Full Year 2021 First High School Education Group Co Ltd Earnings Call
Good day, ladies and gentlemen, thank you for standing by and welcome to the first High School Education group fiscal year 2021 earnings conference call.
Good day ladies and gentlemen. Thank you for standing by and welcome to the first high school education group fiscal year 2021 earnings conference call.
Currently, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. An instruction
Currently all participants are in listen only mode. Later, we will conduct a question and answer session.
And instructions will follow at that time.
As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time.
As a reminder, we are recording today's call. If you have any objections you may disconnect at this time.
Now I will turn the call over to Mr. Tommy Joe, Chief Financial Officer of the company. Mr. Joe, please proceed.
Now I will turn the call over to Mr. Tommy Joe.
<unk> financial officer of the company Mr. Joe. Please proceed.
Thank you operator.
Tommy Joe: Thank you, operator, and greetings investors and friends. Welcome to the First High School Education Group's fiscal year 2021 earning conference call. With us today, we have Mr. Zhang Shaowei, Company Chief Executive Officer, and myself, Tommy.
Greetings and Mastercard com.
Welcome to the first high School Education Group fiscal year 2021 earnings Conference call.
With us today, we have Mr. John Hallway company, Chief Executive Officer, and myself Tommy.
Chief Financial Officer.
Speaker Change: We released our results earlier today. The press release is available on the company's IR website.
We released our results earlier today.
Press release is available on the company's IR website.
Speaker Change: at https.forward slash ir.diyi.top, as well as Newswire services.
At https thought forward slash I R thought D I Y I thought top as well as newswire services.
Speaker Change: A replay of this call will also be available in a few hours on our IR website.
A replay of this call will also be available in a few hours on our IR website.
Speaker Change: Before we continue, please note that today's discussion will contain forward-looking statements.
Before we continue please note that today's discussion will contain forward looking statements.
Speaker Change: made under the Safe Harbor Provisions of U.S. Private Security Litigation Reform Act of 1995.
Made under the Safe Harbor provisions of U S. Private Security Litigation Reform Act of 995.
Forward looking statements involve inherent risks and uncertainties.
Speaker Change: forward-looking statement involves inherent risks and not certain...
Speaker Change: As such, the company's actual result may be materially different from the expectations expressed today.
As such the company's actual results may be materially different from the expectations expressed today.
Speaker Change: Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC.
Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC.
Speaker Change: The company does not assume any obligations to update any forward-looking statements except as required under ethical law.
The company does not assume any obligations to update any forward looking statements, except as required under applicable law.
Speaker Change: Also, please note that unless otherwise stated, all figures mentioned are in the description.
Also please note that unless otherwise stated.
All figures mentioned during the conference call today are in Chinese renminbi.
Speaker Change: during the conference call today are in Chinese, human being.
With that let me now turn the call over to our CEO , Mr. Jon Holly for greeting remarks, which I will then translate to English and then followed by my highlights for fiscal year 2021, Mr. Jong.
Speaker Change: Let me now turn the call over to our CEO , Mr. Zhang Shaowei, for greeting remarks, which I will then translate to English and then follow by my highlights for fiscal year 2021. Mr. Zhang.
Hey, guys.
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Speaker Change: Gao Zhiliang's development is going to be introduced by our financial director, Mr. Tommy Zhou, using English to introduce the 2021 opening of the company.
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Speaker Change: So the translate follows. Greetings, everyone.
So to translate false.
Greetings everyone.
Speaker Change: Thank you all for joining us for the 2021 Earning Release Conference Call.
Thank you all for joining us for the 2021 earning release conference call.
In 2021.
Speaker Change: under high market uncertainty and changing regulatory environment.
Hi, Mark can off certainty and changing regulatory environment.
The environment.
Speaker Change: First High School Education Group achieved stable and high-quality development. I will now introduce our CFO , Mr. Tommy Joel, who will provide details on our business and financial performances in English.
First high school agitation group achieved stable and high quality development I will now introduce our CFO , Mr. Tommy Joel who will provide details on our business and financial performance is in English.
Tommy Joe: So 2021 was certainly an uncommon year.
So 2021 was certainly an oncoming year.
Tommy Joe: The good news is that we, FHS, are probably one of the least adversely affected education company on the market.
The good news is that we.
