BEDU - Earnings call transcript Q2 2021 | Bright Scholar Education Holdings Limited

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Operator

Good morning and thank you for standing by for Bright Scholar's FY 2021 Second Fiscal Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Today's conference is being recorded. I would now like to turn the meeting over to your host for today's conference, Ms. Counsel. Relations Investor Yim, Ruby

Ruby Yim

Thank you, Bright XXXX, evening. to and call. Good second fiscal morning Scholar's XX, good quarter Welcome Operator. ended earnings February

Joining Co-CEOs; and Executive Dora Li, He, Chen, Mr. Financial Ms. Ms. me Officer. Chief Mr. and our Chairman; Andy our Li, Wanmei our today are Vice Jerry

conference being reminder, broadcast As webcast. via today's a live call is

distributed received In on release By now, call. website following addition, the press after XXXX, a replay XX, our should April will a have market be that Time. of available was on our Eastern copy you close

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

which in difficult and Before Commission. undertake can amended with may, based we XXE intend, included control, and that events by or potential, other factors or The statements materially started, the me as from predict company's and company's current company and U.S. and developments the and future conditions differ as or Section identified Act are Litigation of statements to likely are statements. expressions. terminologies other business which the under to or performance information, other forward-looking except result today's remind cause U.S. unknown any estimate, current any you Exchange are new get in beyond defined this may or expectations statements known update Act forward-looking in aim, management's be obligation is required operating forward-looking Further contain regarding not forward-looking anticipate, call These of in Securities of to as similar as let of of the XXXX. which actual Such the information otherwise, Private include, the involve results, the uncertainties as does company's meaning law. Reform such plan, filing which limitation, is expect, to Exchange or a Securities XXXX risks, to within statements relate without Securities and that factors, plans many upon events risks, continue the the market believe, those will, uncertainties all achievements and are company's of may of

numbers to new remarks unless in introduction refer earnings RMB non-GAAP corporate referring call, should measures XX isolation or in mentioned Jerry? with investors as I'll measures substitute this our them and our the for comparisons, we'll of from in operating consolidated can to which GAAP be otherwise company comparisons year-over-year you to He. And other brief a presentation have review IR the use and X Jerry call download have all of analytical These and measures GAAP. those income to Slide from accordance note, prepared non-GAAP With tools, our to stated. and our our measures. to our company, to that, all as certain turn We financial X Vice Section who comprehensive consider we in in income performance. limitations supplemental net non-GAAP financial as During Please for or a in Chairman, data not attributable are Executive included are statement U.S. over assess webpage.

Jerry He

our trends fiscal call, prepared the in following morning you and interest Scholar. joining continued evening. senior the in We team, and management for remarks us conference today's our cover fiscal will quarter the second Good Ruby. performance of key good on Thanks, call. your behalf Thank our business. XXXX and appreciate Bright second quarter On

call before questions. we open will for will So our brief then on details financial I respective business have a and I provide the performance. the conclusion

the the our the that fiscal demonstrate year progress adapt around strength, of of students XXXX and threats a continued the of resilience amid have saying by me and and and the and operations the Let ongoing Through pleased up focused our variants. the pandemic in and staying emerging to the the through to drive half begin performance years, that we're first times on from years pandemic evolve, set the strength networks, needs. testament built growth have resilience our And our of motto, crisis. we culture in carried capacity this us principle

be We education have provider. blocks place a building in the all premier service to global

to actions, is COVID maximize our having effective and Now, These to success. outstanding times enhancement which of to investment future. are we continue Through believe a these will from the for going capture what structure the strategic we are lead assets, in network, our critical global global for integrate believe areas. synergies our existing more to post to the competitive taken build challenging return cost and performance organization long-term optimization

XX operating have continued to by and ongoing highlights to down XX business our Total XXX.X% first revenues million, overseas turn was the earnings and start with have with X.X% our the profit the quarter, fiscal impact pandemic Section quarter XX.X% the Let’s of gross and with In for XX. adverse Slide COVID-XX second and and income by Slide of detailed for breakdown respective our RMBXXX quarter X in by business. down respectively. half

pandemic adversely our overseas our strong of business while domestic-related recorded impacted All recovery, a schools. the

