BEIJING, August 26, 2014 /PRNewswire/ -- Xueda Education Group (NYSE: XUE) ("Xueda" or the "Company"), a leading national provider of personalized tutoring services for primary and secondary school students in China, today announced its unaudited financial results for the second quarter ended June 30, 2014.
Financial Highlights for Second Quarter 2014 Compared to Second Quarter 2013
[1] Effective student count is the number of students whose contract amounts are at least 200RMB as of the last day of the period and have attended at least one tutoring session within the last 180 days. |
[2] All non-GAAP measures exclude share-based compensation expenses. For further details on non-GAAP measures, please refer to the reconciliation tables and a detailed discussion of the Company's use of non-GAAP information set forth elsewhere in this press release. |
Operational Highlights for the Second Quarter 2014
Mr. Xin Jin, co-founder and Chief Executive Officer of Xueda, stated, "A key strategy in 2014 is to increase our student base. In the second quarter, we enrolled 27,000 new students and retained approximately 7,000 more students compared to the second quarter 2013. Our effort to attract and retain students is working, and along with our small group tutoring and eXueda initiatives, we are cementing a broad-based foundation for the future.
"Our enlarged student base is embracing our expanded service offerings and promotions at a much faster pace than we had initially anticipated, causing an unexpected year-over-year decline in average revenue per student and ultimately flat year-over-year 2014 revenue growth. As we roll into 2015, the good news is that we will adjust our pricing and small group sizing, and therefore, normalize average revenue per student. As such, we are confident about our ability to drive meaningful revenue and profit growth in 2015."
Ms. Christine Lu-Wong, Chief Financial Officer of Xueda, added, "In addition to growing our student base, this quarter we aggressively invested in further expanding our learning center network and implementing eXueda. We added net 32 new learning centers and accelerated our investments in eXueda by seeding ownership of Internet-enabled tablets for our newly enrolled students and recruits. We believe these investments, although significantly increasing our cost of sales during the quarter, will build on the momentum and further accelerate the expansion of the tutoring platform."
Second Quarter 2014 Financial and Operating Results
Total Net Revenues
Total net revenues for the second quarter 2014 increased 5.4% year-over-year to $120.8 million, from $114.6.million for the second quarter 2013. Included in total net revenues for the quarter is $9.9 million from 24,000 Internet-enabled tablet devices provided as part of the implementation of eXueda, the Company's cloud-based tutoring platform. Average total revenue per student was $1,881 for the second quarter 2014 compared to $1,973 for the second quarter 2013.
Cost of Revenues
Cost of revenues for the second quarter 2014 increased 13.5% year-over-year to $79.2 million, from $69.8 million for the second quarter 2013. The increase was primarily due to the Company's investment of $11.9 million in Internet-enabled tablet devices provided to students and potential customers as part of the implementation of eXueda.
Gross Profit and Gross Margin
Gross profit for the second quarter 2014 decreased 7.1% year-over-year to $41.7 million from $44.9 million for the second quarter 2013. Gross margin for the second quarter 2014 was 34.5%, compared to 39.1% for the second quarter 2013. The decrease was largely due to investments in the implementation of eXueda.
Operating Expenses
Total operating expenses for the second quarter 2014 were $23.3 million unchanged from the second quarter 2013. Total operating expenses for the second quarter 2014 comprised 19.3% of total net revenues, compared to 20.3% for the second quarter 2013. Total non-GAAP operating expenses for the second quarter 2014 were $21.8 million, compared to $22.2 million the same period in 2013. Total non-GAAP operating expenses for the second quarter 2014 comprised 18.1% of total net revenues, compared to 19.4% for the second quarter 2013.
General and administrative expenses for the second quarter 2014 were $13.2 million, compared to $13.8 million for the same period in 2013. General and administrative expenses for the second quarter 2014 accounted for 10.9% of total net revenues, compared to 12.0% for the second quarter 2013. Non-GAAP general and administrative expenses for the second quarter 2014 were $11.7 million, compared to $12.7 million for the same period in 2013. Non-GAAP general and administrative expenses for the second quarter 2014 accounted for 9.7% of total net revenues, compared to 11.0% for the second quarter 2013. The decrease in general and administrative expenses was due to a decrease in office expenses and bonuses accrued.
