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RISE Education Announces Second Quarter 2018 Unaudited Financial Results

BEIJING, Aug. 16, 2018 (GLOBE NEWSWIRE) --

RISE Education Cayman Ltd ("RISE" or the “Company”) (NASDAQ: REDU), a leading junior English Language Training (“ELT”) provider in China, today announced its unaudited financial results for the second quarter ended June 30, 2018.

Financial and Operational Highlights

  • Total revenues increased by 32.4% year-over-year to RMB300.2 million (US$45.4 million) in the second quarter of 2018.
  • Net income attributable to RISE increased by 34.3% year-over-year to RMB42.7 million (US$6.5 million) in the second quarter of 2018.
  • Non-GAAP net income attributable to RISE1 increased by 43.3% year-over-year to RMB45.6 million (US$6.9 million) in the second quarter of 2018.
  • Adjusted EBITDA1 increased by 34.8% year-over-year to RMB75.5 million (US$11.4 million) in the second quarter of 2018.
  • Total number of student enrollments in self-owned learning centers and online courses, including enrollments of short-term courses, increased by 67.3% year-over-year to 14,419 in the second quarter of 2018 from 8,619 in the second quarter of 2017.
  • Student retention rate at self-owned learning centers increased to approximately 71% in the second quarter of 2018, compared with 70% in the second quarter of 2017.

   
  Three Months Ended
June 30,
(in thousands RMB, except for percentage and per ADS data) 2017   2018   Pct. Change
Revenues 226,777   300,196   32.4%
Net income attributable to RISE 31,825   42,743   34.3%
Non-GAAP net income attributable to RISE 31,825   45,597   43.3%
Net income per ADS attributable to RISE – basic 0.64   0.75   17.2%
Net income per ADS attributable to RISE – diluted 0.64   0.74   15.6%
Non-GAAP net income per ADS attributable to RISE – basic 0.64   0.80   25.0%
Non-GAAP net income per ADS attributable to RISE – diluted 0.64   0.79   23.4%
Adjusted EBITDA 55,978   75,486   34.8%


  Six Months Ended
June 30,
(in thousands RMB, except for percentage and per ADS data) 2017   2018   Pct. Change
Revenues 437,100   570,325   30.5%
Net income attributable to RISE 60,088   78,564   30.7%
Non-GAAP net income attributable to RISE 60,088   84,450   40.5%
Net income per ADS attributable to RISE – basic 1.20   1.39   15.8%
Net income per ADS attributable to RISE – diluted 1.20   1.36   13.3%
Non-GAAP net income per ADS attributable to RISE – basic 1.20   1.49   24.2%
Non-GAAP net income per ADS attributable to RISE – diluted 1.20   1.46   21.7%
Adjusted EBITDA 109,562   144,391   31.8%
           

“We are pleased to deliver another robust quarter of strong financial and operating performances,” stated Mr. Yiding Sun, Chief Executive Officer of RISE. “During the second quarter, we opened four new self-owned learning centers and 19 new franchised centers, bringing the total number of learning centers up to 307. Our student enrollments, including those from online courses and short-term courses, increased by 67.3% year-over-year, and our student retention rate at self-owned learning centers remained at 71%. As we diligently execute our growth strategy of integrating online with offline education products, integrating test preparation with admission consulting services into existing course offerings, continuously monitoring the appropriate M&A targets, and strengthening our product coverage to the whole lifespan of K-12 education, we are confident that we will be able to sustain our high growth rate while maintaining our high service quality and student satisfaction.”

Ms. Chelsea Wang, Chief Financial Officer of RISE, stated, “We continued our growth trajectory during the second quarter of 2018. We increased our total revenues by 32.4% year-over-year and our non-GAAP net income by 43.3% year-over-year during the quarter. Since the beginning of the third quarter, we have increased our investment in sales and marketing to drive future enrollment growth. At the same time, we are striving to optimize the ROI of our marketing dollars through the efficient management of our existing and new marketing channels, as well as the introduction of short-term course offerings to attract trial students. We are confident that our growth strategies should yield excellent shareholder value over the long run.”

