PR Newswire | Dec 17, 2020 09:02AM EST

12/17 08:00 CST

Ambow Education Announces Third Quarter 2020 Financial Results BEIJING, Dec. 17, 2020

BEIJING, Dec. 17, 2020 /PRNewswire/ -- Ambow Education Holding Ltd. ("Ambow" or the "Company") (NYSE American: AMBO), a leading national provider of educational and career enhancement services in China, today announced its unaudited financial and operating results for the three-month and nine-month periods ended September 30, 2020.

"While our business continued to be impacted by COVID-19-related macro headwinds during the third quarter of 2020, I am pleased to report that after a solid start to the new fall semester, revenue from the K-12 schools segment increased 18.8% year-over-year. Encouragingly, deferred revenue related to tuition and course fees and our education service platform increased 12.4% to US$37.9 million from the year-ago period and reached its highest level since 2015, reflecting the resilience of our business. Supported by ample cash resources and a healthy balance sheet, our core strength and fundamentals remain solid across our key segments," noted Dr. Jin Huang, Ambow's President and Chief Executive Officer. "We are excited that in September we won the bid for a Technical and Vocational Education and Training (TVET) Center project that is financially supported by the Asian Development Bank as a part of its inclusive growth project in Ziyang City of Sichuan Province. This achievement demonstrates our exceptional capabilities and leading position in the vocational and technical education sector."

"We continued to execute our key strategies to pursue more balanced growth, while providing high quality educational services that better engage students against the challenging backdrop of the COVID-19 environment. Leveraging our 20-year proven track record in curriculum development, professional training, job placement and education technology innovation, we are making massive progress in building out our online-to-offline education SaaS platform, Huanyujun Education Hub. We have gradually started rolling out Amazon Web Services (AWS) and Cisco-authorized certification and training courses on the Huanyujun Education Hub, which is already supported by our cutting-edge educational solutions such as Ambow Panorama Digital Teaching System and Ambow Cloud Platform. We believe these best-in-class educational services and course offerings will broaden our appeal to a wider student base as they pursue professional certifications for their technology careers."

"Going forward, we will maintain our strategic efforts to enrich our educational service offerings, optimize operating efficiencies, and increase student enrollments and engagement. We remain confident that our efforts will support the long-term sustainability of our overall business," concluded Dr. Huang.

Third Quarter 2020 Financial Highlights

* Net revenues for the third quarter of 2020 decreased by 6.2% to US$16.6 million from US$17.7 million in the same period of 2019. The decrease was primarily from fewer services provided at the Company's tutoring centers, training offices and college campuses. This was partially offset by the increase in the revenue from K-12 schools driven by higher enrollment and the revenue from NewSchool of Architecture and Design, LLC ("NewSchool"), acquired in the first quarter of 2020. * Gross profit for the third quarter of 2020 decreased by 77.8% to US$1.0 million from US$4.5 million in the same period of 2019. Gross profit margin was 6.0%, compared with 25.4% for the third quarter of 2019. The decreases in gross profit and margin were mainly attributable to the decrease in net revenues from CP&CE Programs. * Operating expenses for the third quarter of 2020 decreased by 3.4% to US$14.0 million from US$14.5 million for the same period of 2019. The decrease was primarily attributable to stringent expense controls to improve operating efficiency, and partially offset by operating expenses related to NewSchool. * Net loss attributable to ordinary shareholders was US$12.5 million, or US$0.29 per basic and diluted share, compared with a net loss of US$10.2 million, or US$0.23 per basic and diluted share, for the third quarter of 2019. * As of September 30, 2020, Ambow maintained strong cash resources of US$44.0 million, comprised of cash and cash equivalents of US$12.7 million and short-term investments of US$31.3 million. * As of September 30, 2020, the Company's deferred revenue balance was US$37.9 million, representing a 59.9% increase from US$23.7 million as of December 31, 2019, mainly attributable to the tuition and fees collected at K-12 schools for the fall semester of the 2020-2021 academic year, and deferred revenue collected from our colleges for the fall semester of 2020.

