RISE Education Announces Second Quarter 2018 Unaudited Financial Results


BEIJING, Aug. 16, 2018 (GLOBE NEWSWIRE) --

RISE Education Cayman Ltd ("RISE" or the “Company”) (NASDAQ: REDU), a leading junior English Language Training (“ELT”) provider in China, today announced its unaudited financial results for the second quarter ended June 30, 2018.

Financial and Operational Highlights

  • Total revenues increased by 32.4% year-over-year to RMB300.2 million (US$45.4 million) in the second quarter of 2018.
  • Net income attributable to RISE increased by 34.3% year-over-year to RMB42.7 million (US$6.5 million) in the second quarter of 2018.
  • Non-GAAP net income attributable to RISE1 increased by 43.3% year-over-year to RMB45.6 million (US$6.9 million) in the second quarter of 2018.
  • Adjusted EBITDA1 increased by 34.8% year-over-year to RMB75.5 million (US$11.4 million) in the second quarter of 2018.
  • Total number of student enrollments in self-owned learning centers and online courses, including enrollments of short-term courses, increased by 67.3% year-over-year to 14,419 in the second quarter of 2018 from 8,619 in the second quarter of 2017.
  • Student retention rate at self-owned learning centers increased to approximately 71% in the second quarter of 2018, compared with 70% in the second quarter of 2017.

  
 Three Months Ended
June 30,
(in thousands RMB, except for percentage and per ADS data)2017 2018 Pct. Change
Revenues226,777 300,196 32.4%
Net income attributable to RISE31,825 42,743 34.3%
Non-GAAP net income attributable to RISE31,825 45,597 43.3%
Net income per ADS attributable to RISE – basic0.64 0.75 17.2%
Net income per ADS attributable to RISE – diluted0.64 0.74 15.6%
Non-GAAP net income per ADS attributable to RISE – basic0.64 0.80 25.0%
Non-GAAP net income per ADS attributable to RISE – diluted0.64 0.79 23.4%
Adjusted EBITDA55,978 75,486 34.8%


 Six Months Ended
June 30,
(in thousands RMB, except for percentage and per ADS data)2017 2018 Pct. Change
Revenues437,100 570,325 30.5%
Net income attributable to RISE60,088 78,564 30.7%
Non-GAAP net income attributable to RISE60,088 84,450 40.5%
Net income per ADS attributable to RISE – basic1.20 1.39 15.8%
Net income per ADS attributable to RISE – diluted1.20 1.36 13.3%
Non-GAAP net income per ADS attributable to RISE – basic1.20 1.49 24.2%
Non-GAAP net income per ADS attributable to RISE – diluted1.20 1.46 21.7%
Adjusted EBITDA109,562 144,391 31.8%
      

“We are pleased to deliver another robust quarter of strong financial and operating performances,” stated Mr. Yiding Sun, Chief Executive Officer of RISE. “During the second quarter, we opened four new self-owned learning centers and 19 new franchised centers, bringing the total number of learning centers up to 307. Our student enrollments, including those from online courses and short-term courses, increased by 67.3% year-over-year, and our student retention rate at self-owned learning centers remained at 71%. As we diligently execute our growth strategy of integrating online with offline education products, integrating test preparation with admission consulting services into existing course offerings, continuously monitoring the appropriate M&A targets, and strengthening our product coverage to the whole lifespan of K-12 education, we are confident that we will be able to sustain our high growth rate while maintaining our high service quality and student satisfaction.”

Ms. Chelsea Wang, Chief Financial Officer of RISE, stated, “We continued our growth trajectory during the second quarter of 2018. We increased our total revenues by 32.4% year-over-year and our non-GAAP net income by 43.3% year-over-year during the quarter. Since the beginning of the third quarter, we have increased our investment in sales and marketing to drive future enrollment growth. At the same time, we are striving to optimize the ROI of our marketing dollars through the efficient management of our existing and new marketing channels, as well as the introduction of short-term course offerings to attract trial students. We are confident that our growth strategies should yield excellent shareholder value over the long run.”