1 Non-GAAP net income attributable to RISE excludes share-based compensation expenses from net income attributable to RISE. EBITDA represents net income before interests, taxes, depreciation and amortization. Adjusted EBITDA excludes share-based compensation expenses from EBITDA. For details on the calculation of and reconciliation to each of the non-GAAP net income attributable to RISE, non-GAAP net income per ADS attributable to RISE, EBITDA and adjusted EBITDA, see “About Non-GAAP Financial Measures” and “Reconciliation of GAAP and Non-GAAP Results.”

Financial Results for the Second Fiscal Quarter Ended June 30, 2018

Revenues
Total revenues for the second quarter of 2018 increased by RMB73.4 million, or 32.4%, to RMB300.2 million (US$45.4 million) from RMB226.8 million in the same period of the prior year. This increase was primarily attributable to an increase of RMB59.5 million in revenues from educational programs.

  • Revenues from educational programs for the second quarter of 2018 increased by 29.9% to RMB258.6 million (US$39.1 million), which was primarily due to an increase in the number of student enrollments at our self-owned learning centers and online courses. The increase in student enrollments was primarily attributable to (i) a higher student retention rate of 71% in this quarter comparing with 70%in the same period of the prior year, which we believe was partially driven by the Company’s established brand and continuous offerings of reputable products; and (ii) an increase in the number of self-owned learning centers from 56 as of June 30, 2017 to 68 as of June 30, 2018.
  • Franchise revenues for the second quarter of 2018 increased by 20.9% to RMB33.2 million (US$5.0 million), primarily due to (i) an increase in recurring franchise fees during the same period and (ii) a 25.8% increase in the number of franchised learning centers from 190 as of June 30, 2017 to 239 as of June 30, 2018.
  • Other revenues for the second quarter of 2018 were RMB8.5 million (US$1.3 million) compared with RMB0.3 million in the same period of the prior year. The increase was primarily due to the revenue derived from the business acquired from The Edge Learning Centers Limited, or The Edge, in the fourth quarter of 2017

Cost of Revenues
Cost of revenues for the second quarter of 2018 increased by RMB37.1 million, or 37.2%, to RMB136.8 million (US$20.7 million), primarily due to increases in rental costs and personnel costs. Rental costs increased as the Company expanded its operations. The increase in personnel costs was primarily attributable to an increase of total teaching hours at the Company’s self-owned learning centers, as well as the increase in the number of self-owned learning centers. Non-GAAP cost of revenues for the second quarter of 2018 was RMB136.8 million (US$20.7 million).

Gross Profit
Gross profit for the second quarter of 2018 increased by RMB36.3 million, or 28.6%, to RMB163.4 million (US$24.7 million). Gross margin for the second quarter of 2018 was 54.4%.

Operating Expenses
Total operating expenses for the second quarter of 2018 increased by RMB22.1 million, or 26.5%, to RMB105.7 million (US$16.0 million). Non-GAAP operating expenses2 for the second quarter of 2018 were RMB102.9 million (US$15.6 million).

  • Selling and marketing expenses increased by 25.6% year-over-year RMB50.2 million (US$7.6 million) for the second quarter of 2018, compared with RMB39.9 million for the second quarter of 2017. The increase was primarily due to the increase in personnel expenses and marketing channel expenses as the Company expanded its network of self-owned learning centers and increased student enrollments. Non-GAAP selling and marketing expenses2 for the second quarter of 2018 was RMB49.5 million (US$7.5 million).
  • General and administrative expenses for the second quarter of 2018 were RMB55.5 million (US$8.4 million), increased by 27.3% year-over-year, from RMB43.6 million for the second quarter of 2017. The increase was mainly attributable to the increase in personnel costs and office expenses due to the expansion of our business. Non-GAAP general and administrative expenses2 for the second quarter of 2018 were RMB53.4 million (US$8.1 million).

