Bright Scholar Announces Unaudited Financial Results for the Fourth Fiscal Quarter and Fiscal Year 2022

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    FOSHAN, China, Nov. 30, 2022 /PRNewswire/ — Bright Scholar Education Holdings Limited (“Bright Scholar,” the “Company,” “we” or “our”) (NYSE: BEDU), a global premier education service company, today announced its unaudited financial results for the fourth fiscal quarter and fiscal year ended August 31, 2022.  

    FINANCIAL PERFORMANCE HIGHLIGHTS

    Fourth Fiscal Quarter Ended August 31, 2022 Financial Highlights  

    (in comparison to the same period of the last fiscal year):

    RMB in million

    Except EPS and %

    Fourth Fiscal Quarter

    Ended August 31, 2022

    Fourth Fiscal Quarter

    Ended August 31, 2021

    YoY

    % Change

    Revenue from continuing operations

    403.9

    320.0

    26.2 %

    Gross Profit from continuing operations

    83.8

    48.3

    73.4 %

    Gross Margin from continuing operations

    20.7 %

    15.1 %

    5.6 %

    Operating Loss from continuing operations

    (59.4)

    (204.0)

    70.9 %

    Operating Margin from continuing operations

    (14.7 %)

    (63.7 %)

    49.0 %

    Loss from discontinued operations, net of tax

    (198.9)

    Net Loss for the quarter

    (99.4)

    (478.2)

    79.2 %

    Adjusted Gross Profit from continuing operations (1)

    87.7

    53.0

    65.5 %

    Adjusted Operating Loss from continuing operations (2)

    (48.8)

    (99.2)

    50.7 %

    Adjusted Net Loss (3) for the quarter

    (89.7)

    (175.5)

    48.9 %

    Adjusted EBITDA (4) for the quarter

    (47.6)

    (29.8)

    59.9 %

    Basic and Diluted Loss per Share from continuing operations

    (0.90)

    (2.40)

    62.5 %

    Basic and Diluted Loss per Share from discontinued operations

    (0.66)

    Adjusted Basic and Diluted Loss per Share (5) for the quarter

    (0.82)

    (1.53)

    46.4 %

    Basic and Diluted Loss per ADS from continuing operations

    (3.60)

    (9.60)

    62.5 %

    Basic and Diluted Loss per ADS from discontinued operations

    (2.64)

    Adjusted Basic and Diluted Loss per ADS (6) for the quarter

    (3.28)

    (6.12)

    46.4 %

    Fiscal Year 2022 Ended August 31, 2022 Financial Highlights 

    (in comparison to the last fiscal year):

    RMB in million

    Except EPS and %

    Fiscal Year 2022

    Ended August 31, 2022

    Fiscal Year 2021

    Ended August 31, 2021

    YoY

    % Change

    Revenue from continuing operations

    1,714.9

    1,401.8

    22.3 %

    Gross Profit from continuing operations

    478.1

    221.5

    115.8 %

    Gross Margin from continuing operations

    27.9 %

    15.8 %

    12.1 %

    Operating Loss from continuing operations

    (63.0)

    (389.7)

    83.8 %

    Operating Margin from continuing operations

    (3.7 %)

    (27.8 %)

    24.1 %

    Income from discontinued operations, net of tax

    369.3

    Net Loss for the year

    (159.4)

    (165.8)

    3.8 %

    Adjusted Gross Profit from continuing operations (1)

    495.9

    237.7

    108.7 %

    Adjusted Operating Loss from continuing operations (2)

    (39.4)

    (271.4)

    85.5 %

    Adjusted Net Loss (3) for the year

    (139.6)

    (420.2)

    66.8 %

    Adjusted EBITDA (4) for the year

    149.0

    (30.3)

    592.5 %

    Basic and Diluted Loss per Share from continuing operations

    (1.39)

    (4.54)

    69.4 %

    Basic and Diluted Earnings per Share from discontinued operations

    4.09

    Adjusted Basic and Diluted Loss per Share (5) for the year

    (1.23)

    (3.57)

    65.5 %

    Basic and Diluted Loss per ADS from continuing operations

    (5.56)

    (18.16)

    69.4 %

    Basic and Diluted Earnings per ADS from discontinued operations

    16.36

    Adjusted Basic and Diluted Loss per ADS (6) for the year

    (4.92)

    (14.28)

    65.5 %

    1.   Adjusted gross profit/(loss) from continuing operations is defined as gross profit/(loss) from continuing operations excluding amortization of intangible assets.

    2.   Adjusted operating income/(loss) from continuing operations is defined as operating income/(loss) from continuing operations excluding share-based compensation expense and amortization of intangible assets, impairment loss on operating lease right-of-use assets, impairment loss on goodwill and  impairment loss on property and equipment.

    3.   Adjusted net income/(loss) is defined as net income/(loss) excluding share-based compensation expense, amortization of intangible assets, tax effect of amortization of intangible assets, impairment loss on operating lease right-of-use assets, impairment loss on goodwill, impairment loss on property and equipment and income/(loss) from discontinued operations, net of tax.

    4.   Adjusted EBITDA is defined as net income/(loss) excluding interest income/(expense), net, income tax expense/benefit; depreciation and amortization, share-based compensation expense, impairment loss on operating lease right-of-use assets, impairment loss on goodwill, impairment loss on property and equipment and income/(loss) from discontinued operations, net of tax.

    5.   Adjusted basic and diluted earnings/(loss) per share is defined as adjusted net income/(loss) attributable to ordinary shareholders (net income/(loss) attributable to ordinary shareholders excluding share-based compensation expense, amortization of intangible assets, tax effect of amortization of intangible assets, impairment loss on operating lease right-of-use assets, impairment loss on goodwill,  impairment loss on property and equipment and income/(loss) from discontinued operations, net of tax.) divided by the weighted average number of basic and diluted ordinary shares.

