Q1 2021 Puxin Ltd Earnings Call
Hello, and welcome to push in the first quarter 'twenty 'twenty 1 earnings conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero on your telephone keypad.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then 1 on your telephone keypad to withdraw your question. Please press Star then 2 please note. This event is being recorded.
I would now like to turn the conference over to <unk>, Wang Investor Relations Director.
Bhushan Ltd.
Please go ahead.
Thank you Andrew Hello, everyone. Thanks for joining from his first quarter 2021 of our earnings conference call by the way all of introduction did the sales do you want and that's the relation director and percent of limit that we appreciate your time and ongoing interest in fortune. The comedies. The results were released earlier today and are available.
On the comedy the IR website at IR <unk> com.
On the call today, we have Mr. Yano shop, the company sponsored chairman and Chief Executive Officer, and a means to accommodate.
The Companys Chief Financial Officer Youre the.
On the well give the voice of introduction of the company's business operations of highlights.
All of my colleagues, who will go through the financial from guidance. They will both be available to answer your questions. During the Q&A session that follows.
I will remind you that this call may contain forward looking statements made under the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Such statements are based on management's current expectations and the car market and operation conditions.
And the relate to events that involve unknown risks uncertainties and other factors.
All of which are difficult to predict and many of which are beyond the companys control.
Which may cause the companys, the actual results performance or achievements to differ materially from those of the forward looking statements.
Well the information regarding these and other risks uncertainties and factors is included in the Companys filings with the U S Securities and Exchange Commission. The company does not undertake any obligation to update any forward looking statements I said with all of the new information or future.
Future events or otherwise, except as required by law.
With that I will now turn the call over to Mr. Sha Mr. Szabo of gave his remarks in Chinese Academy of the venous whole from ICA.
You can see we're traveling from him in English Mr. Sha. Please go ahead.
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Ladies and gentlemen, good evening and good morning to you all thank you for joining.
Ltd first quarter.
Earnings Conference call.
During the winter break in the first quarter of 'twenty 'twenty..1 we have 2 once again closed some of all of the learning Center and moved of course its online the law.
There's the local epidemic prevention measures in certain cities to ensure the safety and health of every student and staff member we have strengthened epidemic prevention measures and number of learning centers.
All of the topline had temporarily experienced some headwinds.
Headwinds.
Although net revenue would have been slightly declined year over a year all of the K 12 business still growth had a stat of rate and achieved an increase of 5.2% year over year pushing has implemented a blended learning.
Providing students with both online and offline learning format pushing has been investing in upgrading its state of based and systematic plan for them, which seems seamlessly and pet graves offline and online K 12 tutoring services to the insurers.
The most deliver of courses.
In the first colder of 'twenty 'twenty 1 the company gave all of the business intelligence analysis planned for them, which in Pepperidge Smart data statistics data analysis and data predictions did vary of statistical analysis reports per whereas the basis.
So the more efficient decision, making at the same time, we have developed all the preparatory ERP system based on all the specifics knees, which can better support of our operations improve off of overall operational efficiency and enhance the accuracy and theft.
All state of the analysis in the first quarter of 2021 net revenue of K 12, tutoring services achieved RMB $550.6 million compared to RMB $523.3 million for the same period last year.
Pushing has continued to focus on developing K 12, tutoring services be strengthened teaching teacher training nationwide and of consistently increased R&D investment.
The content of product to our roster of students' interest in learning.
These strategies effectively improved teaching quality and the increased customer satisfaction and customer thickness. The pay trough group class student retention rate rose to 86% leased the implementation of cost reduction.
The efficiency measures operating expenses have decreased by 50.
15% compare of as the same period last year. The bottom line has been the significantly improved on a year over a year of basis net income attribute to Puccini was RMB 37 point aimed milling in the first quarter of 'twenty 'twenty, 1 compared to a low.
Loss of RMB $43.5 million for the same period in 2020.
Moving forward in 'twenty 'twenty, 1 meets the increase all customer retention the strengthening of our P. B S system. The rebound of trying out of the economy and the ease of epidemic raised this vaccine distribution portion of his confidence to achieve a high quality of growth.
In the falling called or no I will hand, the call over to Mr. Wong of her CFO, who will walk you through all of a sudden natural Tito.
