omniture

RISE Education Announces Third Quarter 2019 Unaudited Financial Results

2019-11-15 05:30 5174

BEIJING, Nov. 15, 2019 /PRNewswire/ -- RISE Education Cayman Ltd ("RISE" or the "Company") (NASDAQ: REDU), a leading junior English Language Training ("ELT") provider in China, today announced its unaudited financial results for the third quarter ended September 30, 2019.

Highlights for the Third Quarter of 2019

  • Total revenues increased by 18.4% year-over-year to RMB411.1 million (US$57.5 million) in the third quarter of 2019.
  • Net income attributable to RISE increased by 19.7% year-over-year to RMB39.4 million (US$5.5 million) in the third quarter of 2019.
  • Non-GAAP net income attributable to RISE[1] increased by 22.4% year-over-year to RMB48.5 million (US$6.8 million) in the third quarter of 2019.
  • Adjusted EBITDA1 increased by 37.1% year-over-year to RMB88.9 million (US$12.4 million) in the third quarter of 2019.
  • Student enrollments[2] for Rise regular courses, including Rise Start and Rise On, increased by 14.7% year-over-year to 14,700, which includes 6,492 students in the cities where the collection of standard tuition has been broken into 3 to 4 installments since December 2018; 6,782 in the other cities where the Company continues to collect tuition for the full course and 1,426 from the newly acquired Shijiazhuang business which was fully consolidated in the third quarter of 2019. Student enrollments for other Rise courses were 1,175 in the third quarter of 2019, including 354 from online courses, 288 from short-term and SSAT test-prep courses, and 533 from The Edge Learning Centers Limited ("The Edge").
  • The total number of the Company's learning centers increased to 451, consisting of 87 self-owned (including 7 operated by the newly acquired Shijiazhuang business and 2 operated by The Edge) and 364 franchised learning centers.
  • Student retention rate at self-owned learning centers was 69% in the third quarter of 2019, compared with 71% for the same period of the prior year.
  • The one-year share repurchase program approved by the Board of Directors in November 2018 completed during the quarter. The Company repurchased a total of 1,158,741 ADSs on the open market, at an average price of US$8.66 per ADS, for an aggregate consideration of US$10.0 million.

Three Months Ended


September 30,

(in thousands RMB, except for percentage and per ADS data)

2018

2019

Pct. Change

Revenues

347,395

411,143

18.4%

Net income attributable to RISE

32,890

39,362

19.7%

Non-GAAP net income attributable to RISE

39,621

48,482

22.4%

Net income per ADS attributable to RISE – basic

0.57

0.70

22.8%

Net income per ADS attributable to RISE – diluted

0.57

0.69

21.1%

Non-GAAP net income per ADS attributable to RISE – basic

0.69

0.86

24.6%

Non-GAAP net income per ADS attributable to RISE – diluted

0.68

0.85

25.0%

Adjusted EBITDA

64,817

88,877

37.1%



 Nine Months Ended


 September 30,

(in thousands RMB, except for percentage and per ADS data)

2018

2019

Pct. Change

Revenues

917,720

1,113,225

21.3%

Net income attributable to RISE

111,453

96,965

-13.0%

Non-GAAP net income attributable to RISE

132,075

147,245

11.5%

Net income per ADS attributable to RISE – basic

1.96

1.70

-13.3%

Net income per ADS attributable to RISE – diluted

1.92

1.68

-12.5%

Non-GAAP net income per ADS attributable to RISE – basic

2.32

2.58

11.2%

Non-GAAP net income per ADS attributable to RISE – diluted

2.28

2.55

11.8%

Adjusted EBITDA

209,205

258,328

23.5%

"I'm very delighted to report a solid quarter of growth across our business as we continue to enhance our operations to support sustainable long-term growth," commented Mr. Yiding Sun, Chief Executive Officer of RISE. "We consolidated the Shijiazhuang operations to our business during the third quarter, which added 7 learning centers to our self-owned learning center network, and will help accelerate revenue growth going forward. The investments in our core competitiveness through new incentives for teachers and our continued efforts to deploy marketing dollars in a more targeted manner are beginning to pay off. As a result, teacher retention and employee morale have improved. In face of the challenges posed by the regulatory environment and macroeconomic headwinds, we achieved an 18.9% increase in new student enrollments and a 14.7% increase in total student enrollments for regular courses, and meanwhile managed to reduce student acquisition costs during the quarter. We will continue to focus on further integrating online content into our offline product offerings, investing in teacher training and technology, expanding our geographic network, and enhancing operational efficiency. We remain positive about our future growth and will continue to focus on building our business for the long-term."

