TAL Education Group Announces Unaudited Financial Results for the Third Fiscal Quarter Ended November 30, 2018

-Quarterly Net Revenues up by 35.3% Year-Over-Year

-Quarterly Income from Operations Increased by 59.2% Year-Over-Year

-Quarterly Non-GAAP Income from Operations Increased by 63.5% Year-Over-Year

-Quarterly Total Student Enrollments up by 68.4% Year-Over-Year

BEIJING, Jan. 24, 2019 /PRNewswire/ -- TAL Education Group (NYSE: TAL) ("TAL" or the "Company"), a leading K-12 after-school tutoring services provider in China, today announced its unaudited financial results for the third quarter of fiscal year 2019 ended November 30, 2018.

Highlights for the Third Quarter of Fiscal Year 2019

  • Net revenues increased by 35.3% year-over-year to US$586.0 million from US$433.3 million in the same period of the prior year.
  • Income from operations increased by 59.2% to US$71.0 million from US$44.6 million in the same period of the prior year.
  • Non-GAAP income from operations increased by 63.5% to US$92.9 million from US$56.8 million in the same period of the prior year.
  • Net income attributable to TAL increased by 204.5% year-over-year to US$123.8 million, from US$40.7 million in the same period of the prior year.
  • Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 175.5% to US$145.8 million from US$52.9 million in the same period of the prior year.
  • Basic and diluted net income per American Depositary Share ("ADS") were US$0.22 and US$0.21, respectively. Non-GAAP basic and diluted net income per ADS, excluding share-based compensation expenses, were US$0.26 and US$0.24, respectively. Three ADSs represent one Class A common share.
  • Cash, cash equivalents and short-term investments totaled US$1,612.3 million as of November 30, 2018, compared to US$1,498.9 million as of February 28, 2018.
  • Total student enrollments increased by 68.4% year-over-year to approximately 2,599,180 from approximately 1,543,740 in the same period of the prior year.

Highlights for the Nine Months Ended November 30, 2018

  • Net revenues increased by 51.7% year-over-year to US$1,836.4 million from US$1,210.9 million in the same period of the prior year.
  • Income from operations increased by 60.1% to US$226.9 million from US$141.7 million in the same period of fiscal year 2018.
  • Non-GAAP income from operations increased by 59.9% to US$281.9 million from US$176.3 million in the same period of the prior year.
  • Net income attributable to TAL increased by 107.6% year-over-year to US$267.6 million from US$128.9 million in the same period of the prior year.
  • Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 97.4% year-over-year to US$322.6 million from US$163.5 million in the same period of the prior year.
  • Basic and diluted net income per ADS were US$0.47 and US$0.45, respectively. Non-GAAP basic and diluted net income per ADS, excluding share-based compensation expenses, were US$0.57 and US$0.54, respectively.
  • Average student enrollments per quarter during fiscal year 2019 increased by 96.8% year-over-year to approximately 3,171,150 from approximately 1,611,290 in the same period of the prior year.
  • Total physical network increased from 594 learning centers in 42 cities as of February 28, 2018, to 666 learning centers in 54 cities as of November 30, 2018.

 

Financial and Operating Data - Third Quarter and First Nine months of Fiscal Year 2019

(In US$ thousands, except per ADS data, student enrollments and percentages)



