Xueda Education Group Announces First Quarter 2012 Financial Results

Wed May 23, 2012 4:00am EDT

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Xueda Education Group Announces First Quarter 2012 Financial Results

Net Revenue Increased by 32.2% Year-Over-Year

Total Cash Collections Increased by 50.1% Year-Over-Year

Total Number of Learning Centers Increased by 124 Year-Over-Year to 342

Average Hourly Course Fee Increased by 11.7% Year-Over-Year

PR Newswire

BEIJING, May 23, 2012 /PRNewswire-Asia/ -- Xueda Education Group (NYSE: XUE) ("Xueda" or the "Company"), a leading national provider of tutoring services for primary and secondary school students in China with a focus on offering personalized tutoring services, today announced its unaudited financial results for the first quarter of 2012.

First Quarter 2012 Quick View

  • Total net revenue for the first quarter of 2012 increased by 32.2% year-over-year to $67.2 million from $50.8 million for the first quarter of 2011.
  • Gross profit for the first quarter of 2012 decreased by 2.3% year-over-year to $16.8 million from $17.2 million for the first quarter of 2011. 
  • Loss from operations for the first quarter of 2012 was $0.6 million compared to income from operations of $5.8 million for the first quarter of 2011.
  • Net income for the first quarter of 2012 was $0.6 million compared to net income of $5.9 million for the first quarter of 2011.
  • Total number of learning centers increased to 342 as of the end of the first quarter of 2012, up from 295 learning centers as of the end of the previous quarter. 
  • Course hours delivered in the first quarter of 2012 increased by 15.4% year-over-year to 2.52 million hours from 2.18 million hours in the first quarter of 2011.
  • Total number of students served in the first quarter of 2012 increased by 20.6% year-over-year to 68,336 students from 56,664 students in the first quarter of 2011.
  • Average hourly course fee in the first quarter of 2012 increased by 11.7% year-over-year to $27.6 from $24.7 in the first quarter of 2011.
  • Total cash collections in the first quarter of 2012 increased by 50.1% year-over-year to $99.0 million from $66.0 million in the first quarter of 2011.

Commenting on the results, Mr. Xin Jin, co-founder and Chief Executive Officer of Xueda, stated, "Our first quarter net revenue exceeded our previously-provided guidance, as our recovery plan is taking hold and beginning to yield positive momentum.  We continue to invest into our people and our operating platform while developing new products and services.  With visible progress in our key metrics, we are confident that we are once again on track to position the company for solid growth in the upcoming quarters."

Mr. Jeffery Gao, Chief Financial Officer of Xueda, added, "Our first quarter gross margin improved noticeably to 25.0% from 14.5% a quarter ago, and we are quite pleased with the strong total cash collections.  While we opened 47 new learning centers in the quarter to meet the strong demand for our leading tutoring services, we remain focused on improving the overall efficiency at all of our learning centers.  This disciplined growth should further strengthen our market leadership and drive greater profitability in the future."

First Quarter 2012 Financial and Operating Results

Total net revenue in the first quarter of 2012 increased by 32.2% year-over-year to $67.2 million from $50.8 million in the first quarter of 2011. $8.7 million, or 53.2%, of the increase in net revenue was contributed by the increase in course hours delivered and the other $7.7 million, or 46.8%, of the increase was contributed by the increase in the average hourly course fee from the same period of last year to the first quarter of 2012.

Cost of revenue in the first quarter of 2012 increased by 49.9% year-over-year to $50.4 million from $33.6 million in the first quarter of 2011. This increase was due to the increase in teaching staff costs, rental costs, depreciation costs, and the opening of 47 new learning centers in the first quarter of 2012, compared to opening 11 new learning centers during the same period in 2011.

Gross profit in the first quarter of 2012 decreased by 2.3% year-over-year to $16.8 million from $17.2 million in the first quarter of 2011. Gross margin in the first quarter of 2012 decreased to 25.0% from 33.9% in the first quarter of 2011.

Total operating expenses in the first quarter of 2012 increased by 53.3% year-over-year to $17.4 million from $11.4 million in the first quarter of 2011.

General and administrative expenses in the first quarter of 2012 increased by 52.4% year-over-year to $10.5 million from $6.9 million in the first quarter of 2011. The increase was primarily due to expanded staff to support the Company's expanded operations.

Selling and marketing expenses in the first quarter of 2012 increased by 54.5% year-over-year to $6.9 million from $4.5 million for the first quarter of 2011. This increase was primarily attributable to the increase in expenses relating to advertising, marketing and brand promotion activities.

Loss from operations in the first quarter of 2012 was $0.6 million, compared to income from operations of $5.8 million for the first quarter of 2011.

Interest income for the first quarter of 2012 increased by 83.5% year-over-year to $1.5 million from $0.8 million in the first quarter of 2011.

Net income for the first quarter of 2012 was $0.6 million, compared to net income of $5.9 million in the first quarter of 2011.

Non-GAAP(1)net income for the first quarter of 2012 was $1.5 million, compared to non-GAAP net income of $6.5 million for the first quarter of 2011.

