BEIJING, Could 13, 2022 /PRNewswire/ — Initially Superior-College Education and learning Group Co., Ltd. (“1st Higher-University Instruction Group” or the “Organization”) (NYSE: FHS), an training provider company generally concentrating on high schools in Western China, now announced that it will launch its unaudited monetary benefits for the initially quarter 2022 ended March 31, 2022, prior to U.S. markets open on May 17, 2022.
1st Large-Faculty Education Group’s management will keep an earnings conference get in touch with on Wednesday, May possibly 18, 2022, at 8:00 AM U.S. Eastern Time (8:00 PMCould 18, 2022, Beijing/Hong Kong Time). Remember to dial in 15 minutes before the conference is scheduled to begin employing below numbers.
Intercontinental
1-412-317-6061
United States
1-888-317-6003
Hong Kong
800-963976
Mainland China
4001-206115
Passcode
7478244
A phone replay of the convention call may be accessed by cellphone at the following figures until finally May perhaps 25, 2022.
Worldwide
1-412-317-0088
United States
1-877-344-7529
Replay Accessibility Code
2433115
A are living and archived webcast of the meeting phone will be available on the company’s investors relations internet site at https://ir.diyi.best/.
About To start with Large-Faculty Instruction Group
To start with Significant-School Training Team is an education assistance company principally focusing on high educational facilities in Western China. The Firm aspires to come to be a chief and innovator of non-public high faculty schooling in China, with the focuses on a thorough education and learning administration integrating schooling details consulting, training exploration job enhancement, instruction talent administration, schooling technological know-how administration, schooling company administration, and general vocational integration development services. For much more details, make sure you visit https://ir.diyi.best/.
Forward-Seeking Statements
Statements in this press launch about upcoming anticipations, designs and prospective buyers, as effectively as any other statements relating to matters that are not historical points, may possibly represent “forward-seeking statements” in the meaning of Part 21E of the Securities Exchange Act of 1934, as amended, and as outlined in the U.S. Personal Securities Litigation Reform Act of 1995. These statements include things like, but are not limited to, statements relating to the envisioned investing commencement and closing dates. The words “foresee,” “think,” “proceed,” “could,” “estimate,” “assume,” “intend,” “might,” “plan,” “potential,” “predict,” “challenge,” “should,” “target,” “will,” “would” and comparable expressions are supposed to detect ahead-on the lookout statements, despite the fact that not all forward-on the lookout statements comprise these identifying words and phrases. Real effects may perhaps vary materially from all those indicated by these types of forward-searching statements as a outcome of various vital variables, together with: the uncertainties linked to sector circumstances and the completion of the public featuring on the anticipated terms or at all, and other factors discussed in the “Danger Variables” segment of the preliminary prospectus filed with the SEC. Any forward-on the lookout statements contained in this press launch speak only as of the day hereof, and the Company especially disclaims any obligation to update any forward-searching statement, irrespective of whether as a end result of new info, foreseeable future occasions or usually.
For Trader and Media Inquiries Be sure to Call:
1st High-University Training Team Tommy Zhou Main Fiscal Officer E-mail: tommyzhou@dygz.com
Shopper Support E-mail: FHS_facts@dygz.com Cellular phone: 010-62555966 (9:30-12:00, 13:30-16:00 CST)
MIAMI, May 05, 2022 (GLOBE NEWSWIRE) — Laureate Education, Inc. (NASDAQ: LAUR), which operates five universities across Mexico and Peru, today announced financial results for the first quarter of 2022.
First Quarter 2022 Highlights (compared to first quarter 2021):
New enrollments increased 9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}.
Total enrollments increased 11{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}.
On a reported basis, revenue increased 8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to $209.6 million. On an organic constant currency basis1, revenue increased 9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}.
Operating income for the three months ended March 31, 2022 was $9.0 million, compared to operating loss of $(86.4) million for the three months ended March 31, 2021, which was mainly driven by impairment charges of $56.7 million that were largely attributable to impairment of the Laureate tradename.
Net loss for the three months ended March 31, 2022 was $(44.7) million, compared to net loss of $(164.9) million for the three months ended March 31, 2021, which was mainly driven by impairment charges.
Adjusted EBITDA for the three months ended March 31, 2022 was $27.2 million, compared to Adjusted EBITDA of $9.7 million for the three months ended March 31, 2021.
1 Organic constant currency results exclude the period-over-period impact from currency fluctuations, acquisitions and divestitures, and other items.
Eilif Serck-Hanssen, President and Chief Executive Officer, said, “I am very encouraged by the momentum in the business. Our strategic growth initiatives that play to our unique strengths in Mexico and Peru are having a positive impact on our performance, and as a result we are increasing our guidance for the year.”
First Quarter 2022 Results
New enrollments for the three months ended March 31, 2022 increased 9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared to new enrollment activity for the three months ended March 31, 2021, and total enrollments were up 11{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} compared to the prior-year period. The first quarter represents the primary intake cycle for Peru, and results for the first quarter of 2022 were strong, with new and total enrollments in Peru increasing 5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} and 14{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, respectively, compared to the prior-year period. Mexico’s new enrollments were up 15{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} compared to the prior-year period, and total enrollment was up 7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, following its secondary intake cycle completed in the first quarter of 2022.
For the three months ended March 31, 2022, revenue on a reported basis was $209.6 million, an increase of $14.9 million, or 8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, compared to the three months ended March 31, 2021. On an organic constant currency basis, revenue increased 9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}. Operating income for the three months ended March 31, 2022 was $9.0 million, compared to an operating loss of $(86.4) million for the three months ended March 31, 2021, which was predominantly driven by impairment charges of $56.7 million. Net loss for the three months ended March 31, 2022 was $(44.7) million, which was primarily attributable to a discrete tax expense, compared to net loss of $(164.9) million for the three months ended March 31, 2021, which was mainly attributable to the impairment charges described above. Basic and diluted loss per share for the three months ended March 31, 2022 were $(0.25).
Adjusted EBITDA for the three months ended March 31, 2022 was $27.2 million, compared to Adjusted EBITDA of $9.7 million for the three months ended March 31, 2021.
Balance Sheet and Capital Structure
Laureate has a strong financial position with significant liquidity. As of March 31, 2022, Laureate had $294 million of cash and gross debt of $156 million. Accordingly, total cash, net of debt, was $138 million as of March 31, 2022.
In addition, $74 million of the Walden sale transaction value was paid into an escrow account, which will be released in full or in part to Laureate in August 2022 pursuant to the terms and conditions of the escrow agreement.
Increase to Share Repurchase Program
On March 14, 2022, Laureate announced that its board of directors approved an increase in the Company’s existing share repurchase program, from $600 million to $650 million, to acquire shares of the Company’s common stock. As of March 31, 2022, the Company has repurchased approximately $556 million of shares under the authorization. The Company expects to complete the repurchase program during 2022, dependent on market conditions.
Outlook for Fiscal 2022
Laureate is updating its full-year 2022 guidance to reflect an improved outlook.
Based on the current foreign exchange spot rates2, Laureate currently expects its full-year 2022 results to be as follows:
Total enrollments are now expected to be in the range of 410,000 to 416,000 students, reflecting growth of 6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}-7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} on an organic basis versus 2021;
Revenues are now expected to be in the range of $1,190 million to $1,206 million, reflecting growth of 9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}-11{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} on an organic constant currency basis versus 2021; and
Adjusted EBITDA is now expected to be in the range of $326 million to $334 million, reflecting growth of 22{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}-25{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} on an organic constant currency basis versus 2021 (up 29{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}-32{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} on an as-reported basis).
Reconciliations of forward-looking non-GAAP measures, specifically the 2022 Adjusted EBITDA outlook, to the relevant forward-looking GAAP measures are not being provided, as Laureate does not currently have sufficient data to accurately estimate the variables and individual adjustments for such outlooks and reconciliations. Due to this uncertainty, the Company cannot reconcile projected Adjusted EBITDA to projected net income without unreasonable effort.
Please see the “Forward-Looking Statements” section in this release for a discussion of certain risks related to this outlook.
2 Based on actual FX rates for January-April 2022, and current spot FX rates (local currency per U.S. Dollar) of MXN 20.48 and PEN 3.82 for May 2022 – December 2022. FX impact may change based on fluctuations in currency rates in future periods.
Conference Call
Laureate will host an earnings conference call today at 8:30 am ET. Interested parties are invited to listen to the earnings call by dialing 1-855-307-2849 (for U.S.-based callers) or 1-703-639-1262 (for international callers), and requesting to join the Laureate conference call, conference ID 7763447. Replays of the entire call will be available through May 12, 2022, at 1-855-859-2056 (for U.S.-based callers) and at 1-404-537-3406 (for international callers), conference ID 7763447. The webcast of the conference call, including replays, and a copy of this press release and the related slides will be made available through the Investor Relations section of Laureate’s website at www.laureate.net.
Forward-Looking Statements
This press release includes statements that express Laureate’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, ‘‘forward-looking statements’’ within the meaning of the federal securities laws, which involve risks and uncertainties. Laureate’s actual results may vary significantly from the results anticipated in these forward-looking statements. You can identify forward-looking statements because they contain words such as ‘‘believes,’’ ‘‘expects,’’ ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘seeks,’’ ‘‘approximately,’’ ‘‘intends,’’ ‘‘plans,’’ ‘‘estimates’’ or ‘‘anticipates’’ or similar expressions that concern our strategy, plans or intentions. All statements we make relating to (i) guidance (including, but not limited to, total enrollments, revenues, and Adjusted EBITDA), (ii) our current growth strategy and other future plans, strategies or transactions that may be identified, explored or implemented and any litigation or dispute resulting from any completed transaction, (iii) any anticipated share repurchases or cash distributions and (iv) the potential impact of the COVID-19 pandemic on our business or the global economy as a whole are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. All of these forward-looking statements are subject to risks and uncertainties that may change at any time, including with respect to our current growth strategy and the impact of any completed divestiture or separation transaction on our remaining businesses. Accordingly, our actual results may differ materially from those we expected. We derive most of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations are disclosed in our Annual Report on Form 10-K filed with the SEC on February 24, 2022. These forward-looking statements speak only as of the time of this release and we do not undertake to publicly update or revise them, whether as a result of new information, future events or otherwise, except as required by law.