Ms. Jiandong Lu, Chief Operating Officer and Chief Financial Officer of RISE, stated, "With the backdrop of the challenging regulatory and macroeconomic environment, total revenue increased by 18.4% and adjusted EBITDA margin expanded by 290 basis points to 21.6%, when compared with the same quarter of last year. By better leveraging our offline learning center network and further optimizing the allocation of marketing resources between online and offline channels, we succeeded in reducing selling and marketing expenses as a percentage of revenue to 19.9% during the third quarter, 220 basis points lower than that of the same period of last year, which significantly contributed to the improvement in adjusted EBITDA margin. We will continue investing in our core competitiveness to further drive new student enrollments, strengthen our high retention rate and deliver sustainable growth."

Financial Results for the Third Quarter of 2019

Revenues

Total revenues for the third quarter of 2019 increased by RMB63.7 million, or 18.4%, to RMB411.1 million (US$57.5 million) from RMB347.4 million for the same period of the prior year. This increase was primarily attributable to an increase of RMB56.0 million in revenues from educational programs.

  • Revenues from educational programs for the third quarter of 2019 increased by 20.2% to RMB333.3 million (US$46.6 million). The increase in revenues from educational programs was primarily due to (i) an increase in the number of students in class for the Company's regular courses operated by self-owned learning centers, and (ii) price increases for the Company's regular courses since the beginning of the year. The number of the Company's self-owned learning centers also increased to 87 as of September 30, 2019 from 70 as of September 30, 2018. The Company added 205 classrooms as of September 30, 2019 as compared with September 30, 2018.
  • Franchise revenues for the third quarter of 2019 increased by 27.4% to RMB45.4 million (US$6.3 million), primarily due to an increase in initial franchise fees and recurring franchise fees associated with an increase in the number of franchised learning centers from 273 as of September 30, 2018 to 364 as of September 30, 2019.
  • Other revenues for the third quarter of 2019 decreased by 5.8% year-over-year to RMB32.5 million (US$4.5 million).

Cost of Revenues

Cost of revenues for the third quarter of 2019 increased by RMB32.4 million, or 19.8%, to RMB196.3 million (US$27.5 million). The increase was primarily due to personnel costs associated with an increase in teacher headcount, total teaching hours and teacher compensation at the Company's self-owned learning centers and an increase in rental costs associated with the expansion of the Company's operations. Non-GAAP cost of revenues[3] for the third quarter of 2019 increased by 20.3% to RMB192.4 million (US$26.9 million).

Gross Profit

Gross profit for the third quarter of 2019 increased by RMB31.4 million, or 17.1%, to RMB214.9 million (US$30.1 million). Gross margin was 52.3% for the third quarter of 2019 as compared with 52.8% for the same period of last year.

Operating Expenses

Total operating expenses for the third quarter of 2019 increased by RMB13.7 million, or 10.1%, to RMB149.0 million (US$20.9 million). Non-GAAP operating expenses[3] for the third quarter of 2019 were RMB143.8 million (US$20.1 million).

  • Selling and marketing expenses increased by 7.4% year-over-year to RMB83.3 million (US$11.7 million) for the third quarter of 2019, as compared with RMB77.5 million for the third quarter of 2018. The increase was primarily associated with a headcount increase and an incentive-related salary raise for the Company's marketing staff. Non-GAAP selling and marketing expenses for the third quarter of 2019 increased by 7.0% year-over-year to RMB82.0 million (US$11.5 million).
  • General and administrative expenses increased by 13.7% year-over-year to RMB65.8 million (US$9.2 million) for the third quarter of 2019, as compared with RMB57.8 million for the third quarter of 2018. The increase was mainly attributable to the increase in personnel costs associated with the Company's expanding businesses. Non-GAAP general and administrative expenses for the third quarter of 2019 increased by 10.5% year-over-year to RMB61.8 million (US$8.6 million).

Operating Income and Operating Margin

Operating income for the third quarter of 2019 increased by 36.7% year-over-year to RMB65.8 million (US$9.2 million). Non-GAAP operating income[2] for the third quarter of 2019 increased by 36.5% year-over-year to RMB74.9 million (US$10.5 million).

