BEIJING, March 15, 2018 /PRNewswire/ -- RYB Education, Inc. ("RYB" or the "Company") (NYSE: RYB), a leading early childhood education service provider in China, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2017.
Fourth Quarter 2017 Operational and Financial Summary
| [1] Adjusted net income attributable to ordinary shareholders is a non-GAAP financial measure, which is defined as net income attributable to ordinary shareholders excluding share-based compensation expenses. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release. |
Full Year 2017 Financial Summary
Fourth Quarter 2017 Financial Results
Net Revenues
Net revenues for the fourth quarter of 2017 increased to $39.1 million, from $32.4 million for the same quarter of 2016.
Service revenues for the fourth quarter of 2017 increased to $34.8 million, from $29.0 million for the same quarter of 2016. The increase was primarily due to an increase in the number of students enrolled at our directly owned kindergartens and increases in training and other service revenues.
Product revenues for the fourth quarter of 2017 increased to $4.3 million, compared with $3.4 million for the same quarter of 2016. The increase was primarily due to an increase in the amount of merchandise sold through the Company's franchise network.
Cost of Revenues
Cost of revenues for the fourth quarter of 2017 was $31.6 million, compared with $30.0 million for the same quarter of 2016. Cost of services revenues for the fourth quarter of 2017 was $29.3 million, compared with $28.2 million for the same quarter of 2016. The increase was primarily due to an increase in staff compensation at the Company's directly operated kindergartens and play-and-learn centers and, to a lesser extent, an increase in compensation to our franchise-service-and-supervision team. Cost of products revenues for the fourth quarter of 2017 was $2.3 million, compared with $1.8 million for the same quarter of 2016, as the Company sold more products in the three months ended December 31, 2017.
Gross Profit and Gross Margin
Gross profit for the fourth quarter of 2017 was $7.5 million, compared with $2.4 million for the same quarter of 2016.
Operating Expenses
Total operating expenses for the fourth quarter of 2017 were $7.6 million, compared with $2.5 million for the same quarter of 2016. Excluding share-based compensation expenses, operating expenses were $6.0 million.
Selling expenses for the fourth quarter of 2017 were $0.5 million, compared with $0.6 million for the same quarter of 2016.
General and administrative ("G&A") expenses for the fourth quarter of 2017 were $7.1 million, compared with $1.9 million for the same quarter of 2016. Excluding share-based compensation expenses, G&A expenses were $5.5 million for the fourth quarter of 2017. The increase in G&A expense excluding share-based compensation expenses was primarily due to higher cash compensation cost and additional expenses incurred in professional service fees. The share-based-compensation included in G&A expense was $1.6 million for the quarter.
Operating Income/Loss
Operating loss for the fourth quarter of 2017 was $0.2 million, compared with $0.1 million for the same quarter last year. Adjusted operating income[2] was $1.5 million for the fourth quarter of 2017, compared with a loss of $0.1 million for the same quarter of 2016.
Net Income
Net income attributable to ordinary shareholders of RYB for the fourth quarter of 2017 was $0.2 million, compared with $0.1 million for the same quarter of 2016. Adjusted net income attributable to ordinary shareholders of RYB, which excludes the impact of $1.7 million of share-based compensation expense for the fourth quarter of 2017, was $1.9 million, compared to $0.1 million for the same quarter of 2016.
Basic and diluted net income per American depositary share ("ADS") attributable to ordinary shareholders of RYB for the fourth quarter of 2017 were $0.01 and $0.01, respectively, compared with basic and diluted net income per ADS attributable to ordinary shareholders of RYB of $0.00 and $0.00, respectively for the same quarter of 2016. Each ADS represents one Class A ordinary share.
Adjusted basic and diluted net income per ADS attributable to ordinary shareholders[3] of RYB for the fourth quarter of 2017 were $0.06 and $0.06, respectively, compared with adjusted basic and diluted net income per ADS attributable to ordinary shareholders of RYB of $0.00 and $0.00, respectively for the same quarter last year.