1 Non-GAAP net income attributable to RISE excludes share-based compensation expenses from net income attributable to RISE. EBITDA represents net income before interests, taxes, depreciation and amortization. Adjusted EBITDA excludes share-based compensation expenses from EBITDA. For details on the calculation of and reconciliation to each of the non-GAAP net income attributable to RISE, non-GAAP net income per ADS attributable to RISE, EBITDA and adjusted EBITDA, see “About Non-GAAP Financial Measures” and “Reconciliation of GAAP and Non-GAAP Results.”

Financial Results for the Second Fiscal Quarter Ended June 30, 2018

Revenues
Total revenues for the second quarter of 2018 increased by RMB73.4 million, or 32.4%, to RMB300.2 million (US$45.4 million) from RMB226.8 million in the same period of the prior year. This increase was primarily attributable to an increase of RMB59.5 million in revenues from educational programs.

  • Revenues from educational programs for the second quarter of 2018 increased by 29.9% to RMB258.6 million (US$39.1 million), which was primarily due to an increase in the number of student enrollments at our self-owned learning centers and online courses. The increase in student enrollments was primarily attributable to (i) a higher student retention rate of 71% in this quarter comparing with 70%in the same period of the prior year, which we believe was partially driven by the Company’s established brand and continuous offerings of reputable products; and (ii) an increase in the number of self-owned learning centers from 56 as of June 30, 2017 to 68 as of June 30, 2018.
  • Franchise revenues for the second quarter of 2018 increased by 20.9% to RMB33.2 million (US$5.0 million), primarily due to (i) an increase in recurring franchise fees during the same period and (ii) a 25.8% increase in the number of franchised learning centers from 190 as of June 30, 2017 to 239 as of June 30, 2018.
  • Other revenues for the second quarter of 2018 were RMB8.5 million (US$1.3 million) compared with RMB0.3 million in the same period of the prior year. The increase was primarily due to the revenue derived from the business acquired from The Edge Learning Centers Limited, or The Edge, in the fourth quarter of 2017

Cost of Revenues
Cost of revenues for the second quarter of 2018 increased by RMB37.1 million, or 37.2%, to RMB136.8 million (US$20.7 million), primarily due to increases in rental costs and personnel costs. Rental costs increased as the Company expanded its operations. The increase in personnel costs was primarily attributable to an increase of total teaching hours at the Company’s self-owned learning centers, as well as the increase in the number of self-owned learning centers. Non-GAAP cost of revenues for the second quarter of 2018 was RMB136.8 million (US$20.7 million).

Gross Profit
Gross profit for the second quarter of 2018 increased by RMB36.3 million, or 28.6%, to RMB163.4 million (US$24.7 million). Gross margin for the second quarter of 2018 was 54.4%.

Operating Expenses
Total operating expenses for the second quarter of 2018 increased by RMB22.1 million, or 26.5%, to RMB105.7 million (US$16.0 million). Non-GAAP operating expenses2 for the second quarter of 2018 were RMB102.9 million (US$15.6 million).

  • Selling and marketing expenses increased by 25.6% year-over-year RMB50.2 million (US$7.6 million) for the second quarter of 2018, compared with RMB39.9 million for the second quarter of 2017. The increase was primarily due to the increase in personnel expenses and marketing channel expenses as the Company expanded its network of self-owned learning centers and increased student enrollments. Non-GAAP selling and marketing expenses2 for the second quarter of 2018 was RMB49.5 million (US$7.5 million).
  • General and administrative expenses for the second quarter of 2018 were RMB55.5 million (US$8.4 million), increased by 27.3% year-over-year, from RMB43.6 million for the second quarter of 2017. The increase was mainly attributable to the increase in personnel costs and office expenses due to the expansion of our business. Non-GAAP general and administrative expenses2 for the second quarter of 2018 were RMB53.4 million (US$8.1 million).

