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Daqo New Energy Announces Unaudited Third Quarter 2020 Results

PR Newswire


SHANGHAI
, Nov. 23, 2020 /PRNewswire/ — Daqo New Energy Corp. (NYSE: DQ) (“Daqo New Energy”, the “Company” or “we”), a leading manufacturer of high-purity polysilicon for the global solar PV industry, today announced its unaudited financial results for the third quarter of 2020.

Third Quarter 2020 Financial and Operating Highlights

  • Polysilicon production volume was 18,406 MT in Q3 2020, compared to 18,097 MT in Q2 2020
  • Polysilicon sales volume was 13,643 MT in Q3 2020, compared to 18,881 MT in Q2 2020
  • Polysilicon average total production cost(1) was $5.82/kg in Q3 2020, compared to $5.79/kg in Q2 2020
  • Polysilicon average cash cost(1) was $4.88/kg in Q3 2020, compared to $4.87/kg in Q2 2020
  • Polysilicon average selling price (ASP) was $9.13/kg in Q3 2020, compared to $7.04/kg in Q2 2020
  • Revenue was $125.5 million in Q3 2020, compared to $133.5 million in Q2 2020
  • Gross profit was $45.3 million in Q3 2020, compared to $22.7 million in Q2 2020. Gross margin was 36.0% in Q3 2020, compared to 17.0% in Q2 2020
  • Net income attributable to Daqo New Energy Corp. shareholders was $20.8 million in Q3 2020, compared to $2.4 million in Q2 2020
  • Earnings per basic American Depositary Share (ADS)(3) was $0.29 in Q3 2020, compared to $0.03 in Q2 2020
  • EBITDA (non-GAAP)(2) was $51.6 million in Q3 2020, compared to $26.8 million in Q2 2020. EBITDA margin (non-GAAP)(2) was 41.1% in Q3 2020, compared to 20.0% in Q2 2020
  • Adjusted net income (non-GAAP)(2) attributable to Daqo New Energy Corp. shareholders was $25.2 million in Q3 2020, compared to $6.9 million in Q2 2020
  • Adjusted earnings per basic ADS(3) (non-GAAP)(2) was $0.35 in Q3 2020, compared to $0.10 in Q2 2020


Three months ended

US$ millions

except as indicated otherwise


Sep 30,
2020


Jun 30,
2020


Sep 30,
2019

Revenues

125.5

133.5

83.9

Gross profit

45.3

22.7

18.1

Gross margin

36.0%

17.0%

21.5%

Income from operations

33.3

10.8

8.8

Net income attributable to Daqo New Energy Corp.
shareholders


20.8

2.4

5.0

Earnings per basic ADS ($ per ADS)(3)


0.29

0.03

0.07

Adjusted net income (non-GAAP)(2) attributable to
Daqo New Energy Corp. shareholders


25.2

6.9

9.5

Adjusted earnings per basic ADS (non-GAAP)(2)
($ per ADS) (3)


0.35

0.10

0.14

EBITDA (non-GAAP)(2) 

51.6

26.8

19.7

EBITDA margin (non-GAAP)(2)

41.1%

20.0%

23.5%

Polysilicon sales volume (MT) 

13,643

18,881

9,238

Polysilicon average total production cost ($/kg)(1)

5.82

5.79

6.97

Polysilicon average cash cost (excl. dep’n) ($/kg)(1)

4.88

4.87

5.85

 

Notes:

(1)  Production cost and cash cost only refer to production in our Xinjiang polysilicon facilities. Production cost is calculated by the inventoriable costs relating to production of polysilicon in Xinjiang divided by the production volume in the period indicated. Cash cost is calculated by the inventoriable costs relating to production of polysilicon excluding depreciation expense, divided by the production volume in the period indicated.

(2)  Daqo New Energy provides EBITDA, EBITDA margins, adjusted net income attributable to Daqo New Energy Corp. shareholders and adjusted earnings per ADS on a non-GAAP basis to provide supplemental information regarding its financial performance. For more information on these non-GAAP financial measures, please see the section captioned “Use of Non-GAAP Financial Measures” and the tables captioned “Reconciliation of non-GAAP financial measures to comparable US GAAP measures” set forth at the end of this press release.


(3)  ADS means American Depositary Share. On November 17, 2020, the Company effected a change of the ratio of its ADSs to ordinary shares from one (1) ADS representing twenty-five (25) ordinary shares to one (1) ADS representing five (5) ordinary shares. The earnings per ADS and number of ADS information has been retrospectively adjusted to reflect the change for all periods presented.

Management Remarks

Mr.Longgen Zhang, CEO of Daqo New Energy, commented, “During the third quarter of 2020, we successfully completed the annual maintenance and several technology improvement projects at our polysilicon manufacturing facilities. We resumed full production in August with excellent operational results. For the third quarter, we produced 18,406 MT of polysilicon among which approximately 97.7% was mono-grade. We continued our relentless drive to lower production cost and reached a record-low cost in Renminbi terms. During the third quarter, we completed our digital transformation project, with a fully digitized manufacturing system that allows us to continuously improve our process control and analyze our manufacturing data so as to achieve better results in system stability, manufacturing efficiencies, production cost and product quality in future. As our facilities are now running with increased efficiency, we expect to achieve a higher production volume of approximately 19,500-20,500 MT in the fourth quarter, with a potential cost reduction by approximately 3% as compared to the third quarter.”

“During the quarter, polysilicon ASPs increased rapidly due to the quick recovery in solar PV demand from both domestic and foreign markets. Our ASP was $9.13/kg, a significant improvement from approximately $7.04/kg in the second quarter. With robust market demand for mono-grade polysilicon, we expect our ASP to improve meaningfully in the fourth quarter as compared to the third quarter. In recent weeks, because of strong solar module and installation demand, we began to see solar glass capacity shortage becoming a bottleneck for the solar industry and limiting module production. We expect the shortage of solar glass to ease over the coming months as additional solar glass capacity comes online. The temporary constraint on the industry’s utilization rate will be removed which eventually will increase demand for polysilicon.”

“Solar is now becoming one of the most competitive sources of energy, even compared to traditional power generation methods. Globally, we are seeing strong momentum around the world in adopting and implementing renewable energy policies that would strongly benefit the solar end market. Last month, Mr. Xi Jinping, President of China, announced China’s initiative to scale up the national contributions to peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060. We believe favorable policies benefiting solar will be implemented during the upcoming 14th five-year-plan, driving a substantial increase in solar installations in China. In addition, a growing number of countries and regions, including the most important economies in the world, have announced goals and plans to reduce carbon emission and widely adopt renewable energies. In particular, we are starting to see the trend of utility-scale solar generation combined with power storage providing base-load energy and replacing and displacing coal power plants. We believe this is the beginning of a long term trend of solar displacing traditional fossil-fuel based generation driven by both economics and renewable energy mandates. We are strongly committed to contributing our efforts as a raw material provider for mainstream solar PV modules and are fully confident we will benefit from this fast-growing market.”


Outlook and guidance

The Company expects to produce approximately 19,500 to 20,500 MT of polysilicon and sell approximately 20,500 MT to 21,500 MT of polysilicon to external customers during the third quarter of 2020. For the full year of 2020, the Company expects to produce approximately 75,800 MT to 76,800 MT of polysilicon, inclusive of the impact of the Company’s annual facility maintenance.

This outlook reflects Daqo New Energy’s current and preliminary view as of the date of this press release and may be subject to changes. The Company’s ability to achieve these projections is subject to risks and uncertainties. See “Safe Harbor Statement” at the end of this press release.

Third Quarter 2020 Results


Revenues

Revenues were $125.5 million, compared to $133.5 million in the second quarter of 2020 and $83.9 million in the third quarter of 2019. The sequential decrease in revenues was primarily due to lower polysilicon sales volume despite higher ASP.


Gross profit and margin

Gross profit was $45.3 million, compared to $22.7 million in the second quarter of 2020 and $18.1 million in the third quarter of 2019. Gross margin was 36.0%, compared to 17.0% in the second quarter of 2020 and 21.5% in the third quarter of 2019. The increase in gross margin was primarily due to improvement in production costs and higher ASP.


Selling, general and administrative expenses

Selling, general and administrative expenses were $9.2 million, compared to $10.1 million in the second quarter of 2020 and $8.2 million in the third quarter of 2019. SG&A expenses during the quarter included $4.0 million in non-cash share-based compensation costs related to the Company’s share incentive plan. 


Research and development expenses

Research and development (R&D) expenses were $1.7 million, compared to $2.0 million in the second quarter of 2020 and $1.2 million in the third quarter of 2019. Research and development expenses can vary from period to period and reflect R&D activities that take place during the quarter.


Income from operations and operating margin

As a result of the foregoing, income from operations was $33.3 million, compared to $10.8 million in the second quarter of 2020 and $8.8 million in the third quarter of 2019. Operating margin was 26.6%, compared to 8.1% in the second quarter of 2020 and 10.5% in the third quarter of 2019.


Interest expense

Interest expense was $5.4 million, compared to $6.7 million in the second quarter of 2020 and $2.6 million in the third quarter of 2019.


EBITDA (non-GAAP)

EBITDA (non-GAAP) was $51.6 million, compared to $26.8 million in the second quarter of 2020 and $19.7 million in the third quarter of 2019. EBITDA margin (non-GAAP) was 41.1%, compared to 20.0% in the second quarter of 2020 and 23.5% in the third quarter of 2019.


Net income attributable to Daqo New Energy Corp. shareholders and earnings per ADS

As a result of the aforementioned, net income attributable to Daqo New Energy Corp. shareholders was $20.8 million in the third quarter of 2020, compared to $2.4 million in the second quarter of 2020 and $5.0 million in the third quarter of 2019.

Earnings per basic ADS was $0.29 in the third quarter of 2020, compared to $0.03 in the second quarter of 2020, and $0.07 in the third quarter of 2019.


Financial Condition

As of September 30, 2020, the Company had $109.8 million in cash and cash equivalents and restricted cash, compared to $115.8 million as of June 30, 2020 and $68.2 million as of September 30, 2019. As of September 30, 2020, notes receivable balance was $1.9 million, compared to $8.2 million as of June 30, 2020 and $4.3 million as of September 30, 2019. As of September 30, 2020, total borrowings were $271.0 million, of which $140.0 million were long-term borrowings, compared to total borrowings of $264.8 million, including $116.9 million long-term borrowings, as of June 30, 2020 and total borrowings of $248.8 million, including $163.5 million long-term borrowings, as of September 30, 2019.


Cash Flows

For the nine months ended September 30, 2020, net cash provided by operating activities was $71.1 million, compared to $101.6 million in the same period of 2019.

For the nine months ended September 30, 2020, net cash used in investing activities was $80.3 million, compared to $202.3 million in the same period of 2019. The net cash used in investing activities in 2020 and 2019 was primarily related to the capital expenditures on our Phase 3B and 4A polysilicon projects.

For the nine months ended September 30, 2020, net cash provided by financing activities was $1.1 million, compared to $76.6 million in the same period of 2019.

Use of Non-GAAP Financial Measures

To supplement Daqo New Energy’s consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles (“US GAAP”), the Company uses certain non-GAAP financial measures that are adjusted for certain items from the most directly comparable GAAP measures including earnings before interest, taxes, depreciation and amortization (“EBITDA”) and EBITDA margin; adjusted net income attributable to Daqo New Energy Corp. shareholders and adjusted earnings per basic and diluted ADS. Our management believes that each of these non-GAAP measures is useful to investors, enabling them to better assess changes in key element of the Company’s results of operations across different reporting periods on a consistent basis, independent of certain items as described below. Thus, our management believes that, used in conjunction with US GAAP financial measures, these non-GAAP financial measures provide investors with meaningful supplemental information to assess the Company’s operating results in a manner that is focused on its ongoing, core operating performance. Our management uses these non-GAAP measures internally to assess the business, its financial performance, current and historical results, as well as for strategic decision-making and forecasting future results. Given our management’s use of these non-GAAP measures, the Company believes these measures are important to investors in understanding the Company’s operating results as seen through the eyes of our management. These non-GAAP measures are not prepared in accordance with US GAAP or intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with US GAAP; the non-GAAP measures should be reviewed together with the US GAAP measures, and may be different from non-GAAP measures used by other companies.

The Company uses EBITDA, which represents earnings before interest, taxes, depreciation and amortization, and EBITDA margin, which represents the proportion of EBITDA in revenues. Adjusted net income attributable to Daqo New Energy Corp. shareholders and adjusted earnings per basic and diluted ADS exclude costs related to the non-operational polysilicon assets in Chongqing. Such costs mainly consist of non-cash depreciation costs, as well as utilities and maintenance costs associated with the temporarily idle polysilicon machinery and equipment, and the Company had removed this adjustment from the non-GAAP reconciling item since the fourth quarter of 2018, because as of the end of the third quarter of 2018, all of the polysilicon machinery and equipment had been either relocated to Xinjiang, disposed, or planned to be disposed of in due course. Adjusted net income attributable to Daqo New Energy Corp. shareholders and adjusted earnings per basic and diluted ADS also exclude costs related to share-based compensation. Share-based compensation is a non-cash expense that varies from period to period. As a result, our management excludes this item from our internal operating forecasts and models. Our management believes that this adjustment for share-based compensation provides investors with a basis to measure the Company’s core performance, including compared with the performance of other companies, without the period-to-period variability created by share-based compensation.

A reconciliation of non-GAAP financial measures to comparable US GAAP measures is presented later in this document.

Conference Call

The Company has scheduled a conference call to discuss the results at 8:00 AM U.S. Eastern Time on November 23, 2020 (9:00 PM Beijing / Hong Kong time on the same day).

The dial-in details for the earnings conference call are as follows:

Participant dial in (U.S. toll free):

+1-888-346-8982

Participant international dial in:

+1-412-902-4272

China mainland toll free:

4001-201203

Hong Kong toll free:

800-905945

Hong Kong local toll:

+852-301-84992

You can also listen to the conference call via Webcast through the URL:
https://services.choruscall.com/links/dq201123.html

A replay of the call will be available 1 hour after the end of the conference through November 30, 2020.

The conference call replay numbers are as follows:

US Toll Free:

+1-877-344-7529

International Toll:

+1-412-317-0088

Canada Toll Free:

855-669-9568

Replay access code:

10149965

To access the replay using an international dial-in number, please select the link below.

https://services.choruscall.com/ccforms/replay.html

Participants will be required to state their name and company upon entering the call.

About Daqo New Energy Corp.

Daqo New Energy Corp. (NYSE: DQ) (“Daqo” or the “Company”) is a leading manufacturer of high-purity polysilicon for the global solar PV industry. Founded in 2008, the Company is one of the world’s lowest cost producers of high-purity polysilicon. Daqo’s highly-efficient and technically advanced manufacturing facility currently has a nameplate annual polysilicon production capacity of 70,000 metric tons.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the outlook for the fourth quarter and the full year of 2020 and quotations from management in this announcement, as well as Daqo New Energy’s strategic and operational plans, contain forward-looking statements. The Company may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the demand for photovoltaic products and the development of photovoltaic technologies; global supply and demand for polysilicon; alternative technologies in cell manufacturing; the Company’s ability to significantly expand its polysilicon production capacity and output; the reduction in or elimination of government subsidies and economic incentives for solar energy applications; the Company’s ability to lower its production costs; changes in the political and regulatory environment; and the duration of COVID-19 outbreaks in China and many other countries and the impact of the outbreaks and the quarantines and travel restrictions instituted by relevant governments on economic and market conditions, including potentially weaker global demand for solar PV installations that could adversely affect the Company’s business and financial performance. Further information regarding these and other risks is included in the reports or documents the Company has filed with, or furnished to, the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date hereof, and the Company undertakes no duty to update such information or any forward-looking statement, except as required under applicable law.