EBITDA[4] for the fourth quarter of 2017 was $2.3 million, compared with $1.2 million for the same period last year. Adjusted EBITDA[5] for the fourth quarter of 2017 was $3.9 million, compared with $1.2 million for the same quarter of 2016.
| [2] Adjusted operating income is a non-GAAP financial measure, which is defined as operating income excluding share-based compensation expenses. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release. |
| [3] Adjusted basic and diluted net income per ADS attributable to ordinary shareholders is a non-GAAP financial measure, which is defined as basic and diluted net income per ADS attributable to ordinary shareholders excluding share-based compensation expenses. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release. |
| [4] EBITDA is defined as net income excluding depreciation, amortization and income tax expenses. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release. |
| [5] Adjusted EBITDA is a non-GAAP financial measure, which is defined as net income excluding depreciation, amortization, interest expenses, income tax expenses, and share-based compensation expenses. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release. |
Balance Sheet
As of December 31, 2017, the Company had total cash, cash equivalents and term deposits of $158.7 million, compared with $46.7 million as of December 31, 2016.
Operating Cash Flow
Cash used in operating activities was $15.0 million during the fourth quarter of 2017, compared with $4.8 million of cash generated from operating activities during the fourth quarter of 2016. The cash outflow in the quarter was primarily driven by the pay-out of IPO related disbursements and one-off refunds to contracted and potential franchisees.
Full Year 2017 Financial Results
Net Revenues
Net revenues for 2017 was $140.8 million, compared with $108.5 million for 2016.
Service revenues for 2017 was $122.9 million, compared with $95.9 million for 2016.
Product revenues for 2017 was $17.9 million, compared with $12.6 million for 2016. The increase was primarily due to an increase in the amount of merchandise sold through the Company's franchise network.
Cost of Revenues
Cost of revenues for 2017 was $111.3 million, compared with $91.6 million for 2016. Cost of services revenues for 2017 was $101.5 million, compared with $85.4 million for 2016. The increase was primarily due to an increase in staff compensation at the Company's directly operated kindergartens and play-and-learn centers and, to a lesser extent, an increase in compensation to the franchise service and supervision team. Cost of products revenues for 2017 was $9.8 million, compared with $6.3 million for 2016, as the Company sold more products in 2017.
Gross Profit
Gross profit for 2017 was $29.5 million, compared with $16.9 million for 2016.
Operating Expenses
Total operating expenses for 2017 were $20.2 million, compared with $9.3 million for 2016. Excluding share-based compensation expenses, operating expenses were $16.3 million for 2017.
Selling expenses for 2017 were $1.8 million, compared with $1.9 million for 2016.
G&A expenses for 2017 were $18.4 million, compared with $7.4 million for 2016. Excluding share-based compensation expenses, G&A expenses were $14.6 million for 2017. The increase was primarily due to higher expenses incurred in staff compensation and professional service fees.
Operating Income
Operating income for 2017 was $9.3 million, compared with $7.6 million for 2016.
Adjusted operating income for 2017 was $13.3 million, compared with $7.6 million for 2016.
Net Income
Net income attributable to ordinary shareholders of RYB for 2017 was $7.1 million, compared with $6.5 million for 2016.
Adjusted net income attributable to ordinary shareholders of RYB, which excludes the impact of share-based compensation expense, for 2017 was $11.1 million, compared with $6.5 million for 2016.
Basic and diluted net income per American depositary share ("ADS") attributable to ordinary shareholders of RYB for 2017 were $0.29 and $0.27, respectively, compared with basic and diluted net income per ADS attributable to ordinary shareholders of RYB of $0.28 and $0.26, respectively for 2016. Each ADS represents one Class A ordinary share.
Adjusted basic and diluted net income per ADS attributable to ordinary shareholders of RYB for 2017 was $0.45 and $0.42, respectively, compared with adjusted basic and diluted net income per ADS attributable to ordinary shareholders of RYB of $0.28 and $0.26, respectively for 2016.
EBITDA for 2017 was $16.5 million, compared with $12.9 million for 2016. Adjusted EBITDA for 2017 was $20.4 million, compared with $12.9 million for 2016.