Operating Income and Operating Margin
Operating income for the second quarter of 2018 increased by 32.7% year-over-year to RMB57.7 million (US$8.7 million). Non-GAAP operating income2 for the second quarter of 2018 increased by 39.2% year-over-year to RMB60.5 million (US$9.1 million).

Operating margin for the second quarter of 2018 remained stable at 19.2%, compared with the same period of the prior year.

Interest Expense
Interest expense for the second quarter of 2018 was RMB8.0 million (US$1.2 million), compared with RMB4.7 million in the same period of the prior year. The increase in interest expense was primarily due to a higher principal of the Company’s loan from CTBC Bank Co. Ltd. (“CTBC”), which was expanded in September 2017.

Other Income
Other income for the second quarter of 2018 was RMB0.8 million (US$0.1 million), compared with a loss of RMB0.3 million in the same period of the prior year.

Net Income Attributable to RISE
Net income attributable to RISE for the second quarter of 2018 increased by 34.3% to RMB42.7 million (US$6.5 million). Net margin attributable to RISE in the second quarter of 2018 improved to 14.2% from 14.0% in the same period of the prior year. Non-GAAP net income attributable to RISE for the second quarter of 2018 increased by 43.3% year-over-year to RMB45.6 million (US$6.9 million). Non-GAAP net margin attributable to RISE2 expanded to 15.2% during the quarter from 14.0% in the same period of the prior year.

EBITDA2 for the second quarter of 2018 increased by 29.8% to RMB72.6 million (US$11.0 million) from RMB56.0 million in the same period of the prior year. Adjusted EBITDA for the second quarter of 2018 increased by 34.8% year-over-year to RMB75.5 million (US$11.4 million) from RMB56.0 million in the same period of the prior year. Adjusted EBITDA margin2 expanded to 25.1% in the second quarter of 2018, from 24.7% in the same period of the prior year.

2 Non-GAAP cost of revenues exclude relevant share-based compensation expenses from cost of revenues. Each of non-GAAP operating expenses, non-GAAP selling and marketing expenses or non-GAAP general and administrative expenses excludes relevant share-based compensation expenses. EBITDA represents net income before interests, taxes, depreciation and amortization. For details on the calculation of and reconciliation to each of these non-GAAP, see “About Non-GAAP Financial Measures” and “Reconciliation of GAAP and Non-GAAP Results.”

Basic and Diluted Earnings per ADS
Basic and diluted net income attributable to RISE per ADS was RMB0.75 (US$0.11) and RMB0.74 (US$0.11), respectively, for the second quarter of 2018. Basic and diluted non-GAAP net income attributable to RISE per ADS was RMB0.80 (US$0.12) and RMB0.79 (US$0.12), respectively, for the second quarter of 2018.

For details on the calculation of and reconciliation to the nearest GAAP measures for each of non-GAAP cost of revenues, operating expenses, net income, net income attributable to RISE per ADS, EBITDA, and adjusted EBITDA, see “About Non-GAAP Financial Measures” and “Reconciliation of GAAP and Non-GAAP Results.”

Cash Flow
Net cash provided by operating activities for the second quarter of 2018 was RMB34.4 million (US$5.2 million), compared with RMB3.0 million of cash generated from operating activities in the same period of the prior year.   

Balance Sheet
As of June 30, 2018, the Company had combined cash and cash equivalents, restricted cash and short-term investment of RMB1,086.3 million (US$164.2 million), compared with RMB1,084.9 million as of December 31, 2017.

Current and non-current deferred revenue and customer advances was RMB1,031.7 million (US$155.9 million) as of June 30, 2018, representing an increase of 26.9% from RMB812.8 million as of December 31, 2017. The increase was primarily due to higher pre-paid tuition and fees from growing student enrollment, which was partially offset by recognized revenue as courses were delivered. Deferred revenue and customer advances mainly consisted of upfront tuition fee payments from students and initial franchise fees from the Company’s franchise partners.