Probably one of the least adversely affected education company on the market.
Tommy Joe: As suggested by our name, we mainly operate high schools and it's not greatly affected by the compulsory requirements of recent regulations.
As suggested by our name, we mainly operate high schools and it's not greatly affected by the compulsory requirements of recent regulations.
Compared with 2020.
Tommy Joe: The company's revenue from continuing operation increased 13.7% to $400,000.
The companys revenue from continuing operation.
Increased 13, 7%.
Two 400 million RMB.
Tommy Joe: The number of schools we currently service include 14 high schools, 6, Gaokao repeater schools, and 2, public schools with management services.
The number of schools. We currently service include 14 high schools.
Gulf I'll repeat our schools and to public schools with management services.
Tommy Joe: So the total number is 22, 22 schools we're servicing right now.
So the total number is 20 to 22 schools, we're servicing right now.
Tommy Joe: The number of students enrolled include 18,686 for our high schools and Galka repeater schools.
The number of students enrolled include 18686.
For our high schools in Gulf of repeater schools.
Tommy Joe: and 2,561 for our public school management services.
In 2000, and 561 for a public school management services.
Tommy Joe: for a total of 21,247 students of continuing operations.
For a total of 21247 students of continuing operation.
Tommy Joe: Lastly, we have approximately 54,000 boarding beds in service and in reserve, able to provide healthy and stable room for girls the next three to five years.
Lastly, we have approximately 54014 beds.
Service and UN Reserve Abel.
<unk> able to provide healthy unstable room for growth there.
Next three to five years.
Tommy Joe: In addition to the financial results, we are extremely proud of the education service, the quality of the education service we provide.
In addition to the financial results we are extremely proud.
The education service the quality of the education service we provide.
For 2021 graduation year, we weren't group top class similar schools with students, who scored above 700 or 600 in the golf ball exam and.
Tommy Joe: We were grouped top class in similar schools with students who scored about 700 or 600 in the Gaokao exam.
Tommy Joe: And we were also group top class in the schools with students of most increased scores from entering our school to graduating our school. So the great education quality proven our teaching ability and our goal of providing the best education services.
And we were also group top class in the schools with students of most increased scores from entering our school graduating high school.
So it's a great agitation quality proven our teaching our ability and our goal of providing the best education services to anyone and everyone who enrolls in our school programs.
Tommy Joe: to anyone and everyone who enrolls in our school program.
The company's fiscal year 2021 profit margin.
Tommy Joe: The company's fiscal year 2021 profit margin decreased comparatively with 2020.
Decreased comparatively was 2020.
Tommy Joe: It was mainly due to non-recurring expenses that was caused by our initial public offering, which was done in 2021 March.
It was mainly due to nonrecurring expenses that was caused by our initial public offering which was done in 2021 March.
Tommy Joe: The cost related with new school openings also decreased our margins.
The costs related with New school openings also decreased our margins are.
We want to express our.
Tommy Joe: Thoughts that school management must be balanced and long-term focused.
So I'll start school management must be balanced and long term focused.
Tommy Joe: We strongly believe this long-term focus business will yield higher profitability in 2022 from a chain of new schools and overall improvement of our efficiency.
We strong belief, there's long term focused business well, even higher profitability in 2022 from a training of new schools and overall improvement of our efficiency.
Tommy Joe: In order to express our determination, currently we have 20 senior management-level staff of the company, including the CEO and myself. We all agree to voluntarily reduce our salary by over 20%, starting April .
In order to express our determination currently we have 20 senior management level staff, the company, including the CEO and myself.
We all agreed to voluntarily reduce our salary by over 20% starting April .
Tommy Joe: and our salary reduced salary will not resume until 2022. School enrollment task is completed in October . The company and all the management team is very confident on our goal and wish to determine
And our salaries reduced salary will not resume I'll tell 2022 school enrollment task is completed in October .
The company and all the management team is very confident on our ball I wish to determine.
Tommy Joe: our wish to express our determination to complete this year's performance goal.
Our wished it.
Express our determination to complete this year's performance goals.
Tommy Joe: Specifically in 2022, a little bit about forward-looking, the company has three specific goals.
Specifically in 2022, a little bit about forward looking the company has three subsisting goals.
First of.