Operating margin for the third quarter of 2019 was 16.0%, as compared with 13.9% for the same period of the prior year. Non-GAAP operating margin was 18.2% for the third quarter of 2019, as compared with 15.8% for the same period of last year. The significant improvement in the operating margin was the result of improvements in the optimization of the Company's selling and marketing resources and a careful control of general and administrative expenses.

Interest Expense

Interest expense for the third quarter of 2019 was RMB8.8 million (US$1.2 million), as compared with RMB8.6 million for the same period of the prior year.

Other Income, net

Other income for the third quarter of 2019 was RMB0.7 million (US$0.1 million), as compared with RMB0.4 million for the same period of the prior year.

Income Tax Expense

Income tax expense for the third quarter of 2019 was RMB24.0 million (US$3.4 million), as compared with RMB17.3 million for the same period of the prior year.

Net Income Attributable to RISE

Net income attributable to RISE for the third quarter of 2019 increased by 19.7% to RMB39.4 million (US$5.5 million). Net margin attributable to RISE in the third quarter of 2019 was 9.6%, compared with 9.5% for the same period of the prior year. Non-GAAP net income attributable to RISE for the third quarter of 2019 increased by 22.4% year-over-year to RMB48.5million (US$6.8 million). Non-GAAP net margin attributable to RISE[1] was 11.8% for the third quarter of 2019, as compared with 11.4% for the same period of the prior year.

EBITDA represents net income before interests, taxes, depreciation, and amortization. EBITDA for the third quarter of 2019 increased by 35.0% to RMB84.2 million (US$11.8 million) from RMB62.4 million for the same period of the prior year. Adjusted EBITDA for the third quarter of 2019 increased by 37.1% year-over-year to RMB88.9 million (US$12.4 million) from RMB64.8 million for the same period of the prior year. Adjusted EBITDA margin improved to 21.6% in the third quarter of 2019 from 18.7% for the same period of the prior year.

Basic and Diluted Earnings per ADS

Basic and diluted net income attributable to RISE per ADS was RMB0.70 (US$0.10) and RMB0.69 (US$0.10), respectively, for the third quarter of 2019. Basic and diluted non-GAAP net income attributable to RISE per ADS was RMB0.86 (US$0.12) and RMB0.85 (US$0.12), respectively, for the third quarter of 2019.

For details on the calculation of and reconciliation to the nearest GAAP measures for each of non-GAAP cost of revenues, operating expenses, net income, net income attributable to RISE per ADS, EBITDA, and adjusted EBITDA, see "About Non-GAAP Financial Measures" and "Reconciliation of GAAP and Non-GAAP Results."

Cash Flow

Net cash generated from operating activities for the third quarter of 2019 was RMB10.0 million (US$1.4 million), as compared with RMB74.7 million of cash generated from operating activities for the same period of the prior year, mainly attributable to the change in the tuition collection schedule mandated by government regulations.

Balance Sheet

As of September 30, 2019, the Company had combined cash and cash equivalents, restricted cash, short-term investment and loan to a related party of RMB1,036.9 million (US$145.1 million), as compared with RMB1,316.8 million as of December 31, 2018.

Current and non-current deferred revenue and customer advances were RMB831.6 million (US$116.3 million) as of September 30, 2019, representing a decrease of 20.0% from RMB1,038.8 million as of December 31, 2018. The decrease was primarily due to the change in the tuition collection schedule. Deferred revenue and customer advances mainly consisted of upfront tuition payments from students and initial franchise fees from the Company's franchise partners.

Financial Results for the Nine Months Ended September 30, 2019

Revenues

Total revenues for the first nine months of 2019 increased by RMB195.5 million, or 21.3%, to RMB1,113.2 million (US$155.7 million) from RMB917.7 million for the same period of the prior year. This increase was primarily attributable to an increase of RMB171.2 million in revenues from educational programs.

  • Revenues from educational programs for the first nine months of 2019 increased by 22.1% to RMB944.8 million (US$132.2 million). The increase in revenues from educational programs was primarily due to (i) an increase in the number of students in class for the Company's regular courses operated by self-owned learning centers and (ii) an increase in prices for the Company's regular courses from the beginning of the year.
  • Franchise revenues for the first nine months of 2019 increased by 27.1% to RMB123.3 million (US$17.3 million), primarily due to an increase in initial franchise fees and recurring franchise fees associated with an increase in the number of franchised learning centers from 273 as of September 30, 2018 to 364 as of September 30, 2019.
  • Other revenues for the first nine months of 2019 were RMB45.1 million (US$6.3 million), as compared with RMB47.2 million for the same period of the prior year.

