EX-99.1
Published on August 22, 2019
RYB Education, Inc. Reports Second Quarter 2019 Financial Results
BEIJING, August 20, 2019 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 second quarter of 2019.
Second Quarter 2019 Operational and Financial Summary
· Number of students enrolled at directly operated facilities was 30,478 as of June 30, 2019, compared with 23,526 as of June 30, 2018.
· Net revenues were $53.6 million, compared with $47.5 million for the second quarter of 2018.
· Gross profit was $11.9 million, compared with $15.9 million for the second quarter of 2018.
· Net income attributable to ordinary shareholders of RYB for the second quarter of 2019 was $2.9 million, compared with $4.7 million for the second quarter of 2018. Adjusted net income attributable to ordinary shareholders1 of RYB for the second quarter of 2019 was $3.9 million, compared with $6.9 million for the second quarter of 2018.
· Cash used in operating activities was $2.9 million in the second quarter of 2019, compared with $10.6 million cash used in operating activities for the second quarter of 2018.
First Six Months of 2019 Financial Highlights
· Net revenues were $87.8 million, compared with $76.2 million for the first six months of 2018.
· Gross profit was $13.8 million, compared with $16.5 million for the first six months of 2018.
1 Adjusted net income (loss) attributable to ordinary shareholders is a non-GAAP financial measure, which is defined as net income (loss) attributable to ordinary shareholders excluding share-based compensation expenses and changes in redeemable non-controlling interests. See Use of Non-GAAP Financial Measures and Reconciliations of GAAP and non-GAAP results elsewhere in this earnings release.
· Net income attributable to ordinary shareholders of RYB was $0.6 million, compared with $2.0 million for the same period of 2018. Adjusted net income attributable to ordinary shareholders of RYB was $2.7 million, compared with $6.0 million for the same period of 2018.
· Cash generated from operating activities was $10.3 million, versus $5.3 million of cash used in operating activities for the same period of 2018.
We delivered another solid performance during the second quarter of 2019, which was driven by the strength of our core offerings: play-and-learn centers and kindergarten services. Additionally, during the second quarter, net enrollment increased at our directly operated facilities as we benefitted from healthy domestic growth and contributions from our overseas operations. The strong market appeal of our expanded educational platform continues to be fueled by our steadfast commitment to offering differentiated educational products and services to the students and families we serve, said Ms. Yanlai Shi, Co-founder, Director and Chief Executive Officer of RYB.
With the expanded brand portfolio for our kindergarten business following our Singapore acquisition, we now adopt a multi-layered brand portfolio strategy to cater to a broader student base, and improve children and parents satisfaction level. Our teams on both sides will explore opportunities for resources sharing, and introduce integrated early education services to our students at home and abroad. We expect potential benefits to unfold through our combined efforts. In this process, we remain committed to improving the quality of our educational offerings, and ultimately contributing to the greater good of our children, families and communities, concluded Ms. Shi.
Mr. Hao Gu, Chief Financial Officer of RYB, said, In second quarter 2019, our net revenues reached $53.6 million. The solid revenue growth was attributable to enrollment increases at our directly operated facilities, and product revenues increases from our newly added courses, among others. These were partially offset by a decline in our franchise fee revenue. Due to the change of accounting estimate, franchise fee revenue in the second quarter of 2018 was relatively high.
With focused execution of our growth strategy and prudent cost management, the Companys adjusted operating income was $6.3 million in this quarter, improving from the adjusted operating income generated in the second quarter last year (excluding certain estimate change which resulted in a high comparison base in the second quarter 2018). General and administrative (G&A) expenses declined in absolute terms from a year ago, primarily due to reduced expenses in administrative functions such as professional services and corporate spending. Looking ahead, we will continually strive for stable growth and creating shareholder value, concluded Mr. Gu.
Second Quarter 2019 Financial Results
Net Revenues
Net revenues for the second quarter of 2019 were $53.6 million, compared with $47.5 million for the same quarter of 2018.