 

 

 


Daqo New Energy Corp.


Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income

(US dollars in thousands, except ADS and per ADS data)


Three months ended


Nine months ended


Sep 30,
2020


Jun 30,
2020


Sep 30,
2019


Sep 30,
2020


Sep 30,
2019

Revenues

$125,529

$133,518

$83,909

$427,878

$231,072

Cost of revenues

(80,276)

(110,820)

(65,834)

(303,373)

(186,087)

Gross profit

45,253

22,698

18,075

124,505

44,985

Operating expenses

Selling, general and administrative
  expenses

 

(9,223)

 

(10,120)

 

(8,178)

 

(28,235)

 

(23,920)

Research and development expenses

(1,746)

(1,958)

(1,228)

(5,358)

(4,052)

Other operating (expense) / income

(954)

133

145

(1,036)

579

Total operating expenses

(11,923)

(11,945)

(9,261)

(34,629)

(27,393)

Income from operations

33,330

10,753

8,814

89,876

17,592

Interest expense

(5,438)

(6,653)

(2,551)

(18,378)

(6,461)

Interest income

200

368

193

719

775

Foreign exchange loss

–

–

–

–

(189)

Income before income taxes

28,092

4,468

6,456

72,217

11,717

Income tax expense

(6,193)

(2,037)

(1,561)

(14,574)

(3,652)

Net income from continuing operations

21,899

2,431

4,895

57,643

8,065

Income / (loss) from discontinued
operations, net of tax

 

–

 

(55)

 

88

 

(141)

 

1,370

Net income

21,899

2,376

4,983

57,502

9,435

Net income (loss) attributable to non-
  controlling interest

 


1,142

 

(7)

 

–

 


1,132

 

–

Net income attributable to Daqo New
  Energy Corp. shareholders


$20,757

$2,383

$4,983


$56,370

$9,435

Net income

21,899

2,376

4,983

57,502

9,435

Other comprehensive income / (loss):

Foreign currency translation adjustments

25,937

1,213

(21,337)

17,331

(20,594)

Total other comprehensive income / (loss)

25,937

1,213

(21,337)

17,331

(20,594)

Comprehensive income / (loss)

47,836

3,589

(16,354)

74,833

(11,159)

Comprehensive income / (loss)
  attributable to non-controlling interest


1,163

(6)

–

 


1,148

 

–

Comprehensive income / (loss)
  attributable to Daqo New Energy Corp.
  shareholders

 

 


$46,673

 

 

$3,595

 

 

$(16,354)

 

 


$73,685

 

 

$(11,159)

 Earnings per ADS* (GAAP)

– continuing operations


0.29

0.03

0.07


0.80

0.12

– discontinued operations

0.00

0.00

0.00

0.00

0.02

 Basic


0.29

0.03

0.07


0.80

0.14

– continuing operations


0.27

0.03

0.06


0.74

0.12

– discontinued operations

0.00

0.00

0.01

0.00

0.02

 Diluted


0.27

0.03

0.07


0.74

0.14

 

Weighted average ADS outstanding*

Basic

71,281,184

70,546,207

68,172,007

70,570,987

67,483,068

Diluted

76,626,371

76,270,603

75,755,443

76,398,480

69,631,876

*ADS means American Depositary Share. On November 17, 2020, the Company effected a change of the ratio of its ADSs to ordinary
shares from one (1) ADS representing twenty-five (25) ordinary shares to one (1) ADS representing five (5) ordinary shares. The earning
per ADS and number of ADS information has been retrospectively adjusted to reflect the change for all periods presented.

 

 

 


Daqo New Energy Corp.


Unaudited Consolidated Balance Sheets

(US dollars in thousands)

Sep 30, 2020

Jun 30, 2020

Sep 30, 2019

ASSETS:

Current Assets:

Cash and cash equivalents

$70,150

$88,215

$26,985

Restricted cash

39,640

27,551

41,192

Accounts receivable, net

42

65

129

Notes receivable

1,908

8,163

4,294

Prepaid expenses and other current assets

12,972

13,476

24,176

Advances to suppliers

1,229

6,712

7,823

Inventories, net

53,640

26,824

21,023

Amount due from related parties

213

12

3,492

Current assets associated with discontinued operation

–

667

414

Total current assets

179,794

171,685

129,528

Property, plant and equipment, net

987,295

956,675

883,084

Prepaid land use right

29,815

28,826

21,030

Deferred tax assets

1,386

1,332

790

Investment in affiliate

658

633

625

Operating lease Right-of-use assets

137

153

211

Other non-current assets

147

–

–

Non-current asset associated with discontinued operation

–

181

6,804

TOTAL ASSETS

1,199,232

1,159,485

1,042,072

Current liabilities:

Short-term borrowings, including current portion of long-
  term borrowings

 

131,064

 

147,839

 

85,278

Accounts payable

19,739

18,833

20,070

Notes payable

62,128

49,143

62,287

Advances from customers-short term portion

17,544

23,500

21,218

Payables for purchases of property, plant and equipment

76,158

97,239


81,709

Accrued expenses and other current liabilities

16,616

18,262


12,071

Amount due to related parties


4,820

8,169


16,787

Income tax payable

7,314

4,414

3,437

Lease liabilities – short term portion

78

74

81

Current liabilities associated with discontinued operation

–

877


1,087

Total current liabilities


335,461

368,350

304,025

Long-term borrowings

139,967

116,911

163,519

Advance from customers – long term portion

1,266

1,132

9,092

Amount due to related parties – long term portion

10,897

16,247

15,387

Other long-term liabilities

21,157

20,067


20,876

Deferred tax liabilities

5,647

5,459

1,145

Lease liabilities – long term portion

–

–

74

Non-current liabilities associated with discontinued 
operation

–

–


–

TOTAL LIABILITIES


514,395

528,166

514,118

 

EQUITY:

Ordinary shares

36

36

35

Treasury stock

(1,749)

(1,749)

(1,749)

Additional paid-in capital

405,784


400,103

382,660

Accumulated gains

257,292

236,535

180,834

Accumulated other comprehensive loss

(2,622)

(28,538)

(33,826)

Total Daqo New Energy Corp.’s shareholders’ equity

658,741


606,387

527,954

Non-controlling interest


26,096


24,932

–

Total equity


684,837

631,319

527,954

TOTAL LIABILITIES & EQUITY

1,199,232

1,159,485

1,042,072

 

 

 


Daqo New Energy Corp.


Unaudited Consolidated Statements of Cash Flows

(US dollars in thousands)

For the nine months ended Sep 30,

2020

2019


Operating Activities:

Net income

57,502

9,435

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

(141)

1,370

Net income from continuing operations

57,643

8,065

Adjustments to reconcile net income to net cash provided by operating activities

68,248

45,814

Changes in operating assets and liabilities

(54,722)

45,588

Net cash provided by operating activities-continuing operations

71,169

99,467

Net cash (used in) / provided by operation activities-discontinued operations

(50)

2,138

Net cash provided by operating activities

71,119

101,605


Investing activities:

Net cash used in investing activities-continuing operations

(80,147)

(204,067)


Net cash (used in) / provided by investing activities-discontinued operations

(195)

1,791

Net cash used in investing activities

(80,342)

(202,276)


Financing activities:

Net cash provided by financing activities – continuing operations

1,127

87,445

Net cash used in financing activities – discontinued operations

(64)

(10,843)

Net cash provided by financing activities

1,063

76,602


Non-cash transactions

Effect of exchange rate changes

2,656

(2,582)

Net (decrease) / increase in cash, cash equivalents and restricted cash

(5,504)

(26,651)

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

115,294

95,120

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

109,790

68,469

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows.

Sep 30, 2020

Sep 30, 2019

Cash and cash equivalents

70,150

27,277

Restricted cash

39,640

41,192

Total cash, cash equivalents, and restricted cash shown in the

statement of cash flows

109,790

68,469

 

 

 


Daqo New Energy Corp.


Reconciliation of non-GAAP financial measures to comparable US GAAP measures

(US dollars in thousands)


Three months Ended


Nine months Ended


Sep 30,
2020


Jun 30,
2020


Sep 30,
2019


Sep 30,
2020


Sep 30,
2019



Net income

21,899

2,431

4,895

57,643

8,065

Income tax expense

6,193

2,037

1,561


14,574

3,652

Interest expense

5,438

6,653

2,551

18,378

6,461

Interest income

(200)

(368)

(193)

(719)

(775)

Depreciation & Amortization

18,289

16,004

10,878

51,568

32,524


EBITDA (non-GAAP)

51,619

26,757

19,692


141,444

49,927


EBITDA margin (non-GAAP)

41.1%

20.0%

23.5%

33.1%

21.6%

 

 


Three months Ended


Nine months Ended


Sep 30,
2020


Jun 30,
2020


Sep 30,
2019


Sep 30,
2020


Sep 30,
2019


Net income attributable to Daqo New Energy Corp.
  shareholders

 


20,757

 

2,383

 

4,983

 


56,370

 

9,435

Share-based compensation

4,478

4,491

4,476

13,430

13,436


Adjusted net income (non-GAAP) attributable to Daqo New
Energy Corp. shareholders


25,235

6,874

9,459


69,800

22,871


Adjusted earnings per basic ADS* (non-GAAP)


$0.35

$0.10

$0.14


$0.99

$0.34


Adjusted earnings per diluted ADS* (non-GAAP)


$0.33

$0.09

$0.12


$0.91

$0.33

*ADS means American Depositary Share. On November 17, 2020, the Company effected a change of the ratio of its ADSs to ordinary
shares from one (1) ADS representing twenty-five (25) ordinary shares to one (1) ADS representing five (5) ordinary shares. The earning
per ADS and number of ADS information has been retrospectively adjusted to reflect the change for all periods presented.

 

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SOURCE Daqo New Energy Corp.

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Clear Channel Outdoor Holdings, Inc. To Participate In The Wells Fargo TMT Summit

PR Newswire

SAN ANTONIO, Nov. 23, 2020 /PRNewswire/ — Clear Channel Outdoor Holdings, Inc., (NYSE:CCO) announced today that William Eccleshare, CEO of Clear Channel Outdoor Holdings, Inc., Brian Coleman, CFO of Clear Channel Outdoor Holdings, Inc. and Scott Wells, CEO of Clear Channel Outdoor Americas are scheduled to participate in a question and answer session at the Wells Fargo TMT Summit on Wednesday, December 2, 2020, at 10:40 a.m., Eastern Time.  A live audio webcast of the question and answer session will be available on Clear Channel Outdoor Holdings’ investor website at www.investor.clearchannel.com and will be available for replay on the website for 30 days. 

About Clear Channel Outdoor Holdings 

Clear Channel Outdoor Holdings, Inc. (NYSE: CCO) is one of the world’s largest outdoor advertising companies with a diverse portfolio of approximately 500,000 print and digital displays in 31 countries across North America, Europe, Latin America and Asia, reaching millions of people monthly. A growing digital platform includes more than 16,000 digital displays in international markets and more than  2,000 digital displays (excluding airports), including more than 1,400 digital billboards, in the U.S.

Comprised of two business divisions – Clear Channel Outdoor Americas (CCOA), the U.S. and Caribbean business division, and Clear Channel International (CCI), covering markets in Europe, Latin America and Asia – CCO employs approximately 5,100 people globally. More information is available at investor.clearchannel.com, clearchanneloutdoor.com and clearchannelinternational.com.

 

 

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SOURCE Clear Channel Outdoor Holdings, Inc.

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The GEO Group Announces Decision by Federal Bureau of Prisons to Not Rebid Its Contract for Rivers Correctional Facility

The GEO Group Announces Decision by Federal Bureau of Prisons to Not Rebid Its Contract for Rivers Correctional Facility

BOCA RATON, Fla.–(BUSINESS WIRE)–The GEO Group, Inc. (NYSE: GEO) (“GEO”) announced today that the Federal Bureau of Prisons has decided to not rebid the contract for the company-owned, 1,450-bed Rivers Correctional Facility in North Carolina, which is set to expire on March 31, 2021. The contract for the Rivers Correctional Facility generated approximately $43 million in annualized revenues for GEO. GEO expects to market the Rivers Correctional Facility to other federal and state agencies.

George C. Zoley, Chairman and Chief Executive Officer of GEO, said, “We have operated the Rivers Correctional Facility under a public-private partnership with the Federal Bureau of Prisons for 20 years. Over the last two decades, our employees have delivered high quality services, helping Washington D.C. residents at the Rivers Correctional Facility achieve successful rehabilitation and community reentry outcomes. Federal prison populations in the United States have experienced a decline, more recently as a result of the COVID-19 pandemic. We expect to market the Rivers Correctional Facility to other federal and state agencies.”

In an effort to enhance the community support services for Washington D.C. residents housed at the Rivers Correctional Facility, GEO established Reentry Success D.C. in collaboration with the National Federation of Federal Employees (an affiliate of the International Association of Machinists and Aerospace Workers). The program enhances GEO’s pre- and post-release services by connecting returning citizens to gainful employment. Reentry Success D.C. is available to every GEO Continuum of Care participant at the Rivers Correctional Facility, who is returning to Washington D.C. upon release. Additional information on Reentry Success D.C. can be found at www.reentrysuccessdc.com

About The GEO Group

The GEO Group (NYSE: GEO) is a fully integrated equity real estate investment trust specializing in the design, financing, development, and operation of secure facilities, processing centers, and community reentry centers in the United States, Australia, South Africa, and the United Kingdom. GEO is a leading provider of enhanced in-custody rehabilitation, post-release support, electronic monitoring, and community-based programs. GEO’s worldwide operations include the ownership and/or management of 123 facilities totaling approximately 93,000 beds, including projects under development, with a workforce of approximately 23,000 professionals.

This press release contains forward-looking statements regarding future events and the future performance of GEO that involve risks and uncertainties that could materially affect actual results. Factors that could cause actual results to vary from current expectations and forward-looking statements contained in this press release include, but are not limited to: (1) GEO’s ability to successfully market the Rivers Correctional Facility to other federal and state agencies as of March 31, 2021 or as soon as practicable thereafter; (2) GEO’s ability to win management contracts for which it has submitted proposals and to retain existing management contracts; (3) GEO’s ability to declare future quarterly cash dividends and the timing and amount of such future dividends; (4) GEO’s ability to successfully pursue further growth and continue to enhance shareholder value; (5) GEO’s ability to access the capital markets in the future on satisfactory terms or at all; (6) GEO’s ability to control operating costs associated with contract start-ups; (7) GEO’s ability to timely open facilities as planned, profitably manage such facilities and successfully integrate such facilities into GEO’s operations without substantial costs; (8) GEO’s ability to obtain future financing on acceptable terms or at all; (9) GEO’s ability to sustain company-wide occupancy rates at its facilities; and (10) other factors contained in GEO’s Securities and Exchange Commission filings, including its Form 10-K, 10-Q and 8-K reports.

Pablo E. Paez (866) 301 4436

Executive Vice President, Corporate Relations

KEYWORDS: Florida North Carolina United States North America

INDUSTRY KEYWORDS: REIT Other Construction & Property White House/Federal Government Construction & Property Public Policy/Government

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AECOM awarded design contract to modernize U.S. Air Force Academy’s historic Sijan Hall

AECOM awarded design contract to modernize U.S. Air Force Academy’s historic Sijan Hall

LOS ANGELES–(BUSINESS WIRE)–
AECOM (NYSE:ACM), the world’s premier infrastructure consulting firm, today announced that the U.S. Army Corps of Engineers (USACE), Omaha District selected the firm to design the renovation of the U.S. Air Force Academy’s 700,000-square-foot Sijan Hall, which is located just north of Colorado Springs, CO. The dormitory is situated in the campus’s Cadet Area, which is a National Historic Landmark District. This will be the first modernization project at Sijan Hall since it was built in 1968, with the design encompassing residential, academic, courtyard, and recreational spaces.

