omniture

Four Seasons Education Reports Second Quarter Fiscal 2021 Unaudited Financial Results

2020-10-26 18:00 7678

SHANGHAI, Oct. 26, 2020 /PRNewswire/ -- Four Seasons Education (Cayman) Inc. ("Four Seasons Education" or the "Company") (NYSE: FEDU), a leading Shanghai-based educational company dedicated to providing comprehensive after-school education services with a focus on high-quality math education, today announced its unaudited financial results for the second quarter fiscal year 2021, ended August 31, 2020.

Second Quarter Fiscal Year 2021 Financial and Operational Highlights

  • Revenue was RMB83.8 million (US$12.2 million), compared with RMB128.8 million in the same period of last year.
  • Gross profit was RMB35.6 million (US$5.2 million), compared with RMB71.0 million in the same period of last year.
  • Operating loss was RMB2.7 million (US$0.4 million), compared with operating income of RMB28.3 million in the same period of last year.
  • Adjusted operating income(1) (non-GAAP) was RMB4.5 million (US$0.7 million), compared with RMB35.7 million in the same period of last year.
  • Net income was RMB4.0 million (US$0.6 million), compared with RMB20.3 million in the same period of last year.
  • Adjusted net income(2) (non-GAAP) was RMB6.8 million (US$1.0 million), compared with RMB26.9 million in the same period of last year.
  • Basic and diluted net income per American Depositary Share ("ADS") attributable to ordinary shareholders were both RMB0.07 (US$0.01), compared with RMB0.40 and RMB0.39, respectively, for the same period of last year. Each two ADSs represent one ordinary share.
  • Adjusted basic and diluted net income per ADS attributable to ordinary shareholders(3) (non-GAAP) were both RMB0.13 (US$0.02), compared with RMB0.53 and RMB0.52, respectively, for the same period of last year.
  • Number of learning centers was 50 as of August 31, 2020, compared with 54 as of August 31, 2019.
  • Total student enrollment(4) was 37,085, compared with 39,357 during the same period of last year.

(1) Adjusted operating income/loss is defined as operating income/loss excluding share-based compensation expenses.

(2) Adjusted net income/loss is defined as net income/loss excluding share-based compensation expenses and fair value change of investments.

(3) Adjusted basic/diluted net income/loss per ADS attributable to ordinary shareholders is defined as basic/diluted net income/loss per ADS attributable to ordinary shareholders excluding share-based compensation expenses per ADS attributable to ordinary shareholders and fair value change of investments per ADS attributable to ordinary shareholders.

For more information on these adjusted financial measures, please see the section captioned under "About Non-GAAP Financial Measures" and the tables captioned "Reconciliation of GAAP and non-GAAP Results" set forth at the end of this release.

(4) Total student enrollment is defined as the cumulative number of courses enrolled in and paid for by the Company's students during the respective period, including multiple courses enrolled in and paid for by the same student. 

"All of our learning centers have resumed offline classes during this quarter," said Ms. Yi (Joanne) Zuo, the Director and Chief Executive Officer of Four Seasons Education. "While our overall business continued to be impacted in the quarter by the macro challenges and regulatory changes, the tough operating environment did not slow us from continuing to execute our strategic initiatives with a keen focus on building a long-term sustainable business. We remain focused on strengthening our operational capabilities at multiple fronts in order to further optimize the learning experience of students enrolled in our diverse curricula and tutoring programs.

"With our strong track record of helping students achieve excellent learning outcomes, we have been making endeavors to enhance the quality of our educational service and launch new course products to better engage students in an evolving and dynamic industry, and to ultimately gain even broader appeal with a wider student base. Moving forward, we will continue our strategic efforts to boost the diversity of our course offerings, optimize our learning center network, increase student enrollments and engagement, while exploring new growth potential. 

"It is encouraging that our second quarter financial performance improved on a quarter-over-quarter basis, highlighted by a 42.8% increase in revenue and a 430 basis points increase in gross margin. In this quarter, we are also pleased to see improving profitability sequentially, evidencing our enhanced operating efficiency. We believe our focus on our core strengths and fundamentals will set the foundation for sustainable operation. We remain confident about the recovery and robust long-term prospects," Ms. Zuo concluded.

Second Quarter Fiscal Year 2021 Financial Results

Revenue was RMB83.8 million (US$12.2 million) for the second quarter of fiscal year 2021, compared with RMB128.8 million in the same period of last year, primarily due to latest regulatory policy and the extended impact of COVID-19.