Financial Results for the Six Months Ended June 30, 2018

Revenues
Total revenues for the first half of 2018 increased 30.5% to RMB570.3 million (US$86.2 million) from RMB437.1 million in the same period of the prior year. This increase was primarily attributable to an increase of RMB107.0 million in revenues from educational programs.

  • Revenues from educational programs for the first half of 2018 increased by 28.3% to RMB484.8 million (US$73.3 million) from RMB377.8 million in the same period of the prior year. This increase was primarily due to the same factors that led to the quarterly increase.
  • Franchise revenues for the first half of 2018 increased by 17.9% to RMB61.4 million (US$9.3 million) from RMB52.0 million in the same period of the prior year. This increase was primarily due to the same factors that led to the quarterly increase.
  • Other revenues for the first half of 2018 increased by 230.7% to RMB24.2 million (US$3.7 million) from RMB7.3 million in the same period of the prior year. The increase was primarily due to the revenue contribution from business assets acquired from The Edge, in the fourth quarter of 2017.

Cost of Revenues
Cost of revenues for the first half of 2018 increased 33.8% to RMB262.3 million (US$39.6 million) from RMB196.1 million in the same period of the prior year, which was primarily due to the increase in rental costs and personnel costs. Rental costs increased as the Company expanded its operations. The increase in personnel costs was primarily attributable to an increase in teaching hours at self-owned learning centers, as well as the increase in the number of self-owned learning centers. Non-GAAP cost of revenues for the first six months of 2018 was RMB261.8 million (US$39.6 million).

Gross Profit
Gross profit for the first half of 2018 increased by 27.8% to RMB308.0 million (US$46.5 million) from RMB241.0 million in the same period of the prior year. Gross margin was 54.0% for the first half of 2018, compared with 55.1% in the same period of the prior year.

Operating Expenses
Total operating expenses for the first half of 2018 increased by 33.6% to RMB208.6 million (US$31.5 million) from RMB156.2 million in the same period of the prior year. The increase was mainly attributable to the increase in personnel costs and office expenses due to the expansion of our business. Non-GAAP operating expenses for the first half of 2018 were RMB203.2 million (US$30.7 million).

  • Selling and marketing expenses for the first half of 2018 increased by 38.5% year-over-year to RMB98.7 million (US$14.9 million) from RMB71.2 million in the same period of the prior year. The increase was primarily due to the increase in personnel expenses and marketing channel expenses as the Company expanded its network of self-owned learning centers and increased student enrollments. Non-GAAP selling and marketing expenses for the first half of 2018 was RMB97.4 million (US$14.7 million).
  • General and administrative expenses for the first half of 2018 increased by 29.4% year-over-year to RMB109.9 million (US$16.6 million) from RMB84.9 million in the same period of the prior year. The increase was mainly attributable to the increase in personnel costs and office expenses due to the expansion of our business. Non-GAAP general and administrative expenses for the first half of 2018 were RMB105.8 million (US$16.0 million).

Operating Income and Operating Margin
Operating income for the first half of 2018 increased by 17.2% year-over-year to RMB99.4 million (US$15.0 million). Non-GAAP operating income for the first half of 2018 increased by 39.2% year-over-year to RMB105.3 million (US$15.9 million).

Operating margin was 17.4% during the first half of 2018, compared with 19.4% in the same period of the prior year. 

Interest Expense
Interest expense for the first half of 2018 was RMB16.2 million (US$2.5 million), compared with RMB9.9 million in the same period of the prior year. The increase in interest expense was primarily due to a higher principal of the Company’s loan from CTBC Bank Co. Ltd. (“CTBC”), which was expanded in September 2017.

Other Income
Other income for the first half of 2018 was RMB11.7 million (US$1.8 million), compared with a loss of RMB0.1 million in the same period of the prior year. The Company’s ADR depositary reimbursed the Company a total of RMB10.0 million in consideration in the first quarter of 2018.

