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New Oriental Announces Results for the Third Fiscal Quarter Ended February 29, 2016
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Financial Highlights for the Third Fiscal Quarter Ended
- Total net revenues increased by 20.6% year-over-year to
US$346.9 million for the third fiscal quarter of 2016. - Operating income increased by 32.6% year-over-year to
US$42.3 million for the third fiscal quarter of 2016. - Net income attributable to New Oriental increased by 16.8% year-over-year to
US$48.4 million .
Key Financial Results
(in thousands US$, except per ADS(1) data) |
3Q FY2016 |
3Q FY2015 |
% of change |
Net revenues |
346,912 |
287,733 |
20.6% |
Operating income |
42,297 |
31,903 |
32.6% |
Non-GAAP operating income (2)(3) |
46,743 |
35,854 |
30.4% |
Net income attributable to New Oriental |
48,442 |
41,483 |
16.8% |
Non-GAAP net income attributable to New Oriental (2)(3) |
52,888 |
45,434 |
16.4% |
Net income per ADS attributable to New Oriental - basic |
0.31 |
0.27 |
16.1% |
Net income per ADS attributable to New Oriental - diluted |
0.31 |
0.26 |
16.1% |
Non-GAAP net income per ADS attributable to New Oriental - basic(3)(4) |
0.34 |
0.29 |
15.7% |
Non-GAAP net income per ADS attributable to New Oriental - diluted(3)(4) |
0.34 |
0.29 |
15.8% |
(in thousands US$, except per ADS(1) data) |
9M FY2016 |
9M FY2015 |
% of change |
Net revenues |
1,083,483 |
917,958 |
18.0% |
Operating income |
161,744 |
130,507 |
23.9% |
Non-GAAP operating income(2)(3) |
174,922 |
141,500 |
23.6% |
Net income attributable to New Oriental |
182,868 |
157,298 |
16.3% |
Non-GAAP net income attributable to New Oriental(2)(3) |
196,046 |
168,291 |
16.5% |
Net income per ADS attributable to New Oriental - basic |
1.17 |
1.00 |
16.3% |
Net income per ADS attributable to New Oriental - diluted |
1.16 |
1.00 |
16.5% |
Non-GAAP net income per ADS attributable to New Oriental - basic(3)(4) |
1.25 |
1.07 |
16.5% |
Non-GAAP net income per ADS attributable to New Oriental - diluted(3)(4) |
1.25 |
1.07 |
16.7% |
(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 Third Fiscal Quarter Ended
- Total student enrollments in academic subjects tutoring and test preparation courses increased by 25.2% year-over-year to approximately 755,100 for the third fiscal quarter of 2016.
- The total number of schools and learning centers was 727 as of
February 29, 2016 , an increase of 5 compared to 722 as ofFebruary 28, 2015 , and an increase of 7 compared to 720 as ofNovember 30, 2015 . The total number of schools was 64 as ofFebruary 29, 2016 .
Mr. Yu continued, "As part of our strategy to optimize the market via profitable growth, we opened a new school in the city of Zhuhai, a fast growing Special Economic Zone in southern
In
Financial Results for the Third Fiscal Quarter Ended
Net Revenues
For the third fiscal quarter of 2016, New Oriental reported net revenues of
Total student enrollments in academic subjects tutoring and test preparation courses in the third fiscal quarter of 2016 increased by 25.2% year-over-year to approximately 755,100.
Operating Costs and Expenses
Operating costs and expenses for the quarter were
- Cost of revenues increased by 15.1% year-over-year to
US$145.0 million , primarily due to increases in teachers' compensation for more teaching hours. - Selling and marketing expenses increased by 8.0% year-over-year to
US$45.0 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 30.0% year-over-year to
US$114.6 million . Non-GAAP general and administrative expenses, which exclude share-based compensation expenses, wereUS$110.1 million , representing a 30.8% increase year-over-year, primarily due to increases in R&D expenses and human resources expenses related to the development of our online and offline integrated education ecosystem.
Total share-based compensation expenses, which were allocated to related operating costs and expenses, increased by 12.5% to
Operating Income and Operating Margin
Operating income was
Operating margin for the quarter was 12.2%, compared to 11.1% in the same period of the prior fiscal year. Non-GAAP operating margin, which excludes share-based compensation expenses, for the quarter was 13.5%, compared to 12.5% in the same period of the prior fiscal year.
