Ambow Education Announces Third Quarter 2018 Financial Results

BEIJING, Nov. 26, 2018 /PRNewswire/ -- Ambow Education Holding Ltd. ("Ambow" or the "Company") (NYSE American: AMBO), a leading national provider of educational and career enhancement services in China, today announced its unaudited financial and operating results for the three-month and nine-month periods ended September 30, 2018.

Third Quarter 2018 Financial Highlights

• Net revenues for the third quarter of 2018 increased by 10.6% to US$15.7 million from US$14.2 million in the same period of 2017. This increase was due primarily to revenues from Boston-based Bay State College ("BSC") (acquired in November 2017) and higher student enrollment for the 2018-2019 academic year in the Company's K-12 schools.
• Gross profit for the third quarter of 2018 was US$4.3 million, compared with US$4.2 million for the same period of 2017. Gross profit margin was 27.4% for the third quarter of 2018, compared to 29.6% in the same period of 2017. The decrease in gross profit margin was primarily attributable to lower profit margin at BSC, as the Company is in the process of consolidating its business operations.
• Operating expenses in the third quarter of 2018 decreased by 13.0% to US$6.0 million from US$6.9 million for the same period of 2017. Operating expenses as a percentage of net revenues for the quarter decreased to 38.2% from 48.6% in the same period of 2017.
• Operating loss in the third quarter of 2018 decreased by 37.0% to US$1.7 million from US$2.7 million for the same period of 2017.
• Net loss attributable to ordinary shareholders for the third quarter of 2018 was US$1.8 million, or US$0.04 per basic and diluted share, compared with a net income of US$2.6 million for the third quarter of 2017, or US$0.07 per basic and diluted share, as a one-time gain of US$5.7 million from the sale of subsidiaries was recorded in the prior-year quarter.
• As of September 30, 2018, Ambow maintained strong cash resources of US$62.1 million, comprised of cash and cash equivalents of US$30.5 million, short-term investments of US$27.2 million, and restricted cash of US$4.4 million.
• As of September 30, 2018, the Company's deferred revenue balance was US$24.4 million, representing a 38.6% increase from US$17.6 million as of December 31, 2017, mainly attributable to tuition and course fees collected in the K-12 business segment for the 2018-2019 academic year, and tuition and fees collected at BSC for the fall semester of 2018.

First Nine Months 2018 Financial Highlights

• Net revenues for the first nine months of 2018 increased by 17.3% to US$52.8 million from US$45.0 million in the first nine months of 2017, due primarily to revenues from BSC and higher student enrollment for both 2017-2018 and 2018-2019 academic years in the Company's K-12 schools.
• Gross profit for the first nine months of 2018 increased by 7.0% to US$19.9 million from US$18.6 million in the first nine months of 2017. Gross profit margin was 37.7%, compared to 41.3% in the same period of 2017. The decrease in gross profit margin was primarily attributable to lower profit margin at BSC, as the Company is in the process of consolidating its business operations.
• Operating expenses for the first nine months of 2018 were US$19.0 million, an 8.2% decrease from US$20.7 million in the same period of 2017. Operating expenses as a percentage of net revenues for the period decreased to 36.0% from 46.0% in the same period of 2017.
• Operating income in the first nine months of 2018 was US$0.8 million, compared with an operating loss of US$2.1 million for the same period of 2017.
• Net income attributable to ordinary shareholders for the first nine months of 2018 was US$2.0 million, or US$0.05 per basic and diluted share, compared with a net income of US$3.7 million for the first nine months of 2017, or US$0.10 per basic and diluted share, as a one-time gain of US$5.7 million from the sale of subsidiaries was recorded in the prior-year period.

Dr. Jin Huang, Ambow's President and Chief Executive Officer, commented, "We are pleased with the results achieved during this seasonally slow quarter, as they continue to demonstrate our solid growth trajectory. Both of our primary revenue streams, Better Schools and Better Jobs, continued to show strong growth with 6% and 43% year-over-year increases, respectively. Notably in the third quarter, deferred revenue grew 39% to US$24.4 million from the prior year period. This significant increase positions us well for near-term growth.

"During the third quarter, we also focused heavily on further differentiating our education services through our enhanced collaboration with schools and corporations and our increasing library of cutting-edge curriculum offerings and training programs. With our industry-leading experience, Ambow is uniquely positioned to play an integral role in addressing the gap between supply and demand for job-ready talent, in particular, helping career universities/colleges prepare students for the booming IT and technology-driven upgrades happening across nearly all industries. We're on track with implementation of our new cross-border college/university model through deepened integration with Bay State College.

"With the tuition fees from Bay State College contributing significantly to Ambow's revenue throughout 2018, we also incorporated the transition expenses related to this acquisition into our financial results, which has pressured our margins. However, with our strong cost control effort, we've been able to deliver improved operating leverage to largely offset this pressure. Our results were favorably impacted by the meaningful reduction in both operating expenses and operating expenses as a percentage of net revenues on a year-over-year basis in the third quarter and the first nine months of 2018, as well as a 23% decrease in general and administrative expenses in the third quarter of 2018 compared with the same period in 2017.

"Looking forward, we anticipate continued improvements in Ambow's overall operating performance, which will include the introduction of new revenue-generating program. We are committed to increasing enrollments across all Ambow programs while maintaining stringent cost controls, and we are confident in our ability to accelerate profitable growth and strengthen our leadership position in the career enhancement market in China."  

The Company's third quarter 2018 financial and operating results can also be found on its Form 6-K filed with the U.S. Securities and Exchange Commission at www.sec.gov.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all amounts translated from RMB to U.S. dollars for the third quarter and the first nine months of 2018 are based on the effective exchange rate of 6.8680 as of September 28, 2018; all amounts translated from RMB to U.S. dollars for the third quarter and the first nine months of 2017 are based on the effective exchange rate of 6.6533 as of September 29, 2017. The exchange rates were according to the middle rate as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.

About Ambow Education Holding Ltd.

Ambow Education Holding Ltd. is a leading national provider of educational and career enhancement services in China, offering high-quality, individualized services and products. With its extensive network of regional service hubs complemented by a dynamic proprietary learning platform and distributors, Ambow provides its services and products to students in 30 out of the 31 provinces and autonomous regions within China.

Follow us on Twitter: @Ambow_Education

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" and similar statements.  Among other things, the outlook and quotations from management in this announcement, as well as Ambow's strategic and operational plans, contain forward-looking statements. Ambow may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. 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 statements, including but not limited to the following: the Company's goals and strategies, expansion plans, the expected growth of the content and application delivery services market, the Company's expectations regarding keeping and strengthening its relationships with its customers, and the general economic and business conditions in the regions where the Company provides its solutions and services. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and Ambow undertakes no duty to update such information, except as required under applicable law.

For investor and media inquiries please contact:

Ambow Education Holding Ltd.
Tel: +86 10-6206-8000

The Piacente Group | Investor Relations
Tel: +1 212-481-2050 or +86 10-5730-6200
Email: ambow@tpg-ir.com

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