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New Oriental Announces Results for the Third Fiscal Quarter Ended February 28, 2018
|
Quarterly Net Revenues Increased by 41.2% Year-Over-Year
Quarterly Student Enrollments Increased by 7.7% Year-Over-Year
Financial Highlights for the Third Fiscal Quarter Ended
- Total net revenues increased by 41.2% year-over-year to
US$618.1 million for the third fiscal quarter of 2018. - Operating income increased by 1.5% year-over-year to
US$58.4 million for the third fiscal quarter of 2018. - Net income attributable to New Oriental increased by 1.1% year-over-year to
US$68.4 million for the third fiscal quarter of 2018.
Key Financial Results |
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(in thousands US$, except per ADS(1) data) |
3Q FY2018 |
3Q FY2017 |
% of change |
Net revenues |
618,081 |
437,849 |
41.2% |
Operating income |
58,367 |
57,515 |
1.5% |
Non-GAAP operating income (2)(3) |
81,156 |
65,784 |
23.4% |
Net income attributable to New Oriental |
68,376 |
67,619 |
1.1% |
Non-GAAP net income attributable to New Oriental (2)(3) |
91,165 |
75,888 |
20.1% |
Net income per ADS attributable to New Oriental - basic |
0.43 |
0.43 |
0.7% |
Net income per ADS attributable to New Oriental - diluted |
0.43 |
0.43 |
0.7% |
Non-GAAP net income per ADS attributable to New Oriental - |
0.58 |
0.48 |
19.6% |
Non-GAAP net income per ADS attributable to New Oriental - |
0.57 |
0.48 |
19.6% |
(in thousands US$, except per ADS(1) data) |
9M FY2018 |
9M FY2017 |
% of change |
Net revenues |
1,746,429 |
1,313,156 |
33.0% |
Operating income |
206,374 |
210,313 |
-1.9% |
Non-GAAP operating income(2)(3) |
241,602 |
221,628 |
9.0% |
Net income attributable to New Oriental |
231,048 |
219,041 |
5.5% |
Non-GAAP net income attributable to New Oriental(2)(3) |
266,276 |
230,356 |
15.6% |
Net income per ADS attributable to New Oriental - basic |
1.46 |
1.39 |
5.1% |
Net income per ADS attributable to New Oriental - diluted |
1.46 |
1.39 |
5.1% |
Non-GAAP net income per ADS attributable to New Oriental - |
1.68 |
1.46 |
15.1% |
Non-GAAP net income per ADS attributable to New Oriental - |
1.68 |
1.46 |
15.2% |
(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 7.7% year-over-year to approximately 861,400 for the third fiscal quarter of 2018.
- The total number of schools and learning centers was 1000 as of
February 28, 2018 , an increase of 197 compared to 803 as ofFebruary 28, 2017 , and an increase of 60 compared to 940 as ofNovember 30, 2017 . The total number of schools was 87 as ofFebruary 28, 2018 .
Financial Results for the Third Fiscal Quarter Ended
Net Revenues
For the third fiscal quarter of 2018, New Oriental reported net revenues of
Operating Costs and Expenses
Operating costs and expenses for the quarter were
- Cost of revenues increased by 46.5% year-over-year to
US$268.8 million , primarily due to increases in teachers' compensation for more teaching hours and rental cost for increased number of schools and learning centers in operation. - Selling and marketing expenses increased by 38.2% year-over-year to
US$77.2 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 51.7% year-over-year to
US$213.7 million . Non-GAAP general and administrative expenses, which exclude share-based compensation expenses, wereUS$190.9 million , representing a 43.9% increase year-over-year, primarily due to increased headcount as the Company expanded its network of schools and learning centers, as well as 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 175.6% to
Operating Income and Operating Margin
Operating income for the quarter was
Operating margin for the quarter was 9.4%, compared to 13.1% in the same period of the prior fiscal year. Non-GAAP operating margin, which excludes share-based compensation expenses, for the quarter was 13.1%, compared to 15.0% 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 2018 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 2018 was
Financial Results for the Nine Months Ended
For the first nine months of fiscal year 2018, 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 2018 increased by 24.2% to approximately 4,271,500.
Income from operations for the first nine months of fiscal year 2018 was
Operating margin for the first nine months of fiscal year 2018 was 11.8%, compared to 16.0% 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 2018, was 13.8%, compared to 16.9% for the same period of the prior fiscal year.
Net income attributable to New Oriental for the first nine months of fiscal year 2018 was
Non-GAAP net income attributable to New Oriental for the first nine months of fiscal year 2018 was
Outlook for Fourth Quarter of Fiscal Year 2018
New Oriental expects total net revenues in the fourth quarter of fiscal year 2018 (
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 "7194007."
A replay of the conference call may be accessed by phone at the following number until
International: |
+61-2-8199-0299 |
Passcode: |
7194007 |
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://www.neworiental.org/english/.
