Q1 2024 Bright Scholar Education Holdings Ltd Earnings Call

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Good morning, and thank you for standing by for Bright Scholar's first fiscal quarter of fiscal 'twenty 'twenty four earnings conference call. At this time all participants are in listen only mode. After management's prepared remarks, there will be an opportunity to ask questions.

Today's conference is being recorded I would now like to turn the meeting over to your host for today's conference Ms. Ruby Yim Investor Relations Counsel.

Please go ahead.

Thank you operator good morning.

Good evening, everyone I would like to welcome huge bright scholar's plus physical port the 'twenty 'twenty four and November 30th 2020 Spring earnings call with me today on the call are Mr. Roberts, Our Chief Executive Officer, and MS. Cindy Zhang our Chief Financial Officer.

The agenda today.

It's blocking will start the call with an update on progress so called strategic initiatives to be followed by our business performance.

Its coke.

I'll call it a strategic priority in fiscal year 'twenty 'twenty four Unfortunately to walk you through our key financial performance. We will then open the call for questions.

As a reminder, today's conference call is being broadcast live via webcast. In addition, a replay will be available on our website. Following the call by now you should have received a copy of our press release that was distributed on February 2024 after market close eastern time.

If you have not it is available on the IR section of our website.

Before we get started.

Let me remind you that today's call may contain forward looking statements within the meaning of section 21.

Oh, The Securities Exchange Act of 19th century, It's a manager and that's the point in the U S. Private Securities Litigation Reform Act.

1995.

Forward looking statements.

So the limitation the company's business plans and development, which can be identified by terminology such as May will expect anticipate.

That's too much in time plan believe potential continue its all all like two or all the stimulus.

Such statements are based upon management's current expectations and current market and operating conditions and we'd like to events that involve known or unknown risks uncertainties and other factors all of which are difficult to predict and many of which are beyond the company's control, which may cause the company actually.

So performance or achievements to differ.

Materiality can judge in the forward looking statements.

Information regarding this and other risks uncertainties or factors is included in the company's filings with the U S Securities and Exchange Commission.

The company does not undertake any obligations to update any forward looking statements as a result of new information future events or otherwise except required under law.

During this call, we'll be referring to GAAP and non-GAAP financial measures, we use certain non-GAAP measures as supplemental measures to review and assess our.

Our operating performance this non-GAAP financial measures have limitations as analytical tools and investors should not place.

The nation or as a substitute for net income attributable to company or other consolidated statement of comprehensive income data prepared in accordance with U S. GAAP.

She's not.

All numbers in our management's remarks, I know M D and all comparisons refer to year over year comparisons unless otherwise stated you can download a copy of our earnings presentation on our IR web page.

Now I'll turn to call over to Alexey O Roberts. Please go ahead.

Thank you.

And I want to welcome you and thank you for joining our conference call.

Today I'm delighted to have the chance to speak with you in this setting.

In our court I will begin with an overview of this.

Strategic.

We've implemented.

It's an ongoing effort.

On the business around.

I like the progress and the accomplishments we've made over the past year.

Yeah.

Actions on the company before briefly touched on.

Our physical once your performance.

Finally, I want to outline what we can expect one hour.

Management and global change regarding our.

Thank you Jake.

It is for the rest of the year and beyond.

Oh aspiration has always been to continuously huge a global premier.

There was a company that offers world class education.

Slide six please.

Our portfolio companies in less than 12 months since joining the company in my previous role as CFO.

I have had the opportunity it's not what you spend time with our management.

Management teams in the U K and China offices.

This experience has allowed me to again, a holistic understanding of our census.

It's just been profoundly impacted by the pandemic.

Immediately recognize the immense opportunity which has been.

Oh.

Well the business recovery.

And companies that we can unlock suddenly become better outcomes.

If we wanted to.

The way we operate.

Following a thorough review.

We've identified gaps.

And the opportunities.

Okay.

What the business would be called.

Well, the Brazil recovery.

Yes.

Yeah.

Right.

Following a thorough review we've identified gaps for Ya man and the opportunities to capitalize on prioritized our strategy our imperatives and then each day its efforts to reengineer our cost base.

