ATA Creativity Global (“ACG” or the “Company”, Nasdaq:
AACG), an international educational services company
focused on providing quality learning experiences that cultivate
and enhance students’ creativity, today announced preliminary
unaudited financial results for the quarter ended March 31, 2021
(“First Quarter 2021”).
First Quarter 2021 Highlights
- During First Quarter 2021, student
enrollment was 964, an increase of 41.6% from 681 in the prior-year
period. Of these students, 528 were enrolled in ACG’s portfolio
training programs. Approximately 27,865 credit hours were delivered
during First Quarter 2021, an increase of 5.5% from 26,410 in the
prior-year period.
- First Quarter 2021 net revenues of
RMB37.6 million (US$5.7 million), an increase of 15.0% from RMB32.7
million in the prior-year period
- First Quarter 2021 net loss
attributable to ACG improved to RMB19.0 million (US$2.9 million),
from RMB20.5 million in the prior-year period
- RMB95.6 million (US$14.6 million) in
cash and cash equivalents as of March 31, 2021
Management Commentary
Mr. Kevin Ma, Chairman and CEO of ACG, stated, “2021 began
with continued progress in the recovering pandemic environment as
ACG reported a 41.6% year-over-year increase in total student
enrollment and 15% growth on the top line, which was primarily
driven by an overall increase in services delivered during First
Quarter 2021. We were pleased to see enrollment growth across all
our major programs, including portfolio training, overseas study
counselling and research-based learning services, which continues
to see strong demand and for which we continue to develop new
programs. As the recovery from the global pandemic continues to
unfold in the coming months, ACG is prepared to provide students
with the best possible offerings for their artistic and creative
pursuits whether that means a virtual workshop with a reputable
overseas partner institution or a local art-themed tour with a
small group of students. During First Quarter 2021, we saw strong
enrollment growth in our portfolio training programs with a total
of 528 students, an increase of 30.7% from the prior-year period,
as well as an increase in credit hours delivered by 5.5% to
27,865.”
Outlook
Mr. Jun Zhang, President of ACG, stated, “We were pleased to see
the positive turn in enrollment and credit hours delivered during
First Quarter 2021, which is a testament to the dedication of our
quality teaching staff and to the value our students see in our
academic and experiential offerings. We believe our improved and
expanded research-based learning services business will make strong
contributions toward the growth of ACG in 2021 as we are seeing
some pent-up demand for both in-person and online hands-on learning
experiences. We believe our current programs provide students with
a wide range of options for pursuing their creative education,
depending on their interests and preferred method of learning, and
we are proactively developing additional programs and ways in which
we can serve and nurture students with a passion for the arts.”
Operating Review
Enrollment Update
ACG student enrollment for First Quarter 2021 was 964, of which
528 were enrolled in its portfolio training programs, which consist
of time-based programs and project-based programs.
A total of 27,865 credit hours were delivered for portfolio
training programs during First Quarter 2021, of which 16,135 credit
hours were delivered for time-based programs and 11,730 credit
hours were delivered for project-based programs. These courses were
delivered either in person through ACG’s nationwide training center
network or via online platform.
The following is a summary of the credit hours delivered for
ACG’s portfolio training programs for First Quarter 2021, compared
to those for the prior-year period:
|
|
FirstQuarter EndedMar. 31,
2021 |
|
|
FirstQuarter EndedMar. 31,
2020 |
|
|
% Change |
|
|
No. of CreditHours |
|
|
No. of CreditHours |
|
|
|
|
|
|
|
|
|
|
|
|
Time-based Program |
|
16,135 |
|
|
16,655 |
|
|
(3.1%) |
Project-based Program |
|
11,730 |
|
|
9,755 |
|
|
20.2% |
Total |
|
27,865 |
|
|
26,410 |
|
|
5.5% |
During First Quarter 2021, 436 students were enrolled in ACG’s
other programs, which mainly consisted of overseas study
counselling, research-based learning services and foreign language
training services.
First Quarter 2021 Financial Review – GAAP
Results
ACG’s total net revenues for First Quarter 2021 increased 15.0%
to RMB37.6 million (US$5.7 million), from RMB32.7 million in the
prior-year period, which was primarily due to an increase in
services delivered across all of ACG’s major programs in a
recovering post-pandemic environment. Revenues from portfolio
training programs were RMB23.9 million, or 63.5% of total net
revenues, during the period. Revenues from overseas study
counselling, research-based learning services and other educational
services were RMB13.7 million, or 36.5% of total net revenues
during the period.