Presentation of Non-GAAP Measures
In addition to the results provided in accordance with U.S. generally accepted accounting principles (GAAP) throughout this press release, Laureate provides the non-GAAP measurements of Adjusted EBITDA, and total cash, net of debt (or net cash). We have included these non-GAAP measurements because they are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans.
Adjusted EBITDA consists of income (loss) from continuing operations, adjusted for the items included in the accompanying reconciliation. The exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Additionally, Adjusted EBITDA is a key input into the formula used by the compensation committee of our board of directors and our Chief Executive Officer in connection with the payment of incentive compensation to our executive officers and other members of our management team. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
Total cash, net of debt (or net cash) consists total cash and cash equivalents, less total gross debt. Net cash provides a useful indicator about Laureate’s leverage and liquidity.
Laureate’s calculations of Adjusted EBITDA and total cash, net of debt (or net cash) are not necessarily comparable to calculations performed by other companies and reported as similarly titled measures. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP but should not be considered a substitute for or superior to GAAP results. Adjusted EBITDA is reconciled from the GAAP measure in the attached table “Non-GAAP Reconciliation.”
We evaluate our results of operations on both an as reported and an organic constant currency basis. The organic constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates, acquisitions and divestitures, and other items. We believe that providing organic constant currency information provides valuable supplemental information regarding our results of operations, consistent with how we evaluate our performance. We calculate organic constant currency amounts using the change from prior-period average foreign exchange rates to current-period average foreign exchange rates, as applied to local-currency operating results for the current period, and then exclude the impact of acquisitions and divestitures and other items described in the accompanying presentation.
About Laureate Education, Inc.
Laureate Education, Inc. operates five universities across Mexico and Peru, enrolling more than 375,000 students in high-quality undergraduate, graduate, and specialized degree programs through campus-based and online learning. Our universities have a deep commitment to academic quality and innovation, strive for market-leading employability outcomes, and work to make higher education more accessible. At Laureate, we know that when our students succeed, countries prosper, and societies benefit. Learn more at laureate.net.
Key Metrics and Financial Tables (Dollars in millions, except per share amounts, and may not sum due to rounding)
(1) Organic Constant Currency results exclude the period-over-period impact from currency fluctuations, acquisitions and divestitures, and other items. Other items include the impact of acquisition-related contingent liabilities for taxes other-than-income tax, net of changes in recorded indemnification assets. Organic Constant Currency is calculated using the change from prior-period average foreign exchange rates to current-period average foreign exchange rates, as applied to local-currency operating results for the current period. The “Organic Constant Currency” {ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} changes are calculated by dividing the Organic Constant Currency amounts by the 2021 Revenues and Adjusted EBITDA amounts, excluding the impact of the divestitures.
Consolidated Balance Sheets
IN MILLIONS
March 31, 2022
December 31, 2021
Change
Assets
Cash and cash equivalents
$
293.8
$
324.8
$
(31.0
)
Receivables (current), net
129.1
152.0
(22.9
)
Other current assets
68.7
67.5
1.2
Property and equipment, net
516.9
499.5
17.4
Operating lease right-of-use assets, net
384.5
384.3
0.2
Goodwill and other intangible assets
715.7
689.6
26.1
Deferred income taxes
47.8
38.7
9.1
Other long-term assets
47.7
48.6
(0.9
)
Long-term assets held for sale
6.6
6.2
0.4
Total assets
$
2,210.7
$
2,211.3
$
(0.6
)
Liabilities and stockholders’ equity
Accounts payable and accrued expenses
$
186.6
$
182.9
$
3.7
Deferred revenue and student deposits
97.1
44.0
53.1
Total operating leases, including current portion
412.8
415.3
(2.5
)
Total long-term debt, including current portion
152.6
153.7
(1.1
)
Other liabilities
303.4
263.4
40.0
Current and long-term liabilities held for sale
11.7
10.8
0.9
Total liabilities
1,164.1
1,070.0
94.1
Redeemable noncontrolling interests and equity
1.7
1.7
—
Total stockholders’ equity
1,044.9
1,139.6
(94.7
)
Total liabilities and stockholders’ equity
$
2,210.7
$
2,211.3
$
(0.6
)
Consolidated Statements of Cash Flows
For the three months ended March 31,
IN MILLIONS
2022
2021
Change
Cash flows from operating activities
Net loss
$
(44.7
)
$
(164.9
)
$
120.2
Depreciation and amortization
14.4
22.7
(8.3
)
Loss on impairment of assets
0.1
57.7
(57.6
)
(Gain) loss on sales and disposal of subsidiaries and property and equipment, net
(0.7
)
16.5
(17.2
)
Gain on derivative instruments
—
(29.3
)
29.3
Loss on debt extinguishment
—
0.1
(0.1
)
Deferred income taxes
4.4
84.4
(80.0
)
Unrealized foreign currency exchange gain
(0.8
)
(23.7
)
22.9
Income tax receivable/payable, net
27.0
(16.7
)
43.7
Working capital, excluding tax accounts
44.3
25.6
18.7
Other non-cash adjustments
9.9
39.1
(29.2
)
Net cash provided by operating activities
53.9
11.3
42.6
Cash flows from investing activities
Purchase of property and equipment
(1.2
)
(11.7
)
10.5
Expenditures for deferred costs
—
(1.9
)
1.9
Receipts from sales of discontinued operations, net of cash sold, and property and equipment
9.2
30.8
(21.6
)
Payments on derivatives related to sale of discontinued operations
—
(18.3
)
18.3
Net cash provided by (used in) investing activities
7.9
(1.1
)
9.0
Cash flows from financing activities
Decrease in long-term debt, net
(9.2
)
(52.7
)
43.5
Proceeds from exercise of stock options
11.5
—
11.5
Payments to repurchase common stock
(102.2
)
(145.2
)
43.0
Financing other, net
(4.3
)
(1.2
)
(3.1
)
Net cash used in financing activities
(104.1
)
(199.2
)
95.1
Effects of exchange rate changes on Cash and cash equivalents and Restricted cash
11.2
(6.9
)
18.1
Change in cash included in current assets held for sale
—
(3.5
)
3.5
Net change in Cash and cash equivalents and Restricted cash
(31.1
)
(199.3
)
168.2
Cash and cash equivalents and Restricted cash at beginning of period
345.6
867.3
(521.7
)
Cash and cash equivalents and Restricted cash at end of period
$
314.4
$
668.0
$
(353.6
)
Liquidity (including Undrawn Revolver)
$
703.8
$
971.4
$
(267.6
)
Non-GAAP Reconciliation
The following table reconciles Loss from continuing operations to Adjusted EBITDA:
For the three months ended March 31,
IN MILLIONS
2022
2021
Change
Loss from continuing operations
$
(45.4
)
$
(164.5
)
$
119.1
Plus:
Equity in net income of affiliates, net of tax
(0.1
)
—
(0.1
)
Income tax expense
48.0
112.9
(64.9
)
Income (loss) from continuing operations before income taxes and equity in net income of affiliates
2.4
(51.7
)
54.1
Plus:
Foreign currency exchange loss (gain), net
3.6
(28.2
)
31.8
Other expense, net
1.2
—
1.2
Gain on derivatives
—
(29.3
)
29.3
Interest expense
3.7
23.5
(19.8
)
Interest income
(2.0
)
(0.7
)
(1.3
)
Operating income (loss)
9.0
(86.4
)
95.4
Plus:
Depreciation and amortization
14.4
22.8
(8.4
)
EBITDA
23.4
(63.6
)
87.0
Plus:
Share-based compensation expense (2)
2.8
1.3
1.5
Loss on impairment of assets (3)
0.1
56.7
(56.6
)
EiP implementation expenses (4)
0.9
15.3
(14.4
)
Adjusted EBITDA
$
27.2
$
9.7
$
17.5
(2) Represents non-cash, share-based compensation expense pursuant to the provisions of ASC Topic 718, “Stock Compensation.” (3) Represents non-cash charges related to impairments of long-lived assets. (4) Excellence-in-Process (EiP) implementation expenses are related to our enterprise-wide initiative to optimize and standardize Laureate’s processes, creating vertical integration of procurement, information technology, finance, accounting and human resources. It included the establishment of regional shared services organizations (SSOs), as well as improvements to the Company’s system of internal controls over financial reporting. The EiP initiative also included other back- and mid-office areas, as well as certain student-facing activities, expenses associated with streamlining the organizational structure, an enterprise-wide program aimed at revenue growth, and certain non-recurring costs incurred in connection with the dispositions. The EiP initiative was completed as of December 31, 2021, except for certain EiP expenses related to the run out of programs that began in prior periods.
BOCA RATON, Fla., May 04, 2022 (GLOBE NEWSWIRE) — Newtek Business Services Corp. (“Newtek” or the “Company”) (Nasdaq: NEWT), an internally managed business development company (“BDC”), announced today its financial and operating results for three months ended March 31, 2022.
First Quarter 2022 Financial Highlights
Total investment income of $20.3 million for the three months ended March 31, 2022; a decrease of (41.4){ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} over total investment income of $34.7 million for the three months ended March 31, 2021. First quarter 2021 financial results included $24.2 million of fee income from the Paycheck Protection Program (“PPP”) which, as previously disclosed, is not recurring.
Net investment income of $1.0 million, or $0.04 per share, for the three months ended March 31, 2022, which represents a (94.1){ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease, on a per share basis, compared to net investment income of $15.2 million, or $0.68 per share, for the three months ended March 31, 2021. First quarter 2021 financial results included $24.2 million of fee income from the PPP which, as previously disclosed, is not recurring.