Service revenues for the second quarter of 2019 were $48.2 million, compared with $43.6 million for the same quarter of 2018. The increase was primarily contributed by enrollment increase at directly operated facilities and newly acquired facilities in Singapore, and was partially offset by the decrease in the franchise services revenue. Franchise fee revenue in the second quarter of 2018 was relatively higher due to the recording of an accounting estimate change.
Product revenues for the second quarter of 2019 were $5.4 million, compared with $3.9 million for the same quarter of 2018, primarily due to an increase in delivery of products of certain courses rolled out by the Company during the first quarter of 2019 and an increase in the amount of merchandise sold through the Companys franchise network.
Cost of Revenues
Cost of revenues for the second quarter of 2019 was $41.6 million, a 31.7% increase from $31.6 million for the same quarter of 2018. Cost of revenues for services for the second quarter of 2019 was $38.8 million, compared with $29.4 million for the same quarter of 2018. The increase was primarily due to an increase in staff compensation at the Companys directly operated facilities and higher operating cost. Cost of product revenues for the second quarter of 2019 was $2.8 million, compared with $2.2 million for the same quarter of 2018. The increase was in line with the increase in product revenues.
Gross Profit and Gross Margin
Gross profit for the second quarter of 2019 decreased by 24.9% to $11.9 million, compared with $15.9 million for the same quarter of 2018. The decrease was primarily due to the increase in staff compensation and operating costs at the directly operated facilities and decrease in franchise services revenue.
Gross margin for the second quarter of 2019 was 22.3%, compared with 33.5% for the same quarter of 2018. The decrease in gross margin was primarily due to the increase in staff compensation and operating costs at the directly operated facilities and decrease in franchise services revenue.
Operating Expenses
Total operating expenses for the second quarter of 2019 were $6.6 million, compared with $8.4 million for the same quarter of 2018. Excluding share-based compensation expenses, operating expenses were $5.7 million, a decrease of 9.1% from $6.2 million for the second quarter of 2018.
Selling expenses for the second quarter of 2019 were $0.7 million, compared with $0.4 million for the same quarter of 2018.
G&A expenses for the second quarter of 2019 were $5.9 million, a 26.2% decrease from $8.0 million for the same quarter of 2018. Excluding share-based compensation expenses, G&A expenses were $5.0 million for the second quarter of 2019, a 15.2% decrease from $5.8 million for the same quarter of 2018. The decrease in G&A expenses excluding share-based compensation expenses was primarily due to less expenses incurred in professional service fees and stringent cost control. The share-based compensation expenses included in G&A expenses were $0.9 million for the quarter.
Operating Income
Operating income for the second quarter of 2019 was $5.3 million, compared with $7.5 million for the same quarter of 2018. Adjusted operating income2 was $6.3 million for the second quarter of 2019, compared with $9.7 million for the same quarter of 2018.
Net Income
Net income attributable to ordinary shareholders of RYB for the second quarter of 2019 was $2.9 million, compared with $4.7 million for the second quarter of 2018. Adjusted net income attributable to ordinary shareholders of RYB, which excludes the impact of $1.0 million of share-based compensation expense was $3.9 million, compared with $6.9 million for the second quarter of 2018.
Basic and diluted net income per American depositary share (ADS) attributable to ordinary shareholders of RYB for the second quarter of 2019 were $0.11 and $0.10, respectively, compared with basic and diluted net income per ADS of $0.16 and $0.15, respectively for the second quarter of 2018. Each ADS represents one Class A ordinary share.
Adjusted basic and diluted net income per ADS attributable to ordinary shareholders3 of RYB for the second quarter of 2019 were $0.14 and $0.13, respectively, compared with adjusted basic and diluted net income per ADS of $0.24 and $0.22, respectively for the second quarter of 2018.
EBITDA4 for the second quarter of 2019 was $8.2 million, compared with $10.1 million for the second period of 2018. Adjusted EBITDA5 for the second quarter of 2019 was $9.2 million, compared with $12.3 million for the second quarter of 2018.
