Bright Scholar(BEDU) - 2021 Q3 - Quarterly Report

Executive Summary & Financial Highlights This section provides an overview of Bright Scholar's financial performance for the third fiscal quarter and the nine months ended May 31, 2021 Third Fiscal Quarter Financial Highlights Bright Scholar reported strong financial results for the third fiscal quarter ended May 31, 2021, with significant year-over-year growth in revenue, gross profit, operating income, and net income, primarily driven by the recovery of domestic businesses | Metric (RMB in million) | Q3 FY2021 | Q3 FY2020 | YoY % Change | | :---------------------- | :-------- | :-------- | :----------- | | Revenue | 1,053.8 | 739.4 | 42.5% | | Gross Profit | 418.2 | 292.0 | 43.2% | | Gross Margin | 39.7% | 39.5% | 0.2% | | Operating Income | 212.7 | 136.2 | 56.2% | | Operating Margin | 20.2% | 18.4% | 1.8% | | Net Income | 163.9 | 68.0 | 141.0% | | Net Margin | 15.6% | 9.2% | 6.4% | | Adjusted Net Income | 170.6 | 44.3 | 285.5% | | Adjusted EBITDA | 319.3 | 164.5 | 94.1% | | Basic and Diluted EPS | 1.43 | 0.64 | 123.4% | | Adjusted Basic and Diluted EPS | 1.49 | 0.44 | 238.6% | Nine Months Ended Financial Highlights For the nine months ended May 31, 2021, Bright Scholar achieved revenue growth despite a slight decline in gross profit and operating income, with adjusted net income showing a modest increase | Metric (RMB in million) | 9M FY2021 | 9M FY2020 | YoY % Change | | :---------------------- | :-------- | :-------- | :----------- | | Revenue | 2,914.4 | 2,714.4 | 7.4% | | Gross Profit | 1,025.1 | 1,072.3 | (4.4)% | | Gross Margin | 35.2% | 39.5% | (4.3)% | | Operating Income | 400.8 | 479.6 | (16.4)% | | Operating Margin | 13.8% | 17.7% | (3.9)% | | Net Income | 312.4 | 312.8 | (0.1)% | | Net Margin | 10.7% | 11.5% | (0.8)% | | Adjusted Net Income | 331.8 | 326.7 | 1.6% | | Adjusted EBITDA | 688.2 | 669.4 | 2.8% | | Basic and Diluted EPS | 2.61 | 2.62 | (0.4)% | | Adjusted Basic and Diluted EPS | 2.78 | 2.73 | 1.8% | Business Performance Highlights This section details the performance of Bright Scholar's key business segments, including domestic K-12 schools, complementary education, overseas schools, and education technology Domestic K-12 Schools The domestic K-12 school business, including international schools, bilingual schools, and kindergartens, showed strong recovery and growth in both student enrollment and revenue for the third fiscal quarter and nine-month period - Average student enrollment increased by 16.9% to 57,188 for Q3 FY2021 and 13.7% to 55,376 for the nine-month period[6] Q3 FY2021 Domestic K-12 Schools Performance (RMB million) | Metric | Q3 FY2021 | Q3 FY2020 | YoY % Change | | :----- | :-------- | :-------- | :----------- | | Revenue (RMB million) | 750.0 | 434.8 | 72.5% | | Revenue (% of total) | 71.2% | 58.9% | - | | Gross Margin | 47.8% | 43.1% | 4.7% | | Operating Margin | 37.0% | 27.0% | 10.0% | 9M FY2021 Domestic K-12 Schools Performance (RMB million) | Metric | 9M FY2021 | 9M FY2020 | YoY % Change | | :----- | :-------- | :-------- | :----------- | | Revenue (RMB million) | 1,993.5 | 1,552.1 | 28.4% | | Revenue (% of total) | 68.4% | 57.1% | - | | Gross Margin | 41.8% | 42.3% | (0.5)% | | Operating Margin | 28.9% | 28.8% | 0.1% | Complementary Education Services Complementary education services, including language training and overseas study counseling, showed strong revenue growth in Q3 FY2021, driven by recovery in camps and domestic tours, despite ongoing impacts on overseas-related services Q3 FY2021 Complementary Education Services Performance (RMB million) | Metric | Q3 FY2021 | Q3 FY2020 | YoY % Change | | :----- | :-------- | :-------- | :----------- | | Revenue (RMB million) | 130.2 | 72.9 | 78.5% | | Revenue (% of total) | 12.4% | 9.7% | - | | Gross Margin | 27.2% | 38.4% | (11.2)% | | Operating Margin | 6.6% | 8.0% | (1.4)% | 9M FY2021 Complementary Education Services Performance (RMB million) | Metric | 9M FY2021 | 9M FY2020 | YoY % Change | | :----- | :-------- | :-------- | :----------- | | Revenue (RMB million) | 387.7 | 323.8 | 19.7% | | Revenue (% of total) | 13.3% | 12.1% | - | | Gross Margin | 27.0% | 26.2% | 0.8% | | Operating Margin | 9.6% | 4.6% | 5.0% | Overseas Schools (CATS Global Schools) Overseas schools continued to be significantly impacted by the pandemic and travel restrictions, leading to a substantial decline in revenue and negative operating margins for both the quarter and nine-month period Q3 FY2021 Overseas Schools Performance (RMB million) | Metric | Q3 FY2021 | Q3 FY2020 | YoY % Change | | :----- | :-------- | :-------- | :----------- | | Revenue (RMB million) | 142.3 | 210.4 | (32.4)% | | Revenue (% of total) | 13.4% | 28.5% | - | | Gross Margin | 6.3% | 29.9% | (23.6)% | | Operating Margin | (33.4)% | 5.1% | (38.5)% | 9M FY2021 Overseas Schools Performance (RMB million) | Metric | 9M FY2021 | 9M FY2020 | YoY % Change | | :----- | :-------- | :-------- | :----------- | | Revenue (RMB million) | 427.1 | 766.8 | (44.3)% | | Revenue (% of total) | 14.7% | 28.2% | - | | Gross Margin | 7.6% | 36.7% | (29.1)% | | Operating Margin | (30.3)% | 9.5% | (39.8)% | Education Technology ("EdTech") The EdTech business demonstrated strong revenue growth for both the third fiscal quarter and the nine-month period, indicating increasing adoption of online career counseling, Academic Olympiad training, and international school services Q3 FY2021 Education Technology Performance (RMB million) | Metric | Q3 FY2021 | Q3 FY2020 | YoY % Change | | :----- | :-------- | :-------- | :----------- | | Revenue (RMB million) | 31.3 | 21.3 | 47.1% | | Revenue (% of total) | 3.0% | 2.9% | - | | Gross Margin | 49.6% | 65.0% | (15.4)% | | Operating Margin | 15.4% | 37.6% | (22.2)% | 9M FY2021 Education Technology Performance (RMB million) | Metric | 9M FY2021 | 9M FY2020 | YoY % Change | | :----- | :-------- | :-------- | :----------- | | Revenue (RMB million) | 106.1 | 71.7 | 47.9% | | Revenue (% of total) | 3.6% | 2.6% | - | | Gross Margin | 50.8% | 68.1% | (17.3)% | | Operating Margin | 15.7% | 34.5% | (18.8)% | Management Commentary & Outlook This section presents management's review of the third fiscal quarter performance, insights into business segments, and the company's future strategy and guidance Third Fiscal Quarter Performance Review Management expressed satisfaction with the strong Q3 FY2021 results, attributing them to a robust recovery in domestic businesses and the acceleration of strategic initiatives, alongside effective cost discipline - Strong Q3 FY2021 results were driven by a stronger than expected recovery in domestic businesses and acceleration of key strategic initiatives[10] - Focus on engines of growth and cost discipline across all businesses led to 42.5% revenue growth and 141.0% net income growth YoY for Q3[10] - Domestic K-12 business showed the strongest recovery in Q3, with enrollment growth across international schools (11.6%), bilingual schools (8.4%), and kindergartens (29.4%); revenues and average fees per student returned to pre-COVID levels[10] Business Segment Insights Management provided specific insights into the performance of each business segment, highlighting strong recovery in domestic K-12 and