Net Income and EPS
Net income attributable to New Oriental for the quarter was
Non-GAAP Net Income and Non-GAAP EPS
Non-GAAP net income attributable to New Oriental for the quarter was
Cash Flow
Net operating cash flow for the third fiscal quarter of 2016 was approximately
Balance Sheet
As of
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 third quarter of fiscal year 2016 was
Financial Results for the Nine Months Ended
For the first nine months of fiscal year 2016, New Oriental reported net revenues of
Total student enrollments in academic subjects tutoring and test preparation courses in the first nine months of fiscal year 2016 increased by 23.4% to approximately 2,607,400.
Income from operations for the first nine months of fiscal year 2016 was
Operating margin for the first nine months of fiscal year 2016 was 14.9 %, compared to 14.2% for the same period of the prior fiscal year. Non-GAAP operating margin, which excludes share-based compensation expenses for the first nine months of fiscal year 2016, was 16.1%, compared to 15.4% for the same period of the prior fiscal year.
Net income attributable to New Oriental for the first nine months of fiscal year 2016 was
Non-GAAP net income attributable to New Oriental for the first nine months of fiscal year 2016 was
Outlook for Fourth Quarter of Fiscal Year 2016
Reflecting ongoing positive momentum, New Oriental expects total net revenues in the fourth quarter of fiscal year 2016 (
If not including the impact from the recent depreciation of Renminbi against the U.S. Dollar, the projected revenue growth rate is expected to be in the range of 20% to 24% for the fourth quarter of fiscal year 2016.
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
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
International: |
+61-2-8199-0299 |
Passcode: |
80096892 |
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
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 fourth quarter of fiscal year 2016, 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
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
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
Ms.
Tel: +852-3768-4537
Email: cara.obrien@fticonsulting.com
Ms.
Tel: +86-10-6260-5568
Email: zhaosisi@xdf.cn
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
|||
(In thousands) |
|||
As of February 29 |
As of November 30 |
||
2016 |
2015 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
||
ASSETS: |
|||
Current assets: |
|||
Cash and cash equivalents |
464,061 |
524,053 |
|
Restricted cash, current |
46 |
658 |
|
Term deposits |
94,983 |
71,363 |
|
Short term investments |
752,964 |
698,859 |
|
Accounts receivable, net |
4,459 |
3,646 |
|
Inventory |
25,803 |
28,255 |
|
Deferred tax assets, current (note 1) |
- |
14,111 |
|
Prepaid expenses and other current assets |
102,166 |
87,999 |
|
Amounts due from related parties, current |
1,111 |
1,140 |
|
Long term investment due within one year |
238,943 |
- |
|
Total current assets |
1,684,536 |
1,430,084 |
|
Property, plant and equipment, net |
232,621 |
233,188 |
|
Land use rights, net |
3,949 |
4,079 |
|
Amounts due from related parties, non-current |
1,934 |
1,954 |
|
Deferred tax assets, non-current (note 1) |
19,466 |
6,515 |
|
Long term deposit |
14,722 |
15,808 |
|
Long term prepaid rent |
300 |
364 |
|
Restricted cash, non-current |
2,834 |
2,428 |
|
Intangible assets |
2,901 |
3,249 |
|
Goodwill |
10,589 |
10,861 |
|
Long term investments |
154,556 |
390,739 |
|
Other non-current assets |
1,526 |
1,878 |
|
Total assets |
2,129,934 |
2,101,147 |
|
LIABILITIES AND EQUITY |
|||
Current liabilities: |
|||
Accounts payable (including accounts payable of the consolidated VIE without recourse to New Oriental of US$23,352 and US$16,709 as of November 30, 2015 and February 29, 2016, respectively) |
17,615 |
23,491 |
|
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIE without recourse to New Oriental of US$136,464 and US$152,101 as of November 30, 2015 and February 29, 2016, respectively) |
168,811 |
149,531 |
|
Dividend payable (including dividend payable of the consolidated VIE without recourse to New Oriental of nil and nil as of November 30, 2015 and February 29, 2016, respectively) |
- |
7,582 |
|
Income taxes payable (including income tax payable of the consolidated VIE without recourse to New Oriental of US$28,980 and US$28,881 as of November 30, 2015 and February 29, 2016, respectively) |
31,784 |
30,040 |
|