2 Adjusted operating loss is a non-GAAP financial measure, which is defined as operating income excluding share-based compensation expenses and changes in redeemable non-controlling interests. 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 (loss) per ADS attributable to ordinary shareholders is a non- GAAP financial measure, which is defined as basic and diluted net income (loss) per ADS attributable to ordinary shareholders excluding share-based compensation expenses and changes in redeemable non-controlling interest. 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 (loss) excluding depreciation, amortization, interest expenses 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 (loss) 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.
Operating Cash Flow
Cash used in operating activities was $2.9 million during the second quarter of 2019, compared with $10.6 million cash used in operating activities during the second quarter of 2018.
Balance Sheet
As of June 30, 2019, the Company had total cash and cash equivalents of $80.7 million, a decrease from $104.1 million as of December 31, 2018. The decrease in cash and cash equivalents balances was mainly due to payment for acquisition and other investments activities as well as share repurchase executed in the quarter.
First Six Months of 2019 Financial Results
Net Revenues
Net revenues for the first six months of 2019 were $87.8 million, compared with $76.2 million for the same period of 2018.
Services revenues for the first six months of 2019 were $80.0 million, compared with $69.6 million for the same period last year. The increase was mainly contributed by student enrollment improvement and newly-added directly operated facilities. The increase was partially offset by the decrease in the franchise services revenue. Franchise fee revenue in the second quarter of 2018 was relatively higher due to the recording of an accounting estimate change. This impact was partially offset by the moderate expansion of network during the first six months of 2019.
Product revenues for the first six months of 2019 were $7.8 million, compared with $6.6 million for the same period in 2019. The increase was primarily due to an increase in delivery of products of certain courses rolled out by the Company during the first quarter of 2019 and an increase in the amount of merchandise sold through the Companys franchise network.
Cost of Revenues
Cost of revenues for the first six months of 2019 was $74.0 million, compared with $59.7 million for the first six months of 2018. Cost of services revenues for the first six months of 2019 was $70.0 million, compared with $56.1 million for the same period in 2018. The increase was primarily due to an increase in staff compensation at the Companys directly operated facilities and higher operating cost. Cost of product revenues for the first six months of 2019 was $4.0 million, compared with $3.6 million for the same period last year. The increase was in line with the increase in product revenues.
Gross Profit and Gross Margin
Gross profit for the first six months of 2019 was $13.8 million, compared with $16.5 million for the same period last year.
Gross margin for the first six months of 2019 was 15.7%, compared with 21.7% for the same period last year.
Operating Expenses
Total operating expenses for the first six months of 2019 were $12.5 million, compared with $14.2 million for the same period last year. Excluding share-based compensation expenses, operating expenses were $10.3 million for the first six months of 2019.
Selling expenses were $1.3 million for the first six months of 2019, compared with $0.7 million for the same period last year.
G&A expenses for the first six months of 2019 were $11.2 million, compared with $13.5 million for the same period last year. Excluding share-based compensation expenses, G&A expenses were $9.0 million for the first six months of 2019, a 6.5% decrease from $9.6 million for the same quarter of 2018. The decrease in G&A expenses excluding share-based compensation expenses was primarily due to less expenses incurred in professional service fees and stringent cost control.
Operating Income
Operating income for the first six months of 2019 was $1.3 million, compared with $2.4 million for the same period last year. Adjusted operating income for the first six months of 2019 was $3.5 million, compared with $6.3 million for the same period last year.
Net Income
Net income attributable to ordinary shareholders of RYB for the first six months of 2019 was $0.6 million, compared with $2.0 million for the same period of 2018. Adjusted net income attributable to ordinary shareholders of RYB, which excludes the impact of share-based compensation expense and changes in redeemable non-controlling interests, for the first six months of 2019 was $2.7 million, compared with $6.0 million for the same period of 2018.