Cost of revenue decreased by 16.7% to RMB48.2 million (US$7.0 million) for the second quarter of fiscal year 2021 from RMB57.9 million in the same period of last year.

Gross profit was RMB35.6 million (US$5.2 million) for the second quarter of fiscal year 2021, compared with RMB71.0 million in the same period of last year.  

General and administrative expenses decreased by 7.0% to RMB30.3 million (US$4.4 million) for the second quarter of fiscal year 2021 from RMB32.6 million in the same period of last year.

Sales and marketing expenses decreased by 20.6% to RMB8.0 million (US$1.2 million) for the second quarter of fiscal year 2021 from RMB10.0 million in the same period of last year.

Operating loss was RMB2.7 million (US$0.4 million) for the second quarter of fiscal year 2021, compared with operating income of RMB28.3 million in the same period of last year. Adjusted operating income(1) (non-GAAP), which is calculated as operating income excluding share-based compensation expenses, was RMB4.5 million (US$0.7 million) for the second quarter of fiscal year 2021, compared with RMB35.7 million in the same period of last year.

Income tax expense was RMB1.8 million (US$0.3 million) for the second quarter of fiscal year 2021, compared with RMB9.2 million in the same period of last year. 

Net income was RMB4.0 million (US$0.6 million) during the second quarter of fiscal year 2021, compared with RMB20.3 million in the same period of last year. Adjusted net income (2) (non-GAAP), which is calculated as net income excluding share-based compensation expenses and fair value change of the Company's investments, was RMB6.8 million (US$1.0 million) for the second quarter of fiscal year 2021, compared with RMB26.9 million in the same period of last year.

Basic and diluted net income per ADS attributable to ordinary shareholders for the second quarter of fiscal year 2021 were both RMB0.07 (US$0.01), compared with RMB0.40 and RMB0.39, respectively, for the same period of last year. Adjusted basic and diluted net income per ADS attributable to ordinary shareholders(3) (non-GAAP), which is calculated as basic/diluted net income/loss per ADS attributable to ordinary shareholders excluding share-based compensation expenses per ADS attributable to ordinary shareholders and fair value change of investments measured at fair value per ADS attributable to ordinary shareholders, were both RMB0.13 (US$0.02) for the second quarter of fiscal year 2021, compared with RMB0.53 and RMB0.52, respectively, for the same period of last year.

Cash and cash equivalents. As of August 31, 2020, the Company had cash and cash equivalents of RMB423.0 million (US$61.6 million), compared with RMB404.7 million as of February 29, 2020.

First Six Months Fiscal Year 2021 Financial Results

Revenue was RMB142.5 million (US$20.8 million) for the first six months of fiscal year 2021, compared with RMB214.5 million in the same period of last year, primarily due to the impact of the COVID-19 and latest regulatory policy.

Cost of revenue decreased by 18.9% to RMB84.5 million (US$12.3 million) for the first six months of fiscal year 2021 from RMB104.2 million in the same period of last year.

Gross profit was RMB58.0 million (US$8.5 million) for the first six months of fiscal year 2021, compared with RMB110.3 million in the same period of last year.

General and administrative expenses decreased by 11.9% to RMB58.3 million (US$8.5 million) for the first six months of fiscal year 2021 from RMB66.2 million in the same period of last year.

Sales and marketing expenses decreased by 16.6% to RMB14.9 million (US$2.2 million) for the first six months of fiscal year 2021 from RMB17.9 million in the same period of last year.

Operating loss was RMB15.2 million (US$2.2 million) for the first six months of fiscal year 2021, compared with operating income of RMB26.3 million in the same period of last year. Adjusted operating loss, which excludes share-based compensation expenses, was RMB0.3 million (US$0.0 million) for the first six months of fiscal year 2021, compared with adjusted operating income of RMB43.4 million in the same period of last year.

Net loss was RMB7.6 million (US$1.1 million) during the first six months of fiscal year 2021, compared with net income of RMB24.5 million in the same period of last year. Adjusted net income, which excludes share-based compensation expenses and fair value change of the Company's investments measured at fair value, was RMB6.2 million (US$0.9 million) for the first six months of fiscal year 2021, compared with RMB38.1 million in the same period of last year.