“AECOM’s strong in-house multi-disciplinary capabilities and track record of technical excellence positioned us as a trusted partner to help modernize the cadet experience,” said Lara Poloni, AECOM’s president. “With more than 20 years of project experience at the U.S. Air Force Academy, we understand that it plays a vital role as both an active military installation and a prestigious institution of higher education. We are proud to support the Academy’s mission to prepare future generations of leaders in the Air Force, Space Force, and beyond.”

The $25-million design contract requires a complex five-phase renovation that will allow Sijan Hall to remain occupied throughout construction. Sijan Hall—the second-largest dormitory in the United States with 2,200 beds—is a cornerstone of cadet living and is grouped into squadrons. AECOM’s design team will reconfigure shared spaces for studying and socializing to foster collaboration and improve cadet wellbeing. The modernization will incorporate energy-efficient materials and systems, smart building technologies, improved daylighting, and updated HVAC systems, including geothermal energy and air conditioning for the first time—all while meeting USACE high-performance and sustainable building requirements.

AECOM’s portfolio of work at the U.S. Air Force Academy includes the ongoing restoration of the iconic Cadet Chapel, the design of the new U.S. Air Force Center for Cyber Innovation (Cyberworx), and the historic Kettle Creek Dam, as well as master planning, facility assessments, building renovations, environmental services, and airfield designs.

About AECOM

AECOM (NYSE: ACM) is the world’s premier infrastructure consulting firm, delivering professional services throughout the project lifecycle – from planning, design and engineering to program and construction management. On projects spanning transportation, buildings, water, energy and the environment, our public- and private-sector clients trust us to solve their most complex challenges. Our teams are driven by a common purpose to deliver a better world through our unrivaled technical expertise and innovation, a culture of equity, diversity and inclusion, and a commitment to environmental, social and governance priorities. AECOM is a Fortune 500 firm and its Professional Services business had revenue of $13.2 billion in fiscal year 2020. See how we deliver what others can only imagine at aecom.com and @AECOM.

Forward-Looking Statements

All statements in this communication other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including any statements of the plans, strategies and objectives for future operations, profitability, strategic value creation, coronavirus impacts, risk profile and investment strategies, and any statements regarding future economic conditions or performance, and the expected financial and operational results of AECOM. Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in our forward-looking statements include, but are not limited to, the following: our business is cyclical and vulnerable to economic downturns and client spending reductions; impacts caused by the coronavirus and the related economic instability and market volatility, including the reaction of governments to the coronavirus, including any prolonged period of travel, commercial or other similar restrictions, the delay in commencement, or temporary or permanent halting of construction, infrastructure or other projects, requirements that we remove our employees or personnel from the field for their protection, and delays or reductions in planned initiatives by our governmental or commercial clients or potential clients; losses under fixed-price contracts; limited control over operations run through our joint venture entities; liability for misconduct by our employees or consultants; failure to comply with laws or regulations applicable to our business; maintaining adequate surety and financial capacity; high leverage and potential inability to service our debt and guarantees; exposure to Brexit; exposure to political and economic risks in different countries; currency exchange rate fluctuations; retaining and recruiting key technical and management personnel; legal claims; inadequate insurance coverage; environmental law compliance and adequate nuclear indemnification; unexpected adjustments and cancellations related to our backlog; partners and third parties who may fail to satisfy their legal obligations; AECOM Capital real estate development projects; managing pension cost; cybersecurity issues, IT outages and data privacy; risks associated with the benefits and costs of the Power transaction and other recent acquisitions and divestitures, including the risk that the expected benefits of such transactions or any contingent purchase price will not be realized within the expected time frame, in full or at all; the risk that costs of restructuring transactions and other costs incurred in connection with recent acquisitions and divestitures will exceed our estimates or otherwise adversely affect our business or operations; as well as other additional risks and factors that could cause actual results to differ materially from our forward-looking statements set forth in our reports filed with the Securities and Exchange Commission. Any forward-looking statements are made as of the date hereof. We do not intend, and undertake no obligation, to update any forward-looking statement.

Investor Contact:

Will Gabrielski

Senior Vice President, Investor Relations

213.593.8208

[email protected]

Media Contact:

Brendan Ranson-Walsh

Vice President, Global Communications & Corporate Responsibility

213.996.2367

[email protected]

KEYWORDS: California United States North America

INDUSTRY KEYWORDS: Architecture Contracts Professional Services Defense Environment Construction & Property Engineering Building Systems Landscape Consulting Manufacturing Interior Design

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Montrose Environmental Group Announces Secondary Offering of Shares

Montrose Environmental Group Announces Secondary Offering of Shares

IRVINE, Calif.–(BUSINESS WIRE)–
Montrose Environmental Group, Inc. (the “Company” or “Montrose”) (NYSE: MEG) announced today that certain of the Company’s stockholders, including funds managed by Oaktree Capital Management, L.P. (the “Selling Stockholders”), intend to offer for sale in an underwritten secondary offering 4,920,052 shares of the Company’s common stock. The Selling Stockholders will also grant the underwriters a 30-day option to purchase up to an additional 738,012 shares of common stock. The Selling Stockholders will receive all of the proceeds from the offering. Montrose is not offering any shares of its common stock in the offering and will not receive any proceeds from the offering.

BofA Securities and William Blair are acting as joint leading book-running managers and representatives of the underwriters for the offering. J.P. Morgan and Morgan Stanley are acting as joint book-running managers.

The offering of these securities will be made only by means of a prospectus. Copies of the preliminary prospectus relating to the offering can be obtained from: BofA Securities, NC1-004-03-43; 200 North College Street, 3rd Floor, Charlotte, North Carolina 28255-0001, Attention: Prospectus Department or by email at [email protected]; or William Blair & Company, L.L.C., Attention: Prospectus Department, 150 North Riverside Plaza, Chicago, Illinois, 60606, by phone at +1(800) 621-0687, or by email at [email protected].

A registration statement relating to these securities has been filed with the Securities and Exchange Commission, but has not yet become effective. These securities may not be sold, nor may offers to buy be accepted, prior to the time that the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of any offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Montrose

Montrose is an environmental services company that supports government and commercial organizations with a range of services, from air measurement and laboratory services to regulatory compliance, permitting, engineering, and remediation.

Forward-Looking Statements

This press release contains forward-looking statements. Forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may be identified by the use of words such as “intend,” “expect”, and “may”, and other similar expressions that predict or indicate future events or that are not statements of historical matters. Forward-looking statements are based on current information available at the time the statements are made and on management’s reasonable belief or expectations with respect to future events, and are subject to risks and uncertainties, many of which are beyond the Company’s control, that could cause actual performance or results to differ materially from the belief or expectations expressed in or suggested by the forward-looking statements. Further, many of these factors are, and may continue to be, amplified by the COVID-19 pandemic. Additional factors or events that could cause actual results to differ may also emerge from time to time, and it is not possible for the Company to predict all of them. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update any forward-looking statement to reflect future events, developments or otherwise, except as may be required by applicable law. Investors are referred to the Company’s registration statement for additional information regarding the risks and uncertainties that may cause actual results to differ materially from those expressed in any forward-looking statement.

Investor Relations:

Rodny Nacier

(949) 988-3383

[email protected]

Media Relations:

Doug Donsky

(646) 361-1427

[email protected]

KEYWORDS: California United States North America

INDUSTRY KEYWORDS: Professional Services Engineering Other Professional Services Environment Manufacturing Finance Consulting

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Eagle Pharmaceuticals’ Presentation at Piper Sandler 32nd Annual Virtual Healthcare Conference Available for Viewing

Eagle Pharmaceuticals’ Presentation at Piper Sandler 32nd Annual Virtual Healthcare Conference Available for Viewing

WOODCLIFF LAKE, N.J.–(BUSINESS WIRE)–
Eagle Pharmaceuticals, Inc. (Nasdaq: EGRX) (“Eagle” or the “Company”) today announced that the Company’s pre-recorded presentation at the Piper Sandler 32nd Annual Virtual Healthcare Conference is now available for viewing via the link below:

https://pipersandler.zoom.us/rec/play/0TlXfXVGZ3QG7IgEE4PyzFEfiG8HyD57XqSaO9Uq1Rsb_J29jmyS2ZvqWskPC1MJPA_AP6kFUMjJQfFd.vyuNfKmJI0FvhIOg

It is also available on theCompany’s website at www.eagleus.com, under the Investors section, where it will be archived for 30 days.

Scott Tarriff, Chief Executive Officer, and Brian Cahill, Chief Financial Officer, will be participating in 1×1 meetings on December 1, 2020. Meetings can be requested exclusively via Piper Sandler.

About Eagle Pharmaceuticals, Inc.

Eagle is a fully integrated pharmaceutical company with research and development, clinical, manufacturing and commercial expertise. Eagle is committed to developing innovative medicines that result in meaningful improvements in patients’ lives. Eagle’s commercialized products include RYANODEX®, BENDEKA®, BELRAPZO®, and its oncology and CNS/metabolic critical care pipeline includes product candidates with the potential to address underserved therapeutic areas across multiple disease states. Additional information is available on Eagle’s website at www.eagleus.com.

Investor Relations for Eagle Pharmaceuticals, Inc.:

Lisa M. Wilson

In-Site Communications, Inc.

T: 212-452-2793

E: [email protected]

KEYWORDS: New Jersey United States North America

INDUSTRY KEYWORDS: Biotechnology Pharmaceutical Health

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NovaBay Pharmaceuticals Expands Avenova’s Geographic Reach to Australia with New Exclusive Distribution Agreement

NovaBay Pharmaceuticals Expands Avenova’s Geographic Reach to Australia with New Exclusive Distribution Agreement

EMERYVILLE, Calif.–(BUSINESS WIRE)–NovaBay® Pharmaceuticals, Inc. (NYSE American: NBY), a pharmaceutical company focusing on commercializing Avenova® for the eye care market, announces the signing of an agreement with Paragon Care Group Australia Pty Ltd for the exclusive distribution of Avenova in Australia. Paragon Care Group will begin distributing Avenova directly to consumers under its Designs For Vision brand beginning in early 2021.

“We are delighted to expand the geographic reach of Avenova with this agreement covering Australia,” said Justin Hall, NovaBay CEO. “In Designs for Vision we have secured an ideal partner with a reputation for sourcing the highest quality products and an established market presence from more than 40 years of serving the ophthalmology and optometry sectors in Australia.”

“Avenova fits extremely well with our portfolio of eye care products,” said Nikolas Apostolou, General Manager of Designs for Vision. “It is the only commercially available pure hypochlorous acid lid and lash spray proven to be effective in eliminating the underlying cause of bacterial dry eye, yet Avenova is soothing, safe and effective for long-term use. We believe these qualities make Avenova the best product to treat the chronic bacterial infections that affect approximately 85% of all dry eye sufferers. We are thrilled to make this product available to Australians with dry eye disease.”

Avenova previously received approval from the Australian Government Department of Health and was provided an Australian Register of Therapeutic Good Certificate for distribution in that country.

About Paragon Care Group Australia Pty Ltd

Paragon Care has become recognized as a leading provider of equipment, devices and consumables to the healthcare market. We also offer equipment repair, maintenance and total equipment management through Paragon Care Service & Technology. Our agility and experience enable customers to provide the right solution to achieve the optimal outcome, today.

About NovaBay Pharmaceuticals, Inc.: Going Beyond Antibiotics®

NovaBay Pharmaceuticals, Inc. is a biopharmaceutical company focusing on commercializing and developing its non-antibiotic anti-infective products to address the unmet therapeutic needs of the global, topical anti-infective market with its two distinct product categories: the NEUTROX® family of products and the AGANOCIDE® compounds. The Neutrox family of products includes AVENOVA® for the eye care market, NEUTROPHASE® for wound care market, and CELLERX® for the aesthetic dermatology market. The Aganocide compounds, still under development, have target applications in the dermatology and urology markets.

Forward-Looking Statements

This release contains forward-looking statements that are based upon management’s current expectations, assumptions, estimates, projections and beliefs. These statements include, but are not limited to, statements about our success in selling Avenova in Australia and generally the Company’s expected future financial results. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or achievements to be materially different and adverse from those expressed in or implied by the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, risks and uncertainties relating to our ability to enter into the beauty market, find and maintain distribution channels, and generally all risks associated with launching a new product into the beauty industry. Other risks relating to NovaBay’s business, including risks that could cause results to differ materially from those projected in the forward-looking statements in this press release, are detailed in NovaBay’s latest Form 10-Q/K filings with the Securities and Exchange Commission, especially under the heading “Risk Factors.” The forward-looking statements in this release speak only as of this date, and NovaBay disclaims any intent or obligation to revise or update publicly any forward-looking statement except as required by law.

Socialize and Stay informed on NovaBay’s progress

Like us on Facebook

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Visit NovaBay’s Website

Avenova Purchasing Information

For NovaBay Avenova purchasing information:

Please call 800-890-0329 or email [email protected].

Avenova.com

NovaBay Contact

Justin Hall

Chief Executive Officer and General Counsel

510-899-8800

[email protected]

Investor Contact

LHA Investor Relations

Jody Cain

310-691-7100

[email protected]

KEYWORDS: Australia/Oceania Australia United States North America California

INDUSTRY KEYWORDS: Biotechnology Pharmaceutical Optical Health

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China Online Education Group Announces Third Quarter 2020 Results

Third quarter net revenues increased by 31.8% year-over-year

Third quarter GAAP/non-GAAP net margin were 5.9%/7.1% respectively

PR Newswire

BEIJING, Nov. 23, 2020 /PRNewswire/ — China Online Education Group (“51Talk” or the “Company”) (NYSE: COE), a leading online education platform in China, with core expertise in English education, announced its unaudited financial results for the third quarter ended September 30, 2020.

Third Quarter
 2020 Financial and Operating Highlights

  • Net revenues were RMB538.5 million (US$79.3 million), a 31.8% increase from RMB408.7 million for the third quarter of 2019.
  • Gross margin was 72.8%, compared with 71.6% for the third quarter of 2019.
  • GAAP net income was RMB31.6 million, representing GAAP net margin of 5.9%, compared with GAAP net loss RMB5.8 million and GAAP net margin of negative 1.4% for the third quarter of 2019.
  • Non-GAAP net income[1], which is a non-GAAP measure that excludes share-based compensation, was RMB38.5million, representing non-GAAP net margin of 7.1% compared with non-GAAP net loss RMB2.3 million and non-GAAP net margin of negative 0.6% for the third quarter of 2019.
  • Operating cash inflow was RMB186.1 million (US$27.4 million), compared with RMB123.2 million operating cash inflow for the third quarter of 2019.
  • Cash, cash equivalents, time deposits and short-term investments balance reached RMB1,592.5 million (US$234.5 million) as of September 30, 2020.
  • Gross billings[2] were RMB728.4 million (US$107.3 million), a 33.1% increase from RMB547.3 million for the third quarter of 2019.


Key Financial and Operating Data


For the three months ended


Sep
. 30,


Sep
. 30,


Y-o-Y


2019


2020


Change


Net Revenues (in RMB millions)

408.7

538.5

31.8%

K-12 one-on-one mass market offering

323.1

471.8

46.0%

K-12 small class offering

25.8

25.4

(1.3%)

One-on-One others

59.8

41.3

(30.9%)


Gross billings (in RMB millions)

547.3

728.4

33.1%

K-12 one-on-one mass market offering

504.6

692.2

37.2%

        K-12 small class offering

8.7

10.6

21.8%

One-on-One others

34.0

25.6

(24.7%)


Active students[3]
(in thousands)

258.2

338.0

30.9%

 

[1] For more information on non-GAAP financial measures, please see the section of “Use of Non-GAAP Financial Measures” and the table captioned “Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures” set forth in this press release.