Basic and diluted net income per ADS attributable to ordinary shareholders of RYB for the first six months of 2019 were $0.02 and $0.02, respectively, compared with basic and diluted net income per ADS attributable to ordinary shareholders of RYB of $0.07 and $0.06, respectively for the same period of 2018. Each ADS represents one Class A ordinary share.
Adjusted basic and diluted net income per ADS attributable to ordinary shareholders of RYB for the first six months of 2019 were $0.10 and $0.09, respectively, compared with adjusted basic and diluted net income per ADS attributable to ordinary shareholders of RYB of $0.20 and $0.19, respectively for the same period of 2018.
EBITDA for the first six months of 2019 was $7.5 million, compared with $7.3 million for the same period of 2018. Adjusted EBITDA for the first six months of 2019 was $9.8 million, compared with $11.2 million for the same period of 2018.
Outlook
For the third quarter of 2019, the Companys management currently expects:
· Net revenues to be between $45.5 million and $47.0 million, representing a year-over-year increase of approximately 29% to 33%.
For the full year of 2019, the Companys management currently expects:
· Net revenues to be between $195.5 million and $203.5million, representing a year-over-year increase of approximately 25% to 30%.
The above outlook is based on the current market conditions and reflects the Company managements current and preliminary estimates of market and operating conditions, customer demand and foreign exchange environment, which are all subject to change. The above outlook includes revenue consideration of the Companys completed acquisition of a leading Singapore-based private childhood education group, as initially announced on February 5, 2019.
Conference Call
Management will hold a conference call at 8:30 a.m. Eastern Time on Wednesday, August 21, 2019 (8:30 p.m. Beijing Time on August 21, 2019). Listeners may access the call by dialing:
|
United States (toll free): |
|
1-888-317-6003 |
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International: |
|
1-412-317-6061 |
|
China (toll free): |
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400-120-6115 |
|
Hong Kong (toll free): |
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800-963-976 |
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Participant Elite Entry Number: |
|
5180218 |
Participants should dial-in at least 10-15 minutes before the scheduled start time and ask to be connected to the RYB Education, Inc. conference call.
A telephone replay will be available approximately one hour after the call until August 28, 2019 by dialing:
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United States (toll free): |
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1-877-344-7529 |
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International: |
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1-412-317-0088 |
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Replay Access Code: |
|
10134450 |
Additionally, a live and archived webcast of the conference call will be available at http://ir.rybbaby.com.
About RYB Education, Inc.
Founded on the core values of Care and Responsibility, Inspire and Innovate, 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 high-quality, individualized and age-appropriate care and education to nurture and inspire each child for his or her betterment in life. During its 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 Chinas early childhood education industry. RYBs 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.
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 changes in redeemable non-controlling interest; 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 and changes in redeemable non-controlling interest.
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 Companys 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 Companys brand recognition and market reputation; student enrollment in the Companys teaching facilities; the Companys growth strategies; its future business development, results of operations and financial condition; trends and competition in Chinas early childhood education market; changes in its revenues and certain cost or expense items; the expected growth of the Chinese early childhood education market; Chinese governmental policies relating to the Companys industry and general economic conditions in China. Further information regarding these and other risks is included in the Companys 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) 6508-0677
E-mail: ryb@tpg-ir.com
In the United States:
The Piacente Group, Inc.