    6.   Adjusted basic and diluted earnings/(loss) per American depositary share (“ADS”) is defined as adjusted net income/(loss) attributable to ADS shareholders (net income/(loss) attributable to ADS shareholders excluding share-based compensation expense, amortization of intangible assets, tax effect of amortization of intangible assets, impairment loss on operating lease right-of-use assets, impairment loss on goodwill, impairment loss on property and equipment and income/(loss) from discontinued operations, net of tax.) divided by the weighted average number of basic and diluted ADSs. The number of shares used in calculating basic and diluted earnings/(loss) per ADS have been retrospectively adjusted to reflect the ADS ratio change from one ADS representing one Class A ordinary share to one ADS representing four Class A ordinary shares, which became effective on August 19, 2022.

    For more information on these adjusted financial measures, please see the section captioned under “Non-GAAP Financial Measures” and the tables captioned “Reconciliations of GAAP and Non-GAAP Results” set forth at the end of this release.

    Overseas Schools (CATS Global Schools)

    CATS Global Schools included 4 Stafford House locations in UK, 4 CATS Colleges in US and UK, Cambridge School of Visual & Performing Arts and 3 independent boarding schools in UK as of August 31, 2022.

    • For the fourth fiscal quarter, revenue amounted to RMB121.6 million, representing a 61.1% increase compared to RMB75.5 million in the same fiscal quarter last year, and accounted for 30.1% of the total revenue for the fourth fiscal quarter.
    • For the fiscal year, revenue amounted to RMB652.8 million, representing a 29.9% increase compared to RMB502.6 million in last fiscal year, and accounted for 38.1% of the total revenue.

    Complementary Education Services 

    The complementary education services business comprises language training, overseas study counselling, career counselling, study tour and camps as well as international contest training and others.

    • For the fourth fiscal quarter, revenue amounted to RMB179.7 million, compared to RMB182.6 million in the same fiscal quarter last year, and accounted for 44.5% of the total revenue for the fourth fiscal quarter.
    • For the fiscal year, revenue amounted to RMB636.6 million, representing a 1.8% increase compared to RMB625.6 million for last fiscal year, and accounted for 37.1% of the total revenue.

    Domestic Kindergartens & K-12 Operation Services  

    The domestic kindergartens & K-12 operation services business comprises of for-profit kindergartens and operation services for domestic K-12 schools including catering and procurement services.  

    • For the fourth fiscal quarter, revenue amounted to RMB102.6 million, representing a 65.7% increase compared to RMB61.9 million in the same fiscal quarter last year, and accounted for 25.4% of the total revenue for the fourth fiscal quarter.
    • For the fiscal year, revenue amounted to RMB425.5million, representing a 55.6% increase compared to RMB273.6 million for last fiscal year, and accounted for 24.8% of the total revenue.

    “We had another solid quarter of business recovery to finish off a challenging year,” said Mr. Jerry He, Executive Vice Chairman of Bright Scholar. “For continuing operation in the quarter, we recorded a 26.2% growth in revenue, significant improvement of 73.4% in gross profit, and operating and net losses continued to narrow. On a full fiscal year basis, revenue grew by 22.3% year-over-year, with gross profit up by 115.8% and operating and net losses improved by 83.8% and 70.2% year-over-year respectively.”

    “The fourth quarter results illustrate the gradual return of demand for quality education as parents and students look to close the learning gaps created by the disruption of in-person learnings from pandemic. Revenue for Overseas School Business increased by 61.1% in the fourth quarter and 29.9% in the full fiscal year,” Mr. He commented on the performance of overseas school business. “We are pleased with the progress of recovery, but at the same time vigilant of the imminent energy crisis in UK and the inflationary pressures in quarters ahead. We will continue to vigorously manage our costs to optimize sustainable returns over the medium to long term.”

    “For Complementary Education Services, the fourth fiscal quarter proved to be more challenging than we anticipated with summer academic terms being disrupted by regional outbreak of new COVID variants. Revenue was down by 1.6% in the fourth fiscal quarter and up modestly by 1.8% in fiscal year 2022,” said Mr. Zi Chen, Chief Executive Officer of Complementary Education Services. “Despite the challenging operating environments, we are encouraged by the continuous recovery of our overseas study counselling and career counselling business with respective revenue increased by 35.1% and 46.7% year-over-year for the quarter and 26.6% and 9.9% for full fiscal 2022, respectively. Our strategic blueprint remains firmly on all-round development for students that comprised of both school and non-school contexts critical to children’s learning and achievement,” Mr. Chen concluded.

    “Strong fourth quarter results reflect our focus on strategic imperatives we put in motion to rebuild and reshape our business that enabled us to sustain through the depths of the pandemic,” said Ms. Wanmei Li, Chief Executive Officer of Domestic Kindergartens & K-12 Operation Services. “Revenue for Domestic Kindergartens & K-12 Operation Services grew by 65.7% in the fourth fiscal quarter and 55.6% in fiscal year 2022. The business performance mainly attributed to the increase of revenue generated from catering services and expansion of procurement services. As of the end August 2022, we had provided catering and procurement services to the students in a total of 24 schools and 60 kindergartens.”

