-- First Quarter Revenues of RMB89.3
million, up 14.2% year-over-year
-- First Quarter Net Income of RMB19.6 million, up 264.4% year-over-year
BEIJING, May 17, 2022
/PRNewswire/ -- First High-School Education Group Co., Ltd. ("First
High-School Education Group" or the "Company") (NYSE: FHS), an
education service provider primarily focusing on high schools in
Western China, today announced its
unaudited financial results for the first quarter ended
March 31, 2022.
First Quarter 2022 Financial and Operational Highlights –
Continuing Operations
- Total revenues were RMB89.3
million (US$14.1 million), an
increase of 14.2% from RMB78.2
million in the first quarter of 2021.
- Gross profit was RMB32.1
million (US$5.1 million), an
increase of 69.0% from RMB19.0
million in the first quarter of 2021.
- Income from operations was RMB22.4 million (US$3.5
million), an increase of 103.4% from RMB11.0 million in the first quarter of
2021.
- Net income was RMB19.6
million (US$3.1 million), an
increase of 264.4% from RMB5.4
million in the first quarter of 2021.
- Adjusted net income[1]
(Non-GAAP) was RMB19.6 million
(US$3.1 million), an increase of
264.4% from RMB5.4 million in the
first quarter of 2021.
- The total number of students enrolled at our school
programs and public schools that we provide management services as
of March 31, 2022 was 21,242, an
increase of 3.0% from 20,631 as of March 31,
2021.
- The total number of school programs at our school
programs and public schools that we provide management services as
of March 31, 2022 was 22, an increase
of 4.8% from 21 as of March 31,
2021.
[1] Adjusted
net income is a non-GAAP measure. See "Non-GAAP measure" in this
press release. A reconciliation of the Company's most directly
comparable GAAP measure to historical non-GAAP financial measure
has been provided in the tables captioned "Reconciliation of GAAP
to Non-GAAP Measure" included at the end of this press release, and
investors are encouraged to review the reconciliation.
|
CFO Comments
Mr. Tommy Zhou, Chief Financial
Officer of First High-School Education Group, commented:
May 2022 had been a busy month for
the Company. We completed the annual report on Form 20-F (the "2021
Annual Report") for the fiscal year ended December 31, 2021 with the U.S. Securities and
Exchange Commission (the "SEC") on May 9,
2022, and is now announcing our first quarter 2022 unaudited
financial results.
For our first quarter 2022 unaudited financial results, it
signals a distinctly improved trend compared to the same period of
2021. The Company's revenue from continuing operation increased by
14.2% to RMB89.3 million
(US$14.1 million), and net income
increased by 264.4% to RMB19.6
million (US$3.1 million). The
notable increase in our profit margin was primarily driven by the
effective cost control measures implemented since the second half
of 2021. Despite our increased revenue, and increased total number
of students enrolled in the first quarter of 2022, our cost of
revenues actually decreased slightly compared with the same period
of 2021, significantly increasing our gross profit. The effective
cost control was completed by a combination of driving down
campus-related expenses, and improved staffing efficiency.
Since April 2022, we have been
proactively working on student admission related work. For school
year 2022, we have 18 school programs with recurring enrollments,
and two school programs with first-year enrollments. Additionally,
in 2022 we will have noticeably increased number of liberal
education classes such as fine arts, media studies, dance and music
majors, as well as vocational education classes. In May 2022, leveraging our strong brand name and
reputation, we were able to expand our management service to a new
school in central China, further
expanding our first-rate teaching method and services.
First Quarter 2022 Financial Results – Continuing
Operations
Total Revenues
Total revenues were RMB89.3
million (US$14.1 million), an
increase of 14.2% from RM78.2 million
in the first quarter of 2021. The increase was primarily driven by
greater student enrollment due to the increased number of students
enrolled in our schools.
Revenues from customers were RMB76.9 million (US$12.1
million), an increase of 13.3% from RMB67.8 million in the first quarter of 2021. The
increase was primarily driven by greater student enrollment in our
schools.
Revenues from government cooperative agreements were
RMB12.5 million (US$2.0 million), an increase of 20.1% from
RMB10.4 million in the first quarter
of 2021, primarily due to increased number of
publicly-sponsored students served.
Cost of revenues
Cost of revenues were RMB57.3
million (US$9.0 million), a
decrease of 3.3% from RMB59.3 million
in the first quarter of 2021. The decrease was primarily due to
improved control of campus-related costs, and more efficient
compensation structure for teachers and staffs.