First Nine Months 2020 Financial Highlights

* Net revenues for the first nine months of 2020 decreased by 8.0% to US$52.8 million from US$57.4 million in the same period of 2019. The decrease was primarily from fewer boarding and other ancillary services provided for K-12 schools as result of temporary COVID-19-related campus closures in the first half of 2020, and fewer services provided at the Company's tutoring centers, training offices and college campuses. This was partially offset by the revenue from NewSchool which was acquired in the period. * Gross profit for the first nine months of 2020 decreased by 40.5% to US$11.6 million from US$19.5 million in the same period of 2019. Gross profit margin was 22.0%, compared with 34.0% for the first nine months of 2019. The decreases in gross profit and margin were mainly attributable to the decrease in net revenues from CP&CE Programs. * Operating expenses for the first nine months of 2020 decreased by 1.9% to US$30.4 million from US$31.0 million for the same period of 2019. The decrease was primarily attributable to lower expenditures due to the temporary suspension of operations at training offices and tutoring centers in the period as a part of the national pandemic containment efforts, as well as stringent expense controls to improve operating efficiency, and partially offset by NewSchool's operating expenses. * Net loss attributable to ordinary shareholders was US$10.9 million, or US$0.25 per basic and diluted share, compared with a net loss of US$12.3 million, or US$0.28 per basic and diluted share, for the first nine months of 2019.

On October 5, 2020, the Company completed a registered direct offering of 1,507,538 American Depositary Shares ("ADSs", representing 3,015,076 Class A Ordinary Shares), at a purchase price of $3.98 per ADS. The Company also issued to investors registered warrants to purchase up to an aggregate amount of 603,016 ADSs (representing 1,206,032 Class A Ordinary Shares). Net proceeds from this offering were approximately US$5.2 million.

The Company's financial and operating results for the third quarter and first nine months of 2020 can also be found on its Form 6-K filed with the U.S. Securities and Exchange Commission at www.sec.gov.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all amounts translated from RMB to U.S. dollars for the third quarter and first nine months of 2020 are based on the effective exchange rate of 6.7896 as of September 30, 2020; all amounts translated from RMB to U.S. dollars for the third quarter and first nine months of 2019 are based on the effective exchange rate of 7.1477 as of September 30, 2019; all amounts translated from RMB to U.S. dollars as of December 31, 2019 are based on the effective exchange rate of 6.9618 as of December 31, 2019. The exchange rates were according to the middle rate as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.

About Ambow Education Holding Ltd.

Ambow Education Holding Ltd. is a leading national provider of educational and career enhancement services in China, offering high-quality, individualized services and products. With its extensive network of regional service hubs complemented by a dynamic proprietary learning platform and distributors, Ambow provides its services and products to students in 15 out of the 34 provinces and autonomous regions within China.

Follow us on Twitter: @Ambow_Education

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 and quotations from management in this announcement, as well as Ambow's strategic and operational plans, contain forward-looking statements. Ambow 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. 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 statements, including but not limited to the following: the Company's goals and strategies, expansion plans, the expected growth of the content and application delivery services market, the Company's expectations regarding keeping and strengthening its relationships with its customers, and the general economic and business conditions in the regions where the Company provides its solutions and services. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and Ambow undertakes no duty to update such information, except as required under applicable law.