Other Operations Update
In late 2017, a female teacher at RYB-operated Xintiandi kindergarten in Beijing was criminally charged with "maltreatment of children under care" in connection with a class she taught (the "Xintiandi incident"). The case remains under investigation. The police have published a report rejecting as rumors certain allegations against RYB that had circulated on internet. Nonetheless, in the wake of the Xintiandi incident, the Company has redoubled its efforts to raise quality standards on the security and safety of its facilities and the management of its faculty and staff. The Company has taken steps to implement more stringent teacher recruitment requirements, by, among other things, improving teacher training, raising teacher compensation, and more closely monitoring and providing support to its staff. In addition, the Company has taken measures to improve its security monitoring and management system. The Company has invited parents to participate in open classes and other efforts aiming to make its facilities more safe and transparent. While the aforementioned actions are expected to increase the Company's operating costs in the near term, they are also expected to help set a strong foundation for a stable high-quality teaching team; create a warm, secure and harmonious environment for its students and their parents and enable the Company to continue delivering high-quality education. These efforts are also expected to help build long-term growth prospects and sustain healthy financial performance.
About RYB Education, Inc.
Founded on the core values of ''Care'' and ''Responsibility,'' RYB Education, Inc. is a leading early childhood education service provider in China. Since opening its first play-and-learn center in 1998, the Company has grown and flourished with the mission to provide individualized age-appropriate education to stimulate and nurture children so they can realize their full potential. During its nearly two decades of operating history, the Company has built "RYB" into a well-recognized education brand and helped bring about many new educational practices in China's early childhood education industry. RYB's comprehensive early childhood education solutions meet the needs of children from infancy to 6 years old through structured courses at kindergartens and play-and-learn centers, as well as at-home educational products and services.
For more information, please visit http://ir.rybbaby.com
Use of Non-GAAP Financial Measures
We use EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, and adjusted basic and diluted net income per ADS, each a non-GAAP financial measure, in evaluating our operating results and for financial and operational decision-making purposes.
EBITDA is defined as net income excluding depreciation, amortization, interest expenses, and income tax expenses; adjusted EBITDA is defined as net income excluding depreciation, amortization, interest expenses, income tax expenses, and share-based compensation expenses; adjusted operating income is defined as operating income excluding share-based compensation expenses; adjusted net income attributable to ordinary shareholders is defined as net income attributable to ordinary shareholders excluding share-based compensation expenses; and adjusted basic and diluted net income per ADS attributable to ordinary shareholders are defined as basic and diluted net income per ADS attributable to ordinary shareholders excluding share-based compensation expenses.
We believe that EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, and adjusted basic and diluted net income per ADS, help identify underlying trends in our business that could otherwise be distorted by the effect of certain expenses that we include in income from operations and net income. We believe that EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, and adjusted basic and diluted net income per ADS, provide useful information about our operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making.
EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, and adjusted basic and diluted net income per ADS, should not be considered in isolation or construed as an alternative to net income or any other measure of performance or as an indicator of our operating performance. Investors are encouraged to review the historical Adjusted financial measures to the most directly comparable GAAP measures. EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, and adjusted basic and diluted net income per ADS, presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.
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," "confident" and similar statements. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. 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 statement, including but not limited to the following: the Company's brand recognition and market reputation; student enrollment in the Company's teaching facilities; the Company's growth strategies; its future business development, results of operations and financial condition; trends and competition in China's early childhood education market; changes in its revenues and certain cost or expense items; the expected growth of the Chinese early education market; Chinese governmental policies relating to the Company's industry and general economic conditions in China. Further information regarding these and other risks is included in the Company's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and the Company undertakes no obligation to update any forward-looking statement, except as required under applicable law.
For investor and media inquiries, please contact:
In China:
RYB Education, Inc.
Investor Relations
Tel: 86-10-8767-5752
E-mail: ir@rybbaby.com
The Piacente Group, Inc.
Ross Warner
Tel: +86 (10) 5730-6200
E-mail: ryb@tpg-ir.com
In the United States:
The Piacente Group, Inc.