Tommy Joe: All of our 29 school programs currently in operation must yield improved financial results compared with last year.
All of our 29 school programs currently in operation must yield improved financial results compared with last year.
Tommy Joe: This will be done by some of our new schools, increased recruitment and operations.
This will be done by some of our new schools increased recruitment and operation.
Tommy Joe: Secondly, the company plans to open certain new schools, both high schools and vocational school programs.
The company plans to open a certain new schools, both high schools and vocational school programs.
Tommy Joe: which will increase our bed capacity in reserve and also increase our overall enrollment number.
Which will increase our bad bed capacity in reserve and also increase our overall enrollment number.
Tommy Joe: Third, the company's services will fully cover the entire educational spectrum, comprising of education auxiliary materials, education human resources, education logistic and boarding services, and education technology.
The company's services will fully cover the entire educational spectrum.
Uprising of education auxiliary materials education, human resources education, logistic Onboarding services and education technology.
Tommy Joe: The newly established services will complement our existing school programs and yield greater profitability for our overall company.
The newly established services will complement our existing school programs and yield greater profitability for our overall company.
So the company had been performing for the four.
Tommy Joe: So the company had been performing the four newly established services for many years already. It's not a complete new service that we added to our group. But in 2022, these services will expand outward and generate new income and revenue for us in the years to come.
The company had been performing.
<unk> newly established services for many years already is not a complete new service that we added to our group, but in 2022 DS services will expand outward and generate new income and revenue for us in the years to come.
Yeah.
Lastly.
Tommy Joe: Lastly, I want to disclose that in compliance with the requirements of the implementation rules for the law of promoting private education of the PRC.
I want to disclose that in compliance with the requirement.
The implementation rules for the law of promoting private education of the PRC.
Tommy Joe: The company had divested its operation in primary and middle school programs after September 1, 2021, and classified them as discontinued operations.
The company had divested its operation in primary and Middle School programs. After September one 2021 and.
And classified them as discontinued operation.
So during fiscal year of 2021 revenue for the discontinued operation was $104 2 million RMB, which is roughly $16 4 million U S dollars.
Tommy Joe: So during fiscal year of 2021, revenue for the discontinued operation was 104.2 million RMB, which is roughly 16.4 million US dollars.
Tommy Joe: And the net loss from these discontinued operations was about 7.5 million RMB, which was about 1.2 million US dollars.
And the net loss from the discontinued operation was about seven 5 million RMB, which was about $1 2 million U S dollars.
Tommy Joe: which had only minor effect on the company's profitability overall.
Which had only minor effect on the company's profitability overall.
So.
Tommy Joe: Now with the brief business operation remarks completed, I will go through our financial highlights for fiscal year 2021. Please again, know that all numbers presented below are in R&B unless otherwise.
Now with a brief business operational remarks completed I will go through our financial highlights for our fiscal year 2021. Please again note that all numbers presented below are in RMB unless otherwise.
Tommy Joe: Stated, all percentage changes on our year-over-year basis unless otherwise subsidized. Detail analysis is contained in our earning press release, which is already available on our IR website.
Stated all percentage changes on all on our year over year basis, unless otherwise specific subsidised detailed analysis is contained in our earnings press release, which is already available on our IR website.
Tommy Joe: So for total revenues, the total revenues was RMB 400.2 million.
So for total revenues the total revenues was RMB $400 2 million.
Tommy Joe: equivalent of $62.8 million, an increase of 13.7% from RMB of $351.9 million in 2020. The increase was primarily driven by greater student enrollment due to the opening of new schools and the increased number of students enrolled in our existing schools, along with the higher tuition income and boarding fees.
Equivalent of $62 8 million U S dollars, an increase of 17 or 13, 7% from RMB of $3 $51 9 million in 2020. The increase was primarily driven by greater student enrollment due to the opening of new schools and increased number of students enrolled in our existing schools along with the higher tuition income aboard.
Fees.
Tommy Joe: Within the total revenue revenue from customers was
Within the total revenue revenue from customers was.
Tommy Joe: RMB 349.3 million RMB, equivalent of 54.8 million US dollars, an increase of 12.4 percent.
RMB 304, $349 3 million RMB.
The equivalent of $54 8 million U S dollars, an increase of 12, 4%.