complementary education, while acknowledging the continued challenges faced by overseas schools due to the pandemic - 94% of 2021 graduating class students from international schools in China received offers from global top 50 institutions[10] - Complementary business revenue grew by 78.5% YoY to RMB130.2 million in Q3, primarily due to moderate recovery of camps and domestic tour business and after-school all-round education services[10] - Overseas related complementary business and overseas school business continued to be impacted by the pandemic and travel restrictions, leading to slower recovery; the company integrated and rebranded its overseas business as CATS Global Schools, serving 3,500 full-time students and 14,500 English language training students across 16 locations[10][11] Future Outlook and Strategy Bright Scholar remains confident in its ability to drive continued recovery and growth, focusing on strategic initiatives such as improving domestic K-12 efficiency, rebuilding overseas revenue, and expanding complementary services, while navigating economic, political, regulatory, and global health risks - Company is confident in continued recovery with multiple engines of growth as the pandemic recedes[12] - Strategic initiatives include improving utilization and efficiency of domestic K-12, rebuilding overseas business revenue post-COVID, and expanding complementary service offerings[12] - These initiatives aim to bolster brand awareness, build an effective global organization, expand emblematic offerings, enrich learning experience, and generate new business growth mid to long term[12] Dividend Declaration The Board of Directors declared a cash dividend of US$0.12 per ADS, reflecting confidence in the company's financial future and commitment to delivering value to stakeholders - Board of Directors declared a cash dividend of US$0.12 per ADS to shareholders[12] Unaudited Financial Results - Third Fiscal Quarter This section provides a detailed breakdown of Bright Scholar's unaudited financial results for the third fiscal quarter, including revenue, costs, profits, and earnings per share Revenue Analysis Total revenue for the third fiscal quarter increased significantly by 42.5% year-over-year, primarily driven by a strong recovery in domestic businesses, particularly kindergartens Q3 FY2021 Revenue by Segment (RMB million) | Segment | Q3 FY2021 Revenue (RMB million) | % of Total Revenue | Q3 FY2020 Revenue (RMB million) | % of Total Revenue | YoY % Change | | :---------------------- | :------------------------------ | :----------------- | :------------------------------ | :----------------- | :----------- | | Domestic K-12 Schools | 750.0 | 71.2% | 434.8 | 58.9% | 72.5% | | International Schools | 300.2 | 28.5% | 242.9 | 32.9% | 23.6% | | Bilingual Schools | 260.2 | 24.7% | 185.5 | 25.1% | 40.3% | | Kindergartens | 189.6 | 18.0% | 6.4 | 0.9% | 2,875.4% | | Overseas Schools | 142.3 | 13.4% | 210.4 | 28.5% | (32.4)% | | Education Technology | 31.3 | 3.0% | 21.3 | 2.9% | 47.1% | | Complementary Education | 130.2 | 12.4% | 72.9 | 9.7% | 78.5% | | Total | 1,053.8 | 100.0% | 739.4 | 100.0% | 42.5% | Cost of Revenue Cost of revenue increased by 42.1% year-over-year, largely in line with the revenue growth - Cost of revenue for Q3 FY2021 was RMB635.6 million, a 42.1% increase from RMB447.4 million in Q3 FY2020[14] Gross Profit and Margin Gross profit saw a substantial increase of 43.2% year-over-year, with a slight improvement in gross margin; adjusted gross profit also increased, though adjusted gross margin slightly decreased Q3 FY2021 Gross Profit by Segment (RMB