Q3 2020 Earnings Call

The company does not assume any obligation to update any forward-looking statements except as required under applicable or please also know that Four Seasons education or Life release and this conference core include discussions on audited financial information as well as on audited non-GAAP Financial measures Four Seasons education package release contains our conflation of the on audited non-GAAP measures to the other hand most directly comparable gaap measures.

I will now turn the call.

Please go ahead.

Thank you, Olivia. And hello everyone. We achieved another quarter of steady performance with revenue of R&D 103.5 million representing year-over-year growth of 13.5% and adjusted net profit of R&B 14.5 minute. The stable financial performance was attributable to our Relentless efforts on growing The Core Business Kia just by The Continuous ramp-up of our Learning Centers during this quarter. We also maintained our momentum in diversifying cost off to better address the different academic demands of students across the entire K-12 age groups.

I want development plan for the Learning Center Network remained on track in the surface called quarter. We open at 2 new Learning Centers in jiangsu Province as a result. The phone number of Learning Centers increase the 2:55 in the third quarter compared to the preceding quarter going forward. We will concentrate our Network rebuilding efforts economic. Am I not become markets. In the meantime, we continue to prudently optimize our Learning Center Network and ongoing basis as we explore better location and the mortgage or rental terms the steady ramp-up for Learning Center and continuous optimization of a network will eventually through our Revenue growth.

addition

All right online classes as an efficient supplement to our offline courses are well-received by our students and have achieved a rapid development in the fiscal to Thursday. We have also been proactively explore new opportunities in the online education Market.

Besides our organic business growth will remain active in developing and cultivating various Innovative educational products and activities that permanently differentiate ourselves. I'm on the K-12 after school education providers. Our interests are into the courses have been well received by students from different age groups are met with project Flagship product. Continue the to gain the industry's attention. We have established a comprehensive math based curriculum and evaluation system in this whole program including cultural causes experimental activity classes as a magical games.

I'm Michelle testing system.

S off the quarter we in agreement with multiple regular key drop schools to introduce our meth lab teaching materials and courses to their students forget the enhancing Four Seasons education and awareness, you know targeting student group addition math lab project received a very positive feedback from educational professionals and participants in a fifth China education Innovation Expo this achievement demonstrate our commitment to education as well as our strong educational Innovation capabilities, which in turn will further increase student engagement with us. We will remain dedicated to curriculum development and Technology Innovation offer besides consistently improving. Our meth lab projects will consistently upgrading the self testing system. We have been proactively explore new opportunities. Yep.

Gear S2 Investments your online presence in the meanwhile. Also, we will

Keep cultivating our brand educational content and the teaching methods to consolidate our leading position and the brand reputation in K-12 education and the intellectual development.

We believe our enrollment growth Learning Center networks development top-notch performance as well as positive progress of other activities in the third quarter also to illustrate the exactness our strategy and the resiliency of our business model with the right strategy and efficient execution in place. We're optimistic about our performance for the quarter to come with strike experience in math education for active approach to diversifying cost offering level coverage extension as well as delicious Network construction would believe we're in the right trajectory to grow our business with that. I would now turn the call over to our vice president of finance ministry 1000 discuss key financial results.

Thank you, Joanne and hello, everyone.

Quarter results was solid and in line with our expectations, we deliver revenue of R&B 103.5 million representing year-over-year growth of 13.55% This top-line performance reflects the healthy ramp-up of our Learning Centers as a result of our established brand image among students and parents along with our cost control an optimization of operations. We realized operating income of R&B 10.9 million and continued to make positive strides in the third quarter page dedicated to optimizing our operation across all aspects on an ongoing basis in order to further improve our profitability. We are launching new launching food and expansion plans now, I'd like to walk you through further details of our third quarter fiscal year 2020 Financial results.

Revenue increased by Thirteen point five million to R&B 103.5 million for the third quarter of fiscal year too old too old from R&B 1991. I am in the same period of last year primarily attributable to the healthy ramp-up of new Learning Centers, which the company opened during fiscal year 2019 cost of revenues increased by 17.2% to R&B fifty point five million for the third quarter of fiscal year 2020 from R&B 43.1 million in the same period of last year primarily attributable to the increase in faculty staff cost.

Rock

Increase by 10.2% to arm be fifty-three million for the third quarter of fiscal year too old too old from 48.1 million in the same period of last year General and administrative expenses increased by 4.1% to R&B thirty three point four million from the third quarter of fiscal year to Old well from Arby's 32.1 million in the same period of last year sales and marketing expenses increased by 5% to our eight point eight million for the third quarter of fiscal year to 12 from R&B eight point three million in the same period of last year operating income wage increased by 41.5% to R&B ten point nine million from the third quarter of six V code 20300 strong arm birth.