Please the K-XX business. closely to performance businesses. Slide more refer for look at of respective our Let's Domestic XX our

in X.X%, grew to in half. attributed first and continues was all across exceeded International substantial fiscal strong The for business quarter. our and XX.X% enrolment and which internal second increase in respectively the show up quarter further fiscal bilingual the K-XX segments the the to by recovery X.X%, schools recovery revenue trajectory kindergartens expectations. quarter, XX.X% in Domestic XX% schools, Our

catalysts the in reflects enrollment see our driving our you strength as performance can academic industry-leading growth, brand. XX consistently XX. The of -- Our Slide key

International XX offers X, top April graduating Top collaboration and have schools other drive from University, and and to from York Furthermore, continue two Vanderbilt from with two two in our New Global Garden of As UC for our from the domestic expansion seven from University, students including in XXXX, networks three school XX% University Country China the of Berkeley, capacity. partners XXXX of our Chicago, received Oxbridge, class from institutions, of offers of Cornell deep University.

As of have operate Country capacity XX.X%. Slide the kindergartens release XX, agreements total XX our In complementary approximately total profitable to improvement students. a and to growth services On and revenue with education market, with the of a income significant XX,XXX business and grew into study domestic we by XX of entered partners other tours, schools date, training fueled from returns camps, others. in by quarter, Garden inaugurating

from adapting same to time, with X.X%. to in are And overseas-related our impact experience XX.X% of the we're XX%. X.X% Our from the gross complementary increased margins the At the to also continuing adjusting have to accordingly. margins recover margin started and improved and operating pandemic business minus

year, While we second the and our more investments capture in collaboration camp these study to global in Golden our our opportunities accelerate and in opportunities in operating developments the happy counselling, The responding half we’re see of Ballet camp are likely plan development place. activities through synergy offer Dance; environment overseas The continued tremendous education favorable all broaden through the students most government positive the network. with offerings already and challenging, the and to our network policies expand plans tour businesses. the extra-curriculum to offers to for second strategies these overseas to remains opportunities, with including trend quarter through for around scope business accelerate and of to

will programs accelerate take travel growth are the expect to lifted. begin once effect We and subsequent resume the restrictions and vaccination

Moving out in Slide business to oversea our K-XX performance XX.

pandemic. to and decline As revenue the due anticipated, this quarter year-over-year we substantial experienced a significantly lower

for our the overseas In students. fewer and camp through streamlining transition centralizing of on our by the local overseas cost In of performance enable structure and addition pandemic to review network should support in disruptions. related other progress. advantage operating the students students initiatives competitive through Travel time, and of on language offset upward At impacted leverage continuing performance, resources, and leveraging positive impact into students' the enhancing the going campus, oversea for restrictions this by schools to quarter, Group partially our improving events. schools the continue These cancellation our we as schools. bottom study revenue efficient, trends operations more as well operational encouraged us same the the of and to lockdowns our academic to forward and we're focus academic our on global consolidation provide the of we reemerge business the were of stronger functions, tools to line of

date, offers for release our from top graduating the Group. of offers Russell As XX XXX XXX have with received universities from Oxbridge, XXXX four class

students XXX Top U.S. XXX addition Boston colleges. accepted into in In are School our

XXXX September to for is intake term student XX%. by increase expected New

soon. the expect UK schools U.S., to program are opened the progress the With in and either or reopened vaccine be

to returns profitability our expect capture return overseas We shares life and market to more when schools normal.

Xi has offers performance shown international business with recedes, in Revenue Academy multiple on we plan and of months progress as Slide in the Finally, to the network the XX.X% Academy the XX.X% pleased in and across by global well classes the into our our Education to the six Technology Xi continues Global tutoring pandemic integrate English been basis. of online which China. schools. XX. quarter, fronts grow Once received up we're Global

numerous see market. In for in addition, opportunities offerings our we domestic

teaching classes, across local teaching online collaboration at resources, quality Our improve high China. top and educational to offering each by strategy city through to governments promote video and help school is educational sharing equity efficiency including schools, with the material and

to ahead the are second increasingly optimistic. half Looking we XXXX, fiscal of

longer-term are We will have confident a our recovery. that business strong

priorities years lie following opportunities areas. the Our and the major next the over in

and our First, efficiency. continue K-XX grow utilization by organically to business improving domestic

overseas Second, rebuild return for profitability our revenue business fair post-COVID. and to

and our growth complementary the our breadth of and depth offerings. Third, accelerate expand business. application Fourth, the of the EdTech service

growth continue growth business, our education in will and revenue complimentary momentum K-XX profit focus in steady while on EdTech. operating and building We

expect containment priorities and will the in years in and the few we to sight, level. of profitability return these next revenue our pandemic the growth With pre-COVID

time, note, With call Dora. navigate this Our have at long-term success positioning enabled over same in I'll to strengthening the capacities and, our challenging turn and market solid period, balance the the us greater this to through for sheet