million) | Segment | Q3 FY2021 Gross Profit (RMB million) | Margin % | Q3 FY2020 Gross Profit (RMB million) | Margin % | YoY % Change | | :---------------------- | :----------------------------------- | :------- | :----------------------------------- | :------- | :----------- | | Domestic K-12 Schools | 358.3 | 47.8% | 187.4 | 43.1% | 91.3% | | International Schools | 149.3 | 49.7% | 127.3 | 52.4% | 17.3% | | Bilingual Schools | 123.5 | 47.5% | 94.9 | 51.1% | 30.2% | | Kindergartens | 85.5 | 45.1% | (34.8) | (547.2)% | (345.1)% | | Overseas Schools | 8.9 | 6.3% | 62.8 | 29.9% | (85.8)% | | Education Technology | 15.5 | 49.6% | 13.8 | 65.0% | 12.3% | | Complementary Education | 35.5 | 27.2% | 28.0 | 38.4% | 26.5% | | Total | 418.2 | 39.7%| 292.0 | 39.5%| 43.2% | - Adjusted gross profit for Q3 FY2021 was RMB426.0 million, a 40.7% increase YoY; adjusted gross margin was 40.4%, down from 41.0% YoY[16] Selling, General and Administrative Expenses Total SG&A expenses increased by 28.8% year-over-year, while adjusted SG&A expenses increased by 7.5%, indicating some efficiency gains when excluding share-based compensation Q3 FY2021 SG&A Expenses by Segment (RMB million) | Segment | Q3 FY2021 SG&A (RMB million) | % of Total Revenue | Q3 FY2020 SG&A (RMB million) | % of Total Revenue | YoY % Change | | :---------------------- | :--------------------------- | :----------------- | :--------------------------- | :----------------- | :----------- | | Domestic K-12 Schools | 82.9 | 7.9% | 70.3 | 9.6% | 17.9% | | Overseas Schools | 60.9 | 5.8% | 60.7 | 8.2% | 0.3% | | Education Technology | 10.9 | 1.0% | 5.8 | 0.8% | 87.4% | | Complementary Education | 28.2 | 2.7% | 22.7 | 3.0% | 24.7% | | Unallocated Corporate Expenses | 31.2 | 3.0% | 6.8 | 0.9% | 355.0% | | Total | 214.1 | 20.4% | 166.3 | 22.5% | 28.8% | - Adjusted SG&A expenses for Q3 FY2021 were RMB213.5 million, a 7.5% increase from RMB198.6 million YoY[19] Operating Income and Margin Operating income surged by 56.2% year-over-year, with operating margin improving to 20.2%; adjusted operating income also saw a substantial increase of 92.8%, reflecting strong operational performance Q3 FY2021 Operating Income by Segment (RMB million) | Segment | Q3 FY2021 Operating Income (RMB million) | Margin % | Q3 FY2020 Operating Income (RMB million) | Margin % | YoY % Change | | :---------------------- | :--------------------------------------- | :------- | :--------------------------------------- | :------- | :----------- | | Domestic K-12 Schools | 277.4 | 37.0% | 117.5 | 27.0% | 136.1% |\ | Overseas Schools | (47.5) | (33.4)% | 10.6 | 5.1% | (546.3)% | | Education Technology | 4.8 | 15.4% | 8.0 | 37.6% | (39.9)% | | Complementary Education | 8.6 | 6.6% | 5.8 | 8.0% | 47.6% | | Unallocated Corporate Expenses | (30.6) | - | (5.7) | - | 431.0% | | Total | 212.7 | 20.2%| 136.2 | 18.4%| 56.2% | - Adjusted operating income for Q3 FY2021 was RMB221.2 million, a 92.8% increase from RMB114.7 million YoY; adjusted operating margin increased to 21.0% from 15.5% YoY[21] Net Income and EPS Net income and adjusted net income both experienced significant year-over-year growth, leading to substantial increases in basic and diluted earnings per share - Net income for Q3 FY2021 was RMB163.9 million, a 141.0% increase from RMB68.0 million YoY[22] - Adjusted net income for Q3 FY2021 was RMB170.6 million, a 285.5% increase from RMB44.3 million YoY[22] Q3 FY2021 Earnings Per Share | Metric | Q3 FY2021 | Q3 FY2020 | YoY % Change | | :-------------------------------- | :-------- | :-------- | :----------- | | Basic and Diluted EPS | 1.43 | 0.64 | 123.4% | | Adjusted Basic