BEIJING, February 28, 2013 /PRNewswire/ -- Xueda Education Group (NYSE: XUE) ("Xueda" or the "Company"), a leading national provider of tutoring services for primary and secondary school students in China with a focus on offering personalized tutoring services, today announced its unaudited financial results for fourth quarter and fiscal year 2012 ended December 31, 2012.
Fourth Quarter 2012 Quick View
Full Year 2012 Quick View
Commenting on the results, Mr. Xin Jin, co-founder and Chief Executive Officer of Xueda, stated, "I am glad to see that our fourth quarter net revenue exceeded the high-end of our previous guidance, continuing the trend of solid revenue growth in each and every quarter of 2012. With a total net increase of 88 learning centers, I believe we successfully achieved our primary goal for 2012, which enables us to continue to grow organically going forward. For 2013, our key focus is to expand our gross margins and achieve healthy net profits. Based on our strong competitive position, we are confident that we can achieve those objectives."
"In the past 12 years, Xueda has been focusing on personalized tutoring and has successfully deployed it through the one-on-one format. Instead of being an exam-focused educator, we have differentiated ourselves by being a people-focused educator and helping our students achieve not only academic success but also personal growth." Mr. Jin concluded.
Ms. Christine Lu-Wong, Chief Financial Officer of Xueda, added, "I'm very pleased that the more I learn about the Company, the more I'm convinced that Xueda now has the foundation in place that will enable us to fully leverage our leading brand and reach to grow not only our revenue but also our profitability. As such, despite a currently common perception that the personalized tutoring business model is not scalable, I'm confident that our 2013 financial results will prove that Xueda and its personalized tutoring business model can effectively scale and achieve sustainable profits."
Fourth Quarter 2012 Financial and Operating Results
Total Net Revenue
Total net revenue in the fourth quarter of 2012 increased by 24.9% year-over-year to $59.6 million from $47.8 million in the fourth quarter of 2011. $8.5 million, or 71.9%, of the increase in net revenue was contributed by the increase in course hours delivered and the remaining $3.3 million, or 28.1%, of the increase was contributed by the increase in the average hourly course fee from the same period of last year to the fourth quarter of 2012.
Cost of Revenue
Cost of revenue in the fourth quarter of 2012 increased by 24.3% year-over-year to $50.7 million from $40.8 million in the fourth quarter of 2011. This increase was primarily due to an increase of $6.0 million in teaching staff cost and an increase of $3.7 million in rental cost and depreciation cost.
Gross Profit and Gross Margin
Gross profit in the fourth quarter of 2012 increased by 28.2% year-over-year to $8.9 million from $6.9 million in the fourth quarter of 2011. Gross margin in the fourth quarter of 2012 was 14.9%, compared to 14.5% in the fourth quarter of 2011. The 40 basic points improvement in gross margin was mainly attributable to enhanced efficiency of learning centers and teaching staff, partially offset by higher rental and depreciation cost.
Operating Expenses
Total operating expenses increased slightly to $19.7 million in the fourth quarter of 2012, compared to $18.5 million in the same period of 2011. Total operating expenses accounted for 33.1% of total net revenue in the fourth quarter of 2012, compared to 38.7% a year ago, reflecting effective cost controls and higher operating leverage.
General and administrative expenses of $13.0 million in the fourth quarter of 2012 improved to 21.7% of total net revenue, compared to 23.4% a year ago, due to effective cost controls. Selling and marketing expenses of $6.8 million in the fourth quarter of 2012 improved to 11.3% of total net revenue, compared to 15.3% a year ago, benefiting from the use of more effective marketing channels.
Operating Loss
Loss from operations in the fourth quarter of 2012 was $10.7 million, compared to $11.3 million for the fourth quarter of 2011. Non-GAAP loss from operations for the fourth quarter in 2012 was $9.9 million, compared to $10.7 million for the fourth quarter of 2011.
Net Loss and Net Loss per ADS
Net loss attributable to Xueda Education Group for the fourth quarter of 2012 was $8.1 million, compared to $9.9 million in the fourth quarter of 2011. Diluted net loss attributable to Xueda Education Group per ADS for the fourth quarter of 2012 was $0.12, compared to $0.15 for the fourth quarter of 2011.
Non-GAAP net loss[2] attributable to Xueda Education Group for the fourth quarter of 2012 was $7.3 million, compared to $9.3 million for the fourth quarter of 2011. Non-GAAP diluted net loss attributable to Xueda Education Group per ADS for the fourth quarter of 2012 was $0.11, compared to $0.14 for the fourth quarter of 2011.
