Q2 2024 Bright Scholar Education Holdings Ltd Earnings Call

Hello, Ladies and gentlemen, thank you for standing by for Bright Scholar's second quarter of fiscal 2024 earnings conference call. At this time, all participants will be in a listen only mode. After the management's remarks, there will be a question and answer session. Today's conference call is being recorded I would now like to turn the call over to your host Ms. Andrea Wall.

Andrea Wall: Investor Relations counsel of the company. Please go ahead Ms Andrea.

Andrea Wall: Thank you very much Hello, everyone and they'll all come for Bright scholar earnings conference call for goes back on causing upper 20 upon it for physical year accommodates financial and operational results were released earlier today and are available online, but they're getting on the IR section of our robots that I, our adult Brett Gellner Dot com.

Andrea Wall: Please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Public communication that Geisha Reform Act of 1995, so they're looking statements involve inherent risks and uncertainties as such the company's result may majority of different from today's field.

Andrea Wall: Information regarding these and other risks and uncertainties is included in the company's form factors and other public filings as filed with the U S and do you see the company does not assume any obligation to update any forward looking statements, except as required under applicable law I.

Andrea Wall: Additionally, bright scholar's earnings press release, and this conference call include discussion I'll get it on a non-GAAP financial measures, but scholars earnings press release contains a reconciliation of all non-GAAP measures. Please also note that all numbers are in RMB.

Andrea Wall: Hi, Casey depends on today's call will include our Chief Executive Officer, Mr. Robin you will provide a company overview and update on our strategic initiatives with highlights from the quarter, Our Chief Financial Officer. Mr. <unk>. Zhang will then provide details on the company's financial results for the period.

Speaker Change: We will then open the call for questions.

Speaker Change: I will now turn the call over to our Chief Executive Officer. Mr. Robin You. Please go ahead Sir.

Robin You: Thank you.

Robin You: My pleasure to speak with you today.

Robin You: Our turnaround has taken routine fiscal 'twenty to 'twenty four.

Robin You: Actively restoring growth and profitability, while strengthening our balance sheet.

Speaker Change: Lastly, last quarter I discussed our strategic.

Speaker Change: Initiatives to revive our business and how this will restore our growth in revenue and EBITDA.

Speaker Change: Promised we continue to grow these metrics in the second fiscal quarter.

Speaker Change: Making our second consecutive quarter of year over year improvement.

Speaker Change: In the second fiscal quarter, our total revenues increased 17, 2% gross profit surged 40.2%.

Speaker Change: Adjusted EBITDA was renminbi $33 7 million versus a loss for the same period last year.

Speaker Change: These gains reflect the strength of our strategic initiatives showing we are on the right path to sustainable growth and profitability.

Speaker Change: Our operational efficiency is better than ever and our cost controls are proving effective as we continue to restructure our business portfolio.

Speaker Change: We are heavily focused on our cast global schools network well.

Speaker Change: We look for opportunities to divest some of our non core assets.

Leveraging our established global network help schools and the ecosystem.

Speaker Change: We believe we can celebrate all overseas revenue growth and create sustainable value for both customers and shareholders over the long term.

Speaker Change: No I'd like to share some details from the quarter.

Speaker Change: Each of our business segments.

Speaker Change: First the recovery of our overseas schools segment is still with the strongest.

Speaker Change: With revenue up 25% year over year in the second fiscal quarter. This business is all primary revenue source and we will continue to be our growth engine.

Speaker Change: Yeah today.

Speaker Change: Total of 224 students.

Speaker Change: I'll start.

Speaker Change: And registered at all Oh persists K 12 schools for enrollment in September.

Speaker Change: Marking a 20% year over year increase.

Speaker Change: It demonstrates the growth growing demand.

Speaker Change: The high quality of education, our schools de lever.

Speaker Change: Well as the unique advantages we can offer.

Speaker Change: Skull and until utilization will drive our top line growth, while expanding our bottom line through increased operating leverage.

Speaker Change: All of our schools are driven to continually improve the quality of offerings we provide.

