BEIJING, Oct. 25, 2016 /PRNewswire/ -- New Oriental Education
and Technology Group Inc. (the "Company" or "New Oriental") (NYSE: EDU), the largest provider of private educational services in
China, today announced its unaudited financial results for the first fiscal quarter ended
August 31, 2016, which is the first quarter of New Oriental's fiscal year 2017.
Financial Highlights for the First Fiscal Quarter Ended August 31, 2016
- Total net revenues increased by 16.5% year-over-year to US$534.1 million for the first fiscal
quarter of 2017.
- Operating income increased by 17.5% year-over-year to US$152.6 million for the first fiscal
quarter of 2017.
- Net income attributable to New Oriental increased by 9.7% year-over-year to US$141.1 million
for the first fiscal quarter of 2017.
Key Financial Results
|
(in thousands US$, except per ADS(1) data)
|
1Q FY2017
|
1Q FY2016
|
% of change
|
|
Net revenues
|
534,069
|
458,489
|
16.5%
|
|
Operating income
|
152,584
|
129,846
|
17.5%
|
|
Non-GAAP operating income (2)(3)
|
153,465
|
133,595
|
14.9%
|
|
Net income attributable to New Oriental
|
141,062
|
128,543
|
9.7%
|
|
Non-GAAP net income attributable to New Oriental
(2)(3)
|
141,943
|
132,292
|
7.3%
|
|
Net income per ADS attributable to New Oriental - basic
|
0.90
|
0.82
|
9.1%
|
|
Net income per ADS attributable to New Oriental - diluted
|
0.89
|
0.82
|
9.2%
|
|
Non-GAAP net income per ADS attributable to New Oriental -
basic(3)(4)
|
0.90
|
0.84
|
6.7%
|
|
Non-GAAP net income per ADS attributable to New Oriental -
diluted(3)(4)
|
0.90
|
0.84
|
6.7%
|
|
|
|
|
|
(1) Each ADS represents one common share.
|
|
(2) GAAP represents Generally Accepted Accounting Principles in
the United States of America.
|
|
(3) New Oriental provides net income attributable to New
Oriental, operating income and net income per ADS attributable to New Oriental on a non-GAAP basis that excludes
share-based compensation expenses to provide supplemental information regarding its operating performance. For more
information on these non-GAAP financial measures, please see the section captioned "About Non-GAAP Financial Measures"
and the tables captioned "Reconciliations of Non-GAAP Measures to the Most Comparable GAAP Measures" set forth at the end
of this release.
|
|
(4) The Non-GAAP net income per ADS is computed using Non-GAAP
net income and the same number of shares and ADSs used in GAAP basic and diluted EPS calculation.
|
Operating Highlights for the First Fiscal Quarter Ended August 31, 2016
- Total student enrollments in academic subjects tutoring and test preparation courses increased by 31.2% year-over-year to
approximately 1,326,300 for the first fiscal quarter of 2017.
- The total number of schools and learning centers was 771 as of August 31, 2016, an increase
of 50 compared to 721 as of August 31, 2015, and an increase of 23 compared to 748 as of
May 31, 2016. The total number of schools was 67 as of August 31,
2016.
Michael Minhong Yu, New Oriental's Executive Chairman, commented, "We are very pleased with
what was a very strong start to fiscal year 2017. Top line growth for the first quarter was 16.5%, or 23.7% in our functional
currency Renminbi, exceeding the high end of our expected range and driven largely by a healthy 31.2% increase in student
enrollments. Our K-12 all-subjects after-school tutoring business continued its strong momentum during the quarter, with revenue
up approximately 28% and enrollment up approximately 46% year-over-year. Further, our U-Can middle and high school all-subjects
after-school tutoring business grew approximately 23% year-over-year, and the revamped POP Kids program delivered a
year-over-year revenue increase of approximately 39%. By all accounts, this is a very solid start to the new fiscal year."