Again, the goal of our post Covid turnaround strategy is to reset our business around economy economies.

That is designed to deliver sustainable high return growth in revenue EBITDA and cash flow.

Advancing operational efficiency.

And the culture of Beijing.

Comparative cost structure are essential pillars for executing our strategic plan.

Okay.

Let me share with you the progress in slide seven.

The areas and actions that have.

Already set in motion and <unk>.

We are committed to extending these efforts.

On Boeing is.

Number one our first step involves restructuring and streamlining our operations.

That's our China headquarters.

Through these efforts.

We have successfully made our operations leaner and more efficient.

These included the removal of middle layers facilitates.

And the effective communications between senior management.

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So it's neither the outcome has been remarkably inquiries.

Home currently.

To enforce this.

He's pretty substantially by Fox.

Well, our overseas operation headquarter in the U K.

Under the brand of cash global skews, we have commenced various initiatives. Firstly, we have reinforced internal controls establishing it as a key performance indicator.

Agent team and business leaders.

As a result.

We have successfully addressed and resolved the two material weaknesses.

<unk> you know, it's funny, Oh financial year 'twenty two.

We initiated to conduct a comprehensive assessment Oh power.

Organizational operational and cost structure.

Potential avenues for improvement.

Thirdly.

We continue to leverage organic growth opportunity through increase in utilization as well.

We achieved both games.

Number three simultaneously so initial steps to improve our financial agility by strengthening our balance sheets, we paid off or the outstanding Bank Bank loans.

July 'twenty to 'twenty three.

We have also initiated plans to decrease our liabilities in the space and our balance sheets.

Supplementing our continuous effort to boost return to.

Cost reduction measures and operational efficiency enhancements.

The focus on executing our turnaround strategy in physical 2023 enabled us to conclude.

The fiscal year strongly with revenue greatly exceeded.

Top end guidance and bottom line poops operation or <unk>.

With operating loss and the <unk>.

Income loss, if that makes any reduced.

This in turn leads us to our first fiscal quarter of 2020 full performance in slides.

Number eight well.

Choose all.

Fiscal year 'twenty 'twenty four is a solid start as we continue to make waste rights and revitalizing our business it'll be ramping.

Our global operations.

In the first fiscal quarter, we achieved a seven 6% increase in revenue.

A couple of weeks.

Sundance.

The boat.

Holtzman of 13, 1% and gross profits.

In 2000 eights in operating income and 44, 9% in net income compared to the same quarter in the previous fiscal year.

The recovery O.

Oh overseas schools Sigma remains the strongest marked by a 28, 4% increase in top line.

Revenue during the first fiscal quarter.

Music and then continues to offer significant opportunities for scaling gross and the bottom line enhancements, who increased operating leverage. Meanwhile.

The complementary agitation assemblies at Sigma and sustained steady revenue growth predominantly driven by the recovery of overseas study consulting business.

<unk> achieved a 12, 8% revenue increase in the first physical quarter.

Conversely, the domestic Kinder gardens, and K 12 operations services segment continued its contraction recording.

One is six 4% decrease in revenue aligning with our internal expectations.

As we progress into the reminder, remainder over fiscal 'twenty 'twenty four.

The Atlanta men and any extra to achieve.

Cheap train physical 2023, and the first.

One quarter <unk> make money for.

Have we established a strong foundation for executing our multiyear.

To explain.

With the goal of sapiens portfolio Christmas geared towards sustainable revenue growth.

Enhanced.

<unk> and solus.

Flow through heightened operational efficiency.

The following slides offer an overview of our goals and priorities while respective.

At Cigna.

Slide number nine shows you the opposites.

Operational structure of our overseas school Sigma with headquarters in the UK.

Our primary focus in financial year, 'twenty 'twenty four is to maximize both internal and external value creation by optimizing.

Restructuring and operating leverage.

With Ultimates objective building skull and high return business in the longer term.

Strategic change we plan to ink womens in fiscal 'twenty 'twenty four are expected to result in significant bottom line improvement.

In the years to come.

That was for the complementary education services.

And domestic.

Kinder Garden and trade swap operations services Sigma that's showing in slide 10.