Operating Income and Operating Margin
Operating income for the second quarter of 2018 increased by 32.7% year-over-year to RMB57.7 million (US$8.7 million). Non-GAAP operating income2 for the second quarter of 2018 increased by 39.2% year-over-year to RMB60.5 million (US$9.1 million).

Operating margin for the second quarter of 2018 remained stable at 19.2%, compared with the same period of the prior year.

Interest Expense
Interest expense for the second quarter of 2018 was RMB8.0 million (US$1.2 million), compared with RMB4.7 million in the same period of the prior year. The increase in interest expense was primarily due to a higher principal of the Company’s loan from CTBC Bank Co. Ltd. (“CTBC”), which was expanded in September 2017.

Other Income
Other income for the second quarter of 2018 was RMB0.8 million (US$0.1 million), compared with a loss of RMB0.3 million in the same period of the prior year.

Net Income Attributable to RISE
Net income attributable to RISE for the second quarter of 2018 increased by 34.3% to RMB42.7 million (US$6.5 million). Net margin attributable to RISE in the second quarter of 2018 improved to 14.2% from 14.0% in the same period of the prior year. Non-GAAP net income attributable to RISE for the second quarter of 2018 increased by 43.3% year-over-year to RMB45.6 million (US$6.9 million). Non-GAAP net margin attributable to RISE2 expanded to 15.2% during the quarter from 14.0% in the same period of the prior year.

EBITDA2 for the second quarter of 2018 increased by 29.8% to RMB72.6 million (US$11.0 million) from RMB56.0 million in the same period of the prior year. Adjusted EBITDA for the second quarter of 2018 increased by 34.8% year-over-year to RMB75.5 million (US$11.4 million) from RMB56.0 million in the same period of the prior year. Adjusted EBITDA margin2 expanded to 25.1% in the second quarter of 2018, from 24.7% in the same period of the prior year.

2 Non-GAAP cost of revenues exclude relevant share-based compensation expenses from cost of revenues. Each of non-GAAP operating expenses, non-GAAP selling and marketing expenses or non-GAAP general and administrative expenses excludes relevant share-based compensation expenses. EBITDA represents net income before interests, taxes, depreciation and amortization. For details on the calculation of and reconciliation to each of these non-GAAP, see “About Non-GAAP Financial Measures” and “Reconciliation of GAAP and Non-GAAP Results.”

Basic and Diluted Earnings per ADS
Basic and diluted net income attributable to RISE per ADS was RMB0.75(US$0.11) and RMB0.74(US$0.11), respectively, for the second quarter of 2018. Basic and diluted non-GAAP net income attributable to RISE per ADS was RMB0.80(US$0.12) and RMB0.79(US$0.12), respectively, for the second quarter of 2018.

For details on the calculation of and reconciliation to the nearest GAAP measures for each of non-GAAP cost of revenues, operating expenses, net income, net income attributable to RISE per ADS, EBITDA, and adjusted EBITDA, see “About Non-GAAP Financial Measures” and “Reconciliation of GAAP and Non-GAAP Results.”

Cash Flow
Net cash provided by operating activities for the second quarter of 2018 was RMB34.4 million (US$5.2 million), compared with RMB3.0 million of cash generated from operating activities in the same period of the prior year.   

Balance Sheet
As of June 30, 2018, the Company had combined cash and cash equivalents, restricted cash and short-term investment of RMB1,086.3 million (US$164.2 million), compared with RMB1,084.9 million as of December 31, 2017.

Current and non-current deferred revenue and customer advances was RMB1,031.7 million (US$155.9 million) as of June 30, 2018, representing an increase of 26.9% from RMB812.8 million as of December 31, 2017. The increase was primarily due to higher pre-paid tuition and fees from growing student enrollment, which was partially offset by recognized revenue as courses were delivered. Deferred revenue and customer advances mainly consisted of upfront tuition fee payments from students and initial franchise fees from the Company’s franchise partners.