[2] Gross billings for a specific period, which is one of the Company’s key operating data, is defined as the total amount of cash received for the sale of course packages and services in such period, net of the total amount of refunds in such period.

“We are pleased to deliver another robust quarter of solid financial and operating results. Our third quarter performance proves the merits of our strategy focused on the K-12 one-on-one mass market offering in non-tier-one cities[4] and showcases our ability to execute our initiatives,” said Mr. Jack Jiajia Huang, Founder, Chairman and Chief Executive Officer of 51Talk. “Highlights of the quarter included net revenues reaching RMB538.5 million, up 31.8% year-over-year, surpassing the top end of our guidance, with contribution from our K-12 one-on-one mass market offering growing by 46.0% year-over-year to hit RMB471.8 million. Moreover, the number of active students on our platform in the third quarter grew to 338,000, up 30.9% compared to the third quarter in 2019.    

“Clearly families across China are gaining greater familiarity and comfort with online learning channels and recognizing the strong value we provide. As they do, they are sharing their positive experiences with their friends and our high-quality brand reputation is spreading.

“In October, we were honored to be invited as the only online education enterprise to join the 2020 China Annual Conference for International Education and provide key inputs for future guidelines and requirements for online foreign teachers in China. At the conference, we signed a framework agreement with the China Education Association for International Exchange to jointly create recruiting and training standards for online foreign teachers. These standards will become part of China Ministry of Education’s policies regulating online foreign teachers. We are excited to be part of this national level working group. We look forward to sharing our experience working with thousands of online foreign teachers, and helping shape the future of our industry.”   

Mr. Huang further added, “Also in October, we hosted our 2020 Sino-Philippines Educational Exchanges Seminar attended by education and government leaders, including the ambassadors from China and the Philippines. Through live streaming, we engaged over 5,000 people from China and the Philippines to celebrate 45th anniversary of the establishment of diplomatic relations between the two countries, showing mutual cooperation and our positive role in cross-border relations. This video received the Guinness World Records award for ‘the largest online video album of people waving.‘

“In conclusion, our K-12 one-on-one mass market non-tier-one city strategy is working, our teams are executing and the ground work we’ve laid is allowing us to take advantage of more and more market opportunities. With these pieces in place, we will continue to drive sustained long-term growth and maintain balanced bottom line profitability.” concluded Mr. Huang.  

“As COVID-19 was under control in China and people’s lives were getting back to normal, we continued our growth momentum in the third quarter, achieving strong topline increment coupled with another quarter of profitability, our fourth consecutive profitable quarter. As the demand for online education continues to accelerate, our strategy to pursue balanced growth is delivering as planned,” said Mr. Min Xu, Chief Financial Officer of 51Talk. “During the quarter, we increased non-GAAP sales and marketing expenses by 30.6% year-over-year to capture more market opportunities and increased non-GAAP product development expenses by 12.8% year-over-year to further improve our technology platform and curriculum. Despite the increase in expenses, we still recorded quarterly profitability, with non-GAAP net income coming in at RMB38.5 million. Excluding the RMB15.0 million favorable impact of coronavirus relief policies in the third quarter, our non-GAAP net profit margin would have been 4.4%. Additionally, our operating cash inflow reached another historical high of RMB186.1 million. Looking ahead, we will continue on our pathway of sustained growth in this rapidly developing market and executing our strategies to bring strong value proposition to our students.”

[3] An “active student” for a specified period refers to a student who booked at least one paid lesson, excluding those students who only attended paid live broadcasting lessons or trial lessons.

[4] Tier-one cities include Beijing, Shanghai, Shenzhen, Guangzhou and Tianjin

Third Quarter 2020
 Financial Results
                                       


Net Revenues

Net revenues for the third quarter of 2020 were RMB538.5 million (US$79.3 million), a 31.8% increase from RMB408.7 million for the same quarter last year. The increase was primarily attributed to the increases in the number of active students. The number of active students in the third quarter of 2020 was 338,000, a 30.9% increase from 258,200 for the same quarter last year. The average revenue per active student in the third quarter of 2020 increased by 0.7% year-over-year.

Net revenues from one-on-one offerings for the third quarter of 2020 were RMB513.0 million (US$75.6 million), a 34.0% increase from RMB382.9 million for the same quarter last year. Net revenues from small class offerings for the third quarter of 2020 were RMB25.4 million (US$3.7 million), a 1.3% decrease from RMB25.8 million for the same quarter last year.


Cost of Revenues

Cost of revenues for the third quarter of 2020 was RMB146.7 million (US$21.6 million), a 26.5% increase from RMB116.0 million for the same quarter last year. The increase was primarily driven by an increase in total service fees paid to teachers, mainly due to an increased number of paid lessons.

As part of Chinese government’s effort to ease the burden of businesses affected by the coronavirus (COVID-19) outbreak, the Ministry of Human Resources and Social Security, the Ministry of Finance and the State Taxation Administration temporarily reduced and exempted employer obligation on social security contributions from February 2020. The impact of coronavirus policies on cost of revenues was RMB0.3 million in the third quarter. Excluding the impact, total cost of revenues for the third quarter would have been RMB147.0 million (US$21.7 million), representing a 26.7% year-over-year increase.

Cost of revenues of one-on-one offerings for the third quarter of 2020 was RMB137.4 million (US$20.2 million), a 31.3% increase from RMB104.6 million for the same quarter last year. Cost of revenues of small class offering for the third quarter of 2020 was RMB9.3 million (US$1.4 million), an 18.4% decrease from RMB11.3 million for the same quarter last year.


Gross Profit and Gross Margin

Gross profit for the third quarter of 2020 was RMB391.8 million (US$57.7 million), a 33.9% increase from RMB292.7 million for the same quarter last year. Gross margin for the third quarter of 2020 was 72.8%, compared with 71.6% for the same quarter last year.

Excluding the positive impact of the coronavirus related exemption of employer obligation on social security contributions, gross profit and gross margin for the third quarter would have been RMB391.5 million (US$57.7 million) and 72.7% respectively.

Gross margin for one-on-one offerings in the third quarter of 2020 was 73.2%, compared with 72.7% for the same quarter last year. The increase was mainly attributable to improve the efficiency of American Academy lessons. 51Talk’s small class offering gross margin for the third quarter of 2020 was 63.6%, compared with 56.0% for the third quarter of 2019. The increase was mainly due to a favorable mix of higher margin products.


Operating Expenses

Total operating expenses for the third quarter of 2020 were RMB379.6 million (US$55.9 million), a 26.8% increase from RMB299.4 million for the same quarter last year. The increase was the result of an increase in sales and marketing expenses, general and administrative expenses, and product development expenses.

Sales and marketing expenses for the third quarter of 2020 were RMB282.8 million (US$41.7 million), a 31.3% increase from RMB215.4 million for the same quarter last year. The increase was mainly due to higher marketing and branding expenses and higher sales personnel costs related to increases in the number of sales and marketing personnel. Excluding share-based compensation expenses, non-GAAP sales and marketing expenses for the third quarter of 2020 were RMB280.6 million (US$41.3 million), a 30.6% increase from RMB214.8 million for the same quarter last year. Non-GAAP sales and marketing expenses, excluding branding expenses, were 31.8% of the gross billings for the third quarter of 2020, compared with 32.6 % for the same quarter last year. The impact of coronavirus policy related exemption of employer obligation on social security contributions on sales and marketing expense was RMB5.5 million in the third quarter. Excluding the impact, sales and marketing expenses for the third quarter would have been RMB288.3 million (US$42.5 million), representing a 33.8% year-over-year increase.

Product development expenses for the third quarter of 2020 were RMB43.8 million (US$6.4 million), a 14.0% increase from RMB38.4 million for the same quarter last year. The increase was primarily due to higher product development personnel costs related to increases in both the number of personnel and average salary. Excluding share-based compensation expenses, non-GAAP product development expenses for the third quarter of 2020 were RMB42.1 million (US$6.2 million), an 12.8% increase from RMB37.3 million for the same quarter last year. The impact of COVID-19 policy related exemption of employer obligation on social security contributions on product development expenses was RMB0.7 million in the third quarter. Excluding the impact, product development expenses for the third quarter would have been RMB44.5 million (US$6.6 million), representing a 15.9% year-over-year increase.

General and administrative expenses for the third quarter of 2020 were RMB53.0 million (US$7.8 million), a 16.2% increase from RMB45.6 million for the same quarter last year. The increase was primarily due to higher general and administrative personnel costs related to increases in the number of personnel. Excluding share-based compensation expenses, non-GAAP general and administrative expenses for the third quarter of 2020 were RMB50.0 million (US$7.4 million), a 14.2% increase from RMB43.8 million for the same quarter last year. The impact of coronavirus policy related exemption of employer obligation on social security contributions on general and administrative expenses was RMB0.9 million in the third quarter. Excluding the impact, general and administrative expenses for the third quarter would have been RMB53.9 million (US$7.9 million), representing a 18.2% year-over-year increase.


Other income

As part of Chinese government’s effort to ease the burden of businesses affected by the coronavirus (COVID-19) outbreak, the State Taxation Administration exempted a wide range of consumer services from value added tax (VAT) from January 2020. The income obtained by taxpayers from providing essential services shall be exempt from VAT. The favorable impact of coronavirus relief policies was RMB7.6 million in the third quarter.

On September 30, 2019, Ministry of Finance and the State Taxation Administration announced that from October 1, 2019 to December 31, 2021, the taxpayers engaging in the provision of essential services are allowed to deduct an extra 15% of the deductible input tax for the current period from the payable tax. The impact of the policy of additional value-added tax credit for the income generated by the life services provided by enterprises was RMB1.7 million in the third quarter.


Income/(loss) from Operations

Operating income for the third quarter of 2020 was RMB21.4 million (US$3.2 million), compared with loss from operations of RMB6.7 million for the same quarter last year. Operating income margin for the third quarter was 4.0%, compared with operating margin of negative 1.6% for the same quarter last year.

Non-GAAP operating income for the third quarter of 2020 was RMB28.3 million (US$4.2 million), compared with non-GAAP loss from operations of RMB3.3 million for the same quarter last year. Non-GAAP operating income margin for the third quarter was 5.3%, compared with non-GAAP operating margin of negative 0.8% for the same quarter last year.

The total favorable impact of coronavirus relief policies was RMB15.0 million in the third quarter, including impact of coronavirus policy related exemption of employer obligation on social security contributions on income from operations of RMB7.4 million, in addition to coronavirus policy related VAT exemption of RMB7.6 million. Excluding the favorable impact, operating income and non-GAAP operating income for the third quarter would have been RMB6.4 million (US$0.9 million) and RMB13.3 million (US$2.0 million) respectively, representing 1.2% GAAP operating margin and 2.5% non-GAAP operating margin.


Net


income/(loss)

Net income for the third quarter of 2020 was RMB31.6 million (US$4.7 million), compared with net loss of RMB5.8 million for the same quarter last year.  Net margin for the third quarter was 5.9%, compared with net margin of negative 1.4% for the same quarter last year.

Non-GAAP net income for the third quarter of 2020 was RMB38.5 million (US$5.7 million), compared with non-GAAP loss of RMB2.3 million for the same quarter last year. Non-GAAP net margin for the third quarter was 7.1%, compared with non-GAAP net margin of negative 0.6% for the same quarter last year.

The favorable impact of coronavirus relief policies was RMB15.0 million in the third quarter. Excluding the favorable impact, net income and non-GAAP net income for the third quarter would have been RMB16.6 million (US$2.4 million) and RMB23.5 million (US$3.5 million), representing net margin of 3.1% and 4.4% respectively.

Basic net income per American depositary share (“ADS”) attributable to ordinary shareholders for the third quarter of 2020 was RMB1.46 (US$0.22), compared with basic net loss per ADS of RMB0.28 for the same quarter last year. Diluted net income per ADS attributable to ordinary shareholders for the third quarter of 2020 was RMB1.38 (US$0.20), compared with diluted net loss per ADS of RMB0.28 for the same quarter last year. Each ADS represents 15 Class A ordinary shares.

Non-GAAP basic net income per ADS attributable to ordinary shareholders for the third quarter of 2020 was RMB1.78 (US$0.26), compared with non-GAAP basic net loss per ADS attributable to ordinary shareholders of RMB0.11 for the same quarter last year. Non-GAAP diluted net income per ADS attributable to ordinary shareholders for the third quarter of 2020 was RMB1.68(US$0.25), compared with non-GAAP diluted net loss per ADS attributable to ordinary shareholders of RMB0.11 for the same quarter last year.

The favorable impact of coronavirus relief policies was RMB15.0 million in the third quarter. Excluding the favorable impact, basic net income per ADS attributable to ordinary shareholders for the third quarter of 2020 was RMB0.77 (US$0.11) and non-GAAP basic net income per ADS attributable to ordinary shareholders for the third quarter of 2020 was RMB1.09 (US$0.16).

Excluding the favorable impact, diluted net income per ADS attributable to ordinary shareholders for the third quarter of 2020 was RMB0.72 (US$0.11) and non-GAAP diluted net income per ADS attributable to ordinary shareholders for the third quarter of 2020 was RMB1.02 (US$0.15).


Balance Sheet

As of September 30, 2020, the Company had total cash, cash equivalents, time deposits and short-term investments of RMB1,592.5 million (US$234.5 million), compared with RMB1,053.4 million as of December 31, 2019. As a part of cash, cash equivalents, time deposits and short-term investments, the Company had non-current time deposits of RMB554.7 million (US$81.7 million), compared with RMB113.4 million as of December 31, 2019.

The Company had advances from students[5] (current and non-current) of RMB2,568.6 million (US$378.3 million) as of September 30, 2020, compared with RMB2,186.6 million as of December 31, 2019.

Outlook

We cannot predict whether the incremental revenue boost from students spending more time at home amidst the COVID-19 outbreak will continue during the remainder of 2020.  However, based on latest information available at the time of this release, for the fourth quarter of 2020, the Company currently expects net revenues to be between RMB525 million to RMB530 million, which would represent an increase of approximately 32.2% to 33.4% from RMB397.2 million for the same quarter last year;

The above outlook is based on the current market conditions and reflects the Company’s current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change.

Share Repurchase Program

On September 8, 2020, 51Talk announced that its board of directors had authorized a share repurchase program of up to US$20.0 million between September 8, 2020 and September 7, 2021. As of November 19, 2020, the Company had repurchased 69,852 ADSs for approximately US$1.7 million under this program.

Conference Call

The Company’s management will host an earnings conference call at 8:00 AM U.S. Eastern Time on November 23, 2020 (9:00 PM Beijing/Hong Kong time on November 23, 2020).

Dial-in details for the earnings conference call are as follows:

United States (toll free):

1-866-264-5888

International:

1-412-317-5226

Mainland China:

400-120-1203

Hong Kong (toll free):

800-905-945

Hong Kong:

852-3018-4992

Participants should dial-in at least 15 minutes before the scheduled start time and ask to be connected to the call for “China Online Education Group.”

Additionally, a live and archived webcast of the conference call will be available on the Company’s investor relations website at http://ir.51talk.com.

A replay of the conference call will be accessible until November 30, 2020, by dialing the following telephone numbers:

United States (toll free):

1-877-344-7529

International:

1-412-317-0088

Replay Access Code:

10150031

 

[5] “Advances from students”, which is defined as the amount of obligation to transfer good or service to students or business partners for which consideration has been received from students in advance. The deposits from students are also presented in the total amount of “advances from students”.