Gross profit
Gross profit was RMB32.1 million (US$5.1 million), an increase of 69.0% from
RMB19.0 million in the first quarter
of 2021.
Gross margin was 35.9%, compared with 24.2% in the first
quarter of 2021. The increased gross margin was primarily due to
the improved cost control measures, resulted from (1) improved
school operating efficiencies with reduced repairs, tighter utility
usage limits, and stricter budget control; and (2) revised
compensation structure for teachers and supporting staffs, for a
more efficient system tying pay to performances.
Net operating expenses
Net operating expenses were RMB9.7
million (US$1.5 million), an
increase of 21.5% from RMB8.0 million
in the first quarter of 2021.
- Selling and marketing expenses were RMB0.1 million (US$0.02
million), a decrease of 60.0% from RMB0.3 million in the first quarter of 2021. The
decrease was primarily due to the decreased expenses in brand
promotion and marketing activities for our relatively mature school
operation.
- General and administrative expenses were RMB9.9 million (US$1.6
million), an increase of 12.9% from RMB8.7 million in the first quarter of 2021. The
increase was primarily due to increased professional service costs
related to complying with our reporting obligations under
applicable securities laws after we became a public company since
March 2021.
- Government grants were RMB0.3
million (US$0.05 million), a
decrease of 72.0% from RMB1.1 million
in the first quarter of 2021, primarily because the majority of the
government grants were paid to the discontinued operations of
middle school programs.
Income from operations
Income from operations was RMB22.4
million (US$3.5 million), an
increase of 103.4% from RMB11.0
million in the first quarter of 2021.
Net Income from continuing
operations
Net income from continuing operations was RMB21.1 million (US$3.3
million), an increase of 125.1% from RMB9.4 million in the first quarter of 2021.
Net Loss from discontinued
operations
Net loss from discontinued operations was RMB1.5 million (US$0.2
million), compared with a net loss of RMB4.0 million in the first quarter of 2021.
Net income
Net income was RMB19.6 million
(US$3.1 million), an increase of
264.4% from RMB5.4 million in the
first quarter of 2021.
Adjusted net
income[2]
(Non-GAAP)
Adjusted net income (Non-GAAP) was RMB19.6 million (US$3.1
million), an increase of 264.4% from RMB5.4 million in the first quarter of 2021.
[2] Adjusted net income is a non-GAAP
measure. See "Non-GAAP measure" in this press release. A
reconciliation of the Company's most directly comparable GAAP
measure to historical non-GAAP financial measure has been provided
in the tables captioned "Reconciliation of GAAP to Non-GAAP
Measure" included at the end of this press release, and investors
are encouraged to review the reconciliation.
|
Business Outlook
For the fiscal year 2022, the Company expects total revenues of
continuing operations to be between RMB480.0
million to RMB520.0 million,
representing an increase of 15% to 24% on a year-over-year basis.
This outlook reflects the Company's current and preliminary views
on the market and operational conditions, and the outlook ranges
for the fiscal year 2022 reflect a number of assumptions that are
subject to change based on uncertainties.
Impact of Implementation Rules for Private Education
Laws
On May 14, 2021, the State Council
of the People's Republic of China
promulgated the amended Implementation Regulations of the Law on
the Promotion of Private Education of the People's Republic of
China (中华人民共和国民办教育促进法实施条例) (the
"Implementation Rules"), which became effective on September 1, 2021. The Implementation Rules
prohibit social organizations and individuals from controlling
private schools that provide compulsory education through, among
other methods, mergers, acquisitions and contractual arrangements.
Additionally, the Implementation Rules prohibit any private schools
providing compulsory education from conducting transactions with
its related parties. As a result, the Implementation Rules affected
the Company's control over the affiliated entities providing
compulsory education as well as the sponsor entities (collectively
referred to as the "Affected Entities").
In compliance with the Implementation Rules and other applicable
PRC regulations and based on the relevant accounting standard in
accordance with U.S. GAAP, the Company has determined to cease to
recognize revenues for all activities related to schools providing
compulsory education and the sponsor entities after September 1, 2021 within China that are affected by the Implementation
Rules, and classified such Affected Entities as discontinued
operations. The discontinued operations of the Affected Entities
had certain impact on the Company's financial conditions for the
three months ended March 31, 2022.
Net loss from discontinued operations was RMB1.5 million (US$0.2
million) for the three months ended March 31, 2022.
