Puxin Limited Announces First Quarter 2019 Unaudited Financial Results
BEIJING, May 20, 2019 /PRNewswire/ -- Puxin Limited (NYSE: NEW) ("Puxin" or the "Company"), a successful consolidator of the after-school education industry in China, today announced its unaudited financial results for the first quarter ended March 31, 2019.
First Quarter 2019 Financial and Operational Highlights
- Net revenues were RMB615.7 million (US$91.7 million), an increase of 24.2% from RMB495.7 million in the first quarter of 2018.
- Operating loss was RMB136.5 million (US$20.3 million), a decrease of 58.1% from RMB325.8 million in the first quarter of 2018.
- Adjusted operating loss[1] was RMB41.8 million (US$6.2 million), an increase of 3.6% from RMB40.4 million in the first quarter of 2018.
- Net loss attributable to Puxin Limited was RMB248.8 million (US$37.1 million), a decrease of 29.9% from RMB355.0 million in the first quarter of 2018.
- Adjusted net loss attributable to Puxin Limited[2] was RMB73.8 million (US$11.0 million), an increase of 63.8% from RMB45.0 million in the first quarter of 2018.
- Adjusted EBITDA[3] was RMB(16.9) million (US$(2.5) million), a decrease of 10.8% from RMB(19.0) million in the first quarter of 2018.
- Cash and cash equivalents were RMB666.6 million (US$99.3 million), compared with RMB778.0 million as of December 31, 2018.
- Student enrollments increased by 54.1% to 402,061 from 260,973 in the first quarter of 2018.
Mr. Yunlong Sha, Chairman and Chief Executive Officer of Puxin, commented, "We started off the year strongly with net revenues growing 24.2% year-over-year to RMB615.7 million, significantly exceeding the high-end of our guidance, while our net loss attributable to Puxin Limited narrowed by 29.9% from the same period last year. In particular, revenues from K-12 education rose 38% year-over-year, mainly driven by our efforts to strengthen organic growth in student enrollment. Gross profit for the quarter increased by 26% year-over-year while our gross margin expanded above 45%. Although we slowed the pace of acquisitions late last year in response to changes in the regulatory environment, student enrollments during the quarter increased by 54.1%, while our retention rate reached 81.3%, which we believe demonstrates the solid integration of schools that we have acquired over the past few years. We have worked diligently to implement a structured management approach, and improve and standardize both the teaching quality and materials in all of the new classrooms that we acquire. It also highlights the enormous organic growth potential of our existing schools, our strong operational capabilities, and the increasing trust parents have in our educational services. With our unique 'acquisition plus integration' model, in addition to the launch of our online education business in the fourth quarter of last year, we are looking forward to further exploring an Online-Merge-Offline, or "OMO", model in the education market in China.
Financial Results for the First Quarter of 2019
Net Revenues
Net revenues increased by 24.2% to RMB615.7 million (US$91.7 million) from RMB495.7 million in the first quarter of 2018. This increase was primarily driven by increases in student enrollments. Student enrollments increased by 54.1% to 402,061 from 260,973 in the same period of 2018.
Cost of Revenues
Cost of revenues increased by 22.7% to RMB335.6 million (US$50.0 million) from RMB273.5 million in the same period of 2018, primarily due to an increase in teacher compensation. Cost of revenues, excluding share-based compensation expenses, increased by 22.6% to RMB334.2 million (US$49.8 million) from RMB272.5 million in the first quarter of 2018.
Gross Profit and Gross Margin
Gross profit was RMB280.1 million (US$41.7 million), an increase of 26.0% from RMB222.3 million in the same period of 2018. Gross margin was 45.5%, compared with 44.8% for the same period in 2018.
Operating Expenses
Total operating expenses decreased by 24.0% to RMB416.6 million (US$62.1 million) from RMB548.0 million in the first quarter of 2018.
Selling expenses increased by 35.2% to RMB222.6 million (US$33.2 million) from RMB164.6 million in the first quarter of 2018. Selling and marketing expenses, excluding share-based compensation expenses, increased by 32.7% to RMB215.5 million (US$32.1 million) from RMB162.4 million in the first quarter of 2018. The increases were primarily due to increases in selling and marketing staff compensation.
