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Bright Scholar Education Holdings Limited American Depositary Shares, each representing four Class A Ordinary Share
Q3 2024 Earnings Conference Call
8/2/2024
spk01: Hello, ladies and gentlemen. Thank you for standing by for Bright Scholars' third quarter of fiscal 2024 earnings conference call. At this time, all participants are in listen-only mode. After management's remarks, there will be a question-and-answer session. Today's conference call is being recorded. I will now turn the call over to your host for Piacente Financial Communications, Andrea Groh, IR Counsel for the company. Please go ahead, Andrea.
spk02: Thank you very much. Hello, everyone, and welcome to Brett Scholar's earnings conference call for the third quarter of the 2024 fiscal year. The company's financial and operational results were released earlier today and are available online by visiting the IR section of our website at ir.brettscholar.com. Please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Privileged Securities Litigation Reform Act of 1995. forelooking statements involving hurried risks and uncertainties. As such, the company's results may materially differ from today's views. Further information regarding these and other risks and uncertainties is included in the company's prospectus and other public filings as filed with the USSEC. The company does not assume any obligation to update any forelooking statements, except as required under applicable law. Additionally, Brett Scholar's earnings press release and this conference call include discussions of unaudited GAAP and non-GAAP financial measures. Brett Scholar's earnings press release contains a reconciliation of the unaudited non-GAAP measures. Please also note that all numbers are in RMB. Participants on today's call will include our Chief Executive Officer, Mr. Robert Niu, who will provide a company overview and update on our strategic initiatives with highlights from the quarter. Our Chief Financial Officer, Ms. Cindy Zhang, will then provide details on the company's financial results for the period. We will then open the call for questions. I will now turn the call over to Bradford's Chief Executive Officer, Ms. Robert Mew. Please go ahead, sir.
spk00: Hello, everyone, and thank you for joining us on today's call. We are pleased to announce that Price Scholar achieved solid quarterly results amid the uncertain and evolving external environment in the third fiscal quarter. Our strategic execution was unwavering, propelling our dedicated initiatives that fueled our global business. We also made headway in optimizing our organizational structure which improved our operating efficiency and drove another quarter of positive adjusted net income. Our total revenues grew 6% quarter over quarter, led by ongoing growth in our dominant overseas schools business. This growth is testament to our business resilience and vitality. In addition, our further enhanced and utilization of our facility and teaching resources with utilization rate of our overseas schools increasing to 62% for the quarter. Leveraging our established global network of schools and ecosystems, we believe we can accelerate our overseas revenue growth and create a sustainable value for both customers and shareholders over the long term. Now, I'd like to share some details from the quarter on each of our business segments. First, overseas schools sustain a solid growth momentum and remain our strongest segment. Revenue was up 19.4% year over year in the third fiscal quarter, extending the double-digit year over year growth streak this segment has achieved for the past five consecutive quarters. This business is our growth engine and primary revenue source, accounting for nearly 48% of our total revenue for the period. Furthermore, our overseas schools' student enrollment grew by 8% year-over-year this quarter. Year-to-date, over 900 students have accepted offers from our September intake. Our students have demonstrated exceptional performance across different facets of school life, particularly showcasing impressive academic achievements. This year, three in every five of our Cass Global Schools students have received an offer from a prestigious Russell Group University, globally recognized for its commitment to world-class research and academic excellence. The Russell Group compromised 24 member universities, including Oxford and Cambridge. Furthermore, 24 of our CAT Global School students received offers from renowned G5 universities of Oxford, Cambridge, Imperial College London, the London School of Economics, and University College London. We remain steadfast in our commitment to facilitating our students' educational excellency and creating opportunities for their academic success as well as well-rounded development. Overall, we are pleased with advancements we made with our overseas schools business in the third fiscal quarter. Our dedication to delivering a top-tier education to our students and equipping them for success in the global market is driving this business growth and supporting accelerated year-over-year enrollment. Moving on to our complementary education services, revenue from this segment decreased 18% year-over-year in the fiscal third quarter as we strategically reduced lower return and underutilized programs. in alignment with our internal expectations. We also divest our non-core career counseling business and international contest training business in June and May. Our divestment strategy is geared towards focusing our resources on our high-growth core overseas school business and streamlining our management efficiency. By reallocating resources, we aim to drive innovation, and enhance service delivery in our overseas school business. As we move forward, we will continue to cultivate the international school market, aligning our efforts with our long-term vision and adapting to the dynamic environment. With our goal of leaner and more efficient operations, in the third fiscal quarter, we continue to optimize our organizational structure and enhance corporate governance. We conduct a wide array of health checks to identify issues in our overseas schools business, and again, a deeper understanding of these overseas operations. We dispatched a management team from our headquarters to directly oversee the overseas school business, establishing clear management responsibilities and reporting mechanisms. We also implemented advanced IT systems to enhance collaboration between our different departments and internal control teams. The gradual integration of our headquarters and overseas management teams not only help us reduce management costs, but more importantly, allows the group strategy to be executed more efficiently at the local level. Under this model, the organization's productivity has increased significantly. Our senior team can respond to market dynamics with more agility, paving the way for sustainable growth and innovation. In summary, the third fiscal quarter has demonstrated that our business remains resilient and is steadily improving in the face of a dynamic market. We are operating with increasing efficiency and will continue to refine our operations to align with our goals. Our priority remains on expanding our steady overseas school business while seeking opportunities to diverse non-core assets related to complementary education services and domestic kindergarten and K-12 operations. Moving forward, we will continue to advance our high-growth, high-return business, gearing up to seize extensive growth opportunities that will strengthen our market share as a leading global education service provider. With that, I will turn the call over to our CFO, Ms. Cindy Zhang, who will discuss our key financial results. Please go ahead, Cindy.