Sales and marketing expenses for the second quarter 2014 were $10.1 million, compared to $9.5 million for the same period in 2013. Sales and marketing expenses for the second quarter 2014 represented 8.4% of total net revenues, compared to 8.3% for the second quarter 2013. Sales and marketing expenses were approximately in line with the year-ago quarter.
Operating Income
Operating income for the second quarter 2014 was $18.3 million, compared to $21.5 million for the second quarter 2013. Non-GAAP operating income for the second quarter 2014 was $19.8 million, compared to $22.7 million for the second quarter 2013. The decrease was primarily due to lower gross profit.
Net Income and Net Income per ADS
Net income attributable to Xueda Education Group for the second quarter 2014 was $15.3 million, compared to $17.2 million for the same period in 2013. Diluted net income attributable to Xueda Education Group per ADS for the second quarter 2014 was $0.24 per ADS, compared to $0.26 per ADS for the second quarter 2013.
Non-GAAP net income attributable to Xueda Education Group for the second quarter 2014 was $16.7 million, compared to $18.3 million for the second quarter 2013. Non-GAAP diluted net income attributable to Xueda Education Group per ADS for the second quarter 2014 was $0.27 per ADS, compared to $0.28 for the second quarter 2013.
Cash Flow
Net operating cash outflow for the second quarter 2014 was $19.7 million, compared to $5.3 million cash outflow for the second quarter 2013. The increase in net operating cash outflow was mainly due to lower cash collections from enrollment and renewals. Capital expenditures for the second quarter 2014 were $3.7 million, compared to $1.7 million for the second quarter 2013. The increase in capital expenditures was attributed to the increase in new learning centers in the second quarter 2014, compared to the net decrease of 2 learning centers in the second quarter 2013.
First Half 2014 Financial Results and Operating Results
Total Net Revenues
Total net revenues were $206.1 million for the first half 2014, an increase of 3.8% year-over-year from $198.5 million for the corresponding period in 2013.
Cost of Revenues
Total cost of revenues were $140.3 million for the first half 2014, an increase of 8.0% year-over-year from $130.0 million for the corresponding period in 2013.
Gross Profit and Gross Margin
Gross profit was $65.7 million for the first half 2014, a decrease of 4.1% year-over-year from $68.6 million for the corresponding period in 2013. For the first half 2014, gross margin was 31.9%, compared to 34.5% for the corresponding period in 2013. The decrease was largely attributed to the Company's investment in Internet-enable tablet devices in the second quarter to support the implementation of eXueda.
Operating Expenses
Total operating expenses were $47.1 million for the first half 2014, an increase of 3.9% year-over-year from $45.4 million for the corresponding period in 2013. Total operating expenses accounted for 22.9% of total net revenues for the first half 2014, nearly flat year-over-year from 22.8% for the corresponding period in 2013.
General and administrative expenses were $28.5 million for the first half 2014, an increase of 5.0% year-over-year from $27.2 million for the corresponding period in 2013. Selling and marketing expenses were $18.6 million for the first half 2014, compared to $18.2 million for the corresponding period in 2013.
Operating Income
Income from operations for the first half 2014 was $18.6 million, a decrease of 19.7% year-over-year from $23.2 million for the corresponding period in 2013. Non-GAAP income from operations for the first half 2014 was $22.9 million, a decrease of 9.5% from $25.4 million for the corresponding period in 2013. The decrease was primarily attributed to lower gross profit.
Net Income and Net Income per ADS
Net income attributable to Xueda Education Group for the first half 2014 was $16.4 million, a decrease of 14.5% year-over-year from $19.2 million for the corresponding period in 2013. Diluted net income attributable to Xueda Education Group per ADS for the first half 2014 was $0.25, compared to $0.29 for the corresponding period in 2013.
Non-GAAP net income attributable to Xueda Education Group for the first half 2014 was $20.7 million, a decrease of 2.9% year-over-year from $21.3 million for the corresponding period in 2013. Non-GAAP diluted income attributable to Xueda Education Group per ADS for the first half 2014 was $0.31, nearly flat year-over-year from $0.32 for the corresponding period in 2013.