[noise]. Thank you Mr Sha Hello, ladies and gentlemen.
Please be reminded that all amounts of hold true to here will be RMB and ultra of sudden tape the increases will be on a year over year basis, unless otherwise stated.
Please also refer to our earnings release for detailed information.
Priority of financial performance on a year over year of places.
Now starting with the financial results for the first quarter or if the tenant group into 1.
Net revenues were $686.8 million.
Decreased 8.6% in the year over year.
This decrease was primarily due to the decrease in student enrollment from.
408891.
600 eclipsed the 1.
Cleaning pushing all high school in the first quarter 'twenty of 22.500 of 39355 in the same period of 'twenty 'twenty 1.
Net revenues of K 12, tutoring services were 500 of 56 of Millen.
The increase of $5.2 per cent from 520 of 3.3 million.
Clothing, pushing non school in the first quarter of of 2020.
This increase was the primary driven by our improved teaching service quality and the enriching content.
Ox.
Cost of revenue decreased by 3.8 per cent to 385 point of view of Millen.
Primarily due to decreases in teaching staff compensation and the lease cost of fall off a whole classrooms.
Cost of revenues.
Share based compensation expenses.
Creates by 3.8 per cent to 300, and the $84.5 million.
Gross profit was 301.8 none of them a decrease of 14% of year over year.
Gross margin was $43.9 per cent compared to 46.7 per cent for the same period in 2020.
Total operating expenses decreased by 15% year over year to 295.2 million.
Selling expenses decreased by 19, 5% year on year to $185.6 million sort.
Selling expenses, excluding share based compensation expenses.
Rates by $19.3 per cent to 100, and the 80 to 1.9 million.
Primarily due to decrease the marketing expenses and marketing staff compensation.
General and administrative expenses decreased by $6.6 of $6.3 per cent to $109.6 million.
General and administrative expenses, excluding share based compensation expenses decreased by $5.2 per cent.
$207.3 million the decrease this what's the time rig due to decreases in staff compensation.
Yeah.
Total share based compensation expenses decreased by $34.5 per cent to $5.5 million from $8.4 million in the fifth quarter of a 2020 the.
The decrease was primarily due to decrease the number of options vested in the first quarter of Attunity attention 1 compared with the same period of of 2020.
Operating income was $6.5 million compared to $3.7 million in the first part of of 'twenty or 'twenty.
Operating margin was 1 point in the first quarter of of 'twenty 'twenty, 1 compared to zero of upon 5 per cent for the same period in 2020.
Adjusted operating income was $12.1 million.
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Adjusted operating margin was 1.8 per cent compared to $1.6 per cent.
Yeah right off the prior year.
Net income attributable to the brick and eliminate at least.
Already of 7.8 million compared to the net loss of $43.5 million during the first quarter of of 'twenty 'twenty.
Basic and diluted net income for as a trigger to push 11. It was 0.44 and zero point, the overall 6 respectively compared to basic and diluted net loss per of it is.
To be able to book him Lemon head of.
Zero 5 years the of Ralph during the same periods of about 20 of 'twenty.
Adjusted net income attributable to pushing Ltd. Lewis the 9.6 minutes of decrease of 6.2 points of 1% year over year.
Adjusted the basic and diluted net income per ads of tubular Pucci Ltd.
Zero point of 1.1 and the 011, respectively compared to 2 zero to 9 and real time to 9 during the same period of the 'twenty to 'twenty.
You'd be dollars 70 for bunch of Mellon compared to negative $3.9 million in the first part of the country.
EBITDA margin was 10, 8% in the first quarter, 2.1 compared to net activity zero 5 per cent in the same period in 2020.
Adjusted the EBITDA at least 46 point of 1 million compared to 65 million in the first quarter of 2020.
Adjusted EBITDA margin was $6.7 per cent compared to 8.6% in the same period in 2020.
Next well move onto the balance sheet.
As of March of Saturday, 1.2020, 1 the company had total cash and cash equivalents.
Current portion of the restricted cash of $795.7 million compared to 563 zero of Mellon as of December 31, 2020.
The current portion of restricted cash consistent prime day of deposits with the Chinese commercial banks as collateral for all of the banking Barnes within 1 year term.
