Bright Scholar Education Q3 2024 Earnings Report

Bright Scholar Education EPS Results

• Actual EPS: $0.20
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Bright Scholar Education Revenue Results

• Actual Revenue: $76.51 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Bright Scholar Education Announcement Details

• Quarter: Q3 2024
• Date: 8/2/2024
• Time: Before Market Opens
• Conference Call Date: Friday, August 2, 2024
• Conference Call Time: 8:00AM ET

Bright Scholar Education (NYSE:BEDU), an education service provider, operates and provides K-12 schools and complementary education services in China, Hong Kong, Canada, the United States, and the United Kingdom. The company operates in three segments: Overseas Schools; Complementary Education Services; and Domestic Kindergartens and K-12 Operation Services. It also offers a range of complementary education services, including camps and after-school programs, and international education consulting services, as well as career counselling and international contest training services. The company was founded in 1994 and is headquartered in Foshan, China.

Bright Scholar Education Q3 2024 Earnings Call Transcript

[Operator]

Hello, ladies and gentlemen. Thank you for standing by for Bright Scholar's Third Quarter of Fiscal 20 24 Earnings Conference Call. At this time, all participants are in listen only mode. After management's remarks, there will be a question and answer session. Today's conference call is being recorded.

[Operator]

I will now turn the call over to your host for Piacente Financial Communications, Andrea Guo, IR Counsel for the company. Please go ahead, Andrea.

[Speaker 1]

Thank you very much. Hello, everyone, and welcome to Brett Scholar's earnings conference call for the Q3 of the 2024 fiscal year. The company's financial and operational results were released earlier today and are available online by visiting the IR section of our website at ir.bratzcholar.com. Please note that today's discussion will contain forward looking statements made under the Safe Harbor provisions of the U. S.

[Speaker 1]

Private Securities Litigation Reform Act of 1995. Forward looking statements involve inherent risks and uncertainties. As such, the company's results may materially differ from today's views. Further information regarding this and other risks and uncertainties is included in the company's prospectus and other public filings as filed with the U. S.

[Speaker 1]

SEC. The company does not assume any obligation to update any forward looking statements, except as required under applicable law. Additionally, Bright Scholar's earnings press release and this conference call include discussions of unaudited GAAP and non GAAP financial measures. First quarter's earnings press release contains a reconciliation of the unaudited non GAAP measures. Please also note that all numbers are in RMB.

[Speaker 1]

Participants on today's call will include our Chief Executive Officer, Mr. Robert Niu, who will provide a company overview and update on our strategic initiatives with highlights from the quarter. Our Chief Financial Officer, Ms. Cindy Zhang, will then provide details on the company's financial results for the period. We will then open the call for questions.

[Speaker 1]

I will now turn the call over to Brightcove's Chief Executive Officer, Ms. Robert Liu. Please go ahead, sir.

[Speaker 2]

Hello, everyone, and thank you for joining us on today's call. We are pleased to announce that Bright Scholar achieved solid quarterly results amid uncertain and evolving external environment in the 3rd fiscal quarter. Our strategic execution was unwavering, propelling our dedicated initiatives that fueled our global business. We also made headway in optimizing our organizational structure, which improved our operating efficiency and drove another quarter of positive adjusted net income. Our total revenues grew 6% quarter over quarter, led by ongoing growth in our dominant overseas schools business.

[Speaker 2]

This growth is testament to our business resilience and vitality. In addition, our further enhanced and utilization of our facility and teaching resources with utilization rate of our overseas schools increasing to 62% for the quarter. Leveraging our established global network of schools and ecosystems, we believe we can accelerate our overseas revenue growth and create a sustainable value for both customers and shareholders over the long term. Now, I'd like to share some details from the quarter on each of our business segments. First, overseas schools sustained a solid growth momentum and remain our strongest segment.

[Speaker 2]

Revenue was up 19.4% year over year in the 3rd fiscal quarter, extending the double digit year over year growth streak this segment has achieved for the past 5 consecutive quarters. This business is our growth engine and primary revenue source accounting for nearly 48% of our total revenue for the period. Furthermore, our overseas school student enrollment grew by 8% year over year this quarter. Year to date, over 900 students have accepted offers from our September intake. Our students have demonstrated exceptional performance across different facets of school life, particularly showcasing impressive academic achievements.

[Speaker 2]

This year, 3 in every 5 of our CAST Global School students have received an offer from a prestigious Russell Group University, globally recognized for its commitment to world class research and academic excellence. The Russell Group compromised 24 member universities, including Oxford and Cambridge. Furthermore, 24 of our CAT Global School students received offers from renowned G5 Universities of Oxford, Cambridge, Imperial College London, the London School of Economics and University College London. We remain steadfast in our commitment to facilitating our students' education, educational excellency and creating opportunities for their academic success as well as well rounded developments. Overall, we are pleased with advancements we made with our overseas schools business in the 3rd fiscal quarter.

[Speaker 2]

Our dedication to delivering a top tier education to our students and equipping them for success in the global market is driving this business growth and supporting accelerated year over year enrollment. Moving on to our complementary education services, revenue from this segment decreased 18% year over year in the fiscal Q3 as we strategically reduced lower return and underutilized programs in alignment with our internal expectations. We also divested our non core career counseling business and international contest training business in June May. Our divestment strategy is geared towards focusing our resources on our high growth core overseas school business and streamlining our management efficiency. By reallocating resources, we aim to drive innovation and enhance service delivery in our overseas school business.

