EXHIBIT 99.1
Published on July 7, 2021
Exhibit 99.1
RYB Education, Inc. Reports First Quarter 2021 Financial Results
BEIJING, July 6, 2021 -- 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 first quarter of 2021.
First Quarter 2021 Operational and Financial Summary
| · | Number of students enrolled at directly operated facilities was 36,890 as of March 31, 2021, compared with 31,2511 as of March 31, 2020. |
| · | Net revenues increased by 111.8% to $36.7 million, compared with $17.3 million for the first quarter of 2020. |
| · | Gross profit was $3.4 million, versus gross loss of $11.6 million for the first quarter of 2020. |
| · | Net loss attributable to ordinary shareholders of RYB for the first quarter of 2021 was $1.8 million, compared with $26.6 million for the first quarter of 2020. Adjusted net loss attributable to ordinary shareholders2 of RYB for the first quarter of 2021 was $1.2 million, compared with $25.8 million for the first quarter of 2020. |
1 The number of students enrolled as of March 31, 2020 refers to the number of students enrolled before the temporary closure of the Company’s facilities in China due to COVID-19 and the number of students enrolled in our facilities in Singapore as at March 31, 2020. Our facilities in Singapore remained open as at March 31, 2020.
2 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.
| · | Cash generated from operating activities was $22.8 million in the first quarter of 2021, versus $14.0 million cash used in operating activities for the first quarter of 2020. |
First quarter 2021 Financial Results
Net Revenues
Net revenues for the first quarter of 2021 increased by 111.8% to $36.7 million, from $17.3 million for the same quarter of 2020.
Service revenues for the first quarter of 2021 increased by 108.7% to $35.1 million, from $16.8 million for the same quarter of 2020. The increase was mainly due to a significant increase in tuition fees revenue, as all of the Company’s directly operated facilities in China were in normal operation in the first quarter of 2021 whereas those facilities were temporarily closed for most time of the same quarter of 2020 as a result of COVID-19 outbreak. The increase in the number of students enrolled at facilities in both China and Singapore also contributed to a higher tuition fees revenue.
Product revenues for the first quarter of 2021 increased by 208.9% to $1.6 million, from $0.5 million for the same quarter of 2020. The increase was due to a significant increase in the amount of merchandise sold through the Company’s franchise network, as the franchisees’ facilities have resumed operation.
Cost of Revenues
Cost of revenues for the first quarter of 2021 was $33.3 million, a 15.1% increase from $28.9 million for the same quarter of 2020. Cost of revenues for services for the first quarter of 2021 was $32.6 million, compared with $28.7 million for the same quarter of 2020. The increase was mainly driven by an increase in the direct cost of directly operated facilities after normal operations resumed from previous temporary suspensions due to Covid-19. Cost of products revenues for the first quarter of 2021 was $0.7 million, compared with $0.3 million for the same quarter of 2020. The increase was generally in line with the increase in products revenues.
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Gross Profit/Loss
As a result of the foregoing, gross profit for the first quarter of 2021 was $3.4 million, versus gross loss of $11.6 million for the same quarter of 2020.
Operating Expenses
Total operating expenses for the first quarter of 2021 were $5.7 million, compared with $14.5 million for the first quarter of 2020. Excluding share-based compensation expenses, operating expenses were $5.0 million, a decrease of 63.4% from $13.7 million for the first quarter of 2020.
Selling expenses for the first quarter of 2021 were $0.4 million, compared with $0.2 million for the same quarter of 2020.
General and administrative ("G&A") expenses for the first quarter of 2021 were $5.3 million, a 9.2% decrease from $5.8 million for the same quarter of 2020. Excluding share-based compensation expenses, G&A expenses were $4.6 million, compared with $5.0 million for the same quarter of 2020. The share-based compensation expenses included in G&A expenses were $0.6 million for the first quarter of 2021. The decrease in G&A expenses excluding share-based compensation expenses was primarily due to the decrease in staff cost and operational expenses as a result of stringent cost control measures taken in response to COVID-19 outbreak.