Basic and diluted net loss per ADS attributable to ordinary shareholders for the first six months of fiscal year 2021 were both RMB0.16 (US$0.02), compared with net income of RMB0.48 and RMB0.46, respectively, for the same period of last year. Non-GAAP basic and diluted net income per ADS attributable to ordinary shareholders for the first six months of fiscal year 2021 were both RMB0.13 (US$0.02), compared with RMB0.77 and RMB0.74, respectively, for the same period of last year.

Business Outlook

For the third quarter of fiscal year 2021, the Company expects to generate revenue in the range of RMB62.1 million to RMB67.2 million.

The above guidance reflects the Company's current and preliminary view, which is subject to change.

Conference Call

The Company's management will host an earnings conference call at 8:00 AM U.S. Eastern Time on October 26, 2020 (8:00 PM Beijing/Hong Kong time on October 26, 2020)

Dial-in details for the earnings conference call are as follows:

United States (toll free):

1-888-346-8982

International:

1-412-902-4272

Hong Kong, China (toll free):

800-905-945

Hong Kong, China:

852-3018-4992

Mainland China (toll free):

400-120-1203

Participants should dial-in at least 5 minutes before the scheduled start time and ask to be connected to the call for "Four Seasons Education."

Additionally, a live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.sijiedu.com.

A replay of the conference call will be accessible approximately one hour after the conclusion of the live call until November 2, 2020, by dialing the following telephone numbers:

United States (toll free):

1-877-344-7529

International:

1-412-317-0088

Replay Access Code:

10149342

About Four Seasons Education (Cayman) Inc.

Four Seasons Education (Cayman) Inc. is a leading Shanghai-based educational company dedicated to providing comprehensive after-school education services with a focus on high-quality math education. The Company's vision is to unlock students' intellectual potential through high quality and effective education that can profoundly benefit students' academic, career and life prospects. The Company provides educational programs that are primarily focused on elementary-level math and have expanded in recent years to also include other subjects, including physics, chemistry, and languages, and other grade levels, including kindergarten-level and middle school-level programs. The Company's proprietary educational content is designed to cultivate students' interests and enhance their cognitive and logic abilities. The Company develops its educational content through a systematic development process and updates it regularly based on student performance and feedback. Such process allows the Company to effectively drive better learning outcomes and serve students of different ages, aptitude levels and learning objectives. The Company's faculty is led by a group of experienced senior educators, including recognized scholars, award-winning teachers. Over the years, the quality of the Company's education services has been demonstrated by its student outstanding academic performance.

About Non-GAAP Financial Measures

In evaluating the Company's business, the Company considers and uses certain non-GAAP measures, including primarily adjusted operating income/loss, adjusted net income/loss and adjusted basic and diluted net income/loss per ADS attributable to ordinary shareholders, as supplemental measures to review and assess the Company's operating performance. Adjusted operating income/loss is defined as operating income/loss excluding share-based compensation expenses. Adjusted net income/loss is defined as net income/loss excluding share-based compensation expenses and fair value change of the Company's investments. Adjusted basic/ diluted net income/loss per ADS attributable to ordinary shareholders is defined as basic/diluted net income/loss per ADS attributable to ordinary shareholders excluding share-based compensation expenses per ADS attributable to ordinary shareholders and fair value change of investments measured at fair value per ADS attributable to ordinary shareholders. The presentation of these non-GAAP financial measures 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.

The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses, fair value change of investments measured at fair value and impairment loss on intangible assets and goodwill (where applicable) that may not be indicative of the Company's operating performance from a cash perspective. The Company believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to the Company's historical performance and liquidity. The Company also believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in the Company's financial and operational decision making. A limitation of using non-GAAP measures is that these non-GAAP measures exclude share-based compensation charges and fair value change of investments measured at fair value (where applicable) that have been and will continue to be for the foreseeable future a significant recurring expense in the Company's business. The Company compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

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 translations from RMB to U.S. dollars are made at a rate of RMB6.8647 to US$1.00, the rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on August 28, 2020.

Safe Harbor Statement

This press release contains statements of a forward-looking nature. These statements, including the statements relating to the Company's future financial and operating results, are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "believes," "anticipates," "intends," "estimates" and similar statements. Among other things, management's quotations and the Business Outlook section contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company and the industry. Potential risks and uncertainties include, but are not limited to, those relating to its ability to attract new students and retain existing students, its ability to deliver a satisfactory learning experience and improving their academic performance, PRC regulations and policies relating to the education industry in China, general economic conditions in China, and the Company's ability to meet the standards necessary to maintain listing of its ADSs on the NYSE or other stock exchange, including its ability to cure any non-compliance with the NYSE's continued listing criteria. All information provided in this press release is as of the date hereof, and the Company undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Further information regarding risks and uncertainties faced by the Company is included in the Company's filings with the U.S. Securities and Exchange Commission, including its annual reports on Form 20-F.