Net Income Attributable to RISE
Net income attributable to RISE for the first half of 2018 increased by 30.7% to RMB78.6 million (US$11.9 million). Net margin attributable to RISE in the first half of 2018 expanded to 13.8% from 13.7% in the same period of the prior year. Non-GAAP net income attributable to RISE for the first half of 2018 increased by 40.5% year-over-year to RMB84.5 million (US$12.8 million). Non-GAAP net margin attributable to RISE expanded to 14.8% in the first half of 2018 from 13.7% in the same period of the prior year.

EBITDA for the first half of 2018 increased by 26.4% to RMB138.5 million (US$20.9 million) from RMB109.6 million in the same period of the prior year. Adjusted EBITDA for the first half of 2018 increased by 31.8% to RMB144.4 million (US$21.8 million) from RMB109.6 million in the same period of the prior year. Adjusted EBITDA margin improved to 25.3% in the first half of 2018 from 25.1% in the same period of the prior year.

Basic and Diluted Earnings per ADS
Basic and diluted net income attributable to RISE per ADS was RMB1.39 (US$0.21) and RMB1.36 (US$0.21), respectively, for the first half of 2018. Basic and diluted non-GAAP net income attributable to RISE per ADS was RMB1.49 (US$0.23) and RMB1.46 (US$0.22), respectively, for the first half of 2018.

Cash Flow
Net cash provided by operating activities for the first half of 2018 was RMB232.8 million (US$35.2 million), compared with RMB259.8 million in the same period of the prior year. The decrease was mainly attributable to the repayment of consulting fee of RMB20 million (US$3.0 million) to Bain Capital Advisors (China) Ltd., a related party of the Company, as well as an increase in rental deposits for new self-owned learning centers.

Business Outlook
For the third quarter of 2018, the Company expects its total revenues to be in the range of RMB343.2 million to RMB348.4 million, representing a year-over-year growth rate of approximately 32% to 34%. This forecast reflects the Company's current and preliminary view on the market and operational conditions, which is subject to change.

Conference Call Information
RISE will hold a conference call on August 16, 2018 at 9:00 pm Eastern Time (or August 17, 2018 at 9:00 am Beijing Time) to discuss the financial results. Participants may access the call by dialing the following numbers:

United States:+1-845-675-0437
International:+65-6713-5090
China Domestic:               400-6208-038
Hong Kong:+852-3018-6771
Conference ID:#6297338

The replay will be accessible through August 24, 2018 by dialing the following numbers:

United States:+1-646-254-3697
International:+61-2-8199-0299
Conference ID:                 #6297338

A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.risecenter.com/.

Exchange Rate
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 stated, all translations from RMB to USD were made at the rate of RMB6.6171 to US$1.00, the noon buying rate in effect on June 30, 2018 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.

About Non-GAAP Financial Measures
To supplement RISE’s financial results presented in accordance with U.S. GAAP, the Company uses non-GAAP financial measures, which are adjusted from results based on U.S. GAAP. Reconciliations of non-GAAP financial measures to U.S. GAAP financial measures are set forth in table at the end of this earnings release titled “Reconciliation of GAAP and Non-GAAP Results,” which provides more details on the non-GAAP financial measures.

Each of non-GAAP net income, non-GAAP net income attributable to RISE, non-GAAP net income per ADS attributable to RISE, excludes share-based compensation expenses from net income.

Non-GAAP cost of revenues, non-GAAP operating expenses, including non-GAAP selling and marketing expenses and non-GAAP general and administrative expenses, provides us with an understanding of the results from the primary operations of our business by excluding the relevant share-based compensation expenses that does not reflect the ordinary operating expenses of our operations.

EBITDA represents net income before interests, taxes, depreciation and amortization. Adjusted EBITDA excludes share-based compensation expenses from EBITDA.

