XUEDA EDUCATION GROUP (ADR) BEIJING, Aug. 13, 2015 /PRNewswire/ -- Xueda Education Group (NYSE: XUE) ("Xueda" or the "Company"), a leading national provider of personalized tutoring services for primary and secondary school students in China, today announced its unaudited financial results for the quarter ended June 30, 2015.
Financial Highlights for Second Quarter 2015 Compared to Second Quarter 2014
-- Total net revenues increased 0.4% to $121.3 million from $120.8 million.
-- Gross margin was 37.9%, compared to 34.5%.
-- Net income attributable to Xueda Education Group was $10.7 million,
compared to $15.3 million.
-- Non-GAAP diluted net income([1]) per ADS attributable to Xueda Education
Group was $0.19, compared to $0.27.
Operational Highlights for Second Quarter 2015
-- Effective student count([2]) increased 8.2% to 63,726, from 58,895 for
the second quarter 2014.
-- New student sign-ups([3]) decreased 1.2% to 26,721, from 27,049 for the
second quarter 2014.
-- The number of retained student increased 16.2% to 37,005, from 31,846
for the second quarter 2014.
-- New learning centers increased net 17, with 19 opened and 2 closed.
Total number of learning centers at the end of the second quarter was
499. Total area of learning centers decreased 1.5% year-over-year to
approximately 286,000 square meters, from approximately 290,000 square
meters in the second quarter 2014.
All non-GAAP measures exclude
share-based compensation
expenses. For further details on
non-GAAP measures, please refer
to the reconciliation tables and
a detailed discussion of the
Company's use of non-GAAP
information set forth elsewhere
[1] in this press release.
Effective student count is defined
as the number of students who
(i) had effective contracts with
amounts of at least RMB200 per
contract as of the last day of
the relevant period and(ii) had
attended at least one tutoring
session within the 180 days
before the last day of the
[2] relevant period.
New student sign-ups is defined
as the number of students who
enrolled in a Xueda program
during the relevant period for
the second time in the last three
[3] calendar years.
Second Quarter 2015 Financial and Operating Results
Total Net Revenues
Total net revenues for the second quarter 2015 increased 0.4% year-over-year to $121.3 million, from $120.8 million for the second quarter 2014. The increase reflects 5.9% revenue growth year-over-year from one-on-one tutoring and 67.9% revenue growth year-over-year from small group tutoring. For comparison purposes, the Company notes that in the second quarter 2014, it recorded a one-time sale of Internet-enabled tablet devices of $9.9 million as part of its effort to support the launch of eXueda.
-- Effective student count increased 8.2% to 63,726 for the second quarter
2015, from 58,895 for the second quarter 2014.
-- Average net revenue per student for the second quarter 2015 decrease
5.1% to $1,729, compared to 1,822 for the second quarter 2014.
Cost of Revenues
Cost of revenues for the second quarter 2015 decreased 4.7% to $75.4 million, from $79.2 million for the second quarter 2014.
Gross Profit and Gross Margin
Gross profit for the second quarter 2015 increased 10.3% to $45.9 million, from $41.7 million for the second quarter 2014. Gross margin for the second quarter 2015 was 37.9%, compared to 34.5% for the second quarter 2014. For comparison purposes, excluding the impact from the one-time sale of Internet-enabled tablet devices recorded in the second quarter 2014, gross margin for the second quarter 2014 would have been 39.4%.
-- Teaching staff cost for the second quarter 2015 increased to $60.3
million, from $51.7 million in the second quarter 2014. As a percentage
of total net revenues, teaching staff cost was 49.7% and 42.8% for the
second quarters 2015 and 2014, respectively.
-- Rental cost for the second quarter 2015 was $10.6 million, unchanged
from the second quarter 2014. As a percentage of total net revenues,
rental costs were 8.7% and 8.8%, for the second quarters 2015 and 2014,
respectively.
-- Depreciation cost for the second quarter 2015 was $2.6 million, compared
to $3.1 million for the second quarter 2014.
Operating Expenses
Total operating expenses for the second quarter 2015 increased to $29.1 million from $23.3 million for the second quarter 2014. Total operating expenses for the second quarter 2015 accounted for 24.0% of total net revenues, compared to 19.3% for the second quarter 2014. Total non-GAAP operating expenses for the second quarter 2015 were $28.1 million, compared to $21.8 million for the same period in 2014. Total non-GAAP operating expenses for the second quarter 2015 comprised 23.1% of total net revenues, compared to 18.1% for the second quarter 2014.