Cost of Revenues

Cost of revenues for the first nine months of 2019 increased by RMB84.9 million, or 19.9%, to RMB511.1 million (US$71.5 million). The increase was primarily due to personnel costs associated with an increase in teacher headcount, total teaching hours and teacher compensation at the Company's self-owned learning centers and an increase in rental costs associated with the expansion of the Company's operations. Non-GAAP cost of revenues[3] for the first nine months of 2019 increased by 20.0% to RMB498.1 million (US$69.7 million).

Gross Profit

Gross profit for the first nine months of 2019 increased by RMB110.6 million, or 22.5%, to RMB602.1 million (US$84.2 million). Gross margin improved to 54.1% during the first nine months of 2019 from 53.6% for the same period of last year.

Operating Expenses

Total operating expenses for the first nine months of 2019 increased by RMB96.1 million, or 27.9%, to RMB440.0 million (US$61.6 million). Non-GAAP operating expenses[3] for the first nine months of 2019 were RMB402.8 million (US$56.3 million).

  • Selling and marketing expenses increased by 24.7% year-over-year to RMB219.7 million (US$30.7 million) for the first nine months of 2019, as compared with RMB176.2 million for the first nine months of 2018. The increase was primarily associated with a headcount increase and an incentive-related salary raise for the Company's marketing staff. Non-GAAP selling and marketing expenses for the first nine months of 2019 increased by 25.5% year-over-year to RMB216.5 million (US$30.3 million).
  • General and administrative expenses for the first nine months of 2019 were RMB220.3 million (US$30.8 million), an increase of 31.4% year-over-year, from RMB167.7 million for the first nine months of 2018. The increase was mainly attributable to (i) increased share-based compensation expenses associated with new option grants during the second quarter of 2019, (ii) an increase in personnel costs and rental costs associated with the Company's expanding business and (iii) an increase in professional service fees related to acquisitions and the Company's strategic projects. Non-GAAP general and administrative expenses for the first nine months of 2019 increased by 15.1% year-over-year to RMB186.2 million (US$26.1 million).

Operating Income and Operating Margin

Operating income for the first nine months of 2019 increased by 9.8% year-over-year to RMB162.1 million (US$22.7 million). Non-GAAP operating income[1] for the first nine months of 2019 increased by 26.3% year-over-year to RMB212.4 million (US$29.7 million).

Operating margin for the first nine months of 2019 was 14.6%, compared with 16.1% for the same period of the prior year. Non-GAAP operating margin for the first nine months of 2019 was 19.1%, as compared with 18.3% for the same period of last year. The improvement in the operating margin was the result of improvements in the optimization of the Company's selling and marketing resources and careful control of general and administrative expenses

Interest Expense

Interest expense for the first nine months of 2019 was RMB26.7 million (US$3.7 million), compared with RMB24.9 million for the same period of the prior year.

Other Income

Other income for the first nine months of 2019 was RMB9.2 million (US$1.3 million), as compared with RMB12.1 million for the same period of the prior year.

Income Tax Expense

Income tax expense for the first nine months of 2019 was RMB62.0 million (US$8.7 million), as compared with RMB47.0 million for the same period of the prior year. The increase was mainly due to non-deductible share-based compensation expenses recognized in 2019.

Net Income Attributable to RISE

Net income attributable to RISE for the first nine months of 2019 decreased by 13.0% to RMB97.0 million (US$13.6 million). Net margin attributable to RISE for the first nine months of 2019 decreased to 8.7% from 12.1% for the same period of the prior year. Non-GAAP net income attributable to RISE for the first nine months of 2019 increased by 11.5% year-over-year to RMB147.2 million (US$20.6 million). Non-GAAP net margin attributable to RISE[1] declined to 13.2% for the first nine months of 2019 from 14.4% for the same period of the prior year.

EBITDA for the first nine months of 2019 increased by 10.0% to RMB221.0 million (US$30.9 million) from RMB200.9 million for the same period of the prior year. Adjusted EBITDA for the first nine months of 2019 increased by 23.5% year-over-year to RMB258.3 million (US$36.1 million) from RMB209.2 million for the same period of the prior year. Adjusted EBITDA margin increased to 23.2% for the first nine months of 2019, from 22.8% for the same period of the prior year.