Adjusted net investment income (“ANII”)1 of $17.3 million, or $0.72 per share, for the three months ended March 31, 2022; a decrease of (31.4){ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, on a per share basis, compared to ANII of $23.5 million, or $1.05 per share, for the three months ended March 31, 2021. First quarter 2021 financial results included $24.2 million of fee income from the PPP which, as previously disclosed, is not recurring.
Debt-to-equity ratio of 1.17x at March 31, 2022; proforma debt-to-equity ratio was 1.14x after taking into account the sales of government-guaranteed portions of SBA 7(a) loans prior to March 31, 2022, which sales settled subsequent to the balance sheet date.
Total investment portfolio increased by 5.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to $764.1 million at March 31, 2022, from $726.1 million at March 31, 2021.
Net asset value (“NAV”) of $398.5 million, or $16.49 per share, at March 31, 2022; a decrease of (1.4){ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} on a per share basis, compared to NAV of $16.72 per share at December 31, 2021.
2022 Dividend Declarations & Payments
On March 31, 2022, the Company paid a first quarter 2022 cash dividend of $0.65 per share to shareholders of record as of March 21, 2022, which represented a 30.0{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase over the first quarter 2021 dividend of $0.50 per share.
The Company’s board of directors declared a second quarter 2022 dividend of $0.752 per share, which represents a 7.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase over the second quarter 2021 dividend, and is payable on June 30, 2022 to shareholders of record on June 20, 2022.
The Company has paid and declared dividends totaling $1.40 per share for the first and second quarters of 2022, which represents a 16.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase over dividends paid in the first and second quarters of 2021.
Lending Highlights
Newtek Small Business Finance, LLC (“NSBF”) funded $163.3 million of SBA 7(a) loans during the three months ended March 31, 2022; a 56.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase over the $104.4 million of SBA 7(a) loans funded for the three months ended March 31, 2021.
NSBF forecasts funding approximately $750 million of SBA 7(a) loans for the full year 2022, which represents a 33.8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase over $560.6 million of SBA 7(a) loans funded in 2021.
Newtek Business Lending (“NBL”), a wholly owned portfolio company closed $31.4 million SBA 504 loans during the three months ended March 31, 2022; an increase of 67.0{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} over $18.8 million SBA 504 loans closed during the three months ended March 31, 2021.
NBL forecasts closing approximately $150 million SBA 504 loans for the full year 2022, which would represent a 66.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase over $90.1 million of SBA 504 closings in 2021.
Additional First Quarter 2022 Highlights
On January 28, 2022, Newtek’s joint venture, Newtek Conventional Lending LLC (“NCL”), closed a conventional commercial loan securitization with the sale of $56.3 million of Class A Notes (“Notes”), NCL Business Loan Trust 2022-1, secured by a segregated asset pool consisting primarily of conventional commercial business loans. The Notes were rated “A” (sf) by DBRS Morningstar.
Barry Sloane, Chairman, President and Chief Executive Officer said, “We believe that Newtek’s performance in the first quarter demonstrated continued growth in our business model and performance metrics. One must keep in mind that the pandemic influenced business results in 2020 and 2021, and our goal in 2022 is to replace approximately $50 million in PPP fee income we earned in 2021, which equates to an excess of $2.00 of revenue per share. As we have stated many times, we believe that the flexibility of our business model and our ability to be nimble and to adjust to changing business climates is one of our trademark assets. Indeed, last year, while funding approximately $730 million of PPP loans to over 15,000 borrowers, we funded a Company record of $560.6 million of SBA 7(a) loans, which we believe clearly illustrates the flexibility and adaptability of our business model.”
Mr. Sloane continued, “We experienced strong year-over-year comparisons across key metrics in the first quarter of 2022. Our first quarter 2022 SBA 7(a) loan fundings of $163.3 million was a Company record for first quarter SBA 7(a) loan fundings and an increase of 56.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} over first quarter 2021 SBA 7(a) loan fundings of $104.4 million. This is our highest ever quarter-over-quarter comparison on a percentage basis in a first quarter. Additionally, the dividends that the Company has paid or declared for the first six months of 2022 total $1.40 per share, which represents a 16.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase over dividends paid in the first and second quarters of 2021. We are particularly proud of this six month year-over-year dividend growth considering that there will be no PPP income in 2022 versus $50 million of PPP fee income received in 2021. Finally, and I believe worth noting, is that even though we experienced a slight decrease in NAV at March 31, 2022 over December 31, 2021, due to a number of factors, including a widening of credit spreads and an increase in cost of capital, we did experience a solid increase in NAV from December 31, 2020 to December 31, 2021 of 8.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}.”
Commenting further on first quarter 2022 SBA 7(a) loan fundings, Mr. Sloane said, “We are extremely proud of accomplishing this strong year-over-year quarterly growth in SBA 7(a) fundings, particularly in light of the fact that we have historically experienced lower funding amounts in the first quarter as the SBA 7(a) pipeline is diminished at year end as we start fresh at the beginning of the year. Moreover, we are proud of the fact that NSBF has maintained its positions as second largest SBA 7(a) lender, including banks, by loan approval dollar volume as of March 31, 2022, and the largest non-bank SBA 7(a) lender, while the SBA7(a) program experienced flat growth year over year. We attribute this outstanding performance and strong comparisons to changes that we implemented to our lending business as well as how we source our lending business. We made technological improvements to our NewTracker(R) platform which enables us to transfer data from borrowers to our lending process in a more seamless and frictionless manner. In addition, managerial additions and adjustments at the senior management level under Peter Downs, NSBF’s President and the Company’s Chief Lending Officer, during the two pandemic-laden years, has been a hugely successful. Not only has management enhanced its buy-in to our business methodology, but staff turnover created a huge opportunity to add to our team of experienced professionals who are readily adopting our way of business, Furthermore, our historic utilization of our NewTracker® platform which is still receiving and tracking close to 100,000 referrals per quarter, on average across all business lines, gives us the advantage of pairing borrowers with loans from our SBA 7(a), SBA 504, secured lines of credit and non-conforming conventional loan businesses. NewTracker® enables us to remotely originate all business opportunities beyond lending through strategic alliance partnerships without the traditional use of branches, brokers, business development officers, and frequent salesforce contact, and historically has proven to be a winning strategy. We will elaborate on all of this in more depth on tomorrow’s conference call.”
Mr. Sloane further stated, “Some people mistakenly view Newtek solely as an SBA 7(a) lender. Although it’s been a flagship product for the Company during our 22-year history as a public company, we like to remind our investors that it was our technology solutions and payment processing businesses that carried Newtek through many years, including the 2008-2009 lending crisis. We believe that our portfolio companies’ performance has improved and Newtek Technology Solutions, Newtek Merchant Solutions, Newtek Business Lending and Newtek Conventional Lending made meaningful contributions to our first quarter 2022 dividend of $0.65 per share. In our technology solutions and payment processing businesses, David Simon and Jared Mills are both demonstrating great leadership and results in guiding their business units through 2022. We are also finally seeing improvements from our payroll processing and insurance agency businesses under the leadership of Shannon Vestal, Samantha Razon, Kyle Sloane, and Melissa Walker, and expect to see continued improvements in future quarters.”
Mr. Sloane concluded, “On Monday, May 2, 2022, the Company filed it definitive proxy statement seeking shareholder approval of a proposal authorizing the Company’s Board of Directors to discontinue the Company’s election to be regulated under the Investment Company Act of 1940 (subject to certain regulatory approvals and other conditions described in the proxy statement). The proxy statement is being distributed to shareholders at the time of this press release. In addition, the Company has been developing the NewtekOne Dashboard™ as well as additional ways to market and unlock benefits from the NewTracker(R) and other technologies that the Company has created and, most importantly, utilized for over two decades, which is an exciting development that we believe we can achieve. We want to highlight the fact that if shareholders authorize the discontinuance of our regulation under the 1940 Act and we receive the required regulatory approvals to close the acquisition of the National Bank of New York, we expect to be the same company, in the same businesses, just in a different corporate and financial structure. As set forth more fully in the proxy statement, we believe that as a bank holding company we will be able to unlock value that can improve Newtek’s existing client experience, open the organization to new clients and importantly can create benefits to the Company by lowering dependence on selling shares for capital, and utilizing the bank’s balance sheet for financing and diversifying the loan book of business to reduce risk. We encourage shareholders to review our Proxy Statement dated May 2, 2022 and the accompanying materials carefully. We look forward to discussing the performance of each of our businesses and updating the market in a more granular basis on our call tomorrow morning at 8:30 a.m. ET. The accompanying PowerPoint will be available for review on our website by 4:45 p.m. ET today.”
First Quarter 2022 Conference Call and Webcast
A conference call to discuss first quarter 2022 results will be hosted by Barry Sloane, President, Chairman and Chief Executive Officer, and Nicholas Leger, Chief Accounting Officer, tomorrow, Thursday, May 5, 2022 at 8:30 a.m. ET. The live conference call can be accessed by dialing (346) 248-7799 using the Meeting ID: 96364580000 and passcode 456097.
In addition, a live audio webcast of the call with the corresponding presentation will be available in the ‘Events & Presentations’ section of the Investor Relations portion of Newtek’s website at http://investor.newtekbusinessservices.com/events-and-presentations. A replay of the webcast with the corresponding presentation will be available on Newtek’s website shortly following the live presentation and will remain available for 90 days.
1Use of Non-GAAP Financial Measures – Newtek Business Services Corp. and Subsidiaries
In evaluating its business, Newtek considers and uses ANII as a measure of its operating performance. ANII includes short-term capital gains from the sale of the guaranteed portions of SBA 7(a) loans and conventional loans, and beginning in 2016, capital gain distributions from controlled portfolio companies, which are reoccurring events. The Company defines ANII as Net investment income (loss) plus Net realized gains recognized from the sale of guaranteed portions of SBA 7(a) loan investments, less realized losses on non-affiliate investments, plus the net realized gains on controlled investments, plus or minus the change in fair value of contingent consideration liabilities, plus loss on extinguishment of debt, plus or minus an adjustment for gains or losses on derivative transactions.
