Q2 2020 Puxin Ltd Earnings Call
statement
No management card expectation and Colonel creating conditions and relate to events that involve a known risk and services and other factors of which are difficult to predict and my thoughts are beyond the company's control which might cost the comedy the actual results performance or achievements to differ materially from those in the forward-looking statements a number of information regarding this off a certain head and other factors are included in our public in public filings with the Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statement as a result of new information future events, or otherwise except by required law with that. I will not turn the call over to mister shop.
Mister Charles will get his remarks in Chinese and Jessie J from my car investor relations advisory firm, which excuse me will translate in English money.
Mystery Shop, please. Go ahead.
Gentlemen. I am I'm single appreciate you transition from home. So I tell you if you can hold off some good. Sorry.
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Ladies and gentlemen, good evening, and good morning to you all thank you for joining pushing limited second quarter 2020 earnings conference call together the teaching staff and students have overcome the challenges posed by the covid-19 pandemic over the past few months under the guidance of the Ministry of Education and the National Health commission local governments have coordinated with schools and numerous is to resume classes and we are glad to see the entire education industry. It's finally back on track.
Again, we appreciate the contribution of government departments all sectors of the community as well as the staff at portion. Thank you for providing you your continuous social mental and emotional support.
In the second quarter of 2020 though. There were a few bumps back occurrences of covid-19 in some areas of China pushing continue to place the mental and physical health of our student teaching stuff to our first priority. We have had zero covid-19 case and will work all about to keep this record going forward push. It has made steady for dog in the second quarter student enrollment increased by 18.1% year-over-year to 850,000 pushing. Once again, one directly nation of birth parents with our excellent teaching quality.
As far as the impact of the covid-19 pandemic revenues in the second quarter, exceeded R&B six hundred million that income was above rmd thirty-five million compared with a net loss of R&B 190 million in the second quarter of 2019.
We should also continue to show profitability in non-gaap measures. Non-gaap was over eighty million two- R&B twenty six million dead. So made progress in cost control by refining our marketing and sales strategy non-gaap setting expenses decreased by 12.4 year-over-year.
Excuse me, six decreased by 12.4% year-over-year.
In addition administrative expenses dropped by 30.3% year-over-year in the second quarter of 2020 K twelve The Core Business segments of pushing achieved revenues of R&B 420 million an increase of 14% year-over-year due to the impact of the pandemic in overseas Market 9th Avenues of study abroad Services decreased by 39.9% However, its profitability was improved during the second quarter of 2020 if it was approved the R&B four million compared to a negative R&B ninety million in the same period of 19 2019.
Online school benefited from previous strategic Investments has made impressive progress net revenues were approximately 24 millions and increase of more than 680 one year.
Covid-19 pandemic gave us a unique opportunity to reflect or business in terms of pushes organic growth of emanate zero engine strategies. We found pushing businesses some effective for improving the operational and financial performance of the acquired skills positive achievements can be seen in carryover income and then get income and student enrollment.
These have proved that the acquisition and integration approach is truly driving the organic internal growth of fishing. For example, the non-gaap income of the majority of K-12 schools wired in 2015 and 2016 became positive after adopting pushing business system.
These results have reaffirmed the Strategic role of PBS and its capability to optimize capital structure.
The education industry has recovered substantially since the second quarter of this year. However, we will never second over efforts.
Looking into the third quarter of 2020 we will continue our focus on the key 12:15 segments and the online module fine strategy.
We expect that pushy online school may continue to achieve a rapid growth We Believe pushing will gradually become a premium brand with strong profitability.
Now I will hand the call over to mr. Wang over CFO. We will walk you through our financial details.
Thank you. Mr. Shaw. Hello, ladies and Gentlemen. Please remind them all amounts quoted here will be R&B presented increases will be nine year of your business office unless otherwise stated. It is also referred to as earnings release for detailed information have a comparative financial performance on a year-over-year business starting wage results for the second part of a 2020 net revenues were are in the six hundred one point 1 million decrease 5.5% from the second quarter of 2019.
This decrease is prime rib you to the universe impact of the covid-19 and dammit on demand for study abroad between services.
Having used to in service increased by 14% year-over-year to 419.7 million in the second quarter 2013. The student enrollment of Capers help tutoring services including group class personalized filtering full-time catering services reached 598-8366 nine revenue of pushing nine School significantly increased to twenty four million from three million in the same. 219.
student
Elements of 49 School. What's 149452 in the second quarter of 2020?
Revenues of study abroad between Services decreased by 39.9% year-over-year to 157.4 million.
This was primarily due to a software of instilling woman's from 15696 to 8853 in the second part of life by the global spread to call $19 Dynamic a major countries of the world.