About China Online Education Group

China Online Education Group (NYSE: COE) is a leading online education platform in China, with core expertise in English education. The Company’s mission is to make quality education accessible and affordable. The Company’s online and mobile education platforms enable students across China to take live interactive English lessons with overseas foreign teachers, on demand. The Company connects its students with a large pool of highly qualified foreign teachers that it assembled using a shared economy approach, and employs student and teacher feedback and data analytics to deliver a personalized learning experience to its students.

Use of Non-GAAP Financial Measures

In evaluating its business, 51Talk considers and uses the following measures defined as non-GAAP financial measures by the SEC as supplemental metrics to review and assess its operating performance: non-GAAP sales and marketing expenses, non-GAAP product development expenses, non-GAAP general and administrative expenses, non-GAAP operating expenses, non-GAAP operating income/(loss), non-GAAP net income/(loss), non-GAAP net income/(loss) attributable to ordinary shareholders, and non-GAAP net income/(loss) attributable to ordinary shareholders per share and per ADS. To present each of these non-GAAP measures, the Company excludes share-based compensation expenses. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of non-GAAP measures to the most comparable GAAP measures” set forth at the end of this press release.

51Talk believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding share-based compensation expenses that may not be indicative of its operating performance from a cash perspective. 51Talk believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to 51Talk’s historical performance. 51Talk computes its non-GAAP financial measures using the same consistent method from quarter to quarter and from period to period. 51Talk believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. A limitation of using non-GAAP measures is that these non-GAAP measures exclude share-based compensation expenses that have been and will continue to be for the foreseeable future a significant recurring expense in the 51Talk’s business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying table at the end of this press release provides more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.7896 to US$1.00, the rate in effect as of September 30, 2020 as certified for customs purposes by the Federal Reserve Bank of New York.

Safe Harbor Statement

This press release contains statements that may constitute “forward-looking” statements pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will”, “expects”, “anticipates”, “aims”, “future”, “intends”, “plans”, “believes”, “estimates”, “likely to” and similar statements. Among other things, 51Talk’s business outlook and quotations from management in this announcement, as well as 51Talk’s strategic and operational plans, contain forward-looking statements. 51Talk may also make written or oral forward-looking statements in its periodic reports to the Securities and Exchange Commission (“SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about 51Talk’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: 51Talk’s goals and strategies; 51Talk’s expectations regarding demand for and market acceptance of its brand and platform; 51Talk’s ability to retain and increase its student enrollment; 51Talk’s ability to offer new courses; 51Talk’s ability to engage, train and retain new teachers; 51Talk’s future business development, results of operations and financial condition; 51Talk’s ability to maintain and improve infrastructure necessary to operate its education platform; competition in the online education industry in China; the expected growth of, and trends in, the markets for 51Talk’s course offerings in China; relevant government policies and regulations relating to 51Talk’s corporate structure, business and industry; general economic and business condition in China, the Philippines and elsewhere and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in 51Talk’s filings with the SEC. All information provided in this press release is as of the date of this press release, and 51Talk does not undertake any obligation to update any forward-looking statement, except as required under applicable law.


CHINA ONLINE EDUCATION GROUP


UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


(In thousands)


 As of


Dec. 31,


Sep. 30,


Sep. 30,


2019


2020


2020


RMB


RMB


US$


ASSETS

Current assets

Cash and cash equivalents

342,951

327,429

48,225

Time deposits

144,093

268,442

39,537

Short-term investments

452,936

441,884

65,082

Inventory

308

1,615

238

Prepaid expenses and other current assets

250,215

292,066

43,017

Total current assets

1,190,503

1,331,436

196,099

Non-current assets

Property and equipment, net

20,336

21,361

3,146

Intangible assets, net

9,918

8,101

1,193

Goodwill

4,223

4,223

622

Right-of-use assets

56,638

67,969

10,011

Time deposits

113,415

554,715

81,701

Other non-current assets

6,784

18,809

2,770

Total non-current assets

211,314

675,178

99,443


Total assets


1,401,817


2,006,614


295,542


LIABILITIES


AND STOCKHOLDERS’ DEFICIT

Current liabilities

Short-term loan

16,578

–

–

Advances from students

2,181,808

2,565,883

377,914

Accrued expenses and other current liabilities

166,955

212,910

31,358

Lease liability

31,550

38,172

5,622

Taxes payable

21,661

25,335

3,731

Total current liabilities

2,418,552

2,842,300

418,625

Non-current liabilities

Advances from students

4,783

2,691

396

Lease liability

23,545

29,187

4,299

Other non-current liabilities

1,595

1,821

268

Total non-current liabilities

29,923

33,699

4,963


Total liabilities


2,448,475


2,875,999


423,588



Total shareholders’ deficit


(1,046,658)


(869,385)


(128,046)


Total liabilities and shareholders’ deficit


1,401,817


2,006,614


295,542


 


 CHINA ONLINE EDUCATION GROUP 


 UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS 


 (In thousands except for number of shares and per share data) 


 For the three months ended 


 For the nine months ended 


 Sep. 30, 


 Jun. 30, 


 Sep. 30, 


 Sep. 30, 


 Sep. 30, 


 Sep. 30, 


 Sep. 30, 


2019


2020


2020


2020


2019


2020


2020


 RMB 


 RMB 


 RMB 


 US$ 


 RMB 


 RMB 


 US$ 

 Net revenues[6] 

408,662

493,471

538,466

79,307

1,081,339

1,519,021

223,728

 Cost of revenues  

(115,988)

(143,560)

(146,692)

(21,605)

(329,275)

(434,283)

(63,963)

 Gross profit 

292,674

349,911

391,774

57,702

752,064

1,084,738

159,765

 Operating expenses  

     Sales and marketing expenses 

(215,415)

(239,894)

(282,846)

(41,659)

(590,071)

(751,127)

(110,629)

     Product development expenses 

(38,396)

(38,616)

(43,769)

(6,446)

(120,459)

(118,252)

(17,417)

    General and administrative expenses 

(45,598)

(53,902)

(53,007)

(7,807)

(147,146)

(157,598)

(23,212)

 Total operating expenses 

(299,409)

(332,412)

(379,622)

(55,912)

(857,676)

(1,026,977)

(151,258)

 Other income 

–

9,628

9,259

1,364

–

35,648

5,250

 (Loss)/income from operations 

(6,735)

27,127

21,411

3,154

(105,612)

93,409

13,757

 Interest income 

5,070

8,735

10,485

1,544

11,677

26,797

3,947


 Interest expense and other expenses, net 

(2,692)

(1,337)

1,287

190

(7,533)

(259)

(38)

 (Loss)/income before income tax expenses 

(4,357)

34,525

33,183

4,888

(101,468)

119,947

17,666

 Income tax expenses 

(1,431)

(1,759)

(1,598)

(235)

(3,761)

(4,804)

(708)

 Net (loss)/income, all attributable to the

 Company’s ordinary shareholders 

(5,788)

32,766

31,585

4,653

(105,229)

115,143

16,958

Weighted average number of ordinary shares used in computing basic (loss)/earnings per share 

308,834,290

317,793,905

323,676,655

323,676,655

307,455,221

318,242,591

318,242,591

Weighted average number of ordinary shares used in computing diluted (loss)/earnings per share 

308,834,290

340,457,526

344,208,745

344,208,745

307,455,221

340,543,022

340,543,022

[6] By performing our last year-end financial closing procedures, we discovered an oversight in our process for evaluating the status of lessons that caused us to overstate net revenues during 2018 and in interim periods of 2019. The amounts were reflecting RMB2.9 million (including RMB 2.5 million out-of-period adjustment attributed to the year of 2018) , RMB0.8 million and RMB0.5 million decreases to net revenues for the three months ended March 31, 2019, June 30, 2019 and September 30, 2019, respectively.  Based on our quantitative and qualitative analysis, we do not consider the out of period impact to be material to our financial position or results of operations for any prior periods or for the quarter or year ended December 31, 2019.

 

 


 CHINA ONLINE EDUCATION GROUP


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/ INCOME


(In thousands except for number of shares and per share data)


For the three months ended 


For the nine months ended


Sep. 30,


Jun. 30,


Sep. 30,


Sep. 30,


Sep. 30,


Sep. 30,


Sep. 30,


2019


2020


2020


2020


2019


2020


2020


RMB


RMB


RMB


US$


RMB


RMB


US$

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

Basic

(0.02)

0.10

0.10

0.01

(0.34)

0.36

0.05

diluted

(0.02)

0.10

0.09

0.01

(0.34)

0.34

0.05

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

basic 

(0.28)

1.55

1.46

0.22

(5.13)

5.43

0.80

diluted

(0.28)

1.44

1.38

0.20

(5.13)

5.07

0.75

Comprehensive (loss)/income:

Net (loss)/income 

(5,788)

32,766

31,585

4,653

(105,229)

115,143

16,958

Other comprehensive (loss)/income

Foreign currency translation adjustments

8,439

917

(12,229)

(1,801)

9,404

(6,768)

(997)

Total comprehensive (loss)/income

2,651

33,683

19,356

2,852

(95,825)

108,375

15,961

Share-based compensation expenses are included in the operating expenses as follows:

Sales and marketing expenses

(609)

(2,447)

(2,211)

(326)

(2,012)

(6,960)

(1,025)

Product development expenses

(1,063)

(1,637)

(1,660)

(244)

(3,254)

(3,196)

(471)

General and administrative expenses

(1,800)

(2,785)

(3,001)

(442)

(7,727)

(9,786)

(1,441)

 


CHINA ONLINE EDUCATION GROUP


Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures


(In thousands except for number of shares and per share data)

 


For the three
 months ended

 

 


For the
nine
 months ended

 


Sep. 30,


Jun. 30,


Sep. 30,


Sep. 30,


Sep. 30,


Sep. 30,


Sep. 30,


2019


2020


2020


2020


2019


2020


2020


RMB


RMB


RMB


US$


RMB


RMB


US$

Sales and marketing expenses

(215,415)

(239,894)

(282,846)

(41,659)

(590,071)

(751,127)

(110,629)

Less: Share-based compensation expenses

(609)

(2,447)

(2,211)

(326)

(2,012)

(6,960)

(1,025)

Non-GAAP sales and marketing expenses

(214,806)

(237,447)

(280,635)

(41,333)

(588,059)

(744,167)

(109,604)

Product development expenses

(38,396)

(38,616)

(43,769)

(6,446)

(120,459)

(118,252)

(17,417)

Less: Share-based compensation expenses

(1,063)

(1,637)

(1,660)

(244)

(3,254)

(3,196)

(471)

Non-GAAP product development expenses

(37,333)

(36,979)

(42,109)

(6,202)

(117,205)

(115,056)

(16,946)

General and administrative expenses

(45,598)

(53,902)

(53,007)

(7,807)

(147,146)

(157,598)

(23,212)

Less: Share-based compensation expenses

(1,800)

(2,785)

(3,001)

(442)

(7,727)

(9,786)

(1,441)

Non-GAAP general and administrative expenses

(43,798)

(51,117)

(50,006)

(7,365)

(139,419)

(147,812)

(21,771)

Operating expenses

(299,409)

(332,412)

(379,622)

(55,912)

(857,676)

(1,026,977)

(151,258)

Less: Share-based compensation expenses

(3,472)

(6,869)

(6,872)

(1,012)

(12,993)

(19,942)

(2,937)

Non-GAAP operating expenses

(295,937)

(325,543)

(372,750)

(54,900)

(844,683)

(1,007,035)

(148,321)

(Loss)/income from operations

(6,735)

27,127

21,411

3,154

(105,612)

93,409

13,757

Less: Share-based compensation expenses

(3,472)

(6,869)

(6,872)

(1,012)

(12,993)

(19,942)

(2,937)

Non-GAAP (loss)/income from operations

(3,263)

33,996

28,283

4,166

(92,619)

113,351

16,694

 

 


CHINA ONLINE EDUCATION GROUP


Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures


 (In thousands except for number of shares and per share data)


For the three months ended


For the
nine
 months ended


Sep. 30,


Jun. 30,


Sep. 30,


Sep. 30,


Sep. 30,


Sep. 30,


Sep. 30,


2019


2020


2020


2020


2019


2020


2020


RMB


RMB


RMB


US$


RMB


RMB


US$

Income tax expenses

(1,431)

(1,759)

(1,598)

(235)

(3,761)

(4,804)

(708)

Less: Tax impact of Share-based

compensation expenses

–

–

–

–

–

–

–

Non-GAAP income tax expenses

(1,431)

(1,759)

(1,598)

(235)

(3,761)

(4,804)

(708)

Net (loss)/income, all attributable to the

Company’s ordinary shareholders

(5,788)

32,766

31,585

4,653

(105,229)

115,143

16,958

Less: Share-based compensation expenses

(3,472)

(6,869)

(6,872)

(1,012)

(12,993)

(19,942)

(2,937)

Non-GAAP net (loss)/income, all

attributable to the Company’s ordinary shareholders

(2,316)

39,635

38,457

5,665

(92,236)

135,085

19,895

Weighted average number of ordinary shares

used in computing basic (loss)/earnings per share

308,834,290

317,793,905

323,676,655

323,676,655

307,455,221

318,242,591

318,242,591

Weighted average number of ordinary shares

used in computing diluted (loss)/earnings per share

308,834,290

340,457,526

344,208,745

344,208,745

307,455,221

340,543,022

340,543,022

Non-GAAP net (loss)/earnings per share attributable to

ordinary shareholders

    basic

(0.01)

0.12

0.12

0.02

(0.30)

0.42

0.06

    diluted

(0.01)

0.12

0.11

0.02

(0.30)

0.40

0.06

Non-GAAP net (loss)/earnings per ADS attributable to

ordinary shareholders

    basic

(0.11)

1.87

1.78

0.26

(4.50)

6.37

0.94

    diluted

(0.11)

1.75

1.68

0.25

(4.50)

5.95

0.88

 


 CHINA ONLINE EDUCATION GROUP 


 UNAUDITED ADDITIONAL INFORMATION 


  (In thousands except percentages) 


 For the three months ended 


 For the nine months ended 


 Sep. 30, 


 Jun. 30, 


 Sep. 30, 


 Sep. 30, 


 Sep. 30, 


 Sep. 30, 


 Sep. 30, 


2019


2020


2020


2020


2019


2020


2020


  RMB 

 RMB 

 RMB 


 US$ 


 RMB 

 RMB 


 US$ 


Net revenues

   One-on-one offerings

382,896

464,926

513,039

75,562

994,943

1,442,389

212,441

   Small class offerings

25,766

28,545

25,427

3,745

86,396

76,632

11,287


Total net revenues

408,662

493,471

538,466

79,307

1,081,339

1,519,021

223,728


Cost of revenues

   One-on-one offerings

(104,639)

(131,818)

(137,436)

(20,242)

(287,907)

(402,861)

(59,335)

   Small class offerings

(11,349)

(11,742)

(9,256)

(1,363)

(41,368)

(31,422)

(4,628)


Total cost of revenues

(115,988)

(143,560)

(146,692)

(21,605)

(329,275)

(434,283)

(63,963)


Gross profit

   One-on-one offerings

278,257

333,108

375,603

55,320

707,036

1,039,528

153,106

   Small class offerings

14,417

16,803

16,171

2,382

45,028

45,210

6,659


Total gross profit

292,674

349,911

391,774

57,702

752,064

1,084,738

159,765


Gross margin

   One-on-one offerings

72.7%

71.6%

73.2%

73.2%

71.1%

72.1%

72.1%

   Small class offerings

56.0%

58.9%

63.6%

63.6%

52.1%

59.0%

59.0%


Total gross margin

71.6%

70.9%

72.8%

72.8%

69.5%

71.4%

71.4%

 


