Bright Scholar Education Holdings Ltd Class A (NYSE:BEDU) reported its fourth-quarter earnings for 2024, showcasing a mixed financial performance with a notable focus on international expansion. Despite a decline in revenue and gross profit, the company's stock rose by 5.98% to close at $2, with an additional 2.56% increase in aftermarket trading. This positive market reaction is attributed to strategic initiatives and cost management improvements.
Key Takeaways
- Bright Scholar expanded services to new international markets, including Vietnam and the US.
- SG&A expenses decreased by 33% year-over-year, indicating effective cost control.
- The company approved a $1.2 million share repurchase plan, signaling confidence in its future.
Company Performance
Bright Scholar's overall performance was marked by a decrease in key financial metrics compared to the previous year. However, the company's strategic focus on expanding its international presence and optimizing operations has been well-received by the market. The education sector's global growth potential, particularly in Southeast Asia and South America, presents opportunities for the company.
Financial Highlights
- Revenue: $44.7 million, down from $55.5 million year-over-year.
- Gross Profit: $13 million, down from $17.9 million.
- Gross Margin: 29.2%, down from 33.5%.
- Net Income: $4 million, down from $5 million.
- SG&A Expenses: Decreased to $8.4 million, a 33% reduction.
Earnings vs. Forecast
The earnings call summary did not provide specific EPS and revenue forecasts, preventing a direct comparison. However, the company's performance reflects ongoing challenges in revenue growth and margin pressure.
Market Reaction
Following the earnings announcement, Bright Scholar's stock rose by 5.98% to $2, with an additional 2.56% increase in aftermarket trading. This upward movement suggests investor optimism about the company's strategic direction and cost management efforts. The stock remains below its 52-week high of $3.23 but is recovering from its low of $1.35.
Outlook & Guidance
Bright Scholar aims to enhance its global footprint with a dual engine growth strategy focused on its schools business and international student recruitment. The company plans to expand further into the US, Middle East, South America, and Asia, aspiring to become a leading global K-12 international education service provider.
Executive Commentary
CEO Robert Niu emphasized the company's international ambitions, stating, "We will be a much more international or global education group." He also highlighted the importance of stable earnings distribution and market confidence through the share buyback initiative.
Q&A
Analysts inquired about enrollment figures, with Bright Scholar reporting 1,103 new students in September 2024 and 213 in January 2025, bringing total enrollment close to 3,000. The company explained cash movements due to advance tuition receipts and recruitment expenses.
Risks and Challenges
- Revenue and gross profit declines could impact long-term growth.
- New UK VAT policies may affect market dynamics and student recruitment.
- Decreased gross margins highlight potential pricing or cost pressures.
- Continued challenges in international student recruitment could hinder expansion efforts.
Full transcript - Bright Scholar Education Holdings Ltd Class A (BEDU) Q1 2025:
Conference Operator: Hello, ladies and gentlemen. Thank you for standing by for Bright Scholar's First Quarter of Fiscal Year 2025 Earnings Conference Call. At this time, all participants are in listen only mode. After management's remarks, there will be a question and answer session. Today's conference call is being recorded.
I will now turn the call over to your host from Piacente Financial Communications, Andrea Goh, IR Counsel for the company. Please go ahead, Andrea.
Andrea Goh, IR Counsel, Piacente Financial Communications: Thank you very much. Hello, everyone, and welcome to Bratz Scholar's earnings conference call for the Q1 of fiscal 2025. The company's financial and operational results were released earlier today and are available online by visiting the IR section of our website at ir.bratzcholar.com. Please note that today's discussion will contain forward looking statements made under the State Harbor provisions of the U. S.
Private Securities Litigation Reform Act of 1995. Forward looking statements involve inherent risks and uncertainties. As such, the company's results may materially differ from today's views. Further information regarding these and other risks and uncertainties is included in the company's prospectus and other public filings as filed with the U. S.