There still exist uncertainties with respect to the
interpretation and enforcement of the Implementation Rules. The
Company will closely monitor the developments related to the
Implementation Rules, and continue to assess the possible impacts
on the Company and make any applicable actions to keep in
compliance with the Implementation Rules and other applicable PRC
regulations.
Conference Call
First High-School Education Group's management will hold an
earnings conference call on Wednesday, May
18, 2022, at 8:00 AM U.S.
Eastern Time (8:00 PM May 18, 2022, Beijing/Hong Kong Time). Please dial in 15
minutes before the conference is scheduled to begin using below
numbers.
International
|
1-412-317-6061
|
United
States
|
1-888-317-6003
|
Hong Kong
|
800-963976
|
Mainland
China
|
4001-206115
|
Passcode
|
7478244
|
A telephone replay of the conference call may be accessed by
phone at the following numbers until May 25,
2022.
International
|
1-412-317-0088
|
United
States
|
1-877-344-7529
|
Replay Access
Code
|
2433115
|
A live and archived webcast of the conference call will be
available on the Company's investors relations website at
https://ir.diyi.top/
About First High-School Education Group
First High-School Education Group is an education service
provider primarily focusing on high schools in Western China. The Company aspires to become a
leader and innovator of private high school education in
China, with the focuses on a
comprehensive education management integrating education
information consulting, education research project development,
education talent management, education technology management,
education service management, and general vocational integration
development services. For more information, please visit
https://ir.diyi.top/.
Non-GAAP Measure
The Company has provided in this press release financial
information that has not been prepared in accordance with U.S.
generally accepted accounting principles, or U.S. GAAP. The Company
considers and uses one non-GAAP measure, adjusted net income, as a
supplemental measure to review and assess its operating
performance. Adjusted net income enables the Company's management
to assess the Company's operating results without considering the
impact of non-cash charges, including share-based compensation
expenses, and without considering the impact of donation expenses
and transaction costs in relation to previous financing activities.
The Company also believes that the use of the non-GAAP measure
facilitates investors' assessment of its operating performance.
The presentation of the non-GAAP financial measure is not
intended to be considered in isolation or as a substitute for the
financial information prepared and presented in accordance with
U.S. GAAP. Adjusted net income is a non-GAAP measure. A
reconciliation of the Company's most directly comparable GAAP
measure to historical non-GAAP financial measure has been provided
in the tables captioned "Reconciliation of GAAP to Non-GAAP
Measure" included at the end of this press release, and investors
are encouraged to review the reconciliation.
Exchange Rate
The Company's business is primarily conducted in China and all of the revenues are denominated
in Renminbi ("RMB"). This announcement contains translations of
certain RMB amounts into U.S. dollars ("USD" or "US$") at specified
rates solely for the convenience of the readers. Unless otherwise
noted, all translations from RMB to USD are made at the rate of
RMB6.3393 to US$1.00, the exchange rate set forth in the H.10
statistical release of the Federal Reserve Board on March 31, 2022. No representation is made that
the RMB amounts could have been, or could be, converted, realized
or settled into US$ at that rate on March
31, 2022, or at any other rate.
Statement Regarding Preliminary Unaudited Financial
Information
The unaudited financial information set out in this earnings
release is preliminary and subject to potential adjustments.
Adjustments to the consolidated financial statements may be
identified when audit work has been performed for the Company's
year-end audit, which could result in significant differences from
this preliminary unaudited financial information.
Forward-Looking Statements
Statements in this press release about future expectations,
plans and prospects, as well as any other statements regarding
matters that are not historical facts, may constitute
"forward-looking statements" within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended, and as defined in
the U.S. Private Securities Litigation Reform Act of 1995. These
statements include, but are not limited to, statements relating to
the expected trading commencement and closing dates. The words
"anticipate," "believe," "continue," "could," "estimate," "expect,"
"intend," "may," "plan," "potential," "predict," "project,"
"should," "target," "will," "would" and similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words. Actual
results may differ materially from those indicated by such
forward-looking statements as a result of various important
factors, including: the uncertainties related to market conditions
and the completion of the public offering on the anticipated terms
or at all, and other factors discussed in the "Risk Factors"
section of the preliminary prospectus filed with the SEC. Any
forward-looking statements contained in this press release speak
only as of the date hereof, and the Company specifically disclaims
any obligation to update any forward-looking statement, whether as
a result of new information, future events or otherwise.