Speaker Change: This app is up hoping your factories and we are gaining increasing attention and recognition that continues to support enrollment in the wake of pandemic.

Speaker Change: In February this year, the telegraph's named hours to Michael schools are the best value schools in the U K in 2020 for.

Speaker Change: I'll have more than 2500 other independent schools. Some mikos was named the number one SKU in the U K offering the highest academic return on peace.

Speaker Change: Many of our students go on.

Sure.

Speaker Change: Prestigious colleges.

Speaker Change: College is based on their stellar education, we provide that prepares them for their next educational success.

Speaker Change: Six of our tests globally with schools students receive offers two study at the University of Cambridge, The University of Oxford and two students receive offers to study at Ivy League universities.

Speaker Change: Setting a new company record.

Speaker Change: These results are made possible by the huge moratoriums.

Speaker Change: Combined bite all dedicated.

Speaker Change: Teaching teams, our keep profession program leaders provide personalized advice on the combination of academic subjects independent study research projects and extra curriculum experienced relevant to the students' specific choice helps degree.

Speaker Change: As part of the service students receive support with athletes applications admission test and interview preparation, including advice for Aluminized and University that's yours.

Speaker Change: Overall.

Speaker Change: We may just anything significant progress with our black Scholes overseas schools business in our second fiscal quarter.

Speaker Change: Our commitment to providing our students with a world class education and preparing them for that.

Speaker Change: In the global marketplace remains central to our growth and ability to celebrate enrollments.

Speaker Change: Let me I'll, let you all our complementary education services this stigma and sustained steady revenue growth of 19.5% year over year in the fiscal second quarter, mainly driven by the recovery of our overseas study consulting business.

Speaker Change: Meanwhile, revenue will fall in our domestic kindergartens and K 12 operation services segment declined by one 5% year over year, which aligns with our internal expectations.

In addition, we continue to build a leaner more efficient operations.

Speaker Change: Throughout the period in the second fiscal quarter, we remained focused on refining our products and services. We further prioritize streamlining all overseas schools offerings.

Speaker Change: Enhance their operational efficiency, while recognizing the diverse needs of students from different parts of the world. We continue to tailor our high quality educational products to meet these needs.

Speaker Change: We are committed to strengthening our each of our schools strategic positioning and cultivating they are unique.

Speaker Change: Specialties aligning waste a nuanced demands of their target.

Speaker Change: Students.

Speaker Change: In summary, the second fiscal quarter has shown that our business has officially turned the corner. So continued strong growth and profitability that we began at the start of this fiscal year.

Speaker Change: The dedicated blend old vault, that's that utilize resources.

Speaker Change: And streamlined cost structure and sharpen our ability to revitalize our business.

Speaker Change: Our main goal remains to maximize our value both internally and externally we.

Speaker Change: We will do this by optimizing our restructuring and operations to skull.

Speaker Change: Celebrates our high return business.

Speaker Change: Our progress.

Speaker Change: Translate to your ongoing year over year gross revenue EBITDA and ultimately our cash flow.

Speaker Change: Meanwhile, we will continue to consolidate and strengthen our overseas business operation in the U K.

Speaker Change: While we have an established global network of Reno schools and intensive ecosystem of educational.

Speaker Change: Resources looking ahead, we are gearing up to capture both growth opportunities and solidify our position as a global Premier Education service company with that I will turn the call over to our CFO Ms <unk>.

Speaker Change: <unk>, Zhang who will discuss our key financial results. Please go ahead Cindy.

Speaker Change: Okay.

Cindy: Thank you, Rob, but now I'd like to discuss our financial results for the second quarter, all physical attendance and before please note.

Cindy: Mhm and all comparisons refer to year over year comparison.

Okay.

Cindy: We are pleased to report a solid financial performance for the second quarter.

Total revenues increased by 17, 2% driven by increase in our older fleet.

Cindy: Isn't it and complementary education says it.

Cindy: Which grew 25%.

Cindy: 19, 5% basket yeah, okay.