and Diluted EPS | 1.49 | 0.44 | 238.6% | Adjusted EBITDA Adjusted EBITDA for the third fiscal quarter showed a strong increase of 94.1% year-over-year, reflecting improved operational profitability before non-cash and non-operating items - Adjusted EBITDA for Q3 FY2021 was RMB319.3 million, a 94.1% increase from RMB164.5 million YoY[24] Unaudited Financial Results - Nine Months Ended This section presents a comprehensive analysis of Bright Scholar's unaudited financial results for the nine months ended May 31, 2021, covering key income statement metrics Revenue Analysis Total revenue for the nine months ended May 31, 2021, increased by 7.4% year-over-year, primarily driven by growth in domestic K-12 schools and education technology, partially offset by a decline in overseas schools 9M FY2021 Revenue by Segment (RMB million) | Segment | 9M FY2021 Revenue (RMB million) | % of Total Revenue | 9M FY2020 Revenue (RMB million) | % of Total Revenue | YoY % Change | | :---------------------- | :------------------------------ | :----------------- | :------------------------------ | :----------------- | :----------- | | Domestic K-12 Schools | 1,993.5 | 68.4% | 1,552.1 | 57.1% | 28.4% | | International Schools | 802.2 | 27.5% | 695.5 | 25.6% | 15.4% | | Bilingual Schools | 706.0 | 24.2% | 573.2 | 21.1% | 23.2% | | Kindergartens | 485.3 | 16.7% | 283.4 | 10.4% | 71.3% | | Overseas Schools | 427.1 | 14.7% | 766.8 | 28.2% | (44.3)% | | Education Technology | 106.1 | 3.6% | 71.7 | 2.6% | 47.9% | | Complementary Education | 387.7 | 13.3% | 323.8 | 12.1% | 19.7% | | Total | 2,914.4 | 100.0% | 2,714.4 | 100.0% | 7.4% | Cost of Revenue Cost of revenue for the nine-month period increased by 15.1% year-over-year, outpacing revenue growth and contributing to a decline in gross profit - Cost of revenue for the nine-month period was RMB1,889.3 million, a 15.1% increase from RMB1,642.1 million in the prior year[26] Gross Profit and Margin Gross profit for the nine-month period decreased by 4.4% year-over-year, with gross margin declining to 35.2%, primarily due to the significant impact on overseas schools 9M FY2021 Gross Profit by Segment (RMB million) | Segment | 9M FY2021 Gross Profit (RMB million) | Margin % | 9M FY2020 Gross Profit (RMB million) | Margin % | YoY % Change | | :---------------------- | :----------------------------------- | :------- | :----------------------------------- | :------- | :----------- | | Domestic K-12 Schools | 833.9 | 41.8% | 657.3 | 42.3% | 26.9% | | Overseas Schools | 32.6 | 7.6% | 281.2 | 36.7% | (88.4)% | | Education Technology | 53.9 | 50.8% | 48.9 | 68.1% | 10.3% | | Complementary Education | 104.7 | 27.0% | 84.9 | 26.2% | 23.3% | | Total | 1,025.1 | 35.2%| 1,072.3 | 39.5%| (4.4)% | - Adjusted gross profit for the nine-month period was RMB1,047.5 million, a 5.2% decrease YoY; adjusted gross margin was 35.9%, down from 40.7% YoY[28] Selling, General and Administrative Expenses Total SG&A expenses increased by 6.3% year-over-year for the nine-month period, while adjusted SG&A expenses increased by 3.9%, reflecting controlled spending despite business expansion 9M FY2021 SG&A Expenses by Segment (RMB million) | Segment | 9M FY2021 SG&A (RMB million) | % of Total Revenue | 9M FY2020 SG&A (RMB million) | % of Total Revenue | YoY % Change | | :---------------------- | :--------------------------- | :----------------- | :--------------------------- | :----------------- | :----------- | | Domestic K-12 Schools | 261.7 | 8.9% | 213.2 | 7.8% | 22.8% | | Overseas Schools | 169.7 | 5.8% | 216.8 | 8.0% | (21.7)% | | Education Technology | 38.0 | 1.3% | 24.7 | 0.9% | 