General and administrative expenses decreased by 49.4% to RMB194.0 million (US$28.9 million) from RMB383.4 million during the same period of 2018. The decrease was primarily due to a decrease in share-based compensation expenses. General and administrative expenses, excluding share-based compensation expenses, increased by 6.5% to RMB107.8 million (US$16.1 million) from RMB101.2 million in the first quarter of 2018.
Total share-based compensation expenses allocated to related operating costs and expenses decreased by 66.8% to RMB94.7 million (US$14.1 million) from RMB285.4 million in the same period of 2018. The decrease was primarily due to less new grants of options to employees in the first quarter of 2019.
Operating Loss and Operating Margin
Operating loss decreased by 58.1% to RMB136.5 million (US$20.3 million) from RMB325.8 million in the first quarter of 2018.
Operating margin was (22.2)% in the first quarter of 2019, compared with (65.7)% for the same period in 2018.
Adjusted operating loss was RMB41.8 million (US$6.2 million), compared with RMB40.4 million in the first quarter of 2018.
Adjusted operating margin was (6.8)%, compared with (8.1)% in the same period of the prior year.
Net Loss
Net loss attributable to Puxin Limited decreased by 29.9% to RMB248.8 million (US$37.1 million) from RMB355.0 million during the first quarter of 2018. Basic and diluted net loss per ADS attributable to Puxin Limited were RMB3.02 (US$0.44), compared with RMB6.10 during the same period of 2018.
Adjusted net loss attributable to Puxin Limited was RMB73.8 million (US$11.0 million), compared with RMB45.0 million during the same period of 2018. Adjusted basic and diluted net loss per ADS attributable to Puxin Limited[4] were RMB0.90 (US$0.13), compared with RMB0.78 during the same period of 2018.
EBITDA
EBITDA decreased by 41.7% to RMB(191.9) million (US$(28.6) million) from RMB(328.9) million in the first quarter of 2018.
EBITDA margin was (31.2)% in the first quarter of 2019, compared with (66.4)% for the same period in 2018.
Adjusted EBITDA was RMB(16.9) million (US$(2.5) million), compared with RMB(19.0) million in the first quarter of 2018.
Adjusted EBITDA margin was (2.7)%, compared with (3.8)% in the same period of the prior year.
Cash and cash equivalents
As of March 31, 2019, the Company had total cash and cash equivalents of RMB666.6 million (US$99.3 million), compared with RMB778.0 million as of December 31, 2018.
Business Outlook
For the second quarter of 2019, based on the information available as of the date of this press release, the Company expects net revenues to be between RMB611.0 million and RMB637.6 million, which represents an increase of 15% to 20% year-over-year. These forecasts reflect the Company's current and preliminary views on the market and operational conditions, which are subject to change.
Conference Call Information
Puxin's management team will hold a conference call on May 20, 2019 at 8:00 AM U.S. Eastern Time (or 8:00 PM on the same day, Beijing/Hong Kong Time) following the quarterly results announcement. Participants may access the call by dialing the following numbers:
International: |
+1-412-902-4272 |
China: |
4001-201203 |
US: |
+1-888-346-8982 |
Hong Kong: |
+852-301-84992 |
Passcode: |
Puxin |
Please dial in 10 minutes before the call is scheduled to begin. When prompted, ask to be connected to the Puxin Limited Call. Participants will be required to state their name and company upon entering the call.
A replay of the conference call will be accessible two hours after the conclusion of the conference call through May 27, 2019 by dialing the following numbers:
International: |
+1-412-317-0088 |
US: |
+1-877-344-7529 |
Passcode: |
10131688 |
A live webcast and archive of the conference call will be available on the Investor Relations section of Puxin's website at http://ir.pxjy.com/.
Exchange Rate
The Company's business is primarily conducted in China and all of the revenues are denominated in Renminbi ("RMB"). This announcement contains translations of certain RMB amounts into U.S. dollars ("USD") at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to USD are made at the rate of RMB6.7112 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on March 29, 2019. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on March 29, 2019, or at any other rate.