Chenggang Zhou, New Oriental's Chief Executive Officer, added, "We have also maintained focus
on executing our now well-proven "Optimize the Market" strategy, which has been guiding us effectively since fiscal year 2015. We
are intent on maintaining a healthy balance between top line and bottom line growth, while at the same time investing in building
out our online and offline (O2O) integrated education ecosystem. As part of this approach, we opened a new school in the city of
Baoding and added a net of 22 learning centers in existing cities, adding a total of approximately 49,000 square meters of
classroom area which represents about 4% capacity expansion. To complement this offline expansion, we continued to roll out a
sophisticated O2O integrated education system, including new POP Kids program and U-Can Visible Progress Teaching system in all
existing cities. We also launched the O2O system for overseas test preparation business, such as IELTS, TOEFL and SAT programs,
in seven large cities in China. In addition, our pure online education platform, Koolearn.com,
recorded a revenue growth of 45% year-over-year in the quarter, with an 80% increase in registered users and a 38% increase in
paid users."
Stephen Zhihui Yang, New Oriental's Chief Financial Officer, commented, "We are greatly
encouraged by not only the strong revenue performance but also the continued improvement of operational efficiency. During the
first quarter, operating income increased by 17.5% year- over-year to approximately US$152.6
million, even while we investing heavily in customer acquisition. In order to rapidly acquire grade 7 student customers
before they start the first year of secondary school, we rolled out a large scale promotion this summer, by offering low price
experiential courses for multiple subjects in Beijing and Shanghai and math courses in approximately 25 other cities. Despite the promotion costs, the operating
margin for the first quarter increased by 30 basis points to 28.6% from 28.3% a year ago. The margin expansion was largely driven
by improved utilization of facilities and effective cost control within the organization. We will continue our efforts to enhance
efficiency and productivity and believe that will contribute greatly to building long term value for our customers and
shareholders."
Financial Results for the First Fiscal Quarter Ended August 31, 2016
Net Revenues
For the first fiscal quarter of 2017, New Oriental reported net revenues of US$534.1 million,
representing a 16.5% increase year-over-year. Net revenues from educational programs and services for the first fiscal quarter
were US$494.3 million, representing a 17% increase year-over-year. The growth was mainly driven by
increases in student enrollments in K-12 after-school tutoring courses.
Total student enrollments in academic subjects tutoring and test preparation courses in the first fiscal quarter of 2017
increased by 31.2% year-over-year to approximately 1,326,300.
Operating Costs and Expenses
Operating costs and expenses for the quarter were US$381.5 million, representing a 16.1%
increase year-over-year. Non-GAAP operating costs and expenses for the quarter, which exclude share-based compensation expenses,
were US$380.6 million, representing a 17.1% increase year-over-year.
- Cost of revenues increased by 18.5% year-over-year to US$203.4 million, primarily due
to increases in teachers' compensation for more teaching hours.
- Selling and marketing expenses increased by 18.4% year-over-year to US$58.5 million,
primarily due to increases in brand promotion expenses and selling and marketing staff's compensation.
- General and administrative expenses for the quarter increased by 11.2% year-over-year to US$119.7 million. Non-GAAP general and administrative expenses, which exclude share-based compensation
expenses, were US$118.8 million, representing a 14.3% increase year-over-year.
Total share-based compensation expenses, which were allocated to related operating costs and expenses, decreased by 76.5% to
US$0.9 million in the first fiscal quarter of 2017.
Operating Income and Operating Margin
Operating income was US$152.6 million, representing a 17.5% increase year-over-year. Non-GAAP
income from operations for the quarter was US$153.5 million, representing a 14.9% increase
year-over-year.
Operating margin for the quarter was 28.6%, compared to 28.3% in the same period of the prior fiscal year. Non-GAAP operating
margin, which excludes share-based compensation expenses, for the quarter was 28.7%, compared to 29.1% in the same period of the
prior fiscal year.