We do not designate derivatives as hedges to qualify for hedge accounting and therefore any net payments under, or fluctuations in the fair value of, our derivatives are recognized currently in our GAAP income statement. However, fluctuations in the fair value of the related assets are not included in our income statement. We consider the gain or loss on our hedging positions related to assets that we still own as of the reporting date to be “open hedging positions.” While recognized for GAAP purposes, we exclude the results on the hedges from ANII until the related asset is sold and/or the hedge position is “closed,” whereupon they would then be included in ANII in that period. These are reflected as “Adjustment for realized gain/(loss) on derivatives” for purposes of computing ANII for the period. We believe that excluding these specifically identified gains and losses associated with the open hedging positions adjusts for timing differences between when we recognize changes in the fair values of our assets and changes in the fair value of the derivatives used to hedge such assets.
The term ANII is not defined under U.S. generally accepted accounting principles, or U.S. GAAP, and is not a measure of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. ANII has limitations as an analytical tool and, when assessing the Company’s operating performance, investors should not consider ANII in isolation, or as a substitute for net investment income, or other consolidated income statement data prepared in accordance with U.S. GAAP. Among other things, ANII does not reflect the Company’s actual cash expenditures. Other companies may calculate similar measures differently than Newtek, limiting their usefulness as comparative tools. The Company compensates for these limitations by relying primarily on its GAAP results supplemented by ANII.
2 Note Regarding Dividend Payments Amount and timing of dividends, if any, remain subject to the discretion of the Company’s Board of Directors. The Company’s Board of Directors expects, while a BDC and regulated investment company (RIC), to maintain a dividend policy with the objective of making quarterly distributions in an amount that approximates 90 – 100{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of the Company’s annual taxable income. The determination of the tax attributes of the Company’s distributions is made annually as of the end of the Company’s fiscal year based upon its taxable income for the full year and distributions paid for the full year.
Newtek Business Services Corp., Your Business Solutions Company®, is an internally managed BDC, which along with its controlled portfolio companies, provides a wide range of business and financial solutions under the Newtek® brand to the small- and medium-sized business (“SMB”) market. Since 1999, Newtek has provided state-of-the-art, cost-efficient products and services and efficient business strategies to SMB relationships across all 50 states to help them grow their sales, control their expenses and reduce their risk.
Newtek’s and its portfolio companies’ products and services include: Business Lending, SBA Lending Solutions, Electronic Payment Processing, Technology Solutions (Cloud Computing, Data Backup, Storage and Retrieval, IT Consulting), eCommerce, Accounts Receivable Financing & Inventory Financing, Insurance Solutions, Web Services, and Payroll and Benefits Solutions.
Newtek® and Your Business Solutions Company®, are registered trademarks of Newtek Business Services Corp.
Note Regarding Forward Looking Statements
This press release contains certain forward-looking statements. Words such as “believes,” “intends,” “expects,” “projects,” “anticipates,” “forecasts,” “goal” and “future” or similar expressions are intended to identify forward-looking statements. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, include our ability to close the pending acquisition of the National Bank of New York City (the “Acquisition”), obtain required regulatory approvals for the pending Acquisition and obtain shareholder approval to withdraw our election as a BDC, as well as projections concerning or considering the pending Acquisition, our ability to originate new investments, achieve certain margins and levels of profitability, the availability of additional capital and the ability to maintain certain debt to asset ratios, intensified competition, operating problems and their impact on revenues and profit margins, anticipated future business strategies and financial performance, anticipated future number of customers, business prospects, legislative developments and similar matters. Risk factors, cautionary statements and other conditions, which could cause Newtek’s actual results to differ from management’s current expectations, are contained in Newtek’s filings with the Securities and Exchange Commission and available through http://www.sec.gov/. Newtek cautions you that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected or implied in these statements.
NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (In Thousands, except for Per Share Data)
March 31, 2022
December 31, 2021
ASSETS
(Unaudited)
Investments, at fair value
SBA unguaranteed non-affiliate investments (cost of $449,551 and $431,970, respectively; includes $333,659 and $344,266, respectively, related to securitization trusts)
$
440,005
$
424,417
SBA guaranteed non-affiliate investments (cost of $65,425 and $16,964, respectively)
71,939
72,970
Controlled investments (cost of $150,048 and $138,891, respectively)
251,133
260,398
Non-control investments (cost of $1,000 and $1,000, respectively)
1,000
1,000
Total investments at fair value
764,077
758,785
Cash
4,911
2,397
Restricted cash
158,543
184,463
Broker receivable
16,725
44,537
Due from related parties
4,812
4,395
Servicing assets, at fair value
28,855
28,008
Right of use assets
7,005
7,310
Other assets
24,384
26,666
Total assets
$
1,009,312
$
1,056,561
LIABILITIES AND NET ASSETS
Liabilities:
Bank notes payable
$
50,000
$
50,000
Notes due 2024 (par: $38,250 and $38,250 as of March 31, 2022 and December 31, 2021)
37,734
37,679
Notes due 2025 (par: $30,000 and $15,000 as of March 31, 2022 and December 31, 2021)
29,124
14,545
Notes due 2026 (par: $115,000 and $115,000 as of March 31, 2022 and December 31, 2021)
112,307
112,128
Notes payable – Securitization trusts (par: $232,606 and $249,750 as of March 31, 2022 and December 31, 2021)
229,354
246,250
Notes payable – related parties
—
11,450
Due to related parties
582
1,490
Lease liabilities
8,696
9,056
Deferred tax liabilities
13,676
12,733
Due to participants
117,459
146,225
Derivative instruments
—
183
Accounts payable, accrued expenses and other liabilities
11,900
10,935
Total liabilities
610,832
652,674
Commitment and contingencies
Net assets:
Preferred stock (par value $0.02 per share; authorized 1,000 shares, no shares issued and outstanding)
—
—
Common stock (par value $0.02 per share; authorized 200,000 shares, 24,161 and 24,159 issued and outstanding, respectively)
483
483
Additional paid-in capital
368,299
367,663
Accumulated undistributed earnings
29,698
35,741
Total net assets
398,480
403,887
Total liabilities and net assets
$
1,009,312
$
1,056,561
Net asset value per common share
$
16.49
$
16.72
NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands, except for Per Share Data)
Three Months Ended March 31,
2022
2021
Investment income
From non-affiliate investments:
Interest income – PPP loans
$
—
$
24,208
Interest income – SBA 7(a) loans
7,079
5,949
Servicing income
3,181
2,740
Other income
1,579
1,114
Total investment income from non-affiliate investments
11,839
34,011
From non-control investments:
Interest income
—
124
Dividend income
22
26
Total investment income from non-control investments
22
150
From controlled investments:
Interest income
664
533
Dividend income
7,824
—
Total investment income from controlled investments
8,488
533
Total investment income
20,349
34,694
Expenses:
Salaries and benefits
5,109
4,450
Interest
4,667
5,072
Depreciation and amortization
63
85
Professional fees
1,301
1,188
Origination and loan processing
2,454
2,971
Origination and loan processing – related party
4,029
3,143
Loss on extinguishment of debt
—
955
Other general and administrative costs
1,753
1,635
Total expenses
19,376
19,499
Net investment income
973
15,195
Net realized and unrealized gains (losses):
Net realized gain on non-affiliate investments – SBA 7(a) loans
15,295
7,393
Net realized gain (loss) on derivative transactions
445
—
Net unrealized appreciation (depreciation) on SBA guaranteed non-affiliate investments
(728
)
4,393
Net unrealized appreciation (depreciation) on SBA unguaranteed non-affiliate investments
(1,990
)
1,387
Net unrealized appreciation (depreciation) on controlled investments
(2,024
)
2,375
Change in deferred taxes
(943
)
(633
)
Net unrealized appreciation on non-control investments
—
527
Net unrealized appreciation on derivative transactions
183
—
Net unrealized depreciation on servicing assets
(1,559
)
(513
)
Net realized and unrealized gains
$
8,679
$
14,929
Net increase in net assets resulting from operations
$
9,652
$
30,124
Net increase in net assets resulting from operations per share
$
0.40
$
1.35
Net investment income per share
$
0.04
$
0.68
Dividends and distributions declared per common share
$
0.65
$
0.50
Weighted average number of shares outstanding
24,156
22,337
NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES NON-GAAP FINANCIAL MEASURES- ADJUSTED NET INVESTMENT INCOME RECONCILIATION:
Three months ended
Three months ended
(in thousands, except per share amounts)
March 31, 2022
Per share
March 31, 2021
Per share
Net investment income
$
973
$
0.04
$
15,195
$
0.68
Net realized gain on non-affiliate investments – SBA 7(a) loans
15,295
0.63
7,393
0.33
Adjustment for realized gain on derivatives (1)
1,010
0.04
—
—
Loss on debt extinguishment
—
—
955
0.04
Adjusted Net investment income
$
17,278
$
0.72
$
23,543
$
1.05
Note: Amounts may not foot due to rounding
(1) The following is a reconciliation of GAAP net realized gain/(loss) on derivative transactions to our adjustment for realized gain/(loss) on derivatives on closed transactions presented in the computation of ANII in the preceding tables:
Three months ended
Three months ended
(in thousands, except per share amounts)
March 31, 2022
Per share
March 31, 2021
Per share
Net realized gain on derivatives
$
445
$
0.02
$
—
$
—
Hedging realized adjustment on hedging positions closed during current period
565
0.02
—
—
Adjustment for realized gain on derivatives
$
1,010
$
0.04
$
—
$
—
Note: Amounts may not foot due to rounding
NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES DEBT-TO-EQUITY RATIO – ACTUAL AT MARCH 31, 2022
(in thousands):
Actual Debt-to-Equity Ratio at March 31, 2022
Total senior debt
$
465,856
Total equity
$
398,480
Debt-to-equity ratio – actual
1.17x
NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES DEBT-TO-EQUITY RATIO – PROFORMA AT MARCH 31, 2022
(in thousands):
Broker receivable, including premium income receivable
$
16,725
Less: realized gain on sale included in broker receivable
(1,651
)
Broker receivable
15,074
90{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} advance rate on SBA guaranteed non-affiliate portions of loans sold, not settled
BOCA RATON, Fla., April 20, 2022 (World NEWSWIRE) — Newtek Small business Products and services Corp., (NASDAQ: NEWT), an internally managed small business development enterprise (“BDC”), these days announced that its Board of Directors declared a 2nd quarter 2022 income dividend of $.75 for every share.1 The 2nd quarter 2022 dividend is payable on June 30, 2022 to shareholders of record as of June 20, 2022.