For investor and media inquiries please contact:

Ambow Education Holding Ltd.Tel: +86-10-6206-8000

The Piacente Group | Investor RelationsTel: +1-212-481-2050 or +86-10-6508-0677E-mail: ambow@tpg-ir.com

AMBOW EDUCATION HOLDING LTD. UNAUDITED CONSOLIDATED BALANCE SHEETS (All amounts in thousands, except for share and per share data)



As of September 30, As of December 31,

2020 2019

US$ RMB RMB

ASSETS

Current assets:

Cash and cash equivalents 12,677 86,072 157,600

Restricted cash 2,006 13,621 -

Short term investments, available for sale 26,898 182,629 57,487

Short term investments, held to maturity 4,419 30,000 31,000

Accounts receivable, net 3,616 24,549 17,939

Amounts due from related parties 907 6,159 2,318

Prepaid and other current assets, net 23,150 157,177 133,296

Total current assets 73,673 500,207 399,640

Non-current assets:

Property and equipment, net 21,603 146,678 157,463

Land use rights, net 254 1,726 1,759

Intangible assets, net 8,168 55,458 56,607

Goodwill 3,787 25,710 60,353

Deferred tax assets, net 538 3,653 10,195

Operating lease right-of-use asset 38,704 262,787 257,361

Finance lease right-of-use asset 884 6,000 6,450

Other non-current assets, net 12,429 84,388 70,971

Total non-current assets 86,367 586,400 621,159



Total assets 160,040 1,086,607 1,020,799



LIABILITIES

Current liabilities:

Short-term borrowings * 2,948 20,013 -

Deferred revenue * 37,906 257,368 165,111

Accounts payable * 2,284 15,500 14,718

Accrued and other liabilities * 27,277 185,203 192,957

Income taxes payable, current * 27,060 183,729 180,715

Amounts due to related parties * 718 4,876 1,971

Operating lease liability, current * 7,459 50,642 53,512

Total current liabilities 105,652 717,331 608,984

Non-current liabilities:

Income taxes payable, non-current * 5,094 34,589 32,152

Operating lease liability, non-current * 34,723 235,756 216,067

Total non-current liabilities 39,817 270,345 248,219



Total liabilities 145,469 987,676 857,203



EQUITY

Preferred shares

(US$ 0.003 par value;1,666,667 shares authorized, nil issued and outstanding as of - - - December 31, 2019 and September 30, 2020)

Class A Ordinary shares

(US$0.003 par value; 66,666,667 and 66,666,667 shares authorized, 38,858,199 and 38,895,700 shares issued and 108 731 730 outstanding as of December 31, 2019 and September 30, 2020, respectively)

Class C Ordinary shares

(US$0.003 par value; 8,333,333 and 8,333,333 shares authorized, 4,708,415 and 4,708,415 shares issued and outstanding as of 13 90 90 December 31, 2019 and September 30, 2020, respectively)

Additional paid-in capital 516,868 3,509,330 3,508,745

Statutory reserve 620 4,210 20,185

Accumulated deficit (505,202) (3,430,122) (3,371,815)

Accumulated other comprehensive income 2,420 16,429 6,341

Total Ambow Education Holding Ltd.'s equity 14,827 100,668 164,276

Non-controlling interests (256) (1,737) (680)

Total equity 14,571 98,931 163,596

Total liabilities and equity 160,040 1,086,607 1,020,799



* All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets.

AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands, except for share and per share data)

For the nine months ended For the three months ended September 30, September 30,

2020 2020 2019 2020 2020 2019

US$ RMB RMB US$ RMB RMB

NET REVENUES

Educationalprogram and 52,742 358,098 409,367 16,560 112,439 126,729 services

Intelligentprogram and 52 352 1,193 40 269 (173) services

Total net 52,794 358,450 410,560 16,600 112,708 126,556revenues

COST OF REVENUES

Educationalprogram and (40,898) (277,683) (265,454) (15,518) (105,359) (92,934) services

Intelligentprogram and (345) (2,340) (5,818) (130) (882) (1,109) services

Total cost of (41,243) (280,023) (271,272) (15,648) (106,241) (94,043)revenues

GROSS PROFIT 11,551 78,427 139,288 952 6,467 32,513

Operatingexpenses:

Selling and (5,576) (37,861) (40,778) (2,011) (13,655) (15,607)marketing

General and (18,739) (127,230) (140,510) (6,331) (42,987) (48,116)administrative

Research and (656) (4,456) (1,555) (259) (1,758) (1,087)development

Impairment loss (5,405) (36,699) (38,754) (5,405) (36,699) (38,754)

Total operating (30,376) (206,246) (221,597) (14,006) (95,099) (103,564)expenses

OPERATING LOSS (18,825) (127,819) (82,309) (13,054) (88,632) (71,051)

OTHER INCOME(EXPENSES)

Interest income 1,053 7,150 3,343 444 3,015 1,823

Foreign exchangegain (loss), 5 31 46 (1) (4) 45 net

Other income 124 840 193 (105) (712) 7(loss), net

Gain fromderegistration 584 3,967 1,279 10 70 -of subsidiaries

Gain on disposalof 111 752 - 111 752 - subsidiaries

Gain on the 5,932 40,273 - - - -bargain purchase

Gain on sale ofinvestment 365 2,477 422 209 1,421 3 available forsale

Total other 8,174 55,490 5,283 668 4,542 1,878income

LOSS BEFOREINCOME TAX AND NON- (10,651) (72,329) (77,026) (12,386) (84,090) (69,173) CONTROLLING INTEREST

Income tax (353) (2,399) (11,032) (114) (776) (3,634)expense

NET LOSS (11,004) (74,728) (88,058) (12,500) (84,866) (72,807)

Less: Net(loss)/income attributable to (153) (1,040) (269) (49) (332) 4non- controllinginterest

NET LOSSATTRIBUTABLE (10,851) (73,688) (87,789) (12,451) (84,534) (72,811) TO ORDINARY SHAREHOLDERS

NET LOSS (11,004) (74,728) (88,058) (12,500) (84,866) (72,807)

OTHER COMPREHENSIVE INCOME, NET OFTAX

Foreign currencytranslation 1,581 10,731 (3,267) 354 2,403 (93) adjustments

Unrealizedgains on shortterm investments

Unrealizedholding gains 224 1,518 1,238 85 578 538 arisingduring period

Less:reclassification adjustment 318 2,161 489 220 1,493 37for gains included innet income

Othercomprehensive 1,487 10,088 (2,518) 219 1,488 408income (loss)

TOTAL COMPREHENSIVE (9,517) (64,640) (90,576) (12,281) (83,378) (72,399) LOSS

Net loss pershare - basic (0.25) (1.69) (2.02) (0.29) (1.94) (1.67)and diluted

Weighted averageshares used in calculating 43,583,448 43,583,448 43,496,848 43,595,871 43,595,871 43,512,447basic and diluted netloss per share

AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(All amounts in thousands, except for share and per share data)

Attributable to Ambow Education Holding Ltd.'s Equity

Retained Accumulated

Class A Ordinary Class C Ordinary Additional Earnings other Non-

shares shares paid-in Statutory (Accumulated comprehensive controlling Total

Shares Amount Shares Amount capital reserves deficit) income Interest Equity

RMB RMB RMB RMB RMB RMB RMB RMB

Balance as of January 1, 38,858,199 730 4,708,415 90 3,508,745 20,185 (3,372,409) 6,341 (680) 163,002 2020

Share-based compensation - - - - 238 - - - - 238

Issuance of ordinary shares 12,500 0 - - (0) - - - - - for restricted stock award

Foreign currency translation - - - - - - - 433 - 433 adjustment

Unrealized gain on investment, net of income - - - - - - - 154 - 154 taxes

Net income/(loss) - - - - - - 6,039 - (412) 5,627

Balance as of March 31, 38,870,699 730 4,708,415 90 3,508,983 20,185 (3,366,370) 6,928 (1,092) 169,454 2020

Share-based compensation - - - - 242 - - - - 242

Issuance of ordinary shares 12,500 1 - - (1) - - - - - for restricted stock award