Financial Results for the Six Months Ended June 30, 2018

Revenues
Total revenues for the first half of 2018 increased 30.5% to RMB570.3 million (US$86.2 million) from RMB437.1 million in the same period of the prior year. This increase was primarily attributable to an increase of RMB107.0 million in revenues from educational programs.

  • Revenues from educational programs for the first half of 2018 increased by 28.3% to RMB484.8 million (US$73.3 million) from RMB377.8 million in the same period of the prior year. This increase was primarily due to the same factors that led to the quarterly increase.
  • Franchise revenues for the first half of 2018 increased by 17.9% to RMB61.4 million (US$9.3 million) from RMB52.0 million in the same period of the prior year. This increase was primarily due to the same factors that led to the quarterly increase.
  • Other revenues for the first half of 2018 increased by 230.7% to RMB24.2 million (US$3.7 million) from RMB7.3 million in the same period of the prior year. The increase was primarily due to the revenue contribution from business assets acquired from The Edge, in the fourth quarter of 2017.

Cost of Revenues
Cost of revenues for the first half of 2018 increased 33.8% to RMB262.3 million (US$39.6 million) from RMB196.1 million in the same period of the prior year, which was primarily due to the increase in rental costs and personnel costs. Rental costs increased as the Company expanded its operations. The increase in personnel costs was primarily attributable to an increase in teaching hours at self-owned learning centers, as well as the increase in the number of self-owned learning centers. Non-GAAP cost of revenues for the first six months of 2018 was RMB261.8 million (US$39.6 million).

Gross Profit
Gross profit for the first half of 2018 increased by 27.8% to RMB308.0 million (US$46.5 million) from RMB241.0 million in the same period of the prior year. Gross margin was 54.0% for the first half of 2018, compared with 55.1% in the same period of the prior year.

Operating Expenses
Total operating expenses for the first half of 2018 increased by 33.6% to RMB208.6 million (US$31.5 million) from RMB156.2 million in the same period of the prior year. The increase was mainly attributable to the increase in personnel costs and office expenses due to the expansion of our business. Non-GAAP operating expenses for the first half of 2018 were RMB203.2 million (US$30.7 million).

  • Selling and marketing expenses for the first half of 2018 increased by 38.5% year-over-year to RMB98.7 million (US$14.9 million) from RMB71.2 million in the same period of the prior year. The increase was primarily due to the increase in personnel expenses and marketing channel expenses as the Company expanded its network of self-owned learning centers and increased student enrollments. Non-GAAP selling and marketing expenses for the first half of 2018 was RMB97.4 million (US$14.7 million).
  • General and administrative expenses for the first half of 2018 increased by 29.4% year-over-year to RMB109.9 million (US$16.6 million) from RMB84.9 million in the same period of the prior year. The increase was mainly attributable to the increase in personnel costs and office expenses due to the expansion of our business. Non-GAAP general and administrative expenses for the first half of 2018 were RMB105.8 million (US$16.0 million).

Operating Income and Operating Margin
Operating income for the first half of 2018 increased by 17.2% year-over-year to RMB99.4 million (US$15.0 million). Non-GAAP operating income for the first half of 2018 increased by 39.2% year-over-year to RMB105.3 million (US$15.9 million).

Operating margin was 17.4% during the first half of 2018, compared with 19.4% in the same period of the prior year. 

Interest Expense
Interest expense for the first half of 2018 was RMB16.2 million (US$2.5 million), compared with RMB9.9 million in the same period of the prior year. The increase in interest expense was primarily due to a higher principal of the Company’s loan from CTBC Bank Co. Ltd. (“CTBC”), which was expanded in September 2017.

Other Income
Other income for the first half of 2018 was RMB11.7 million (US$1.8 million), compared with a loss of RMB0.1 million in the same period of the prior year. The Company’s ADR depositary reimbursed the Company a total of RMB10.0 million in consideration in the first quarter of 2018.