For investor and media inquiries, please contact:

In China:
Four Seasons Education (Cayman) Inc.
Olivia Li
Tel: +86 (21) 6317-6678
E-mail: IR@fsesa.com

The Piacente Group, Inc.
Jenny Cai
Tel: +86 (10) 6508-0677
E-mail: fourseasons@tpg-ir.com

In the United States:
The Piacente Group, Inc.  
Brandi Piacente
Tel: +1-212-481-2050
E-mail: fourseasons@tpg-ir.com

 

 

 

FOUR SEASONS EDUCATION (CAYMAN) INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data and per share data)




As of



February 29,


August 31,


August 31,




2020


2020


2020




RMB


RMB


USD


Current assets











Cash and cash equivalents



404,652



422,983



61,617


Accounts receivable and contract assets



1,261



1,183



172


Other receivables, deposits and other assets



18,484



15,565



2,267


Short-term investments



10,000



-



-


Long-term investment under fair value - current



181,821



33,994



4,953


Total current assets



616,218



473,725



69,009













Non-current assets











Restricted cash



37,703



10,548



1,537


Property and equipment, net



19,749



17,244



2,512


Operating lease right-of-use assets



190,074



183,085



26,671


Intangible assets, net



8,765



7,808



1,137


Land and building use right, net



-



11,637



1,696


Goodwill



35,163



36,967



5,385


Deferred tax assets



13,445



18,324



2,669


Equity method investments



1,295



42,706



6,221


Long-term investments under fair value - non current



104,414



240,467



35,029


Rental deposits—non-current



10,790



12,303



1,792


Total non-current assets



421,398



581,089



84,649


TOTAL ASSETS



1,037,616



1,054,814



153,658













Current liabilities











Amounts due to related parties



1,323



2,065



301


Accrued expenses and other current liabilities



75,118



88,039



12,825


Operating lease liabilities – current



51,842



53,666



7,818


Income tax payable



12,789



12,130



1,767


Deferred revenue



71,946



75,586



11,010


Total current liabilities



213,018



231,486



33,721


 

 

 

FOUR SEASONS EDUCATION (CAYMAN) INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data and per share data)




As of



February 29,


August 31,


August 31,




2020


2020


2020




RMB


RMB


USD


Non-current liabilities











Deferred tax liabilities



2,136



1,905



278


Operating lease liabilities – non-current



147,510



136,216



19,843


Total non-current liabilities



149,646



138,121



20,121


TOTAL LIABILITIES



362,664



369,607



53,842













EQUITY











Total equity



674,952



685,207



99,816


TOTAL LIABILITIES AND EQUITY



1,037,616



1,054,814



153,658


 

 

 

FOUR SEASONS EDUCATION (CAYMAN) INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share data and per share data)




Three Months Ended August 31,


Six Months Ended August 31,



2019


2020


2020


2019


2020


2020



RMB


RMB


USD


RMB


RMB


USD

Revenue



128,836



83,803



12,208



214,479



142,481



20,756

Cost of revenue



(57,881)



(48,199)



(7,021)



(104,171)



(84,470)



(12,305)

Gross profit



70,955



35,604



5,187



110,308



58,011



8,451




















General and administrative expenses



(32,633)



(30,333)



(4,419)



(66,153)



(58,287)



(8,491)

Sales and marketing expenses



(10,016)



(7,955)



(1,159)



(17,903)



(14,938)



(2,176)

Operating income (loss)



28,306



(2,684)



(391)



26,252



(15,214)



(2,216)




















Subsidy income



24



4,345



633



7,396



7,852



1,144

Interest income



1,534



905



132



2,612



1,892



276

Other income (expenses), net



(315)



3,420



498



2,052



662



96

Income (loss) before income taxes and loss from

  equity method investments



29,549



5,986



872



38,312



(4,808)



(700)




















Income tax expense



(9,165)



(1,782)



(260)



(13,680)



(1,395)



(203)

Loss from equity method investments



(75)



(230)



(34)



(155)



(1,364)



(199)




















Net income (loss)



20,309



3,974



578



24,477



(7,567)



(1,102)

Net income attributable to non-controlling interest



1,073



916



133



1,472



61



9

Net income (loss) attributable to Four Seasons Education

  (Cayman) Inc.