Three Months Ended


November 30,


2017

2018

Pct. Change

Net revenues

433,265

585,991

35.3%

Operating income

44,597

70,996

59.2%

Non-GAAP operating income

56,844

92,931

63.5%

Net income attributable to TAL

40,662

123,834

204.5%

Non-GAAP net income attributable to

TAL

52,909

145,769

175.5%

Net income per ADS attributable to
TAL - basic

0.08

0.22

184.7%

Net income per ADS attributable to
TAL - diluted

0.07

0.21

193.2%

Non-GAAP net income per ADS
attributable to TAL - basic

0.10

0.26

157.5%

Non-GAAP net income per ADS
attributable to TAL - diluted

0.09

0.24

165.8%

Total student enrollments in small class,
one-on-one, and online courses

1,543,740

2,599,180

68.4%




Nine Months Ended


November 30,


2017

2018

Pct. Change

Net revenues

1,210,918

1,836,423

51.7%

Operating income

141,728

226,876

60.1%

Non-GAAP operating income

176,279

281,878

59.9%

Net income attributable to TAL

128,901

267,624

107.6%

Non-GAAP net income attributable to
TAL

163,452

322,626

97.4%

Net income per ADS attributable to
TAL - basic

0.24

0.47

94.2%

Net income per ADS attributable to
TAL - diluted

0.22

0.45

102.5%

Non-GAAP net income per ADS
attributable to TAL - basic

0.31

0.57

84.7%

Non-GAAP net income per ADS
attributable to TAL - diluted

0.28

0.54

93.3%

Average student enrollments per
quarter

1,611,290

3,171,150

96.8%

"Our third quarter revenue performance was based on healthy growth of small class business and the continued scaling of our online courses," said Mr. Rong Luo, TAL's Chief Financial Officer. "We are pleased to see that during the quarter, our overall financial and business performance have further improved due to our ongoing efforts to upgrade operational utilization and efficiency."

Mr. Luo continued, "TAL is as always committed to promote education through science and technology. For the long term, we will maintain our investments in enriching the content and all cutting-edge areas of educational technologies, which will enable students to develop their potential through both curriculum based and competence oriented tutoring programs."

Financial Results for the Third Quarter of Fiscal Year 2019

Net Revenues

In the third quarter of fiscal year 2019, TAL reported net revenues of US$586.0 million, representing a 35.3% increase from US$433.3 million in the third quarter of fiscal year 2018. The increase was mainly driven by an increase in total student enrollments, which increased by 68.4% to approximately 2,599,180 from approximately 1,543,740 in the same period of the prior year. The increase in total student enrollments was driven primarily by promotions in small class and online courses.

Operating Costs and Expenses

In the third quarter of fiscal year 2019, operating costs and expenses were US$515.4 million, a 32.4% increase from US$389.3 million in the third quarter of fiscal year 2018. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$493.5 million, a 30.9% increase from US$377.0 million in the third quarter of fiscal year 2018.

Cost of revenues increased by 21.0% to US$267.6 million, from US$221.1 million in the third quarter of fiscal year 2018. The increase in cost of revenues was mainly due to an increase in teacher compensation and rental costs. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increased by 21.0% to US$267.5 million from US$221.0 million in the third quarter of fiscal year 2018.

Selling and marketing expenses increased by 64.4% to US$101.6 million from US$61.8 million in the third quarter of fiscal year 2018. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 62.9% to US$98.5 million from US$60.5 million in the third quarter of fiscal year 2018. The increase of selling and marketing expenses in the third quarter of fiscal year 2019 was primarily a result of more marketing promotion activities to expand our customer base and brand enhancement, as well as a rise in the compensation to sales and marketing staff to support a greater number of programs and service offerings compared to the same period in the prior year.

General and administrative expenses increased by 37.9% to US$146.2 million from US$106.0 million in the third quarter of fiscal year 2018. The increase in general and administrative expenses was mainly due to an increase of the number of our general and administrative personnel compared to the same period in the prior year and a rise in compensation to our general and administrative personnel. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 33.9% to US$127.5 million from US$95.2 million in the third quarter of fiscal year 2018.

Total share-based compensation expenses allocated to the related operating costs and expenses increased by 79.1% to US$21.9 million in the third quarter of fiscal year 2019 from US$12.2 million in the same period of fiscal year 2018.

Gross Profit                                                                                                                                 

Gross profit increased by 50.1% to US$318.4 million from US$212.2 million in the third quarter of fiscal year 2018.

Income from Operations

Income from operations increased by 59.2% to US$71.0 million from US$44.6 million in the third quarter of fiscal year 2018. Non-GAAP income from operations, which excluded share-based compensation expenses, increased by 63.5% to US$92.9 million from US$56.8 million in the third quarter of fiscal year 2018.