Amounts due to related party(including amounts due to related parties of the consolidated VIE without recourse to New Oriental of US$174 and US$35 as of November 30, 2015 and February 29, 2016, respectively) |
35 |
174 |
|
Deferred revenue (including deferred revenue of the consolidated VIE without recourse to New Oriental of US$582,021and US$582,007 as of November 30, 2015 and February 29, 2016, respectively) |
585,349 |
586,455 |
|
Total current liabilities |
803,594 |
797,273 |
|
Deferred tax liabilities (including deferred tax liabilities of the consolidated VIE without recourse to New Oriental of US$1,514 and US$1,457 as of November 30, 2015 and February 29, 2016, respectively) (note 1) |
2,097 |
2,214 |
|
Total long-term liabilities |
2,097 |
2,214 |
|
Total liabilities |
805,691 |
799,487 |
|
Noncontrolling interests |
13,370 |
13,371 |
|
Total New Oriental Education & Technology Group Inc. shareholders' equity |
1,310,873 |
1,288,289 |
|
Total shareholder's equity |
1,324,243 |
1,301,660 |
|
Total liabilities and shareholder's equity |
2,129,934 |
2,101,147 |
|
Note 1: In November, 2015, the FASB issued a new pronouncement which changes how deferred taxes are classified on organizations' balance sheets. The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. The amendments apply to all organizations that present a classified balance sheet. For public companies, the amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. |
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||
(In thousands except for per share and per ADS amounts) |
|||
For the Three Months Ended February 29 |
For the Three Months Ended February 28 |
||
2016 |
2015 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
||
Net Revenues: |
|||
Educational programs and services |
313,251 |
262,041 |
|
Books and others |
33,661 |
25,692 |
|
Total net revenues |
346,912 |
287,733 |
|
Operating costs and expenses (note 2): |
|||
Cost of revenues |
145,045 |
126,015 |
|
Selling and marketing |
44,989 |
41,647 |
|
General and administrative |
114,581 |
88,168 |
|
Total operating costs and expenses |
304,615 |
255,830 |
|
Operating Income |
42,297 |
31,903 |
|
Other income, net |
16,125 |
16,318 |
|
Provision for income taxes |
(8,515) |
(6,333) |
|
Loss from equity method investment |
(1,137) |
(453) |
|
Net income |
48,770 |
41,435 |
|
Net loss(gain) attributable to the noncontrolling interests |
(328) |
48 |
|
Net income attributable to New Oriental Education & Technology Group Inc. |
48,442 |
41,483 |
|
Net income per share attributable to New Oriental-Basic |
0.31 |
0.27 |
|
Net income per share attributable to New Oriental-Diluted |
0.31 |
0.26 |
|
Net income per ADS attributable to New Oriental-Basic (note 3) |
0.31 |
0.27 |
|
Net income per ADS attributable to New Oriental-Diluted (note 3) |
0.31 |
0.26 |
|
Other comprehensive loss, net of tax |
(30,695) |
(19,183) |
|
Comprehensive income |
18,075 |
22,252 |
|
Comprehensive income attributable to New Oriental Education & Technology Group Inc. |
18,076 |
22,300 |
|
Notes: |
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Note 2: Share-based compensation expenses (in thousands) are included in the operating costs and expenses as follows: |
|||
For the Three Months Ended February 29 |
For the Three Months Ended February 28 |
||
2016 |
2015 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
||
General and administrative |
4,446 |
3,951 |
|
Total |
4,446 |
3,951 |
|
Note 3: Each ADS represents one common share. |
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC. |
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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 February 29 |
For the Three Months Ended February 28 |
||
2016 |
2015 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
||
General and administrative expenses |
114,581 |
88,168 |
|
Share-based compensation expense in general and administrative expenses |
4,446 |
3,951 |
|
Non-GAAP general and administrative expenses |
110,135 |
84,217 |
|
Total operating costs and expenses |
304,615 |
255,830 |
|
Share-based compensation expenses |
4,446 |
3,951 |
|
Non-GAAP operating costs and expenses |
300,169 |
251,879 |
|
Operating income |
42,297 |
31,903 |
|
Share-based compensation expenses |
4,446 |
3,951 |
|
Non-GAAP operating income |
46,743 |
35,854 |
|
Operating margin |
12.2% |
11.1% |
|
Non-GAAP operating margin |
13.5% |
12.5% |
|
Net income attributable to New Oriental |
48,442 |
41,483 |
|
Share-based compensation expenses |
4,446 |
3,951 |
|
Non-GAAP net income |
52,888 |
45,434 |
|