[Speaker 2]

As we move forward, we will continue to cultivate the international school markets, aligning our efforts with our long term vision and adapting to the dynamic environment. With our goal of leaner and more efficient operations in the 3rd fiscal quarter, we continue to optimize our organizational structure and enhance corporate governance. We conduct a wide array of health checks to identify issues in our overseas schools business and again a deeper understanding of these overseas operations. We dispatched a management team from our headquarters to directly oversee the overseas school business, establishing clear management responsibilities and reporting mechanisms. In addition, we also implemented advanced IT systems to enhance collaboration between our different departments and internal control teams.

[Speaker 2]

The gradual integration of our headquarters and overseas management teams not only help us reduce management costs, but more importantly allows the group's strategy to be executed more efficiently at the local level. Under this model, the organization's productivity has increased significantly. Our senior team can response to market dynamics with more agility paving the way for sustainable growth and innovation. In summary, the 3rd fiscal quarter has demonstrated that our business remain resilient and and is steadily improving in the face of dynamic market. We are operating with increasing efficiency and we'll continue to refine our operations to align with our goals.

[Speaker 2]

Our priority remains on expanding our steady overseas school business, while seeking opportunities to divest non core assets related to complementary education services and the domestic kindergarten and K-twelve operations. Moving forward, we will continue to advance our high growth, high return business, gearing up to see extensive growth opportunities that will strengthen our market share and trade it as a leading global education service provider. With that, I will turn the call over to our CFO, Ms. Cindy Zhang, who will discuss our key financial results. Please go ahead, Cindy.

[Speaker 3]

Thank you, Robert. Now I would like to discuss our financial results for the 3rd quarter of fiscal 2024. Please note all amounts are in RMB unless otherwise stated. We are pleased to report healthy financial results in the 3rd fiscal quarter. Our total revenues grew by 6.2% quarter over quarter driven by gains in our overseas goods business.

[Speaker 3]

Ongoing optimization in our cost structure and improved operating efficiency drove our gross margin up by 3 17 basis points year over year and 5.60 basis points quarter over quarter and we achieved profitability for the 3rd consecutive quarter on a non GAAP basis. Looking at our financial results for the 3rd fiscal quarter in more detail. We achieved total revenue of RMB554 1,000,000 in the 3rd fiscal quarter. By segment, the largest proportion of our business overseas grew recorded revenue of RMB264.9 million contributing 47.8 percent of total revenue and growing by year over year and 6.7% quarter over quarter. Complementary education services and domestic kindergartens and K-twelve operation services revenues were 169 point $5,000,000 $119,600,000 respectively.

[Speaker 3]

Both decreased year over year as we continue to advance our portfolio and optimize cost through development of these non core education businesses. Cost of revenues was $351,200,000 or 60 or 63.4 percent of total revenue in the 3rd fiscal quarter. This compares with 67.1% for the same quarter last fiscal year, making the 3rd consecutive quarter of improved year over year cost as a percentage of total revenue. This improvement was mainly attributable to our cost saving measures and efficiency enhancements at our headquarters. Our gross profit increased by 5% year over year and 25.4 percent quarter over quarter for RMB202.7 million.

[Speaker 3]

Dollars The increase was mainly attributable to revenue growth in our overseas food with the segment's gross profit increasing 40.1% year over year. Gross margin increased to 36.6% from 32.9% for the same quarter last fiscal year and 31% for the previous quarter, a testament to our robust cost management system and enhanced utilization of facilities and teaching resources. Notably, our overseas business gross margin reached 33%, the highest level we've seen in the past 3 years. Adjusted gross profit was RMB205.9 million, representing a 4.7% increase year over year and a 24.9% increase quarter over quarter. SG and A expenses were RMB147 1,000,000 compared with RMB 100 and $42,000,000 for the same quarter last fiscal year.

[Speaker 3]

The slightly increase was mainly attributable to a rise in overseas personnel related expenses. Adjusted EBITDA was $76,600,000 compared with 90 6,000,000 for the same quarter last fiscal year in the previous quarter. Now turning to profitability, due to a RMB133 1,000,000 impairment loss on goodwill, we recorded a net loss of RMB 19.90 point $3,000,000 in the 3rd fiscal quarter. Excluding this one time impact, net income was 42,700,000 dollars compared with a net loss of $37,700,000 for the same quarter last fiscal year. Adjusted net income was $48,500,000 compared with an adjusted net loss of 30 $4,900,000 for the same quarter last fiscal year.

[Speaker 3]

As for our balance sheet, our cash position rebounded this quarter. As of May 31, 2024, we had cash and cash equivalents and restricted cash of RMB537,200,000 compared with RMB496,900,000 as of February 29, 2024. Moving forward, we will continue to prudently manage our costs and strategically reshape our portfolio to maximize returns while strengthening our financial position through margin improvement, fortifying our balance sheet and increasing cash flow, our strong cash position will continue to support us in mitigating the market dynamics. We are confident in maintaining a healthy balance sheet while achieving organic growth and creating sustainable value for our customers and shareholders in the long term. Okay.

[Speaker 3]

This concludes all our prepared remarks today. We will now open the call to questions. Operator, please go ahead.

[Operator]

We will now begin the question and answer session. And so no questions in the queue, I would like to turn the call back over to Andrea Guo for closing remarks.

[Speaker 1]

Thank you once again for joining us today. If you have any further questions, please feel free to contact Bragg Scholar's Investor Relations through the contact information provided on our website.

[Operator]

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.