  CHINA ONLINE EDUCATION GROUP


UNAUDITED ADDITIONAL INFORMATION


(In thousands except for number of shares and per share data)


For the three months ended


For the
nine
 months ended


Sep. 30,


Jun. 30,


Sep. 30,


Sep. 30,


Sep. 30,


Sep. 30,


Sep. 30,


2019


2020


2020


2020


2019


2020


2020


RMB


RMB


RMB


US$


RMB


RMB


US$

Sales and marketing expenses

     One-on-one offerings

(203,848)

(225,226)

(272,441)

(40,127)

(548,508)

(713,177)

(105,040)

     Small class offerings

(11,567)

(14,668)

(10,405)

(1,532)

(41,563)

(37,950)

(5,589)

Total sales and marketing expenses[7]

(215,415)

(239,894)

(282,846)

(41,659)

(590,071)

(751,127)

(110,629)

Product development expenses

     One-on-one offerings

(34,028)

(35,102)

(41,582)

(6,124)

(105,431)

(108,666)

(16,005)

     Small class offerings

(4,368)

(3,514)

(2,187)

(322)

(15,028)

(9,586)

(1,412)

Total product development expenses[8]

(38,396)

(38,616)

(43,769)

(6,446)

(120,459)

(118,252)

(17,417)

General and administrative expenses

     One-on-one offerings

(42,251)

(50,509)

(50,587)

(7,451)

(133,030)

(148,393)

(21,856)

     Small class offerings

(3,347)

(3,393)

(2,420)

(356)

(14,116)

(9,205)

(1,356)

Total general and administrative expenses[9]

(45,598)

(53,902)

(53,007)

(7,807)

(147,146)

(157,598)

(23,212)

Operating expenses

     One-on-one offerings

(280,127)

(310,837)

(364,610)

(53,702)

(786,969)

(970,236)

(142,901)

     Small class offerings

(19,282)

(21,575)

(15,012)

(2,210)

(70,707)

(56,741)

(8,357)

Total operating expenses

(299,409)

(332,412)

(379,622)

(55,912)

(857,676)

(1,026,977)

(151,258)

Other income

     One-on-one offerings

–

7,884

7,794

1,148

–

31,214

4,597

     Small class offerings

–

1,744

1,465

216

–

4,434

653

Total other income

–

9,628

9,259

1,364

–

35,648

5,250

(Loss)/income from operations

     One-on-one offerings

(1,870)

30,155

18,787

2,766

(79,933)

100,506

14,802

     Small class offerings

(4,865)

(3,028)

2,624

388

(25,679)

(7,097)

(1,045)

Total (loss)/income from operations

(6,735)

27,127

21,411

3,154

(105,612)

93,409

13,757

[7]Share-based compensation expenses included in the sales and marketing expenses for one-on-one offerings and small class offerings were RMB2,086 and RMB125 respectively for the third quarter of 2020, and RMB561 and RMB48 respectively for the third quarter of 2019.

[8]Share-based compensation expenses, included in the product development expenses for one-on-one offerings and small class offerings were RMB1,135 and RMB525 respectively for the third quarter of 2020, and RMB806 and RMB257 respectively for the third quarter of 2019.

[9]Share-based compensation expenses, included in the general and administrative expenses for one-on-one offerings and small class offerings were RMB2,960 and RMB41 respectively for the third quarter of 2020, and RMB1,784 and RMB16 respectively for the third quarter of 2019.

Cision View original content:http://www.prnewswire.com/news-releases/china-online-education-group-announces-third-quarter-2020-results-301178817.html

SOURCE China Online Education Group

Posted on

Merck Submits Applications for Licensure of V114, the Company’s Investigational 15-valent Pneumococcal Conjugate Vaccine, for Use in Adults to the U.S. FDA and European Medicines Agency

Merck Submits Applications for Licensure of V114, the Company’s Investigational 15-valent Pneumococcal Conjugate Vaccine, for Use in Adults to the U.S. FDA and European Medicines Agency

KENILWORTH, N.J.–(BUSINESS WIRE)–
Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced the company has submitted applications to the U.S. Food and Drug Administration (FDA) and European Medicines Agency (EMA) for licensure of V114, Merck’s investigational 15-valent pneumococcal conjugate vaccine, for use in adults 18 years of age and older. The company awaits acceptance of the submissions by the U.S. and European regulatory authorities.

“For more than a century, Merck inventors have developed vaccines that help tackle some of society’s biggest public health challenges, and that heritage is reflected today in our pneumococcal vaccine portfolio,” said Dr. Roy Baynes, senior vice president and head of global clinical development, chief medical officer, Merck Research Laboratories. “These submissions for V114 help bring us closer to offering more options to help protect against pneumococcal disease.”

The regulatory applications for licensure of V114 include results from Phase 2 and Phase 3 clinical studies in a variety of adult populations, including healthy adults and those at increased risk, such as adults with chronic medical conditions, adults with HIV, and those 65 years of age and older.

About V114

V114 is Merck’s investigational 15-valent pneumococcal conjugate vaccine candidate for the prevention of pneumococcal disease in adults and children. V114 consists of pneumococcal polysaccharides from 15 serotypes conjugated to a CRM197 carrier protein and includes serotypes 22F and 33F, which are commonly associated with invasive pneumococcal disease in older adults worldwide and are not contained in the pneumococcal conjugate vaccine currently licensed for use in adults. An overview of the late-stage development program for V114 is available here.

V114 previously received Breakthrough Therapy Designation from the FDA for the prevention of invasive pneumococcal disease in pediatric patients 6 weeks to 18 years of age and adults 18 years of age and older.

Merck’s Commitment to Infectious Diseases

For more than 100 years, Merck has contributed to the discovery and development of novel medicines and vaccines to combat infectious diseases. In addition to a combined portfolio of vaccines and antibacterial, antiviral and antifungal medicines, Merck has multiple programs that span discovery through late-stage development. To learn more about Merck’s infectious diseases pipeline, visit www.merck.com.

About Merck

For more than 125 years, Merck, known as MSD outside of the United States and Canada, has been inventing for life, bringing forward medicines and vaccines for many of the world’s most challenging diseases in pursuit of our mission to save and improve lives. We demonstrate our commitment to patients and population health by increasing access to health care through far-reaching policies, programs and partnerships. Today, Merck continues to be at the forefront of research to prevent and treat diseases that threaten people and animals – including cancer, infectious diseases such as HIV and Ebola, and emerging animal diseases – as we aspire to be the premier research-intensive biopharmaceutical company in the world. For more information, visit www.merck.com and connect with us on Twitter, Facebook, Instagram, YouTube and LinkedIn.

Forward-Looking Statement of Merck & Co., Inc., Kenilworth, N.J., USA

This news release of Merck & Co., Inc., Kenilworth, N.J., USA (the “company”) includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. There can be no guarantees with respect to pipeline products that the products will receive the necessary regulatory approvals or that they will prove to be commercially successful. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements.

Risks and uncertainties include but are not limited to, general industry conditions and competition; general economic factors, including interest rate and currency exchange rate fluctuations; the impact of the global outbreak of novel coronavirus disease (COVID-19); the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the company’s ability to accurately predict future market conditions; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; dependence on the effectiveness of the company’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions.

The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the company’s 2019 Annual Report on Form 10-K and the company’s other filings with the Securities and Exchange Commission (SEC) available at the SEC’s Internet site (www.sec.gov).

Media Contacts:

Pamela Eisele

(267) 305-3558

Kim Hamilton

(908) 391-0131

Investor Contacts:

Peter Dannenbaum

(908) 740-1037

Raychel Kruper

(908) 740-2107

KEYWORDS: New Jersey Europe United States North America

INDUSTRY KEYWORDS: FDA Health Infectious Diseases Clinical Trials Pharmaceutical Biotechnology

MEDIA:

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Posted on

Korn Ferry Announces Second Quarter Fiscal 2021 Results of Operations

PR Newswire

LOS ANGELES, Nov. 23, 2020 /PRNewswire/ —

FY’21 Second Quarter Performance

  • Korn Ferry reports fee revenue of $435.4 million in Q2 FY’21, a decrease of 12% (decrease of 12% on a constant currency basis) from Q2 FY’20.  On a quarter sequential basis, Q2 FY’21 fee revenue increased 27% from Q1 FY’21.
  • Net income attributable to Korn Ferry was $27.8 million in Q2 FY’21.
  • Operating income was $48.2 million in Q2 FY’21 with an operating margin of 11.1%.  Adjusted EBITDA was $66.2 million with an Adjusted EBITDA margin of 15.2%.
  • Q2 FY’21 diluted earnings per share and adjusted diluted earnings per share was $0.51 and $0.54, respectively.

Korn Ferry (NYSE: KFY), a global organizational consulting firm, today announced second quarter fee revenue of $435.4 million.  Second quarter diluted earnings per share was $0.51 and adjusted diluted earnings per share was $0.54.  Adjusted diluted earnings per share for the second quarter excludes an aggregate of $1.7 million, net of tax or $0.03 per share, of restructuring charges, net, due to the coronavirus pandemic (“COVID-19”).

“During the recently completed second quarter, I’m pleased that Korn Ferry’s revenue was up 27% sequentially to $435 million.  We had a sharp improvement in earnings and profitability with net income attributable to Korn Ferry of $28 million with an operating margin of 11.1% and $66 million of adjusted EBITDA and a 15.2% adjusted EBITDA margin,” said Gary D. Burnison, CEO, Korn Ferry.  “I’m not only encouraged by the financial results, but extremely proud of all that has been accomplished by our Korn Ferry colleagues to help our business rebound so dramatically.  The actions, strategy, solutions and messages we’ve taken to the marketplace have resonated.  Our clients have responded, and our colleagues have been resilient through a year that none of us have experienced in our lifetimes.

“As we look to the calendar year ahead, almost every company on the planet is and will have to re-imagine their business.  So forget the new normal, this is normal,” Burnison added.  “Companies are rethinking their organizational structure, roles and responsibilities.  How they compensate, engage and develop their workforce, along with the type of agile talent they hire and how they hire talent in a virtual world.  That’s real, tangible opportunity for Korn Ferry.”

Selected Financial Results
(dollars in millions, except per share amounts) (a)


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

Fee revenue

$

435.4

$

492.4

$

779.5

$

976.9

Total revenue

$

437.8

$

504.2

$

784.7

$

1,000.4

Operating income

$

48.2

$

61.9

$

4.4

$

122.2

Operating margin

11.1%

12.6%

0.6%

12.5%

Net income (loss) attributable to Korn Ferry

$

27.8

$

42.8

$

(3.1)

$

85.8

Basic earnings (loss) per share

$

0.51

$

0.78

$

(0.06)

$

1.54

Diluted earnings (loss) per share

$

0.51

$

0.77

$

(0.06)

$

1.54


EBITDA Results (b):


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

EBITDA

$

63.7

$

75.7

$

46.1

$

150.7

EBITDA margin

14.6%

15.4%

5.9%

15.4%


Adjusted Results (c):


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

Adjusted EBITDA (b)

$

66.2

$

78.3

$

76.8

$

153.3

Adjusted EBITDA margin (b)

15.2%

15.9%

9.8%

15.7%

Adjusted net income attributable to Korn Ferry

$

29.5

$

44.8

$

19.3

$

87.7

Adjusted basic earnings per share

$

0.54

$

0.81

$

0.35

$

1.58

Adjusted diluted earnings per share

$

0.54

$

0.81

$

0.35

$

1.57

_________________

(a)

Numbers may not total due to rounding.

(b)

EBITDA refers to earnings before interest, taxes, depreciation and amortization.  Adjusted EBITDA further adjusts EBITDA to exclude integration/acquisition costs and restructuring charges, net.  EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures (see attached reconciliations).

(c)

Adjusted results are non-GAAP financial measures that adjust for the following, as applicable (see attached reconciliations):


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

Integration/acquisition costs

$

—

$

2.6

$

0.7

$

2.6

Restructuring charges, net

$

2.4

$

—

$

29.9

$

—

Fee revenue was $435.4 million in Q2 FY’21, a decrease of 12% (down 12% on a constant currency basis) compared to Q2 FY’20.  The decrease in fee revenue across Executive Search, Consulting, and RPO and Professional Search, was primarily due to a decline in demand for our products and services due to the impact of COVID-19 on economies around the world.  This decline in fee revenue was partially offset by an increase in Digital fee revenue when compared to Q2 FY’20, which was primarily due to the acquisition of Miller Heiman Group, AchieveForum and Strategy Execution (the “acquired companies”) in the third quarter of fiscal 2020.

Actions taken by various government and other authoritative bodies in response to the COVID-19 caused a contraction in economic activity which translated into the decrease in fee revenue compared to the year-ago quarter.  This decline in fee revenue was partially offset by savings associated with actions taken to align our cost structure with the lower level of business demand, and resulted in a net income attributable to Korn Ferry of $27.8 million in Q2 FY’21 as compared to net income attributable to Korn Ferry of $42.8 million in Q2 FY’20.

Operating margin was 11.1% in Q2 FY’21 compared to 12.6% in the year-ago quarter.  The decrease in operating margin was primarily due to the decline in fee revenue in Q2 FY’21 associated with the impact of COVID-19.

Adjusted EBITDA margin was 15.2%, compared to 15.9% in the year-ago quarter.

Results by Segment

Selected Consulting Data

(a)

(dollars in millions) (b)


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

Fee revenue

$

126.7

$

144.0

$

226.0

$

281.6

Total revenue

$

127.1

$

148.2

$

226.6

$

289.5

Operating income

$

14.6

$

9.8

$

3.7

$

21.6

Operating margin

11.5%

6.8%

1.6%

7.7%

Ending number of consultants and execution staff (c)

1,491

1,886

1,491

1,886

Hours worked in thousands (d)

399

463

766

915

Average billed rate (e)

$

318

$

311

$

295

$

308


EBITDA Results (f):


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

EBITDA

$

19.0

$

14.6

$

12.9

$

31.3

EBITDA margin

15.0%

10.1%

5.7%

11.1%


Adjusted Results (g):


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

Adjusted EBITDA (f)

$

20.2

$

14.6

$

26.8

$

31.3

Adjusted EBITDA margin (f)

15.9%

10.1%

11.8%

11.1%

_____________________

(a)

In the third quarter of fiscal 2020, the Company changed the composition of its global segments.  Consulting segment represents the consulting business that was previously included in the Advisory segment.  Segment data for Q2 FY’20 has been recast to reflect the division of the Advisory segment into the Consulting and Digital segments.

(b)

Numbers may not total due to rounding.

(c)

Represents number of employees originating, delivering and executing consulting services.

(d)

The number of hours worked by consultant and execution staff during the period.

(e)

The amount of fee revenue divided by the number of hours worked by consultants and executive staff.

(f)

EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures (see attached reconciliations).

(g)

Adjusted results are non-GAAP financial measures that adjust for the following (see attached reconciliations):


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

Restructuring charges, net

$

1.1

$

—

$

13.9

$

—

Fee revenue was $126.7 million in Q2 FY’21 compared to $144.0 million in Q2 FY’20, a decrease of $17.3 million or 12% (down 13% on a constant currency basis).  This change was due to the decline in demand for our products and services due to the contraction in economic activity as a result of COVID-19.

Operating income was $14.6 million in Q2 FY’21 with an operating margin of 11.5% compared to operating income of $9.8 million and an operating margin of 6.8% in the year-ago quarter.  This change resulted from a decrease in compensation and benefits expense driven by a reduction in headcount and decreases in both general and administrative expenses and cost of services expense, all of which resulted from the cost saving initiatives that were put in place, partially offset by the decline in fee revenue outlined above and an increase in restructuring charges, net incurred in Q2 FY’21.

