Bright Scholar Education Holdings Limited (NYSE: NYSE:BEDU) reported substantial growth in its second quarter of fiscal 2024, marking a significant turnaround from the previous year. The company's total revenues increased by 17.2%, with gross profit surging 40.2%.
Adjusted EBITDA reached RMB 33.7 million, a stark contrast to the loss reported in the same period last year. Overseas School segment and Complementary Education Services were the primary drivers of this growth, with revenue increases of 20.5% and 19.5% respectively. The company's focus on operational efficiency and cost controls contributed to these positive results.
Key Takeaways
- Bright Scholar's total revenues and gross profit saw year-over-year increases of 17.2% and 40.2%, respectively.
- Adjusted EBITDA turned positive at RMB 33.7 million compared to a loss in the same quarter of the previous year.
- Overseas School segment revenue grew by 20.5%, with a 20% year-over-year increase in student enrollments.
- Complementary Education Services revenue increased by 19.5%, mainly due to the recovery of the overseas study counseling business.
- Domestic Kindergartens & K-12 Operation Services segment revenue declined slightly by 1.5%.
Company Outlook
- Bright Scholar is actively restoring growth and profitability while strengthening its balance sheet.
- The company will continue to focus on its CATS Global Schools network and divest non-core assets.
- Plans to accelerate overseas revenue growth and create sustainable value for customers and shareholders.
Bearish Highlights
- Revenue from Domestic Kindergartens & K-12 Operation Services segment experienced a minor decline of 1.5% year-over-year.
Bullish Highlights
- The company's operational efficiency is at an all-time high, with effective cost controls in place.
- Recognition of quality education provided, with St Michael's School being named the Best Value School in the U.K. by The Telegraph.
- Record numbers of students received offers from top universities, including the University of Cambridge, the University of Oxford, and Ivy League institutions.
Misses
- There were no significant misses reported in the earnings call.
Q&A Highlights
- The Q&A session provided further insights into the company's financial health and future strategies.
- Management expressed confidence in maintaining a balance between growth momentum and cost control for long-term value creation.
Bright Scholar's CEO, Mr. Robert Niu, and CFO, Ms. Cindy Zhang, highlighted the success of the company's strategic initiatives, which have led to a second consecutive quarter of year-over-year improvement.
The company is gearing up to capture broad growth opportunities and solidify its position as a premier global education service provider. With a strong focus on strategic portfolio restructuring and prudent cost management, Bright Scholar is set to continue its trajectory of growth and profitability.
InvestingPro Insights
Bright Scholar Education Holdings Limited (NYSE: BEDU) has demonstrated a commendable performance in the last twelve months as of Q2 2024, with revenue growth of 23.24% and a gross profit margin of 29.78%. This indicates the company's ability to not only increase its revenue but also maintain profitability in its operations. The revenue growth aligns with the company's reported increases in its Overseas School segment and Complementary Education Services, underscoring the effectiveness of its strategic initiatives.
InvestingPro Tips:
- Investors may want to consider the company's robust revenue growth and improving gross profit margin as positive indicators for future performance.
- With a Price / Book ratio of 0.29, the company's stock may be undervalued, presenting a potential opportunity for value investors.
InvestingPro Data:
- Market Cap (Adjusted): 56.78M USD, reflecting the company's current valuation in the market.
- Revenue (LTM Q2 2024): 311.69M USD, showcasing the company's scale of operations over the last twelve months.
- EBITDA Growth (LTM Q2 2024): 244.78%, highlighting significant improvement in earnings before interest, taxes, depreciation, and amortization, which could be a sign of operational efficiency.
For those interested in further insights, InvestingPro offers additional tips to help make informed decisions. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 5 more InvestingPro Tips available for Bright Scholar, which could provide a deeper understanding of the company's financial health and growth prospects.
Full transcript - Bright Scholar Education Holdings (BEDU) Q2 2024:
Operator: 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 Gall], Investor Relations Counsel of the Company. Please go ahead, Ms. Andrea.