Net Income Attributable to RISE
Net income attributable to RISE for the first half of 2018 increased by 30.7% to RMB78.6 million (US$11.9 million). Net margin attributable to RISE in the first half of 2018 expanded to 13.8% from 13.7% in the same period of the prior year. Non-GAAP net income attributable to RISE for the first half of 2018 increased by 40.5% year-over-year to RMB84.5 million (US$12.8 million). Non-GAAP net margin attributable to RISE expanded to 14.8% in the first half of 2018 from 13.7% in the same period of the prior year.

EBITDA for the first half of 2018 increased by 26.4% to RMB138.5 million (US$20.9 million) from RMB109.6 million in the same period of the prior year. Adjusted EBITDA for the first half of 2018 increased by 31.8% to RMB144.4 million (US$21.8 million) from RMB109.6 million in the same period of the prior year. Adjusted EBITDA margin improved to 25.3% in the first half of 2018 from 25.1% in the same period of the prior year.

Basic and Diluted Earnings per ADS
Basic and diluted net income attributable to RISE per ADS was RMB1.39(US$0.21) and RMB1.36(US$0.21), respectively, for the first half of 2018. Basic and diluted non-GAAP net income attributable to RISE per ADS was RMB1.49(US$0.23) and RMB1.46(US$0.22), respectively, for the first half of 2018.

Cash Flow
Net cash provided by operating activities for the first half of 2018 was RMB232.8 million (US$35.2 million), compared with RMB259.8 million in the same period of the prior year. The decrease was mainly attributable to the repayment of consulting fee of RMB20 million (US$3.0 million) to Bain Capital Advisors (China) Ltd., a related party of the Company, as well as an increase in rental deposits for new self-owned learning centers.

Business Outlook
For the third quarter of 2018, the Company expects its total revenues to be in the range of RMB343.2 million to RMB348.4 million, representing a year-over-year growth rate of approximately 32% to 34%. This forecast reflects the Company's current and preliminary view on the market and operational conditions, which is subject to change.

Conference Call Information
RISE will hold a conference call on August 16, 2018 at 9:00 pm Eastern Time (or August 17, 2018 at 9:00 am Beijing Time) to discuss the financial results. Participants may access the call by dialing the following numbers:

United States: +1-845-675-0437
International: +65-6713-5090
China Domestic:                400-6208-038
Hong Kong: +852-3018-6771
Conference ID: #6297338

The replay will be accessible through August 24, 2018 by dialing the following numbers:

United States: +1-646-254-3697
International: +61-2-8199-0299
Conference ID:                  #6297338

A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.risecenter.com/.

Exchange Rate
This announcement contains translations of certain RMB amounts into U.S. dollars (“USD”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.6171 to US$1.00, the noon buying rate in effect on June 30, 2018 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.

About Non-GAAP Financial Measures
To supplement RISE’s financial results presented in accordance with U.S. GAAP, the Company uses non-GAAP financial measures, which are adjusted from results based on U.S. GAAP. Reconciliations of non-GAAP financial measures to U.S. GAAP financial measures are set forth in table at the end of this earnings release titled “Reconciliation of GAAP and Non-GAAP Results,” which provides more details on the non-GAAP financial measures.

Each of non-GAAP net income, non-GAAP net income attributable to RISE, non-GAAP net income per ADS attributable to RISE, excludes share-based compensation expenses from net income.

Non-GAAP cost of revenues, non-GAAP operating expenses, including non-GAAP selling and marketing expenses and non-GAAP general and administrative expenses, provides us with an understanding of the results from the primary operations of our business by excluding the relevant share-based compensation expenses that does not reflect the ordinary operating expenses of our operations.

EBITDA represents net income before interests, taxes, depreciation and amortization. Adjusted EBITDA excludes share-based compensation expenses from EBITDA.