Basic net income per ADS for the first quarter of 2012 was $0.01, compared to basic net income per ADS of $0.09 for the first quarter of 2011. Non-GAAP basic net income per ADS for the first quarter of 2012 was $0.02, compared to non-GAAP net income per ADS of $0.09 for the first quarter of 2011.

Diluted net income per ADS for the first quarter of 2012 was $0.01, compared to diluted net income per ADS of $0.08 for the first quarter of 2011. Non-GAAP diluted net income per ADS for the first quarter of 2012 was $0.02, compared to non-GAAP diluted net income per ADS of $0.09 for the first quarter of 2011. Each ADS represents two ordinary shares of the Company.

As of March 31, 2012, the Company had cash and cash equivalents plus short-term investments totaling $245.4 million.

Deferred revenues increased to $125.6 million as of March 31, 2012, compared to $101.4 million as of December 31, 2011.

(1)  All non-GAAP measures exclude share-based compensation expenses. For further details on non-GAAP measures, please refer to the reconciliation tables and a detailed discussion of the Company's use of non-GAAP information set forth elsewhere in this press release.

ADS Repurchases

As of May 22, 2012, under the Company's authorized plan to repurchase up to $30 million worth of the Company's outstanding ADSs, the Company has repurchased an aggregate of approximately 3.6 million ADSs at an average price of $3.50 per ADS for a total of $12.7 million.

Business Outlook

The Company currently expects its net revenue for the second quarter of 2012 to be in the estimated range of $87.8 million to $91.3 million, an increase of approximately 22.5% to 27.5% from the same quarter of the previous year. 

The Company reiterates its expectation that its net revenue for the full year 2012 will be in the estimated range of $272 million to $282 million, an increase of approximately 22.5% to 27.0% from the full year 2011.

This guidance is based on the current market conditions and reflects the Company's current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change.

Non-GAAP Financial Measures

To supplement the financial measures calculated in accordance with U.S. GAAP, this press release includes certain non-GAAP financial measures of adjusted net income and adjusted diluted earnings per ADS, each of which is adjusted to exclude share-based compensation expenses. The Company believes excluding such expenses from its non-GAAP financial measures is useful for its management and investors to assess and analyze the Company's core operating results as such expenses are not directly attributable to the underlying performance of the Company's business operations and do not impact its cash earnings. The Company also believes that these non-GAAP financial measures are important to help investors understand the Company's current financial performance and future prospects and compare business trends among different reporting periods on a consistent basis. These non-GAAP financial measures should be considered in addition to financial measures presented in accordance with U.S. GAAP, but should not be considered as a substitute for, or superior to, financial measures presented in accordance with U.S. GAAP. For a reconciliation of each of these non-GAAP financial measures to the most directly comparable U.S. GAAP financial measure, please see the financial information included elsewhere in this press release.

Conference Call

Xueda will hold a corresponding conference call and live webcast at 8:00 a.m. ET (8:00 p.m. Beijing Time) on Wednesday, May 23, 2012 to discuss the first quarter results and answer questions from investors.  Listeners may access the call by dialing:

US Toll Free:

1-866-519-4004

US Toll/International:

1-718-354-1231

Hong Kong Toll Free: 

800-930-346

Hong Kong Toll:

852-2475-0994

China Toll Free

800-819-0121

China Toll Free (Mobile)

400-620-8038

Conference ID:

76259791

A replay of the webcast will be accessible through May 30, 2012 on http://ir.xueda.com or by dialing:

United States toll free:

1-866-214-5335

US Toll/International:   

1-718-354-1232

Conference ID:

76259791

About Xueda Education Group

Xueda Education Group ("Xueda") is a leading national provider of tutoring services for primary and secondary school students in China with a focus on offering personalized tutoring services. Since opening its first learning center in 2004, Xueda has organically built an extensive tutoring service network comprised of 342 learning centers and over 13,000 full-time service professionals, serving customers located in 66 economically developed cities across 28 provinces and municipalities as of March 31, 2012.

Forward-looking Statements

All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current expectations, market and operating conditions, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," "targets" and similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks and uncertainties beyond our control, which could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. Further information regarding these and other risks, uncertainties or factors is included in our filings with the U.S. Securities and Exchange Commission. We do not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

Contact:

Xueda Education Group
Sophia Zhou
Tel: +86-10-6427-8899 ext. 6619
Email: zhouqi_1@21edu.com

Three Part Advisors
John Palizza
Tel: +1-888-550-8392
Email: jpalizza@threepa.com

Xueda Education Group  
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of $)


 As of 


March 31, 2012

December 31, 2011


(Unaudited)

(Note)

Current assets:



Cash and cash equivalents

202,558

217,746

Short-term investments

42,874

7,944

Prepaid expenses and other current assets

15,467

18,645

Amounts due from related party

43

43

Deferred tax assets-current

3,764

3,618

Total current assets

264,706

247,996

Property and equipment, net

41,258

35,613

Rental deposits

4,154

3,787

Goodwill

862

863

Other non-current assets

2,303

1,576

Total assets

313,283

289,835




Liabilities and shareholders' equity



Current liabilities:



Deferred revenues-current (including deferred revenues
of the consolidated VIE without recourse to the Company
of $99,188 and $79,095 as of March 31, 2012 and
December 31, 2011, respectively)

99,188

79,095

Accrued expenses and other current liabilities (including
accrued expenses and other current liabilities of the
consolidated VIE without recourse to the Company of 
$18,696 and $17,482 as of March 31, 2012 and
December 31, 2011, respectively)

19,548

19,753

Income taxes payable (including income taxes payable of
the consolidated VIE without recourse to the Company of 
$4,645 and $4,047 as of March 31, 2012 and December
31, 2011, respectively)

4,800

4,047

Other taxes payable (including other taxes payable of the
consolidated VIE without recourse to the Company of 
$2,259 and $1,663 as of March 31, 2012 and December
31, 2011, respectively)

2,674

1,980

Deferred income-current (including deferred income of
the consolidated VIE without recourse to the Company of
$nil and $nil as of March 31, 2012 and December 31,
2011, respectively)

347

371

Amounts due to related party (including amounts due to
related party of the consolidated VIE without recourse to
the Company of $nil and $nil as of March 31, 2012 and

December 31, 2011, respectively)

44

-

Total current liabilities

126,601

105,246

Deferred revenues-noncurrent (including deferred
revenues of the consolidated VIE without recourse
to the Company of  $26,367 and $22,309 as of March 31,
2012 and December 31, 2011, respectively)

26,367

22,309

Deferred income-noncurrent (including deferred income
of the consolidated VIE without recourse to the Company
of $nil and $nil as of March 31, 2012 and December
31, 2011, respectively)

867

929




Total liabilities

153,835

128,484




Total Shareholders' equity

159,448

161,351




Total liabilities and shareholders' equity

313,283

289,835

Note: The above financial information as of and for the year ended December 31, 2011 is derived from Xueda Education Group's audited financial statements for the year ended December 31, 2011.

 

Xueda Education Group
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of $, except number of ADSs and per ADS data)

 


Three Months Ended March 31,


2012

2011




Net revenues

67,166

50,794

Cost of revenues

(50,369)

(33,599)

Gross profit

16,797

17,195




Operating expenses:



General and administrative

(10,536)

(6,912)

Selling and marketing

(6,909)

(4,471)

Total operating expenses

(17,445)

(11,383)

Government subsidies

27

-

(Loss) Income from operations

(621)

5,812

Interest income

1,521

829

Income before income tax expenses

900

6,641

Income tax expense

(284)

(757)




Net income

616

5,884







Net income per ADS:



Net income attributable to Xueda Education
Group ordinary shareholders



Basic

0.01

0.09

Diluted

0.01

0.08




Weighted average ADS numbers used
in calculating net
income per ADS:



Basic                                                                                           

66,289,929

69,164,320

Diluted

66,702,505

71,820,195




 

Xueda Education Group

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In U.S. dollars in thousands)


Three Months Ended March 31,


2012

2011

Net income

616

5,884

Other comprehensive income (loss)*

62

(21)

Comprehensive income

678

5,863




* Other comprehensive income (loss) in the first quarter of 2012 and the first quarter of 2011 is the
change in cumulative foreign currency translation adjustments.








Three Months Ended March 31,


2012

2011

Share-based compensation expense included in:



Cost of revenues

2

1

Selling and marketing expenses

1

2

General and administrative expenses

892

624

Total

895

627




 

Xueda Education Group
Unaudited Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures
(in thousands of $)

 


Three Months Ended March 31,


2012


2011





Cost of revenue

(50,369)


(33,599)

Share-based compensation expense included in
cost of revenue

2


1

Non-GAAP cost of revenue

(50,367)


(33,598)





General and administrative expenses

(10,536)


(6,912)

Share-based compensation expense included in
general and administrative expenses

892


624

Non-GAAP general and administrative expenses

(9,644)


(6,288)





Selling and marketing expenses

(6,909)


(4,471)

Share-based compensation expense included in
selling and marketing expenses

1


2

Non-GAAP selling and marketing expenses

(6,908)


(4,469)





Total operating costs and expenses

(67,814)


(44,982)

Share-based compensation expenses

895


627

Non-GAAP operating costs and expenses

(66,919)


(44,355)





Gross profit

16,797


17,195

Share-based compensation expenses

2


1

Non-GAAP gross profit

16,799


17,196





 (Loss) Income from operations

(621)


5,812

Share-based compensation expenses

895


627

Non-GAAP income from operations

274


6,439





Net income:

616


5,884

Share-based compensation expenses

895


627

Non-GAAP net income

1,511


6,511





Non-GAAP net income per ADS:  




Non-GAAP net income attributable to Xueda Education
Group ordinary shareholders  




   Basic  

0.02


0.09

   Diluted  

0.02


0.09





Weighted average ADS numbers used in calculating
non-GAAP net income per ADS:  




   Basic

66,289,929


69,164,320

   Diluted

66,702,505


71,820,195


SOURCE Xueda Education Group

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