Foreign currency translation - - - - - - - 7,895 - 7,895 adjustment

Unrealized gain on investment, net of income - - - - - - - 118 - 118 taxes

Deregistration of - - - - - (15,473) 15,473 - - - subsidiaries

Net income/(loss) - - - - - - 4,807 - (297) 4,510

Balance as of June 30, 38,883,199 731 4,708,415 90 3,509,224 4,712 (3,346,090) 14,941 (1,389) 182,219 2020

Share-based compensation - - - - 239 - - - - 239

Issuance of ordinary shares 12,501 0 - - (0) - - - - - for restricted stock award

Foreign currency translation - - - - - - - 2,403 - 2,403 adjustment

Unrealized gain on investment, net of income - - - - - - - (915) - (915) taxes

Deregistration of subsidiary - - - - - - - - (16) (16)

Disposal of subsidiaries - - - - (133) (502) 502 - - (133)

Net loss - - - - - - (84,534) - (332) (84,866)

Balance as of 38,895,700 731 4,708,415 90 3,509,330 4,210 (3,430,122) 16,429 (1,737) 98,931 September 30, 2020

Balance as of January 1, 38,756,289 728 4,708,415 90 3,507,123 20,149 (3,271,838) 8,305 (1,786) 262,771 2019

Share-based compensation - - - - 872 - - - - 872

Issuance of ordinary shares 28,646 1 - - (1) - - - - - for restricted stock award

Foreign currency translation - - - - - - - (2,428) - (2,428) adjustment

Unrealized gain on investment, net of income - - - - - - - 75 - 75 taxes

Net loss - - - - - - (23,756) - (93) (23,849)

Balance as of March 31, 38,784,935 729 4,708,415 90 3,507,994 20,149 (3,295,594) 5,952 (1,879) 237,441 2019

Share-based compensation - - - - 266 - - - - 266

Issuance of ordinary shares 19,097 0 - - (0) - - - - - for restricted stock award

Foreign currency translation - - - - - - - (746) - (746) adjustment

Unrealized gain on investment, net of income - - - - - - - 173 - 173 taxes

Addition of noncontrolling interests resulting from - - - - - - - - 502 502 new subsidiaries

Net income (loss) - - - - - - 8,778 - (180) 8,598

Balance as of June 30, 38,804,032 729 4,708,415 90 3,508,260 20,149 (3,286,816) 5,379 (1,557) 246,234 2019

Share-based compensation - - - - 244 - - - - 244

Foreign currency translation - - - - - - - (93) - (93) adjustment

Unrealized gain on investment, net of income - - - - - - - 501 - 501 taxes

Net (loss) / income - - - - - - (72,811) - 4 (72,807)

Balance as of 38,804,032 729 4,708,415 90 3,508,504 20,149 (3,359,627) 5,787 (1,553) 174,079 September 30, 2019

Discussion of Segment Operations

(All amounts in thousands)

For the nine months ended For the three months ended September 30, September 30,

2020 2020 2019 2020 2020 2019

US$ RMB RMB US$ RMB RMB

NET REVENUES

K-12 Schools 27,360 185,766 203,214 8,685 58,966 52,256

CP&CE Programs 25,434 172,684 207,346 7,915 53,742 74,300

Total net 52,794 358,450 410,560 16,600 112,708 126,556revenues

COST OF REVENUES

K-12 Schools (17,670) (119,972) (128,887) (6,692) (45,430) (38,794)

CP&CE Programs (23,573) (160,051) (142,385) (8,956) (60,811) (55,249)

Total cost of (41,243) (280,023) (271,272) (15,648) (106,241) (94,043)revenues

GROSS PROFIT

K-12 Schools 9,690 65,794 74,327 1,993 13,536 13,462

CP&CE Programs 1,861 12,633 64,961 (1,041) (7,069) 19,051

Total gross 11,551 78,427 139,288 952 6,467 32,513profit

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SOURCE Ambow Education Holding Ltd.