    Mr. He concluded, “Our fiscal 2022 performance demonstrates our continued resilience and relentless commitment to rebuild our revenue across all of our businesses. As we continue to navigate the dynamic macroeconomic challenges and profound shifts in economies and societies, we have gathered momentum in reshaping and rebuilding our businesses. The strength of our diversified portfolio of businesses that focus on advancing quality education services is most evident in these times of uncertainty. As we look out to fiscal 2023, we will continue to evolve our business, think comprehensively about how we bring quality education and all-round development supplementary services to students and innovate ahead of their needs, all of which will further deepen connectivity across our platform of diversified education services. In addition, we will continue to take steps to reduce overhead and mitigate risks associated with inflationary cost pressures. We are firmly committed to return to profit after impact of K-12 regulations in China, and bringing together the best of Bright Scholar in order to deliver better all round education and development for our students.”

    RECENT DEVELOPMENTS

    Regained Compliance with NYSE Minimum Price Requirement

    On March 25, 2022, the NYSE notified the Company of its non-compliance with the NYSE’s price criteria

    for continued listing standard. In order to regain compliance with the minimum share price requirement, the Company changed the ratio of its ADSs to its Class A ordinary shares (the “ADS Ratio”), par value US$0.00001 per share, from the previous ADS Ratio of one (1) ADS to one (1) Class A ordinary share to the current ADS Ratio of one (1) ADS to four (4) Class A ordinary shares, effective August 19, 2022. The effect of the ratio change on the ADS trading price on the New York Stock Exchange took place at the open of business on August 19, 2022 (U.S. Eastern Time).

    On September 1, 2022, the Company received a confirmation from the NYSE that the Company has regained compliance within the prescribed time, and the ADSs will continue to be traded on the NYSE, subject to the Company’s continued compliance with all applicable continued listing criteria.

    UNAUDITED FINANCIAL RESULTS for THE FoURTH FISCAL quarter ENDED AUGUST 31, 2022

    Revenue from Continuing Operations

    Revenue for the fourth fiscal quarter was RMB403.9 million, representing a 26.2% increase from RMB320.0 million for the same quarter of the last fiscal year.

    Overseas Schools: Revenue contribution for the fourth fiscal quarter was RMB121.6 million, representing a 61.1% increase from RMB75.5 million for the same quarter of the last fiscal year. The increase was mainly attributable to recovery of overseas schools’ operation from pandemic.

    Complementary Education Services: Revenue contribution for the fourth fiscal quarter was RMB179.7 million, as compared to RMB182.6 million for the same quarter of the last fiscal year. The decrease was mainly attributable to study tour and camps business and language training being disrupted by regional outbreak of new COVID variants.

    Domestic Kindergartens & K-12 Operation Services: Revenue contribution for the fourth fiscal quarter was RMB102.6 million, representing a 65.7% increase from RMB61.9 million for the same quarter of the last fiscal year. The increase was mainly attributable to the increase of catering services revenues and expansion of procurement service.

    We have continued to provide essential services without recognizing any revenues relating to such activities to schools provide compulsory education in our discontinued operations, which are key to the normal daily operation of such schools.

    Cost of Revenue from Continuing Operations

    Cost of revenue for the fourth fiscal quarter was RMB320.1 million, as compared to RMB271.7 million for the same quarter of last fiscal year.

    Gross Profit, Gross Margin and Adjusted Gross Profit from Continuing Operations

    Gross profit for the fourth fiscal quarter was RMB83.8 million, representing a 73.4% increase from RMB48.3 million for the same quarter of the last fiscal year. Gross margin increased to 20.7% from 15.1% for the same quarter of the last fiscal year. The increase was mainly due to the recovery of overseas business.

    Adjusted gross profit for the fourth fiscal quarter was RMB87.7 million, representing a 65.5% increase from RMB53.0 million for the same quarter of the last fiscal year.

    Selling, General and Administrative Expenses from Continuing Operations

    Total SG&A expenses for the fourth fiscal quarter were RMB137.8 million, representing a 13.0% decrease from RMB158.5 million for the same period quarter of the last fiscal year. The decrease in SG&A expenses was mainly due to vigorously costs management across all of our business segments.

    Operating Loss, Operating Margin and Adjusted Operating Loss from Continuing Operations

    Operating loss for the fourth fiscal quarter was RMB59.4 million, representing a 70.9% decrease from operating loss of RMB204.0 million for the same quarter of the last fiscal year. Operating loss margin was 14.7% for the fourth fiscal quarter, as compared to operating loss margin of 63.7% for the same quarter of the last fiscal year. 

    Adjusted operating loss for the fourth fiscal quarter was RMB48.8 million, representing a 50.7% decrease from adjusted operating loss of RMB99.2 million for the same quarter of the last fiscal year.

    Net Loss and Adjusted Net Loss 

    Net loss for the fourth fiscal quarter was RMB99.4 million, representing a 64.4% decrease in loss from net loss of RMB279.3 million from continuing operations for the same quarter of the last fiscal year. Net loss was RMB478.2 million for the same quarter of the last fiscal year, which includes net loss of RMB279.3 million from continuing operations and net loss of RMB198.9 million from discontinued operations. The management of the Company noted that the Company’s market capitalization has been lower than its net assets and is closely monitoring the possibility of the impairment of goodwill and intangible assets.

    Adjusted net loss for the fourth fiscal quarter was RMB89.7 million, representing a decrease of 48.9% from adjusted net loss of RMB175.5 million for the same quarter of the last fiscal year. 

    Net Loss per ordinary share/ADS and Adjusted Net Loss per ordinary share/ADS

    Basic and diluted net loss per ordinary share attributable to ordinary shareholders from continuing operations for the fourth fiscal quarter were RMB0.90 and RMB0.90, respectively, as compared to loss of RMB2.40 and RMB2.40, respectively, for the same quarter of the last fiscal year.

    Adjusted basic and diluted net loss per ordinary share attributable to ordinary shareholders for the fourth fiscal quarter were RMB0.82 and RMB0.82, respectively, as compared to loss of RMB1.53 and RMB1.53, respectively, for the same quarter of the last fiscal year.