53.9% | | Complementary Education | 76.2 | 2.6% | 71.7 | 2.7% | 6.3% | | Unallocated Corporate Expenses | 101.5 | 3.5% | 82.1 | 3.0% | 23.5% | | Total | 647.1 | 22.1% | 608.5 | 22.4% | 6.3% | - Adjusted SG&A expenses for the nine-month period were RMB645.1 million, a 3.9% increase from RMB620.6 million YoY[31] Operating Income and Margin Operating income for the nine-month period decreased by 16.4% year-over-year, with operating margin declining to 13.8%, primarily due to the challenges in the overseas schools segment 9M FY2021 Operating Income by Segment (RMB million) | Segment | 9M FY2021 Operating Income (RMB million) | Margin % | 9M FY2020 Operating Income (RMB million) | Margin % | YoY % Change | | :---------------------- | :--------------------------------------- | :------- | :--------------------------------------- | :------- | :----------- | | Domestic K-12 Schools | 576.4 | 28.9% | 446.5 | 28.8% | 29.1% | | Overseas Schools | (129.5) | (30.3)% | 72.9 | 9.5% | (277.6)% | | Education Technology | 16.6 | 15.7% | 24.7 | 34.5% | (32.9)% | | Complementary Education | 37.1 | 9.6% | 14.8 | 4.6% | 151.8% | | Unallocated Corporate Expenses | (99.8) | - | (79.3) | - | 25.7% | | Total | 400.8 | 13.8%| 479.6 | 17.7%| (16.4)% | - Adjusted operating income for the nine-month period was RMB425.3 million, a 15.0% decrease from RMB500.5 million YoY; adjusted operating margin was 14.6%, down from 18.4% YoY[34] Net Income and EPS Net income for the nine-month period remained relatively stable year-over-year, while adjusted net income saw a slight increase, leading to minor changes in basic and diluted earnings per share - Net income for the nine-month period was RMB312.4 million, compared to RMB312.8 million YoY, a (0.1)% change[34] - Adjusted net income for the nine-month period was RMB331.8 million, a 1.6% increase from RMB326.7 million YoY[34] 9M FY2021 Earnings Per Share | Metric | 9M FY2021 | 9M FY2020 | YoY % Change | | :-------------------------------- | :-------- | :-------- | :----------- | | Basic and Diluted EPS | 2.61 | 2.62 | (0.4)% | | Adjusted Basic and Diluted EPS | 2.78 | 2.73 | 1.8% | Adjusted EBITDA Adjusted EBITDA for the nine-month period increased by 2.8% year-over-year, indicating a modest improvement in core operational cash flow - Adjusted EBITDA for the nine-month period was RMB688.2 million, a 2.8% increase from RMB669.4 million YoY[36] Liquidity and Capital Resources As of May 31, 2021, Bright Scholar maintained a solid liquidity position with significant cash and short-term investments, despite a decrease in cash and cash equivalents from the previous quarter Liquidity Position (RMB million) | Metric | As of May 31, 2021 (RMB million) | As of Feb 28, 2021 (RMB million) | | :-------------------------- | :------------------------------- | :------------------------------- | | Cash and cash equivalents | 661.199 | 2,098.4 | | Restricted cash | 1,005.491 | - | | Short-term investments | 2,507.2 | - | | Total Cash, Restricted Cash & Short-term Investments | 4,173.89 | 2,098.4 | - Capital expenditure for the nine months ended May 31, 2021, was approximately RMB110.4 million, up 2.9% YoY[37] Fiscal Year 2021 Guidance Bright Scholar reaffirms its guidance for fiscal year 2021, expecting revenue growth and an increase in average student enrollment in its domestic and overseas schools - Company reaffirms FY2021 revenue guidance in the range of RMB3.59 billion to RMB3.69 billion, representing 7% to 10% YoY growth[38] - Average student enrollment in domestic and overseas schools is expected to be between 56,000 and 57,000, representing an 8% to 10% YoY increase[38] Additional