Alan Wang
Tel: +1-212-481-2050
E-mail: ryb@tpg-ir.com
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
||||
| (in thousands of U.S. dollars) |
||||
| As of |
||||
| December 31, |
December 31, |
|||
| Current assets: |
||||
| Cash and cash equivalents |
158,691 |
46,256 |
||
| Term deposits |
- |
432 |
||
| Accounts receivable, net |
901 |
1,022 |
||
| Inventories |
3,549 |
3,043 |
||
| Prepaid expenses and other current assets |
9,541 |
9,414 |
||
| Amounts due from related parties |
126 |
3,816 |
||
| Total current assets |
172,808 |
63,983 |
||
| Non-current assets: |
||||
| Restricted cash |
543 |
372 |
||
| Property, plant and equipment, net |
40,163 |
29,411 |
||
| Goodwill |
428 |
401 |
||
| Long-term investments |
256 |
378 |
||
| Deferred tax assets |
12,430 |
6,951 |
||
| Other non-current assets |
3,110 |
2,914 |
||
| Total assets |
229,738 |
104,410 |
||
| Liabilities and shareholders' equity |
||||
| Current liabilities: |
||||
| Prepayments from customers, current portion(including |
11,968 |
16,576 |
||
| Accrued expenses and other current liabilities(including |
51,854 |
36,436 |
||
| Income taxes payable(including income taxes payable of |
10,534 |
5,869 |
||
| Deferred revenue, current portion(including deferred |
22,666 |
21,406 |
||
| Total current liabilities |
97,022 |
80,287 |
||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Continued) |
||
| (in thousands of U.S. dollars) |
||
| As of |
||
| December 31, |
December 31, |
|
| Non-current liabilities: |
||
| Prepayments from customers, non-current portion |
8,542 |
5,908 |
| Deferred revenue, non-current portion (including deferred |
10,396 |
8,242 |
| Other non-current liabilities (including other non-current |
8,484 |
6,012 |
| Total liabilities |
124,444 |
100,449 |
| Equity |
||
| Ordinary shares |
29 |
23 |
| Additional paid-in capital |
129,134 |
36,420 |
| Statutory reserve |
2,678 |
2,156 |
| Accumulated other comprehensive income |
783 |
381 |
| Accumulated deficit |
(28,879) |
(35,472) |
| Total RYB Education, Inc. shareholders' equity |
103,745 |
3,508 |
| Non-controlling interest |
1,549 |
453 |
| Total equity |
105,294 |
3,961 |
| Total liabilities and total equity |
229,738 |
104,410 |
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||
| (in thousands of U.S. dollars, except share, ADS, per share and per ADS data) |
||||
| Three Months Ended |
Year Ended December 31, |
|||
| 2017 |
2016 |
2017 |
2016 |
|
| Net revenues: |
||||
| Services |
34,755 |
28,998 |
122,869 |
95,936 |
| Products |
4,306 |
3,434 |
17,934 |
12,577 |
| Total net revenues |
39,061 |
32,432 |
140,803 |
108,513 |
| Cost of revenues: |
||||
| Services |
29,292 |
28,194 |
101,522 |
85,356 |
| Products |
2,292 |
1,845 |
9,755 |
6,260 |
| Total cost of revenues |
31,584 |
30,039 |
111,277 |
91,616 |
| Gross profit |
7,477 |
2,393 |
29,526 |
16,897 |
| Operating expenses |
||||
| Selling Expenses |
536 |
643 |
1,774 |
1,922 |
| General and administrative |
7,106 |
1,895 |
18,418 |
7,424 |
| Total operating expenses |
7,642 |
2,538 |
20,192 |
9,346 |
| Operating (loss) income |
(165) |
(145) |
9,334 |
7,551 |
| Interest income |
435 |
42 |
563 |
107 |
| Government subsidy income |
443 |
210 |
863 |
573 |
| Loss on disposal of subsidiaries |
- |
- |
(168) |
- |
| Income before income taxes |
713 |
107 |
10,592 |
8,231 |
| Less: Income tax expense |
486 |
26 |
3,812 |
2,155 |
| Income before loss in equity method |