    Basic and diluted net loss per ADS attributable to ADS holders from continuing operations for the fourth fiscal quarter were RMB3.60 and RMB3.60, respectively, as compared to loss of RMB9.60 and RMB9.60, respectively, for the same quarter of the last fiscal year.

    Adjusted basic and diluted net loss per ADS attributable to ADS holders for the fourth fiscal quarter were RMB3.28 and RMB3.28, respectively, as compared to loss of RMB6.12 and RMB6.12, respectively, for the same quarter of the last fiscal year.

    Adjusted EBITDA Loss

    Adjusted EBITDA loss for the fourth fiscal quarter was RMB47.6 million, representing a decrease of 59.9% from adjusted EBITDA loss of RMB29.8 million for the same quarter of the last fiscal year.

    UNAUDITED FINANCIAL RESULTS for The fiscal year ENDED august 31, 2022

    Revenue from Continuing Operations

    Revenue for the fiscal year was RMB1,714.9 million, representing a 22.3% increase from RMB1,401.8 million for last fiscal year.

    Overseas Schools: Revenue contribution for the fiscal year was RMB652.8 million, representing a 29.9% increase from RMB502.6 million for the last fiscal year. The increase was mainly attributable to recovery of overseas schools’ operation from pandemic.

    Complementary Education Services: Revenue contribution for the fiscal year was RMB636.6 million. It represented a 1.8% increase from RMB625.6 million for the last fiscal year. The increase was mainly attributable to the recovery of overseas study counselling and career counselling business.

    Domestic Kindergartens & K-12 Operation Services: Revenue contribution for the fiscal year was RMB425.5 million, representing a 55.6% increase from RMB273.6 million for the last fiscal year. The increase was mainly due to the increase of catering services revenues and expansion of procurement services.

    We have continued to provide essential services without recognizing any revenues relating to such activities to schools that provide compulsory education in our discontinued operations, which are key to the normal daily operation of such schools.

    Cost of Revenue from Continuing Operations

    Cost of revenue for the fiscal year was RMB1,236.8 million, as compared to RMB1,180.3 million for the last fiscal year.

    Gross Profit, Gross Margin and Adjusted Gross Profit from Continuing Operations

    Gross profit for the fiscal year was RMB478.1 million, representing a 115.8% increase from RMB221.5 million for the last fiscal year. Gross margin increased to 27.9% from 15.8% for the last fiscal year. The increase was mainly attributable to the continuous recovery of our overseas business, our overseas study counselling and career counselling businesses.

    Adjusted gross profit for the fiscal year was RMB495.9 million, representing a 108.7% increase from RMB237.7 million for the last fiscal year.

    Selling, General and Administrative Expenses from Continuing Operations

    Total SG&A expenses for the fiscal year were RMB539.9 million, as compared to RMB535.9 million for the last fiscal year.

    Operating Loss, Operating Margin and Adjusted Operating Loss from Continuing Operations

    Operating loss for the fiscal year was RMB63.0 million, representing an 83.8% decrease in loss from operating loss of RMB389.7 million for the last fiscal year. Operating loss margin was 3.7% for the fiscal year, as compared to operating loss margin of 27.8% for the last fiscal year. 

    Adjusted operating loss for the fiscal year was RMB39.4 million, representing an 85.5% decrease in loss from adjusted operating loss of RMB271.4 million for the last fiscal year. 

    Net Loss and Adjusted Net Loss 

    Net loss for the fiscal year was RMB159.4 million, representing a 70.2% decrease in loss from net loss of RMB535.1 million from continuing operations for the last fiscal year. Net loss was RMB165.8 million for the last fiscal year, which includes net loss of RMB535.1 million from continuing operations and net income of RMB369.3 million from discontinued operations.

    Adjusted net loss for the fiscal year was RMB139.6 million, representing a decrease of 66.8% from adjusted net loss of RMB420.2 for the last fiscal year. 

    Net Loss per ordinary share/ADS and Adjusted Net Loss per ordinary share/ADS

    Basic and diluted net loss per ordinary share attributable to ordinary shareholders from continuing operations for the fiscal year were RMB1.39 and RMB1.39, respectively, as compared to loss of RMB4.54 and RMB4.54, respectively, for the last fiscal year.

    Adjusted basic and diluted net loss per ordinary share attributable to ordinary shareholders for the fiscal year were RMB1.23 and RMB1.23, respectively, as compared to loss of RMB3.57 and RMB3.57, respectively, for the last fiscal year.

    Basic and diluted net loss per ADS attributable to ADS holders from continuing operations for the fiscal year were RMB5.56 and RMB5.56, respectively, as compared to loss of RMB18.16 and RMB18.16, respectively, for the last fiscal year.

    Adjusted basic and diluted net loss per ADS attributable to ADS holders for the fiscal year were RMB4.92 and RMB4.92, respectively, as compared to loss of RMB14.28 and RMB14.28, respectively, for the last fiscal year.

    Adjusted EBITDA

    Adjusted EBITDA for the fiscal year was RMB149.0 million, representing a 592.5% increase from adjusted EBITDA loss of RMB30.3 million for the last fiscal year.

    Cash and Working Capital

    As of August 31, 2022, the Company’s cash and cash equivalents and restricted cash, were RMB857.8 million (US$124.5 million), as compared to RMB1,371.6 million as of May 31, 2022. The company redeemed all of its outstanding senior notes matured on July 31, 2022 with a total redemption price of US$232.3 million, which consists of principle amount and interest.