1Observe about Dividend Payments: The Firm’s Board of Directors expects to preserve a dividend policy with the goal of making quarterly distributions in an amount of money that approximates 90 – 100{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of the Company’s yearly taxable cash flow. The willpower of the tax characteristics of the Company’s distributions is designed each year as of the finish of the Company’s fiscal year centered upon its taxable earnings for the whole yr and distributions paid for the entire yr.
Newtek Organization Companies Corp., Your Enterprise Options Company® , is an internally managed BDC, which alongside with its managed portfolio businesses, delivers a extensive range of organization and money methods less than the Newtek® manufacturer to the smaller- and medium-sized company (“SMB”) marketplace. Since 1999, Newtek has presented point out-of-the-artwork, charge-productive items and expert services and productive company strategies to SMB associations across all 50 states to help them expand their revenue, command their bills and minimize their danger.
Newtek® and Your Business enterprise Alternatives Company® are registered trademarks of Newtek Company Providers Corp.
Observe Concerning Ahead Wanting Statements
This push launch includes selected forward-searching statements. Words these as “believes,” “intends,” “expects,” “projects,” “anticipates,” “forecasts,” “goal” and “future” or comparable expressions are supposed to determine forward-seeking statements.All ahead-seeking statements involve a variety of threats and uncertainties that could result in true results to differ materially from the programs, intentions and anticipations reflected in or recommended by the forward-hunting statements. These types of challenges and uncertainties incorporate, among the other individuals, intensified competition, operating complications and their effect on revenues and gain margins, expected long run business enterprise techniques and monetary functionality, expected upcoming quantity of buyers, business prospective buyers, legislative developments and related matters. Chance factors, cautionary statements and other problems, which could bring about Newtek’s genuine final results to vary from management’s present-day expectations, are contained in Newtek’s filings with the Securities and Exchange Commission and readily available throughhttp://www.sec.gov/.Newtek cautions you that forward-hunting statements are not assures of potential overall performance and that actual effects or developments may possibly vary materially from individuals projected or implied in these statements.
2021 Operating and Financial Results Met or Exceeded Guidance
Conference Call Today at 10 a.m. ET
PARSIPPANY, N.J., Feb. 28, 2022 (GLOBE NEWSWIRE) — Lincoln Educational Services Corporation (Nasdaq: LINC) today, reported operating and financial results for the fourth quarter and full year ended December 31, 2021 as well as recent business developments.
Fourth Quarter 2021 Financial Highlights and Recent Operating Developments
Revenue of $87.8 million, up 7.4{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} compared to prior year
Adjusted EBITDA* of $15.1 million, up 13.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} over prior year
Average student population up 6.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}; ending population up 6.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} or 850 students
Consummated sale-leaseback transactions generate gain on sale of $22.5 million and net proceeds of $45.4 million, with approximately $17 million used to retire all outstanding debt
Net cash position of $83.3 million, up $62.5 million over prior year
Net income of $24.0 million
Full Year 2021 Results – Achieved or Exceeded Guidance
Student start growth of 7.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}
Adjusted EBITDA* of $38.1 million
Adjusted pre-tax net income* of $27.1 million
*See Use of “Non-GAAP Financial Information” below.
“Strong execution, both during the fourth quarter and for the full year, allows Lincoln to enter 2022 in an extremely strong operating position with approximately 850 more students compared to the year-ago period. Additionally, the proceeds from the sale-leaseback transactions significantly improved our liquidity, giving us one of the strongest balance sheets in Lincoln’s 75-year history,” said Scott Shaw, President & CEO. “Our continued success, high graduate placement rates and a more favorable outlook for high school student starts compared to a year ago, gives us a high degree of confidence that we can achieve even greater results for years to come.
The expected proceeds of approximately $34.0 million from the contemplated sale of our Nashville, Tennessee property, assuming consummation, combined with our continuing strong cash flow provides the Company with even more financial resources to execute our near and long-term growth strategies. During 2022, we plan to begin the relocation of our Nashville campus to a new and more efficient facility in the Nashville area. Furthermore, we plan to expand our footprint through a new campus while continuing to invest in new programs. We are poised to execute these strategies to generate consistent, long-term growth while enhancing our ability to serve our growing student population as well as our corporate partners.”
2021 FOURTH QUARTER FINANCIAL RESULTS
(Quarter ended December 31, 2021 compared to quarter ended December 31, 2020)
Revenue increased $6.0 million, or 7.4{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, to $87.8 million from $81.8 million. The increase in revenue resulted from a 6.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase in average population, driven by a 7.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase in starts for the year.
Educational services and facilities expense increased $3.3 million, or 10.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, to $34.8 million from $31.5 million in the prior year comparable period. Increased costs were primarily concentrated in instructional expense, books and tools expense and facilities expense. In addition to increases resulting from higher student populations, instruction expense rose due to higher salaries as a consequence of inflationary pressures and instructor shortages, particularly in nursing programs. Facility expenses increased $0.6 million due to additional rent expense in the current quarter as a result of the sale-leaseback transactions.
Selling, general and administrative expense increased $1.6 million, or 4.0{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to $40.8 million primarily due to an increase in benefits expense driven by an uptick in medical claims in the current year in combination with a slight increase in salaries.
Gain on sale of assets was $22.5 million recorded upon the consummation of the sale-leaseback transactions involving the Denver, Colorado and Grand Prairie, Texas campuses.
Operating income increased to $34.0 million in 2021, from $11.1 million in the prior year period. The increase was mainly driven by a $22.5 million gain resulting from the sale-leaseback transactions, partially offset by $0.6 million of additional rent expense related to the two campuses that were subject of the sale-leaseback transactions and a $0.7 million non-cash impairment charge to adjust the book value of a former campus facility, which closed about 10 years ago. Excluding the impact of the sale-leaseback transactions and the impairment charge as a one-time event, operating income would have increased $1.7 million, or 15.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}.
Net interest expense increased $0.8 million, to $1.1 million from $0.3 million in the prior year comparable period. The additional expense was driven by the sale-leaseback transactions which included $0.5 million related to terminating the interest rate hedge early and $0.5 million non-cash write-off of deferred finance fees.
Net income of $24.0 million, or $0.73 per diluted share, compared to $46.0 million, or $1.44 per diluted share. In 2021, income tax provision was $12.5 million compared to $35.1 million tax benefit related to a full valuation allowance reversal in 2020.
Debt-free balance sheetas of December 31, 2021 after payoff of all outstanding debt in the fourth quarter compared to $17.8 million of borrowings in the prior year.
FOURTH QUARTER SEGMENT RESULTS Transportation and Skilled Trades Segment Revenue increased $4.3 million, or 7.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to $62.9 million from $58.6 million in the prior year comparable period. The increase in revenue results from a 7.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} higher average student population, driven by the 9.0{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase in student starts for the year.
Operating income improved to $16.6 million from $15.6 million in the prior year comparable quarter, driven mainly by revenue growth.
Healthcare and Other Professions Segment Revenue increased $1.7 million, or 7.4{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to $24.9 million from $23.2 million in the prior year comparable quarter. The increase in revenue results from a 3.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} higher average student population, driven by the 4.8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase in student starts for the year, and a 3.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase in average revenue per student in the current quarter.
Operating income was $4.1 million down slightly from $4.7 million in the prior year comparable quarter due primarily to higher instructional salaries.
Corporate and Other This category includes unallocated expenses incurred on behalf of the entire Company. Corporate and other expenses were $8.5 million compared to $9.2 million after excluding the $22.5 million gain from sale-leaseback transactions, partially offset by a one-time non-cash impairment charge of $0.7 million in the current year.
YEAR-END FINANCIAL RESULTS (Period ended December 31, 2021 compared to December 31, 2020)
Total revenue increased by $42.2 million, or 14.4{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, to $335.3 million, compared to $293.1 million
Student starts grew by 1,081 or 7.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, to 15,402 compared to 14,321
Transportation and Skilled Trades segment revenue increased by $33.1 million, or 16.0{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, to $240.5 million, compared to $207.4 million
The Healthcare and Other Professions segment revenue increased by $9.1 million, or 10.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}, to $94.8 million, compared to $85.7 million
Adjusted EBITDA increased $14.2 million or 59{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to $38.1 million, compared to $23.9 million
Operating income increased to $49.3 million as compared to $14.8 million
FULL YEAR 2022 OUTLOOK
Through the combination of cash generated from Lincoln’s strong operating performance and additional liquidity provided by the sale-leaseback transactions, Lincoln entered 2022 with over $80 million of net cash. In addition, the Company has availability under its credit agreement and anticipates increasing its cash position from the contemplated consummation of the sale of its Nashville, Tennessee campus. Lincoln will utilize this strong balance sheet to increase its level of investment in growth strategies and operating efficiencies.