Unidentified Company Representative: Thank you very much. Hello, everyone, and welcome to Bright Scholar's earnings conference call for the second quarter of the 2024 fiscal year. The company's financial and operational results were released earlier today and are available online by visiting the IR section of our website at ir.brightscholar.com. Please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may materially differ from today's view. Further information regarding these and other risks and uncertainties is included in the company's prospectus and other public filings as filed with the U.S. SEC. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Additionally, Bright Scholar's earnings press release and this conference call include discussions of unaudited GAAP and non-GAAP financial measures. Bright Scholar's earnings press release contains a reconciliation of the unaudited non-GAAP measures. Please also note that all numbers are in RMB. Participants on today's call will include our Chief Executive Officer, Mr. Robert Niu, who will provide a company overview and update on our strategic initiatives with highlights from the quarter. Our Chief Financial Officer, Ms. Cindy Zhang, who will then provide details on the company's financial results for the period. We will then open the call for questions. I will now turn the call over to our Chief Executive Officer, Mr. Robert Niu. Please go ahead, sir.
Ruolei Niu: Thank you. And it's my pleasure to speak with you today. Our turnaround has taken root in fiscal 2024. We are actively restoring growth and profitability while strengthening our balance sheet. Last quarter, I discussed our strategic initiative to revive our business and how this will restore our growth in revenue and EBITDA. As promised, we continue to grow these metrics in the second fiscal quarter making our second consecutive quarter of year-over-year improvement. In the second fiscal quarter, our total revenues increased 17.2%. Gross profit surged 40.2% and our adjusted EBITDA was RMB33.7 million versus a loss for the same period last year. These gains reflect the strength of our strategic initiatives, showing we are on the right path to sustainable growth and profitability. Our operational efficiency is better than ever and our cost controls are proving effective as we continue to restructure our business portfolio. We are heavily focused on our CATS Global Schools network, while we look for opportunities to divest some of our non-core assets, leveraging our established global network of schools and the ecosystem. We believe we can accelerate our overseas revenue growth and create sustainable value for both customers and shareholders over the long-term. Now I'd like to share some details on the quarter on each of our business segments. First, the recovery of our Overseas School segment is still the strongest. With revenue up 20.5% year-over-year in the second fiscal quarter, this business is our primary revenue source and will continue to be our growth engine. Year-to-date, a total of 224 students have accepted our offer and registered at our overseas K-12 schools for enrollments in September, marking a 20% year-over-year increase. This demonstrates the growing demand for the high-quality education our schools deliver as well as the unique advantages we can offer. Scale and better utilization will drive our topline growth while expanding our bottom line through increased operating leverage. All of our schools are driven to continually improve the quality of offerings we provide. These efforts are proving effective and we are gaining increasing attention and recognition that continues to support enrollment in the wake of pandemic. In February this year, The Telegraph named our St Michael's School as the Best Value School in the U.K. in 2024. Out of more than 2,500 other independent schools, St Michael's was named the number one school in the U.K., offering the highest academic return on fees. Many of our students go on to prestigious colleges based on their stellar education we provide that prepares them for their next educational success. Six of our CATS Global School students receive offers to study at University of Cambridge, the University of Oxford and two students receive offers to study at Ivy League Universities, setting a new company record. These results are made possible by the huge monitoring efforts provided by our dedicated teaching teams. Our key professional program leaders provide personalized advice on the combination of academic subjects, independent study, research projects and extra curriculum experience relevant to the student's specific choice of degree. As part of this service, students receive support with applications, admission tests and interview preparation, including advice for alumni and university lecturers. Overall, we made significant progress with our Bright Scholar's Overseas Schools business in the second fiscal quarter. Our commitment to providing our students with a world-class education and preparing them for – in the global marketplace remains central to our growth and ability to accelerate enrollments. Moving on to our Complementary Education Services. This segment sustained steady revenue growth of 19.5% year-over-year in the fiscal second quarter, mainly driven by the recovery of our overseas study counselling business. Meanwhile, revenue from our Domestic Kindergartens & K-12 Operations Services segment declined by 1.5% year-over-year, which aligns with our internal expectations. In addition, we continue to build leaner, more efficient operations throughout the period. In the second fiscal quarter, we remain focused on refining our products and services. We further prioritize streamlining our overseas schools offerings to 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. We are committed to strengthening our – each of our schools strategic positioning and cultivating their unique specialties, aligning with the nuanced demands of their target students. In summary, the second fiscal quarter has shown that our business has officially turned the corner through continued strong growth and profitability that we began at the start of this fiscal year. The dedicated blend of our better utilized resources and streamlined cost structure have sharpened our ability to revitalize our business. Our main goal remains to maximize our value both internally and externally. We will do this by optimizing our restructuring and operations to scale and accelerate our high-return business. Our progress will translate to ongoing year-over-year growth in our revenue, EBITDA and ultimately, our cash flow. Meanwhile, we will continue to consolidate and strengthen our overseas business operation in the U.K., while we have an established global network of renowned schools and an intensive ecosystem of educational resources. Looking ahead, we are gearing up to capture broad 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. Cindy Zhang, who will discuss our key financial results. Please go ahead, Cindy.