    CONVENIENCE TRANSLATION

    The Company’s reporting currency is Renminbi (“RMB”). However, periodic reports made to shareholders will include current period amounts translated into U.S. dollars using the prevailing exchange rates at the balance sheet date, for the convenience of readers. Translations of balances in the condensed consolidated balance sheets, and the related condensed consolidated statements of operations, and cash flows from RMB into U.S. dollars as of and for the quarter and fiscal year ended August 31, 2022 are solely for the convenience of the readers and were calculated at the rate of US$1.00=RMB6.8890, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on August 31, 2022. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on August 31, 2022 or at any other rate.

    NON-GAAP FINANCIAL MEASURES

    In evaluating our business, we consider and use certain non-GAAP measures, including primarily adjusted EBITDA, adjusted net income/(loss), adjusted gross profit/(loss), adjusted operating income/(loss), adjusted net earnings/(loss) per share attributable to ordinary shareholders/ADS holders basic and diluted as supplemental measures to review and assess our operating performance. 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 U.S. GAAP. We define adjusted gross profit/(loss) from continuing operations as gross profit/(loss) from continuing operations excluding amortization of intangible assets. We define adjusted EBITDA as net income/(loss) excluding interest income/(expense), net, income tax expense/benefit, depreciation and amortization, share-based compensation expense, impairment loss on operating lease right-of-use assets, impairment loss on goodwill, impairment loss on property and equipment and income/(loss) from discontinued operations, net of tax. We define adjusted net income/(loss) as net income/(loss) excluding share-based compensation expense, amortization of intangible assets, tax effect of amortization of intangible assets, impairment loss on operating lease right-of-use assets, impairment loss on goodwill, impairment loss on property and equipment and income/(loss) from discontinued operations, net of tax. We define adjusted operating income/(loss) from continuing operations as operating income/(loss) from continuing operations excluding share-based compensation expense and amortization of intangible assets, impairment loss on operating lease right-of-use assets, impairment loss on goodwill and impairment loss on property and equipment. Additionally, we define adjusted net earnings/(loss) per share attributable to ordinary shareholders/ADS holders, basic and diluted, as adjusted net income/(loss) attributable to ordinary shareholders/ADS holders (net income/(loss) to ordinary shareholders/ADS holders excluding share-based compensation expense, amortization of intangible assets, tax effect of amortization of intangible assets, impairment loss on operating lease right-of-use assets, impairment loss on goodwill, impairment loss on property and equipment and income/(loss) from discontinued operations, net of tax)  divided by the weighted average number of basic and diluted ordinary shares or ADSs. 

    We incur amortization expense of intangible assets related to various acquisitions that have been made in recent years. These intangible assets are valued at the time of acquisition and are then amortized over a period of several years after the acquisition. We believe that exclusion of these expenses allows greater comparability of operating results that are consistent over time for the Company’s newly-acquired and long-held business as the related intangibles do not have significant connection to the growth of the business. Therefore, we provide exclusion of amortization of intangible assets to define adjusted gross profit from continuing operations, adjusted operating income/(loss) from continuing operations, adjusted net income/(loss), and adjusted net earnings/(loss) per share attributable to ordinary shareholders/ADS holders, basic and diluted. In addition, due to the impact of the amended Implementation Regulations of the Law on the Promotion of Private Education of the People’s Republic of China (the “Implementation Rules”), the Affected Entities (7) deconsolidated is classified as discontinued operations, which is a non-recurring item. The exclusion facilitates comparisons of our operating performance on a period-to-period basis.  Therefore, we provide exclusion of income/(loss) from discontinued operations, net of tax, to define adjusted net income/(loss), adjusted EBITDA, adjusted net earnings/(loss) per share attributable to ordinary shareholders/ADS holders, basic and diluted.

    We present the non-GAAP financial measures because they are used by our management to evaluate our operating performance and formulate business plans. Such non-GAAP measures include adjusted EBITDA, adjusted net income/(loss), adjusted gross profit/(loss) from continuing operations, adjusted operating income/(loss) from continuing operations, adjusted net earnings/(loss) per share attributable to ordinary shareholders/ADS holders basic and diluted. Non-GAAP financial measures enable our management to assess our operating results without considering the impact of non-cash charges, including depreciation and amortization and share-based compensation expense, and without considering the impact of non-operating items such as interest income/(expense), net; income tax expense/benefit; share-based compensation expense; amortization of intangible assets, tax effect of amortization of intangible assets, and without considering the impact of non-recurring item, i.e. income/(loss) from discontinued operations. We also believe that the use of these non-GAAP measures facilitates investors’ assessment of our operating performance.

    The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using these non-GAAP financial measures is that they do not reflect all items of income and expense that affect our operations. Interest income/(expense), net; income tax expense/benefit; depreciation and amortization; share-based compensation expense; tax effect of amortization of intangible assets; and income/(loss) from discontinued operations, have been and may continue to be incurred in our business and are not reflected in the presentation of these non-GAAP measures, including adjusted EBITDA or adjusted net income/(loss). Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.

    7.   Affected Entities refers to private schools, entities holding such private schools as well as other enterprises within China that are affected by the Implementation Rules effective on September 1, 2021. 

    About Bright Scholar Education Holdings Limited

    Bright Scholar is a global premier education service company, which primarily provides quality international education to global students and equip them with the critical academic foundation and skillsets necessary to succeed in the pursuit of higher education. Bright Scholar also complements its international offerings with Chinese government-mandated curriculum for students who wish to maintain the option of pursuing higher education in China.

    Safe Harbor Statement

    This announcement contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, the Company’s business plans and development, which can be identified by terminology such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. Such statements are based upon management’s current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company’s control, which may cause the Company’s actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.