Net Income and EPS
Net income attributable to New Oriental for the quarter was US$141.1 million, representing a
9.7% increase from the same period of the prior fiscal year. Basic and diluted earnings per ADS attributable to New Oriental were
US$0.90 and US$0.89, respectively.
Non-GAAP Net Income and Non-GAAP EPS
Non-GAAP net income attributable to New Oriental for the quarter was US$141.9 million,
representing a 7.3% increase from the same period of the prior fiscal year. Non-GAAP basic and diluted earnings per ADS
attributable to New Oriental were US$0.90 and US$0.90,
respectively.
Cash Flow
Net operating cash flow for the first fiscal quarter of 2017 was approximately US$187.6 million.
Capital expenditures for the quarter were US$25.4 million, which were primarily attributable to the
opening of 45 new learning centers and renovations at existing learning centers.
Balance Sheet
As of August 31, 2016, New Oriental had cash and cash equivalents of US$591.1 million, as compared to US$709.2 million as of May 31, 2016. In addition, the Company had US$96.3 million in term deposits,
US$1,133.6 million in short-term investment and US$41.8 million in
long-term held-to-maturity investments due within one year consisting of trusts guaranteed by a bank and expected to mature
within one year from August 31, 2016.
New Oriental's deferred revenue balance, which is cash collected from registered students for courses and recognized
proportionally as revenue as the instructions are delivered, at the end of the first quarter of fiscal year 2017 was US$657.1 million, an increase of 28.4% as compared to US$511.7 million at the end
of the first quarter of fiscal year 2016.
Outlook for Second Quarter of Fiscal Year 2017
New Oriental expects total net revenues in the second quarter of fiscal year 2017 (September 1,
2016 to November 31, 2016) to be in the range of US$324.6 million to
US$335.1 million, representing year-over-year growth in the range of 17% to 21%.
The projected growth rate of revenue in our functional currency Renminbi is expected to be in the range of 23% to 27% for the
second quarter of fiscal year 2017.
This forecast reflects New Oriental's current and preliminary view, which is subject to change.
Conference Call Information
New Oriental's management will host an earnings conference call at 8 AM on October 25, 2016, U.S. Eastern Time (8 PM on October 25,
2016, Beijing/Hong Kong Time).
Dial-in details for the earnings conference call are as follows:
|
US:
|
+1-845-675-0437
|
|
Hong Kong:
|
+852-3018-6771
|
|
UK:
|
+44-20-3621-4779
|
Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call. The passcode is
"New Oriental Earnings Call."
A replay of the conference call may be accessed by phone at the following number until November 2,
2016:
|
International:
|
+61-2-8199-0299
|
|
Passcode:
|
80911934
|
Additionally, a live and archived webcast of the conference call will be available at http://investor.neworiental.org.
About New Oriental
New Oriental is the largest provider of private educational services in China based on the
number of program offerings, total student enrollments and geographic presence. New Oriental offers a wide range of educational
programs, services and products consisting primarily of English and other foreign language training, test preparation courses for
major admissions and assessment tests in the United States, the PRC and Commonwealth countries,
primary and secondary school education, development and distribution of educational content, software and other technology, and
online education. New Oriental's ADSs, each of which represents one common share, currently trade on the New York Stock Exchange
under the symbol ''EDU.''
For more information about New Oriental, please visit http://english.neworiental.org.