We use non-GAAP operating expenses, including non-GAAP selling and marketing expenses and non-GAAP general and administrative expenses, non-GAAP operating income, EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income attributable to RISE, and basic and diluted non-GAAP net income per ADS attributable to RISE to evaluate our period-over-period operating performance because our management believes these provide a more comparable measure of our continuing business as it adjusts for transaction-related expenses that are not reflective of the normal earnings of our business. These measures may be useful to an investor in evaluating the underlying operating performance of our business, and to enhance investors’ overall understanding of the historical and current financial performance of the Company’s continuing operations and prospects for the future.

Non-GAAP financial information should not be considered a substitute for or superior to U.S. GAAP results. In addition, calculations of this non-GAAP financial information may be different from calculations used by other companies, and therefore comparability may be limited.

About RISE Education
RISE Education Cayman Ltd is a leading junior English Language Training (“ELT”) provider based in Beijing. Founded in 2007, the Company pioneered the application of the “subject-based learning” philosophy in China, which uses language arts, math, natural science, and social science to teach English in an immersive environment that helps students learn to speak and think like a native speaker. Through three flagship courses, Rise Start, Rise On, and Rise Up, the Company provides ELT to students aged three to six, seven to twelve and 13 to 18, respectively. The Company’s highly scalable business model includes both self-owned and franchised learning centers. For more information, please visit http://en.risecenter.com/.

Safe Harbor Statement
This press release contains statements of a forward-looking nature. These statements, including the statements relating to the Company’s future financial and operating results, are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as “will,” “expects,” “believes,” “anticipates,” “intends,” “estimates” and similar statements. Among other things, management’s quotations and the Business Outlook section contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about RISE and the industry. Potential risks and uncertainties include, but are not limited to, those relating to its ability to attract new students and retain existing students, its ability to maintain or enhance its brand, its ability to compete effectively against its competitors, its ability to execute its growth strategy, its ability to introduce new products or enhance existing products, its ability to obtain required licenses, permits, filings or registrations, its ability to grow or operate or effectively monitor its franchise business, quarterly variations in its operating results caused by factors beyond its control and macroeconomic conditions in China and their potential impact on the sales of insurance products. All information provided in this press release is as of the date hereof, and RISE undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although RISE believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Further information regarding risks and uncertainties faced by RISE is included in RISE’s filings with the U.S. Securities and Exchange Commission, including its registration statement on Form F-1 filed in connection with its initial public offering.

Investor Relations Contact

Mei Li
RISE Education
Email: riseir@rdchina.net
Tel: +86 (10) 8559-9160

Jack Wang
ICR, Inc.
Tel: +1 (347) 436-8371
Email: riseir@rdchina.net

Media Relations Contact

Edmond Lococo 
ICR Inc.
Tel: +86 (10) 6583-7510
Email: Edmond.Lococo@icrinc.com

RISE EDUCATION CAYMAN LTD
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data and per share data)
  As of
  December 31   June 30   June 30
  2017   2018   2018
  RMB   RMB   USD
ASSETS          
Current assets:          
Cash and cash equivalents 1,055,982     858,339     129,715  
Restricted cash 28,913     27,963     4,226  
Short-term investment -     200,000     30,225  
Accounts receivable, net 2,470     5,685     859  
Amounts due from a related party 6,604     150,183     22,696  
Inventories 7,905     13,503     2,041  
Prepaid expenses and other current assets 40,571     68,073     10,287  
Total current assets 1,142,445     1,323,746     200,049  
Property and equipment, net 100,177     110,292     16,668  
Intangible assets, net 200,615     196,410     29,682  
Goodwill 475,732     480,229     72,574  
Deferred tax assets 2,404     15,488     2,341  
Other non-current assets 34,965     41,685     6,300  
Total assets 1,956,338     2,167,850     327,614  
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable 6,041     14,617     2,209  
Accrued expenses and other current liabilities 171,099     142,074     21,471  
Due to a related party 20,000     -     -  
Deferred revenue and customer advances 812,821     1,002,230     151,461  
Income taxes payable 20,739     24,128     3,646  
Total current liabilities 1,030,700     1,183,049     178,787  
Long-term loan 623,439     559,023     84,482  
Deferred revenue and customer advances -     29,511     4,460  
Deferred tax liabilities 3,785     9,874     1,492  
Other non-current liabilities 2,682     2,232     337  
Total liabilities 1,660,606     1,783,689     269,558  
           