Brandi Piacente
Tel: +1-212-481-2050
E-mail: ryb@tpg-ir.com
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)
|
|
|
As of |
| ||
|
|
|
June |
|
December |
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
80,673 |
|
104,084 |
|
|
Term deposits |
|
874 |
|
|
|
|
Accounts receivable, net |
|
2,598 |
|
876 |
|
|
Inventories |
|
7,030 |
|
4,811 |
|
|
Prepaid expenses and other current assets |
|
14,604 |
|
11,243 |
|
|
Loan receivables-current |
|
583 |
|
582 |
|
|
Total current assets |
|
106,362 |
|
121,596 |
|
|
|
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
|
|
Restricted cash |
|
772 |
|
746 |
|
|
Property, plant and equipment, net |
|
48,500 |
|
45,896 |
|
|
Acquired intangible assets |
|
18,745 |
|
4,491 |
|
|
Goodwill |
|
52,284 |
|
25,096 |
|
|
Long-term investments |
|
4,564 |
|
4,805 |
|
|
Deferred tax assets |
|
17,336 |
|
16,195 |
|
|
Other non-current assets |
|
8,437 |
|
24,048 |
|
|
Operating lease right-of-use assets |
|
84,142 |
|
|
|
|
Loan receivables non-current |
|
583 |
|
582 |
|
|
Total assets |
|
341,725 |
|
243,455 |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Prepayments from customers, current portion(including prepayments from customers of the consolidated VIEs without recourse to the Group of $4,588 and $6,647 as of June 30, 2019 and December 31, 2018, respectively) |
|
5,702 |
|
6,647 |
|
|
Accrued expenses and other current liabilities(including accrued expenses and other current liabilities of the consolidated VIEs without recourse to the Group of $47,193 and $54,443 as of June 30, 2019 and December 31, 2018, respectively) |
|
53,896 |
|
60,429 |
|
|
Income taxes payable(including income taxes payable of the consolidated VIEs without recourse to the Group of $12,865 and $11,298 as of June 30, 2019 and December 31, 2018, respectively) |
|
13,341 |
|
11,685 |
|
|
Deferred revenue, current portion(including deferred revenue of the consolidated VIEs without recourse to the Group of $36,922 and $29,578 as of June 30, 2019 and December 31, 2018, respectively) |
|
37,256 |
|
29,578 |
|
|
Operating lease liabilities, current portion (including operating lease liabilities of the consolidated VIEs without recourse to the Group of $12,619 and nil as of June 30, 2019 and December 31, 2018, respectively) |
|
15,721 |
|
|
|
|
Long-term debt, current portion (including long-term debt of the consolidated VIEs without recourse to the Group of nil and nil as of June 30, 2019 and December 31, 2018, respectively) |
|
80 |
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
125,996 |
|
108,339 |
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(in thousands of U.S. dollars)
|
|
|
As of |
| ||
|
|
|
June |
|
December |
|
|
Non-current liabilities: |
|
|
|
|
|
|
Prepayments from customers, non-current portion (including prepayments from customers of the consolidated VIEs without recourse to the Group of $4,236 and $3,582 as of June 30, 2019 and December 31, 2018, respectively) |
|
4,236 |
|
3,582 |
|
|
Deferred revenue, non-current portion (including deferred revenue of the consolidated VIEs without recourse to the Group of $4,916 and $5,567 as of June 30, 2019 and December 31, 2018, respectively) |
|
6,262 |
|
6,915 |
|
|
Other non-current liabilities (including other non-current liabilities of the consolidated VIEs without recourse to the Group of $9,008 and $8,541 as of June 30, 2019 and December 31, 2018, respectively) |
|
10,784 |
|
8,541 |
|
|
Deferred income tax liabilities (including deferred income tax liabilities of the consolidated VIEs without recourse to the Group of $1,486 and $1,110 as of June 30, 2019 and December 31, 2018, respectively) |
|
3,653 |
|
1,110 |
|
|
Operating lease liabilities, non-current portion (including operating lease liabilities of the consolidated VIEs without recourse to the Group of $70,531 and nil as of June 30, 2019 and December 31, 2018, respectively) |
|
73,374 |
|
|
|
|
Long-term debt, non-current portion (including long term debt of the consolidated VIEs without recourse to the Group of nil and nil as of June 30, 2019 and December 31, 2018, respectively) |
|
47 |
|
|
|
|
Total liabilities |
|
224,352 |
|
128,487 |
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(in thousands of U.S. dollars)
|
|
|
As of |
| ||
|
|