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 for the second quarter of fiscal year 2017, quotations from management in this announcement, as well as New
Oriental's strategic and operational plans, contain forward-looking statements. New Oriental 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. Statements that are not historical facts, including statements about New Oriental'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: our ability to attract students without a significant decrease in course fees; our ability to continue
to hire, train and retain qualified teachers; our ability to maintain and enhance our "New Oriental" brand; our ability to
effectively and efficiently manage the expansion of our school network and successfully execute our growth strategy; the outcome
of ongoing, or any future, litigation or arbitration, including those relating to copyright and other intellectual property
rights; competition in the private education sector in China; changes in our revenues and certain cost or expense items as a
percentage of our revenues; the expected growth of the Chinese private education market; Chinese governmental policies relating
to private educational services and providers of such services; health epidemics and other outbreaks in China; and general
economic conditions in China. Further information regarding these and other risks is included in our annual report on Form 20-F
and other documents filed with the Securities and Exchange Commission. New Oriental does not undertake any obligation to update
any forward-looking statement, except as required under applicable law. All information provided in this press release and in the
attachments is as of the date of this press release, and New Oriental undertakes no duty to update such information, except as
required under applicable law.
About Non-GAAP Financial Measures
To supplement New Oriental's consolidated financial results presented in accordance with GAAP, New Oriental uses the following
measures defined as non-GAAP financial measures by the SEC: net income excluding share-based compensation expenses, operating
income excluding share-based compensation expenses, operating costs and expenses excluding share-based compensation expenses,
general and administrative expenses excluding share-based compensation expenses, operating margin excluding share-based
compensation expenses, and basic and diluted net income per ADS and per share excluding share-based compensation expenses. The
presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the
financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures,
please see the tables captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" set forth at the end
of this release.
New Oriental believes that these non-GAAP financial measures provide meaningful supplemental information regarding its
performance and liquidity by excluding share-based compensation expenses that may not be indicative of its operating performance
from a cash perspective. New Oriental believes that both management and investors benefit from referring to these non-GAAP
financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial
measures also facilitate management's internal comparisons to New Oriental's historical performance and liquidity. New Oriental
computes its non-GAAP financial measures using the same consistent method from quarter to quarter. New Oriental believes these
non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information
used by management in its financial and operational decision making. A limitation of using these non-GAAP measures is that they
exclude share-based compensation charge that has been and will continue to be for the foreseeable future a significant recurring
expense in our business. Management compensates for these limitations by providing specific information regarding the GAAP
amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP
financial measures that are most directly comparable to non-GAAP financial measures.
Contacts
For investor and media inquiries, please contact:
In China:
Ms. Cara O'Brien
FTI Consulting
Tel: +852-3768-4537
Email: cara.obrien@fticonsulting.com
Ms. Sisi Zhao
New Oriental Education and Technology Group Inc.
Tel: +86-10-6260-5568