Shareholders’ equity:          
Ordinary shares 6,782     7,060     1,067  
Additional paid-in capital 532,474     585,247     88,445  
Statutory reserves 46,366     46,366     7,007  
Accumulated deficit (315,531 )   (281,089 )   (42,479 )
Accumulated other comprehensive income 40,040     41,502     6,272  
Total Rise Education Cayman Ltd shareholders’ equity 310,131     399,086     60,312  
Non-controlling interests (14,399 )   (14,925 )   (2,256 )
Total equity 295,732     384,161     58,056  
Total liabilities, non-controlling interests and shareholders’ equity 1,956,338     2,167,850     327,614  


RISE EDUCATION CAYMAN LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except share data and per share data)
                         
    Three Months Ended June 30,   Six Months Ended June 30,
    2017   2018   2018   2017   2018   2018
    RMB   RMB   USD   RMB   RMB   USD
Revenues   226,777     300,196     45,367     437,100     570,325     86,190  
Educational programs   199,038     258,575     39,077     377,759     484,769     73,260  
Franchise revenues   27,420     33,151     5,010     52,025     61,361     9,273  
Others   319     8,470     1,280     7,316     24,195     3,656  
Cost of revenues   (99,763 )   (136,842 )   (20,680 )   (196,079 )   (262,309 )   (39,641 )
Gross profit   127,014     163,354     24,687     241,021     308,016     46,548  
Selling and marketing expenses   (39,937 )   (50,158 )   (7,580 )   (71,243 )   (98,680 )   (14,913 )
General and administrative expenses   (43,613 )   (55,538 )   (8,393 )   (84,921 )   (109,896 )   (16,608 )
Operating income   43,464     57,658     8,713     84,857     99,440     15,027  
Interest income   6,832     8,457     1,278     9,438     12,663     1,914  
Interest expense   (4,740 )   (8,043 )   (1,215 )   (9,907 )   (16,248 )   (2,455 )
Foreign currency exchange gain   215     117     18     198     145     22  
Other income, net   (288 )   813     123     (136 )   11,721     1,771  
Income before income tax expense   45,483     59,002     8,917     84,450     107,721     16,279  
Income tax expense   (14,047 )   (15,690 )   (2,371 )   (26,623 )   (29,683 )   (4,486 )
Net income   31,436     43,312     6,545     57,827     78,038     11,793  
Add: net loss/(income) attributable to non-controlling interests   389     (569 )   (86 )   2,261     526     79  
Net income attributable to RISE Education Cayman Ltd   31,825     42,743     6,459     60,088     78,564     11,873  
                         
Net income per ordinary share:                        
Basic   0.32     0.37     0.06     0.60     0.69     0.10  
Diluted   0.32     0.37     0.06     0.60     0.68     0.10  
                         
Net  income per ADS:                        
Basic   0.64     0.75     0.11     1.20     1.39     0.21  
Diluted   0.64     0.74     0.11     1.20     1.36     0.21  
                         
Shares used in net  income per ordinary share computation:                        
Basic   100,000,000     114,035,580     114,035,580     100,000,000     113,228,870     113,228,870  
Diluted   100,000,000     116,100,409     116,100,409     100,000,000     115,736,692     115,736,692  
                         
ADSs used in net  income per ADS computation:                        
Basic   50,000,000     57,017,790     57,017,790     50,000,000     56,614,435     56,614,435  
Diluted   50,000,000     58,050,205     58,050,205     50,000,000     57,868,346     57,868,346  
                         