227 |
81 |
6,780 |
6,076 |
| Loss from equity method investment |
(117) |
(189) |
(239) |
(189) |
| Net income (loss) |
110 |
(108) |
6,541 |
5,887 |
| Less: Net loss attributable to noncontrolling |
(89) |
(201) |
(574) |
(618) |
| Net income attributable to ordinary |
199 |
93 |
7,115 |
6,505 |
| Net income per share attributable to ordinary |
||||
| Basic |
0.01 |
0.00 |
0.29 |
0.28 |
| Diluted |
0.01 |
0.00 |
0.27 |
0.26 |
| Net income per ADS attributable to ordinary |
||||
| Basic |
0.01 |
0.00 |
0.29 |
0.28 |
| Diluted |
0.01 |
0.00 |
0.27 |
0.26 |
|
Weighted average shares used in calculating |
||||
| Basic |
29,213,801 |
23,163,801 |
24,735,445 |
23,163,801 |
| Diluted |
31,678,204 |
24,864,290 |
26,566,657 |
24,682,525 |
| Note 1: Each ADS represents one Class A ordinary share. |
||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
||||
| (in thousands of U.S. dollars) |
||||
| Three Months Ended |
Year Ended December 31, |
|||
| 2017 |
2016 |
2017 |
2016 |
|
| Net income |
110 |
(108) |
6,541 |
5,887 |
| Other comprehensive income (loss), net of tax of |
||||
| Change in cumulative foreign currency translation |
115 |
(94) |
410 |
(99) |
| Total comprehensive income |
225 |
(202) |
6,951 |
5,788 |
| Less: Comprehensive loss attributable to non- |
(120) |
(224) |
(566) |
(630) |
| Comprehensive income attributable to RYB |
345 |
22 |
7,517 |
6,418 |
| RECONCILIATION OF GAAP and non-GAAP results |
||||
| (in thousands of U.S. dollars, except share, ADS, per share and per ADS data) |
||||
| Three Months Ended |
Year Ended December 31, |
|||
| 2017 |
2016 |
2017 |
2016 |
|
| Operating income |
(165) |
(145) |
9,334 |
7,551 |
| Share-based compensation expenses |
1,654 |
- |
3,990 |
- |
| Adjusted operating income |
1,489 |
(145) |
13,324 |
7,551 |
| Net income attributable to RYB |
199 |
93 |
7,115 |
6,505 |
| Share-based compensation expenses |
1,654 |
- |
3,990 |
- |
| Adjusted net income attributable to RYB |
1,853 |
93 |
11,105 |
6,505 |
| Net income |
110 |
(108) |
6,541 |
5,887 |
| Add: Income tax expense |
486 |
26 |
3,812 |
2,155 |
| Depreciation of property, plant and equipment |
1,668 |
1,329 |
6,099 |
4,831 |
| EBITDA |
2,264 |
1,247 |
16,452 |
12,873 |
| Share-based compensation expenses |
1,654 |
- |
3,990 |
- |
| Adjusted EBITDA |
3,918 |
1,247 |
20,442 |
12,873 |
| Net income per ADS attributable to RYB- Basic |
0.01 |
0.00 |
0.29 |
0.28 |
| Net income per ADS attributable to RYB- Diluted |
0.01 |
0.00 |
0.27 |
0.26 |
| Adjusted net income per ADS attributable to RYB- |
0.06 |
0.00 |
0.45 |
0.28 |
| Adjusted Net income per ADS attributable to RYB- |
0.06 |
0.00 |
0.42 |
0.26 |
| Weighted average shares used in calculating |
29,213,801 |
23,163,801 |
24,735,445 |
23,163,801 |
| Weighted average shares used in calculating |
31,678,204 |
24,864,290 |
26,566,657 |
24,682,525 |
| Adjusted net income per share- Basic |
0.06 |
0.00 |
0.45 |
0.28 |
| Adjusted net income per share- Diluted |
0.06 |
0.00 |
0.42 |
0.26 |
| Note 1: Each ADS represents one Class A ordinary share. |
||||
View original content:http://www.prnewswire.com/news-releases/ryb-education-inc-reports-fourth-quarter-and-full-year-2017-financial-results-300614550.html
![The 2024 World Vocational and Technical Education Development Conference has been taking place in Tianjin this week. [Photo/china.com.cn] (PRNewsfoto/China Daily)](https://mma.prnasia.com/media2/2565215/China_Daily.jpg?p=medium600)
