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Xueda Education Group Reports First Quarter 2015 Financial ResultsBEIJING, May 19, 2015 /PRNewswire/ -- Xueda Education Group (NYSE: XUE) ("Xueda" or the "Company"), a leading national provider of personalized tutoring services for primary and secondary school students in China, today announced its unaudited financial results for the quarter ended March 31, 2015. Financial Highlights for First Quarter 2015 Compared to First Quarter 2014
Operational Highlights for the First Quarter 2015
Mr. Xin Jin, co-founder and Chief Executive Officer of Xueda, stated, "In the first quarter, we delivered results that slightly exceeded our financial guidance. We were especially pleased to see effective student count grow by 3.9%, fueled by a 6.1% increase in new student sign-ups and 2.6% rise in the number of retained students. These upticks helped grow cash collections by $10 million. Additionally, in the first quarter we added net 15 new learning centers and gained further traction in our Small Group Tutoring and eXueda initiatives." He concluded, "Following a challenging 2014, the Company is entering 2015 in a more stable position. We remain focused on our core one-on-one tutoring services and further refining our strategic initiatives deeper into our operations."
First Quarter 2015 Financial and Operating Results Total Net Revenues Total net revenues for the first quarter 2015 increased 0.2% year-over-year to $85.4 million, from $85.3 million for the first quarter 2014. The increase reflects relatively flat revenue growth year-over-year from one-on-one tutoring and 96% revenue growth year-over-year from small group tutoring; offset by a revenue decrease in study tour offerings, principally from the Model United Nations program.
Cost of Revenues Cost of revenues for the first quarter 2015 was $63.8 million, compared to $61.2 million in the first quarter 2014. Gross Profit and Gross Margin Gross profit for the first quarter 2015 decreased to $21.6 million from $24.1 million for the first quarter 2014. Gross margin for the first quarter 2015 was 25.3%, compared to 28.3% for the first quarter 2014.
Operating Expenses Total operating expenses for the first quarter 2015 decreased to $21.3 million from $23.8 million for the first quarter 2014. Total operating expenses for the first quarter 2015 accounted for 24.9% of total net revenues, compared to 27.9% for the first quarter 2014. Total non-GAAP operating expenses for the first quarter 2015 were $20.3 million, compared to $21.0 million for the same period in 2014. Total non-GAAP operating expenses for the first quarter 2015 comprised 23.8% of total net revenues, compared to 24.6% for the first quarter 2014. General and administrative expenses for the first quarter 2015 decreased 13.4% year-over-year to $13.3 million, from $15.3 million for the same period in 2014. The decrease was mainly attributable to reduced share based compensation expense. Non-GAAP general and administrative expenses for the first quarter 2015 were $12.3 million, compared to $12.5 million for the same period in 2014. Non-GAAP general and administrative expenses for the first quarter 2015 accounted for 14.4% of total net revenues, compared to 14.7% for the first quarter 2014. Sales and marketing expenses for the first quarter 2015 decreased 5.1% year-over-year to $8.1 million, compared to $8.5 million for the same period in 2014. Sales and marketing expenses for the first quarter 2015 represented 9.4% of total net revenues, compared to 10.0% for the first quarter 2014. Operating Income Operating income for the first quarter 2015 was $332 thousand, compared to $302 thousand for the first quarter 2014. Non-GAAP operating income for the first quarter 2015 was $1.3 million, compared to $3.1 million for the first quarter 2014. Net Income and Net Income per ADS Net income attributable to Xueda Education Group for the first quarter 2015 was $0.9 million, compared to $1.2 million for the same period in 2014. Net income attributable to Xueda Education Group per ADS for the first quarter 2015 was $0.02 per ADS, almost unchanged from the first quarter 2014. Non-GAAP net income attributable to Xueda Education Group for the first quarter 2015 was $1.9 million, compared to $4.0 million for the first quarter 2014. Non-GAAP net income attributable to Xueda Education Group per ADS for the first quarter 2015 was $0.03 per ADS, compared to $0.06 for the first quarter 2014. Cash Flow Net operating cash inflow for the first quarter 2015 was $33.0 million, compared to $17.1 million inflow for the first quarter 2014. The increase in net operating cash inflow was mainly due to increased cash collections from student enrollment and renewal. Capital expenditures for the first quarter 2015 were $2.8 million, compared to $3.4 million for the first quarter 2014. Business Outlook For the second quarter 2015, the Company currently expects:
These estimates do not include any potential costs that may be incurred by the Company in connection with the preliminary proposal by Insight Investment Co., Ltd. to acquire all of the Company's outstanding shares, which is further described below. The above guidance 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. Subsequent Events Compensation Committee Chairperson Appointed The Company today announced that, effective immediately, Mr. Arthur Wong, an Independent Director of the Company's board of directors has been appointed to serve as Chairperson of the board's compensation committee. Mr. Wong replaces in this role Mr. William Hsu, who resigned from the Company's board of directors on April 27, 2015. Preliminary Proposal to Acquire All Outstanding Shares of the Company The Company received a preliminary non-binding proposal letter dated April 20, 2015 from Insight Investment Co., Ltd., a Chinese company listed on the Shenzhen Stock Exchange under the Stock Code 000526.SZ ("Insight"), to acquire all of the Company's outstanding shares at $3.38 per ADS, or $1.69 per ordinary share. The Board of Directors of the Company has formed a committee of independent directors to review and evaluate this proposal. The Company cautions its shareholders and others considering trading its securities that neither the board of directors nor the independent committee has made any decision with respect to the Company's response to the proposal by Insight. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated. The Company does not undertake any obligation to provide any updates with respect to this proposal or any other transaction, except as required under applicable law. Non-GAAP Financial Measures To supplement the financial measures calculated in accordance with U.S. GAAP, this press release includes certain non-GAAP financial measures of adjusted cost of revenues, adjusted gross profit (loss), adjusted operating expenses, adjusted general and administrative expenses, adjusted selling and marketing expenses, adjusted operating income (loss), adjusted net income (loss) and adjusted diluted net income (loss) per ADS, each of which is adjusted to exclude share-based compensation expenses. The Company believes excluding such expenses from its non-GAAP financial measures is useful for its management and investors to assess and analyze the Company's core operating results as such expenses are not directly attributable to the underlying performance of the Company's business operations and do not impact its cash earnings. The Company also believes that these non-GAAP financial measures are important to help investors understand the Company's current financial performance and future prospects and compare business trends among different reporting periods on a consistent basis. These non-GAAP financial measures should be considered in addition to financial measures presented in accordance with U.S. GAAP, but should not be considered as a substitute for, or superior to, financial measures presented in accordance with U.S. GAAP. For a reconciliation of each of these non-GAAP financial measures to the most directly comparable U.S. GAAP financial measure, please see the financial information included elsewhere in this press release. Conference Call Xueda will hold a corresponding conference call and live webcast at 8:00 p.m. EDT on Tuesday, May 19, 2015 (which corresponds to 5:00 p.m. PDT on Tuesday, May 19, 2015 and 8:00 a.m. Beijing/Hong Kong Time on Wednesday, May 20, 2015) to discuss the results and answer questions from investors. Listeners may access the call by dialing:
The conference call will be available live via webcast on the Investors section of Xueda's website at http://ir.xueda.com. The archive replay will be available on Xueda's website shortly after the call. A replay of the conference call may be accessed through May 27, 2015 by dialing:
About Xueda Education Group Xueda Education Group ("Xueda") is a leading national provider of personalized tutoring services for primary and secondary school students in China. For more information about Xueda, please visit http://ir.xueda.com. Forward-looking Statements All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current expectations, market and operating conditions, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," "targets" and similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks and uncertainties beyond our control, which could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. Further information regarding these and other risks, uncertainties or factors is included in our filings with the U.S. Securities and Exchange Commission. We do not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law. Contact: Xueda Education Group Asia Bridge Capital Limited
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