Adjusted EBITDA was $20.2 million in Q2 FY’21 with an Adjusted EBITDA margin of 15.9% compared to $14.6 million and 10.1%, respectively, in the year-ago quarter.  The increase in Adjusted EBITDA was due to the same factors impacting operating income outlined above except for restructuring charges.

Selected Digital Data

(a)

(dollars in millions) (b)

Digital is an integrated platform that gives clients direct access to people and organizational data, insights, analytics, and digital assets that when used together, give clients a common language for all talent matters.


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

Fee revenue

$

75.0

$

65.7

$

131.0

$

123.7

Total revenue

$

75.0

$

65.7

$

131.1

$

123.7

Operating income

$

15.8

$

18.6

$

13.2

$

32.6

Operating margin

21.1%

28.2%

10.1%

26.3%

Ending number of consultants

299

348

299

348

Subscription & License fee revenue

$

22.7

$

15.9

$

43.8

$

31.3


EBITDA Results (c):


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

EBITDA

$

23.0

$

22.4

$

27.5

$

40.2

EBITDA margin

30.7%

34.1%

21.0%

32.5%


Adjusted Results (d):


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

Adjusted EBITDA (c)

$

23.1

$

22.4

$

31.0

$

40.2

Adjusted EBITDA margin (c)

30.8%

34.1%

23.7%

32.5%

_____________________

(a)

In the third quarter of fiscal 2020, the Company changed the composition of its global segments.  Digital segment represents the products business that was previously included in the Advisory segment.  Segment data for Q2 FY’20 has been recast to reflect the division of the Advisory segment into the Consulting and Digital segments.

(b)

Numbers may not total due to rounding.

(c)

EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures (see attached reconciliations).

(d)

Adjusted results are non-GAAP financial measures that adjust for the following (see attached reconciliations):


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

Integration/acquisition costs

$

—

$

—

$

0.6

$

—

Restructuring charges, net

$

0.1

$

—

$

2.9

$

—

Fee revenue was $75.0 million in Q2 FY’21 compared to $65.7 million in Q2 FY’20, an increase of $9.3 million or 14% (13% on a constant currency basis).  The increase in fee revenue was primarily due to fee revenue generated by the acquired companies.

Operating income was $15.8 million in Q2 FY’21 with an operating margin of 21.1% compared to operating income of $18.6 million and an operating margin of 28.2% in the year-ago quarter.  Contributing to the change was an increase in compensation and benefits expense, cost of services expense and depreciation and amortization expense, relating to the acquired companies, which was partially offset by the cost saving initiatives that were put in place and an increase in fee revenue outlined above.

Adjusted EBITDA was $23.1 million in Q2 FY’21 with an Adjusted EBITDA margin of 30.8% compared to $22.4 million and 34.1%, respectively, in the year-ago quarter.  The increase in Adjusted EBITDA was due to the same factors impacting operating income described above except for depreciation and amortization expense.

Selected Executive Search Data

(dollars in millions) (a)


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

Fee revenue

$

148.1

$

187.9

$

268.2

$

381.1

Total revenue

$

148.6

$

192.0

$

269.5

$

390.0

Operating income

$

25.6

$

41.2

$

13.3

$

86.9

Operating margin

17.3%

21.9%

5.0%

22.8%

Ending number of consultants

512

585

512

585

Average number of consultants

511

577

534

575

Engagements billed

3,082

3,848

4,618

6,086

New engagements (b)

1,331

1,575

2,446

3,270


EBITDA Results (c):


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

EBITDA

$

27.3

$

44.0

$

26.2

$

92.9

EBITDA margin

18.5%

23.4%

9.8%

24.4%


Adjusted Results (d):


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

Adjusted EBITDA (c)

$

28.2

$

44.0

$

36.3

$

92.9

Adjusted EBITDA margin (c)

19.1%

23.4%

13.5%

24.4%

____________________

(a)

Numbers may not total due to rounding.

(b)

Represents new engagements opened in the respective period.

(c)

EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures (see attached reconciliations).

(d)

Adjusted results are non-GAAP financial measures that adjust for the following (see attached reconciliations):


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

Restructuring charges, net

$

0.9

$

—

$

10.0

$

—

Fee revenue was $148.1 million and $187.9 million in Q2 FY’21 and Q2 FY’20, respectively, a decrease of $39.8 million or 21% (down 22% on a constant currency basis).  The decrease in fee revenue was attributable to a decline in fee revenue in all regions due to the decrease in demand for our products and services because of the worldwide economic downturn associated with COVID-19.

Operating income was $25.6 million in Q2 FY’21 compared to operating income of $41.2 million in Q2 FY’20.  Operating margin was 17.3% in Q2 FY’21 compared to 21.9% in the year-ago quarter.  The change was mainly due to a decrease in fee revenue in Q2 FY’21 as compared to the year-ago quarter, partially offset by a decrease in compensation and benefits expense driven by a reduction in headcount and a decline in general and administrative expenses, all of which resulted from the cost saving initiatives that were put in place.

Adjusted EBITDA was $28.2 million in Q2 FY’21 with an Adjusted EBITDA margin of 19.1% compared to $44.0 million and 23.4%, respectively, in the year-ago quarter.  The decrease in Adjusted EBITDA was due to the same factors impacting operating income described above.

Selected RPO and Professional Search Data

(dollars in millions) (a)


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

Fee revenue

$

85.7

$

94.8

$

154.3

$

190.6

Total revenue

$

87.1

$

98.3

$

157.5

$

197.2

Operating income

$

12.5

$

15.1

$

14.7

$

30.1

Operating margin

14.6%

15.9%

9.5%

15.8%

Engagements billed (b)

1,173

1,441

1,778

2,274

New engagements (c)

657

693

1,221

1,460


EBITDA Results (d):


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

EBITDA

$

13.5

$

16.1

$

16.8

$

32.2

EBITDA margin

15.7%

17.0%

10.9%

16.9%


Adjusted Results (e):


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

Adjusted EBITDA (d)

$

13.8

$

16.1

$

19.8

$

32.2

Adjusted EBITDA margin (d)

16.1%

17.0%

12.8%

16.9%

____________________

(a)

Numbers may not total due to rounding.

(b)

Represents professional search engagements billed.

(c)

Represents new professional search engagements opened in the respective period.

(d)

EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures (see attached reconciliations).

(e)

Adjusted results are non-GAAP financial measures that adjust for the following (see attached reconciliations):


Second Quarter


Year to Date


FY’21


FY’20


FY’21


FY’20

Restructuring charges, net

$

0.3

$

—

$

3.1

$

—

Fee revenue was $85.7 million in Q2 FY’21, a decrease of $9.1 million or 10% (decrease of 11% on a constant currency basis), compared to the year-ago quarter.  The lower fee revenue was driven by a decrease in professional search and recruitment process outsourcing of $7.7 million and $1.4 million, respectively, due to of the worldwide economic downturn associated with COVID-19.  For the quarter, professional search was down 21% (22% on a constant currency) and RPO was down 3% (4% at constant currency), both compared to the year-ago quarter.

Operating income was $12.5 million in Q2 FY’21, a decrease of $2.6 million compared to operating income of $15.1 million in Q2 FY’20.  Operating margin was 14.6% in the current quarter compared to 15.9% in the year-ago quarter.  Adjusted EBITDA was $13.8 million in Q2 FY’21 with an Adjusted EBITDA margin of 16.1% in Q2 FY’21 compared to $16.1 million and 17.0%, respectively, in the year-ago quarter.  The decrease in operating income and Adjusted EBITDA was due to the lower fee revenue discussed above, partially offset by a decrease in compensation and benefits expense driven by a reduction in headcount and a decline in general and administrative expenses, both of which resulted from the cost saving initiatives that were put in place.

Outlook

Approximately three months have passed since our last earnings call and, while advances have been made in the science and societal and economic consequences of COVID-19, there remains significant uncertainty about the ultimate impact of COVID-19.  On the positive side, there have been several announcements around vaccines that have greater than 90% effectiveness.  In addition, the world has adopted new ways of working and interacting with substantial acceptance of business being conducted in a virtual world.  On the negative side, there are a number of unanswered questions regarding the capacity to manufacture the vaccines at scale as well as how they will be distributed and administered to the population at large.  In addition, we are seeing governments putting lockdowns back in place as the number of COVID-19 cases and hospitalizations reach all-time highs.

The constantly evolving and unprecedented nature of what we are currently experiencing, combined with all the unanswered questions and ever-changing datapoints, continues to cloud the near-term predictability of our business.  Consequently, and consistent with our approach to the fourth quarter of FY’20 and first and second quarters of FY’21, we will not issue any specific revenue or earnings guidance for the third quarter of FY’21.  We plan to reassess the suspension of our guidance once we are comfortable that the coronavirus uncertainties have largely passed.

Earnings Conference Call Webcast

The earnings conference call will be held today at 12:00 PM (EST) and hosted by CEO Gary Burnison, CFO Robert Rozek and SVP Finance Gregg Kvochak.  The conference call will be webcast and available online at ir.kornferry.com.  We will also post to this section of our website earnings slides, which will accompany our webcast, and other important information, and encourage you to review the information that we make available on our website.

About Korn Ferry

Korn Ferry is a global organizational consulting firm.  We help clients synchronize strategy and talent to drive superior performance.  We work with organizations to design their structures, roles, and responsibilities.  We help them hire the right people to bring their strategy to life.  And we advise them on how to reward, develop, and motivate their people.  Visit kornferry.com for more information.


Forward-Looking Statements

Statements in this press release and our conference call that relate to future results and events (“forward-looking statements”) are based on Korn Ferry’s current expectations.  These statements, which include words such as “believes”, “expects”, “anticipates:” or “likely”, include references to our outlook as well as the expected benefits of the acquisition of the acquired companies (as defined below), the timing and expected benefits of our restructuring plan, the magnitude and duration of the impact of the COVID-19 outbreak on our business, employees, customers and our ability to provide services in affected regions, and the potential opportunities for our business as a result of worldwide changes in how companies conduct business as a result of COVID-19.  Readers are cautioned not to place undue reliance on such statements.  Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties that are beyond the control of Korn Ferry.  The potential risks and uncertainties include those relating to the magnitude and duration of the negative impact of the COVID-19 outbreak on our business, employees, customers and our ability to provide services in affected regions, global and local political or economic developments in or affecting countries where we have operations, competition, changes in demand for our services as a result of automation, the dependence on and costs of attracting and retaining qualified and experienced consultants, our ability to maintain relationships with customers and suppliers and retain key employees, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, the portability of client relationships, consolidation of the industries we serve, currency fluctuations in our international operations, risks related to growth, alignment of our cost structure, restrictions imposed by off-limits agreements, reliance on information processing systems, cyber security vulnerabilities, changes to data security, data privacy and data protection laws, limited protection of our intellectual property, our ability to enhance and develop new technology, our ability to develop new products and services, the utilization and billing rates of our consultants, dependence on third parties for the execution of critical functions, our ability to successfully recover from a disaster or other business continuity problems, changes in our accounting estimates/assumptions, technical guidance relating to the Tax Act, treaties, or regulations on our business and our company, impairment of goodwill and other intangible assets, deferred tax assets that we may not be able to use, our indebtedness, the phase-out of the London Interbank Offered Rate, expansion of social media platforms, seasonality, ability to effect acquisition and integrate recently acquired companies, including those of Miller Heiman Group, AchieveForum, and Strategy Execution (collectively, the “acquired companies”); the ability to recognize the anticipated benefits of the acquisition of the acquired companies; the costs related to the acquisition of the acquired companies and employment liability risk
.  For a detailed description of risks and uncertainties that could cause differences, please refer to Korn Ferry’s periodic filings with the Securities and Exchange Commission.  Korn Ferry disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


Use of Non-GAAP Financial Measures

This press release contains financial information calculated other than in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).  In particular, it includes:

  • Adjusted net income attributable to Korn Ferry, adjusted to exclude integration/acquisition costs and restructuring charges, net of income tax effect
    ;
  • Adjusted basic and diluted earnings per share, adjusted to exclude integration/acquisition costs and restructuring charges, net of income tax effect;
  • Constant currency (calculated using a quarterly average) percentages that represent the percentage change that would have resulted had exchange rates in the prior period been the same as those in effect in the current period;
  • EBITDA, or earnings before interest, taxes, depreciation and amortization and EBITDA margin; and
  • Adjusted EBITDA, which is EBITDA further adjusted to exclude integration/acquisition costs and restructuring charges, and Adjusted EBITDA margin.

This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial information determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Management believes the presentation of non-GAAP financial measures in this press release provides meaningful supplemental information regarding Korn Ferry’s performance by excluding certain charges that may not be indicative of Korn Ferry’s ongoing operating results.  These non-GAAP financial measures are performance measures and are not indicative of the liquidity of Korn Ferry.  These charges, which are described in the footnotes in the attached reconciliations, represent 1) costs we incurred to acquire and integrate a portion of our Digital business and 2) charges we incurred to restructure the Company as a result of COVID-19.  The use of non-GAAP financial measures facilitates comparisons to Korn Ferry’s historical performance.  Korn Ferry includes non-GAAP financial measures because management believes they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its evaluation of Korn Ferry’s ongoing operations and financial and operational decision-making.  Adjusted net income attributable to Korn Ferry, adjusted basic and diluted earnings per share and Adjusted EBITDA, exclude certain charges that management does not consider on-going in nature and allows management and investors to make more meaningful period-to-period comparisons of the Company’s operating results.  Management further believes that EBITDA is useful to investors because it is frequently used by investors and other interested parties to measure operating performance among companies with different capital structures, effective tax rates and tax attributes and capitalized asset values, all of which can vary substantially from company to company.  In the case of constant currency percentages, management believes the presentation of such information provides useful supplemental information regarding Korn Ferry’s performance as excluding the impact of exchange rate changes on Korn Ferry’s financial performance allows investors to make more meaningful period-to-period comparisons of the Company’s operating results, to better identify operating trends that may otherwise be masked or distorted by exchange rate changes and to perform related trend analysis, and provides a higher degree of transparency of information used by management in its evaluation of Korn Ferry’s ongoing operations and financial and operational decision-making.