Specific operating and financial guidance for the coming year is as follows:
Revenue in the range of $350 million to $365 million
Student start growth in the range of 5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to 10{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}
Adjusted EBITDA* in the range of $35.0 million to $40.0 million
Net Income in the range of $17.0 million to $22.0 million
Capital expenditures in the range of $7.0 million to $9.0 million
*See Use of “Non-GAAP Financial Information” below
The 2022 guidance excludes the impact of the contemplated consummation of the sale and relocation of the Nashville, Tennessee campus, which is under contract, as well as additional costs associated with a new potential campus. The outlook is based on, among other things, current enrollment trends and does not account for the impact from continuing COVID-19 issues or any new COVID-19 variants. Accordingly, as is always the case, the guidance may be revised as the year unfolds due to changes in student demand and other factors.
The Company is also providing additional information as to the progress of operations through 2022. This information represents management’s current expectations for the upcoming year and may be revised in-line with the developing business environment.
Revenue Pursuant to the Company’s seasonality patterns, it is anticipated that approximately 45{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} of revenue will occur in the first half of the year. Student starts are expected to increase in the low single digits during the first quarter, with higher start growth in the remainder of the year.
Operating Expenses Operating expenses are expected to range in the low to mid $80 million level each quarter, with the third quarter’s expenses expected to reflect the high point of the year, consistent with the seasonality of the Company’s business. This higher level of operating expenses for the full year includes the addition of $3.2 million of rent expense resulting from the sale-leaseback transactions as well as $2.0 million of additional spending related to growth initiatives, efforts to streamline operations and development and implementation of improvements to Lincoln’s hybrid teaching model. First quarter operating expenses will show the largest increase year over year, as the first quarter of 2021 included a one-time $3.0 million benefit due to Care Act funds credited to student’s accounts.
Other Interest expense, depreciation and amortization and stock-based compensation expense are expected to be approximately $0.4 million, $6.6 million, and $4.5 million respectively, recognized evenly throughout the year. The effective tax rate for the year is projected to be 28.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550}.
CONFERENCE CALL INFO Lincoln will host a conference call today at 10:00 a.m. Eastern Daylight Time to discuss results. To access the live webcast of the conference call, please go to the Investor Relations section of Lincoln’s website at http://www.lincolntech.edu. Participants can also listen to the conference call by dialing 844-413-0946 (domestic) or 216-562-0456 (international) and providing access code 2498132. Please log in or dial into the call at least 10 minutes prior to the start time.
A replay of the call will also be available for seven days by calling 855-859-2056 (domestic) or 404-537-3406 (international) and providing access code 2498132.
ABOUT LINCOLN EDUCATIONAL SERVICES CORPORATION Lincoln Educational Services Corporation is a provider of diversified career-oriented post-secondary education helping to provide solutions to America’s skills gap. For 75 years, Lincoln has offered and continues to offer recent high school graduates and working adults degree and diploma programs. The Company operates under two reportable segments: Transportation and Skilled Trades and Healthcare and Other Professions. Lincoln has provided the nation’s workforce with skilled technicians since its inception in 1946. For more information, go to www.lincolntech.edu.
SAFE HARBOR Statements in this press release and in oral statements made from time to time by representatives of Lincoln Educational Services Corporation regarding Lincoln’s business that are not historical facts, including those made in a conference call, may be “forward-looking statements” as that term is defined in the federal securities law. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. Generally, these statements relate to business plans or strategies and projections involving anticipated revenues, earnings or other aspects of the Company’s operating results. Such forward-looking statements include the Company’s current belief that it is taking appropriate steps regarding the pandemic and that student growth will continue. The Company cautions you that these statements concern current expectations about the Company’s future performance or events and are subject to a number of uncertainties, risks and other influences many of which are beyond the Company’s control, that may influence the accuracy of the statements and the projects upon which the statements are based including, without limitation, impacts related to the COVID-19 pandemic, our inability to close on the sale of our Nashville campus; our failure to comply with the extensive regulatory framework applicable to our industry or our failure to obtain timely regulatory approvals in connection with acquisitions or a change of control of our Company; our success in updating and expanding the content of existing programs and developing new programs for our students in a cost-effective manner or on a timely basis; risks associated with changes in applicable federal laws and regulations; uncertainties regarding our ability to comply with federal laws and regulations, such as the 90/10 rule and prescribed cohort default rates; risks associated with the opening of new campuses; risks associated with integration of acquired schools; industry competition; our ability to execute our growth strategies; conditions and trends in our industry; the COVID-19 pandemic and its impact on our business and the U.S. and global economics; general economic conditions; and other factors discussed in the “Risk Factors” section of our Annual Reports and Quarterly Reports filed with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement, and Lincoln undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events or otherwise after the date hereof.
(Tables to Follow) (In Thousands)
Three Months Ended
Year-Ended
December 31,
December 31,
(Unaudited)
(Unaudited)
2021
2020
2021
2020
REVENUE
$
87,816
$
81,792
$
335,336
$
293,095
COSTS AND EXPENSES:
Educational services and facilities
34,788
31,463
138,931
122,196
Selling, general and administrative
40,762
39,188
168,923
156,199
(Gain) loss on disposition of assets
(22,479
)
15
(22,479
)
(81
)
Impairment of long-lived assets
700
–
700
–
Total costs & expenses
53,771
70,666
286,075
278,314
OPERATING INCOME
34,045
11,126
49,261
14,781
OTHER:
Interest expense
(1,142
)
(315
)
(2,015
)
(1,275
)
INCOME BEFORE INCOME TAXES
32,903
10,811
47,246
13,506
PROVISION (BENEFIT) FOR INCOME TAXES
8,939
(35,209
)
12,528
(35,059
)
NET INCOME
$
23,964
$
46,020
$
34,718
$
48,565
PREFERRED STOCK DIVIDENDS
304
304
1,219
1,378
INCOME AVAILABLE TO COMMON STOCKHOLDERS
$
23,660
$
45,716
$
33,499
$
47,187
Basic and Diluted
Net income per share
$
0.73
$
1.44
$
1.04
$
1.49
Weighted average number of common shares outstanding:
Basic and Diluted
25,180
24,831
25,081
24,748
Other data:
Adjusted EBITDA (1)
$
15,136
$
13,380
$
38,065
$
23,867
Depreciation and amortization
$
1,520
$
1,854
$
7,140
$
7,400
Number of campuses
22
22
22
22
Average enrollment
13,599
12,796
12,899
11,729
Stock-based compensation
$
796
$
400
$
2,889
$
1,686
Net cash provided by operating activities
$
9,697
$
13,263
$
27,447
$
23,485
Net cash provided by (used in) investing activities
$
43,100
$
(2,026
)
$
37,848
$
(5,483
)
Net cash used in financing activities
$
(16,640
)
$
(804
)
$
(20,014
)
$
(18,620
)
Selected Consolidated Balance Sheet Data:
December 31, 2021
(Unaudited)
Cash and cash equivalents
$
83,307
Current assets
121,627
Working capital
55,745
Total assets
295,299
Current liabilities
65,882
Long-term debt obligations, including current portion, net of deferred financing fees
–
Series A convertible preferred stock
11,982
Total stockholders’ equity
129,418
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company believes it is useful to present non-GAAP financial measures that exclude certain significant items as a means to understand the performance of its business. EBITDA, Adjusted EBITDA, reconciled net cash and Adjusted Pre-tax income are measures not recognized in financial statements presented in accordance with GAAP.
We define EBITDA as income (loss) before interest expense (net of interest income), provision (benefit) for income taxes, depreciation and amortization.
We define Adjusted EBITDA as EBITDA plus stock compensation expense and adjustments for items not considered part of the Company’s normal recurring operations.
We define reconciled net cash as our cash and cash equivalents and restricted cash less both the short and long-term portion under the Company’s credit agreement, and deferred financing fees.
We define Adjusted pre-tax income as pre-tax net income before gain on sale of assets, non-cash impairment charges and expenses incurred resulting from the consummation of the sale-leaseback transactions.
EBITDA, Adjusted EBITDA, reconciled net cash and Adjusted Pre-tax income are presented because we believe they are useful indicators of our performance and our ability to make strategic acquisitions and meet capital expenditures and debt service requirements. However, they are not intended to represent cash flows from operations as defined by GAAP and should not be used as an alternative to net income (loss) as indicators of operating performance or cash flow as a measure of liquidity. EBITDA, Adjusted EBITDA, reconciled net cash and Adjusted Pre-tax income are not necessarily comparable to similarly titled measures used by other companies.
Following is a reconciliation of net income (loss) to EBITDA, Adjusted EBITDA, reconciled net cash and Adjusted Pre-tax income:
BEIJING, Feb. 21, 2022 /PRNewswire/ — TAL Education Group (NYSE: TAL) (“TAL” or the “Company”), a smart learning solutions provider in China, today announced its unaudited financial results for the third quarter of fiscal year 2022 ended November 30, 2021.
Highlights for the Third Quarter of Fiscal Year 2022
Net revenues decreased by 8.8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} year-over-year to US$1,020.9 million from US$1,119.1 million in the same period of the prior year.
Loss from operations was US$108.4 million, compared to loss from operations of US$127.4 million in the same period of the prior year.
Non-GAAP loss from operations, which excluded share-based compensation expenses, was US$67.6 million, compared to non-GAAP loss from operations of US$73.4 million in the same period of the prior year.
Net loss attributable to TAL was US$99.4 million, compared to net loss attributable to TAL of US$43.6 million in the same period of the prior year.
Non-GAAP net loss attributable to TAL, which excluded share-based compensation expenses, was US$58.6 million, compared to non-GAAP net income attributable to TAL of US$10.4 million in the same period of the prior year.
Basic and diluted net loss per American Depositary Share (“ADS”) were both US$0.15. Non-GAAP basic and diluted net loss per ADS, which excluded share-based compensation expenses, were both US$0.09. Three ADSs represent one Class A common share.
Cash, cash equivalents and short-term investments totaled US$2,837.2 million as of November 30, 2021, compared to US$5,937.5 million as of February 28, 2021.
Highlights for the Nine Months Ended November 30, 2021
Net revenues increased by 22.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} year-over-year to US$3,849.8 million from US$3,133.1 million in the same period of the prior year.