Gross profit for First Quarter 2021 increased 27.4% to RMB14.9
million (US$2.3 million), from RMB11.7 million in the prior-year
period. Gross margin improved to 39.6% during the period, compared
to 35.8% in the prior-year period.
Total operating expenses for First Quarter 2021 were RMB38.1
million (US$5.8 million), compared to RMB38.4 million in the
prior-year period.
Loss from operations for First Quarter 2021 was RMB23.2 million
(US$3.5 million), compared to RMB26.5 million in the prior-year
period, primarily as a result of the increased gross profit
mentioned above.
Net loss attributable to ACG for First Quarter 2021 improved to
RMB19.0 million (US$2.9 million), from RMB20.5 million in the
prior-year period, primarily as a result of the approximate RMB3.2
million improvement in loss from operations mentioned above, offset
by an RMB1.7 million in reduced benefit from non-redeemable
non-controlling interests.
For First Quarter 2021, basic and diluted losses per common
share attributable to ACG were both RMB0.33 (US$0.05), compared to
RMB0.35 for the prior-year period. Basic and diluted losses per ADS
attributable to ACG were both RMB0.66 (US$0.10), compared to
RMB0.70 in the prior-year period.
Non-GAAP Measures
Adjusted net loss attributable to ACG for First Quarter 2021,
which excludes share-based compensation expense and foreign
currency exchange gain (loss) (non-GAAP), was RMB18.9 million
(US$2.9 million), compared to adjusted net loss of RMB19.8 million
in the prior-year period.
Basic and diluted losses per common share attributable to ACG
excluding share-based compensation expense and foreign currency
exchange gain (non-GAAP) for First Quarter 2021, were RMB0.32
(US$0.05). Basic and diluted losses per ADS attributable to ACG
excluding share-based compensation expense and foreign currency
exchange gain (non-GAAP) for First Quarter 2021 were RMB0.64
(US$0.10).
Please see the note about non-GAAP measures and the
reconciliation table at the end of this press release.
Other Data
The number of weighted average ADSs used to calculate both basic
and diluted earnings per ADS for First Quarter 2021 were 31.4
million. Each ADS represents two common shares.
Balance Sheet Highlights
As of March 31, 2021, ACG’s cash and cash equivalents were
RMB95.6 million (US$14.6 million), working capital deficit was
RMB173.4 million (US$26.5 million), and total shareholders’ equity
was RMB178.5 million (US$27.2 million); compared to cash and cash
equivalents of RMB112.7 million, working capital deficit of
RMB153.9 million, and total shareholders’ equity of RMB199.2
million, respectively, as of December 31, 2020.
Conference Call and Webcast Information (With
Accompanying Presentation)
ACG will host a conference call at 9 p.m. Eastern Time
on Thursday, May 13, 2021 (9 a.m. Beijing time on Friday, May 14,
2021), during which management will discuss the results of the
quarter ended March 31, 2021.
To participate in the conference call, please use the following
dial-in numbers about 10 minutes prior to the scheduled conference
call time:
U.S. & Canada (Toll-Free): |
|
+1 (877) 407-9122 |
International (Toll): |
|
+1 (201) 493-6747 |
|
|
|
|
Local Access |
China: |
(400) 120 2840 |
Hong Kong: |
(800) 965561 |
A live webcast of the conference call can be accessed at:
https://78449.themediaframe.com/dataconf/productusers/atac/mediaframe/45084/indexl.html.
An accompanying slide presentation will also be made available
30 minutes prior to the conference call at the investor relations
section of ACG’s website (https://ir.atai.net.cn/). To listen to
the webcast, please visit ACG’s website a few minutes prior to the
start of the call to register, download, and install any necessary
audio software.
A replay will be available shortly after the call and will
remain available for 90 days.
About ATA Creativity Global
ATA Creativity Global is an international educational services
company focused on providing quality learning experiences that
cultivate and enhance students’ creativity. ATA Creativity Global
offers a wide range of education services consisting primarily of
portfolio training, research-based learning services, overseas
study counselling and other educational services through its
training center network. For more information, please visit ACG’s
website at www.atai.net.cn.
Cautionary Note Regarding Forward-looking
Statements
This announcement contains 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, and as defined in the Private Securities
Litigation Reform Act of 1995.