SEC. The company does not assume any obligation to update any forward looking statements, except as required under applicable law. Additionally, Bright Scholar's earnings press release and this conference call include discussions of unaudited GAAP and non GAAP financial measures. Brad Scholar's earnings press release contains a reconciliation of the unaudited non GAAP measures. Please also note that all numbers are in GBP.
Participants on today's call will include our Chief Executive Officer, Mr. Robert Niu, who will provide a company overview and update on our strategic initiatives with highlights from the quarter. Our Chief Financial Officer, Mr. Li Zhang, will then provide details on the company's financial results for the period. We will then open the call for questions.
I will now turn the call over to Bratz Color's Chief Executive Officer, Ms. Robert Liu. Please go ahead, sir.
Robert Niu, Chief Executive Officer, Bright Scholar: Hello, everyone, and thank you for joining us on today's call. We are pleased to announce that Bright Scholar achieved solid quarterly results amid an evolving external environment in the 1st fiscal quarter. As we mentioned last quarter, we are consistently advancing our dual engine growth strategy by propelling our overseas school business expansion and executing our global recruitment initiative for prospective international students. This quarter, we successfully expanded our product and service offering on our existing China platform and made this available in more international markets, including Vietnam, Canada, the United States, Pakistan and Taiwan. We have also developed local teams, local customers and local agents in these regions to provide consulting services for students to study abroad.
Furthermore, we made great progress in optimizing our operation operating efficiency and drove significant decreases in our SG and A expenses year over year. Leveraging our established global network of schools and ecosystems, we believe we can accelerate our revenue growth and create sustainable value for both customers and shareholders over the long term. Before I move on, please note that starting this quarter, we have reorganized our business structure and segment reporting to reflect our strategic focus. Cindy will give you full breakdown before her financial overview, but I want to point out that our previous overseas school business segment is now known simply as our schools business. Now I'd like to discuss that segment's performance for the quarter as well as our enhanced operational efficiency in more detail.
The schools business remained our primary revenue source this quarter, accounting for around 57% of our total revenue. While the U. K. New VAT policy has impacted student enrollment to some degree, we have adjusted our strategic approach to response to the changing market conditions. This includes leveraging the capabilities of our recruitment team, enhancing collaboration with various recruitment channels and ensuring management's active involvement in driving enrollment initiatives.
We are confident that our intensified recruitment efforts and augmented student support services will fortify our competitive position in the market going forward. Overall, we are pleased with advancements we have made in our schools business during the 1st fiscal quarter. We are deeply committed to enhancing our students' educational success by providing high quality teaching resources and promoting a collaborative learning atmosphere. As a result, our students have consistently excelled in various aspects of student life, especially in academics. During the quarter, 97 of our Katz Global School students receive offers from prestigious Russell Group Universities.
Furthermore, 64 of our CGS students receive offers from world's top 100 universities as ranked by QS World University Rankings, one of the higher education's leading ranking systems. Moving to operations. To achieve our goal of leaner and more efficient operations, we optimized our internal operational management and streamlined logistics processes during the 1st fiscal quarter. For example, through a recent pilot outsourcing canteen and cleaning services, we optimized the school's cost structure by cutting administrative expenses. This improved operational efficiency and quality, freeing up our resources to advance educational excellence.
We also boosted service efficiency and customer satisfaction by leveraging our logistics vendors' expertise and technical solutions. We will implement regular evaluations and feedback mechanism to drive ongoing improvements, foster a virtuous cycle that offers faculty and students a more pleasant and convenient learning and living environment. These initiatives will also elevate the school's overall management, ultimately optimizing both educational outcome and logistics. As we move forward, our focus will shift towards integrating advanced technologies that streamline processes and drive innovation, ensuring sustained growth and resilience in an increasingly competitive landscape. In summary, our 1st fiscal quarter performance reflects our business continued resilience and steady improvement in the face of a dynamic market.
Our priority remains on advancing our dual engine growth strategy, expanding our school's business and boosting global recruitment to serve more students planning to study abroad. Our next goal for global equipment initiative is tap into Nepal, Malaysia and Thailand while continuing to explore North American markets. Meanwhile, we will persist in streamlining our global operations and enhancing efficiencies as we work towards our long term vision and adapt to the evolving environment. Looking ahead, we are confident we can seize the market's extensive growth opportunities to strengthen our market share and our position as leading global education service provider. With that, I will turn the call over to our CFO, Ms.