Other Income

Other income was US$98.7 million for the third quarter of fiscal year 2019, compared to other income of US$5.4 million in the third quarter of fiscal year 2018. Other income in the third quarter of fiscal year 2019 was substantially all from the fair value changes of a long-term investment. The fair value changes of the long-term investment were transferred from accumulated other comprehensive income to other income as the investment was reclassified from available-for-sale investment to equity security with readily determinable fair value upon listing on the Hong Kong Exchange in November 2018.

Impairment loss on long-term investments

Impairment loss on long-term investments was US$41.1 million in the third quarter of fiscal year 2019, compared to US$1.5 million in the third quarter of fiscal year 2018. Impairment loss on long-term investments was mainly due to other-than-temporary declines in the value of long-term investments in several investees.

Income Tax Expense

Income tax expense was US$10.4 million in the third quarter of fiscal year 2019, compared to US$11.4 million in the third quarter of fiscal year 2018.

Net Income Attributable to TAL Education Group 

Net income attributable to TAL increased by 204.5% to US$123.8 million from US$40.7 million in the third quarter of fiscal year 2018. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 175.5% to US$145.8 million from US$52.9 million in the third quarter of fiscal year 2018.

Basic and Diluted Net Income per ADS

Basic and diluted net income per ADS were US$0.22 and US$0.21, respectively in the third quarter of fiscal year 2019. Non-GAAP basic and diluted net income per ADS, excluding share-based compensation expenses, were US$0.26 and US$0.24, respectively.

Capital Expenditures

Capital expenditures for the third quarter of fiscal year 2019 were US$73.0 million, representing an increase of US$44.7 million from US$28.3 million in the third quarter of fiscal year 2018. The increase was mainly due to leasehold improvements and the purchase of land use right, servers, computers, software systems and other hardware for the Company's teaching facilities and mobile network research and development.

Cash, Cash Equivalents and Short-Term Investments

As of November 30, 2018, the Company had US$1,253.0 million of cash and cash equivalents and US$359.3 million of short-term investments, compared to US$711.5 million of cash and cash equivalents and US$787.4 million of short-term investments as of February 28, 2018.

Deferred Revenue

As of November 30, 2018, the Company's deferred revenue balance was US$866.3 million, compared to US$1,074.9 million as of November 30, 2017, representing a decrease of 19.4% mainly due to the change of tuition fees collection schedule and the adoption of Revenue from Contracts with Customers ("Topic 606") beginning March 1, 2018.

Financial Results for the First Nine Months of Fiscal Year 2019

Net Revenues

For the first nine months of fiscal year 2019, TAL reported net revenues of US$1,836.4 million, representing a 51.7% increase from US$1,210.9 million in the first nine months of fiscal year 2018. The increase was mainly driven by an increase in total student enrollments, which increased by 96.8% to approximately 3,171,150 from approximately 1,611,290 in the same period of the prior year. The increase in total student enrollments was driven primarily by the growth of enrollments in the small class offerings and online courses.

Operating Costs and Expenses

In the first nine months of fiscal year 2019, operating costs and expenses were US$1,616.2 million, a 50.5% increase from US$1,073.7 million in the first nine months of fiscal year 2018. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$1,561.2 million, a 50.2% increase from US$1,039.1 million in the first nine months of fiscal year 2018.

Cost of revenues increased by 35.0% to US$858.3 million from US$635.6 million in the first nine months of fiscal year 2018. The increase in cost of revenues was mainly due to an increase in teacher compensation and rental costs. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increased by 35.0% to US$857.8 million from US$635.4 million in the first nine months of fiscal year 2018.

Selling and marketing expenses increased by 112.4% to US$347.8 million from US$163.8 million in the first nine months of fiscal year 2018. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 112.9% to US$340.7 million from US$160.0 million in the first nine months of fiscal year 2018. The increase of selling and marketing expenses in the first nine months of fiscal year 2019 was primarily a result of more marketing promotion activities to expand our customer base and brand enhancement, as well as a rise in the compensation to sales and marketing staff to support a greater number of programs and service offerings compared to the same period in the prior year.