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 2018, 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:
Ms.
Tel: +852-3768-4569
Email: nan.dong@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 |
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(In thousands) |
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As of February 28 |
As of May 31 |
||
2018 |
2017 |
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(Unaudited) |
(Audited) |
||
USD |
USD |
||
ASSETS: |
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Current assets: |
|||
Cash and cash equivalents |
721,530 |
641,018 |
|
Restricted cash, current |
44 |
44 |
|
Term deposits |
113,513 |
195,085 |
|
Short-term investments |
1,682,515 |
1,312,942 |
|
Accounts receivable, net |
5,427 |
3,343 |
|
Inventory |
42,176 |
31,742 |
|
Prepaid expenses and other current assets, net |
165,470 |
119,397 |
|
Amounts due from related parties, current |
1,312 |
5,948 |
|
Long-term investments due within one year |
- |
16,743 |
|
Total current assets |
2,731,987 |
2,326,262 |
|
Property and equipment, net |
418,826 |
282,800 |
|
Land use rights, net |
3,862 |
3,668 |
|
Amounts due from related parties, non-current |
2,150 |
1,748 |
|
Deferred tax assets, net |
31,369 |
28,858 |
|
Long-term deposit |
36,747 |
24,023 |
|
Long-term prepaid rent |
226 |
849 |
|
Restricted cash, non-current |
3,693 |
3,608 |
|
Intangible assets, net |
9,155 |
4,005 |
|
Goodwill, net |
32,122 |
14,083 |
|
Long-term investments, net |
297,854 |
217,259 |
|
Other non-current assets |
6,707 |
17,816 |
|
Total assets |
3,574,698 |
2,924,979 |
|
LIABILITIES AND EQUITY |
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Current liabilities: |
|||
Accounts payable (including accounts payable of the |
40,500
|
24,258
|
|
Accrued expenses and other current liabilities (including accrued |
315,239
|
260,700
|
|
Income taxes payable (including income tax payable of the |
56,127
|
51,045
|
|
Amounts due to related parties (including amounts due to related |
216
|
48
|
|
Deferred revenue (including deferred revenue of the |
1,083,783
|
866,630
|
|
Total current liabilities |
1,495,865 |
1,202,681 |
|
Deferred tax liabilities (including deferred tax liabilities of the |
3,279
|
2,220
|
|
Total long-term liabilities |
3,279 |
2,220 |
|
Total liabilities |
1,499,144 |
1,204,901 |
|
Noncontrolling interests |
46,625 |
39,130 |
|
Total New Oriental Education & Technology Group Inc. |
2,028,929 |
1,680,948 |
|
Total shareholders' equity |
2,075,554 |
1,720,078 |
|
Total liabilities and shareholders' equity |
3,574,698 |
2,924,979 |
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(In thousands except for per share and per ADS amounts) |
|||
For the Three Months Ended February 28 |
|||
2018 |
2017 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
||
Net Revenues: |
|||
Educational programs and services |
564,752 |
394,797 |
|
Books and others |
53,329 |
43,052 |
|
Total net revenues |
618,081 |
437,849 |
|
Operating costs and expenses (note 1): |
|||
Cost of revenues |
268,823 |
183,551 |
|
Selling and marketing |
77,209 |
55,882 |
|
General and administrative |
213,682 |
140,901 |
|
Total operating costs and expenses |
559,714 |
380,334 |
|
Operating Income |
58,367 |
57,515 |
|
Other income, net |
21,902 |
19,750 |
|
Provision for income taxes |
(13,409) |
(10,583) |
|
Loss from equity method investments |
(258) |
(260) |
|
Net income |
66,602 |
66,422 |
|
Net loss attributable to the noncontrolling interests |
1,774 |
1,197 |
|
Net income attributable to New Oriental Education & |
68,376 |
67,619 |
|
Net income per share attributable to New Oriental-Basic |
0.43 |
0.43 |
|
Net income per share attributable to New Oriental-Diluted |
0.43 |
0.43 |
|
Net income per ADS attributable to New Oriental-Basic |
0.43
|
0.43
|
|
Net income per ADS attributable to New Oriental-Diluted |
0.43
|
0.43
|
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC. |
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RECONCILIATION OF NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP MEASURES |
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(In thousands except for per share and per ADS amounts) |
|||
For the Three Months Ended February 28 |
|||
2018 |
2017 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
||
General and administrative expenses |
213,682 |
140,901 |
|
Share-based compensation expense in general |
22,789
|
8,269
|
|
Non-GAAP general and administrative expenses |