Finally for guidance.
For the second corridor of 2021 based on information available as of the day of this price relief.
The company expects.
Net revenue to be the trend $661.2 million and the 691 plus.
1.3 million, which represents an increase of 10% 2 of 15% year over year.
This forecast reflects the company's current and preliminary views on the market and the operational conditions, which are subject to change.
This concludes our prepared remarks, I'll now turn the call over to the operator and opened up for Q&A operator.
Now we're ready to take questions. Thank you.
We will now begin the question and answer session to ask a question you May Press Star then 1 on your telephone keypad.
If you are using a speaker phone.
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At this time, we will pause momentarily to assemble our roster.
Yeah.
Okay.
Yeah.
The.
The first question comes from Julian Zone with high total international.
Please go ahead.
Hello, Thanks for taking my question this is from.
On behalf of book not any rule of thumb.
The first of all question is regarding the regulation and the even though they are low trough of rumors. So high we can I can true if you could share with us your thoughts on the Terra and typically that's the rating environment.
Do you have and the bear case, our base case and the bare case scenario under the current to recognize the impairment on the Hollywood space impact here of your business going forward, especially in terms of the.
Advertising and then their names from various patients that's why don't I'll state of cash flow management. Thanks Meredith.
Okay. Thank.
Thank you for questions to the parent.
And regulatory environments are yes, they are a lot of the real immerse sayings Ah, Iran recently.
But if we look seriously at the recent released our regulations and policies and and interpretations of by Differentiators of our government. We can say day there have been little.
The incremental or marginal change of.
Between the 2 of the current.
The policies or regulations and those are released add during a 2018.
Well the.
T O. The of the first quarter of of 2019 are in fact, we look at our the current regulations or policies as the ninth.
Tension that execution.
Of those.
Great.
In the in in in the.
In the third and fourth quarter of 2018.
For example, if we look at the the deferred revenue the prepaid true Asian policy, we can say.
In the ear 2018 of the educational offering choose already stated that Oh.
All of those off of school after school tutoring companies are what's the post the 2 deposit a certain portion of those are you know those are cash sure.
Revenues are aiming to.
Yeah, the gonna age of out of pounds.
The the current or of the the recently released policies just.
You know just give details about how to how the deposit those those 2 Asians are aware of to deposit and how you can do all your money out of those Oh, there's a net back of comms.
Yes.
They are the there have been more details there have been more price questions, but Ah we see those regulations.
Regulations as the execution of the those policies are.
And in the 2018 sort of 2019.
So cardio second question the impact of those regulations I'm pushing.
Actually we.
We are we've been focusing all of our.
And of G. On 2 things first we as the public company, we try our best we said no efforts to be in full compliance with those regulations policies and a deep shiao of execution.
You know.
By the local educational committees.
We have to be would have a burst of to be in full compliance.
And.
With that.
We believe 8 won't become kind of the.
Competitive come.
Competitive edge.
For us and the.
Even for our 4 other public after school tutoring companies because after all.
Parents need a place to send the our case to.
While the our kids to be.
Relative to a successful to perform better so the demand will be there.
But ed on the on the side of supply.
If any of player wants to be a aim of the day you have to pay more attention to are 2 of the compliance thing. So we do not have the that's where it's not a real best scenario or.
You know common scenario.
You know projection for <unk> for the next for the next so masters and in fact, we focus on compliance and we focus on providing bet. Our colleague T. You know better content teaching.
2 of the students in.
In the long run I believe there might be.
Less of supply in the day in the street are with the <unk>.
Probably less demand well.
Thank you for the question scan.
Thanks.
Again, if you have the question. Please press Star then 1 on a touchtone phone.
Yeah.
Yeah.
Again it is star then 1 to ask a question.
This concludes our question and answer session I would like to turn the call.
Back over to MS <unk> Wang for any closing remarks.
Thank you Andrew in closing on behalf of <unk>.
Management came off portion with the likes of thank you again for your participation in today's call. If you have any further in salaries in the future. Please feel free to contact us at IR at P. F. The PX, Jay why don't pump of Houston at ICA, a shadow of pump. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.
Okay.
[music].
Yes.