Loss from operations was US$615.2 million, compared to loss from operations of US$141.0 million in the same period of the prior year.
Non-GAAP loss from operations, which excluded share-based compensation expenses, was US$440.5 million, compared to non-GAAP loss from operations of US$16.4 million in the same period of the prior year.
Net loss attributable to TAL was US$1,028.0 million, compared to net income attributable to TAL of US$53.0 million in the same period of the prior year.
Non-GAAP net loss attributable to TAL, which excluded share-based compensation expenses, was US$853.3 million, compared to non-GAAP net income attributable to TAL of US$177.6 million in the same period of the prior year.
Basic and diluted net loss per ADS were both US$1.60. Non-GAAP basic and diluted net loss per ADS, excluding share-based compensation expenses, were both US$1.33.
Financial Data——Third Quarter and First Nine Months of Fiscal Year 2022
(In US$ thousands, except per ADS data and percentages)
Financial Results for the Third Quarter of Fiscal Year 2022
Net Revenues
In the third quarter of fiscal year 2022, TAL reported net revenues of US$1,020.9 million, representing an 8.8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from US$1,119.1 million in the third quarter of fiscal year 2021.
Operating Costs and Expenses
In the third quarter of fiscal year 2022, operating costs and expenses were US$1,139.3 million, representing a 9.3{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from US$1,255.9 million in the third quarter of fiscal year 2021. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$1,098.5 million, representing an 8.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} decrease from US$1,201.8 million in the third quarter of fiscal year 2021.
Cost of revenues increase by 0.8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to US$519.5 million from US$516.0 million in the third quarter of fiscal year 2021. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increase by 0.8{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to US$519.2 million, from US$515.2 million in the third quarter of fiscal year 2021.
Selling and marketing expenses decreased by 35.0{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to US$273.6 million from US$420.7 million in the third quarter of fiscal year 2021. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, decreased by 36.4{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to US$258.6 million, from US$406.4 million in the third quarter of fiscal year 2021.
General and administrative expenses increased by 5.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to US$300.0 million from US$283.8 million in the third quarter of fiscal year 2021. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 12.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to US$274.4 million, from US$244.5 million in the third quarter of fiscal year 2021.
Total share-based compensation expenses allocated to the related operating costs and expenses decreased by 24.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to US$40.8 million in the third quarter of fiscal year 2022 from US$54.0 million in the same period of fiscal year 2021.
Impairment loss on intangible assets and goodwill was $46.2 million for the third quarter of fiscal year 2022, compared to US$35.7 million for the third quarter of fiscal year 2021.
Gross Profit
Gross profit decreased by 16.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to US$501.4 million from US$603.6 million in the third quarter of fiscal year 2021.
Loss from Operations
Loss from operations was US$108.4 million in the third quarter of fiscal year 2022, compared to loss from operations of US$127.4 million in the third quarter of fiscal year 2021. Non-GAAP loss from operations was US$67.6 million, compared to Non-GAAP loss from operations of US$73.4 million in the same period of the prior year.
Other Income
Other income was US$9.5 million for the third quarter of fiscal year 2022, compared to other income of US$45.5 million in the third quarter of fiscal year 2021.
Impairment Loss on Long-term Investments
Impairment loss on long-term investments was nil for the third quarter of fiscal year 2022, compared to US$11.5 million for the third quarter of fiscal year 2021.
Income Tax Benefit/(expense)
Income tax expense was US$25.6 million in the third quarter of fiscal year 2022, compared to US$13.9 million of income tax benefit in the third quarter of fiscal year 2021.
Net Loss/(income) Attributable to TAL Education Group
Net loss attributable to TAL was US$99.4 million in the third quarter of fiscal year 2022, compared to net loss attributable to TAL of US$43.6 million in the third quarter of fiscal year 2021. Non-GAAP net loss attributable to TAL, which excluded share-based compensation expenses, was US$58.6 million, compared to Non-GAAP net income attributable to TAL of US$10.4 million in the third quarter of fiscal year 2021.
Basic and Diluted Net Loss per ADS
Basic and diluted net loss per ADS were both US$0.15 in the third quarter of fiscal year 2022. Non-GAAP basic and diluted net loss per ADS, which excluded share-based compensation expenses, were both US$0.09, in the third quarter of fiscal year 2022.
Cash, Cash Equivalents, and Short-Term Investments
As of November 30, 2021, the Company had US$1,347.9 million of cash and cash equivalents and US$1,489.3 million of short-term investments, compared to US$3,243.0 million of cash and cash equivalents and US$2,694.5 million of short-term investments as of February 28, 2021.
Financial Results for the First Nine Months of Fiscal Year 2022
Net Revenues
For the first nine months of fiscal year 2022, TAL reported net revenues of US$3,849.8 million, representing a 22.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from US$3,133.1 million in the first nine months of fiscal year 2021.
Operating Costs and Expenses
In the first nine months of fiscal year 2022, operating costs and expenses were US$4,480.0 million, a 36.1{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from US$3,291.5 million in the first nine months of fiscal year 2021. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$4,305.3 million, a 35.9{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} increase from US$3,166.9 million in the first nine months of fiscal year 2021.
Cost of revenues increased by 36.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to US$2,005.3 million from US$1,467.1 million in the first nine months of fiscal year 2021. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increased by 36.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to US$2,004.3 million from US$1,466.0 million in the first nine months of fiscal year 2021.
Selling and marketing expenses decreased by 0.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to US$1,014.7 million from US$1,019.6 million in the first nine months of fiscal year 2021. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, decreased by 3.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to US$951.2 million from US$988.0 million in the first nine months of fiscal year 2021.
General and administrative expenses increased by 28.5{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to US$987.6 million from US$768.7 million in the first nine months of fiscal year 2021. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 29.6{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to US$877.3 million from US$676.9 million in the first nine months of fiscal year 2021.
Total share-based compensation expenses allocated to the related operating costs and expenses increased by 40.2{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to US$174.7 million in the first nine months of fiscal year 2022 from US$124.6 million in the same period of fiscal year 2021.
Impairment loss on intangible assets and goodwill was US$472.4 million for the first nine months of fiscal year 2022, compared to US$36.0 million for the same period of fiscal year 2021.
Gross Profit
Gross profit grew by 10.7{ac23b82de22bd478cde2a3afa9e55fd5f696f5668b46466ac4c8be2ee1b69550} to US$1,844.5 million from US$1,666.0 million in the first nine months of fiscal year 2021.
Loss from Operations
Loss from operations was US$615.2 million in the first nine months of fiscal year 2022, compared to loss from operations of US$141.0 million in the same period of the prior year. Non-GAAP loss from operations, which excluded share-based compensation expenses, was US$440.5 million for the first nine months of fiscal year 2022, compared to non-GAAP loss from operations, which excluded share-based compensation expenses, was US$16.4 million in the first nine months of fiscal year 2021.
Other Income
Other income was US$17.6 million for the first nine months of fiscal year 2022, compared to other income of US$132.9 million for the first nine months of fiscal year 2021.
Impairment Loss on Long-term Investments
Impairment loss on long-term investments was US$178.1 million for the first nine months of fiscal year 2022, compared to US$18.4 million for the first nine months of fiscal year 2021.
Income Tax Expense
Income tax expense was US$367.1 million in the first nine months of fiscal year 2022, compared to US$10.6 million of income tax expense in the first nine months of fiscal year 2021.
Net Loss/(income) Attributable to TAL Education Group
Net loss attributable to TAL was US$1,028.0 million in the first nine months of fiscal year 2022, compared to net income attributable to TAL of US$53.0 million in the first nine months of fiscal year 2021. Non-GAAP net loss attributable to TAL, which excluded share-based compensation expenses, was US$853.3 million in the first nine months of fiscal year 2022, compared to Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was US$177.6 million in the first nine months of fiscal year 2021.
Basic and Diluted Net Loss per ADS
Basic and diluted net loss per ADS were both US$1.60, in the first nine months of fiscal year 2022. Non-GAAP basic and Non-GAAP diluted net loss per ADS, which excluded share-based compensation expenses, were both US$1.33, in the first nine months of fiscal year 2022.
Recent Development
On November 12, 2021, the Company issued a press release to announce that in response to the regulatory developments relating to after-school tutoring services, including the Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education, published in July 2021 by the General Office of the CPC Central Committee and the General Office of the State Council (the “Opinion”) and the related implementation rules, regulations and measures promulgated by competent authorities, the Company decided to cease offering academic subjects to students from kindergarten through grade nine (“K9 Academic AST Services”) in the mainland of China by the end of December 2021.
The Company has completed the cessation by the due date and expects that the cessation will have a substantial adverse impact on the Company’s revenues for the fiscal year ending February 28, 2022 and subsequent periods. In the fiscal year ended February 28, 2021, the revenues from offering K9 Academic AST Services accounted for a substantial majority of the Company’s total revenues in the year. Therefore, the Company believes that the financial results for the fiscal periods ended November 30, 2021 would not be indicative for its performance going forward.
By leveraging its leading-edge education technology, high quality content and extensive experience, the Company will continue to operate and develop the portion of its business other than K9 Academic AST Services, and will also explore other opportunities to provide learning solutions in accordance with relevant rules and regulations.
The Company will continue to seek guidance from and cooperate with government authorities in various provinces and municipalities in China in connection with its efforts to comply with the policy directives in the Opinion and any related implementation rules, regulations and measures. The Company will further adjust its business operations as required, and provide updates to its shareholders as appropriate.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, TAL Education Group’s strategic and operational plans contain forward-looking statements. The Company may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company’s ability to continue to provide competitive learning services and products; the Company’s ability to continue to recruit, train and retain talents; the Company’s ability to improve the content of current course offerings and develop new courses; the Company’s ability to maintain and enhance its brand; the Company’s ability to maintain and continue to improve its teaching results; and the Company’s ability to compete effectively against its competitors. Further information regarding these and other risks is included in the Company’s reports filed with, or furnished to the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and TAL Education Group undertakes no duty to update such information or any forward-looking statement, except as required under applicable law.