These forward-looking statements can be identified by terms such
as “anticipate,” “believe,” “could,” “estimate,” “expect,”
“forecast,” “future,” “intend,” “look forward to,” “outlook,”
“plan,” “should,” “will,” and similar terms and include, among
other things, statements regarding ACG’s future growth and
results of operations; ACG’s plans for mergers and acquisitions
generally; ACG’s growth strategy, anticipated growth prospects and
subsequent business activities; market demand for ACG’s portfolio
training programs and other education services; the impact of
COVID-19 on ACG and its operations; and ACG’s plan and anticipated
benefits of the measures implemented in response to COVID-19.
The factors that could cause the Company’s actual financial and
operating results to differ from what the Company currently
anticipates may include its ability to develop and create content
that could accommodate needs of potential students, its ability to
provide effective creative related international education services
and control sales and marketing expenses, its recognition in the
marketplace for services it delivered and branding it established,
its ability to integrate the acquired business, its ability to
maintain market share amid increasing competition, its ability to
identify and execute on M&A opportunities within the education
sector, the economy of China, uncertainties with respect to China’s
legal and regulatory environments, the impact of COVID-19 and other
factors stated in the Company’s filings with the U.S. Securities
and Exchange Commission (“SEC”).
The financial information contained in this release should be
read in conjunction with the consolidated financial statements and
related notes included in the Company’s annual report on
Form 20-F for its fiscal year ended December 31, 2020,
and other filings that ACG has made with the SEC. The filings are
available on the SEC’s website at www.sec.gov and at
ACG’s website at www.atai.net.cn. For additional information
on the risk factors that could adversely affect the Company’s
business, financial conditions, results of operations, and
prospects, please see the “Risk Factors” section of the Company’s
Form 20-F for the fiscal year ended December 31,
2020.
The forward-looking statements in this release involve known and
unknown risks and uncertainties and are based on current
expectations, assumptions, estimates, and projections about ACG and
the markets in which it operates. The Company undertakes no
obligation to update forward-looking statements, which speak only
as of the date of this release, to reflect subsequent events or
circumstances, or changes in its expectations, except as may be
required by law. Although the Company believes that its
expectations and assumptions expressed in these forward-looking
statements are reasonable, the Company cannot assure you that its
expectations and assumptions will turn out to be correct, and
investors are cautioned that actual results may differ materially
from the anticipated results.
Currency Convenience Translation
The Company’s financial information is stated in Renminbi
(“RMB”), the currency of the People’s Republic of China. The
translations of RMB amounts for the quarter ended March 31,
2021, into U.S. dollars are included solely for the convenience of
readers and have been made at the rate of RMB6.5518 to US$1.00, the
noon buying rate as of March 31, 2021, in New York for cable
transfers in RMB per U.S. dollar as set forth in the H.10 weekly
statistical release of the Federal Reserve Board. Such translations
should not be construed as representations that RMB amounts could
be converted into U.S. dollars at that rate or any other rate, or
to be the amounts that would have been reported under U.S.
generally accepted accounting principles (“GAAP”).
About Non-GAAP Financial Measures
To supplement ACG’s consolidated financial information presented
in accordance with U.S. GAAP, ACG uses the following non-GAAP
financial measures: net income (loss) excluding share-based
compensation expense and foreign currency exchange gain or loss,
and basic and diluted earnings (losses) per common share and ADS
excluding share-based compensation expense and foreign currency
exchange gain or loss.
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. ACG believes these non-GAAP financial measures provide
meaningful supplemental information about its performance by
excluding share- based compensation expense and foreign currency
exchange gain or loss, which may not be indicative of its operating
performance.
ACG 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 ACG’s historical performance. ACG computes its
non-GAAP financial measures using a consistent method
from period to period. ACG 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 net income (loss) excluding
share-based compensation expense and foreign currency exchange gain
or loss and basic and diluted earnings (losses) per common share
and per ADS excluding share-based compensation expense and foreign
currency exchange gain or loss is that share-based compensation
charges and foreign currency exchange gain or loss have been, and
are expected to continue to be for the foreseeable future, a
significant recurring expense in ACG’s business.
Management compensates for these limitations by providing
specific information regarding the GAAP amounts excluded from each
non-GAAP measure. The table captioned “Reconciliations of Non-GAAP
Measures to the Most Comparable GAAP Measures” shown at the end of
this news release has more details on the reconciliations between
GAAP financial measures that are most directly comparable to the
non-GAAP financial measures used by ACG.