Cindy Zhang, who will discuss our key financial results. Please go ahead, Cindy.
Cindy Zhang, Chief Financial Officer, Bright Scholar: Thank you, Robert. Now I'd like to discuss our financial results for the first quarter of fiscal 2025. First, let me review the changes to our segment reporting. As Bobo mentioned, starting this quarter, we have reorganized our business structure to better reflect our strategic focus. Accordingly, we are now reporting the following segments: Schools, Overseas Staffing Consulting and Others.
Schools Business refers to our previously overseas group segment. The overseas study consulting business is the overseas study consulting portion of our previous complementary education services segment. Finally, our other segment includes our previous domestic kindergartens and K-twelve operation services and complementary education services, excluding overseas study consulting. In addition, this quarter, we changed our presentation currency from RMB to GBP to better align with our business activities. Please note all amounts are in GBP unless otherwise stated.
We are pleased to kick off fiscal 2025 with solid first quarter results. Our SG and A expenses decreased significantly by 33% year over year, driven by our ongoing efforts to optimize cost structure and streamline operations. Furthermore, benefiting from our reorganized business structure, the overseas study consulting business achieved year over year increase across multiple metrics, including revenue. In addition, we have initiated a share repurchase plan underscoring our commitment to enhance shareholder value. Looking at our financial results for the 1st fiscal quarter in more details, our revenue from continuing operations was $44,700,000 compared to $55,500,000 for the same quarter last fiscal year.
By segment, our overseas study consulting revenue increased by 5.8% to $9,600,000 Schools and others revenue were $25,700,000 $9,400,000 respectively. Gross profit from continuing operations was $13,000,000 compared to 17 $900,000 for the same quarter last fiscal year. Gross margin from continuing operations was 29.2% compared to 33.5% for the same quarter last fiscal year. Adjusted gross profit from continuing operations was $13,200,000 compared to $18,000,000 for the same quarter last fiscal year. SG and A expenses from continuing operations decreased by 33% year over year to $8,400,000 The decrease was mainly due to the improvement in operational efficiency in our schools business.
Adjusted EBITDA was $6,400,000 compared to $7,600,000 for the same quarter last fiscal year. Now turning to profitability, we recorded a net income of $4,000,000 from continuing operations compared to $5,000,000 for the same quarter last fiscal year. Adjusted net income was $4,400,000 compared to $5,100,000 for the same quarter last fiscal year. Moving to our balance sheet. As of November 13, 2024, we had cash and cash equivalents and restricted cash of $47,500,000 compared to $54,300,000 as of August 31, 2024.
Before I conduct my remarks, I would like to briefly update you that our Board of Directors approved a share repurchase plan under which the company may repurchase up to US1.2 million dollars of the company's ADS over the next 12 months, a testament to our confidence in the company's growth strategies, business operations and outlook. We believe that the present external environment coupled with our strong financial foundation presents a compelling opportunity to deliver shareholder value. Looking ahead, we will continue to optimize our operations and shift to enhance profitability by expanding our high growth, high return business by maintaining our healthy balance sheet and constantly executing our dual engine growth strategy, we are well positioned to capitalize on the market tremendous growing potential, delivering exceptional education to our students and creating sustainable shareholder value. Okay. This concludes all our prepared remarks today.
We will now open the call to questions. Operator, please go ahead.
Conference Operator: We will now begin the question and answer session. The first question comes from Huynh Yuan with X Star Fund Management. Please go ahead.
Analyst, Various (X Star Fund Management, MAX Capital): Hi. Thank you for taking my question. Can you share the average enrollment for the overseas schools in 2025 or the last quarter?
Robert Niu, Chief Executive Officer, Bright Scholar: Hi, Yuv. This is Robert speaking. Thank you for your question. For the enrollment number, are you referring our current existing student for this quarter or is it for September intake or for January intake?
