Ambow Education Announces Second Quarter and First Half 2022 Financial Results

BEIJING, Sept. 30, 2022 /PRNewswire/ -- Ambow Education Holding Ltd. ("Ambow" or the "Company") (NYSE American: AMBO), a leading cross-border career educational and technology service provider, today announced its unaudited consolidated financial and operating results for the three-month and six-month periods ended June 30, 2022.

"In the first half of 2022, we remained focused on our core business strategy encompassing premium technology-driven educational and career enhancement service offerings amid the complex macro environment," noted Dr. Jin Huang, Ambow's President and Chief Executive Officer. "As we methodologically pave the way to drive our career-focused education business roadmap, we recorded net revenues of RMB 204.0 million in the first half of 2022."

"We remain dedicated to refining and innovating our proprietary technologies to empower our products and services. As a result, we are delighted to see our high-quality, technology-empowered offerings garner increasing recognition and popularity in the market. Additionally, we deepened our ongoing commitment to facilitating the national strategy of improving collaboration between educational institutions and industries to coordinate and propel talent development throughout China. As a veteran with a track record of over two decades in the education technology space, Ambow has built out a far-reaching cooperative network comprised of universities, institutions and commercial enterprises. Drawing on this powerful network alongside our innovative, superior products and services, we are well positioned to address educators and learners' critical demands in the evolving landscape while promoting the efficient integration of academia and business, as well as fostering a balance in talent supply and demand, especially in the technical fields."

"Moving through the second half of 2022, we will continue strengthening our competitive edge by further advancing our technologies, products and services, actively adapting ourselves to market dynamics and capturing new growth opportunities ahead. As always, we are committed to creating long-term sustainable value for all of our stakeholders," concluded Dr. Huang.

Second Quarter 2022 Financial Highlights 

  • Net revenues for the second quarter of 2022 decreased by 36.2% to RMB 109.9 million (US$ 16.4 million) from RMB 172.3 million for the same period of 2021. The decrease was primarily due to the planned sale of the K-9 business, which is expected to be completed by December 31, 2022. The profit or loss of the K-9 business since September 2021 was borne by and entitled to the buyer as agreed. The decrease was also partially due to the regulatory changes in China affecting the tutoring business since August 2021.

  • Gross profit for the second quarter of 2022 decreased by 40.6% to RMB 45.1 million (US$ 6.7 million) from RMB 75.9 million for the same period of 2021. Gross profit margin was 41.0%, compared with 44.1% for the second quarter of 2021. The decreases in gross profit and gross margin were mainly attributable to the immediate impact of regulatory changes on net revenues of the tutoring business, while there was less impact on costs during the period.

  • Operating expenses for the second quarter of 2022 increased by 20.5% to RMB 67.0 million (US$ 10.0 million) from RMB 55.6 million for the same period of 2021. The increase was primarily caused by a write-off of long-term receivables due from Jinghan Taihe of RMB 13.7 million and a share-based compensation expense of RMB 6.7 million and partially offset by the decrease in operating expenses due to stringent expense control in the period.

  • Operating loss for the second quarter of 2022 was RMB 21.9 million (US$ 3.3 million), compared to operating income of RMB 20.3 million for the same period of 2021.

  • Net loss attributable to ordinary shareholders for the second quarter of 2022 was RMB 71.4 million (US$ 10.7 million), or RMB 1.53 (US$ 0.23) per basic and diluted share, compared with a net income of RMB 22.4 million, or RMB 0.48 per basic and diluted share, for the same period of 2021. Other than the operating loss, the net loss was also caused by the income tax expense of RMB 39.0 million from the gain on waived inter-group payables and RMB 9.0 million from the valuation allowance for the deferred tax assets resulting from the write-off of the long-term receivables due from Jinghan Taihe.

  • As of June 30, 2022, Ambow maintained strong cash resources of RMB 142.6 million (US$ 21.2 million), comprised of cash and cash equivalents of RMB 61.8 million (US$ 9.2 million), short-term investments of RMB 78.5 million (US$ 11.7 million) and restricted cash of RMB 2.3 million (US$ 0.3 million).

First Six Months 2022 Financial Highlights

  • Net revenues for the first six months of 2022 decreased by 32.4% to RMB 204.0 million (US$ 30.5 million) from RMB 301.9 million for the same period of 2021. The decrease was primarily due to the planned sale of the K-9 business, which is expected to be completed by December 31, 2022. The profit or loss of the K-9 business since September 2021 was borne by and entitled to the buyer as agreed. The decrease was also partially due to the regulatory changes in China affecting the tutoring business since August 2021.