|
June |
|
December |
|
|
|
|
|
|
|
|
|
Mezzanine equity |
|
|
|
|
|
|
Redeemable non-controlling interests |
|
8,555 |
|
1,628 |
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Ordinary shares |
|
29 |
|
29 |
|
|
Treasury stock |
|
(12,000 |
) |
|
|
|
Additional paid-in capital |
|
138,142 |
|
135,881 |
|
|
Statutory reserve |
|
3,362 |
|
3,362 |
|
|
Accumulated other comprehensive income |
|
(401 |
) |
(122 |
) |
|
Accumulated deficit |
|
(29,827 |
) |
(30,421 |
) |
|
Total RYB Education, Inc. shareholders equity |
|
99,305 |
|
108,729 |
|
|
Non-controlling interest |
|
9,513 |
|
4,611 |
|
|
Total equity |
|
108,818 |
|
113,340 |
|
|
Total liabilities, mezzanine equity and total equity |
|
341,725 |
|
243,455 |
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of U.S. dollars, except share, ADS, per share and per ADS data)
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
| ||||
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
Net revenues: |
|
|
|
|
|
|
|
|
|
|
Services |
|
48,186 |
|
43,602 |
|
80,029 |
|
69,602 |
|
|
Products |
|
5,365 |
|
3,882 |
|
7,786 |
|
6,635 |
|
|
Total net revenues |
|
53,551 |
|
47,484 |
|
87,815 |
|
76,237 |
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
Services |
|
38,840 |
|
29,418 |
|
70,036 |
|
56,106 |
|
|
Products |
|
2,779 |
|
2,176 |
|
4,009 |
|
3,618 |
|
|
Total cost of revenues |
|
41,619 |
|
31,594 |
|
74,045 |
|
59,724 |
|
|
Gross profit |
|
11,932 |
|
15,890 |
|
13,770 |
|
16,513 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
Selling Expenses |
|
733 |
|
415 |
|
1,283 |
|
693 |
|
|
General and administrative |
|
5,878 |
|
7,970 |
|
11,201 |
|
13,462 |
|
|
Total operating expenses |
|
6,611 |
|
8,385 |
|
12,484 |
|
14,155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
5,321 |
|
7,505 |
|
1,286 |
|
2,358 |
|
|
Interest income |
|
355 |
|
503 |
|
560 |
|
1,038 |
|
|
Government subsidy income |
|
95 |
|
201 |
|
220 |
|
290 |
|
|
Gain on disposal of subsidiaries |
|
|
|
|
|
697 |
|
1 |
|
|
Impairment loss on intangible assets and goodwill |
|
(416 |
) |
|
|
(416 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
5,355 |
|
8,209 |
|
2,347 |
|
3,687 |
|
|
Less: Income tax expenses |
|
1,798 |
|
2,874 |
|
1,361 |
|
1,395 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before loss in equity method investments |
|
3,557 |
|
5,335 |
|
986 |
|
2,292 |
|
|
Loss from equity method investment |
|
(183 |
) |
(35 |
) |
(296 |
) |
(90 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
3,374 |
|
5,300 |
|
690 |
|
2,202 |
|
|
Less: Net income attributable to non-controlling interest |
|
431 |
|
583 |
|
239 |
|
205 |
|
|
Less: Decrease in redeemable non-controlling interests |
|
|
|
|
|
(143 |
) |
|
|
|
Net income attributable to ordinary shareholders of RYB Education, Inc. |
|
2,943 |
|
4,717 |
|
594 |
|
1,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to ordinary shareholders of RYB Education, Inc. |
|
|
|
|
|
|
|
|
|
|
Basic |
|
0.11 |
|
0.16 |
|
0.02 |
|
0.07 |
|
|
Diluted |
|
0.10 |
|
0.15 |
|
0.02 |
|
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per ADS attributable to ordinary shareholders of RYB Education, Inc. (Note 1) |
|
|
|
|
|
|
|
|
|
|
Basic |
|
0.11 |
|
0.16 |
|
0.02 |
|
0.07 |
|
|
Diluted |
|
0.10 |
|
0.15 |
|
0.02 |
|
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used in calculating net income per ordinary share |
|
|
|
|
|
|
|
|
|
|
Basic |
|
27,904,877 |
|
29,349,537 |
|
28,466,197 |
|
29,282,044 |
|
|
Diluted |
|
29,239,156 |
|
31,344,409 |
|
29,813,542 |
|
31,298,700 |
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands of U.S. dollars, except share, ADS, per share and per ADS data)
|
Net income |
|
3,374 |
|
5,300 |
|
690 |
|
2,202 |
|
|
Other comprehensive loss, net of tax of nil: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in cumulative foreign currency translation adjustments |
|
(178 |
) |
(1,320 |
) |
(241 |
) |
(661 |
) |
|
Total comprehensive income |
|
3,196 |
|
3,980 |
|
449 |
|
1,541 |
|
|
Less: Comprehensive income (loss) attributable to non-controlling interest |
|
319 |
|
267 |
|
276 |
|
(57 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to RYB Education, Inc. |
|
2,877 |
|
3,713 |
|
173 |
|
1,598 |
|
Note 1: Each ADS represents one Class A ordinary share.