Analyst, Various (X Star Fund Management, MAX Capital): Right. Like the upcoming school year, yes. Okay.
Robert Niu, Chief Executive Officer, Bright Scholar: I have the new student intake for September January. I'm not sure if PingDi has the total enrollment at the moment. So for September 2024, we have got 1103 new students for September. And for January 2025, we have 213 new students. So that will give so our total enrollment, I don't have the exact number, but it's going to be very close to 3,000 in total.
Conference Operator: The next question comes from Tan Nguyen with MAX Capital. Please go ahead. And your line is now open. You may ask your question.
Analyst, Various (X Star Fund Management, MAX Capital): Sorry, I was on mute. Yes. So management, could you help me understand the movement in cash in the last quarter? Because I saw that the net cash used in operating activities was $7,200,000 and then net cash generated from investing was $4,500,000 So can you help me understand what went in there? And then the second question is regarding the decision to buy back share.
My observation is liquidity in the stock is already quite low. So how do you think about between paying dividends and buying back share? Thank you.
Cindy Zhang, Chief Financial Officer, Bright Scholar: Okay. Thanks for the question. For the first question, it's Cindy Zhang. I would like to ask your question to answer the question. Your question is about the cash and cash equivalents movements between the last quarter and this quarter, right?
Conference Operator: Yes.
Analyst, Various (X Star Fund Management, MAX Capital): Specifically in the cash used in operating activities and cash generated from investing activities.
Cindy Zhang, Chief Financial Officer, Bright Scholar: Okay. So in general, I can present these questions into 3 aspects. First is cash generated in our operation activities. It is we cost around GBP 5,700,000 for operating for our operating activities. And for investing and for the investing activities, we generate RMB3.6 1,000,000 and for the financing activities, we spent RMB 4,400,000 and the exchange gain or loss, it was a cash deduct for CNY300,000 and that results in our cash decrease.
And for our operating activities, it is mainly attributable to that we received the tuitions and accommodation fees in advance before the terms begin. So we generate we receive the cash in advance in August and then we spend the money back for our teacher for all the costs and expenses, especially for our commissions to recruitment for the new recruitment that mainly results in and decrease in our operational activities. And for the second question, it's about the cash repurchase and dividends. I would like to invite Robert to answer the question. Thank you.
Robert Niu, Chief Executive Officer, Bright Scholar: Yes. Thank you for the question. So share buybacks and dividends has always been a question presented to the Board to make a decision over the past few Board meetings. So decision was made for share buybacks was based on number 1, that we think we have enough cash reserve to support our operational requirements and also the CapEx related in the schools. And number 2 is looking at our financial performance.
Last year, I think it has been the 1st year that we have just breakeven on the net profit level. So we haven't really accumulated a sizable distributable profit for last year and up until this year, this financial year. So once we reach what we think is normalized profit level, we'll be considering dividend over share buybacks. In terms of the liquidity, yes, we have observed the liquidity is very low in the market at the moment. However, we think it is probably because number 1 is the market price is very far from the intrinsic value of the company.
So there's very little interest in the shareholders in our shareholders' growth to trade. And number 2 is the market cap at the moment is too small for any meaningful trading. So through the share buyback, this decision, I think we will try to provide the company sorry, the market with confidence that we think that the management has confidence in the future operations in the public growth in the coming quarters years, so that it will encourage more investors to come into the market. And once the share I think the share value moves towards the intrinsic value of the company, the liquidity will improve. And I think that's a positive outcome for all current shareholders and also for any shareholders that take these opportunities to buy stocks.
So I think this is a reason for people to start trading and buying and selling the stocks and that will increase their liquidity for the market.
Analyst, Various (X Star Fund Management, MAX Capital): Robert, could I follow-up with regard to your first answer?
Robert Niu, Chief Executive Officer, Bright Scholar: Yes, please.
Analyst, Various (X Star Fund Management, MAX Capital): So you said that the company because it was not profitable before. So there's not enough cash sorry, there was not enough distributable asset. Do you mean distributable retained earnings in equity? Yes.