From $310 6 million in 2020 of last year. The increase was primarily driven by greater student enrollment due to the opening of new schools and the increased number of students enrolled in our existing schools, along with higher tuition income and boarding fees.
Tommy Joe: from $310.6 million in 2020 of last year. The increase was primarily driven by greater student enrollment due to the opening of new schools and the increased number of students enrolled in our existing schools, along with higher tuition income and boarding fees.
Tommy Joe: Revenue from government cooperative agreements was RMB 50.9 million, U.S. dollar of 8 million dollars, an increase of 23.4% from RMB of 41.3 million in 2020, primarily due to the increased number of publicly sponsored student service.
Revenue from government cooperative agreements was RMB $50 9 million U S. Dollar of $8 million, an increase of 23, 4% from RMB $41 3 million in 2020, primarily due to the increased number of publicly sponsored students are.
Tommy Joe: Cost of revenues was 273.7 million RMB, an increase of 38.7 from 197.4 million
Yes.
Yes.
Cost of revenues was $273 7 million RMB, an increase of $38 seven.
From $197 4 million in 2020.
Tommy Joe: The increase was primarily due to the increased staffing cost from opening of our new schools and in large curriculum, which includes coverage in arts and sports.
The increase was primarily due to the increased staffing cost from opening of our new schools and your large curriculum.
Which includes coverage in the arts and sports.
Tommy Joe: gross profit was 126.5 million, a decrease of 18.1% from an RMB of 154.5 million in 2020.
Gross profit was $126 5 million a decrease of 18, 1% from RMB $154 5 million in 2020.
Tommy Joe: Gross margin was 31.6 compared with the 43.9 in 2020.
Gross margin was 31, 6% compared with $43 nine in 2020.
Tommy Joe: The decreased gross margin was primarily due to the higher cost of revenues resulted from one increased staffing cost due to the increased number of employees and increased compensation level to attract more talents and two increased operating expenses especially for new schools with relatively lower cost efficiency than our existing mature schools.
The decreased gross margin was primarily due to the higher cost of revenues resulted from one increased staffing costs due to the increased number of employees increased compensation level to attract more talent and to increase school operating expenses, especially for new schools was relatively lower cost efficiency than our existing mature schools.
Net operating expenses.
Tommy Joe: That operating expenses was RMB 66.0 million, an increase of 20.1% from RMB 54.9 million.
Operating expenses was RMB 66, 1 million, an increase of 21% from RMB $54 9 million.
In 2020.
Tommy Joe: So selling and marketing expenses was RMB 7.1 million, an increase of 8.6 from RMB 6.5 million in 2020. The increase was primarily due to the increased expenses in brand promotion and marketing activities in relation to the opening of new schools and an assertive school opening plan made in 2021.
Selling and marketing expenses was RMB seven 1 million an increase of $8 six from RMB $6 5 million in 2020. The increase was primarily due to the increased expenses in brand promotion and marketing activities in relation to the opening of new schools and assertive school opening plan.
Made in 2021.
Yes.
Tommy Joe: General and administrative expenses was RMB 61.8 million, an increase of 17.4 from RMB 52.7 million in 2020. The increase was primarily due to the certain non-recurring expenses in relation to the company's initial public offering in March of 2021.
General and administrative expenses was RMB $61 8 million, an increase of $17 four from RMB $52 7 million in 2020. The increase was primarily due to the certain non recurring expenses in relation to the company's initial public offering.
In March of 2021.
Tommy Joe: Government grants was RMB 2.9 million.
Government grants was RMB two 9 million.
Tommy Joe: A decrease of 31.1% for R&B 4.2 million in 2020, primarily due to the certain delayed payments from governments in 2021.
A decrease of 31, 1% for RMB $4 2 million in 2020.
Primarily due to the certain delays in payments from government 2021.
Income from operation was RMB 65 million a decrease of $39 two from RMB $99 6 million in 2020.
Tommy Joe: Income from operation was RMB 6.5 million, a decrease of 39.2 from RMB 99.6 million in 2020.
Tommy Joe: and our income from continuing operation was RMB 50.7 million.
And our income from continuing operation.
Was RMB $50 7 million a.
Tommy Joe: a decrease of $37.9 from $81.7 million in 2020. Laws from discontinued
A decrease of $37 nine from $81 7.002 million 20.