About TAL Education Group
TAL Education Group is a smart learning solutions provider in China. The acronym “TAL” stands for “Tomorrow Advancing Life”, which reflects our vision to promote top learning opportunities for students through both high-quality teaching and content, as well as leading edge application of technology in the education experience. TAL Education Group offers comprehensive learning services to students from pre-school to the twelfth grade primarily through three flexible class formats: small classes, personalized premium services, and online courses. Our learning services mainly cover enrichment learnings programs and some academic subjects in and out of China. Our ADSs trade on the New York Stock Exchange under the symbol “TAL”.
About Non-GAAP Financial Measures
In evaluating its business, TAL considers and uses the following measures defined as non-GAAP financial measures by the SEC as supplemental metrics to review and assess its operating performance: non-GAAP operating costs and expenses, non-GAAP cost of revenues, non-GAAP selling and marketing expenses, non-GAAP general and administrative expenses, non-GAAP income from operations, non-GAAP net income attributable to TAL, non-GAAP basic and non-GAAP diluted net income per ADS. To present each of these non-GAAP measures, the Company excludes share-based compensation expenses. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of non-GAAP measures to the most comparable GAAP measures” set forth at the end of this release.
TAL believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses that may not be indicative of its operating performance from a cash perspective. TAL believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to TAL’s historical performance and liquidity. TAL computes its non-GAAP financial measures using the same consistent method from quarter to quarter and from period to period. TAL believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using non-GAAP measures is that these non-GAAP measures exclude share-based compensation charges that have been and will continue to be for the foreseeable future a significant recurring expense in the Company’s business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.
TAL EDUCATION GROUP
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
As of
February 28, 2021
As of
November 30, 2021
ASSETS
Current assets
Cash and cash equivalents
$ 3,242,953
$ 1,347,934
Restricted cash-current
1,758,937
1,110,112
Short-term investments
2,694,555
1,489,245
Inventory
38,675
22,239
Amounts due from related parties-current
2,964
2,093
Income tax receivables
15,641
20,926
Prepaid expenses and other current assets
403,110
178,349
Total current assets
8,156,835
4,170,898
Restricted cash-non-current
16,094
377,898
Property and equipment, net
511,415
358,914
Deferred tax assets
317,189
8,524
Rental deposits
102,555
94,234
Intangible assets, net
66,041
16,776
Land use right, net
216,702
216,942
Goodwill
454,413
18,836
Amounts due from related parties- non-current
–
63
Long-term investments
667,636
557,974
Long-term prepayments and other non-current assets
57,694
19,943
Operating lease right-of-use assets
1,545,735
828,980
Total assets
$ 12,112,309
$ 6,669,982
LIABILITIES AND EQUITY
Current liabilities
Accounts payable
$ 353,778
$ 150,867
Deferred revenue-current
1,387,493
538,979
Amounts due to related parties-current
3,488
312
Accrued expenses and other current liabilities
911,283
928,463
Income tax payable
65,138
33,297
Current portion of long-term debt
270,000
–
Operating lease liabilities, current portion
382,671
247,344
Total current liabilities
3,373,851
1,899,262
Deferred revenue-non-current
30,005
20
Deferred tax liabilities
10,333
17,898
Bond payable
2,300,000
–
Operating lease liabilities, non-current portion
1,193,564
634,295
Total liabilities
6,907,753
2,551,475
Mezzanine equity
Redeemable non-controlling interests
1,775
–
Equity
Class A common shares
148
166
Class B common shares
67
49
Additional paid-in capital
4,369,125
4,358,131
Statutory reserve
121,285
111,151
Retained earnings/(accumulated deficit)
624,883
(392,975)
Accumulated other comprehensive income
86,321
68,888
Total TAL Education Group’s equity
5,201,829
4,145,410
Noncontrolling interest
952
(26,903)
Total equity
5,202,781
4,118,507
Total liabilities, mezzanine equity and equity
$ 12,112,309
$ 6,669,982
TAL EDUCATION GROUP
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except share, ADS, per share and per ADS data)
For the Three Months Ended November 30,
For the Nine Months Ended November 30,
2020
2021
2020
2021
Net revenues
$ 1,119,135
$ 1,020,932
$ 3,133,066
$ 3,849,755
Cost of revenues (note 1)
515,560
519,483
1,467,112
2,005,252
Gross profit
603,575
501,449
1,665,954
1,844,503
Operating expenses (note 1)
Selling and marketing
420,747
273,629
1,019,598
1,014,666
General and administrative
283,827
299,963
768,719
987,595
Impairment loss on intangible assets and goodwill
35,727
46,247
36,031
472,437
Total operating expenses
740,301
619,839
1,824,348
2,474,698
Government subsidies
9,337
9,961
17,380
15,035
Loss from operations
(127,389)
(108,429)
(141,014)
(615,160)
Interest income
28,879
12,747
79,065
84,644
Interest expense
(2,714)
(1,821)
(9,378)
(7,871)
Other income
45,507
9,520
132,948
17,611
Impairment loss on long-term investments
(11,472)
–
(18,357)
(178,063)
(Loss)/income before provision for income tax and income from equity method investments
(67,189)
(87,983)
43,264
(698,839)
Income tax benefit/(expense)
13,887
(25,562)
(10,556)
(367,120)
Income from equity method investments
411
6,423
6,352
10,471
Net (loss)/income
(52,891)
(107,122)
39,060
(1,055,488)
Add: Net loss attributable to noncontrolling interest
9,283
7,754
13,952
27,496
Total net (loss)/income attributable to TAL Education Group
$ (43,608)
$ (99,368)
$ 53,012
$ (1,027,992)
Net (loss)/income per common share
Basic
$ (0.22)
$ (0.46)
$ 0.26
$ (4.79)
Diluted
(0.22)
(0.46)
0.25
(4.79)
Net (loss)/income per ADS (note 2)
Basic
$ (0.07)
$ (0.15)
$ 0.09
$ (1.60)
Diluted
(0.07)
(0.15)
0.08
(1.60)
Weighted average shares used in calculating net (loss)/income per common share
Basic
202,039,751
214,672,624
200,786,811
214,619,651
Diluted
202,039,751
214,672,624
208,710,216
214,619,651
Note1: Share-based compensation expenses are included in the operating costs and expenses as follows:
For the Three Months
For the Nine Months
Ended November 30,
Ended November 30,
2020
2021
2020
2021
Cost of revenues
$ 404
$ 262
$ 1,158
$ 996
Selling and marketing expenses
14,322
15,008
31,644
63,440
General and administrative expenses
39,309
25,548
91,805
110,261
Total
$ 54,035
$ 40,818
$ 124,607
$ 174,697
Note 2: Three ADSs represent one Class A common Share.
TAL EDUCATION GROUP
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME/(LOSS)
(In thousands of U.S. dollars)
For the Three Months Ended
November 30,
For the Nine Months Ended
November 30,
2020
2021
2020
2021
Net (loss)/income
$ (52,891)
$ (107,122)
$ 39,060
$ (1,055,488)
Other comprehensive income/(loss), net of tax
54,944
6,053
87,834
(17,796)
Comprehensive income/(loss)
2,053
(101,069)
126,894
(1,073,284)
Add: Comprehensive loss attributable to noncontrolling interest
8,581
8,106
12,872
27,855
Comprehensive income/(loss) attributable to TAL Education Group
$ 10,634
$ (92,963)
$ 139,766
$ (1,045,429)
TAL EDUCATION GROUP
Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures
(In thousands of U.S. dollars, except share, ADS, per share and per ADS data)
For the Three Months
Ended November 30,
For the Nine Months Ended November 30,
2020
2021
2020
2021
Cost of revenues
$ 515,560
$ 519,483
$ 1,467,112
$ 2,005,252
Share-based compensation expense in cost of revenues
404
262
1,158
996
Non-GAAP cost of revenues
515,156
519,221
1,465,954
2,004,256
Selling and marketing expenses
420,747
273,629
1,019,598
1,014,666
Share-based compensation expense in selling and marketing expenses
14,322
15,008
31,644
63,440
Non-GAAP selling and marketing expenses
406,425
258,621
987,954
951,226
General and administrative expenses
283,827
299,963
768,719
987,595
Share-based compensation expense in general and administrative expenses
39,309
25,548
91,805
110,261
Non-GAAP general and administrative expenses
244,518
274,415
676,914
877,334
Operating costs and expenses
1,255,861
1,139,322
3,291,460
4,479,950
Share-based compensation expense in operating costs and expenses
54,035
40,818
124,607
174,697
Non-GAAP operating costs and expenses
1,201,826
1,098,504
3,166,853
4,305,253
Loss from operations
(127,389)
(108,429)
(141,014)
(615,160)
Share based compensation expenses
54,035
40,818
124,607
174,697
Non-GAAP loss from operations
(73,354)
(67,611)
(16,407)
(440,463)
Net (loss)/income attributable to TAL Education Group
(43,608)
(99,368)
53,012
(1,027,992)
Share based compensation expenses
54,035
40,818
124,607
174,697
Non-GAAP net income/(loss) attributable to TAL Education Group
$ 10,427
$ (58,550)
$ 177,619
$ (853,295)
Net (loss)/income per ADS
Basic
$ (0.07)
$ (0.15)
$ 0.09
$ (1.60)
Diluted
(0.07)
(0.15)
0.08
(1.60)
Non-GAAP Net income/(loss) per ADS
Basic
$ 0.02
$ (0.09)
$ 0.29
$ (1.33)
Diluted
0.02
(0.09)
0.28
(1.33)
ADSs used in calculating net (loss)/income per ADS
Basic
606,119,253
644,017,872
602,360,433
643,858,953
Diluted
606,119,253
644,017,872
626,130,648
643,858,953
ADSs used in calculating Non-GAAP income/(loss) per ADS