Robert Niu, Chief Executive Officer, Bright Scholar: I think the company has carried retained earnings in the balance sheet. But that earnings, I think, was accumulated over like long time. So what I meant was over the last few years during the pandemic, I think the company has been in a loss making situation. And only last financial year, the company has turned around into the profitability. So we start to accumulate distributable earnings again.
What I meant was we will be more comfortable if the returning earnings grow after this turnaround exercise has finished. And then we'll be looking at to distribute the earnings in a more stable and consistent manner without having to distribute the earnings or profits from the years way back.
Analyst, Various (X Star Fund Management, MAX Capital): See. So right now the accumulated return on earnings is positive, but you would prefer to pay from current year earnings. So you want to wait for current year earnings to be more sustainable before you want to pay out dividend or do other kind of shareholder return activity?
Robert Niu, Chief Executive Officer, Bright Scholar: Yes, that's right. We want to be if we promote the dividends policy, we want it to be sustainable and consistent.
Analyst, Various (X Star Fund Management, MAX Capital): Right. Yes. And you might have one last question. Oh, I can get back in the line. Is there other investors asking?
Robert Niu, Chief Executive Officer, Bright Scholar: May I ask you, do we have any other question in the queue? Okay. I think you can go ahead, please.
Analyst, Various (X Star Fund Management, MAX Capital): Yes. So I noticed that sort of you have been trying to reposition the company. I see that the there have been changes in the way that you categorize the different segments. There have been changes in reporting currencies. So maybe if you could give us a vision or give me the vision of where like how you want to position the company 5 years from now?
What will Bright Scholar how do you want Bright Scholar to be known to other stakeholders 5, 10 years from now? What kind of company? What are your focus? Which market or student group you're targeting sort of thing?
Robert Niu, Chief Executive Officer, Bright Scholar: Yes. That's a very good question. And internally, we have been thinking about this really hard and very, very serious. And I think we continue in our previous earnings call, we have emphasized the new strategy that we call it a dual engine strategy going forward. So one of the growth engine will be our schools business.
By that, I mean international school business, right, in the international markets. At the moment, we have the biggest school market for us is in the U. K. And that's exactly why we changed our reporting currency to the British pound because that's the main revenue source. We will use the UK as a foundation, just like a lot of other K-twelve education group and explore expanding opportunities beyond just UK.
So we are interested in markets like the U. S. Where we already have one school. And we are also interested in developing markets like Middle East, South America, Asia. We are actively looking at opportunities to grow our presence in this area.
So I would say in 5 3 to 5 years' time, the school business will still be the main business for Bright Scholar and we will be a much more international or global education group. So I think we'll have more schools around the world in 3 to 5 years' time. And as for the other engine, growth engine is international student recruitment. So in our recruitment business, we use historically, Bright Scholar has a big platform in China that records students from China to send them overseas. And over the years, I think we have accumulated intensive human capital and know how for the market, I think we can duplicate that services to other parts of the world, especially the developing countries like Southeast Asia, like India, Pakistan and South America.
And these are the growing markets for international students. I think our know how can definitely help students in these markets to study overseas in other in countries like the UK, U. S, Canada, Australia, etcetera. So in 5 years' time, I think we'll have a much broader network of international student recruitment platform. So overall, Bright Scholar will be it will try to become a major K-twelve education service provider for international education.
That means we will be providing educational services, not only only the schools, but also drive the international student recruitment. I think at the moment, we are the biggest international group in terms of student recruitment in the UK. And we are in a very good position, and we have a very good foundation to grow that into a global market. So that is the strategy we are currently pursuing. Hope that answers your question.
Thank you so much, Robert.
Analyst, Various (X Star Fund Management, MAX Capital): Yes, it does. Thank you so much. I appreciate it.
Robert Niu, Chief Executive Officer, Bright Scholar: Thank
Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to the company for any closing remarks.
Andrea Goh, IR Counsel, Piacente Financial Communications: Thank you once again for joining us today. If you have further questions, please feel free to contact Spence Scholar's Investor Relations through the contact information provided on our website.
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