    IR Contact:

    GCM Strategic Communications 
    Email: BEDU.IR@gcm.international

    Media Contact:

    Email: media@brightscholar.com
    Phone: +86-757-6683-2507

    BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED

    UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS 

    (Amounts in thousands) 

    As of

    August 31,

     August 31,

    2021

    2022

    RMB

    RMB

    USD

    ASSETS

    Current assets

    Cash and cash equivalents 

    844,684

    664,769

    96,497

    Restricted cash 

    669,029

    191,365

    27,778

    Accounts receivable, net 

    41,723

    19,084

    2,770

    Amounts due from related parties, net 

    15,087

    196,626

    28,542

    Other receivables, deposits and other assets, net

    81,119

    114,151

    16,571

    Inventories

    7,579

    6,869

    997

    Amount due from affected entities (1), net

    2,028,866

    Total current assets 

    3,688,087

    1,192,864

    173,155

    Restricted cash – non current

    1,450

    1,650

    240

    Property and equipment, net 

    519,452

    404,534

    58,722

    Intangible assets, net

    485,822

    430,495

    62,490

    Goodwill, net 

    1,950,186

    1,832,296

    265,974

    Long-term investments 

    75,443

    40,486

    5,877

    Prepayment for construction contract 

    5,974

    4,894

    710

    Deferred tax assets, net 

    64,096

    85,103

    12,354

    Other non-current assets, net 

    68,217

    15,343

    2,226

    Operating lease right-of-use assets

    1,773,773

    1,461,333

    212,126

    Total non-current assets 

    4,944,413

    4,276,134

    620,719

    TOTAL ASSETS 

    8,632,500

    5,468,998

    793,874

    1. The Affected Entities were deconsolidated on August 31, 2021, and became the related parties of the Company since September 1, 2021. 

    BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED 

    UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS-CONTINUED 

    (Amounts in thousands) 

    As of

    August 31,

     August 31,

    2021

    2022

    RMB

    RMB

    USD

    LIABILITIES AND EQUITY

       Current liabilities

    Accounts payable (including accounts payable of the consolidated VIEs without
         recourse to Bright Scholar of RMB 10,941 and RMB 6,154 as of August 31, 2021
         and August 31, 2022, respectively)

    73,411

    100,229

    14,549

    Amounts due to related parties (including amounts due to related parties of the
         consolidated VIEs without recourse to Bright Scholar of RMB 5,641 and RMB
         294,164 as of August 31, 2021 and August 31, 2022, respectively) 

    40,445

    343,032

    49,794

    Accrued expenses and other current liabilities (including accrued expenses and other
         current liabilities of the consolidated VIEs without recourse to Bright Scholar of
         RMB 13,876 and RMB 27,790 as of August 31, 2021 and August 31, 2022, respectively) 

    234,036

    259,267

    37,636

    Short-term loans (including short- term loans of the consolidated VIEs without
         recourse to Bright Scholar of RMB nil and RMB nil as of August 31, 2021 and
         August 31, 2022, respectively) 

    753,754

    149,239

    21,663

    Bond payable  (including bond payable of the consolidated VIEs without recourse to
         Bright Scholar of RMB nil and RMB nil as of August 31, 2021 and August 31,
         2022, respectively) 

    1,836,362

    Income tax payable (including income tax payable of the consolidated VIEs
         without recourse to Bright Scholar of RMB 19,091 and RMB 19,983 as of August 31,
         2021 and August 31, 2022, respectively)

    178,213

    85,856

    12,463

    Contract liabilities (including contract liabilities of the consolidated VIEs
         without recourse to Bright Scholar of RMB 139,126 and RMB 107,494 as of August
         31, 2021 and August 31, 2022, respectively)   

    425,954

    516,731

    75,008

    Refund liabilities (including refund liabilities of the consolidated VIEs
         without recourse to Bright Scholar of RMB 10,398 and RMB 9,458 as of August
         31, 2021 and August 31, 2022, respectively)

    32,362

    20,517

    2,978

    Operating lease liabilities (including operating lease liabilities of the consolidated
         VIEs without recourse to Bright Scholar of RMB 12,005 and RMB 20,779 as of
         August 31, 2021 and August 31, 2022, respectively)

    123,215

    106,629

    15,478

    Amounts due to affected entities (including Amounts due to affected entities of the
         consolidated VIEs without recourse to Bright Scholar of RMB 276,378 and RMB
         nil as of August 31, 2021 and August 31, 2022, respectively) 

    333,270

    Total current liabilities 

    4,031,022

    1,581,500

    229,569

    Contract liabilities – non current (including contract liabilities – non current of the
         consolidated VIEs without recourse to Bright Scholar of RMB 1,084 and RMB
         1,108 as of August 31, 2021 and August 31, 2022, respectively)  

    1,421

    2,203

    320

    Deferred tax liabilities, net (including deferred tax liabilities, net of the consolidated
         VIEs without recourse to Bright Scholar of RMB 9,561 and RMB 9,551 as of
         August 31, 2021 and August 31, 2022, respectively) 

    26,744

    21,707

    3,151

    Other non-current liabilities due to related parties (including other non-current
         liabilities due to related parties of the consolidated VIEs without recourse to Bright
         Scholar of RMB 13,154 and RMB 11,197 as of August 31, 2021 and August 31,
         2022, respectively) 

    13,154

    11,197

    1,625

    Long-term loans (including long-term loans of the consolidated VIEs without
         recourse to Bright Scholar of RMB nil and RMB nil as of August 31, 2021 and
         August 31, 2022, respectively) 

    616

    633

    92

    Operating lease liabilities – non current (including operating lease liabilities – non
         current of the consolidated VIEs without recourse to Bright Scholar of RMB
         83,475 and RMB 72,464 as of August 31, 2021 and August 31, 2022, respectively)  