Fiscal Year 2012 Financial and Operating Results
Total Net Revenue
Total net revenue in 2012 increased by 32.2% year-over-year to $293.2 million from $221.7 million in 2011. $45.6 million, or 63.8%, of the increase in net revenue was contributed by the increase in course hours delivered and the remaining of the increase $25.9 million, or 36.2%, of the increase was contributed by the increase in the average hourly course fee from 2011.
Cost of Revenue
Cost of revenue in 2012 increased by 40.6% year-over-year to $219.7 million from $156.2 million in 2011. This increase was primarily due to an increase of $41.2 million in teaching staff cost and an increase of $17.8 million in rental cost and depreciation cost.
Gross Profit and Gross Margin
Gross profit in 2012 increased by 12.2% year-over-year to $73.5 million from $65.5 million in 2011. Gross margin in 2012 was 25.1%, compared to 29.5% in 2011. The decrease in gross margin was primarily attributable to the higher cost in teaching staff, rental and other costs related to new-opened learning centers.
Operating Expenses
Total operating expenses was $77.8 million in 2012, compared to $62.4 million in 2011. Total operating expenses accounted for 26.5% of total net revenue in 2012, compared to 28.1% a year ago, benefitting from effective cost controls and higher operating leverage.
General and administrative expenses of $46.4 million in 2012 improved to 15.8% of total net revenue, compared to 16.4% a year ago, due to effective cost controls. Selling and marketing expenses of $31.3 million in 2012 improved to 10.7% of total net revenue, compared to 11.7% a year ago.
Operating Loss
Loss from operations in 2012 was $4.1 million, compared to income from operations of $3.5 million in 2011. Non-GAAP loss from operations in 2012 was $0.9 million, compared to Non-GAAP income from operations of $7.6 million in 2011.
Net Income and Net Income per ADS
Net income attributable to Xueda Education Group in 2012 was $2.0 million, compared to $4.8 million in 2011. Diluted net income attributable to Xueda Education Group per ADS in 2012 was $0.03, compared to $0.07 in 2011.
Non-GAAP net income attributable to Xueda Education Group in 2012 was $5.1 million, compared to $8.9 million in 2011. Non-GAAP diluted net income attributable to Xueda Education Group per ADS in 2012 was $0.08, compared to $0.13 in 2011.
Balance Sheet
As of December 31, 2012, the Company had cash and cash equivalents plus short-term investments totaling $239.2 million, compared to $225.7 million as of December 31, 2011.
Deferred revenues were $133.8 million as of December 31, 2012, compared to $101.4 million as of December 31, 2011.
Business Outlook
For the first quarter of 2013, the Company currently expects:
For the full year 2013, the Company currently expects:
This 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.
[1] | Definition of "course hour" in this press release refer to 60-minute of tutoring. |
[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. |
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 conference call and live webcast at 7:00 p.m. EST on Wednesday, February 27, 2013 (which corresponds to 8:00 a.m. Beijing/Hong Kong Time on Thursday, February 28, 2013) to discuss the results and answer questions from investors. Listeners may access the call by dialing:
US Toll Free: | +1-866-519-4004 |
US Toll/International: | +1-718-354-1231 |
Hong Kong Toll Free: | 800-930-346 |
Hong Kong Toll: | 852-2475-0994 |
China Toll Free | 800-819-0121 |
China Toll Free (Mobile) | 400-620-8038 |
Conference ID: | 86635188 |
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 March 7, 2013 by dialing:
United States Toll Free: | +1-855-452-5696 |
International: | +61-2-8199-0299 |
Conference ID: | 86635188 |
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.
About Xueda Education Group
Xueda Education Group ("Xueda") is a leading national provider of tutoring services for primary and secondary school students in China with a focus on offering personalized tutoring services. For more information about Xueda, please visit ir.xueda.com.