Close to revenues decreased by 0.4% year-over-year to $300 331.4 million off if you to decrease in stock host which reflected the decreased manforce deliver services attributable to the copy nineteen by demek.
Revenues, excluding share-based compensation expenses decreased by 0.3% year-over-year to 330.8 million.
Block profit was 269 269.7 million decreased 10.1% year-over-year.
Gas margin was 44.9% compared to 47.4% for the same. In 2019.
Total operating expenses decreased by 37% of 295.5 million.
Selling expenses decreased by 13.1% a year to 210 .177 expenses, excluding share-based compensation percentage decreased by 12.4% to 207 million. This was primarily due to a decrease in sales staff Perfect Space commission attributed to decrease demand from 4. Sorry board Services caused by the covid-19 dynamic as well as host control mirrors operation efficiency.
General and administrative expenses decreased by 62.4% year-over-year to 85.3 million.
General and administrative expenses screen share expenses decreased by 30.3% year-over-year to eighty two point four million. So decreases were prompt you to our call center mirrors to improve called operation efficiencies to to share risk of research expenses allocated to release course revenues operating expenses decreased by 94.1% year-over-year to 6.8 million.
decrease
Time to do to decrease the number of options vested in the second part to the 20 compared to the same period of 2019.
Operating loss with 25.8 increase of 84.7% year-over-year.
Okay, imagine was -4.3 percent in second quarter of 2020 compared to negative 26.7% for the same. In 2019.
Operating income came from the services was 19.3 Million compared to operating loss of 54.5 million in the second quarter of the 29th while operating margin improved to four point six points from -14.8 percent in the second quarter of 2019.
Adjusted operating plus was 19.1 million or decrease of a 64.3% year-over-year.
Adjusted operating margin was negative 3.2% compared negative 8.4% in the same. The prior-year.
The income a cheaper unlimited was 36.6 million compared to net loss attributed to be limited of R&B 194 bulb on 690 on a second quarter, which is nineteen and they look in net income for a DS attributable to push in level were 0.46 and 0.42 compared to basic values in net loss for abs attributed to be limited of 2.28 and 2.28 during the summer nineteen.
Income limited with 45.2 million compared to a net loss to build too pushy and limited of zero six zero point seven million during the second quarter, which is 19.
Adjusted basic and diluted not net income for us to be able to push. The limit was 0.52 and 0.51 compared with just the base in diluted net loss previous attributed to push limited of 0.771 and 0.71 during the same. 2019.
It'd be $2 71.8 million compared to the negative $150 59.8 million in the second quarter, which is 19 months of paper towels catering services was 109.1 Million compared to -15.3 million in the second quarter of 2019.
Ebitda margin was 12% in the second call have a 2020 compared to negative 25.2% in the same period in the nineteen adjusted if she was eighteen point four million compared to -25.8 million in the second quarter, which is 19.
Just sitting in the same. Since nineteen.
For the financial results for the six months ended June Thirty twenty twenty Avenues were 1350 2.4 million an increase 8.3% year-over-year. This increase is primarily due to the continued growth momentum of student enrollments.
Right when you came to tell you to service has increased by 26.3% year-over-year to 943 million.
In the first half the twenty-twenty the total student enrollment case of particular services including group classes personalized tutoring and full-time teaching services off reached.
165074 net revenue significantly increased to forty thousand students enrollments of of personal and school was six hundred and $7,066 for the first six months of 2020.
Revenues of study abroad which we service has decreased by 27.1% year-over-year to 364 million.
Study abroad Consulting at the tutoring Services have 22890 student enrollment in the first half of 2020 compared with 32,000 366 in the same same. 2019.
This was probably due to the global spread at the corner of 19th Dynamic other countries of the world.
Revenues increased by 9.5% year-over-year to 731.6 million + revenues excluding share-based, This is Frances increased by 9.7% year-over-year to 930.4 million.
Gross profits was 620.8 million and increased 7% year-over-year gross margin was 45.9% compared to 46.5% for the same. 2019.
Expenses decreased by 27.5 27.4% every year to 642.9 million.
Decrease by 1% every year to four hundred four point seven million selling expenses, excluding share-based compensation percentage decrease by 4.1% every year to 433.5 minutes.
General and administrative expenses decreased by 52% year-over-year to 202.3 million General and administrative expenses incurred during service compensation expenses.
Decrease by 13.5% year-over-year to 195.5% a million. The decreases were primarily due to our host Engineers to call Tyson efficiency under the covid-19 pendek.
Compensation expenses allocated to related costs revenues operating expenses decreased by 92.8% year-over-year to 15.2 minutes.
The decrease was primarily due to a decrease in the number of options vesting first, six months of 2020 compared to the same period in nineteen.
decrease by 92.97% year-over-year tu22m
operating margin was 1.6% in the first six months of 2020 compared to 24.4% for the June 19th.