General and administrative expenses increased by 49.7% to US$410.1 million from US$273.9 million in the first nine months of fiscal year 2018. The increase in general and administrative expenses was mainly due to an increase of the number of our general and administrative personnel compared to the same period in the prior year and a rise in compensation to our general and administrative personnel. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 49.1% to US$362.7 million from US$243.4 million in the first nine months of fiscal year 2018.

Total share-based compensation expenses allocated to the related operating costs and expenses increased by 59.2% to US$55.0 million in the first nine months of fiscal year 2019 from US$34.6 million in the same period of fiscal year 2018.

Gross Profit

Gross profit increased by 70.0% to US$978.1 million from US$575.3 million in the first nine months of fiscal year 2018.

Income from Operations

Income from operations increased by 60.1% to US$226.9 million from US$141.7 million in the first nine months of fiscal year 2018. Non-GAAP income from operations, which excluded share-based compensation expenses, increased by 59.9% to US$281.9 million from US$176.3 million in the first nine months of fiscal year 2018.

Other Income  

Other income was US$107.0 million for the first nine months of fiscal year 2019, mainly due to the fair value changes of a long-term investment.

Impairment loss on long-term investments

Impairment loss on long-term investments was US$50.8 million for the first nine months of fiscal year 2019, compared to US$2.2 million for the first nine months of fiscal year 2018. Impairment loss on long-term investments was mainly due to other-than-temporary declines in the value of long-term investments in several investees.

Income Tax Expense

Income tax expense was US$43.3 million in the first nine months of fiscal year 2019, compared to US$35.9 million in the first nine months of fiscal year 2018.

Net Income Attributable to TAL Education Group

Net income attributable to TAL increased by 107.6% to US$267.6 million from US$128.9 million in the first nine months of fiscal year 2018. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 97.4% to US$322.6 million from US$163.5 million in the first nine months of fiscal year 2018.

Basic and Diluted Net Income per ADS

Basic and diluted net income per ADS were US$0.47 and US$0.45, respectively, in the first nine months of fiscal year 2019. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were US$0.57 and US$0.54, respectively.

Business Outlook

Based on the Company's current estimates, total net revenues for the fourth quarter of fiscal year 2019 are expected to be between US$670.5 million and US$685.6 million, representing an increase of 33% to 36% on a year-over-year basis. If not taking into consideration the impact of potential change in exchange rate between Renminbi and the U.S. Dollar, the projected revenue growth rate is expected to be in the range of 40% to 43% for the fourth quarter of fiscal year 2019.

These estimates reflect the Company's current expectation, which is subject to change.

Conference Call

The Company will host a conference call and live webcast to discuss its financial results for the third fiscal quarter of fiscal year 2019 ended November 30, 2018 at 8:00 a.m. U.S. Eastern Time on January 24, 2019 (9:00 p.m. Beijing time on January 24, 2019).

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

- U.S. toll free:

+1-866-519-4004

- Hong Kong toll free:

800-906-601

- International toll:

+65-6713-5090

Conference ID: 

7998495

A live and archived webcast of the conference call will be available on the Investor Relations section of TAL's website at en.100tal.com.

A telephone replay of the conference call will be available through 8:59 a.m. U.S. Eastern time, February 1, 2019 (9:59 p.m. Beijing time, February 1, 2019).

The dial-in details for the replay are as follows:

- U.S. toll free:

+1-855-452-5696

- Hong Kong toll free: 

800-963-117

- International toll:

+61-2-8199-0299

Conference ID:  

7998495

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 of fiscal year 2019 and the fiscal year ending February 28, 2019, quotations from management in this announcement, as well as TAL Education Group's strategic and operational plans, contain forward-looking statements. The Company may also make written or oral forward-looking statements in its reports filed with, 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 Company's ability to continue to attract students to enroll in its courses; the Company's ability to continue to recruit, train and retain qualified teachers; the Company's ability to improve the content of its existing course offerings and to develop new courses; the Company's ability to maintain and enhance its brand; the Company's ability to maintain and continue to improve its teaching results; and the Company's ability to compete effectively against its competitors. Further information regarding these and other risks is included in the Company's reports filed with, or furnished to the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and TAL Education Group undertakes no duty to update such information or any forward-looking statement, except as required under applicable law.