For more information on our company, please contact the
following individuals: |
|
At the Company |
Investor Relations |
ATA Creativity Global |
The Equity Group Inc. |
Amy Tung, CFO |
Carolyne Y. Sohn, Vice President |
+86 10 6518 1133 x 5518 |
415-568-2255 |
amytung@acgedu.cn |
csohn@equityny.com |
|
|
|
Adam Prior, Senior Vice President |
|
212-836-9606 |
|
aprior@equityny.com |
|
ATA CREATIVITY GLOBAL AND SUBSIDIARIES |
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
|
|
|
|
|
|
December 31, |
|
|
March 31, |
|
|
March 31, |
|
|
2020 |
|
|
2021 |
|
|
2021 |
|
|
RMB |
|
|
RMB |
|
|
USD |
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
112,723,433 |
|
|
95,572,345 |
|
|
14,587,189 |
|
Accounts receivable, net |
2,245,194 |
|
|
711,400 |
|
|
108,581 |
|
Prepaid expenses and other current assets |
5,970,973 |
|
|
8,122,879 |
|
|
1,239,793 |
|
Total current assets |
120,939,600 |
|
|
104,406,624 |
|
|
15,935,563 |
|
|
|
|
|
|
|
Long-term investments |
44,000,000 |
|
|
44,000,000 |
|
|
6,715,712 |
|
Goodwill |
194,754,963 |
|
|
194,754,963 |
|
|
29,725,413 |
|
Property and equipment, net |
38,119,216 |
|
|
38,180,465 |
|
|
5,827,477 |
|
Intangible assets, net |
110,586,111 |
|
|
106,277,778 |
|
|
16,221,157 |
|
Right-of-use assets |
41,779,086 |
|
|
40,789,196 |
|
|
6,225,647 |
|
Deferred income tax assets |
2,491,792 |
|
|
2,486,780 |
|
|
379,557 |
|
Other non-current assets |
22,950,264 |
|
|
23,917,446 |
|
|
3,650,515 |
|
Total assets |
575,621,032 |
|
|
554,813,252 |
|
|
84,681,041 |
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accrued expenses and other payables |
47,020,182 |
|
|
47,433,161 |
|
|
7,239,713 |
|
Short-term loans |
6,801,000 |
|
|
6,011,000 |
|
|
917,458 |
|
Payable for business acquisition |
4,642,082 |
|
|
— |
|
|
— |
|
Lease liabilities-current |
16,972,187 |
|
|
16,514,109 |
|
|
2,520,545 |
|
Deferred revenues |
199,448,112 |
|
|
207,839,887 |
|
|
31,722,563 |
|
Total current liabilities |
274,883,563 |
|
|
277,798,157 |
|
|
42,400,279 |
|
|
|
|
|
|
|
Lease Liabilities-non-current |
24,005,765 |
|
|
22,866,856 |
|
|
3,490,164 |
|
Deferred income tax liabilities |
28,985,472 |
|
|
26,255,728 |
|
|
4,007,407 |
|
Total liabilities |
327,874,800 |
|
|
326,920,741 |
|
|
49,897,850 |
|
|
|
|
|
|
|
Mezzanine equity-redeemable non-controlling
interests |
48,498,368 |
|
|
49,427,494 |
|
|
7,544,109 |
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
Common shares |
4,716,675 |
|
|
4,720,147 |
|
|
720,435 |
|
Treasury shares |
(11,625,924 |
) |
|
(10,761,126 |
) |
|
(1,642,469 |
) |
Additional paid-in capital |
541,272,503 |
|
|
540,596,152 |
|
|
82,511,089 |
|
Accumulated other comprehensive loss |
(37,424,722 |
) |
|
(37,334,223 |
) |
|
(5,698,315 |
) |
Retained earnings (accumulated deficit) |
(298,533,669 |
) |
|
(318,943,586 |
) |
|
(48,680,299 |
) |
Total shareholders’ equity attributable to
ACG |
198,404,863 |
|
|
178,277,364 |
|
|
27,210,441 |
|
Non-redeemable non-controlling interests |
843,001 |
|
|
187,653 |
|
|
28,641 |
|
Total shareholders’ equity |
199,247,864 |
|
|
178,465,017 |
|
|
27,239,082 |
|
Commitments and contingencies |
|
|
|
|
|
Total liabilities, mezzanine equity and shareholders’