General and administrative expenses for the second quarter 2015 increased 36.8% year-over-year to $18.1 million, from $13.2 million for the same period in 2014. The increase was mainly attributable to legal and advisory expenses associated with the Company's evaluation of the preliminary non-binding proposal received from Xiamen Insight Investment Co., Ltd., ("Insight") on April 20, 2015, and additional staff cost and office expenses as part of expanded business operations. Non-GAAP general and administrative expenses for the second quarter 2015 were $17.0 million, compared to $11.7 million for the same period in 2014. Non-GAAP general and administrative expenses for the second quarter 2015 accounted for 14.0% of total net revenues, compared to 9.7% for the second quarter 2014.
Sales and marketing expenses for the second quarter 2015 increased 9.5% year-over-year to $11.1 million, compared to $10.1 million for the same period in 2014. Sales and marketing expenses for the second quarter 2015 represented 9.1% of total net revenues, compared to 8.4% for the second quarter 2014.
Operating Income
Operating income for the second quarter 2015 was $16.8 million, compared to $18.3 million for the second quarter 2014. Non-GAAP operating income for the second quarter 2015 was $17.9 million, compared to $19.8 million for the second quarter 2014.
Net Income and Net Income per ADS
Net income attributable to Xueda Education Group for the second quarter 2015 was $10.7 million, compared to $15.3 million for the same period in 2014. Diluted net income attributable to Xueda Education Group per ADS for the second quarter 2015 was $0.17 per ADS, compared to $0.24 for the second quarter 2014.
Non-GAAP net income attributable to Xueda Education Group for the second quarter 2015 was $11.8 million, compared to $16.7 million for the second quarter 2014. Non-GAAP diluted net income attributable to Xueda Education Group per ADS for the second quarter 2015 was $0.19 per ADS, compared to $0.27 for the second quarter 2014.
Cash Flow
Net operating cash outflow for the second quarter 2015 was $13.6 million, compared to $19.7 million outflow for the second quarter 2014. The improvement in operating cash flow was mainly attributable to improved cash collections from increased effective student enrollment. Capital expenditures for the second quarter 2015 were $2.5 million, compared to $3.7 million for the second quarter 2014.
First Half 2015 Financial Results and Operating Results
Total Net Revenues
Total net revenues were $206.8 million for the first half 2015, an increase of 0.3% year-over-year from $206.1 million for the corresponding period in 2014.
-- Total new student sign-ups were 56,163 for the first half 2015, an
increase of 2.5% year-over-year, from 54,793 for the corresponding
period in 2014.
-- Average net revenue per student was $2,938 for the first half 2015,
compared to $3,095 for the corresponding period in 2014.
Cost of Revenues
Total cost of revenues were $139.2 million for the first half 2015, a decrease of 0.8% from $140.3 million for the corresponding period in 2014.
Gross Profit and Gross Margin
Gross profit was $67.6 million for the first half 2015, an increase of 2.8% year-over-year from $65.7 million for the corresponding period in 2014. For the first half 2015, gross margin was 32.7%, compared to 31.9% for the corresponding period in 2014. Excluding the impact of the one-time sale of Internet-enabled tablet devices recorded in the second quarter 2014, gross margin for the first half 2014 would have been 32.8%.
-- Teaching staff cost was 52.1% of total net revenues for the first half
2015, compared to 46.2% for the corresponding period in 2014.
-- Rental cost was 10.1% of total net revenues for the first half 2015,
nearly unchanged from 10.2% for the corresponding period in 2014. Total
number of learning centers at the end of the first half of 2015 was 499,
compared to 462 for the corresponding period in 2014.
Operating Expenses
Total operating expenses were $50.4 million for the first half 2015, an increase of 7.1% year-over-year from $47.1 million for the corresponding period in 2014. Total operating expenses accounted for 24.4% of total net revenues for the first half 2015, compared to 22.9% for the corresponding period in 2014.
General and administrative expenses were $31.3 million for the first half 2015, an increase of 9.8% year-over-year from $28.5 million for the corresponding period in 2014. The increase was primarily due to legal and advisory expenses associated with the Company's evaluation of the preliminary non-binding proposal received from Xiamen Insight on April 20, 2015, and additional staff cost and office expenses as part of expanded business operations. Selling and marketing expenses were $19.1 million for the first half 2015, compared to $18.6 million for the corresponding period in 2014.