Use of Non-GAAP Financial Measures
To supplement the Company's financial results presented in accordance with U.S. GAAP, the Company also uses non-GAAP financial measures, including adjusted operating loss, adjusted net loss attributable to Puxin Limited, EBITDA, adjusted EBITDA, adjusted basic and diluted net loss per ADS attributable to Puxin Limited, as supplemental measures to review and assess the Company's operating performance. Adjusted operating loss is defined as operating loss excluding share-based compensation expenses; adjusted net loss attributable to Puxin Limited is defined as net loss attributable to Puxin Limited excluding share-based compensation expenses, loss on changes in fair value of convertible notes, derivative liabilities and warrants and loss on extinguishment of convertible notes; EBITDA is defined as net loss excluding depreciation, amortization, interest expense, interest income and income tax (benefits) expenses; adjusted EBITDA is defined as net loss excluding depreciation, amortization, interest expense, interest income, income tax (benefits) expenses, share-based compensation expenses, loss on changes in fair value of convertible notes, derivative liabilities and warrants and loss on extinguishment of convertible notes, and adjusted basic and diluted net loss per ADS attributable to Puxin Limited are defined as basic and diluted net loss per ADS attributable to Puxin Limited excluding share-based compensation expenses, loss on changes in fair value of convertible notes, derivative liabilities and warrants and loss on extinguishment of convertible notes.
The Company believes that these non-GAAP financial measures provide useful information about the Company's operating results, enhance the overall understanding of the Company's past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company's management in its financial and operational decision-making.
Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. These non-GAAP financial measures have limitations as analytical tools, and when assessing the Company's operating performance, investors should not consider them in isolation. In addition, calculations of this non-GAAP financial information may be different from calculations used by other companies, and therefore comparability may be limited.
The Company mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating our performance.
For more information on this non-GAAP financial measure, please see the table captioned "Reconciliations of GAAP and non-GAAP results" set forth at the end of this press release.
Safe Harbor Statement
This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and 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. The Company may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following: its goals and strategies, its ability to achieve and maintain profitability, its ability to attract and retain students to enroll in its courses, its ability to effectively manage its business expansion and successfully integrate businesses it acquired, its ability to identify or pursue targets for acquisitions, its ability to compete effectively against its competitors, its ability to improve the content of its existing courses or to develop new courses, and relevant government policies and regulations relating to the Company's corporate structure, business and industry. 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 current as of the date of the press release, and the Company does not undertake any obligation to update such information, except as required under applicable law.
About Puxin Limited
Puxin Limited ("Puxin" or the "Company") is a successful consolidator of the after-school education industry in China. Puxin has a strong acquisition and integration expertise to effectively improve education quality and operational performance of acquired schools. Puxin offers a full spectrum of K-12 and study-abroad tutoring programs designed to help students achieve academic excellence, as well as prepare for admission tests and applications for top schools, universities and graduate programs in China and other countries. The Company has developed a business model effectively combining strategic acquisitions and organic growth achieved through successful post-acquisition integration, which has differentiated the Company from other after-school education service providers in China. For more information, please visit http://www.pxjy.com/.
Contacts
Puxin Limited
Phone: +86-10-6269-8930
E-mail: [email protected]
Christensen
In China
Mr. Christian Arnell