Cash and Cash Flow
Net operating cash outflow for the first half 2014 was $2.6 million, compared to an $18.5 million cash inflow for the corresponding period in 2013. The increase in net operating cash outflow was mainly due to lower cash collection from new enrollment and renewals. Capital expenditures for the first half 2014 were $7.1 million, compared to $4.1 million for the corresponding period in 2013.
Cash and Short-term Investment
As of June 30, 2014, the Company had cash, cash equivalents and short-term investments totaling $198.7 million compared to $246.7 million as of December 31, 2013. The decrease was mainly due to a $9.9 million dividend payment, $29.6 million for repurchased shares and $7.1 million in capital expenditures.
Business Outlook
For the third quarter 2014, the Company currently expects:
For the full-year 2014, the Company currently expects:
The above guidance is based on the current market conditions and reflects the Company's current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change.
Non-GAAP Financial Measures
To supplement the financial measures calculated in accordance with U.S. GAAP, this press release includes certain non-GAAP financial measures of adjusted net income and adjusted diluted earnings per ADS, each of which is adjusted to exclude share-based compensation expenses. The Company believes excluding such expenses from its non-GAAP financial measures is useful for its management and investors to assess and analyze the Company's core operating results as such expenses are not directly attributable to the underlying performance of the Company's business operations and do not impact its cash earnings. The Company also believes that these non-GAAP financial measures are important to help investors understand the Company's current financial performance and future prospects and compare business trends among different reporting periods on a consistent basis. These non-GAAP financial measures should be considered in addition to financial measures presented in accordance with U.S. GAAP, but should not be considered as a substitute for, or superior to, financial measures presented in accordance with U.S. GAAP. For a reconciliation of each of these non-GAAP financial measures to the most directly comparable U.S. GAAP financial measure, please see the financial information included elsewhere in this press release.
Conference Call
Xueda will hold a corresponding conference call and live webcast at 8:00 p.m. EDT on Monday, August 25, 2014 (which corresponds to 5:00 p.m. PDT on Monday, August 25, 2014 and 8:00 a.m. Beijing/Hong Kong Time on Tuesday, August 26, 2014) to discuss the results and answer questions from investors. Listeners may access the call by dialing:
US Toll Free: | 1-866-519-4004 |
International Toll: | 65-6723-9381 |
Hong Kong Toll Free: | 800-930-346 |
Hong Kong Toll: | 852-2475-0994 |
China Toll: | 800-819-0121 |
China Toll (Mobile): | 400-620-8038 |
Conference ID: | 76510171 |
The conference call will be available live via webcast on the Investors section of Xueda's website at http://ir.xueda.com. The archive replay will be available on Xueda's website shortly after the call.
A replay of the conference call may be accessed through September 2, 2014 by dialing:
US Toll Free: | 1-855-452-5696 |
International Toll: | 61-2-8199-0299 |
Conference ID: | 76510171 |
About Xueda Education Group
Xueda Education Group ("Xueda") is a leading national provider of personalized tutoring services for primary and secondary school students in China. For more information about Xueda, please visit http://ir.xueda.com.
Forward-looking Statements
All statements included in this press release, other than statements or characterizations of historical fact, are 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 are based on our current expectations, market and operating conditions, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," "targets" and similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks and uncertainties beyond our control, which could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. Further information regarding these and other risks, uncertainties or factors is included in our filings with the U.S. Securities and Exchange Commission. We do not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
Contact:
Xueda Education Group
Ross Warner
Tel: +86-10-6427-8899 ext. 6619
Email: investor_relations@xueda.com
Asia Bridge Capital Limited
Wendy Sun
Tel: +86-10-8556-9033 (China)
+1-888-550-8392 (U.S.)