About TAL Education Group

TAL Education Group is a leading K-12 after-school tutoring services provider in China. The acronym "TAL" stands for "Tomorrow Advancing Life", which reflects our vision to promote top learning opportunities for Chinese students through both high-quality teaching and content, as well as leading edge application of technology in the education experience. TAL Education Group offers comprehensive tutoring services to students from pre-school to the twelfth grade through three flexible class formats: small classes, personalized premium services, and online courses. Our tutoring services cover the core academic subjects in China's school curriculum as well as competence oriented programs. The Company's learning center network currently covers over 50 key cities in China.

We also operate www.jzb.com, a leading online education platform in China. Our ADSs trade on the New York Stock Exchange under the symbol "TAL". 

About Non-GAAP Financial Measures

In evaluating its business, TAL considers and uses the following measures defined as non-GAAP financial measures by the U.S. Securities and Exchange Commission as supplemental metrics to review and assess its operating performance: non-GAAP operating costs and expenses, non-GAAP cost of revenues, non-GAAP selling and marketing expenses, non-GAAP general and administrative expenses, non-GAAP income from operations, non-GAAP net income attributable to TAL, non-GAAP basic and non-GAAP diluted net income 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 from 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 release.

TAL believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses that may not be indicative of its operating performance from a cash perspective. TAL 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 TAL's historical performance and liquidity. TAL computes its non-GAAP financial measures using the same consistent method from quarter to quarter and from period to period. TAL 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 charges that have been and will continue to be for the foreseeable future a significant recurring expense in the Company's business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

For further information, please contact:

Echo Yan
Investor Relations 
TAL Education Group
Tel: +86 10 5292 6658
Email: ir@100tal.com

Caroline Straathof
IR Inside
Tel: +31 6 5462 4301
Email: info@irinside.com

 

 

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars)




As of


As of



February 28,


November 30,



2018


2018

ASSETS










Current assets





  Cash and cash equivalents


711,519


1,253,012

  Restricted cash-current


6,267


4,504

  Short-term investments


787,391


359,311

  Inventory


5,272


6,436

  Amounts due from related parties-current


3,229


10,304

  Income tax receivables


15,093


6,930

  Prepaid expenses and other current assets


133,235


178,668

Total current assets


1,662,006


1,819,165

  Restricted cash-non-current


9,911


8,348

  Amounts due from related parties-non-current


-


2,438

  Property and equipment, net


247,266


269,425

  Deferred tax assets-non-current


17,361


27,853

  Rental deposits


47,333


51,775

  Intangible assets, net


43,505


61,729

  Goodwill


291,382


305,234

  Long-term investments


597,606


745,720

  Long-term prepayments and other non-current assets


138,190


135,460

Total assets


$ 3,054,560


$ 3,427,147






LIABILITIES AND EQUITY










Current liabilities





Accounts payable (including accounts payable of the 
   consolidated VIEs without recourse to TAL
   Education Group of 51,809 and 71,435 as of February
   28, 2018, and November 30, 2018, respectively)


$ 57,605


$ 79,414

Deferred revenue-current (including deferred revenue-
   current of the consolidated VIEs without recourse to
   TAL Education Group of 772,642 and 805,248 as of
   February 28, 2018, and November 30, 2018,
   respectively)


824,276


862,433

Amounts due to related parties-current (including
   amounts due to related parties-current of the
   consolidated VIEs without recourse to TAL
   Education Group of 2,875 and 18,003 as of February
   28, 2018, and November 30, 2018, respectively)


8,746


28,318

Accrued expenses and other current liabilities (including
   accrued expenses and other current liabilities of the 
   consolidated VIEs without recourse to TAL
   Education Group of 158,849 and 290,409 as of
   February 28, 2018, and November 30, 2018,
   respectively)


229,122


360,892

Income tax payable (including income tax payable of
   the consolidated VIEs without recourse to TAL
   Education Group of 12,106 and 31,818 as of February
   28, 2018, and November 30, 2018, respectively)