190,893 |
132,632 |
|
Total operating costs and expenses |
559,714 |
380,334 |
|
Share-based compensation expenses |
22,789 |
8,269 |
|
Non-GAAP operating costs and expenses |
536,925 |
372,065 |
|
Operating income |
58,367 |
57,515 |
|
Share-based compensation expenses |
22,789 |
8,269 |
|
Non-GAAP operating income |
81,156 |
65,784 |
|
Operating margin |
9.4% |
13.1% |
|
Non-GAAP operating margin |
13.1% |
15.0% |
|
Net income attributable to New Oriental |
68,376 |
67,619 |
|
Share-based compensation expenses |
22,789 |
8,269 |
|
Non-GAAP net income attributable to New |
91,165
|
75,888
|
|
Net income per ADS attributable to New |
0.43
|
0.43
|
|
Net income per ADS attributable to New |
0.43
|
0.43
|
|
Non-GAAP net income per ADS attributable to |
0.58
|
0.48
|
|
Non-GAAP net income per ADS attributable to |
0.57
|
0.48
|
|
Weighted average shares used in calculating |
158,253,243
|
157,607,555
|
|
Weighted average shares used in calculating |
158,736,059
|
158,039,414
|
|
Non-GAAP income per share - basic |
0.58 |
0.48 |
|
Non-GAAP income per share - diluted |
0.57 |
0.48 |
Notes: |
|||||
Note 1: Share-based compensation expenses (in thousands) are included in the operating costs |
|||||
For the Three Months Ended February 28 |
|||||
2018 |
2017 |
||||
(Unaudited) |
(Unaudited) |
||||
USD |
USD |
||||
General and administrative expense |
22,789 |
8,269 |
|||
Total |
22,789 |
8,269 |
|||
Note 2: Each ADS represents one common share. |
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 Nine Months Ended February 28 |
|||
2018 |
2017 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
||
Net Revenues: |
|||
Educational programs and services |
1,591,829 |
1,201,297 |
|
Books and others |
154,600 |
111,859 |
|
Total net revenues |
1,746,429 |
1,313,156 |
|
Operating costs and expenses (note 1): |
|||
Cost of revenues |
766,275 |
550,329 |
|
Selling and marketing |
223,203 |
166,519 |
|
General and administrative |
550,577 |
385,995 |
|
Total operating costs and expenses |
1,540,055 |
1,102,843 |
|
Operating income |
206,374 |
210,313 |
|
Other income, net |
70,413 |
49,681 |
|
Provision for income taxes |
(43,260) |
(36,164) |
|
Loss from equity method investments |
(9) |
(2,943) |
|
Net income |
233,518 |
220,887 |
|
Net gain attributable to the noncontrolling interests |
(2,470) |
(1,846) |
|
Net income attributable to New Oriental Education & |
231,048
|
219,041
|
|
Net income per share attributable to New Oriental-Basic |
1.46 |
1.39 |
|
Net income per share attributable to New Oriental-Diluted |
1.46 |
1.39 |
|
Net income per ADS attributable to New Oriental-Basic |
1.46
|
1.39
|
|
Net income per ADS attributable to New Oriental-Diluted |
1.46
|
1.39
|
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 Nine Months Ended February 28 |
|||
2018 |
2017 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
||
General and administrative expenses |
550,577 |
385,995 |
|
Share-based compensation expense in |
35,228
|
11,315
|
|
Non-GAAP general and administrative |
515,349
|
374,680
|
|
Total operating costs and expenses |
1,540,055 |
1,102,843 |
|
Share-based compensation expenses |
35,228 |
11,315 |
|
Non-GAAP operating costs and expenses |
1,504,827 |
1,091,528 |
|
Operating income |
206,374 |
210,313 |
|
Share-based compensation expenses |
35,228 |
11,315 |
|
Non-GAAP operating income |
241,602 |
221,628 |
|
Operating margin |
11.8% |
16.0% |
|
Non-GAAP operating margin |
13.8% |
16.9% |
|
Net income attributable to New Oriental |
231,048 |
219,041 |
|
Share-based compensation expenses |
35,228 |
11,315 |
|
Non-GAAP net income attributable to |
266,276
|
230,356
|
|
Net income per ADS attributable to New |
1.46
|
1.39
|
|
Net income per ADS attributable to New |
1.46
|
1.39
|
|
Non-GAAP net income per ADS |
1.68
|
1.46
|
|
Non-GAAP net income per ADS |
1.68
|
1.46
|
|
Weighted average shares used in |
158,117,868
|
157,508,173
|
|
Weighted average shares used in |
158,429,934
|
157,910,916
|
|
Non-GAAP income per share - basic |
1.68 |
1.46 |
|
Non-GAAP income per share - diluted |
1.68 |
1.46 |
Notes: |
|||||
Note 1: Share-based compensation expenses (in thousands) are included in the operating costs |
|||||
For the Nine Months Ended February 28 |
|||||
2018 |
2017 |
||||
(Unaudited) |
(Unaudited) |
||||
USD |
USD |
||||
General and administrative expense |
35,228 |
11,315 |
|||
Total |
35,228 |
11,315 |
|||
Note 2: Each ADS represents one common share. |
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