Email: wendy.sun@asiabridgegroup.com
Xueda Education Group | ||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||
(in thousands of US Dollars) | ||
As of | ||
June 30, 2014 | December 31, 2013 | |
(Unaudited) | (Note) | |
Current assets: | ||
Cash and cash equivalents | $ 96,394 | $ 117,063 |
Short-term investments | 102,354 | 129,619 |
Prepaid expenses and other current assets | 23,156 | 16,642 |
Amounts due from related parties | - | 2,631 |
Deferred tax assets-current | 5,416 | 6,139 |
Total current assets | 227,320 | 272,094 |
Property and equipment, net | 33,848 | 34,826 |
Rental deposits | 4,898 | 4,807 |
Goodwill | 875 | 897 |
Long-term investments | 14,751 | 15,197 |
Other non-current assets | 5,294 | 3,797 |
Total assets | $ 286,986 | $ 331,618 |
Liabilities and shareholders' equity | ||
Current liabilities: | ||
Deferred revenues-current (including | 82,321 | 103,871 |
Accrued expenses and other current liabilities | 37,438 | 35,275 |
Income taxes payable (including income | 11,183 | 9,383 |
Deferred income-current (including deferred | 347 | 347 |
Amount due to a related party (including | 11 | - |
Total current liabilities | 131,300 | 148,876 |
Deferred revenues-noncurrent (including | 21,620 | 29,983 |
Deferred income-noncurrent (including | 87 | 260 |
Total liabilities | 153,007 | 179,119 |
Total Xueda Education Group's equity | 133,943 | 152,387 |
Non-controlling interests | 36 | 112 |
Total equity | 133,979 | 152,499 |
Total liabilities and equity | $ 286,986 | $ 331,618 |
Note: The above financial information as of December 31, 2013 is derived from Xueda Education Group's audited financial statements for the year ended December 31, 2013. | ||
Xueda Education Group | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(in thousands of US Dollars, except number of ADSs and per ADS data) | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2014 | 2013 | 2014 | 2013 | |||||
Net revenues | $ 120,810 | $ 114,627 | $ 206,064 | $ 198,528 | ||||
Cost of revenues(1) | (79,160) | (69,772) | (140,319) | (129,953) | ||||
Gross profit | 41,650 | 44,855 | 65,745 | 68,575 | ||||
Operating expenses | ||||||||
General and administrative(1) | (13,202) | (13,768) | (28,507) | (27,155) | ||||
Selling and marketing(1) | (10,117) | (9,543) | (18,605) | (18,202) | ||||
Total operating expenses | (23,319) | (23,311) | (47,112) | (45,357) | ||||
Income from operations | 18,331 | 21,544 | 18,633 | 23,218 | ||||
Interest income | 1,592 | 2,017 | 3,058 | 3,576 | ||||
Income before income tax expenses | 19,923 | 23,561 | 21,691 | 26,794 | ||||
Income tax expenses | (4,939) | (6,347) | (5,372) | (7,393) | ||||
Net income | 14,984 | 17,214 | 16,319 | 19,401 | ||||
Net loss (income) attributable to | 272 | (44) | 93 | (214) | ||||
Net income attributable to | 15,256 | 17,170 | 16,412 | 19,187 | ||||
Net income attributable to | ||||||||
Net income attributable to Xueda | ||||||||
Basic | 0.25 | 0.26 | 0.26 | 0.29 | ||||
Diluted | 0.24 | 0.26 | 0.25 | 0.29 | ||||
Weighted average ADS | ||||||||
Basic | 61,919,516 | 65,560,089 | 64,350,949 | 65,409,790 | ||||
Diluted | 63,161,208 | 66,123,546 | 65,864,497 | 65,766,756 | ||||
(1) Includes the following amounts of share-based compensation expenses for the periods indicated: | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2014 | 2013 | 2014 | 2013 | |||||
Share-based compensation expenses included in: | ||||||||
Cost of revenues | $15 | $ 1 | $19 | $2 | ||||
Selling and marketing expenses | 4 | 1 | 10 | 2 | ||||
General and administrative expenses | 1,471 | 1,104 | 4,276 | 2,134 | ||||
Total | $1,490 | $1,106 | $4,305 | $2,138 | ||||
Xueda Education Group | ||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
(In thousands of US Dollars) | ||||
Three Months Ended June 30, | Six Months Ended June 30, | |||
2014 | 2013 | 2014 | 2013 | |
Net income | $ 14,984 | $ 17,214 | $ 16,319 | $19,401 |