Basic and Diluted Earnings per ADS

Basic and diluted net income attributable to RISE per ADS was RMB1.70 (US$0.24) and RMB1.68 (US$0.24), respectively, for the first nine months of 2019. Basic and diluted non-GAAP net income attributable to RISE per ADS was RMB2.58 (US$0.36) and RMB2.55 (US$0.36), respectively, for the first nine months of 2019.

Cash Flow

Net cash used by operating activities for the first nine months of 2019 was RMB48.0 million (US$6.7 million), as compared with RMB307.5 million of cash generated from operating activities for the same period of the prior year, mainly attributable to the change in tuition collection schedule mandated by government regulations.

Completion of the Share Repurchase Program

The Company's Share Repurchase Program authorizing the Company to repurchase up to US$30 million of its outstanding ADSs, which was approved by its Board of Directors in November 2018, has completed. The Company has repurchased 1,158,741 ADSs on the open market, at an average price of US$8.66 per ADS, for an aggregate consideration of US$10.0 million.

Business Outlook

For the fourth quarter of 2019, the Company expects its total revenues to be in the range of RMB411 million to RMB418 million, representing a year-over-year growth rate of approximately 16% to 18%. This forecast reflects the Company's current and preliminary view on the market and operational conditions, which is subject to change.

Conference Call Information

RISE will hold a conference call on November 14, 2019 at 8:00 pm Eastern Time (or November 15, 2019 at 9:00 am Beijing Time) to discuss the financial results. Participants may access the call by dialing the following numbers:

United States:

+1-845-675-0437

International:

+65-6713-5090

China Domestic:

400-6208-038

Hong Kong:

+852-3018-6771

Conference ID:

#8147155

The replay will be accessible through November 21, 2019 by dialing the following numbers:

United States:

+1-646-254-3697

International:

+61-2-8199-0299

China Domestic:

400-6322-162

Hong Kong:

+852-3051-2780

Conference ID:

#8147155

A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.risecenter.com/.

Exchange Rate

This announcement contains translations of certain RMB amounts into U.S. dollars ("USD") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB7.1477 to US$1.00, the noon buying rate in effect on September 30, 2019 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.

About Non-GAAP Financial Measures

To supplement RISE's financial results presented in accordance with U.S. GAAP, the Company uses non-GAAP financial measures, which are adjusted from results based on U.S. GAAP. Reconciliations of non-GAAP financial measures to U.S. GAAP financial measures are set forth in table at the end of this earnings release titled "Reconciliation of GAAP and Non-GAAP Results," which provides more details on the non-GAAP financial measures.

Non-GAAP cost of revenues, non-GAAP operating expenses, including non-GAAP selling and marketing expenses and non-GAAP general and administrative expenses, provides the Company with an understanding of the results from the primary operations of the Company's business by excluding the effects of certain transaction-related expenses that do not reflect the ordinary operating expenses of the Company's operations and share-based compensation.

EBITDA, adjusted EBITDA, adjusted EBITDA margin and non-GAAP net income provide the Company with an understanding of the results from the primary operations of the Company's business by excluding the effects of certain transaction-related expenses that do not reflect the ordinary EBITDA and net income of the Company's operations.

The Company uses non-GAAP operating expenses, including non-GAAP selling and marketing expenses and non-GAAP general and administrative expenses, non-GAAP operating income, Non-GAAP operating margin, EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income attributable to RISE, and non-GAAP basic and diluted net income per ADS attributable to RISE to evaluate the Company's period-over-period operating performance because the Company's management believes these provide a more comparable measure of the Company's continuing business as it adjusts for transaction-related expenses that are not reflective of the normal earnings of the Company's business. These measures may be useful to an investor in evaluating the underlying operating performance of the Company's business, and to enhance investors' overall understanding of the historical and current financial performance of the Company's continuing operations and prospects for the future.

Non-GAAP financial information should not be considered a substitute for or superior to U.S. GAAP results. In addition, calculations of this non-GAAP financial information may be different from calculations used by other companies, and therefore comparability may be limited.

Non-GAAP cost of revenues exclude relevant share-based compensation expenses and amortization of certain intangible assets ("IA") acquired as part of the 2013 acquisition from cost of revenues. Non-GAAP operating income adds back share-based compensation expenses and amortization of certain intangible assets acquired as part of the 2013 acquisition. Each of non-GAAP operating expenses, non-GAAP selling and marketing expenses or non-GAAP general and administrative expenses excludes relevant share-based compensation expenses and amortization of certain intangible assets acquired as part of the 2013 acquisition. EBITDA represents net income before interests, taxes, depreciation and amortization.