Cindy: Meanwhile, we achieved plus the ability for the second quarter.

Cindy: Our gross margin increased by 510 basis points, reflecting our ongoing optimization of our cost.

Cindy: Structure and operation expenses.

Matt I will talk.

Matt: I will walk you through more details of our second quarter financial results.

Matt: Revenue increased by 17, 2%.

Matt: Two to two 521 4 million.

Matt: 400.

Matt: $45 1 million for the same quarter last fiscal year.

Matt: Overseas schools revenue increased by 21, 5% to $248 9 million.

Matt: One 206 million for the same quarter last fiscal year. This increase was mainly attributable to increase in both the number of students.

Matt: The average tuition fee I'll always be cool.

Matt: Complementary education services revenue increased by 19 points.

Matt: 5% to $214 1 million.

Matt: 179 million for the same quarter last year. The increase was mainly attributable to the recovery of our almost family counseling business as well as uptake in our international focus training and all the business.

Matt: Well, Matthew the goddess and Paypal operation stuff is exactly what.

<unk> 15, 59 million compared to 61 million for the same quarter last year.

Matt: Cost of revenue was 315, nine 8 million or 16, 9% revenue compared with 329 7 million.

Matt: $74 1 million for the same quarter last year. The improvement was mainly attributable to cost saving measures and efficiency enhancements at our headquarter.

Matt: Our gross profit increased by 42% to 171 7 million from 115 point.

Matt: One 4 million for the same quarter last year.

Matt: Increase was mainly attributable to revenue growth in our overhead.

Matt: And complementary education services.

Matt: Gross margin increased to 31% bond, 25% 25 now.

Matt: Thanks for the same quarter last year.

Matt: Adjusted gross profit increased by 38 point sleep.

Matt: 100 and.

60, 413 million, one time debt and $19 2 million for the same quarter of last fiscal year.

Matt: All of the SG&A expenses decreased by five 8% to $146 8 million small long so $155 9 million for the same quarter last year. This decrease was mainly attributable to a coffee stated masses and efficiency enhance.

Speaker Change: That's all the head content.

Speaker Change: Although adelphi it'd be about what does he says he is 3.7 million compared with an adjusted EBITDA loss of $26 6 million for the same quarter last year net.

Speaker Change: Net income.

Speaker Change: Sure no.

Speaker Change: 9 million compared with a net loss.

Speaker Change: On the 15th.

Speaker Change: 50.8 to $15 8 million for the same quarter last fiscal year.

Speaker Change: Adjusted net income was $7 1 million compared to adjusted net loss of 47 8 million for the same quarter last fiscal year.

Speaker Change: As a backup as of the end of the February issue, Yeah. The company has cash and cash equivalents and the restricted cash.

Speaker Change: 496, 9 million compared with $467 2 million as of August 30.

Speaker Change: Wow.

Speaker Change: Not yet no.

Speaker Change: Go ahead, we will remain focused on prudent cost management and strategic portfolio restructuring to optimize returns while closely our financial standing through market expansion strengthening of our balance sheet and enhance our cash flow and maintaining a healthy balance between.

Speaker Change: Our growth momentum and cost we are confident we can generate long term value for all of our customers and shareholders alike.

Speaker Change: Okay. This concludes all our prepared remarks today, we will now open the call to questions. Operator. Please go ahead. 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 if youre 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.

Speaker Change: For the benefit of all participants on today's call. If you wish to ask a question to management in Chinese. Please immediately repeat your question in English and at this time, we'll pause momentarily to assemble our roster.

Speaker Change: Again to ask a question Thats Star then one.

Speaker Change: And this concludes our question and answer session I would like to turn the conference back over to MS. Andrea Wong for any closing remarks. Please go ahead.

Andrea Wong: Thank you once again for joining us today, if you'll have further questions feel free to contact.

Andrea Wong: No.

Andrea Wong: Sure.

Andrea Wong: Information provided on our website.

Andrea Wong: Yeah.

Andrea Wong: Yeah.

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

Speaker Change: [music].