equity |
575,621,032 |
|
|
554,813,252 |
|
|
84,681,041 |
|
|
ATA CREATIVITY GLOBAL AND SUBSIDIARIES |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS) |
|
|
Three-month Period Ended |
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
|
2020 |
|
|
2021 |
|
|
2021 |
|
|
RMB |
|
|
RMB |
|
|
USD |
|
Net revenues |
32,703,405 |
|
|
37,589,545 |
|
|
5,737,285 |
|
Cost of revenues |
20,979,552 |
|
|
22,716,005 |
|
|
3,467,140 |
|
Gross profit |
11,723,853 |
|
|
14,873,540 |
|
|
2,270,145 |
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
Research and development |
2,381,089 |
|
|
2,516,726 |
|
|
384,127 |
|
Sales and marketing |
11,502,625 |
|
|
13,322,987 |
|
|
2,033,485 |
|
General and administrative |
24,542,143 |
|
|
22,264,258 |
|
|
3,398,190 |
|
Total operating expenses |
38,425,857 |
|
|
38,103,971 |
|
|
5,815,802 |
|
Other operating income, net |
235,452 |
|
|
6,238 |
|
|
952 |
|
Loss from operations |
(26,466,552 |
) |
|
(23,224,193 |
) |
|
(3,544,705 |
) |
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
Investments loss |
(32,427 |
) |
|
— |
|
|
— |
|
Interest income, net of interest expenses |
387,579 |
|
|
280,739 |
|
|
42,849 |
|
Foreign currency exchange gain (loss), net |
(69,128 |
) |
|
87,620 |
|
|
13,373 |
|
Loss before income taxes |
(26,180,528 |
) |
|
(22,855,834 |
) |
|
(3,488,483 |
) |
Income tax benefit |
(2,786,536 |
) |
|
(2,719,696 |
) |
|
(415,107 |
) |
Net loss |
(23,393,992 |
) |
|
(20,136,138 |
) |
|
(3,073,376 |
) |
Net loss attributable to redeemable non-controlling interests |
(572,748 |
) |
|
(437,032 |
) |
|
(66,704 |
) |
Net loss attributable to non-redeemable non-controlling
interests |
(2,364,787 |
) |
|
(655,349 |
) |
|
(100,026 |
) |
Net loss attributable to ACG |
(20,456,457 |
) |
|
(19,043,757 |
) |
|
(2,906,646 |
) |
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
|
Foreign currency translation adjustment, net of nil income
taxes |
2,795,502 |
|
|
90,499 |
|
|
13,813 |
|
Comprehensive loss attributable to ACG |
(17,660,955 |
) |
|
(18,953,258 |
) |
|
(2,892,833 |
) |
|
|
|
|
|
|
Basic and diluted losses per common share attributable to ACG |
(0.35 |
) |
|
(0.33 |
) |
|
(0.05 |
) |
Basic and diluted losses per
ADS attributable to ACG |
(0.70 |
) |
|
(0.66 |
) |
|
(0.10 |
) |
|
RECONCILIATIONS OF NON-GAAP MEASURES |
TO THE MOST COMPARABLE GAAP MEASURES |
|
|
Three-month Period
Ended |
|
March 31, |
|
|
March 31, |
|
|
2020 |
|
|
2021 |
|
|
RMB |
|
|
RMB |
|
GAAP net loss attributable to
ACG |
(20,456,457 |
) |
|
(19,043,757 |
) |
Share-based compensation
expenses |
584,799 |
|
|
225,231 |
|
Foreign currency exchange loss
(gain), net |
69,128 |
|
|
(87,620 |
) |
Non-GAAP net loss attributable
to ACG |
(19,802,530 |
) |
|
(18,906,146 |
) |
|
|
|
|
GAAP losses per common share
attributable to ACG |
|
|
|
|
|
Basic and diluted |
(0.35 |
) |
|
(0.33 |
) |
|
|
|
|
Non-GAAP losses per common
share attributable to ACG |
|
|
|
|
|
Basic and diluted |
(0.34 |
) |
|
(0.32 |
) |
|
|
|
|
|
|
ATA Creativity Global (NASDAQ:AACG)
Historical Stock Chart
From Aug 2024 to Sep 2024
ATA Creativity Global (NASDAQ:AACG)
Historical Stock Chart
From Sep 2023 to Sep 2024