Loss from discontinued operation.
Loss from discontinued operation was RMB $10 9 million compared with an income of RMB <unk> 1 million in 2020.
Tommy Joe: Loss from discontinued operation was RMB 10.9 million compared with an income of RMB 0.1 million in 2020.
Tommy Joe: Our net income for the year 2021 was RMB $39.9 million. It decreased by 51% from RMB $81.9 million in 2020.
Our net income for the year 2021 was RMB $39 9 million a decrease of 51% from RMB $81 9 million in 2020.
Tommy Joe: adjusted net income on a non-gap measure with $39.9 million.
Adjusted net income on a non-GAAP measure.
$39 9 million.
A decrease of $51 3 million RMB $81 nine.
Tommy Joe: a decrease of 51.3 million for R&B 81.9 in 2020.
In 2020.
So our business outlook for the year for full fiscal year of 2022.
Tommy Joe: So our business outlook for the year full fiscal year of 2022.
Tommy Joe: The company expects a total revenue of continuing operation to be between RMB $480 million to RMB $520 million representing an increase of 15% to 24% on a year-over-year basis.
The company expects total revenue of continuing operations to be between RMB 480 million to RMB $520 million.
Representing an increase of 15% to 24% on a year over year basis.
Tommy Joe: This outlook reflects the company's current and preliminary view on the market and operational conditions.
This outlook reflects the company's current and preliminary view on the market and operational conditions.
Tommy Joe: The outlook ranges for fiscal year 2022 reflects a number of assumptions that are subject to change based on uncertainties.
The outlook ranges for the fiscal year 2022 reflects a number of assumptions that are subject to change based on uncertainties.
Speaker Change: So the above is my financial highlight briefing and both Mr. John and myself wish to thank everyone for participating and we want to leave more time for call and questions. CEO operator please go ahead and present your questions.
So the above is my financial highlight briefing and both Mr. John myself Swisher, thank everyone for participating and we wanted to leave more time for call and questions.
Operator. Please go ahead and proceed with the Q&A.
Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys.
If you are using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star then two.
If at any time. Your question has been addressed and you would like to withdraw your question. Please.
Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
At this time, we will pause momentarily.
To assemble our roster.
Again, if you have a question.
Please press Star then one.
Speaker Change: This concludes our question and answer session. I would like to turn the call back over to Mr. Joe for any closing remarks. Thank you, Operator. I think we're done.
This concludes our question and answer session.
I would like to turn the call back over to Mr. Joe for any closing remarks.
Thank you operator I think.
Some of our lesson or maybe a bit shy too.
Joe: give a public question and answer session, but that's okay. Most of them know me personally and can reach me anytime after the conference call. So again, both Mr. John and I want to thank everyone for participating on today's call and for everyone's further support. We appreciate everyone's interest in our company and great to look forward to reporting to you again next quarter.
Give a public question and answer session, but that's okay. Most of them know me personally and kind of reach me anytime after the conference call.
So again, both Mr. John I want to thank everyone for participating on today's call and for everyone for the support we appreciate everyone's interest in our company and greater look forward to reporting to you again next quarter.
Joe: And I'll turn over to Mr. John for any closing remark if he has, and I'll try and
And well I'll turn it over to Mr. Zhao for any closing remarks, if you have an all transplant.
Mark: Thank you very much for taking the time to participate in this conference.
Oh, excuse me guys Yantai down there so when I turned yellow music.
Great.
Yeah.
Mark: I'm not sure about the year 2021, but I'm sure we'll be able to make it in 2022.
Appreciating the Rd.
When a woman opinion R&D are in Canada.
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Since you know so you can see yeah.
Maggie to Biogen.
Yes, so Mr. John said again, thank everyone for their time today.
Speaker Change: So, Mr. Johnson, again, thank everyone for their time today. 2021 was certainly an unusual year, and we will have to make sure and be certain that in 2020,
2021 was certainly an unusual year and we will have to make sure and be certain that in 2022.
John: a very good report for error one to be satisfied with. Okay, thank you again operator.
Very good report for everyone to be satisfied with okay. Thank you again operator.
Speaker Change: Thank you all again. This concludes the call. You may now disconnect.
Thank you all again this concludes the call you may now disconnect.
Okay.
Speaker Change: The.
[music].