Email: zhaosisi@xdf.cn
|
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(In thousands)
|
|
As of August 31
|
|
As of May 31
|
|
2016
|
|
2016
|
|
(Unaudited)
|
|
(Unaudited)
|
|
USD
|
|
USD
|
|
ASSETS:
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
591,081
|
|
709,209
|
|
Restricted cash, current
|
965
|
|
110
|
|
Term deposits
|
96,345
|
|
86,706
|
|
Short term investments
|
1,133,634
|
|
819,229
|
|
Accounts receivable, net
|
3,277
|
|
3,747
|
|
Inventory
|
29,339
|
|
27,303
|
|
Prepaid expenses and other current assets
|
104,745
|
|
99,677
|
|
Amounts due from related parties, current
|
5,274
|
|
4,539
|
|
Long term investments due within one year
|
41,757
|
|
118,816
|
|
Total current assets
|
2,006,417
|
|
1,869,336
|
|
|
|
|
|
Property, plant and equipment, net
|
250,667
|
|
237,698
|
|
Land use rights, net
|
3,822
|
|
3,906
|
|
Amounts due from related parties, non-current
|
1,867
|
|
1,741
|
|
Deferred tax assets, non-current
|
14,526
|
|
24,341
|
|
Long term deposit
|
17,236
|
|
14,901
|
|
Long term prepaid rent
|
364
|
|
235
|
|
Restricted cash, non-current
|
3,864
|
|
3,811
|
|
Intangible assets
|
2,314
|
|
2,618
|
|
Goodwill
|
10,390
|
|
10,545
|
|
Long term investments
|
199,248
|
|
178,863
|
|
Other non-current asset
|
-
|
|
6,839
|
|
Total assets
|
2,510,715
|
|
2,354,834
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable (including accounts payable of the consolidated
VIE without recourse to New Oriental of US$21,318 and
US$24,087 as of May 31, 2016 and August 31, 2016,
respectively)
|
24,367
|
|
21,395
|
|
Accrued expenses and other current liabilities (including accrued
expenses and other current liabilities of the consolidated VIE
without recourse to New Oriental of US$192,332 and
US$189,857 as of May 31, 2016 and August 31, 2016,
respectively)
|
215,298
|
|
217,044
|
|
Income taxes payable (including income tax payable of the
consolidated VIE without recourse to New Oriental of US$30,899 and
US$41,180 as of May 31, 2016 and August 31, 2016,
respectively)
|
42,802
|
|
32,806
|
|
Amounts due to related parties (including amounts due to related
parties of the consolidated VIE without recourse to New Oriental of
US$29 and US$41 as of May 31, 2016 and August 31, 2016,
respectively)
|
41
|
|
42
|
|
Deferred revenue (including deferred revenue of the consolidated
VIE without recourse to New Oriental of US$616,299 and
US$654,032 as of May 31, 2016 and August 31, 2016,
respectively)
|
657,098
|
|
646,903
|
|
|
|
|
|
Total current liabilities
|
939,606
|
|
918,190
|
|
|
|
|
|
Deferred tax liabilities (including deferred tax liabilities of the
consolidated VIE without recourse to New Oriental of US$1,432 and
US$1,392 as of May 31, 2016 and August 31, 2016,
respectively)
|
1,870
|
|
1,982
|
|
|
|
|
|
Total long-term liabilities
|
1,870
|
|
1,982
|
|
|
|
|
|
Total liabilities
|
941,476
|
|
920,172
|
|
|
|
|
|
Noncontrolling interests
|
33,927
|
|
30,090
|
|
|
|
|
|
Total New Oriental Education & Technology Group Inc.
shareholders' equity
|
1,535,312
|
|
1,404,572
|
|
|
|
|
|
Total shareholders' equity
|
1,569,239
|
|
1,434,662
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
2,510,715
|
|
2,354,834
|
|
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(In thousands except for per share and per ADS amounts)
|
|
|
|
|
|
For the Three Months Ended August 31
|
|
2016
|
|
2015
|
|
(Unaudited)
|
|
(Unaudited)
|
|
USD
|
|
USD
|
|
Net Revenues:
|
|
|
|
|
Educational programs and services
|
494,307
|
|
422,351
|
|
Books and others
|
39,762
|
|
36,138
|
|
Total net revenues
|
534,069
|
|
458,489
|
|
|
|
|
|
Operating costs and expenses (note 1):
|
|
|
|
|
Cost of revenues
|
203,370
|
|
171,651
|
|
Selling and marketing
|
58,465
|
|
49,377
|
|
General and administrative
|
119,650
|
|
107,615
|
|
Total operating costs and expenses
|
381,485
|
|
328,643
|
|
Operating Income
|
152,584
|
|
129,846
|
|
|
|
|
|
Other income, net
|
14,047
|
|
17,675
|
|
|
|
|
|
Provision for income taxes
|
(22,711)
|
|
(17,939)
|
|
Loss from equity method investments
|
(1,837)
|
|
(998)
|
|
Net income
|
142,083
|
|
128,584
|
|
|
|
|
|
Net gain attributable to the noncontrolling interests
|
(1,021)
|
|
(41)
|
|
|
|
|
|
Net income attributable to New Oriental Education & Technology Group
Inc.