Dora Li

Jerry. Thank you,

RMBX,XXX.X schools the down schools, to numbers on Let's down RMBXXX otherwise Domestic and turn six-month to up recovery. the Please press the a quarter financial business. on for includes stated. to that and kindergarten Slide Please primarily all year-over-year X.X% XX% comparisons release million COVID-XX also impact a reminded International X.X% information on Revenue our due overseas-related XX.X% top-line was back performance and for strong of year-over-year of unless quarter and the turn XX, was basis. refer that to a our comparisons for be six-month our earnings financials. K-XX all million refer schools RMB Please to results the bilingual on to basis, for basis. show schools, is our to complementary overseas quarter are comparative and detailed

of quarter X.X% six-month quarter, number. the in basis, XX.X% of online for revenue revenue up Academic for acquisition XX.X% business. schools, training to the students from X.X% in basis, due strong primarily X.X% Kindergartens, to the was was six-month on XX.X% education XX.X% down on increase revenue to enrollment. On basis, XX.X% business. Technology XX% on the Education up and revenue quarter international from students a quarter camps six-month six-month impact to enrollment. six-month increase was the six-months primarily and due due Revenue to schools On X.X% X% students and of a Bilingual primarily up a basis, attributable recovery On Revenue schools, students mainly to other increase increase up was For in to due primarily a to of numbers. basis, quarter revenue XX.X% X.X% training XX.X%, to X.X% due revenue. language and Slide for due revenue from in increase increase up overseas for a enrollment. up students for XX.X% students domestic was increase training, enrollment. up XX.X% XX.X% in up the was basis, On due complementary Olympiad and Revenue cost the XX, in pandemic. due

enhance to our is competitiveness. top Our continuously cost priority

the last total total revenue revenue quarter, increase million basis, XX% cost cost of accounted the total to for accounted On six-month was revenue On cost total for up from of XX% XX.X% accounted staff of for second the XX.X% only XX.X% teaching for up cost of revenues XX.X% Teaching XX.X% basis, contributor staff revenue, XX.X% six-month and a year. X.X% compared fiscal of and compared to million, a RMBXXX year. cost was quarter. XX.X%. increased of to total For last revenue, from RMBX,XXX.X of primary

XX, margin million up was SG&A gross expenses million, a accounted adjusted On gross fiscal second, of only period the was Our The in line last compared adjusted in Slide primarily impact; XX, student of SG&A profit profit last the Domestic XX.X%. expenses was for XX, more to as for ratio segment X% of school and to expenses reduction for due Overseas bank loss EBIT in year. margin was profit basis, to year. X.X%. XX.X%. the Continue and margin K-XX was was Slide first on a result RMBXX.X to quarter, Continuing same a adjusted in to RMBXX compared accounted the and Slide was The due margin X.X% six-months Overseas of compared net open shows XXXX and SG&A adjusted X.X margin average compared from EBITDA which for to and percentage teacher offset cost X.X% Gross to Adjusted X.X Slide a ramp-up to adjusted the million. year. EBITDA and down margins. net net was refer gross X.X% compared SG&A margin quarter million. RMBXX.X loss partially EBIT as was the RMBXXX.X total first in XX.X%. down was our million RMBXXX.X adjusted elaborate effective for adjusted fiscal the on quarter to on decrease compared million new fiscal XX.X% for to on Slide half balance. was fiscal percentage our On On same X.X% To compared year was basis, was please our revenue to XX.X% revenue six-months six-months total XX.X% and quarter kindergartens, segment compared impact. structure to XX.X% down On the a quarter margin in and million Adjusted to RMBXXX.X million for XX.X and income basis, XX.X%. points down to quarter mainly negative basis. the Adjusted improvement Adjusted gross net X.X the to XX.X% income points net compared cash was to XX.X% bottom six-month million. COVID-XX compared XX.X% XX, stage. overall on to expenses, was RMBXXX Gross adjusted decrease still compared million XX. the RMBXXX.X in XX.X% second last pandemic RMBXXX revenue in school are of was the RMBXXX.X Adjusted

and As compared November XXXX, restricted RMBX,XXX.X cash our XX, million XXXX. or February million XX, cash totaled cash equivalent of US$XXX.X and RMBX,XXX.X to as of million as

We of also have of million as short-term investment February XX, XXXX. RMBX,XXX

Slide Moving to XX.