We use non-GAAP operating expenses, including non-GAAP selling and marketing expenses and non-GAAP general and administrative expenses, non-GAAP operating income, EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income attributable to RISE, and basic and diluted non-GAAP net income per ADS attributable to RISE to evaluate our period-over-period operating performance because our management believes these provide a more comparable measure of our continuing business as it adjusts for transaction-related expenses that are not reflective of the normal earnings of our business. These measures may be useful to an investor in evaluating the underlying operating performance of our business, and to enhance investors’ overall understanding of the historical and current financial performance of the Company’s continuing operations and prospects for the future.

Non-GAAP financial information should not be considered a substitute for or superior to U.S. GAAP results. In addition, calculations of this non-GAAP financial information may be different from calculations used by other companies, and therefore comparability may be limited.

About RISE Education
RISE Education Cayman Ltd is a leading junior English Language Training (“ELT”) provider based in Beijing. Founded in 2007, the Company pioneered the application of the “subject-based learning” philosophy in China, which uses language arts, math, natural science, and social science to teach English in an immersive environment that helps students learn to speak and think like a native speaker. Through three flagship courses, Rise Start, Rise On, and Rise Up, the Company provides ELT to students aged three to six, seven to twelve and 13 to 18, respectively. The Company’s highly scalable business model includes both self-owned and franchised learning centers. For more information, please visit http://en.risecenter.com/.

Safe Harbor Statement
This press release contains statements of a forward-looking nature. These statements, including the statements relating to the Company’s future financial and operating results, are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as “will,” “expects,” “believes,” “anticipates,” “intends,” “estimates” and similar statements. Among other things, management’s quotations and the Business Outlook section contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about RISE and the industry. Potential risks and uncertainties include, but are not limited to, those relating to its ability to attract new students and retain existing students, its ability to maintain or enhance its brand, its ability to compete effectively against its competitors, its ability to execute its growth strategy, its ability to introduce new products or enhance existing products, its ability to obtain required licenses, permits, filings or registrations, its ability to grow or operate or effectively monitor its franchise business, quarterly variations in its operating results caused by factors beyond its control and macroeconomic conditions in China and their potential impact on the sales of insurance products. All information provided in this press release is as of the date hereof, and RISE undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although RISE believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Further information regarding risks and uncertainties faced by RISE is included in RISE’s filings with the U.S. Securities and Exchange Commission, including its registration statement on Form F-1 filed in connection with its initial public offering.

Investor Relations Contact

Mei Li
RISE Education
Email: riseir@rdchina.net
Tel: +86 (10) 8559-9160

Jack Wang
ICR, Inc.
Tel: +1 (347) 436-8371
Email: riseir@rdchina.net

Media Relations Contact

Edmond Lococo 
ICR Inc.
Tel: +86 (10) 6583-7510
Email: Edmond.Lococo@icrinc.com

RISE EDUCATION CAYMAN LTD
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data and per share data)
 As of
 December 31 June 30 June 30
 2017 2018 2018
 RMB RMB USD
ASSETS     
Current assets:     
Cash and cash equivalents1,055,982  858,339  129,715 
Restricted cash28,913  27,963  4,226 
Short-term investment-  200,000  30,225 
Accounts receivable, net2,470  5,685  859 
Amounts due from a related party6,604  150,183  22,696 
Inventories7,905  13,503  2,041 
Prepaid expenses and other current assets40,571  68,073  10,287 
Total current assets1,142,445   1,323,746   200,049  
Property and equipment, net100,177  110,292  16,668 
Intangible assets, net200,615  196,410  29,682 
Goodwill475,732  480,229  72,574 
Deferred tax assets2,404  15,488  2,341 
Other non-current assets34,965  41,685  6,300 
Total assets1,956,338   2,167,850   327,614  
      
