PR Newswire | Jun 28, 2021 09:01AM EDT

06/28 08:00 CDT

Ambow Education Announces First Quarter 2021 Financial Results BEIJING, June 28, 2021

BEIJING, June 28, 2021 /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 period ended March 31, 2021.

"We are pleased to start 2021 with better-than-expected first quarter results, highlighted by a 43.5% year-over-year increase in total revenues, thanks to the strong execution of our overall strategy which focuses on operational improvements," said Dr. Jin Huang, Ambow's President and Chief Executive Officer. "Specifically, we further revived solid gross margin expansion for both of our CP&CE Programs and K-12 Schools segments during the quarter, lifting it even higher than the same period in 2019. As a prominent education brand in China, we remain committed to delivering in-demand and high-quality educational services for our learners in their pursuit of academic and professional excellence."

"Supported by our industry-leading intelligent education products, we endeavor to provide superior online talent training to address various career enhancement needs. For example, we cooperated with Kylinsoft to provide a suite of education services across a series of Kylinsoft operating system products, spanning training courses, certification programs, internship placement, employment services and industrial colleges. We also formed a strategic cooperation with Adobe Authorized Training Centre to provide international certification services for Chinese students. Meanwhile, we further integrated advanced technology into our educational services to increase our competitiveness. We launched a blockchain-based career-oriented education skills recognition system to redefine educational accreditation for professional talents. Looking ahead, we will remain focused on harnessing our technological capabilities to offer a broader range of education services in China and U.S., while enhancing operating efficiency. We believe these efforts, coupled with our 20-year proven track record in the education sector, will help us grow our overall business while delivering long-term value to our shareholders," concluded Dr. Huang.

First Quarter 2021 Financial Highlights

* Net revenues for the first quarter of 2021 increased by 43.5% to RMB129.6 million (US$19.8 million) from RMB90.3 million in the same period of 2020. The increase was primarily due to the full business recovery from the impact of the COVID-19 pandemic and higher revenue contribution from NewSchool of Architecture and Design, LLC ("NewSchool") which was acquired and consolidated by the Company from March 2020. * Gross profit for the first quarter of 2021 increased by 287.8% to RMB44.6 million (US$6.8 million) from RMB11.5 million in the same period of 2020. Gross profit margin was 34.4%, compared with 12.7% for the first quarter of 2020. The increases in gross profit and margin were mainly attributable to faster growth of net revenues in the period. * Operating expenses for the first quarter of 2021 increased by 17.5% to RMB59.8 million (US$9.1 million) from RMB50.9 million in the same period of 2020. The increase was primarily attributable to more expenses related to NewSchool compared to the first quarter of 2020 as the consolidation of NewSchool started in March 2020. * Operating loss for the first quarter of 2021 was RMB15.2 million (US$2.3 million), compared to operating loss of RMB39.3 million in the same period of 2020. * Net loss attributable to ordinary shareholders for the first quarter of 2021 was RMB14.3 million (US$2.2 million), or RMB0.31 (US$0.05) per basic and diluted share, compared with net income of RMB6.0 million, or RMB0.14 (US$0.02) per basic and diluted share for the same period of 2020. Excluding the one-time gain from bargain purchase of NewSchool of RMB40.3 million, net loss for the first quarter of 2020 was RMB34.3 million or RMB0.79 (US$0.11) per basic and diluted share. * As of March 31, 2021, Ambow maintained strong cash resources of RMB281.4 million (US$42.9 million), comprised of cash and cash equivalents of RMB121.4 million (US$18.5 million), short-term investments of RMB158.2 million (US$24.1 million) and restricted cash of RMB1.8 million (US$0.3 million). * As of March 31, 2021, the Company's deferred revenue balance was RMB181.3 million (US$27.7 million), representing a 10.8% increase compared with RMB163.7 million as of December 31, 2020, mainly attributable to the tuition and fees collected at K-12 business segment for the spring semester of the 2020-2021 academic year, and increase in deferred revenue at CP&CE business segment.

The Company's first quarter 2021 financial and operating results 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 first quarter of 2021 are based on the effective exchange rate of 6.5518 as of March 31, 2021; all amounts translated from RMB to U.S. dollars for the first quarter of 2020 are based on the effective exchange rate of 7.0808 as of March 31, 2020; all amounts translated from RMB to U.S. dollars as of December 31, 2020 are based on the effective exchange rate of 6.5250 as of December 31, 2020. 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: +86-10-6206-8000Email: ir@ambow.com

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 March 31, As of December 31,

2021 2020

US$ RMB RMB

ASSETS

Current assets:

Cash and cash equivalents 18,526 121,381 118,821

Restricted cash 271 1,773 824

Short term investments, available for sale 11,326 74,206 117,854

Short term investments, held to maturity 12,821 84,000 45,000

Accounts receivable, net 2,863 18,758 20,972

Amounts due from related parties 464 3,037 3,024

Prepaid and other current assets, net 18,184 119,136 117,634

Total current assets 64,455 422,291 424,129

Non-current assets:

Property and equipment, net 21,483 140,751 144,492

Land use rights, net 260 1,704 1,715

Intangible assets, net 8,287 54,296 54,808

Goodwill 3,924 25,710 25,710

Deferred tax assets, net 901 5,903 6,338

Operating lease right-of-use asset 36,775 240,945 247,608

Finance lease right-of-use asset 870 5,700 5,850

Other non-current assets, net 21,700 142,176 139,067

Total non-current assets 94,200 617,185 625,588



Total assets 158,655 1,039,476 1,049,717



LIABILITIES

Current liabilities:

Short-term borrowing * 1,526 10,000 10,000

Deferred revenue * 27,676 181,325 163,699

Accounts payable * 2,795 18,311 19,423

Accrued and other liabilities * 31,273 204,895 209,590

Income taxes payable, current * 28,298 185,403 184,638

Amounts due to related parties * 388 2,543 2,543

Operating lease liability, current * 7,506 49,177 53,702

Total current liabilities 99,462 651,654 643,595

Non-current liabilities:

Long-term borrowing 1,475 9,662 9,594

Other non-current liabilities * 29 189 292

Income taxes payable, non-current * 5,368 35,173 34,763

Operating lease liability, non-current * 32,944 215,843 220,319

Total non-current liabilities 39,816 260,867 264,968



Total liabilities 139,278 912,521 908,563



EQUITY

Preferred shares

(US$ 0.003 par value;1,666,667 shares authorized, nil issued and outstanding as of - - - December 31, 2020 and March 31, 2021)

Class A Ordinary shares

(US$0.003 par value; 66,666,667 and 66,666,667 shares authorized, 41,923,276 and 41,935,776 shares issued and 121 794 794 outstanding as of December 31, 2020 and March 31, 2021, 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 14 90 90 December 31, 2020 and March 31, 2021, respectively)

Additional paid-in capital 541,117 3,545,292 3,545,073

Statutory reserve 643 4,210 4,210

Accumulated deficit (524,051) (3,433,475) (3,419,146)

Accumulated other comprehensive income 1,870 12,254 12,101

Total Ambow Education Holding Ltd.'s equity 19,714 129,165 143,122

Non-controlling interests (337) (2,210) (1,968)

Total equity 19,377 126,955 141,154

Total liabilities and equity 158,655 1,039,476 1,049,717



* 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 AND COMPREHENSIVE INCOME (LOSS)

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

For the three months ended March 31,

2021 2021 2020

US$ RMB RMB

NET REVENUES

Educational program and services 19,768 129,514 90,267

Intelligent program and services 14 91 12

Total net revenues 19,782 129,605 90,279

COST OF REVENUES

Educational program and services (12,796) (83,839) (77,433)

Intelligent program and services (175) (1,144) (1,298)

Total cost of revenues (12,971) (84,983) (78,731)

GROSS PROFIT 6,811 44,622 11,548

Operating expenses:

Selling and marketing (1,679) (11,000) (10,549)

General and administrative (7,165) (46,945) (39,201)

Research and development (282) (1,845) (1,131)

Total operating expenses (9,126) (59,790) (50,881)

OPERATING LOSS (2,315) (15,168) (39,333)

OTHER INCOME (EXPENSES)

Interest income 314 2,060 1,990

Foreign exchange gain (loss), net 33 215 26

Other (loss) income, net (143) (940) 1,406

Gain from deregistration of subsidiaries 22 144 -

Gain on the bargain purchase - - 40,273

Gain on sale of investment available for sale 114 747 526

Total other income 340 2,226 44,221

(LOSS) INCOME BEFORE INCOME TAX AND NON- (1,975) (12,942) 4,888 CONTROLLING INTEREST

Income tax (expense) benefit (249) (1,629) 739

NET (LOSS) INCOME (2,224) (14,571) 5,627

Less: Net loss attributable to non-controlling interest (37) (242) (412)

NET (LOSS) INCOME ATTRIBUTABLE TO ORDINARY (2,187) (14,329) 6,039 SHAREHOLDERS

NET (LOSS) INCOME (2,224) (14,571) 5,627

OTHER COMPREHENSIVE INCOME, NET OF TAX

Foreign currency translation adjustments 18 115 433

Unrealized gains on short term investments

Unrealized holding gains arising during period 89 582 441

Less: reclassification adjustment for gains included in net 83 544 287 income

Other comprehensive income 24 153 587

TOTAL COMPREHENSIVE (LOSS) INCOME (2,200) (14,418) 6,214

Net (loss) income per share - basic and diluted (0.05) (0.31) 0.14

Weighted average shares used in calculating basic and diluted 46,635,997 46,635,997 43,570,918 net (loss) income 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

Accumulated

Class A Ordinary Class C Ordinary Additional 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, 41,923,276 794 4,708,415 90 3,545,073 4,210 (3,419,146) 12,101 (1,968) 141,154 2021

Share-based compensation - - - - 219 - - - - 219

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

Foreign currency translation - - - - - - - 115 - 115 adjustment

Unrealized gain on investment, net of income - - - - - - - 38 - 38 taxes

Net loss - - - - - - (14,329) - (242) (14,571)

Balance as of March 31, 41,935,776 794 4,708,415 90 3,545,292 4,210 (3,433,475) 12,254 (2,210) 126,955 2021

Balance as of January 1, 38,858,199 730 4,708,415 90 3,508,745 20,185 (3,371,815) 6,341 (680) 163,596 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

Impact on adoption of ASC - - - - - - (594) - - (594) 326

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

Discussion of Segment Operations

(All amounts in thousands)

For the three months ended March 31,

2021 2021 2020

US$ RMB RMB

(All amounts in thousands)

NET REVENUES

K-12 Schools 10,822 70,902 41,411

CP&CE Programs 8,960 58,703 48,868

Total net revenues 19,782 129,605 90,279

COST OF REVENUES

K-12 Schools (6,958) (45,589) (33,429)

CP&CE Programs (6,013) (39,394) (45,302)

Total cost of revenues (12,971) (84,983) (78,731)

GROSS PROFIT

K-12 Schools 3,864 25,313 7,982

CP&CE Programs 2,947 19,309 3,566

Total gross profit 6,811 44,622 11,548

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SOURCE Ambow Education Holding Ltd.