Information This section includes supplementary details such as conference call information, convenience translation notes, non-GAAP financial measure definitions, company overview, and a safe harbor statement Conference Call Details Details for the conference call to discuss the quarterly results and business activities, scheduled for July 22, 2021, are provided - A conference call was scheduled for 8:00 am US Eastern Time (8:00 pm Beijing/Hong Kong Time) on July 22, 2021, to discuss quarterly results[41] Convenience Translation The report clarifies that financial figures are reported in Renminbi (RMB), with U.S. dollar translations provided for convenience using a specific exchange rate as of May 28, 2021 - Reporting currency is Renminbi (RMB); U.S. dollar translations are for convenience, using an exchange rate of US$1.00 = RMB6.3674 as of May 28, 2021[42] Non-GAAP Financial Measures This section defines and explains the rationale behind the use of non-GAAP financial measures such as adjusted EBITDA, adjusted net income, and adjusted gross profit, emphasizing their role in evaluating operating performance and business plans - Non-GAAP measures (adjusted EBITDA, net income, gross profit, SG&A, operating income, EPS) are used by management to evaluate operating performance and formulate business plans[44][46] - Exclusion of amortization of intangible assets allows for greater comparability of operating results over time, as these assets do not have a significant connection to business growth[45] - Non-GAAP measures have limitations as analytical tools, as they do not reflect all income and expense items and may differ from those used by other companies[47] About Bright Scholar Education Holdings Limited Bright Scholar is a global premier education service company offering international and Chinese government-mandated curricula across 107 schools in China and eight overseas schools as of May 31, 2021 - Bright Scholar is a global premier education service company providing international education and Chinese government-mandated curriculum[49] - As of May 31, 2021, the company operated 107 schools across twelve provinces in China and eight schools overseas, covering K-12 academic needs[49] Safe Harbor Statement This statement advises that the announcement contains forward-looking statements subject to known and unknown risks and uncertainties, and the company does not undertake to update them - The announcement contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[50] IR Contact Contact information for investor relations and media inquiries is provided - IR Contact: GCM Strategic Communications, Email: BEDU.IR@gcm.international[51] - Media Contact: Email: media@brightscholar.com, Phone: +86-757-6683-2507[51] Financial Statements This section contains the unaudited condensed consolidated balance sheets, statements of operations, statements of cash flows, and reconciliations of GAAP and non-GAAP results Unaudited Condensed Consolidated Balance Sheets The balance sheets present the company's financial position as of August 31, 2020, and May 31, 2021, showing assets, liabilities, and equity Condensed Consolidated Balance Sheets (RMB in thousands) | Metric (RMB in thousands) | As of Aug 31, 2020 | As of May 31, 2021 | | :------------------------ | :----------------- | :----------------- | | Total Current Assets | 4,700,630 | 4,394,448 | | Total Non-Current Assets | 6,122,679 | 6,190,688 | | TOTAL ASSETS | 10,823,309 | 10,585,136 | | Total Current Liabilities | 3,695,043 | 3,196,330 | | Total Non-Current Liabilities | 4,003,885 | 3,951,920 | | TOTAL LIABILITIES | 