Contact:
Xueda Education Group
Sophia Zhou
Tel: +86-10-6427-8899 ext. 6619
Email: zhouqi_1@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 | ||
December 31, 2012 | December 31, 2011 | |
(Note) | ||
Current assets: | ||
Cash and cash equivalents | $211,944 | $217,746 |
Short-term investments | 27,287 | 7,944 |
Prepaid expenses and other current assets | 12,911 | 18,645 |
Amounts due from related parties | 1,592 | 43 |
Deferred tax assets-current | 4,335 | 3,618 |
Total current assets | 258,069 | 247,996 |
Property and equipment, net | 40,616 | 35,613 |
Acquired intangible assets, net | 563 | - |
Rental deposits | 4,493 | 3,787 |
Goodwill | 3,729 | 863 |
Available-for-sale securities | 5,125 | - |
Other non-current assets | 4,831 | 1,576 |
Total assets | $317,426 | $289,835 |
Liabilities and shareholders' equity | ||
Current liabilities: | ||
Deferred revenues-current (including deferred revenues of the consolidated VIE without recourse to the Company of $105,027 and $79,095 as of December 31, 2012 and December 31, 2011, respectively) | 105,027 | 79,095 |
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIE without recourse to the Company of $24,212 and $19,145 as of December 31, 2012 and December 31, 2011, respectively) | 26,318 | 21,733 |
Dividends payable (including dividends payable of the consolidated VIE without recourse to the Company of $nil and $nil as of December 31, 2012 and December 31, 2011, respectively) | 22,665 | - |
Income taxes payable (including income taxes payable of the consolidated VIE without recourse to the Company of $4,583 and $4,047 as of December 31, 2012 and December 31, 2011, respectively) | 4,329 | 4,047 |
Deferred income-current (including deferred income of the consolidated VIE without recourse to the Company of $nil and $nil as of December 31, 2012 and December 31, 2011, respectively) | 347 | 371 |
Total current liabilities | 158,686 | 105,246 |
Deferred revenues-noncurrent (including deferred revenues of the consolidated VIE without recourse to the Company of $28,765 and $22,309 as of December 31, 2012 and December 31, 2011, respectively) | 28,765 | 22,309 |
Deferred income-noncurrent (including deferred income of the consolidated VIE without recourse to the Company of $nil and $nil as of December 31, 2012 and December 31, 2011, respectively) | 607 | 929 |
Deferred tax liabilities-noncurrent (including deferred tax liabilities of the consolidated VIE without recourse to the Company of $141 and $nil as of December 31, 2012 and December 31, 2011, respectively) | 141 | - |
Total liabilities | 188,199 | 128,484 |
Total Xueda Education Group's equity | 127,864 | 161,351 |
Noncontrolling interests | 1,363 | - |
Total equity | 129,227 | 161,351 |
$317,426 | $289,835 | |
Total liabilities and equity | ||
Note: The above financial information as of and for the year ended December 31, 2011 is derived from Xueda Education Group's audited financial statements for the year ended December 31, 2011. | ||
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 December 31, | Twelve Months Ended December 31, | |||
2012 | 2011 | 2012 | 2011 | |
Net revenues | $59,630 | $47,750 | $293,157 | $221,738 |
Cost of revenues | (50,737) | (40,814) | (219,655) | (156,222) |
Gross profit | 8,893 | 6,936 | 73,502 | 65,516 |
Operating expenses | ||||
General and administrative | (12,953) | (11,156) | (46,427) | (36,425) |
Selling and marketing | (6,760) | (7,303) | (31,336) | (25,940) |
Total operating expenses | (19,713) | (18,459) | (77,763) | (62,365) |
Government subsidies | 137 | 201 | 164 | 357 |
(Loss) Income from operations | (10,683) | (11,322) | (4,097) | 3,508 |
Interest income | 1,772 | 1,491 | 6,722 | 3,766 |
(Loss) Income before income tax expenses | (8,911) | (9,831) | 2,625 | 7,274 |
Income tax benefit (expense) | 687 | (64) | (876) | (2,484) |
Net (loss) income | (8,224) | (9,895) | 1,749 | 4,790 |
Less: Noncontrolling interests, net of taxes | (130) | - | (216) | - |
Net (loss) income attributable to Xueda Education Group | (8,094) | (9,895) | 1,965 | 4,790 |
Net (loss) income attributable to Xueda Education Group per ADS: | ||||
Net (loss) income attributable to Xueda Education Group | ||||
Basic | (0.12) | (0.15) | 0.03 | 0.07 |
Diluted | (0.12) | (0.15) | 0.03 | 0.07 |
Weighted average ADS numbers used in calculating net (loss) income attributable to Xueda Education Group per ADS: | ||||
Basic | 65,049,506 | 67,847,771 | 65,658,002 | 68,872,588 |
Diluted | 65,049,506 | 67,847,771 | 65,888,103 | 71,134,457 |
Xueda Education Group | ||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
(In thousands of US Dollars ) | ||||