For Investor and Media Inquiries Please Contact:
First High-School Education Group
Tommy Zhou
Chief Financial Officer
E-mail: tommyzhou@dygz.com
Customer Service
E-mail: FHS_info@dygz.com
Phone: 010-62555966 (9:30-12:00, 13:30-16:00
CST)
First High-School
Education Group Co., Ltd.
|
Unaudited Condensed
Consolidated Statements of Comprehensive Income
|
(All amounts in
thousands, except share data and per share data, or otherwise
noted)
|
|
|
Three months ended
March 31,
|
2021
|
|
2022
|
|
2022
|
RMB
|
|
RMB
|
|
US$
|
Revenues
|
|
|
|
|
|
Revenue
from customers
|
67,838
|
|
76,859
|
|
12,124
|
Revenue
from governments cooperative agreements
|
10,393
|
|
12,482
|
|
1,969
|
Total
revenues
|
78,231
|
|
89,342
|
|
14,093
|
Cost of
revenues
|
(59,263)
|
|
(57,286)
|
|
(9,037)
|
Gross
profit
|
18,968
|
|
32,056
|
|
5,057
|
|
|
|
|
|
|
Operating expenses and
income
|
|
|
|
|
|
Selling
and marketing expenses
|
(329)
|
|
(132)
|
|
(21)
|
General
and administrative expenses
|
(8,734)
|
|
(9,864)
|
|
(1,556)
|
Government grants
|
1,089
|
|
305
|
|
48
|
Income from
operations
|
10,995
|
|
22,366
|
|
3,528
|
|
|
|
|
|
|
Other income
(expenses):
|
|
|
|
|
|
Interest income
|
(10)
|
|
248
|
|
39
|
Interest expense
|
(379)
|
|
(310)
|
|
(49)
|
Foreign currency exchange loss, net
|
-
|
|
-
|
|
-
|
Others,
net
|
592
|
|
310
|
|
49
|
Income from
Continuing Operations before Income Tax
|
11,198
|
|
22,613
|
|
3,567
|
Income tax
expenses
|
(1,831)
|
|
(1,530)
|
|
(241)
|
Income (loss)
from
Continuing Operations
|
9,367
|
|
21,083
|
|
3,326
|
Discontinued Operations
|
(4,002)
|
|
(1,533)
|
|
(242)
|
Net
Income
|
5,365
|
|
19,550
|
|
3,084
|
Comprehensive income - Continuing Operations
|
9,367
|
|
21,083
|
|
3,326
|
Comprehensive income (loss) - Discontinued Operations
|
(4,002)
|
|
(1,533)
|
|
(242)
|
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
|
Shareholder of the Company
|
5,365
|
|
19,550
|
|
3,084
|
Non-controlling interests
|
158
|
|
(650)
|
|
(102)
|
|
|
|
|
|
|
Earnings per
ordinary share Basic
|
0.07
|
|
0.23
|
|
0.04
|
Diluted
|
0.07
|
|
0.21
|
|
0.03
|
|
|
|
|
|
|
Weighted average
number of ordinary share outstanding
Basic
|
74,162,857
|
|
86,838,700
|
|
86,838,700
|
Diluted
|
74,162,857
|
|
92,388,700
|
|
92,388,700
|
|
|
|
|
|
|
First High-School
Education Group Co., Ltd.