Other comprehensive income(loss), | 377 | 418 | (624) | 153 |
Total comprehensive income | 15,361 | 17,632 | 15,695 | 19,554 |
Less: Comprehensive | (274) | 50 | (76) | 221 |
Total comprehensive income | $15,635 | $17,582 | $15,771 | $19,333 |
Xueda Education Group | ||||
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP MEASURES | ||||
(in thousands of US Dollars) | ||||
Three Months Ended June 30, | ||||
2014 | 2013 | |||
Cost of revenues | $(79,160) | $ (69,772) | ||
Share-based compensation expense included in cost of revenues | 15 | 1 | ||
Non-GAAP cost of revenues | (79,145) | (69,771) | ||
General and administrative expenses | (13,202) | (13,768) | ||
Share-based compensation expense included in general and administrative expenses | 1,471 | 1,104 | ||
Non-GAAP general and administrative expenses | (11,731) | (12,664) | ||
Selling and marketing expenses | (10,117) | (9,543) | ||
Share-based compensation expense included in selling and marketing expenses | 4 | 1 | ||
Non-GAAP selling and marketing expenses | (10,113) | (9,542) | ||
Total costs of revenues and operating expenses | (102,479) | (93,083) | ||
Share-based compensation expenses | 1,490 | 1,106 | ||
Non-GAAP costs of revenues and operating expenses | (100,989) | (91,977) | ||
Gross profit | 41,650 | 44,855 | ||
Share-based compensation expenses | 15 | 1 | ||
Non-GAAP gross profit | 41,665 | 44,856 | ||
Income from operations | 18,331 | 21,544 | ||
Share-based compensation expenses | 1,490 | 1,106 | ||
Non-GAAP income from operations | 19,821 | 22,650 | ||
Net income attributable to Xueda Education Group | 15,256 | 17,170 | ||
Share-based compensation expenses | 1,490 | 1,106 | ||
Non-GAAP net income attributable to Xueda Education Group | 16,746 | 18,276 | ||
Non-GAAP net income attributable to Xueda Education Group per ADS: | ||||
Basic | 0.27 | 0.28 | ||
Diluted | 0.27 | 0.28 | ||
Weighted average ADS numbers used in calculating non-GAAP net income attributable to Xueda Education Group per ADS: | ||||
Basic | 61,919,516 | 65,560,089 | ||
Diluted | 63,161,208 | 66,123,546 | ||
Xueda Education Group | ||||
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP MEASURES | ||||
(in thousands of US Dollars) | ||||
Six Months Ended June 30, | ||||
2014 | 2013 | |||
Cost of revenues | $(140,319) | $ (129,953) | ||
Share-based compensation expense included in cost of revenues | 19 | 2 | ||
Non-GAAP cost of revenues | (140,300) | (129,951) | ||
General and administrative expenses | (28,507) | (27,155) | ||
Share-based compensation expense included in general and administrative expenses | 4,276 | 2,134 | ||
Non-GAAP general and administrative expenses | (24,231) | (25,021) | ||
Selling and marketing expenses | (18,605) | (18,202) | ||
Share-based compensation expense included in selling and marketing expenses | 10 | 2 | ||
Non-GAAP selling and marketing expenses | (18,595) | (18,200) | ||
Total costs of revenues and operating expenses | (187,431) | (175,310) | ||
Share-based compensation expenses | 4,305 | 2,138 | ||
Non-GAAP costs of revenues and operating expenses | (183,126) | (173,172) | ||
Gross profit | 65,745 | 68,575 | ||
Share-based compensation expenses | 19 | 2 | ||
Non-GAAP gross profit | 65,764 | 68,577 | ||
Income from operations | 18,633 | 23,218 | ||
Share-based compensation expenses | 4,305 | 2,138 | ||
Non-GAAP income from operations | 22,938 | 25,356 | ||
Net income attributable to Xueda Education Group | 16,412 | 19,187 | ||
Share-based compensation expenses | 4,305 | 2,138 | ||
Non-GAAP net income attributable to Xueda Education Group | 20,717 | 21,325 | ||
Non-GAAP net income attributable to Xueda Education Group per ADS: | ||||
Basic | 0.32 | 0.33 | ||
Diluted | 0.31 | 0.32 | ||
Weighted average ADS numbers used in calculating non-GAAP net income attributable to Xueda Education Group per ADS: | ||||
Basic | 64,350,949 | 65,409,790 | ||
Diluted | 65,864,497 | 65,766,756 | ||