13,638


31,262

Short-term debt and current portion of long-term debt
   (including short-term debt and current portion of
   long-term debt of the consolidated VIEs without
   recourse to TAL Education Group of nil and nil as of
   February 28, 2018, and November 30, 2018,
   respectively)


-


239,376

Bond payable, current portion (including bond payable,
   current portion of the consolidated VIEs without
   recourse to TAL Education Group of nil and nil as of
   February 28, 2018, and November 30, 2018,
   respectively)


-


5,275

Total current liabilities


1,133,387


1,606,970

Deferred revenue-non-current (including deferred
   revenue-non-current of the consolidated VIEs without
   recourse to TAL Education Group of 17,980 and
   3,866 as of February 28, 2018, and November 30,
   2018, respectively)


17,980


3,866

Amounts due to related parties-non-current (including
   amounts due to related parties-non-current of the
   consolidated VIEs without recourse to TAL
   Education Group of nil and 134 as of February 28,
   2018, and November 30, 2018, respectively)


271


270

Deferred tax liabilities-non-current (including deferred
   tax liabilities-non-current of the consolidated VIEs
   without recourse to TAL Education Group of 19,867 
   and 5,549 as of February 28, 2018, and November 30,
   2018, respectively)


20,039


6,318

Bond payable (including bond payable of the
   consolidated VIEs without recourse to TAL
   Education Group of nil and nil as of February 28,
   2018, and November 30, 2018, respectively)


11,075


-

Long-term payable (including long-term payable of the
   consolidated VIEs without recourse to TAL
   Education Group of 4,660 and nil as of February 28,
   2018, and November 30, 2018, respectively)


6,344


447

Long-term debt (including long-term debt of the
   consolidated VIEs without recourse to TAL
   Education Group of nil and nil as of February 28,
   2018, and November 30, 2018, respectively)


225,000


-

Total liabilities


1,414,096


1,617,871






TAL Education Group Shareholders' Equity





Class A common shares


118


120

Class B common shares


71


71

Class A common shares issuable


-


1,726

Additional paid-in capital


884,717


946,112

Statutory reserve


38,315


38,315

Retained earnings


565,202


841,077

Accumulated other comprehensive income/(loss)


132,325


(35,896)

Total TAL Education Group's equity


1,620,748


1,791,525

Noncontrolling interest


19,716


17,751

Total equity


1,640,464


1,809,276

Total liabilities and equity


$ 3,054,560


$ 3,427,147

 

 

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of U.S. dollars, except share, ADS, per share and per ADS data)





For the Three Months Ended

November 30,


For the Nine Months Ended

November 30,


2017


2018


2017


2018

Net revenues

$ 433,265


$ 585,991


$ 1,210,918


$ 1,836,423

Cost of revenues

221,102


267,633


635,636


858,280

Gross profit

212,163


318,358


575,282


978,143

Operating expenses (note 1)








  Selling and marketing

61,802


101,597


163,755


347,804

  General and administrative

106,000


146,170


273,943


410,119

  Impairment loss on intangible assets and
  goodwill

358


-


358


-

Total operating expenses

168,160


247,767


438,056


757,923

Government subsidies

594


405


4,502


6,656

Income from operations

44,597


70,996


141,728


226,876

Interest income

8,249


13,507


26,484


49,329

Interest expense

(3,906)


(4,059)


(13,001)


(11,881)

Other income

5,370


98,690


14,176


107,021

Impairment loss on long-term
  investments

(1,513)


(41,131)


(2,213)


(50,844)

Income before provision for
  income tax and loss from
  equity method investments

52,797


138,003


167,174


320,501

Provision for income tax

(11,389)


(10,404)


(35,942)


(43,268)

Loss from equity method
  investments

(1,790)


(3,934)


(5,038)


(11,072)

Net income

39,618


123,665


126,194


266,161

Add: Net loss attributable to
  noncontrolling interest

1,044


169


2,707


1,463

Total net income attributable
  to TAL Education Group

$ 40,662


$ 123,834


$ 128,901


$ 267,624

Net income per common share








Basic

$ 0.23


$ 0.65


$ 0.73


$ 1.41

Diluted

0.21


0.62


0.66


1.34

Net income per ADS (note 2)