19,236



3,058



445



23,005



(7,628)



(1,111)




















Net income (loss) per ordinary share:



















Basic



0.81



0.13



0.02



0.96



(0.33)



(0.05)

Diluted



0.78



0.13



0.02



0.93



(0.33)



(0.05)




















Weighted average shares used in calculating

  net income (loss) per ordinary share:



















Basic



23,893,557



23,131,195



23,131,195



23,973,239



23,131,195



23,131,195

Diluted



24,758,409



23,586,813



23,586,813



24,782,219



23,131,195



23,131,195

 

 

 

FOUR SEASONS EDUCATION (CAYMAN) INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, except share data and per share data)




Three Months Ended August 31,


Six Months Ended August 31,



2019


2020


2020


2019


2020


2020



RMB


RMB


USD


RMB


RMB


USD

Net income (loss)



20,309



3,974



578



24,477



(7,567)



(1,102)

Other comprehensive income (loss), net of

   tax of nil



















Foreign currency translation adjustments



14,500



(18,359)



(2,674)



30,576



(9,633)



(1,403)

Comprehensive income (loss)



34,809



(14,385)



(2,096)



55,053



(17,200)



(2,505)

Less: Comprehensive income attributable to
non-controlling interest



1,073



916



133



1,472



61



9

Comprehensive income (loss) attributable to

  Four Seasons Education (Cayman) Inc.



33,736



(15,301)



(2,229)



53,581



(17,261)



(2,514)

 

 

 

FOUR SEASONS EDUCATION (CAYMAN) INC.
RECONCILIATION OF GAAP AND NON-GAAP RESULTS
(in thousands, except share data and per share data)




Three Months Ended August 31,


Six Months Ended August 31,



2019


2020


2020


2019


2020


2020



RMB


RMB


USD


RMB


RMB


USD

Operating income (loss)


28,306


(2,684)


(391)


26,252


(15,214)


(2,216)

Add: share-based compensation expenses


7,344


7,226


1,053


17,159


14,915


2,173

Adjusted operating income (loss) (non-GAAP)


35,650


4,542


662


43,411


(299)


(43)














Net income (loss)


20,309


3,974


578


24,477


(7,567)


(1,102)

Add: share-based compensation expenses (net of tax effect of nil)


7,344


7,226


1,053


17,159


14,915


2,173

Add: fair value change of investments, excluding foreign currency

  translation adjustment (net of tax effect of nil)


(768)


(4,352)


(633)


(3,548)


(1,119)


(164)

Adjusted net income (non-GAAP)


26,885


6,848


998


38,088


6,229


907














Basic net income (loss) per ADS attributable to ordinary shareholders


0.40


0.07


0.01


0.48


(0.16)


(0.02)

Add: share-based compensation expenses per ADS attributable to

  ordinary shareholders


0.15


0.15


0.02


0.36


0.32


0.05

Add: fair value change of investments per ADS attributable to

  ordinary shareholders


(0.02)


(0.09)


(0.01)


(0.07)


(0.03)


(0.01)

Adjusted basic net income per ADS attributable to

  ordinary shareholders (non-GAAP)


0.53


0.13


0.02


0.77


0.13


0.02

Diluted net income (loss) per ADS attributable to

  ordinary shareholders


0.39


0.07


0.01


0.46


(0.16)


(0.02)

Add: share-based compensation expenses per ADS attributable to

  ordinary shareholders


0.15


0.15


0.02


0.35


0.32


0.05

Add: fair value change of investments per ADS attributable to

  ordinary shareholders


(0.02)


(0.09)


(0.01)


(0.07)


(0.03)


(0.01)

Adjusted diluted net income per ADS attributable

  to ordinary shareholders (non-GAAP)


0.52


0.13


0.02


0.74


0.13


0.02

Weighted average ADSs used in calculating earnings per ADS













Basic


47,787,114


46,262,390


46,262,390


47,946,477


46,262,390


46,262,390

Diluted


49,516,818


47,173,626


47,173,626


49,564,438


46,262,390


46,262,390

 

 

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Source: Four Seasons Education Inc.
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