|
Unaudited Condensed
Consolidated Balance Sheets
|
(All amounts in
thousands, except share data and per share data, or otherwise
noted)
|
|
|
Assets
|
As of March
31,
|
2021
|
|
2022
|
|
2022
|
RMB
|
|
RMB
|
|
US$
|
Current
assets
|
|
|
|
|
|
Cash
|
247,435
|
|
120,031
|
|
18,934
|
Accounts receivable, net of allowance for doubtful
accounts
|
18,635
|
|
58,129
|
|
9,170
|
Amounts due from related parties
|
47,282
|
|
55,055
|
|
8,685
|
Prepaid expenses and other current assets
|
115,022
|
|
99,312
|
|
15,666
|
Other receivables from the controlling shareholder
|
4,986
|
|
4,986
|
|
787
|
Assets related to discontinued operation
|
6,836
|
|
26,708
|
|
4,213
|
Total current
assets
|
440,197
|
|
364,220
|
|
57,454
|
|
|
|
|
|
|
Property and equipment, net
|
116,263
|
|
135,716
|
|
21,409
|
Intangible assets, net
|
49,054
|
|
46,890
|
|
7,397
|
Goodwill
|
40,218
|
|
150,996
|
|
23,819
|
Deferred tax assets
|
13,681
|
|
28,567
|
|
4,506
|
Amounts due from related parties
|
500
|
|
-
|
|
-
|
Other non-current assets
|
27,859
|
|
34,050
|
|
5,371
|
Assets related to discontinued operation
|
17,105
|
|
13,358
|
|
2,107
|
Total non-current
assets
|
264,679
|
|
409,576
|
|
64,609
|
Total
assets
|
704,876
|
|
773,796
|
|
122,063
|
Liabilities and
Equities
Current
liabilities
|
As of March
31,
|
2021
|
|
2022
|
|
2022
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
Contract liabilities
|
42,629
|
|
106,330
|
|
16,773
|
Deferred revenue from governments
|
23,160
|
|
14,807
|
|
2,336
|
Borrowings
|
64,053
|
|
43,500
|
|
6,862
|
Other payables due to the controlling shareholder
|
1,379
|
|
1,379
|
|
218
|
Accounts payable
|
20,941
|
|
23,799
|
|
3,754
|
Accrued expenses and other payables
|
91,493
|
|
108,589
|
|
17,129
|
Income tax payables
|
6,015
|
|
22,921
|
|
3,616
|
Amounts due to related parties
|
16,839
|
|
17,634
|
|
2,782
|
Liability related to discontinued operation
|
35,708
|
|
52,585
|
|
8,295
|
Total current
liabilities
|
302,217
|
|
391,544
|
|
61,765
|
|
|
|
|
|
|
Borrowings
|
69,188
|
|
88,610
|
|
13,978
|
Deferred revenue from governments
|
-
|
|
-
|
|
-
|
Other long-term liabilities
|
12,644
|
|
12,384
|
|
1,953
|
Deferred tax liabilities
|
10,961
|
|
16,417
|
|
2,590
|
Liability related to discontinued operation
|
-
|
|
15,097
|
|
2,381
|
Total non-current
liabilities
|
92,793
|
|
132,507
|
|
20,903
|
Total
liabilities
|
395,010
|
|
524,051
|
|
82,667
|
|
|
|
|
|
|
Equity/(Deficit)
|
|
|
|
|
|
Ordinary shares (US$0.00001 par value; 5,000,000,000
shares
authorized; and 86,838,700 shares issued and outstanding as of
March 31, 2021, and 86,838,700 shares issued and outstanding as
of March 31, 2022, respectively)
|
6
|
|
6
|
|
1
|
Additional paid-in capital
|
389,199
|
|
389,199
|
|
61,395
|
Statutory reserves
|
41,591
|
|
49,060
|
|
7,739
|
Accumulated income
|
120,283
|
|
188,163
|
|
29,682
|
Accumulated other comprehensive income
|
(804)
|
|
293
|
|
46
|
Total
(deficit)/equity attributable to the shareholders of the
Company
|
309,708
|
|
250,395
|
|
39,499
|
Non-controlling interests
|
158
|
|
(650)
|
|
(102)
|
Total
(deficit)/equity
|
309,866
|
|
249,745
|
|
39,396
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
and (deficit)/equity
|
704,876
|
|
773,796
|
|
122,063
|
First High-School
Education Group Co., Ltd.
|
Reconciliation of
GAAP to non-GAAP Measure
|
(All amounts in
thousands)
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
2021
|
|
2022
|
|
2022
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
Reconciliation of net
income to adjusted net income:
|
|
|
|
|
|
|
Net
income
|
|
5,365
|
|
19,550
|
|
3,084
|
Add:
|
|
|
|
|
|
|
Share-based compensation expenses
|
|
-
|
|
-
|
|
-
|
Donation expenses
|
|
-
|
|
-
|
|
-
|
Transaction costs in relation to previous financing
activities
|
|
-
|
|
-
|
|
-
|
Tax
effects of adjustments*
|
|
-
|
|
-
|
|
-
|
Adjusted net
income
|
|
5,365
|
|
19,550
|
|
3,084
|
|
* Tax effects were
determined based upon the nature, as well as the jurisdiction, of
each reconciliation
adjustment at the respective applicable income tax rate.
|
View original
content:https://www.prnewswire.com/news-releases/first-high-school-education-group-announces-first-quarter-2022-unaudited-financial-results-301548774.html
SOURCE First High-School Education Group Co., Ltd