LIABILITIES AND SHAREHOLDERS’ EQUITY     
Current liabilities:     
Accounts payable6,041  14,617  2,209 
Accrued expenses and other current liabilities171,099  142,074  21,471 
Due to a related party20,000  -  - 
Deferred revenue and customer advances812,821  1,002,230  151,461 
Income taxes payable20,739  24,128  3,646 
Total current liabilities1,030,700   1,183,049   178,787  
Long-term loan623,439  559,023  84,482 
Deferred revenue and customer advances-  29,511  4,460 
Deferred tax liabilities3,785  9,874  1,492 
Other non-current liabilities2,682  2,232  337 
Total liabilities1,660,606   1,783,689   269,558  
      
Shareholders’ equity:     
Ordinary shares6,782  7,060  1,067 
Additional paid-in capital532,474  585,247  88,445 
Statutory reserves46,366  46,366  7,007 
Accumulated deficit(315,531) (281,089) (42,479)
Accumulated other comprehensive income40,040  41,502  6,272 
Total Rise Education Cayman Ltd shareholders’ equity310,131   399,086   60,312  
Non-controlling interests(14,399) (14,925) (2,256)
Total equity295,732   384,161   58,056  
Total liabilities, non-controlling interests and shareholders’ equity1,956,338   2,167,850   327,614  


RISE EDUCATION CAYMAN LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except share data and per share data)
             
  Three Months Ended June 30, Six Months Ended June 30,
  2017 2018 2018 2017 2018 2018
  RMB RMB USD RMB RMB USD
Revenues 226,777   300,196   45,367   437,100   570,325   86,190  
Educational programs 199,038  258,575  39,077  377,759  484,769  73,260 
Franchise revenues 27,420  33,151  5,010  52,025  61,361  9,273 
Others 319  8,470  1,280  7,316  24,195  3,656 
Cost of revenues (99,763) (136,842) (20,680) (196,079) (262,309) (39,641)
Gross profit 127,014   163,354   24,687   241,021   308,016   46,548  
Selling and marketing expenses (39,937) (50,158) (7,580) (71,243) (98,680) (14,913)
General and administrative expenses (43,613) (55,538) (8,393) (84,921) (109,896) (16,608)
Operating income 43,464   57,658   8,713   84,857   99,440   15,027  
Interest income 6,832  8,457  1,278  9,438  12,663  1,914 
Interest expense (4,740) (8,043) (1,215) (9,907) (16,248) (2,455)
Foreign currency exchange gain 215  117  18  198  145  22 
Other income, net (288) 813  123  (136) 11,721  1,771 
Income before income tax expense 45,483   59,002   8,917   84,450   107,721   16,279  
Income tax expense (14,047) (15,690) (2,371) (26,623) (29,683) (4,486)
Net income 31,436   43,312   6,545   57,827   78,038   11,793  
Add: net loss/(income) attributable to non-controlling interests 389  (569) (86) 2,261  526  79 
Net income attributable to RISE Education Cayman Ltd 31,825   42,743   6,459   60,088   78,564   11,873  
             
Net income per ordinary share:            
Basic 0.32  0.37  0.06  0.60  0.69  0.10 
Diluted 0.32  0.37  0.06  0.60  0.68  0.10 
             
Net  income per ADS:            
Basic 0.64  0.75  0.11  1.20  1.39  0.21 
Diluted 0.64  0.74  0.11  1.20  1.36  0.21 
             
Shares used in net  income per ordinary share computation:            
Basic 100,000,000  114,035,580  114,035,580  100,000,000  113,228,870  113,228,870 
Diluted 100,000,000  116,100,409  116,100,409  100,000,000  115,736,692  115,736,692 
             
ADSs used in net  income per ADS computation:            
Basic 50,000,000  57,017,790  57,017,790  50,000,000  56,614,435  56,614,435 
Diluted 50,000,000  58,050,205  58,050,205  50,000,000  57,868,346  57,868,346 
             