Net income   31,436     43,312     6,545     57,827     78,038     11,793  
Other comprehensive  (loss)/income, net of tax of nil:                        
Foreign currency translation adjustments   (920 )   1,236     187     (920 )   1,463     221  
Other comprehensive (loss)/income   (920 )   1,236     187     (920 )   1,463     221  
Comprehensive  income   30,516     44,548     6,732     56,907     79,501     12,014  
Add: comprehensive loss/(income) attributable to non-controlling interests   389     (569 )   (86 )   2,261     526     79  
Comprehensive income attributable to RISE Education Cayman Ltd   30,905     43,979     6,646     59,168     80,027     12,093  

 

RISE EDUCATION CAYMAN LTD
RECONCILIATION OF GAAP AND NON-GAAP RESULTS
(in thousands, except share data and per share data)
                         
    Three Months Ended June 30,   Six Months Ended June 30,
    2017   2018     2018     2017   2018   2018
    RMB   RMB   USD   RMB   RMB   USD
Net income   31,436   43,312     6,545     57,827   78,038   11,793
Share-based compensation ("SBC")   -   2,854     431         5,886   889
Non-GAAP net income   31,436   46,166     6,976     57,827   83,924   12,682
Add: net loss/(income) attributable to non-controlling interests   389   (569 )   (86 )   2,261   526   79
Non-GAAP net income attributable to RISE Education Cayman Ltd   31,825   45,597     6,890     60,088   84,450   12,761
                         
Net income   31,436   43,312     6,545     57,827   78,038   11,793
Add: Depreciation   7,568   8,719     1,318     14,528   16,597   2,508
Add: Amortization   5,019   5,324     805     10,115   10,602   1,602
Add: Interest expense   4,740   8,043     1,215     9,907   16,248   2,455
Add: Income tax expense   14,047   15,690     2,371     26,623   29,683   4,486
Less: Interest income   6,832   8,456     1,278     9,438   12,663   1,914
EBITDA   55,978   72,632     10,976     109,562   138,505   20,930
SBC   -   2,854     431     -   5,886   889
Adjusted EBITDA   55,978   75,486     11,407     109,562   144,391   21,819
                         
Cost of revenues   99,763   136,842     20,680     196,079   262,309   39,641
Personnel costs   38,892   56,155     8,486     75,878   105,199   15,898
Rental costs   38,476   46,135     6,972     71,345   87,066   13,158
Others   22,395   34,552     5,222     48,856   70,044   10,585
Less: SBC   -   55     8     -   505   76
Non-GAAP cost of revenues   99,763   136,787     20,672     196,079   261,804   39,565
                         
Non-GAAP gross profit   127,014   163,409     24,695     241,021   308,521   46,625
                         
Selling and marketing expenses    39,937   50,158     7,580     71,243   98,680   14,913
Less: SBC   -   682     103     -   1,296   196
Non-GAAP selling and marketing expenses    39,937   49,476     7,477     71,243   97,384   14,717
                         
General and administrative expenses    43,613   55,538     8,393     84,921   109,896   16,608
Less: SBC   -   2,117     320         4,085   617
Non-GAAP general and administrative expenses    43,613   53,421     8,073     84,921   105,811   15,991
                         
Operating expense   83,550   105,696     15,973     156,164   208,576   31,521
Less: SBC   -   2,799     423     -   5,381   813
Non-GAAP operating expense   83,550   102,897     15,550     156,164   203,195   30,708
                         
Non-GAAP operating income   43,464   60,512     9,145     84,857   105,326   15,917
                         
Non-GAAP net income per ADS attributable to RISE-basic (Note 1)   0.64   0.80     0.12     1.20   1.49   0.23
Non-GAAP net income per ADS attributable to RISE-diluted   0.64   0.79     0.12     1.20   1.46   0.22
                         
ADSs used in calculating net income per ADS-basic:   50,000,000   57,017,790     57,017,790     50,000,000   56,614,435   56,614,435
ADSs used in calculating net income per ADS-diluted:   50,000,000   58,050,205     58,050,205     50,000,000   57,868,346   57,868,346
                         
Note 1: Each ADS represents two ordinary shares.                        

RISE Education Cayman Ltd