Three Months Ended December 31, | Twelve Months Ended December 31, | |||
2012 | 2011 | 2012 | 2011 | |
Net (loss) income | $(8,224) | $(9,895) | $1,749 | $4,790 |
Other comprehensive income, net of tax: | 140 | (82) | 250 | 118 |
Foreign currency translation adjustments | ||||
Unrealized holding gain on investment in | 307 | - | 339 | - |
Total comprehensive (loss) income | (7,777) | (9,977) | 2,338 | 4,908 |
Less: comprehensive loss attributable to | (126) | - | (208) | - |
Total comprehensive (loss) income attributable to Xueda Education Group | $(7,651) | $(9,977) | $2,546 | $4,908 |
Xueda Education Group | ||||
(In thousands of US Dollars ) | ||||
Three Months Ended December 31, | Twelve Months Ended December 31, | |||
2012 | 2011 | 2012 | 2011 | |
Share-based compensation expenses included in: | ||||
Cost of revenues | $1 | $1 | $5 | $6 |
Selling and marketing expenses | 1 | 2 | 5 | 11 |
General and administrative expenses | 817 | 620 | 3,156 | 4,092 |
Total | $819 | $623 | $3,166 | $4,109 |
Xueda Education Group | ||||
UNAUDITED RECONSILIATION OF NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP MEASURES | ||||
(in thousands of US Dollars ) | ||||
Three Months Ended December 31, | ||||
2012 | 2011 | |||
Cost of revenues | $(50,737) | $(40,814) | ||
Share-based compensation expense included in cost of revenues | 1 | 1 | ||
Non-GAAP cost of revenues | (50,736) | (40,813) | ||
General and administrative expenses | (12,953) | (11,156) | ||
Share-based compensation expense included in general and administrative expenses | 817 | 620 | ||
Non-GAAP general and administrative expenses | (12,136) | (10,536) | ||
Selling and marketing expenses | (6,760) | (7,303) | ||
Share-based compensation expense included in selling and marketing expenses | 1 | 2 | ||
Non-GAAP selling and marketing expenses | (6,759) | (7,301) | ||
Total costs of revenues and operating expenses | (70,450) | (59,273) | ||
Share-based compensation expenses | 819 | 623 | ||
Non-GAAP costs and operating expenses | (69,631) | (58,650) | ||
Gross profit | 8,893 | 6,936 | ||
Share-based compensation expenses | 1 | 1 | ||
Non-GAAP gross profit | 8,894 | 6,937 | ||
Loss from operations | (10,683) | (11,322) | ||
Share-based compensation expenses | 819 | 623 | ||
Non-GAAP loss from operations | (9,864) | (10,699) | ||
Net loss attributable to Xueda Education Group | (8,094) | (9,895) | ||
Share-based compensation expenses | 819 | 623 | ||
Non-GAAP net loss attributable to Xueda Education Group | (7,275) | (9,272) | ||
Non-GAAP net loss attributable to Xueda Education Group per ADS: | ||||
Basic | (0.11) | (0.14) | ||
Diluted | (0.11) | (0.14) | ||
Weighted average ADS numbers used in calculating non-GAAP net loss attributable to Xueda Education Group per ADS: | ||||
Basic | 65,049,506 | 67,847,771 | ||
Diluted | 65,049,506 | 67,847,771 | ||
Xueda Education Group | |||
UNAUDITED RECONSILIATION OF NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP MEASURES | |||
(in thousands of US Dollars) | |||
Twelve Months Ended December 31, | |||
2012 | 2011 | ||
Cost of revenues | $(219,655) | $(156,222) | |
Share-based compensation expense included in cost of revenues | 5 | 6 | |
Non-GAAP cost of revenues | (219,650) | (156,216) | |
General and administrative expenses | (46,427) | (36,425) | |
Share-based compensation expense included in general and administrative expenses | 3,156 | 4,092 | |
Non-GAAP general and administrative expenses | (43,271) | (32,333) | |
Selling and marketing expenses | (31,336) | (25,940) | |
Share-based compensation expense included in selling and marketing expenses | 5 | 11 | |
Non-GAAP selling and marketing expenses | (31,331) | (25,929) | |
Total costs of revenues and operating expenses | (297,418) | (218,587) | |
Share-based compensation expenses | 3,166 | 4,109 | |
Non-GAAP costs and operating expenses | (294,252) | (214,478) | |
Gross profit | 73,502 | 65,516 | |
Share-based compensation expenses | 5 | 6 | |
Non-GAAP gross profit | 73,507 | 65,522 | |
(Loss) income from operations | (4,097) | 3,508 | |
Share-based compensation expenses | 3,166 | 4,109 | |
Non-GAAP (loss) income from operations | (931) | 7,617 | |
Net income attributable to Xueda Education Group | 1,965 | 4,790 | |
Share-based compensation expenses | 3,166 | 4,109 | |
Non-GAAP net income attributable to Xueda Education Group | 5,131 | 8,899 | |
Non-GAAP net income attributable to Xueda Education Group per ADS: | |||
Basic | 0.08 | 0.13 | |
Diluted | 0.08 | 0.13 | |
Weighted average ADS numbers used in calculating non-GAAP net income attributable to Xueda Education Group per ADS: | |||
Basic | 65,658,002 | 68,872,588 | |
Diluted | 65,888,103 | 71,134,457 | |