Operating Income
Income from operations for the first half 2015 was $17.1 million, a decrease of 8.0% year-over-year from $18.6 million for the corresponding period in 2014. Non-GAAP income from operations for the first half 2015 was $19.2 million, a decrease of 16.2% from $22.9 million for the corresponding period in 2014. The decrease was primarily due to higher operating expenses in the first half 2015.
Net Income and Net Income per ADS
Net income attributable to Xueda Education Group for the first half 2015 was $11.7 million, a decrease of 28.8% year-over-year from $16.4 million for the corresponding period in 2014. Diluted net income attributable to Xueda Education Group per ADS for the first half 2015 was $0.19, compared to $0.25 for the corresponding period in 2014.
Non-GAAP net income attributable to Xueda Education Group for the first half 2015 was $13.8 million, compared to $20.7 million for the corresponding period in 2014. Non-GAAP diluted net income attributable to Xueda Education Group per ADS for the first half 2015 was $0.22, compared to $0.31 for the corresponding period in 2014.
Cash and Cash Flow
Net operating cash inflow for the first half 2015 was $19.4 million, compared to a cash outflow of $2.5 million for the corresponding period in 2014. The increase in net operating cash inflow was mainly attributable to increased cash collection from improved effective student enrollment and the reduction of promotional discount schemes. Capital expenditures for the first half 2015 were $5.3 million, compared to $7.1 million for the corresponding period in 2014.
Cash and Short-term Investments
As of June 30, 2015, the Company had cash, cash equivalents and short-term investments totaling $210.0 million compared to $208.5 million as of December 31, 2014. The increase was primarily attributable to higher cash collection from increased effective student enrollment.
Business Outlook
Considering the definitive merger agreement signed by the Company with Insight on July 26, 2015, the Company does not intend to issue any forward guidance or business outlook at this time.
Non-GAAP Financial Measures
To supplement the financial measures calculated in accordance with U.S. GAAP, this press release includes certain non-GAAP financial measures of adjusted cost of revenues, adjusted gross profit (loss), adjusted operating expenses, adjusted general and administrative expenses, adjusted selling and marketing expenses, adjusted operating income (loss), adjusted net income (loss) and adjusted diluted net income (loss) per ADS, each of which is adjusted to exclude share-based compensation expenses. The Company believes excluding such expenses from its non-GAAP financial measures is useful for its management and investors to assess and analyze the Company's core operating results as such expenses are not directly attributable to the underlying performance of the Company's business operations and do not impact its cash earnings. The Company also believes that these non-GAAP financial measures are important to help investors understand the Company's current financial performance and future prospects and compare business trends among different reporting periods on a consistent basis. These non-GAAP financial measures should be considered in addition to financial measures presented in accordance with U.S. GAAP, but should not be considered as a substitute for, or superior to, financial measures presented in accordance with U.S. GAAP. For a reconciliation of each of these non-GAAP financial measures to the most directly comparable U.S. GAAP financial measure, please see the financial information included elsewhere in this press release.
About Xueda Education Group
Xueda Education Group ("Xueda") is a leading national provider of personalized tutoring services for primary and secondary school students in China. For more information about Xueda, please visit http://ir.xueda.com.
Forward-looking Statements
All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current expectations, market and operating conditions, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," "targets" and similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks and uncertainties beyond our control, which could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. Further information regarding these and other risks, uncertainties or factors is included in our filings with the U.S. Securities and Exchange Commission. We do not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
Contact:
Xueda Education Group
Ross Warner
Tel: +86-10-6427-8899 ext. 6619
Email: investor_relations@xueda.com
Asia Bridge Capital Limited
Wendy Sun
Tel: +86-10-8556-9033 (China)
+1-888-550-8392 (U.S.)