  • Gross profit for the first six months of 2022 decreased by 36.8% to RMB 76.2 million (US$ 11.4 million) from RMB 120.6 million for the same period of 2021. Gross profit margin was 37.3%, compared with 39.9% for the same period of 2021. The decreases in gross profit and gross margin were mainly attributable to the immediate impact of regulatory changes on net revenues of the tutoring business, while there was less impact on costs during the period.

  • Operating expenses for the first six months of 2022 decreased by 1.3% to RMB 113.9 million (US$ 17.0 million) from RMB 115.4 million for the same period of 2021. The decrease was attributable to stringent expense controls, offset by a write-off of long-term receivables due from Jinghan Taihe of RMB 13.7 million and a share-based compensation expense of RMB 6.7 million.

  • Operating loss for the first six months of 2022 was RMB 37.7 million (US$ 5.6 million), compared to operating income of RMB 5.2 million for the same period of 2021.

  • Net loss attributable to ordinary shareholders for the first six months of 2022 was RMB 89.0 million (US$ 13.3 million), or RMB 1.90 (US$ 0.28) per basic and diluted share, compared with a net income of RMB 8.1 million, or RMB 0.17 per basic and diluted share, for the same period of 2021. Other than the operating loss, the net loss was also caused by the income tax expense of RMB 39.0 million from the gain on waived inter-group payables and RMB 9.0 million from the valuation allowance for the deferred tax assets resulting from the write-off of the long-term receivables due from Jinghan Taihe.

The Company's financial and operating results for the second quarter and first half of 2022 can also be found on its Report of Foreign Private Issuer on Form 6-K, to be furnished with the U.S. Securities and Exchange Commission at www.sec.gov.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all amounts translated from RMB to U.S. dollars for the second quarter and first half of 2022 are based on the effective exchange rate of 6.6981 as of June 30, 2022; all amounts translated from RMB to U.S. dollars for the second quarter and first half of 2021 are based on the effective exchange rate of 6.4566 as of June 30, 2021; all amounts translated from RMB to U.S. dollars as of December 31, 2021, are based on the effective exchange rate of 6.3726 as of December 30, 2021. The exchange rates were according to the middle rate as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. Fluctuations in financial highlights are based on RMB amounts.

About Ambow Education Holding Ltd.

Ambow Education Holding Ltd. is a leading cross-border career educational and technology service provider, offering high-quality, individualized services and products. With its extensive network of regional service hubs complemented by a dynamic proprietary learning platform and distributors, Ambow provides its services and products to students in China and the United States of America.

Follow us on Twitter: @Ambow_Education

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" and similar statements. Among other things, the outlook and quotations from management in this announcement, as well as Ambow's strategic and operational plans, contain forward-looking statements. Ambow may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. 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 statements, including but not limited to the following: the Company's goals and strategies, expansion plans, the expected growth of the content and application delivery services market, the Company's expectations regarding keeping and strengthening its relationships with its customers, and the general economic and business conditions in the regions where the Company provides its solutions and services. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and Ambow undertakes no duty to update such information except as required under applicable law.

For investor and media inquiries, please contact:

Ambow Education Holding Ltd.
Tel: +86-10-6206-8000

The Piacente Group | Investor Relations
Tel: +1-212-481-2050 or +86-10-6508-0677
E-mail: ambow@tpg-ir.com

 

 

 

AMBOW EDUCATION HOLDING LTD.

CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except for share and per share data)





As of June 30,


As of December 31,



2022


2021



US$


RMB


RMB



Unaudited



ASSETS







Current assets:







Cash and cash equivalents


9,230


61,824


157,399

Restricted cash


347


2,321


1,823

Short-term investments, available for sale


2,763


18,509


15,764

Short-term investments, held to maturity


8,958


60,000


2,000

Accounts receivable, net


2,529


16,939


25,602

Amounts due from related parties


453


3,037


3,103

Prepaid and other current assets, net


16,442


110,127


109,890

Assets classified as held for sale


21,939


146,951


132,724

Total current assets


62,661


419,708


448,305

Non-current assets:







Property and equipment, net


14,664


98,218


101,915

Intangible assets, net


4,478


29,993


29,986

Goodwill


3,271


21,907


21,907

Deferred tax assets, net




31

Operating lease right-of-use asset


31,240


209,246


220,404

Finance lease right-of-use asset


739


4,950


5,250

Other non-current assets


19,385


129,845


142,364

Total non-current assets


73,777


494,159


521,857








Total assets


136,438


913,867


970,162








LIABILITIES







Current liabilities:







Short-term borrowings *


4,340


29,070


10,103

Deferred revenue *


5,787


38,757


95,036

Accounts payable *


4,140


27,730


29,466

Accrued and other liabilities *


34,220


229,209


216,399

Income taxes payable, current *


23,270


155,864


116,341

Amounts due to related parties *


767


5,135


3,793

Operating lease liability, current *


7,293


48,846


48,923

Liabilities classified as held for sale *


11,773


78,857


83,161

Total current liabilities


91,590


613,468


603,222

Non-current liabilities:







Deferred tax liabilities, net *


1,455


9,748


-

Other non-current liabilities *


3


20


96

Income taxes payable, non-current *


4,412


29,553


21,475

Operating lease liability, non-current *


29,544


197,889


198,687

Total non-current liabilities


35,414


237,210


220,258








Total liabilities


127,004


850,678


823,480








EQUITY







Preferred shares







(US$0.003 par value;1,666,667 shares authorized, nil issued and outstanding as of June 30, 2022 and December 31,
    2021)




Class A Ordinary shares







(US$0.003 par value; 66,666,667 and 66,666,667 shares authorized, 47,398,276 and 41,973,276 shares issued and
    outstanding as of June 30, 2022 and December 31, 2021, respectively)


135


902


795

Class C Ordinary shares







(US$0.003 par value; 8,333,333 and 8,333,333 shares authorized, 4,708,415 and 4,708,415 shares issued and
    outstanding as of June 30, 2022 and December 31, 2021, respectively)


13


90


90

Additional paid-in capital


530,449


3,553,000


3,545,955

Statutory reserve


573


3,837


3,837

Accumulated deficit


(523,251)


(3,504,789)


(3,415,771)

Accumulated other comprehensive income


1,498


10,035


11,291

Total Ambow Education Holding Ltd.'s equity


9,417


63,075


146,197

Non-controlling interests


17


114


485

Total equity


9,434


63,189


146,682

Total liabilities and equity


136,438


913,867


970,162








*      All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of
consolidating these VIEs do not represent additional claims on the Company's general assets.

 

 

 

AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

 (All amounts in thousands, except for share and per share data)





For the six months ended June 30,


For the three months ended June 30,



2022


2022


2021


2022


2022


2021



US$


RMB


RMB


US$


RMB


RMB

NET REVENUES













Educational program and services


29,697


198,912


301,104


15,732


105,373


171,590

Intelligent program and services


766


5,131


752


680


4,555


661

Total net revenues


30,463


204,043


301,856


16,412


109,928


172,251

COST OF REVENUES













Educational program and services


(18,571)


(124,389)


(179,375)


(9,222)


(61,767)


(95,536)

Intelligent program and services


(521)


(3,489)


(1,930)


(461)


(3,088)


(786)

Total cost of revenues


(19,092)


(127,878)


(181,305)


(9,683)


(64,855)


(96,322)














GROSS PROFIT


11,371


76,165


120,551


6,729


45,073


75,929

Operating expenses:













Selling and marketing


(2,576)


(17,253)


(24,422)


(1,121)


(7,511)


(13,422)

General and administrative


(13,443)


(90,043)


(85,357)


(8,413)


(56,349)


(38,412)

Research and development


(986)


(6,603)


(5,602)


(463)


(3,101)


(3,757)

Total operating expenses


(17,005)


(113,899)


(115,381)


(9,997)


(66,961)


(55,591)














OPERATING (LOSS) INCOME


(5,634)


(37,734)


5,170


(3,268)


(21,888)


20,338














OTHER INCOME (EXPENSES)













Interest income, net


534


3,574


4,008


258


1,726


1,948

Foreign exchange (loss) gain, net


(6)


(39)


203


6


43


(12)

Other income (expense), net


163


1,094


(1,180)


118


793


(240)

Gain from deregistration of subsidiaries


44


295


1,325


14


91


1,181

Loss on disposal of subsidiaries


(168)


(1,124)



(168)


(1,124)


Gain on sale of investment available for sale


119


799


1,221


119


799


474

Total other income


686


4,599


5,577


347


2,328


3,351

(LOSS) INCOME BEFORE INCOME TAX
    AND NON-CONTROLLING INTEREST


(4,948)


(33,135)


10,747


(2,921)


(19,560)


 

23,689

Income tax expense


(8,517)


(57,050)


(3,155)


(7,876)


(52,756)


(1,526)














NET (LOSS) INCOME


(13,465)


(90,185)


7,592


(10,797)


(72,316)


22,163

Less: Net loss attributable to non-controlling
    interest


(174)


(1,167)


(519)


(130)


(868)


(277)














NET (LOSS) INCOME ATTRIBUTABLE
    TO ORDINARY SHAREHOLDERS


(13,291)


(89,018)


8,111


(10,667)


(71,448)


 

22,440














NET (LOSS) INCOME


(13,465)


(90,185)


7,592


(10,797)


(72,316)


22,163














OTHER COMPREHENSIVE (LOSS)
    INCOME, NET OF TAX













Foreign currency translation adjustments


(161)