Impairment loss on goodwill was nil for the first quarter of 2021, compared to $8.5 million for the same quarter of 2020.
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Operating Loss
Operating loss for the first quarter of 2021 was $2.3 million, compared with $26.1 million for the same quarter last year. Adjusted operating loss3 was $1.6 million for the first quarter of 2021, compared with $25.3 million for the same quarter of 2020.
Net Loss
Net loss attributable to ordinary shareholders of RYB for the first quarter of 2021 was $1.8 million, compared with $26.6 million for the same quarter of 2020. Adjusted net loss attributable to ordinary shareholders of RYB, which excludes the impact of $0.7 million of share-based compensation expense for the first quarter of 2021, was $1.2 million, compared with $25.8 million for the same quarter of 2020.
Basic and diluted net loss per American depositary share ("ADS") attributable to ordinary shareholders of RYB for the first quarter of 2021 were both $0.06, compared with basic and diluted net loss per ADS attributable to ordinary shareholders of RYB of both $0.96, for the same quarter of 2020. Each ADS represents one Class A ordinary share.
Adjusted basic and diluted net loss per ADS attributable to ordinary shareholders4 of RYB for the first quarter of 2021 were both $0.04, compared with basic and diluted net loss per ADS attributable to ordinary shareholders of RYB of both $0.93, for the same quarter of 2020.
3 Adjusted operating income (loss) is a non-GAAP financial measure, which is defined as operating income (loss) 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 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.
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EBITDA5 for the first quarter of 2021 was $3.1 million, versus a loss of $24.8 million for the same quarter of 2020. Adjusted EBITDA6 for the first quarter of 2021 was $3.8 million, versus a loss of $24.0 million for the same quarter of 2020.
Operating Cash Flow
Cash generated from operating activities was $22.8 million during the first quarter of 2021, versus $14.0 million used in operating activities during the first quarter of 2020. Thanks to the effective control of the Covid-19 pandemic in China, all of the Company’s directly operated facilities resumed operation since September 2020. This has significantly contributed to the operating cash flow for the first quarter of 2021 since the majority of cash inflow is derived from collection of tuition fees. Moreover, the Company has reduced cash outflow by carrying out stringent cost control measures on discretionary expenditures.
Balance Sheet
As of March 31, 2021, the Company had total cash and cash equivalents of $74.2 million, an increase from $53.5 million as of December 31, 2020. The increase in cash balance was mainly due to the operating cash inflow of $22.8 million in this quarter as the Company’s operations recovered from Covid-19 pandemic.
5 EBITDA is defined as net income (loss) 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.
6 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.
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Outlook
For the second quarter of 2021, the Company's management currently expects net revenues to be between $51.0 million and $52.0 million, representing a year-over-year increase of approximately 299% to 307%. The above outlook is based on the current market conditions and reflects the Company management’s current and preliminary estimates of market and operating conditions, customer demand and foreign exchange environment, which are all subject to change.
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 over two decades 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.
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 and income tax expenses; adjusted EBITDA is defined as net income excluding depreciation, amortization, 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.
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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 childhood 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
E-mail: ir@rybbaby.com
The Piacente Group, Inc.