7,698,928 | 7,148,250 | | Total Equity | 3,124,381 | 3,436,886 | Unaudited Condensed Consolidated Statements of Operations The statements of operations detail the company's revenues, expenses, and net income for the third fiscal quarter and nine months ended May 31, 2021 Condensed Consolidated Statements of Operations (RMB in thousands) | Metric (RMB in thousands) | Q3 FY2020 | Q3 FY2021 | 9M FY2020 | 9M FY2021 | | :------------------------ | :-------- | :-------- | :-------- | :-------- | | Revenue | 739,390 | 1,053,789 | 2,714,384 | 2,914,362 | | Cost of revenue | (447,427) | (635,624) | (1,642,122) | (1,889,267) | | Gross profit | 291,963 | 418,165 | 1,072,262 | 1,025,095 | | Selling, general and administrative expenses | (166,304) | (214,117) | (608,537) | (647,116) | | Operating income | 136,156 | 212,677 | 479,608 | 400,819 | | Net income | 68,006 | 163,904 | 312,778 | 312,389 | | Net income attributable to ordinary shareholders | 76,797 | 170,352 | 314,843 | 311,946 | | Basic and Diluted EPS | 0.64 | 1.43 | 2.62 | 2.61 | Unaudited Condensed Consolidated Statements of Cash Flows The cash flow statements provide an overview of cash generated from or used in operating, investing, and financing activities for the third fiscal quarter and nine months ended May 31, 2021 Condensed Consolidated Statements of Cash Flows (RMB in thousands) | Metric (RMB in thousands) | Q3 FY2020 | Q3 FY2021 | 9M FY2020 | 9M FY2021 | | :------------------------ | :-------- | :-------- | :-------- | :-------- | | Net cash used in operating activities | (211,310) | (200,367) | (111,576) | (143,962) | | Net cash used in investing activities | (214,278) | (307,578) | (1,756,712) | (2,520,180) | | Net cash generated from financing activities | 51,901 | 118,089 | 705,541 | 22,168 |\ | Net change in cash and cash equivalents, and restricted cash | (341,464) | (430,349) | (1,173,040) | (2,755,847) | | Cash and cash equivalents, and restricted cash at end of the period | 2,091,974 | 1,668,090 | 2,091,974 | 1,668,090 | Reconciliations of GAAP and Non-GAAP Results This section provides detailed reconciliations between GAAP and non-GAAP financial measures, including gross profit, operating income, net income, and EBITDA, for both the third fiscal quarter and the nine-month period Reconciliations of GAAP and Non-GAAP Results (RMB in thousands) | Metric (RMB in thousands) | Q3 FY2020 | Q3 FY2021 | 9M FY2020 | 9M FY2021 | | :------------------------ | :-------- | :-------- | :-------- | :-------- | | Gross profit | 291,963 | 418,165 | 1,072,262 | 1,025,095 | | Add: Amortization of intangible assets | 10,896 | 7,834 | 32,891 | 22,438 | | Adjusted gross profit | 302,859 | 425,999 | 1,105,153 | 1,047,533 | | Operating income | 136,156 | 212,677 | 479,608 | 400,819 | | Add: Share-based compensation expense | (32,336) | 662 | (12,037) | 2,032 | | Add: Amortization of intangible assets | 10,896 | 7,834 | 32,891 | 22,438 | | Adjusted operating income | 114,716 | 221,173 | 500,462 | 425,289 | | Net income | 68,006 | 163,904 | 312,778 | 312,389 | | Add: Share-based compensation expense | (32,336) | 662 | (12,037) | 2,032 | | Add: Amortization of intangible assets | 10,896 | 7,834 | 32,891 | 22,438 | | Add: Tax effect of amortization of intangible assets | (2,305) | (1,754) | (6,948) | (5,059) | | Adjusted net income | 44,261 | 170,646 | 326,684 | 331,800 | | Adjusted EBITDA | 164,492 | 319,250 | 669,442 | 688,206 | | Adjusted selling, general and administrative expenses | 198,640 | 213,455 | 620,574 | 645,084 | | Adjusted net earnings per share attributable to ordinary shareholders —Basic | 0.44 | 1.49 | 2.73 | 2.78 |