Mucusy in financial year, 'twenty, 'twenty, four will be firmly on portfolio and cost optimization for further improved.

Returns.

Through divestments of noncore education business in <unk>.

We will intensify the restructuring of our portfolio.

And global operations.

To restore profitability and strengthening the balance sheets.

Beyond recovery will also pursue growth opportunity with our go global strategy Recapped in slide 11 for your reference to.

To conclude.

Our focus remains on nurturing.

High growth high return business, while bolstering our financial standing.

<unk> margin expansion.

I mean, our balance sheets and enhance cash flow.

Our overarching goal is to lease that you establish a position of strength, providing ample room for pursue scalable business insurance, we slipped a nimble.

The ability of well into physical year 2025 and beyond.

We firmly believe that.

This marks a pivotal step in driving forward looking value equation policyholders in the long long term.

I'm fully aware that we are asking a great deal on our employees.

To walk through the necessary chance and I deeply appreciate that supports an ongoing commitment to deliver on our company's purpose.

I extend my heartfelt gratitude to our talented global team for their passion and stead fast.

Dedication.

Which continues to drive our solid business and financial performance.

With this notes I'll turn the call all bunch of CBD.

Thank you Robert Thank you Robby.

Now turn back to all the financial.

Please be reminded that all numbers I M D and all comparisons refer to year over year comparison.

Net otherwise stated please also refer to our earnings press release for detailed information of our comparative financial performance. Yeah, I don't think they are facing.

Please turn to slide 13, we ended the physical constraints of physical quarter with revenue up seven points.

And two $572 7 million overseas schools remain to be the best performing segment with revenue up 28.4% to 252.9 million basically due to the recovery of overseas schools.

Brady from that dynamic.

For our complementary education services segment, the ground with Husky study.

Revenue was up two 8% to $210 million, which was primarily due to gradual recovery, although the only piece that is constantly busy.

However, our domestic kindergarten and Paypal operation stomach has continued to experience and palates change with revenue down.

A 26.4% to $109 9 million. This is in line with all the internal projections and we anticipate this chain to Pepsi throughout the fiscal year.

On slide 14 contents rapidly, but the fiscal quarter improved to 64, 5% of total revenue compared to 66.2% of total revenue for the same physical quarter last year.

The improvement was attributed to our ongoing initiatives to enhance our cost structure.

These enhancements of our cost structure, along with accelerated recovery of momentum in our business, especially within the Olympics segment lead to an upturn in gross profit and an improvement in gross margin.

Gross profit for the fiscal quarter was up 13, 1% to $203 4 million and a gross margin improved to 95, 5% from 33, 8% as shown in slide 15.

Moving to the slide 16 to have a look at the improvement in our SG&A expenses.

Our ongoing asset to optimize cost and operations at all the head content once again proving the body without the decrease in SG&A as a percentage of total revenue to 24, 1% fantastic six 3%.

Slide 17 shows our adjusted EBITDA was up 8% to 98.

8 million a decade net income was up 37, 3% to $61 9 million and net income was up 49% to $59 2 million.

This improvement in other Bartonite Alba the improvement in our bottom line is all of the top.

Top priority as we move forward our focus remains on prudent cost management as Jed paycheck portfolio recapturing to optimize returns and strengthened our balance sheet and cash flow, which is essential for our future expansion and the yet to come.

Lastly, please refer to slide 1919 for all the management team Slide 24, the comeback income statement.

A large chunky, one Florida cocreation for net income and EBITDA. Unlike GAAP to non-GAAP lease out and slide 22 for other condensed balance sheet and cash flow statement.

This concludes my financial update and our prepared remarks, and we'd like to open the call for questions. Operator. Thank you.

We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

Can you speak a phone please pickup your handset before pressing the keys.

To withdraw your question. Please press star two.

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

Yeah.

With there being no questions. This concludes our question and answer session now I will turn to Robert for his closing remarks.

Okay. Thank you operator.

I'm excited about our opportunities and our future I look forward to leading <unk> to new heights, and sharing our progress with all of you along our journey. Thank.

Thank you very much for joining this conference call. Please feel free to contact us. If you have any further questions. We wish everyone. A good day. Thank you.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Yeah.