Phone: +86-10-5900-1548
E-mail: [email protected]
In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: [email protected]
[1] Adjusted operating loss is a non-GAAP financial measure, which is defined as operating 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. |
[2] Adjusted net loss attributable to Puxin Limited is a non-GAAP financial measure, which is defined as net loss attributable to Puxin Limited excluding share-based compensation expenses and loss on changes in fair value of convertible notes, derivative liabilities and warrants and loss on extinguishment of convertible notes. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release. |
[3] EBITDA is a non-GAAP financial measure, which is defined as net loss excluding depreciation, amortization, interest expense, interest income and income tax (benefits) expenses; adjusted EBITDA is a non-GAAP financial measure, which is defined as net loss excluding depreciation, amortization, interest expense, interest income, income tax (benefits) expenses, share-based compensation expenses, loss on changes in fair value of convertible notes, derivative liabilities and warrants and loss on extinguishment of convertible notes. 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 loss per ADS attributable to Puxin Limited is a non-GAAP financial measure, which is defined as basic and diluted net loss per ADS attributable to Puxin Limited excluding share-based compensation expenses, loss on changes in fair value of convertible notes, derivative liabilities and warrants and loss on extinguishment of convertible notes. See "Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP and non-GAAP results" elsewhere in this earnings release. |
PUXIN LIMITED |
|||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
|||
(In thousands of RMB and USD, except for share, per share and per ADS data) |
|||
As of December 31 |
As of March 31 |
||
2018 |
2019 |
2019 |
|
RMB |
RMB |
USD |
|
ASSETS |
|||
Current assets |
|||
Cash and cash equivalents |
778,006 |
666,614 |
99,329 |
Restricted cash, current portion |
- |
100,668 |
15,000 |
Inventories |
9,659 |
9,380 |
1,398 |
Prepaid expenses and other current assets |
128,638 |
84,921 |
12,654 |
Total current assets |
916,303 |
861,583 |
128,381 |
Non-current assets |
|||
Restricted cash, non-current portion |
40,971 |
39,539 |
5,891 |
Operating lease right-of-use assets |
- |
781,704 |
116,478 |
Property, plant and equipment, net |
248,801 |
250,267 |
37,291 |
Intangible assets |
218,978 |
211,611 |
31,531 |
Goodwill |
1,243,817 |
1,247,517 |
185,886 |
Deferred tax assets |
3,456 |
1,684 |
251 |
Rental deposit |
64,693 |
63,059 |
9,396 |
TOTAL ASSETS |
2,737,019 |
3,456,964 |
515,105 |
LIABILITIES |
|||
Current liabilities |
|||
Accrued expenses and other current liabilities (including accrued |
515,623 |
560,441 |
83,509 |
Income tax payable of the consolidated VIE without recourse to the |
15,755 |
12,725 |
1,896 |
Deferred revenue, current portion (including deferred revenue, |
876,861 |
834,962 |
124,413 |
Operating lease liabilities, current portion (including operating lease |
- |
165,902 |
24,720 |
Amounts due to related parties (including amounts due to related |
54,493 |
46,898 |
6,988 |
Bank borrowing of the consolidated VIE without recourse to the |
106,600 |
191,100 |
28,475 |
Promissory notes, current portion (including promissory notes, |
361,888 |
357,780 |
53,311 |
Total current liabilities |
1,931,220 |
2,169,808 |
323,312 |
PUXIN LIMITED |
|||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
|||
(In thousands of RMB and USD, except for share, per share and per ADS data) |
|||
As of December 31 |
As of March 31 |
||
2018 |
2019 |
2019 |
|
RMB |
RMB |
USD |
|
Non-current liabilities |
|||
Deferred revenue, non-current portion of the consolidated VIE |
121,191 |
131,441 |
19,585 |
Operating lease liabilities, non-current portion of the consolidated |
- |
555,170 |
82,723 |
Deferred tax liabilities of the consolidated VIE without recourse |
71,031 |
69,076 |
10,293 |
Franchise deposits of the consolidated VIE without recourse to |
1,763 |
1,793 |
267 |
Derivative liabilities (including derivative liabilities of the |
63,942 |
142,277 |
21,200 |
TOTAL LIABILITIES |
2,189,147 |
3,069,565 |
457,380 |
SHAREHOLDERS' EQUITY |
|||
Ordinary shares (par value of USD0.00005 per share; |
62 |
62 |
9 |
Additional paid-in capital |
1,944,325 |
2,039,076 |
303,832 |
Statutory reserve |
4,595 |
4,595 |
685 |
Accumulated other comprehensive income |
68,214 |
61,750 |
9,201 |
Accumulated deficit |
(1,469,303) |
(1,718,081) |
(256,002) |