All righty income of services with 86.0 million compared to operating loss in the same. Since 9 a.m. To 9 one from not negative 10.8%
adjusted operating loss decreased by 92.7% year-over-year to seven million.
Adjust the operating margin was -0.5 per cent compared to -7.6 per cent in the same period of 2019.
Net loss attributed to a personal level. It was 6.9 million a decrease 98.5% year-over-year facing diluted net loss. A children's book was 0.08 compared to basic diluted net loss per areas to be able to push in level of five on to 8 a.m. During the same. Since nineteen.
Adjusted net income to the pushing level with seventy point six million compared to adjust net loss attributable to the unlimited of 130 during the same period of 2019 adjust the base in diluted net income per areas a triple pollution limited were 0.081 and 0.79 compared to adjust the basic diluted net loss for ideas of 1.60 and 660 during the same period of 2019 was 67.9 Million compared to -351.7 minutes for the first month. So six months of 2019.
The services was 170.3 Million compared to -112.1 million in the same. 19.
Ebitda margin was 5% in the first six months of 2020 compared to negative 28.2% in the same. 2019.
adjusted ebitda, 145 compared to -42.7 million in the same period of 2019
Imagine was 10.8% compared negative 3.4% in the same period of 2019 next one will walk to the balance sheet.
As of June 30th 2020 the company has an increased amount of cash and cash equivalents and the card portion restricted cash of 569.6 minutes compared to six hundred six point three million is a December Thirty One 2019. The current portion of the district's cash consists of primaries deposit with the Chinese commercial Banks is collateral of a fan and bahrain's within one year term.
Finally for guidance for the third quarter ended September Thirty twenty twenty based on information available. As of the date of this press release the company expects net revenues to be between 816.8 million and 863.6 million which represents a decrease of 18% to 13% year-over-year. This fog has reflect the company's current and preliminary reviews of the market operational condition, which is subject to change.
This concludes our prepared remarks. I will not turn the call over to the operator and open the call up for Q&A operator. We are ready to take precautions.
Thank you. We will now begin the question-and-answer session to ask a question. You may press * then 1 on your touchtone phone you're using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question, please press * then two for the benefit of all participants on today's 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 today comes from Zane with City, please. Go ahead.
Shawn Shawn, what's your name? Is she got you, I kind of you know now today is out to the one here. So thanks management for taking my question. My first question is how has are off line segments in recovery. Okay extension and receive name of students were all summer courses, and my second question is so could you please provide some updates on the implementation strategy and also some color on our m&a plans for the second half. Thank you.
Okay, thank you for Action is the first question of the reopening of offline Learning Centers. We are happy to say over ninety percent of current offline Learning Centers have been reopened our step-by-step though as we have to get the permission from the local educational committees. And those are fighting authorities. Unfortunately, we have two major cities which are still under the impact of the the nineteen demek which are Beijing and Dalian as you may have no choice. We have two we have two caissons have bodies operating there which makes darling the the largest single.
OCT of cases of operation for pushing due to the to the outbreak of the dynamic in the back end of June.
I'll be offline Learning Centers. And have been closed and all the programs classes have to change the password to online. So yes, we we we did have some negative impact, um due to the to the the second round outbreak of the of the covid-19 demek, especially in Beijing and Dalian for down the impact is mainly on the on the shoulder of cases House business and in Beijing the burden is mainly on the stage blocked business. So yes, we we did have some negative impact, especially in Beijing and Dalian, but we were still dead.
Um optimistic about the the revolving, um of the business in all our server offline learning Samsung S2. The the o m o strategy we've been implementing the o m o strategy off during the the dynamic that. We we had several pilot programs life in another tier two cities like Tyler in like Tom do which are quite optimistic for the first month out for for the first pilot programs, but it it's in terms of Revenue. It's it only contributes a dog.
A very small part of the revenue so o m o strategy is is is one of the the price. All right. I'll have a of business but it's still needs time to play a significant part of our business. In fact as to the one with the third question about this the m&a we did not make any Acquisitions during the first half of this year also due to the outbreak of the covid-19. But we we've been working hard to get back on track with Ms. Strategy again. We will speak to our acquisition. Yep.
integration
strategy and with the
with the with the outbreak of the covid-19. We we can say more more targets are not available due to the the mechanic and we will work hard to to yeah to get back on track. Thank you.
again, if you have a question, please press * then 1
consider appears to be no further question. I would like to turn the conference back over to Nadia Wang for any closing remarks off on behalf of the entire management analyst position would like to thank you again for your participation of this today call. If you have any further questions in the future, please feel free to contact us a m i r s p x j y. Com or person at thank you all.
This constant is now concluded. Thank you for attending today's presentation. You may now disconnect.