Yang Song
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
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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)
| As of | ||||||||
|
March 31, 2021 |
December 31, 2020 |
|||||||
| Current assets: | ||||||||
| Cash and cash equivalents | 74,167 | 53,454 | ||||||
| Accounts receivable, net | 2,080 | 1,844 | ||||||
| Inventories | 6,120 | 5,773 | ||||||
| Prepaid expenses and other current assets | 8,400 | 8,927 | ||||||
| Loan receivables | 229 | 107 | ||||||
| Total current assets | 90,996 | 70,105 | ||||||
| Non-current assets: | ||||||||
| Restricted cash | 943 | 1,127 | ||||||
| Property, plant and equipment, net | 46,376 | 47,638 | ||||||
| Goodwill | 46,018 | 46,147 | ||||||
| Intangible assets, net | 13,550 | 14,179 | ||||||
| Long-term investment | 215 | 217 | ||||||
| Deferred tax assets | 21,545 | 21,168 | ||||||
| Other non-current assets | 12,808 | 14,438 | ||||||
| Operating lease right-of-use assets | 80,253 | 87,472 | ||||||
| Total assets | 312,704 | 302,491 | ||||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Prepayments from customers, current portion | 4,171 | 4,145 | ||||||
| Accrued expenses and other current liabilities | 56,684 | 54,406 | ||||||
| Income tax payable | 18,939 | 18,592 | ||||||
| Operating lease liabilities, current portion | 15,495 | 16,856 | ||||||
| Deferred revenue, current portion | 52,000 | 34,351 | ||||||
| Long-term debt, current portion | - | 7 | ||||||
| Total current liabilities | 147,289 | 128,357 | ||||||
| Non-current liabilities: | ||||||||
| Prepayments from customers, non-current portion | 3,455 | 4,024 | ||||||
| Deferred revenue, non-current portion | 1,118 | 1,726 | ||||||
| Other non-current liabilities | 12,116 | 12,519 | ||||||
| Deferred income tax liabilities | 2,239 | 1,890 | ||||||
| Operating lease liabilities, non-current portion | 70,029 | 76,308 | ||||||
| Total liabilities | 236,246 | 224,824 | ||||||
| Mezzanine equity | ||||||||
| Redeemable non-controlling interests | 10,237 | 9,988 | ||||||
| Equity | ||||||||
| Ordinary shares | 29 | 29 | ||||||
| Treasury stock | (10,101 | ) | (10,321 | ) | ||||
| Additional paid-in capital | 141,528 | 141,094 | ||||||
| Statutory reserve | 4,652 | 4,652 | ||||||
| Accumulated other comprehensive (loss)/ income | (1,474 | ) | (1,468 | ) | ||||
| Accumulated deficit | (73,677 | ) | (71,837 | ) | ||||
| Total RYB Education, Inc. shareholders' equity | 60,957 | 62,149 | ||||||
| Non-controlling interest | 5,264 | 5,530 | ||||||
| Total equity | 66,221 | 67,679 | ||||||
| Total liabilities, mezzanine equity and total equity | 312,704 | 302,491 | ||||||
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UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of U.S. dollars, except share, ADS, per share and per ADS data)
| Three Months Ended
March 31, |
||||||||
| 2021 | 2020 | |||||||
| Net revenues: | ||||||||
| Services | 35,051 | 16,792 | ||||||
| Products | 1,628 | 527 | ||||||
| Total net revenues | 36,679 | 17,319 | ||||||
| Cost of revenues: | ||||||||
| Services | 32,574 | 28,655 | ||||||
| Products | 692 | 256 | ||||||
| Total cost of revenues | 33,266 | 28,911 | ||||||
| Gross profit (loss) | 3,413 | (11,592 | ) | |||||
| Operating expenses | ||||||||
| Selling expenses | 392 | 232 | ||||||
| General and administrative expenses | 5,278 | 5,811 | ||||||
| Impairment loss on goodwill | - | 8,454 | ||||||
| Total operating expenses | 5,670 | 14,497 | ||||||
| Operating loss | (2,257 | ) | (26,089 | ) | ||||
| Interest income | 66 | 49 | ||||||
| Government subsidy income | 1,059 | 145 | ||||||
| Loss before income taxes | (1,132 | ) | (25,895 | ) | ||||
| Less: Income tax expense | 581 | 4,222 | ||||||
| Loss before loss in equity method investments | (1,713 | ) | (30,117 | ) | ||||
| Loss from equity method investments | (1 | ) | (1,893 | ) | ||||
| Net loss | (1,714 | ) | (32,010 | ) | ||||
| Less: Net income(loss) attributable to non-controlling interest | 126 | (5,393 | ) | |||||
| Net loss attributable to ordinary shareholders of RYB | (1,840 | ) | (26,617 | ) | ||||
| Net loss per share attributable to ordinary shareholders of RYB Education, Inc. | ||||||||
| Basic | (0.06 | ) | (0.96 | ) | ||||
| Diluted | (0.06 | ) | (0.96 | ) | ||||
| Net loss per ADS attributable to ordinary shareholders of RYB Education, Inc. (Note 1) | ||||||||
| Basic | (0.06 | ) | (0.96 | ) | ||||
| Diluted | (0.06 | ) | (0.96 | ) | ||||
| Weighted average shares used in calculating net loss per ordinary share | ||||||||
| Basic | 28,376,967 | 27,681,509 | ||||||
| Diluted | 28,376,967 | 27,681,509 | ||||||
Note 1：Each ADS represents one Class A ordinary share.