Total Puxin Limited shareholders' equity |
547,893 |
387,402 |
57,725 |
Non-controlling interest |
(21) |
(3) |
- |
TOTAL SHAREHOLDERS' EQUITY |
547,872 |
387,399 |
57,725 |
TOTAL LIABILITIES AND TOTAL SHAREHOLDERS' EQUITY |
2,737,019 |
3,456,964 |
515,105 |
PUXIN LIMITED |
|||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||
(In thousands of RMB and USD, except for share, per share and per ADS data) |
|||
For the three months ended March 31, |
|||
2018 |
2019 |
2019 |
|
RMB |
RMB |
USD |
|
Net revenues |
495,708 |
615,675 |
91,738 |
Cost of revenues (including share-based compensation expenses of |
273,458 |
335,599 |
50,006 |
Gross profit |
222,250 |
280,076 |
41,732 |
Operating expenses: |
|||
Selling expenses (including share-based compensation expenses of |
164,647 |
222,634 |
33,174 |
General and administrative expenses (including share-based |
383,373 |
193,985 |
28,904 |
Total operating expenses |
548,020 |
416,619 |
62,078 |
Operating loss |
(325,770) |
(136,543) |
(20,346) |
Interest expense |
5,040 |
30,039 |
4,476 |
Interest income |
103 |
766 |
114 |
Foreign exchange loss |
- |
189 |
28 |
Loss on changes in fair value of convertible notes, derivative |
23,665 |
80,262 |
11,959 |
Loss on extinguishment of convertible notes |
900 |
- |
- |
Loss before income taxes |
(355,272) |
(246,267) |
(36,695) |
Income tax (benefits) expenses |
(223) |
2,493 |
371 |
Net loss |
(355,049) |
(248,760) |
(37,066) |
Less: Net (loss) income attributable to non-controlling interest |
(25) |
18 |
3 |
Net loss attributable to Puxin Limited |
(355,024) |
(248,778) |
(37,069) |
Net loss per share attributable to Puxin Limited |
|||
Basic and diluted |
(3.05) |
(1.51) |
(0.22) |
Net loss per ADS attributable to Puxin Limited |
|||
Basic and diluted |
(6.10) |
(3.02) |
(0.44) |
Weighted average shares used in calculating basic and diluted net loss per |
116,364,575 |
165,041,823 |
165,041,823 |
Note: Each ADS represents two ordinary shares. |
|||
PUXIN LIMITED |
|||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS |
|||
(In thousands of RMB and USD) |
|||
For the three months ended March 31, |
|||
2018 |
2019 |
2019 |
|
RMB |
RMB |
USD |
|
Net loss |
(355,049) |
(248,760) |
(37,066) |
Other comprehensive income (loss), net of tax: |
|||
Change in cumulative foreign currency translation adjustments |
19,272 |
(6,464) |
(963) |
Total comprehensive loss |
(335,777) |
(255,224) |
(38,029) |
Less: comprehensive (loss) income attributable to non-controlling interest |
(25) |
18 |
3 |
Total comprehensive loss attributable to Puxin Limited |
(335,752) |
(255,242) |
(38,032) |
PUXIN LIMITED |
|||
RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS |
|||
(In thousands of RMB and USD, except for share, per share and per ADS data) |
|||
For the three months ended March 31, |
|||
2018 |
2019 |
2019 |
|
RMB |
RMB |
USD |
|
Operating loss |
(325,770) |
(136,543) |
(20,346) |
Add: Share-based compensation expenses |
285,414 |
94,748 |
14,118 |
Adjusted operating loss |
(40,356) |
(41,795) |
(6,228) |
Net loss attributable to Puxin Limited |
(355,024) |
(248,778) |
(37,069) |
Add: Share-based compensation expenses |
285,414 |
94,748 |
14,118 |
Add: Loss on changes in fair value of convertible notes, derivative |
23,665 |
80,262 |
11,959 |
liabilities and warrants |
|||
Add: Loss on extinguishment of convertible notes |
900 |
- |
- |
Adjusted net loss attributable to Puxin Limited |
(45,045) |
(73,768) |
(10,992) |
Net loss |
(355,049) |
(248,760) |
(37,066) |
Add: Income tax (benefits) expenses |
(223) |
2,493 |
371 |
Depreciation of property, plant and equipment |
13,347 |
17,306 |
2,579 |
Amortization of intangible assets |
8,052 |
7,767 |
1,157 |
Interest expense |
5,040 |
30,039 |
4,476 |
Interest income |
(103) |
(766) |
(114) |
EBITDA |
(328,936) |
(191,921) |
(28,597) |
Add: Share-based compensation expenses |
285,414 |
94,748 |
14,118 |
Loss on changes in fair value of convertible notes, |
23,665 |
80,262 |
11,959 |
derivative liabilities and warrants |
|||
Loss on extinguishment of convertible notes |
900 |
- |
- |
Adjusted EBITDA |
(18,957) |
(16,911) |
(2,520) |
Net loss per ADS attributable to Puxin Limited |
|||
- Basic and diluted |
(6.10) |
(3.02) |
(0.44) |
Adjusted net loss per ADS attributable to Puxin Limited |
|||
- Basic and diluted |
(0.78) |
(0.90) |
(0.13) |
Weighted average shares used in calculating basic and diluted |
116,364,575 |
165,041,823 |
165,041,823 |
net loss per share |
|||
Note: Each ADS represents two ordinary shares |
|||
SOURCE Puxin Limited
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