(1,079)


(417)


(87)


(584)


(532)

Unrealized gains on short-term investments













Unrealized holding gains arising during
    period


74


497


1,075


33


224


493

Less: reclassification adjustment for gains
    included in net income


101


674


852


101


674


 

308

Other comprehensive loss


(188)


(1,256)


(194)


(155)


(1,034)


(347)














TOTAL COMPREHENSIVE (LOSS)
    INCOME


(13,653)


(91,441)


7,398


(10,952)


(73,350)


21,816














Net (loss) income per share – basic and diluted


(0.28)


(1.90)


0.17


(0.23)


(1.53)


0.48














Weighted average shares used in calculating
    basic and diluted net (loss) income per share


46,756,368


46,756,368


46,642,280


46,825,968


46,825,968


46,648,495

 

 

 

AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(All amounts in thousands, except for share and per share data)





Attributable to Ambow Education Holding Ltd.'s Equity





















Accumulated







Class A Ordinary


Class C Ordinary


Additional






other


Non-





shares


shares


paid-in


Statutory


Accumulated


comprehensive


controlling


Total



Shares


Amount


Shares


Amount


capital


reserves


deficit


income


interest


Equity





RMB




RMB


RMB


RMB


RMB


RMB


RMB


RMB

Balance as of January 1,
    2022


41,973,276


795


4,708,415


90


3,545,955


3,837


(3,415,771)


11,291


485


146,682

Share-based compensation






214






214

Issuance of ordinary shares
    for restricted stock award


12,500


0




(0)






Foreign currency translation
    adjustment









(495)



(495)

Unrealized gain on
    investment, net of income
    taxes









273



273

Capital injection from non-
    controlling shareholders










101


101

Net loss








(17,570)



(299)


(17,869)

Balance as of March 31,
    2022


41,985,776


795


4,708,415


90


3,546,169


3,837


(3,433,341)


11,069


287


128,906

Share-based compensation






226






226

Issuance of ordinary shares
    for restricted stock award


5,412,500


107




6,605






6,712

Foreign currency translation
    adjustment









(584)



(584)

Reversal of unrealized gain
    on investment, net of
    income taxes









(450)



(450)

Disposal of subsidiaries










645


645

Capital injection from non-
    controlling shareholders










50


50

Net loss








(71,448)



(868)


(72,316)

Balance as of June 30, 2022


47,398,276


902


4,708,415


90


3,553,000


3,837


(3,504,789)


10,035


114


63,189






















Balance as of January 1,
    2021


41,923,276


794


4,708,415


90


3,545,073


4,210


(3,419,146)


12,101


(1,968)


141,154

Share-based compensation






219






219

Issuance of ordinary shares
    for restricted stock award


12,500


0




(0)






Foreign currency translation
    adjustment









115



115

Unrealized gain on
    investment, net of income
    taxes









38



38

Net loss








(14,329)



(242)


(14,571)

Balance as of March 31,
    2021


41,935,776


794


4,708,415


90


3,545,292


4,210


(3,433,475)


12,254


(2,210)


126,955

Share-based compensation






220






220

Issuance of ordinary shares
    for restricted stock award


12,500


0




(0)






Foreign currency translation
    adjustment









(532)



(532)

Unrealized gain on
    investment, net of income
    taxes









185



185

Net income/(loss)








22,440



(277)


22,163

Balance as of June 30, 2021


41,948,276


794


4,708,415


90


3,545,512


4,210


(3,411,035)


11,907


(2,487)


148,991






















 

 

 

Discussion of Segment Operations

(All amounts in thousands)





For the six months ended June 30,


For the three months ended June 30,



2022


2022


2021


2022


2022


2021



US$


RMB


RMB


US$


RMB


RMB

NET REVENUES













K-12 Schools


14,922


99,950


175,650


8,048


53,909


104,748

CP&CE Programs


15,541


104,093


126,206


8,364


56,019


67,503

Total net revenues


30,463


204,043


301,856


16,412


109,928


172,251

COST OF REVENUES













K-12 Schools


(7,682)


(51,452)


(97,886)


(4,067)


(27,238)


(52,297)

CP&CE Programs


(11,410)


(76,426)


(83,419)


(5,616)


(37,617)


(44,025)

Total cost of revenues


(19,092)


(127,878)


(181,305)


(9,683)


(64,855)


(96,322)

GROSS PROFIT













K-12 Schools


7,240


48,498


77,764


3,981


26,671


52,451

CP&CE Programs


4,131


27,667


42,787


2,748


18,402


23,478

Total gross profit


11,371


76,165


120,551


6,729


45,073


75,929

 

 

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Source: Ambow Education Holding Ltd. Related Stocks: AMEX:AMBO
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