Basic

$ 0.08


$ 0.22


$ 0.24


$ 0.47

Diluted

0.07


0.21


0.22


0.45

Weighted average shares used
  in calculating net income per
  common share








  Basic

177,882,195


190,312,127


177,388,055


189,601,790

  Diluted

193,855,487


199,636,171


198,821,015


200,186,601









 

 

Note 1: Share-based compensation expenses are included in the operating costs and expenses as follows:



For the Three Months


For the Nine Months


Ended November 30,

Ended November 30,


2017


2018


2017


2018

Cost of revenues

$ 112


$ 158


$ 254


$ 506

Selling and marketing

1,330


3,090


3,706


7,123

General and administrative

10,805


18,687


30,591


47,373

Total

$ 12,247


$ 21,935


$ 34,551


$ 55,002


Note 2: Three ADSs represent one Class A common Share.

 

 

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands of U.S. dollars)




For the Three Months Ended

November 30,


For the Nine Months Ended

November 30,


2017


2018


2017


2018









Net income

$ 39,618


$ 123,665


$ 126,194


$ 266,161

Other comprehensive
(loss)/income, net of tax

(13,116)


(213,073)


18,183


(169,744)

Comprehensive income/(loss)

26,502


(89,408)


144,377


96,417

Add: Comprehensive loss
attributable to noncontrolling
interest

1,044


441


2,707


2,987

Comprehensive income/(loss)
attributable to TAL
Education Group

$ 27,546


$ (88,967)


$ 147,084


$ 99,404

 

 

TAL EDUCATION GROUP

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

(In thousands of U.S. dollars, except share, ADS, per share and per ADS data)



For the Three Months

Ended November 30,


For the Nine Months
Ended November 30,


2017


2018


2017


2018









Cost of revenues

$ 221,102


$ 267,633


$ 635,636


$ 858,280

Share-based compensation
  expense in cost of revenues

112


158


254


506

Non-GAAP cost of revenues

220,990


267,475


635,382


857,774









Selling and marketing expenses

61,802


101,597


163,755


347,804

Share-based compensation
  expense in selling and
  marketing expenses

1,330


3,090


3,706


7,123

Non-GAAP selling and
marketing expenses

60,472


98,507


160,049


340,681

 

General and administrative
expenses

106,000


146,170


273,943


410,119

Share-based compensation
  expense in general and
  administrative expenses

10,805


18,687


30,591


47,373

Non-GAAP general and
administrative expenses

95,195


127,483


243,352


362,746









Operating costs and expenses

389,262


515,400


1,073,692


1,616,203

Share-based compensation
  expense in operating costs and
  expenses

12,247


21,935


34,551


55,002

Non-GAAP operating costs and
expenses

377,015


493,465


1,039,141


1,561,201









Income from operations

44,597


70,996


141,728


226,876

Share based compensation
expenses

12,247


21,935


34,551


55,002

Non-GAAP income from
operations

56,844


92,931


176,279


281,878









Net income attributable to TAL
Education Group

40,662


123,834


 

128,901


267,624

Share based compensation
expenses

12,247


21,935


34,551


55,002

Non-GAAP net income
attributable to TAL Education
 
Group

$ 52,909


$ 145,769


$ 163,452


$ 322,626

Net income per ADS








Basic

$ 0.08


$ 0.22


$ 0.24


$ 0.47

Diluted

0.07


0.21


0.22


0.45

Non-GAAP Net income per
ADS (note 3)








Basic

$ 0.10


$ 0.26


$ 0.31


$ 0.57

Diluted

0.09


0.24


0.28


0.54









ADSs used in calculating net
income per ADS








Basic

533,646,584


570,936,381


532,164,166


568,805,370

Diluted

581,566,462


598,908,513


596,463,046


600,559,803









Note 3: The Non-GAAP adjusted net income per ADS is computed using Non-GAAP adjusted net
income and the same number of ADSs used in GAAP basic and diluted EPS calculation.

 

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