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 June 30, |
|
Six Months Ended June 30, |
| ||||
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
5,321 |
|
7,505 |
|
1,286 |
|
2,358 |
|
|
Share-based compensation expenses |
|
964 |
|
2,212 |
|
2,261 |
|
3,974 |
|
|
Adjusted operating income |
|
6,285 |
|
9,717 |
|
3,547 |
|
6,332 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to ordinary shareholders of RYB Education, Inc. |
|
2,943 |
|
4,717 |
|
594 |
|
1,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expenses |
|
964 |
|
2,212 |
|
2,261 |
|
3,974 |
|
|
Decrease in redeemable non-controlling interests |
|
|
|
|
|
(143 |
) |
|
|
|
Adjusted net income attributable to ordinary shareholders of RYB Education, Inc. |
|
3,907 |
|
6,929 |
|
2,712 |
|
5,971 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
3,374 |
|
5,300 |
|
690 |
|
2,202 |
|
|
Add: Income tax expense |
|
1,798 |
|
2,874 |
|
1,361 |
|
1,395 |
|
|
Depreciation of property, plant and equipment, and amortization of intangible assets |
|
3,027 |
|
1,896 |
|
5,468 |
|
3,666 |
|
|
EBITDA |
|
8,199 |
|
10,070 |
|
7,519 |
|
7,263 |
|
|
Share-based compensation expenses |
|
964 |
|
2,212 |
|
2,261 |
|
3,974 |
|
|
Adjusted EBITDA |
|
9,163 |
|
12,282 |
|
9,780 |
|
11,237 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per ADS attributable to ordinary shareholders of RYB Education,Inc.- Basic (Note1) |
|
0.11 |
|
0.16 |
|
0.02 |
|
0.07 |
|
|
Net income per ADS attributable to ordinary shareholders of RYB Education,Inc.- Diluted (Note1) |
|
0.10 |
|
0.15 |
|
0.02 |
|
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per ADS attributable to ordinary shareholders of RYB Education,Inc.- Basic (Note1) |
|
0.14 |
|
0.24 |
|
0.10 |
|
0.20 |
|
|
Adjusted net income per ADS attributable to ordinary shareholders of RYB Education,Inc.- Diluted (Note1) |
|
0.13 |
|
0.22 |
|
0.09 |
|
0.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used in calculating basic net income per ADS(Note1) |
|
27,904,877 |
|
29,349,537 |
|
28,466,197 |
|
29,282,044 |
|
|
Weighted average shares used in calculating diluted net income per ADS(Note1) |
|
29,239,156 |
|
31,344,409 |
|
29,813,542 |
|
31,298,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per share- Basic |
|
0.14 |
|
0.24 |
|
0.10 |
|
0.20 |
|
|
Adjusted net income per share- Diluted |
|
0.13 |
|
0.22 |
|
0.09 |
|
0.19 |
|
Note 1: Each ADS represents one Class A ordinary share.