7.7 million in the

I'm curious of last year, but wrapped its operating income which excluded share-based compensation expenses increased by 1.5% to earn 17 million from the third quarter of fiscal year too old too old from Arby's sixteen point seven million in the same period of last year.

Anxious income that was earned be one point five million from the third quarter of fiscal year 2012 compared with R&B 1.2 million in the same period of last year's income that was R&B 4.1 million for the third quarter of fiscal year two thousand T compared with other expenses of R&B two point six million in the same period of last year primarily due to Investments fair value change and foreign-exchange not income increased by three hundred and twenty 1.6% to R&B 11.3 million during the third quarter of fiscal year to all twenty compared with R&B 2007 million in the same period of last year.

Just hit nothing comes increased by 6% to R&B 14.5 million compared with R&B 13.7 million in the same period of time of year.

Basic and diluted net income attributable to ordinary shareholders for the third quarter of fiscal year two twenty were armed be $0.24 and our be $0.23 compared with R&B $0.06 and $0.05 respectively for the same period of last year long Camp basic and diluted net income attributable to ordinary shareholders for the third quarter of fiscal year to 20. Well armed be $0.31 and R&B such cents compared with armed be $0.28 and R&B $0.27 respectively for the same period of last year cash and cash equivalents as of November 3219. The company had cash and cash equivalents of R&B 564.6 million.

increase of

28.4% compared with R&B for 39.6 million as of February 20th 218

219

To be mindful of the length of earnings call.

For the first nine months of fiscal year to go to a financial results. I would encourage listeners to refer to our earnings press release for further details.

Looking forward for the fourth quarter of fiscal 220 the company expects to generate Revenue in the range of 80.9 million to R&B 84.1 million representing year-over-year growth of approximately 25% to 30% The above Outlook is based on current market conditions and reflect the company's preliminary estimates of market and operation operating conditions and the customer demand which are all subject to change. This concludes. My opinion of prepared remarks. We will now open the call to questions operator, please go ahead we will now begin the question-and-answer session to ask a question. You may press * then 1 on your touchtone phone.

if you were using a

Your phone, please pick up your handset before pressing the keys to withdraw your question, please press * then two for the benefit of all participants on Thursdays call. If you wish to ask your question to management in Chinese, please immediately repeat your question in English.

At this time, we will pause momentarily to assemble our roster.

The first question comes from Joy way of 86 research, please. Go ahead.

Hi, John . Congratulations on the solid. My question. Is this wait, could you come a little closer to the speaker phone or home phone, please?

Yes, thank you for your help. Okay, my questions will mostly focus on our future growth strategies firstly graphic. I could management share any metrics on the newly entered cities including Toronto and gentle like how many enrollment come from these two thousand zero three cities the run-up pays the better or worse than our expectation and also the reasons behind the results. And secondly, what is the ignition plan in the coming quarters both in Shanghai and also the newly entered cities what kind of measures will we take to promote our brand there how will the development impact our financials and certainly a more general question on our growth strategies besides Geo expansion can management share with us your

lash extending cost offerings in areas like more

Jack's or why their age groups or other models such as online education, which one do you think will offer the most opportunities for Four Seasons education, and how do we place to grab the opportunities there? Any color would be helpful? Thank you.

Okay, let me take a look first. Yeah, I want I can take a first crack and you can try me on it if you want. Okay, first of all, thank you to your first question. I'm sorry. We we don't disclose the detailed involvement of the Learning Centers respectively, but in general our centers in country and the jumps are getting mature and the results are well in line with our expectations and I will say with the East Ocean City thing too because we have several learning said he's just too interested in seeing chance to and internship. I will say, uh potentially better than our expectation. The ramp-up is very well and fast the sensors barely knew so it's still in the sort of you know development. It's the very earliest

Stage of of its cycle so not much color on that yet. So we are in the process of we recruit.

The best team, you know with the you know, the recruiting manager as well as our teachers to to to help us to grow our own Nissan the ancient that the key City that we will focus our efforts in terms of you know, sentenced a section cut. So that's she offers question. I think I messed up question, you know are related is basically a future, you know growth strategy. To be honest for the coming two quarters off. I don't think we were open up a lot of new centers in Shanghai and all that Shanghai. Yes, maybe we were open one or two, but I'm giving that to the centers in the discussions usually open. It's pretty bad. So we'll focus on you know charges and set up fast and some change the big Market wage.

We believe that will help us a job lot of growth, you know contribute.