Email: wendy.sun@asiabridgegroup.com
-tables to follow-
Xueda Education Group
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. Dollars)
As of
-----
June 30, 2015 December 31, 2014
------------- -----------------
(Unaudited) (Note)
Current assets:
Cash and cash equivalents $139,416 $113,825
Short-term investments 70,596 94,721
Prepaid expenses and other current assets 17,484 14,813
Amounts due from related parties - 170
Deferred tax assets-current 9,545 6,125
----- -----
Total current assets 237,041 229,654
------- -------
Property and equipment, net 29,016 30,433
Rental deposits 5,086 4,893
Goodwill 876 875
Long-term investments 12,935 9,010
Other noncurrent assets 3,528 4,084
----- -----
Total assets $288,482 $278,949
======== ========
Liabilities and shareholders' equity
Current liabilities:
Deferred revenue-current (including deferred 91,126 102,461
revenue of the consolidated VIE without
recourse to the Group of $91,126 and
$102,461 as of June 30, 2015 and December
31, 2014, respectively)
Accrued expenses and other current liabilities 44,201 32,473
(including accrued expenses and other
current liabilities of the consolidated VIE
without recourse to the Group of $37,752 and
$30,605 as of June 30, 2015 and December
31, 2014, respectively)
Income taxes payable (including income 17,095 9,064
taxes payable of the consolidated VIE
without recourse to the Group of $13,263 and
$8,632 as of June 30, 2015 and December 31,
2014, respectively)
Deferred income-current (including deferred 158 550
income of the consolidated VIE without
recourse to the Group of nil and nil as of June
30, 2015 and December 31, 2014,
respectively)
Amounts due to related parties (including 25 -
amounts due to related parties of the
consolidated VIE without recourse to the
Group of nil and nil as of June 30, 2015 and
December 31, 2014, respectively)
Total current liabilities 152,605 144,548
------- -------
Deferred revenue-noncurrent (including 20,959 23,687
deferred revenue of the consolidated VIE
without recourse to the Group of $20,959 and
$23,687 as of June 30, 2015 and December
31, 2014, respectively)
Total liabilities 173,564 168,235
======= =======
Total Xueda Education Group Shareholders' equity 115,075 110,793
------- -------
Noncontrolling interests (157) (79)
---- ---
Total equity 114,918 110,714
------- -------
Total liabilities and equity $288,482 $278,949
======== ========
Note: The above financial information as of December 31, 2014 is derived from Xueda Education Group's audited financial statements for the year ended December 31, 2014.
Xueda Education Group
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of U.S. Dollars, except number of ADSs and per ADS data)
Three Months Ended June 30, Six Months Ended June
30,
2015 2014 2015 2014
---- ---- ---- ----
Net revenues $121,339 $120,810 $206,769 $206,064
Cost of revenues(1) (75,400) (79,160) (139,193) (140,319)
Gross profit 45,939 41,650 67,576 65,745
------ ------ ------ ------
Operating expenses
General and administrative(1) (18,059) (13,202) (31,310) (28,507)
Selling and marketing(1) (11,074) (10,117) (19,128) (18,605)
Total operating expenses (29,133) (23,319) (50,438) (47,112)
------- ------- ------- -------
Income from operations 16,806 18,331 17,138 18,633
------ ------ ------ ------
Interest income 1,467 1,592 2,790 3,058
Income before income tax 18,273 19,923 19,928 21,691
expenses and loss in equity
method investment
---
Income tax expenses (7,079) (4,939) (7,646) (5,372)
Income after income tax 11,194 14,984 12,282 16,319
expenses before loss in equity
method investment
Loss in equity method investment (584) - (675) -
---- --- ---- ---
Net income 10,610 14,984 11,607 16,319
------ ------ ------ ------
Net loss attributable to non- 127 272 77 93
controlling interests, net of taxes
---
Net income attributable to 10,737 15,256 11,684 16,412
Xueda Education Group
Net income attributable to
Xueda Education Group per ADS:
Basic 0.17 0.25 0.19 0.26
Diluted 0.17 0.24 0.19 0.25
Weighted average ADS
numbers used in calculating net
income attributable to Xueda
Education Group per ADS:
Basic 62,596,787 61,919,516 62,356,308 64,350,949
Diluted 63,072,477 63,161,208 62,763,568 65,864,497
((1)) Includes the following amounts of share-based compensation expenses for the periods indicated:
Three Months Six Months
Ended Ended June
June 30, 30,
2015 2014 2015 2014
---- ---- ---- ----
Share-based compensation expenses included in:
Cost of revenues $8 $15 $16 $19