Net income per ADS attributable to New Oriental- Basic (note 3) |
0.31 |
0.27 |
|
Net income per ADS attributable to New Oriental- Diluted (note 3) |
0.31 |
0.26 |
|
Non-GAAP net income per ADS attributable to New Oriental - Basic (note 3) |
0.34 |
0.29 |
|
Non-GAAP net income per ADS attributable to New Oriental - Diluted (note 3) |
0.34 |
0.29 |
|
Weighted average shares used in calculating basic net income per ADS (note 3) |
156,932,343 |
155,993,002 |
|
Weighted average shares used in calculating diluted net income per ADS (note 3) |
157,721,515 |
156,874,791 |
|
Non-GAAP income per share - basic |
0.34 |
0.29 |
|
Non-GAAP income per share - diluted |
0.34 |
0.29 |
|
Note 3: Each ADS represents one common share. |
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC. |
|||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||
(In thousands except for per share and per ADS amounts) |
|||
For the Nine Months Ended February 29 |
For the Nine Months Ended February 28 |
||
2016 |
2015 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
||
Net Revenues: |
|||
Educational programs and services |
987,127 |
835,363 |
|
Books and others |
96,356 |
82,595 |
|
Total net revenues |
1,083,483 |
917,958 |
|
Operating costs and expenses (note 2): |
|||
Cost of revenues |
450,931 |
388,893 |
|
Selling and marketing |
138,511 |
135,197 |
|
General and administrative |
332,297 |
263,361 |
|
Total operating costs and expenses |
921,739 |
787,451 |
|
- |
|||
Operating income |
161,744 |
130,507 |
|
Other income, net |
51,620 |
49,226 |
|
Provision for income taxes |
(26,909) |
(21,751) |
|
Loss from equity method investment |
(3,221) |
(732) |
|
Net income |
183,234 |
157,250 |
|
Net loss(gain) attributable to the noncontrolling interests |
(366) |
48 |
|
Net income attributable to New Oriental Education & Technology Group Inc. |
182,868 |
157,298 |
|
Net income per share attributable to New Oriental-Basic |
1.17 |
1.00 |
|
Net income per share attributable to New Oriental-Diluted |
1.16 |
1.00 |
|
Net income per ADS attributable to New Oriental-Basic (note 3) |
1.17 |
1.00 |
|
Net income per ADS attributable to New Oriental-Diluted (note 3) |
1.16 |
1.00 |
|
Other comprehensive income (loss), net of tax |
(51,620) |
5,599 |
|
Comprehensive income |
131,614 |
162,849 |
|
Comprehensive income attributable to New Oriental Education & Technology Group Inc. |
131,577 |
162,897 |
|
Notes: |
|||
Note 2: Share-based compensation expenses (in thousands) are included in the operating costs and expenses as follows: |
|||
For the Nine Months Ended February 29 |
For the Nine Months Ended February 28 |
||
2016 |
2015 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
||
General and administrative |
13,178 |
10,993 |
|
Total |
13,178 |
10,993 |
|
Note 3: 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 Nine Months Ended February 29 |
For the Nine Months Ended February 28 |
||
2016 |
2015 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
||
General and administrative expenses |
332,297 |
263,361 |
|
Share-based compensation expense in general and administrative expenses |
13,178 |
10,993 |
|
Non-GAAP general and administrative expenses |
319,119 |
252,368 |
|
Total operating costs and expenses |
921,739 |
787,451 |
|
Share-based compensation expenses |
13,178 |
10,993 |
|
Non-GAAP operating costs and expenses |
908,561 |
776,458 |
|
Operating income |
161,744 |
130,507 |
|
Share-based compensation expenses |
13,178 |
10,993 |
|
Non-GAAP operating income |
174,922 |
141,500 |
|
Operating margin |
14.9% |
14.2% |
|
Non-GAAP operating margin |
16.1% |
15.4% |
|
Net income attributable to New Oriental |
182,868 |
157,298 |
|
Share-based compensation expenses |
13,178 |
10,993 |
|
Non-GAAP net income |
196,046 |
168,291 |
|
Net income per ADS attributable to New Oriental- Basic (note 3) |
1.17 |
1.00 |
|
Net income per ADS attributable to New Oriental- Diluted (note 3) |
1.16 |
1.00 |
|
Non-GAAP net income per ADS attributable to New Oriental - Basic (note 3) |
1.25 |
1.07 |
|
Non-GAAP net income per ADS attributable to New Oriental - Diluted (note 3) |
1.25 |
1.07 |
|
Weighted average shares used in calculating basic net income per ADS (note 3) |
156,721,538 |
156,745,702 |
|
Weighted average shares used in calculating diluted net income per ADS (note 3) |
157,342,880 |
157,615,286 |
|
Non-GAAP income per share - basic |
1.25 |
1.07 |
|
Non-GAAP income per share - diluted |
1.25 |
1.07 |
|
Note 3: Each ADS represents one common share. |
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