For more information on non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures."

About RISE Education

RISE Education Cayman Ltd is a leading junior English Language Training ("ELT") provider based in Beijing. Founded in 2007, the Company pioneered the application of the "subject-based learning" philosophy in China, which uses language arts, math, natural science, and social science to teach English in an immersive environment that helps students learn to speak and think like a native speaker. Through three flagship courses, Rise Start, Rise On, and Rise Up, the Company provides ELT to students aged three to six, seven to twelve and thirteen to eighteen, respectively. The Company's highly scalable business model includes both self-owned and franchised learning centers. For more information, please visit http://en.risecenter.com/.

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 RISE 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 maintain or enhance its brand, its ability to compete effectively against its competitors, its ability to execute its growth strategy, its ability to introduce new products or enhance existing products, its ability to obtain required licenses, permits, filings or registrations, its ability to grow or operate or effectively monitor its franchise business, quarterly variations in its operating results caused by factors beyond its control, macroeconomic conditions in China and government policies and regulations relating to its corporate structure, business and industry and their potential impact on its future business development, financial condition and results of operations. All information provided in this press release is as of the date hereof, and RISE 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 RISE 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 RISE is included in RISE's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F for the year ended December 31, 2018.

Investor Relations Contact

Mei Li
RISE Education
Email: riseir@rdchina.net
Tel: +86 (10) 8559-9191



[1] Non-GAAP net income attributable to RISE excludes share-based compensation expenses and amortization of certain intangible assets, including teaching course license, trademark, student base and franchise agreements, as part of the junior English Language Training ("ELT") business acquisition by the Company from certain third-party in 2013 (the "2013 acquisition") from net income attributable to RISE. EBITDA represents net income before interests, taxes, depreciation and amortization. Adjusted EBITDA excludes share-based compensation expenses from EBITDA. For details on the calculation of each of these and the reconciliation of each to the most directly comparable GAAP financial measure, see "About Non-GAAP Financial Measures" and "Reconciliation of GAAP and Non-GAAP Results."

[2] Student enrollment refers to the cumulative total number of courses enrolled in by students during a given period of time; if one student enrolls in multiple courses, it will be counted as multiple student enrollments.

[3] Non-GAAP cost of revenues exclude relevant share-based compensation expenses and amortization of certain intangible assets acquired as part of the 2013 acquisition from cost of revenues. Non-GAAP operating income adds back share-based compensation expenses and amortization of certain intangible assets acquired as part of the 2013 acquisition. Each of non-GAAP operating expenses, non-GAAP selling and marketing expenses or non-GAAP general and administrative expenses excludes relevant share-based compensation expenses and amortization of certain intangible assets acquired as part of the 2013 acquisition. For details on the calculation of each of these and the reconciliation of each to the most directly comparable GAAP financial measure, see "About Non-GAAP Financial Measures" and "Reconciliation of GAAP and Non-GAAP Results."

 

RISE EDUCATION CAYMAN LTD

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)



As of


December 31


September 30


September 30


2018


2019


2019


RMB


RMB


USD

ASSETS






Current assets:






Cash and cash equivalents

1,288,080


907,851


127,013

Restricted cash

28,705


29,054


4,065

Accounts receivable, net

2,438


3,757


526

Amounts due from related parties

190


100,378


14,043

Inventories

11,320


7,988


1,118

Prepaid expenses and other current assets

71,537


67,965


9,508

Total current assets

1,402,270


1,116,993


156,273

Property and equipment, net

128,412


134,027


18,751

Intangible assets, net

198,057


208,527


29,174

Long-term investment



33,000


4,617

Goodwill

491,969


654,082


91,509

Deferred tax assets

6,713


21,600


3,022

Other non-current assets

53,353


53,528


7,489

Operating lease right-of use assets



646,804


90,491

Total assets

2,280,774


2,868,561


401,326







LIABILITIES AND SHAREHOLDERS' EQUITY






Current liabilities:






Current portion of long-term loan

82,506


137,593


19,250

Accounts payable

8,426


7,904


1,106

Accrued expenses and other current liabilities

159,882


159,953


22,378

Deferred revenue and customer advances

1,002,796


796,263


111,401

Income taxes payable

25,262


35,737


5,000

Operating lease liabilities, current portion



164,315


22,989

Total current liabilities

1,278,872


1,301,765


182,124

Long-term loan

502,356


378,272


52,922

Deferred revenue and customer advances

36,037


35,319


4,941

Deferred tax liabilities

14,541


32,477


4,544

Other non-current liabilities

8,134


62,760


8,780

Operating lease liabilities, non-current portion



495,480


69,320

Total liabilities

1,839,940


2,306,073


322,631







Shareholders' equity:






Ordinary shares

7,074


7,030


984

Additional paid-in capital

600,011


611,510


85,553

Treasury shares, at cost

(23,460)


(39,235)


(5,489)

Statutory reserves

78,345


78,345


10,961

Accumulated deficit

(248,674)


(151,709)


(21,225)

Accumulated other comprehensive income

42,459


39,390


5,511

Total Rise Education Cayman Ltd shareholders' equity

455,755


545,331


76,295

Non-controlling interests

(14,921)


17,157


2,400

Total equity

440,834


562,488


78,695

Total liabilities, non-controlling interests and shareholders' equity

2,280,774


2,868,561


401,326


 

 

RISE EDUCATION CAYMAN LTD

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except share and ADS data and per share and per ADS data)



Three Months Ended September 30,


Nine Months Ended September 30,


2018


2019


2019


2018


2019


2019


RMB


RMB


USD


RMB


RMB


USD

Revenues

347,395


411,143


57,521


917,720


1,113,225


155,746

Educational programs

277,333


333,327


46,634


773,527


944,766


132,177

Franchise revenues

35,613


45,363


6,347


97,037


123,338


17,256

Others

34,449


32,453


4,540


47,156


45,121


6,313

Cost of revenues

(163,883)


(196,280)


(27,461)


(426,192)


(511,095)


(71,505)

Gross profit

183,512


214,863


30,060


491,528


602,130


84,241

Selling and marketing expenses 

(77,514)


(83,278)


(11,651)


(176,194)


(219,682)


(30,735)

General and administrative expenses 

(57,834)


(65,759)


(9,200)


(167,730)


(220,321)


(30,824)

Operating income

48,164


65,826


9,209


147,604


162,127


22,682

Interest income

8,614


4,498


629


21,277


13,906


1,946

Interest expense

(8,602)


(8,836)


(1,236)


(24,850)


(26,684)


(3,733)

Foreign currency exchange loss

(1,167)


(941)


(132)


(1,022)


(1,430)


(200)

Other income, net

354


688


97


12,074


9,187


1,285

Income before income tax expense

47,363


61,235


8,567


155,083


157,106


21,980

Income tax expense

(17,345)


(24,047)


(3,364)


(47,028)


(61,929)


(8,664)

Net income

30,018


37,188


5,203


108,055


95,177


13,316

Add: net loss attributable to non-controlling interests

2,872


2,174


304


3,398


1,788


250

Net income attributable to RISE Education Cayman Ltd

32,890


39,362


5,507


111,453


96,965


13,566













Net income per ordinary share:












Basic

0.29


0.35


0.05


0.98


0.85


0.12

Diluted

0.28


0.34


0.05


0.96


0.84


0.12













Net income per ADS:












Basic

0.57


0.70


0.10


1.96


1.70


0.24

Diluted

0.57


0.69


0.10


1.92


1.68


0.24













Shares used in net income per ordinary share computation:












Basic

114,414,306


112,960,292


112,960,292


113,628,906


114,302,033


114,302,033

Diluted

116,127,070


114,343,590


114,343,590


115,912,549


115,632,850


115,632,850













ADSs used in net income per ADS computation:












Basic

57,207,153


56,480,146


56,480,146


56,814,453


57,151,016


57,151,016

Diluted

58,063,535


57,171,795


57,171,795


57,956,275


57,816,425


57,816,425

 

 

RISE EDUCATION CAYMAN LTD

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

(in thousands, except share and ADS data and per share and per ADS data)



Three Months Ended September 30,


Nine Months Ended September 30,


2018


2019


2019


2018


2019


2019


RMB


RMB


USD


RMB


RMB


USD

Net income

30,018


37,188


5,203


108,055


95,177


13,316

Other comprehensive income, net of tax of nil:












Foreign currency translation adjustments

(1,052)


(2,467)


(345)


411


(3,069)


(429)

Other comprehensive (loss)/income

(1,052)


(2,467)


(345)


411


(3,069)


(429)