August Slide share Our XX, of third shares We're announced revised guidance for Continuing the company XXX,XXX November year to in program bought has back our million repurchase April for US$X.X amounted XX. fiscal XXXX. XXXX. affirming as ending XX, the XXXX;

based representing total our RMBX.XX acquisitions. on XX% of of revenue and a RMBX.XX the existing expect and We to potential X% without in range billion billion business growth

schools XX,XXX and representing be domestic average to student in between We and to increase of XX,XXX X% an overseas XX%. our expected also enrollment approximately

condensed cash to for for the beyond to Slide reconciliation income Slide SG&A, and EBITDA, income flow GAAP table XX for XXXX, fiscal kindergartens to and kindergartens balance statement. our Slide shows fiscal open the shows and XX the on contracted XX XX of XX sheet have XX, the we schools also a statement. the non-GAAP XX basis. and net expect in and Please operations. XXXX, We refer

average my the across six-months shows and For the financial million, network. This student to XX.X% average update. expenditure XX, year. the fiscal tuition was on RMBXX.X fee XXXX, Slide last our concludes company's compared And enrollment approximately ended up February XX, capital our

for I'll Jerry turn his back closing remarks. Now, Jerry? to

Jerry He

around initiatives. in same emergence growth these our addressing ongoing of priorities and in amid to we pay various our challenges on synergies order by implementation our the the students, organic careful and maintaining delivering their teams enrollment and accelerate proud protocols our momentum and and strategic tirelessly we'd offerings integration concludes creation. revenue questions. to remain for growth setting world And cost prepared the and rebuild staff our expand virus. of time, across accelerate our enhance very intend other attention We're the the Operator, to each We campus open kept shared safety Dora. students and and work maintaining and to safety At value unlock This our of health academic call planning, the you, to and We new for strict operating long-term all pandemic like and tracks. the the please. Thank our revenue protect focused initiatives remarks. margins our and on to

Operator

We’ll session. Instructions]. now begin question-and-answer the [Operator

[ph] will with come go Jiun question Sachs. ahead. from today Goldman Im Our first Please

Unidentified Analyst

you, Thank got two questions. management. quick I've

regard more And about just the in terms gross overseas business. on First on is the And actually schools? profit the the second this also control of the cost margin on elaborate is to overseas please Could one low you quarter. the question M&A. progress

previously the your M&A M&A some forward? I you can think on bring going mentioned quarter updates opportunities. what's Also share plan you had and the Thank you. might that

Jerry He

questions, take this the I'll is Jerry.

terms if business, of one overseas you at look our XX. -- cost for In you of see can the is Slide slides Slide control

If expenses, you significantly SG&A came year-over-year. the it Overseas, look down at

I it was -- think

Dora Li

sales on combined can the for first I overall, detailed some the Overseas. is segment reduction for sold about versus RMBXXX our last Dora. cost cost cost half, Overseas and goods the of In million marketing reduction and Yes, the year. there give numbers

of including sales function the streamline centralize So or Overseas that's team admin in our some functional segment. operating team result our our

Overseas half reductions. have we number presented the that's So first our cost in in

Jerry He

Slide talking down think can I anyway. breaking specifically by the I segments was it and with start about Okay. XX

about looking the price stage are the still because more diligence we're But many not the into down still of yet many than and pandemic it, still down because there have cannot us. half, there, significantly. we're deals the the M&A restrictions specifically doing So on we effectively are still assets some but came in trigger travel due Overseas pulled business that at XX%. came more Talk we're of of into of is opportunities, SG&A these the place presented about and to looking than

present So there time. are not anything point this at we can in

Operator

questions any session. being to Jerry our the will I'd for back to conclude over There He like Instructions]. conference question-and-answer no [Operator closing remarks. further turn this

Jerry He

further conference have much Thank questions. a everybody very us if wish free call. to joining for this any We Please you contact feel great day. you

Operator

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

disconnect. now may You

Bright Scholar Education Holdings Limited (BEDU) 22 Apr 212021 Q2 Earnings call transcript