Cindy Hui Zhang: Thank you, Robert. Now I'd like to discuss our financial results for the second quarter of fiscal 2024. Please note [indiscernible] and all comparisons refer to year-over-year comparisons [indiscernible]. We are pleased to report a solid financial performance for the second quarter. Our total revenues increased by 17.2%, driven by increase in our Overseas Schools business and Complementary Education Services, which grew 20.5% and 19.5%, respectively year-over-year. Meanwhile, we achieved profitability for the second quarter, and our gross margin increased by 510 basis points, reflecting our ongoing optimization in our cost structure and operation expenses. Next, I will talk – I will walk you through more details of our second quarter financial results. Total revenue increased by 17.2% to RMB521.4 million from RMB445.1 million for the same quarter last fiscal year. Overseas Schools revenue increased by 20.5% to RMB248.9 million from RMB206 million for the same quarter last fiscal year. This increase was mainly attributable to increase in both the number of students and the average tuition fees of Overseas Schools. Complementary Education Services revenue increased by 19.5% to RMB214.1 million from RMB179 million for the same quarter last year. The increase was mainly attributable to the recovery of our overseas study counselling business as well as upticks in our international contest training and other business. Domestic Kindergartens & K-12 Operation Services revenue was RMB59 million compared to RMB60.1 million for the same quarter last year. Cost of revenue was RMB359.8 million or 69% of revenues compared with RMB329.7 million or RMB74.1 million for the same quarter last year. The improvement was mainly attributable to cost-saving measures and efficiency enhancements at our headquarters. Our gross profit increased by 40.2% to RMB171.7 million from RMB115.4 million for the same quarter last year. The increase was mainly attributable to revenue growth in our Overseas Schools and Complementary Education Services. Gross margin increased to 31% from 25.9% for the same quarter last year. Adjusted gross profit increased by 38.3% to RMB164.3 million from RMB119.2 million for the same quarter last fiscal year. Our SG&A expenses decreased by 5.8% to RMB146.8 million from RMB155.9 million for the same quarter last year. This decrease was mainly attributable to cost-saving measures and efficiency enhancements at our headquarters. Our adjusted EBITDA was RMB33.7 million compared with an adjusted EBITDA loss of RMB26.6 million for the same quarter last year. Net income was RMB2.9 million compared with the net loss of RMB50.8 million for the same quarter last fiscal year. Adjusted net income was RMB7.1 million compared with the adjusted net loss of RMB47.8 million for the same quarter last fiscal year. As of the end of February this year, the company has cash and cash equivalents and restricted cash of RMB496.9 million compared with RMB467.2 million as of August 31 last year. Looking ahead, we will remain focused on prudent cost management and strategic portfolio restructuring to optimize returns while [bolstering] our financial spending through margin expansion, strengthening our balance sheet and enhance our cash flow by maintaining a healthy balance between our growth momentum and cost. We are confident we can generate long-term value for our customers and shareholders alike. Okay. This concludes all our prepared remarks today. We will now open the call to questions. Operator, please go ahead.
Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions]
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Operator: And this concludes our question-and-answer session. I would like to turn the conference back over to Ms. Andrea Gall for any closing remarks. Please go ahead.
Unidentified Company Representative: Thank you once again for joining us today. If you have further questions, feel free to contact Bright Scholar's Investor Relations through the contact information provided on our website.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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