    1,752,667

    1,438,449

    208,804

    Total non-current liabilities 

    1,794,602

    1,474,189

    213,992

    TOTAL LIABILITIES 

    5,825,624

    3,055,689

    443,561

    EQUITY

    Share capital 

    8

    8

    1

    Additional paid-in capital 

    1,727,020

    1,693,358

    245,806

    Statutory reserves 

    2,531

    14,873

    2,159

    Accumulated other comprehensive income

    168,324

    8,076

    1,172

    Accumulated retained earnings 

    648,944

    471,353

    68,421

    Shareholders’ equity 

    2,546,827

    2,187,668

    317,559

    Non-controlling interests 

    260,049

    225,641

    32,754

    Total equity 

    2,806,876

    2,413,309

    350,313

    TOTAL LIABILITIES AND EQUITY 

    8,632,500

    5,468,998

    793,874

    BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED

    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 

     (Amounts in thousands, except for shares and per share data

     Three Months Ended August 31,

        Twelve Months Ended August 31,

    2021

    2022

    2021

    2022

    RMB

            RMB

    USD

    RMB

           RMB

    USD

    Continuing operations

    Revenue

    320,021

    403,855

    58,623

    1,401,780

    1,714,909

    248,934

    Cost of revenue

    (271,701)

    (320,057)

    (46,459)

    (1,180,263)

    (1,236,799)

    (179,532)

    Gross profit

    48,320

    83,798

    12,164

    221,517

    478,110

    69,402

    Selling, general and administrative expenses

    (158,504)

    (137,825)

    (20,007)

    (535,878)

    (539,893)

    (78,370)

    Impairment loss on goodwill

    (84,730)

    (84,730)

    Impairment loss on operating lease right-of use assets

    (15,575)

    (15,575)

    Impairment loss on property and equipment

    (6,586)

    (956)

    (6,586)

    (956)

    Other operating income

    6,508

    1,252

    182

    24,969

    5,339

    775

    Operating loss

    (203,981)

    (59,361)

    (8,617)

    (389,697)

    (63,030)

    (9,149)

    Interest expense, net

    (47,330)

    (17,093)

    (2,481)

    (169,693)

    (127,840)

    (18,557)

    Investment income

    42,169

    28,200

    4,093

    129,575

    135,309

    19,641

    Other expenses

    (3,035)

    9

    1

    (10,137)

    (5,220)

    (759)

    Loss before income taxes and share of equity in loss of
    unconsolidated affiliates

    (212,177)

    (48,245)

    (7,004)

    (439,952)

    (60,781)

    (8,824)

    Income tax expense 

    (66,664)

    (11,667)

    (1,694)

    (94,176)

    (58,919)

    (8,553)

    Share of equity in loss of unconsolidated affiliates

    (410)

    (39,515)

    (5,736)

    (1,018)

    (39,747)

    (5,770)

    Loss from continuing operations

    (279,251)

    (99,427)

    (14,434)

    (535,146)

    (159,447)

    (23,147)

    Discontinued operations

    (Loss)/income from discontinued operations, net of tax

    (198,941)

    369,343

    Net loss

    (478,192)

    (99,427)

    (14,434)

    (165,803)

    (159,447)

    (23,147)

    Net income/(loss) attributable to non-controlling interests

    Continuing operations

    6,875

    7,556

    1,097

    5,622

    5,803

    842

    Discontinued operations

    (120,316)

    (118,620)

    Net (loss)/ income attributable to ordinary shareholders

    Continuing operations

    (286,126)

    (106,983)

    (15,531)

    (540,768)

    (165,250)

    (23,989)

    Discontinued operations

    (78,625)

    487,963

    Net (loss)/earnings per share attributable to ordinary shareholders

    Basic

    Continuing operations

    (2.40)

    (0.90)

    (0.13)

    (4.54)

    (1.39)

    (0.20)

    Discontinued operations

    (0.66)

    4.09

    Diluted

    Continuing operations

    (2.40)

    (0.90)

    (0.13)

    (4.54)

    (1.39)

    (0.20)

    Discontinued operations

    (0.66)

    4.09

    Weighted average shares used in calculating
    net (loss)/earnings per ordinary share:

    Basic

    Continuing operations

    118,983,474

    118,669,795

    118,669,795

    119,220,331

    118,697,495

    118,697,495

    Discontinued operations

    118,983,474

    119,220,331

    Diluted

    Continuing operations

    118,983,474

    118,669,795

    118,669,795

    119,220,331

    118,697,495

    118,697,495

    Discontinued operations

    118,983,474

    119,220,331

    Net (loss)/earnings per ADS

    Basic

    Continuing operations

    (9.60)

    (3.60)

    (0.52)

    (18.16)

    (5.56)

    (0.80)

    Discontinued operations

    (2.64)

    16.36

    Diluted

    Continuing operations

    (9.60)

    (3.60)

    (0.52)

    (18.16)

    (5.56)

    (0.80)

    Discontinued operations

    (2.64)

    16.36

    BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED

    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

    (Amounts in thousands)

    Three Months Ended August 31,

    Twelve Months Ended August 31,

    2021

    2022

    2021

    2022

    RMB

        RMB

    USD

    RMB

    RMB

    USD

    Net cash generated from operating activities

    842,770

    165,485

    24,021

    698,808

    45,497

    6,604

    Net cash (used in)/ generated from investing activities

    (558,856)

    310,193

    45,027

    (3,079,036)

    (836,769)

    (121,465)

    Net cash (used in)/generated from financing activities

    (468,702)

    (1,001,420)

    (145,365)

    (446,534)

    101,383

    14,717

    Effect of exchange rate changes on cash and cash equivalents, and restricted cash

    31,861

    11,936

    1,733

    (82,012)

    32,510

    4,720

    Net change in cash and cash equivalents, and restricted cash

    (152,927)