Selling and marketing expenses - 4 - 10
General and administrative expenses 1,068 1,471 2,050 4,276
----- ----- ----- -----
Total $1,076 $1,490 $2,066 $4305
====== ====== ====== =====
Xueda Education Group
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands of U.S Dollars)
Three Months Ended June 30, Six Months Ended June 30,
2015 2014 2015 2014
---- ---- ---- ----
Net income $10,610 $14,984 $11,607 $16,319
Other comprehensive income (loss), net of tax 192 377 239 (624)
of nil
---
Total comprehensive income $10,802 $15,361 $11,846 $15,695
Less: Comprehensive loss attributable to non- (127) (274) (78) (76)
controlling interests
---
Total comprehensive income attributable to $10,929 $15,635 $11,924 $15,771
Xueda Education Group
===
Xueda Education Group
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO THE MOST
COMPARABLE GAAP MEASURES
(in thousands of U.S Dollars, except number of ADS and per ADS data)
Three Months Ended June 30,
---------------------------
2015 2014
---- ----
Cost of revenues $(75,400) $(79,160)
Share-based compensation expense included in 8 15
cost of revenues
Non-GAAP cost of revenues (75,392) (79,145)
General and administrative expenses (18,059) (13,202)
Share-based compensation expense included in 1,068 1,471
general and administrative expenses
Non-GAAP general and administrative expenses (16,991) (11,731)
Selling and marketing expenses (11,074) (10,117)
Share-based compensation expense included in - 4
selling and marketing expenses
Non-GAAP selling and marketing expenses (11,074) (10,113)
Total operating expenses (29,133) (23,319)
Share-based compensation expenses 1,068 1,475
----- -----
Non-GAAP total operating expenses (28,065) (21,844)
Total cost of revenues and operating expenses (104,533) (102,479)
Share-based compensation expenses 1,076 1,490
----- -----
Non-GAAP cost of revenues and operating (103,457) (100,989)
expenses
Gross profit 45,939 41,650
Share-based compensation expenses 8 15
--- ---
Non-GAAP gross profit 45,947 41,665
Income from operations 16,806 18,331
Share-based compensation expenses 1,076 1,490
----- -----
Non-GAAP income from operations 17,882 19,821
Net income attributable to Xueda Education 10,737 15,256
Group
Share-based compensation expenses 1,076 1,490
----- -----
Non-GAAP net income attributable to Xueda 11,813 16,746
Education Group
Non-GAAP net income attributable to Xueda
Education Group per ADS:
Basic 0.19 0.27
Diluted 0.19 0.27
Weighted average ADS numbers used in
calculating non-GAAP net income attributable to Xueda Education Group per ADS:
Basic 62,596,787 61,919,516
Diluted 63,072,477 63,161,208
Xueda Education Group
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP MEASURES
(in thousands of U.S Dollars)
Six Months Ended June 30,
2015 2014
---- ----
Cost of revenues $(139,193) $(140,319)
Share-based compensation expense included in 16 19
cost of revenues
---
Non-GAAP cost of revenues (139,177) (140,300)
General and administrative expenses (31,310) (28,507)
Share-based compensation expense included in 2,050 4,276
general and administrative expenses
---
Non-GAAP general and administrative expenses (29,260) (24,231)
Selling and marketing expenses (19,128) (18,605)
Share-based compensation expense included in - 10
selling and marketing expenses
Non-GAAP selling and marketing expenses (19,128) (18,595)
Total operating expenses (50,438) (47,112)
Share-based compensation expenses 2,050 4,286
----- -----
Non-GAAP operating expenses (48,388) (42,826)
Total costs of revenues and operating expenses (189,631) (187,431)
Share-based compensation expenses 2,066 4,305
----- -----
Non-GAAP costs of revenues and operating (187,565) (183,126)
expenses
Gross profit 67,576 65,745
Share-based compensation expenses 16 19
--- ---
Non-GAAP gross profit 67,592 65,764
Income from operations 17,138 18,633
Share-based compensation expenses 2,066 4,305
----- -----
Non-GAAP income from operations 19,204 22,938
Net income attributable to Xueda Education Group 11,684 16,412
Share-based compensation expenses 2,066 4,305
----- -----
Non-GAAP net income attributable to Xueda 13,750 20,717
Education Group
Non-GAAP net income attributable to Xueda
Education Group per ADS:
Basic 0.22 0.32
Diluted 0.22 0.31
Weighted average ADS numbers used in
calculating non-GAAP net income attributable
to Xueda Education Group per ADS:
Basic 62,356,308 64,350,949
Diluted 62,763,568 65,864,497
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SOURCE Xueda Education Group
