434) |
Decrease in redeemable non-controlling | - | - | - | (143) |
Share-based compensation expenses | 703 | 911 | 2,930 | 3,962 |
Adjusted net income/(loss) attributable to | 10,018 | 1,142 | (34,350) | 1,385 |
Net income/(loss) | 10,865 | 658 | (41,183) | (2,190) |
Add: Income tax expense (benefit) | (8,298) | 3,008 | 215 | 3,541 |
Depreciation and amortization | 2,590 | 2,984 | 11,670 | 11,520 |
EBITDA | 5,157 | 6,650 | (29,298) | 12,871 |
Share-based compensation expenses | 703 | 911 | 2,930 | 3,962 |
Adjusted EBITDA | 5,860 | 7,561 | (26,368) | 16,833 |
Net income/(loss) per ADS attributable to | 0.33 | 0.01 | (1.32) | (0.09) |
Net income/(loss) per ADS attributable to | 0.33 | 0.01 | (1.32) | (0.09) |
Adjusted net income/(loss) per ADS | 0.36 | 0.04 | (1.22) | 0.05 |
Adjusted net income/(loss) per ADS | 0.35 | 0.04 | (1.22) | 0.05 |
Weighted average shares used in calculating | 28,194,946 | 27,666,982 | 28,224,094 | 28,074,624 |
Weighted average shares used in calculating | 28,599,693 | 28,905,106 | 28,224,094 | 28,074,624 |
Weighted average shares used in calculating | 28,599,693 | 28,905,106 | 28,224,094 | 29,420,725 |
Adjusted net income per share attributable to | 0.36 | 0.04 | (1.22) | 0.05 |
Adjusted net income per share attributable to | 0.35 | 0.04 | (1.22) | 0.05 |
Note 1: Each ADS represents one Class A ordinary share. | ||||
1 Adjusted net income (loss) attributable to ordinary shareholders is a non-GAAP financial measure, which is defined as net income (loss) attributable to ordinary shareholders excluding share-based compensation expenses and changes of redeemable non-controlling interests. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" included elsewhere in this earnings release.
2 Adjusted net income (loss) attributable to ordinary shareholders is a non-GAAP financial measure, which is defined as net income (loss) attributable to ordinary shareholders excluding share-based compensation expenses and changes of redeemable non-controlling interests. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" included elsewhere in this earnings release.
3 Adjusted operating income is a non-GAAP financial measure, which is defined as operating income excluding share-based compensation expenses.
4 Adjusted basic and diluted net income per ADS attributable to ordinary shareholders is a non-GAAP financial measure, which is defined as basic and diluted net income per ADS attributable to ordinary shareholders excluding share-based compensation expenses.
5 EBITDA is defined as net income excluding depreciation, amortization and income tax expenses.
6 Adjusted EBITDA is a non-GAAP financial measure, which is defined as net income excluding depreciation, amortization, interest expenses, income tax expenses, and share-based compensation expenses.
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SOURCE RYB Education, Inc.
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