Net income 31,436   43,312   6,545   57,827   78,038   11,793  
Other comprehensive  (loss)/income, net of tax of nil:            
Foreign currency translation adjustments (920) 1,236  187  (920) 1,463  221 
Other comprehensive (loss)/income (920) 1,236   187   (920) 1,463   221  
Comprehensive  income 30,516   44,548   6,732   56,907   79,501   12,014  
Add: comprehensive loss/(income) attributable to non-controlling interests 389  (569) (86) 2,261  526  79 
Comprehensive income attributable to RISE Education Cayman Ltd 30,905   43,979   6,646   59,168   80,027   12,093  

 

RISE EDUCATION CAYMAN LTD
RECONCILIATION OF GAAP AND NON-GAAP RESULTS
(in thousands, except share data and per share data)
             
  Three Months Ended June 30, Six Months Ended June 30,
  2017 2018  2018  2017 2018 2018
  RMB RMB USD RMB RMB USD
Net income 31,436 43,312  6,545  57,827 78,038 11,793
Share-based compensation ("SBC") - 2,854  431    5,886 889
Non-GAAP net income 31,436  46,166   6,976   57,827  83,924  12,682
Add: net loss/(income) attributable to non-controlling interests 389 (569) (86) 2,261 526 79
Non-GAAP net income attributable to RISE Education Cayman Ltd 31,825  45,597   6,890   60,088  84,450  12,761
             
Net income 31,436 43,312  6,545  57,827 78,038 11,793
Add: Depreciation 7,568 8,719  1,318  14,528 16,597 2,508
Add: Amortization 5,019 5,324  805  10,115 10,602 1,602
Add: Interest expense 4,740 8,043  1,215  9,907 16,248 2,455
Add: Income tax expense 14,047 15,690  2,371  26,623 29,683 4,486
Less: Interest income 6,832 8,456  1,278  9,438 12,663 1,914
EBITDA 55,978  72,632   10,976   109,562  138,505  20,930
SBC - 2,854  431  - 5,886 889
Adjusted EBITDA 55,978  75,486   11,407   109,562  144,391  21,819
             
Cost of revenues 99,763 136,842  20,680  196,079 262,309 39,641
Personnel costs 38,892 56,155  8,486  75,878 105,199 15,898
Rental costs 38,476 46,135  6,972  71,345 87,066 13,158
Others 22,395 34,552  5,222  48,856 70,044 10,585
Less: SBC - 55  8  - 505 76
Non-GAAP cost of revenues 99,763  136,787   20,672   196,079  261,804  39,565
             
Non-GAAP gross profit 127,014  163,409   24,695   241,021  308,521  46,625
             
Selling and marketing expenses  39,937 50,158  7,580  71,243 98,680 14,913
Less: SBC - 682  103  - 1,296 196
Non-GAAP selling and marketing expenses  39,937  49,476   7,477   71,243  97,384  14,717
             
General and administrative expenses  43,613 55,538  8,393  84,921 109,896 16,608
Less: SBC - 2,117  320    4,085 617
Non-GAAP general and administrative expenses  43,613  53,421   8,073   84,921  105,811  15,991
             
Operating expense 83,550  105,696   15,973   156,164  208,576  31,521
Less: SBC - 2,799  423  - 5,381 813
Non-GAAP operating expense 83,550  102,897   15,550   156,164  203,195  30,708
             
Non-GAAP operating income 43,464  60,512   9,145   84,857  105,326  15,917
             
Non-GAAP net income per ADS attributable to RISE-basic (Note 1) 0.64 0.80  0.12  1.20 1.49 0.23
Non-GAAP net income per ADS attributable to RISE-diluted 0.64 0.79  0.12  1.20 1.46 0.22
             
ADSs used in calculating net income per ADS-basic: 50,000,000 57,017,790  57,017,790  50,000,000 56,614,435 56,614,435
ADSs used in calculating net income per ADS-diluted: 50,000,000 58,050,205  58,050,205  50,000,000 57,868,346 57,868,346
             
Note 1: Each ADS represents two ordinary shares.