|
141,062
|
|
128,543
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to New Oriental-
Basic
|
0.90
|
|
0.82
|
|
|
|
|
|
Net income per share attributable to New Oriental-
Diluted
|
0.89
|
|
0.82
|
|
|
|
|
|
Net income per ADS attributable to New Oriental-Basic
(note 2)
|
0.90
|
|
0.82
|
|
|
|
|
|
Net income per ADS attributable to New Oriental-
Diluted (note 2)
|
0.89
|
|
0.82
|
|
|
|
|
|
Other comprehensive income, net of tax
|
(15,602)
|
|
(33,930)
|
|
Comprehensive income
|
126,481
|
|
94,654
|
|
Comprehensive income attributable to New Oriental
Education & Technology Group Inc.
|
125,013
|
|
94,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
|
|
|
Note 1: Share-based compensation expenses (in thousands) are included in
the
operating costs and expenses as follows:
|
|
|
|
|
|
For the Three Months Ended August 31
|
|
2016
|
|
2015
|
|
(Unaudited)
|
|
(Unaudited)
|
|
USD
|
|
USD
|
|
General and administrative
|
881
|
|
3,749
|
|
Total
|
881
|
|
3,749
|
|
|
|
|
|
|
Note 2: Each ADS represents one common share.
|
|
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.
|
|
RECONCILIATION OF NON-GAAP MEASURES TO THE MOST COMPARABLE
GAAP MEASURES
|
|
(In thousands except for per share and per ADS amounts)
|
|
|
|
For the Three Months Ended August 31
|
|
2016
|
|
2015
|
|
(Unaudited)
|
|
(Unaudited)
|
|
USD
|
|
USD
|
|
|
|
|
|
General and administrative expenses
|
119,650
|
|
107,615
|
|
Share-based compensation expense in general
and administrative expenses
|
881
|
|
3,749
|
|
Non-GAAP general and administrative
expenses
|
118,769
|
|
103,866
|
|
|
|
|
|
Total operating costs and expenses
|
381,485
|
|
328,643
|
|
Share-based compensation expenses
|
881
|
|
3,749
|
|
Non-GAAP operating costs and expenses
|
380,604
|
|
324,894
|
|
|
|
|
|
Operating income
|
152,584
|
|
129,846
|
|
Share-based compensation expenses
|
881
|
|
3,749
|
|
Non-GAAP operating income
|
153,465
|
|
133,595
|
|
|
|
|
|
Operating margin
|
28.6%
|
|
28.3%
|
|
Non-GAAP operating margin
|
28.7%
|
|
29.1%
|
|
|
|
|
|
Net income attributable to New Oriental
|
141,062
|
|
128,543
|
|
Share-based compensation expenses
|
881
|
|
3,749
|
|
Non-GAAP net income
|
141,943
|
|
132,292
|
|
|
|
|
|
Net income per ADS attributable to New
Oriental- Basic (note 2)
|
0.90
|
|
0.82
|
|
Net income per ADS attributable to New
Oriental- Diluted (note 2)
|
0.89
|
|
0.82
|
|
|
|
|
|
Non-GAAP net income per ADS attributable
to New Oriental - Basic (note 2)
|
0.90
|
|
0.84
|
|
Non-GAAP net income per ADS attributable
to New Oriental - Diluted (note 2)
|
0.90
|
|
0.84
|
|
|
|
|
|
Weighted average shares used in calculating
basic net income per ADS (note 2)
|
157,447,723
|
|
156,562,405
|
|
Weighted average shares used in calculating
diluted net income per ADS (note 2)
|
157,829,525
|
|
157,010,006
|
|
|
|
|
|
Non-GAAP income per share - basic
|
0.90
|
|
0.84
|
|
Non-GAAP income per share - diluted
|
0.90
|
|
0.84
|
|
|
|
|
|
Note 2: Each ADS represents one common share.
|
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/new-oriental-announces-results-for-the-first-fiscal-quarter-ended-august-31-2016-300350389.html
SOURCE New Oriental Education and Technology Group Inc.