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.