    (513,806)

    (74,584)

    (2,908,774)

    (657,379)

    (95,424)

    Cash and cash equivalents, and restricted cash at beginning of the period

    1,668,090

    1,371,590

    199,099

    4,423,937

    1,515,163

    219,939

    Cash and cash equivalents, and restricted cash at end of the period

    1,515,163

    857,784

    124,515

    1,515,163

    857,784

    124,515

       

    BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED 

    Reconciliations of GAAP and Non-GAAP Results

    (Amounts in thousands, except for shares and per share data)

    Three Months Ended August 31,

    Twelve Months Ended August 31,

    2021

    2022

    2021

    2022

    RMB

       RMB

    USD

    RMB

           RMB

    USD

    Gross profit from continuing operations

    48,320

    83,798

    12,164

    221,517

    478,110

    69,402

    Add: Amortization of intangible assets

    4,680

    3,931

    571

    16,141

    17,814

    2,586

    Adjusted gross profit from continuing operations

    53,000

    87,729

    12,735

    237,658

    495,924

    71,988

    Operating loss from continuing operations

    (203,981)

    (59,361)

    (8,617)

    (389,697)

    (63,030)

    (9,149)

    Add: Share-based compensation expense

    (167)

    1,865

    (816)

    (118)

    Add: Amortization of intangible assets

    4,680

    3,931

    571

    16,141

    17,814

    2,586

    Add: Impairment loss on operating lease right-of-use assets

    15,575

    15,575

    Add: Impairment loss on goodwill

    84,730

    84,730

    Add: Impairment loss on property and equipment

    6,586

    956

    6,586

    956

    Adjusted operating loss from continuing operations

    (99,163)

    (48,844)

    (7,090)

    (271,386)

    (39,446)

    (5,725)

    Net loss

    (478,192)

    (99,427)

    (14,434)

    (165,803)

    (159,447)

    (23,147)

    Add: Share-based compensation expense

    (167)

    1,865

    (816)

    (118)

    Add: Amortization of intangible assets

    4,680

    3,931

    571

    16,141

    17,814

    2,586

    Add: Tax effect of amortization of intangible assets

    (1,029)

    (811)

    (118)

    (3,343)

    (3,764)

    (546)

     Add: Impairment loss on operating lease right-of-use assets

    15,575

    15,575

    Add: Impairment loss on goodwill

    84,730

    84,730

    Add: Impairment loss on property and equipment

    6,586

    956

    6,586

    956

    Less: (Loss)/income from discontinued operations, net of tax

    (198,941)

    369,343

    Adjusted net loss

    (175,462)

    (89,721)

    (13,025)

    (420,178)

    (139,627)

    (20,269)

    Net loss attributable to ordinary shareholders

    (364,751)

    (106,983)

    (15,531)

    (52,805)

    (165,250)

    (23,989)

    Add: Share-based compensation expense

    (167)

    1,865

    (816)

    (118)

    Add: Amortization of intangible assets

    4,680

    3,931

    571

    16,141

    17,814

    2,586

    Add: Tax effect of amortization of intangible assets

    (1,029)

    (811)

    (118)

    (3,343)

    (3,764)

    (546)

    Add: Impairment loss on operating lease right-of-use assets

    15,575

    15,575

    Add: Impairment loss on goodwill

    84,730

    84,730

    Add: Impairment loss on property and equipment

    6,586

    956

    6,586

    956

    Less: (Loss)/income from discontinued operations, net of tax

    (78,625)

    487,963

    Adjusted net loss attributable to ordinary shareholders

    (182,337)

    (97,277)

    (14,122)

    (425,800)

    (145,430)

    (21,111)

    Net loss

    (478,192)

    (99,427)

    (14,434)

    (165,803)

    (159,447)

    (23,147)

    Add: Interest expense, net

    47,330

    17,093

    2,481

    169,693

    127,840

    18,557

    Add: Income tax expense

    66,664

    11,667

    1,694

    94,176

    58,919

    8,553

    Add: Depreciation and amortization

    35,325

    16,442

    2,387

    138,847

    115,934

    16,829

    Add: Share-based compensation expense

    (167)

    1,865

    (816)

    (118)

    Add: Impairment loss on operating lease right-of-use assets

    15,575

    15,575

    Add: Impairment loss on goodwill

    84,730

    84,730

    Add: Impairment loss on property and equipment

    6,586

    956

    6,586

    956

    Less: (Loss)/income from discontinued operations, net of tax

    (198,941)

    369,343

    Adjusted EBITDA

    (29,794)

    (47,639)

    (6,916)

    (30,260)

    149,016

    21,630

    Weighted average shares used in calculating adjusted net loss per ordinary share:

    Basic and Diluted

    Continuing operations

    118,983,474

    118,669,795

    118,669,795

    119,220,331

    118,697,495

    118,697,495

    Discontinued operations

    118,983,474

    119,220,331

    Adjusted net loss per share attributable to ordinary shareholders

    —Basic

    (1.53)

    (0.82)

    (0.12)

    (3.57)

    (1.23)

    (0.18)

    —Diluted

    (1.53)

    (0.82)

    (0.12)

    (3.57)

    (1.23)

    (0.18)

    Adjusted net loss per ADS

    —Basic

    (6.12)

    (3.28)

    (0.48)

    (14.28)

    (4.92)

    (0.72)

    —Diluted

    (6.12)

    (3.28)

    (0.48)

    (14.28)

    (4.92)

    (0.72)

    Cision View original content:https://www.prnewswire.com/news-releases/bright-scholar-announces-unaudited-financial-results-for-the-fourth-fiscal-quarter-and-fiscal-year-2022-301689620.html

    Source: Bright Scholar Education Holdings Ltd.