Comprehensive income

28,966


34,721


4,858


108,466


92,108


12,887

Add: comprehensive loss attributable to non-controlling interests

2,872


2,174


304


3,398


1,788


250

Comprehensive income attributable to RISE Education Cayman Ltd

31,838


36,895


5,162


111,864


93,896


13,137

 

 

RISE EDUCATION CAYMAN LTD

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

(in thousands, except ADS data and per ADS data)



Three Months Ended September 30,


Nine Months Ended September 30,


2018


2019


2019


2018


2019


2019


RMB


RMB


USD


RMB


RMB


USD

Net income

30,018


37,188


5,203


108,055


95,177


13,316

Share-based compensation ("SBC")

2,452


4,705


658


8,338


37,335


5,224

IA amortization arising from Bain acquisition

4,279


4,415


618


12,284


12,945


1,811

Non-GAAP net income

36,749


46,308


6,479


128,677


145,457


20,351

Add: net loss attributable to non-controlling interests

2,872


2,174


304


3,398


1,788


250

Non-GAAP net income attributable to RISE Education Cayman Ltd

39,621


48,482


6,783


132,075


147,245


20,601













Net income

30,018


37,188


5,203


108,055


95,177


13,316

Add: Depreciation

9,148


11,695


1,636


25,744


33,583


4,698

Add: Amortization

5,866


6,904


966


16,467


17,526


2,452

Add: Interest expense

8,602


8,836


1,236


24,850


26,684


3,733

Add: Income tax expense

17,345


24,047


3,364


47,028


61,929


8,664

Less: Interest income

8,614


4,498


629


21,277


13,906


1,946

EBITDA

62,365


84,172


11,776


200,867


220,993


30,917

SBC

2,452


4,705


658


8,338


37,335


5,224

Adjusted EBITDA

64,817


88,877


12,434


209,205


258,328


36,141













Cost of revenues

163,883


196,280


27,461


426,192


511,095


71,505

Personnel costs

60,233


79,535


11,128


165,937


214,211


29,969

Rental costs

44,990


56,490


7,903


132,056


162,040


22,670

Others

58,660


60,255


8,430


128,199


134,844


18,866

Less: SBC

456


281


39


961


2,485


348

Less: IA amortization arising from Bain acquisition

3,488


3,599


504


10,013


10,552


1,476

Non-GAAP cost of revenues

159,939


192,400


26,918


415,218


498,058


69,681













Non-GAAP gross profit

187,456


218,743


30,603


502,502


615,167


86,065













Selling and marketing expenses 

77,514


83,278


11,651


176,194


219,682


30,735

Less: SBC

105


487


68


1,401


742


104

Less: IA amortization arising from Bain acquisition

791


816


114


2,271


2,393


335

Non-GAAP selling and marketing expenses

76,618


81,975


11,469


172,522


216,547


30,296













General and administrative expenses 

57,834


65,759


9,200


167,730


220,321


30,824

Less: SBC

1,891


3,937


551


5,976


34,108


4,772

Non-GAAP general and administrative expenses

55,943


61,822


8,649


161,754


186,213


26,052













Operating expense

135,348


149,037


20,851


343,924


440,003


61,559

Less: SBC

1,996


4,424


619


7,377


34,850


4,876

Less: IA amortization arising from Bain acquisition

791


816


114


2,271


2,393


335

Non-GAAP operating expense

132,561


143,797


20,118


334,276


402,760


56,348













Operating income

48,164


65,826


9,209


147,604


162,127


22,682

Add: SBC

2,452


4,705


658


8,338


37,335


5,224

Add: IA amortization arising from Bain acquisition

4,279


4,415


618


12,284


12,945


1,811

Non-GAAP operating income

54,895


74,946


10,485


168,226


212,407


29,717













Non-GAAP net income per ADS attributable to RISE-basic

0.69


0.86


0.12


2.32


2.58


0.36

Non-GAAP net income per ADS attributable to RISE-diluted

0.68


0.85


0.12


2.28


2.55


0.36













ADSs used in calculating net income per ADS-basic:

57,207,153


56,480,146


56,480,146


56,814,453


57,151,016


57,151,016

ADSs used in calculating net income per ADS-diluted:

58,063,535


57,171,795


57,171,795


57,956,275


57,816,425


57,816,425


Note 1: Each ADS represents two ordinary shares.

 

 

Cision View original content:http://www.prnewswire.com/news-releases/rise-education-announces-third-quarter-2019-unaudited-financial-results-300958532.html

Source: RISE Education
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