spk03: Thank you, Robert. Now, I would like to discuss our financial results for the third quarter of fiscal 2024. Please note, all amounts are in RMB unless otherwise stated. We are pleased to report healthy financial results in the third fiscal quarter. Our total revenues grew by 6.2% quarter over quarter, driven by gains in our overseas goods business. Ongoing optimization in our core structure and improved operating efficiency drove our growth margin up by 317 base points year-over-year and 560 basis points quarter-over-quarter, and we achieved profitability for the third conservative quarter on a non-GAAP basis. Looking at our financial results for the third fiscal quarter in more detail, We achieved total revenue of $564 million in the third fiscal quarter. By segment, the largest proportion of our business oversees schools. We caught its revenue of $264.9 million, contributing 47.8% of total revenue and growing by 19.4% year-over-year and 6.7% quarter over quarter. Complimentary education services and domestic kindergarten and K-12 operation services revenues were $169.5 million and $119.6 million respectively. Both decreased year over year as we continue to advance our portfolio and optimize costs through the advancement of these non-core education businesses. The cost of revenues was $351.2 million, or 63.4% of total revenue in the third fiscal quarter. This compares with 67.1% for the same quarter last fiscal year, making the third consecutive quarter of improved year-over-year costs as a percentage of total revenues, This improvement was mainly attributable to our cost saving measures and efficiency enhancements at our headquarters. Our gross profit increased by 5% year over year and 25.4% quarter over quarter for 202.7 million. The increase was mainly attributable to revenue growth in our overseas schools. with the segment gross profit increasing 40.1% year-over-year. Gross margin increased to 36.6% from 32.9% for the same quarter last fiscal year and 31% for the previous quarter, a testament to our robust cost management system and enhanced utilization of facilities and teaching resources Notably, our overseas business growth margin reached 33%, the highest level we've seen in the past three years. Adjusted growth profit was 205.9 million, representing a 4.7% increase year-over-year and a 24.9% increase quarter-over-quarter. SG&A expenses were $147 million compared with $142 million for the same quarter last fiscal year. The slightly increase was mainly attributable to a rise in overseas personnel related expenses. Adjusted EBITDA was $76.6 million compared with $96 million for the same quarter last fiscal year in the previous quarter. Now turning to profitability, due to a $133 million impairment loss on Goodwill, we recorded a net loss of $19.93 million in the third fiscal quarter. Excluding this one-time impact, net income was $42.7 million compared with the net loss of $37.7 million for the same quarter last fiscal year. Adjusted net income was $48.5 million, compared with an adjusted net loss of $34.9 million for the same quarter last fiscal year. As for our balance sheet, our cash position rebounded this quarter. As of May 31, 2024, we had cash on cash equivalent and restricted cash of $537.2 million. compared with $496.9 million as of February 29, 2024. Moving forward, we will continue to prudently manage our costs and strategically reshape our portfolio to maximize returns while strengthening our financial position through margin improvement, fortifying our balance sheet, and increasing cash flow. Our strong cash position will continue to support us in mitigating the market dynamics. We are confident in maintaining a healthy balance sheet while achieving organic growth and creating sustainable value for our customers and shareholders in the long term. Okay, this concludes all our prepared remarks today. We will now open the call to questions. Operator, please go ahead.
spk01: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Again, if you have a question, please press star one. To answer no questions in the queue, I would like to turn the Call back over to Andrea Groh for closing remarks.
spk02: Thank you once again for joining us today. If you have any further questions, please feel free to contact Brad Scholar's Investor Relations through the contact information provided on our website.
spk01: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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