[Tables attached]


KORN FERRY AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS


(in thousands, except per share amounts)


Three Months Ended


Six Months Ended


October 31,


October 31,


2020


2019


2020


2019


(unaudited)

 Fee revenue

$

435,439

$

492,389

$

779,536

$

976,938

 Reimbursed out-of-pocket engagement expenses

2,350

11,788

5,136

23,437

           Total revenue

437,789

504,177

784,672

1,000,375

 Compensation and benefits

307,185

337,382

591,197

665,878

 General and administrative expenses

46,476

62,009

93,565

127,816

 Reimbursed expenses

2,350

11,788

5,136

23,437

 Cost of services

15,901

18,414

30,170

35,549

 Depreciation and amortization

15,298

12,715

30,333

25,492

 Restructuring charges, net

2,407

–

29,894

–

           Total operating expenses

389,617

442,308

780,295

878,172

 Operating income

48,172

61,869

4,377

122,203

 Other income, net

277

1,133

11,439

2,959

 Interest expense, net

(7,494)

(4,210)

(14,388)

(8,267)

 Income before provision for income taxes

40,955

58,792

1,428

116,895

 Income tax provision

12,877

15,760

4,205

30,213

 Net income (loss)

28,078

43,032

(2,777)

86,682

           Net income attributable to noncontrolling interest

(300)

(228)

(278)

(927)

 Net income (loss) attributable to Korn Ferry

$

27,778

$

42,804

$

(3,055)

$

85,755

 Earnings (loss) per common share attributable to Korn Ferry:

      Basic

$

0.51

$

0.78

$

(0.06)

$

1.54

      Diluted

$

0.51

$

0.77

$

(0.06)

$

1.54

 Weighted-average common shares outstanding:

      Basic

53,229

54,568

53,246

54,917

      Diluted

53,390

54,716

53,246

55,170

 Cash dividends declared per share:

$

0.10

$

0.10

$

0.20

$

0.20


KORN FERRY AND SUBSIDIARIES


FINANCIAL SUMMARY BY SEGMENT


(in thousands)


(unaudited)


Three Months Ended October 31,


Six Months Ended October 31,


2020


2019


%
 
Change


2020


2019


%
 
Change


Fee revenue:

Consulting

$

126,685

$

144,036

(12.0%)

$

226,003

$

281,578

(19.7%)

Digital

75,043

65,724

14.2%

131,016

123,708

5.9%

Executive Search:

North America

91,168

113,818

(19.9%)

160,483

225,540

(28.8%)

EMEA

31,629

39,821

(20.6%)

61,710

86,351

(28.5%)

Asia Pacific

20,807

25,944

(19.8%)

38,059

53,306

(28.6%)

Latin America

4,456

8,272

(46.1%)

7,951

15,857

(49.9%)

Total Executive Search

148,060

187,855

(21.2%)

268,203

381,054

(29.6%)

RPO and Professional Search

85,651

94,774

(9.6%)

154,314

190,598

(19.0%)

Total fee revenue

435,439

492,389

(11.6%)

779,536

976,938

(20.2%)

Reimbursed out-of-pocket engagement expenses

2,350

11,788

(80.1%)

5,136

23,437

(78.1%)

Total revenue

$

437,789

$

504,177

(13.2%)

$

784,672

$

1,000,375

(21.6%)


Operating income (loss):


Margin


Margin


Margin


Margin

Consulting

$

14,621

11.5%

$

9,826

6.8%

$

3,694

1.6%

$

21,609

7.7%

Digital

15,823

21.1%

18,565

28.2%

13,196

10.1%

32,573

26.3%

Executive Search:

North America

20,491

22.5%

28,124

24.7%

14,756

9.2%

58,446

25.9%

EMEA

1,509

4.8%

6,511

16.4%

(4,710)

(7.6%)

13,822

16.0%

Asia Pacific

3,253

15.6%

5,803

22.4%

4,114

10.8%

12,796

24.0%

Latin America

375

8.4%

791

9.6%

(842)

(10.6%)

1,801

11.4%

Total Executive Search

25,628

17.3%

41,229

21.9%

13,318

5.0%

86,865

22.8%

RPO and Professional Search

12,502

14.6%

15,094

15.9%

14,667

9.5%

30,135

15.8%

Corporate

(20,402)

(22,845)

(40,498)

(48,979)

 Total operating income

$

48,172

11.1%

$

61,869

12.6%

$

4,377

0.6%

$

122,203

12.5%


KORN FERRY AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS


(in thousands, except per share amounts)


October 31,


April 30,


2020


2020


(unaudited)



ASSETS

Cash and cash equivalents

$

553,109

$

689,244

Marketable securities

47,719

41,951

Receivables due from clients, net of allowance for doubtful accounts of $27,853 and $23,795 at October 31, 2020 and April 30, 2020, respectively

435,393

397,165

Income taxes and other receivables

52,995

38,755

Unearned compensation

50,688

43,117

Prepaid expenses and other assets

30,984

26,851

Total current assets

1,170,888

1,237,083

Marketable securities, non-current

146,625

132,134

Property and equipment, net

136,035

142,728

Operating lease right-of-use assets, net

183,926

195,077

Cash surrender value of company-owned life insurance policies, net of loans

150,190

146,408

Deferred income taxes

49,908

55,479

Goodwill

621,560

613,943

Intangible assets, net

102,351

111,926

Unearned compensation, non-current

105,569

79,510

Investments and other assets

25,590

29,540

Total assets

$

2,692,642

$

2,743,828



LIABILITIES AND STOCKHOLDERS’ EQUITY

Accounts payable

$

37,639

$

45,684

Income taxes payable

10,591

21,158

Compensation and benefits payable

247,016

280,911

Operating lease liability, current

51,961

54,851

Other accrued liabilities

211,704

221,603

Total current liabilities

558,911

624,207

Deferred compensation and other retirement plans

312,187

289,136

Operating lease liability, non-current

167,116

180,766

Long-term debt

394,465

394,144

Deferred tax liabilities

556

1,056

Other liabilities

37,885

30,828

Total liabilities

1,471,120

1,520,137

Stockholders’ equity

Common stock: $0.01 par value, 150,000 shares authorized, 74,845 and 73,205 shares issued and 54,153 and 54,450 shares outstanding at October 31, 2020 and April 30, 2020, respectively

575,103

585,560

Retained earnings

728,524

742,993

Accumulated other comprehensive loss, net

(83,655)

(107,172)

Total Korn Ferry stockholders’ equity

1,219,972

1,221,381

Noncontrolling interest

1,550

2,310

Total stockholders’ equity

1,221,522

1,223,691

Total liabilities and stockholders’ equity

$

2,692,642

$

2,743,828


KORN FERRY AND SUBSIDIARIES


RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES


(in thousands, except per share amounts)


Three Months Ended


Six Months Ended


October 31,


October 31,


2020


2019


2020


2019


(unaudited)

 Net income (loss) attributable to Korn Ferry

$

27,778

$

42,804

$

(3,055)

$

85,755

 Net income attributable to non-controlling interest

300

228

278

927

      Net income (loss)

28,078

43,032

(2,777)

86,682

 Income tax provision

12,877

15,760

4,205

30,213

     Income before provision for income taxes

40,955

58,792

1,428

116,895

 Other income, net

(277)

(1,133)

(11,439)

(2,959)

 Interest expense, net

7,494

4,210

14,388

8,267

      Operating income

48,172

61,869

4,377

122,203

 Depreciation and amortization

15,298

12,715

30,333

25,492

 Other income, net

277

1,133

11,439

2,959

         EBITDA

63,747

75,717

46,149

150,654

 Integration/acquisition costs (1)

–

2,615

737

2,615

 Restructuring charges, net (2)

2,407

–

29,894

–

         Adjusted EBITDA

$

66,154

$

78,332

$

76,780

$

153,269

 Operating margin

11.1%

12.6%

0.6%

12.5%

 Depreciation and amortization

3.4%

2.6%

3.9%

2.6%

 Other income, net

0.1%

0.2%

1.4%

0.3%

         EBITDA margin

14.6%

15.4%

5.9%

15.4%

 Integration/acquisition costs (1)

–

0.5%

0.1%

0.3%

 Restructuring charges, net (2)

0.6%

–

3.8%

–

         Adjusted EBITDA margin

15.2%

15.9%

9.8%

15.7%

 Net income (loss) attributable to Korn Ferry

$

27,778

$

42,804

$

(3,055)

$

85,755

 Integration/acquisition costs (1)

–

2,615

737

2,615

 Restructuring charges, net (2)

2,407

–

29,894

–

 Tax effect on the adjusted items (3)

(717)

(668)

(8,321)

(668)

         Adjusted net income attributable to Korn Ferry

$

29,468

$

44,751

$

19,255

$

87,702

 Basic earnings (loss) per common share

$

0.51

$

0.78

$

(0.06)

$

1.54

 Integration/acquisition costs (1)

–

0.05

0.01

0.05

 Restructuring charges, net (2)

0.04

–

0.56

–

 Tax effect on the adjusted items (3)

(0.01)

(0.02)

(0.16)

(0.01)

         Adjusted basic earnings per share

$

0.54

$

0.81

$

0.35

$

1.58

 Diluted earnings (loss) per common share

$

0.51

$

0.77

$

(0.06)

$

1.54

 Integration/acquisition costs (1)

–

0.05

0.01

0.04

 Restructuring charges, net (2)

0.04

–

0.56

–

 Tax effect on the adjusted items (3)

(0.01)

(0.01)

(0.16)

(0.01)

         Adjusted diluted earnings per share

$

0.54

$

0.81

$

0.35

$

1.57


 


 Explanation of Non-GAAP Adjustments

(1)

Costs associated with previous acquisitions, such as legal and professional fees, retention awards and the on-going integration expenses to combine the companies.

(2)

Restructuring charges we incurred to rationalize our cost structure by eliminating redundant positions because of COVID-19.

(3)

Tax effect on integration/acquisition costs and restructuring charges, net.


KORN FERRY AND SUBSIDIARIES


RECONCILIATION OF NET INCOME AND OPERATING INCOME (GAAP) TO


EBITDA AND ADJUSTED EBITDA (NON-GAAP)


(in thousands)


(unaudited)


Three Months Ended October 31, 2020


Executive Search


Consulting


Digital


North
America


EMEA


Asia
Pacific


Latin America


Subtotal


RPO and Professional Search


Corporate


Consolidated

Fee revenue

$

126,685

$

75,043

$

91,168

$

31,629

$

20,807

$

4,456

$

148,060

$

85,651

$

–

$

435,439

Total revenue

$

127,051

$

75,038

$

91,609

$

31,714

$

20,820

$

4,456

$

148,599

$

87,101

$

–

$

437,789

Net income attributable to Korn Ferry

$

27,778

Net income attributable to noncontrolling interest

300

Other income net

(277)

Interest expense, net

7,494

Income tax provision

12,877

Operating income (loss)

$

14,621

$

15,823

$

20,491

$

1,509

$

3,253

$

375

$

25,628

$

12,502

$

(20,402)

48,172

Depreciation and amortization

4,063

7,005

716

355

250

202

1,523

945

1,762

15,298

Other income (loss), net

336

202

(9)

31

166

7

195

24

(480)

277

EBITDA

19,020

23,030

21,198

1,895

3,669

584

27,346

13,471

(19,120)

63,747

EBITDA margin

15.0%

30.7%

23.3%

6.0%

17.6%

13.1%

18.5%

15.7%

14.6%

Restructuring, charges, net

1,143

54

(12)

922

(28)

–

882

328

–

2,407

Adjusted EBITDA

$

20,163

$

23,084

$

21,186

$

2,817

$

3,641

$

584

$

28,228

$

13,799

$

(19,120)

$

66,154

Adjusted EBITDA margin

15.9%

30.8%

23.2%

8.9%

17.5%

13.1%

19.1%

16.1%

15.2%


Three Months Ended October 31, 2019


Executive Search


Consulting


Digital


North
America


EMEA


Asia
Pacific


Latin America


Subtotal


RPO and Professional Search


Corporate


Consolidated

Fee revenue

$

144,036

$

65,724

$

113,818

$

39,821

$

25,944

$

8,272

$

187,855

$

94,774

$

–

$

492,389

Total revenue

$

148,198

$

65,724

$

117,077

$

40,441

$

26,168

$

8,273

$

191,959

$

98,296

$

–

$

504,177

Net income attributable to Korn Ferry

$

42,804

Net income attributable to noncontrolling interest

228

Other income, net

(1,133)

Interest expense, net

4,210

Income tax provision

15,760

Operating income (loss)

$

9,826

$

18,565

$

28,124

$

6,511

$

5,803

$

791

$

41,229

$

15,094

$

(22,845)

61,869

Depreciation and amortization

4,357

3,685

869

450

329

315

1,963

990

1,720

12,715

Other income (loss), net

386

134

637

107

72

30

846

54

(287)

1,133

EBITDA

14,569

22,384

29,630

7,068

6,204

1,136

44,038

16,138

$

(21,412)

75,717

EBITDA margin

10.1%

34.1%

26.0%

17.7%

23.9%

13.7%

23.4%

17.0%

15.4%

Integration/acquisition costs

–

–

–

–

–

–

–

–

2,615

2,615

Adjusted EBITDA

$

14,569

$

22,384

$

29,630

$

7,068

$

6,204

$

1,136

$

44,038

$

16,138

$

(18,797)

$

78,332

Adjusted EBITDA margin

10.1%

34.1%

26.0%

17.7%

23.9%

13.7%

23.4%

17.0%

15.9%


 


KORN FERRY AND SUBSIDIARIES


RECONCILIATION OF NET (LOSS) INCOME AND OPERATING INCOME (GAAP) TO


EBITDA AND ADJUSTED EBITDA (NON-GAAP)


(in thousands)


(unaudited)


Six Months Ended October 31, 2020


Executive Search


Consulting


Digital


North
America


EMEA


Asia
Pacific


Latin


America


Subtotal


RPO and Professional Search


Corporate


Consolidated

Fee revenue

$

226,003

$

131,016

$

160,483

$

61,710

$

38,059

$

7,951

$

268,203

$

154,314

$

–

$

779,536

Total revenue

$

226,641

$

131,060

$

161,465

$

61,909

$

38,160

$

7,951

$

269,485

$

157,486

$

–

$

784,672

Net loss attributable to Korn Ferry

$

(3,055)

Net income attributable to noncontrolling interest

278

Other income, net

(11,439)

Interest expense, net

14,388

Income tax provision

4,205

Operating income (loss)

$

3,694

$

13,196

$

14,756

$

(4,710)

$

4,114

$

(842)

$

13,318

$

14,667

$

(40,498)

4,377

Depreciation and amortization

8,072

13,731

1,446

717

525

404

3,092

1,885

3,553

30,333

Other income (loss), net

1,124

620

9,333

50

392

55

9,830

220

(355)

11,439

EBITDA

12,890

27,547

25,535

(3,943)

5,031

(383)

26,240

16,772

(37,300)

46,149

EBITDA margin

5.7%

21.0%

15.9%

(6.4)%

13.2%

(4.8%)

9.8%

10.9%

5.9%

Integration/acquisition costs

–

556

–

–

–

–

–

–

181

737

Restructuring charges, net

13,877

2,924

963

8,470

204

405

10,042

3,051

–

29,894

Adjusted EBITDA

$

26,767

$

31,027

$

26,498

$

4,527

$

5,235

$

22

$

36,282

$

19,823

$

(37,119)

$

76,780

Adjusted EBITDA margin

11.8%

23.7%

16.5%

7.3%

13.8%

0.3%

13.5%

12.8%

9.8%


Six Months Ended October 31, 2019


Executive Search


Consulting


Digital


North


America


EMEA


Asia
Pacific


Latin
America


Subtotal


RPO and Professional Search


Corporate


Consolidated

Fee revenue

$

281,578

$

123,708

$

225,540

$

86,351

$

53,306

$

15,857

$

381,054

$

190,598

$

–

$

976,938

Total revenue

$

289,534

$

123,708

$

232,523

$

87,753

$

53,836

$

15,860

$

389,972

$

197,161

$

–

$

1,000,375

Net income attributable to Korn Ferry

$

85,755

Net income attributable to noncontrolling interest

927

Other income, net

(2,959)

Interest expense, net

8,267

Income tax provision

30,213

Operating income (loss)

$

21,609

$

32,573

$

58,446

$

13,822

$

12,796

$

1,801

$

86,865

$

30,135

$

(48,979)

122,203

Depreciation and amortization

8,771

7,324

1,770

906

675

643

3,994

1,982

3,421

25,492

Other income (loss), net

911

335

1,777

119

87

87

2,070

128

(485)

2,959

EBITDA

31,291

40,232

61,993

14,847

13,558

2,531

92,929

32,245

(46,043)

150,654

EBITDA margin

11.1%

32.5%

27.5%

17.2%

25.4%

16.0%

24.4%

16.9%

15.4%

Integration/acquisition costs

–

–

–

–

–

–

–

–

2,615

2,615

Adjusted EBITDA

$

31,291

$

40,232

$

61,993

$

14,847

$

13,558

$

2,531

$

92,929

$

32,245

$

(43,428)

$

153,269

Adjusted EBITDA margin

11.1%

32.5%

27.5%

17.2%

25.4%

16.0%

24.4%

16.9%

15.7%


 

 

 

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SOURCE Korn Ferry