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands of U.S. dollars)
|
Three Months Ended March 31, |
||||||||
| 2021 | 2020 | |||||||
| Net loss | (1,714 | ) | (32,010 | ) | ||||
| Other comprehensive loss, net of tax of nil: | ||||||||
| Change in cumulative foreign currency translation adjustments | (224 | ) | (1,509 | ) | ||||
| Total comprehensive loss | (1,938 | ) | (33,519 | ) | ||||
| Less: Comprehensive loss attributable to non-controlling interest | (94 | ) | (5,884 | ) | ||||
| Comprehensive loss attributable to RYB Education, Inc. | (1,844 | ) | (27,635 | ) | ||||
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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 March 31, |
||||||||
| 2021 | 2020 | |||||||
| Operating loss | (2,257 | ) | (26,089 | ) | ||||
| Share-based compensation expenses | 655 | 800 | ||||||
| Adjusted operating loss | (1,602 | ) | (25,289 | ) | ||||
| Net loss attributable to RYB | (1,840 | ) | (26,617 | ) | ||||
| Share-based compensation expenses | 655 | 800 | ||||||
| Adjusted net loss attributable to RYB | (1,185 | ) | (25,817 | ) | ||||
| Net loss | (1,714 | ) | (32,010 | ) | ||||
| Add: Income tax expense | 581 | 4,222 | ||||||
| Depreciation and amortization | 4,264 | 3,036 | ||||||
| EBITDA | 3,131 | (24,752 | ) | |||||
| Share-based compensation expenses | 655 | 800 | ||||||
| Adjusted EBITDA | 3,786 | (23,952 | ) | |||||
| Net loss per ADS attributable to ordinary shareholders of RYB Education, Inc. - Basic (Note1) | (0.06 | ) | (0.96 | ) | ||||
| Net loss per ADS attributable to ordinary shareholders of RYB Education, Inc. - Diluted (Note1) | (0.06 | ) | (0.96 | ) | ||||
| Adjusted net loss per ADS attributable to ordinary shareholders of RYB Education, Inc. - Basic (Note1) | (0.04 | ) | (0.93 | ) | ||||
| Adjusted net loss per ADS attributable to ordinary shareholders of RYB Education, Inc. - Diluted (Note1) | (0.04 | ) | (0.93 | ) | ||||
| Weighted average shares used in calculating basic net loss/adjusted net loss per ADS(Note1) | 28,376,967 | 27,681,509 | ||||||
| Weighted average shares used in calculating diluted net loss/adjusted net loss per ADS(Note1) | 28,376,967 | 27,681,509 | ||||||
| Adjusted net loss per share attributable to ordinary shareholders of RYB Education, Inc.- Basic | (0.04 | ) | (0.93 | ) | ||||
| Adjusted net loss per share attributable to ordinary shareholders of RYB Education, Inc.- Diluted | (0.04 | ) | (0.93 | ) | ||||
Note 1：Each ADS represents one Class A ordinary share.
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