To our total revenue and uh in terms of service Define our cost offerings to different age groups and different subjects. Yes, that's one of our area that we have been focused on since our IPO. We see a very good ramp up enrollment increase in our middle school programs as wage or less prepaid programs. So that's one of the nice results that we see from age group extension and the contribution from birth to our total revenue. It's getting lower and lower which is also a you know, uh, you know result of continuous efforts to expand our subject or phrase now we offer even in primary school. We also English we offer, uh, literature event and for middle school program.

basically cover all the coverage, uh cover all the subjects and

The our content schedule mature and our teachers are getting mature. So hopefully we will get a lot of we will get nicer clothes from those areas as well. That's another area that we decided to focus and put a lot of efforts going forward. We believe that the that's that's one of the Trans Am Four Seasons is very strong in content as well. As a faculty to Us online is really just one of the means, you know how to use a digital means to wage to let out to that our program to reach more students more Target students. That's the way that we're going to work on Hartley for the coming quarters.

The next question comes from Maggie Jones of international please. Go ahead.

Good evening. Thanks for choosing my question. I have to hear the first name. Is there any parts name or changing the regulation locally and and my second question will be they only recently released a new policy for they give me one moment programming yesterday. So it's going to retain the previous University independent of 800 enrollment program and how do you age a new opportunities and watch might be some changes in the cost offerings going forward? Thank you.

regarding

Question about the policy technique. The thing selling has been uh has been out in Shanghai, you know years ago, so we haven't seen a tiny. It's already been heightened enough, you know, two and three years ago. And for the new Yahoo, since it's basically everybody else, you know to you know for the for for the details to come but just for us we believe, you know,

As long as the scarcity of good education they are everybody will looking for opportunities to to to to to get a better education to to get better education opportunities. So we we think you know, the the demand is still going to be solid. It's to your to your second choice on the on the other new policy on the vehicle as you can see, you know, as you can you just follow my personal point of view home. It's just that you know, basically the whole evaluation system become more transparent and a focus more on those basic subjects said, you know, like surely requirements to us. We think is actually uh, uh, it's it's a positive

Drive to to to the you know.

after-school tutoring Market

and was there a follow-up Miss Jones?

Again, if you have a question, please press * then 1 on a touch-tone phone. The next question comes from Hong of Securities, please go ahead.

Hello management. My name is Dalton from Grampa security. Thanks for taking my question. But first I want to congratulate management for such a solid operational appointment to my first question is what's the structure among the 48% student enrollment increased by, it was from primary school middle school and high school. How much was from math English another you know other subjects and my second question is could you share more details about our math lab projects? Like what's the Forum Target student wage? Also? Could you talk more about how we're online strategy thinking?

I want you why why don't you answer the first question first then answer the next two, we are not closing such details by line segments so I can answer a question about the increase the reason of the increase first. I think the most important reason is the house ramp-up of our Learning Centers second page needs. Because you know, the Spring Festival is earlier than last year. So we move the the requirements schedule a little earlier than last year. So that's partially due to the reason of the increased. Mainly it's because of the healthiest type of Alexander's.

Yeah for the math project. Yeah the meth lab but you know the different, you know has different parts may include the mass culture the email, you know, the the intellect of the the the math project as well evaluation evaluation system. Our current strategy is to sell the math project to those standard K12 schools. As I mentioned equipped. We have Inked agreement with a few top schools in Shanghai. So their students will use a meth lab and purchased will use mess it up which will help them to evaluate. You know, how the students capability, you know when it comes to math and birth

secretly we'll we'll also you know Solutions and

And and uh and our teachers were also have uh know to some of the schools. We we should also provide a follower shut off our culture. So that's that that's how the math project is is how the math project with that project works now, but because it's new so the business the business model is actually evolving we would definitely cultivating the math lab to differ needs of you know, for the most schools that you know, we're going to work with so far. We actually have received very positive feedback from the schools because we have a very nice solid and very large problem sets database and evaluation system is also very precise and relieved.

On online strategy. It's really.

You we are still sort of you know in the internal discussion and we're also in discussion with some vague, you know players in the market, you know, in terms of you know home internet traffic as well as content. So we looking for different ways to provide because we believe our you know, the call is very welcome, you know the content when it comes to the content teachers, it's really just, you know perform any which way that we can provide our content in a more economical way to you know, to to tomorrow students not just Shanghai but you know Nationwide so this is one of the key strategy and key area that we're going to focus on for the coming quarters.

Was there a follow-up? Mr. Owl?

I'm good. Thank you.

As there are no further questions now, I would like to turn the call back over to the company for closing remarks.

Thank you. Once again for joining us today. If you have further questions, please feel free to contact Four Seasons investor relations through the contact information provided on our website off Master relations.

This concludes this conference call. You may now disconnect your line. Thank you.

Yes.

Thursday