Four Seasons Education (Cayman) Inc. (NYSE:FEDU) Q3 2020 Earnings Conference Call - Preliminary Transcript

Jan 16, 2020 • 08:00 am ET

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Four Seasons Education (Cayman) Inc. (NYSE:FEDU) Q3 2020 Earnings Conference Call - Preliminary Transcript

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Presentation
Executive
Xun Wang

further improve our profitability. We are launching new -- launching prudent expansion plans.

Now, I'd like to walk you through further details of our third quarter fiscal year 2020 financial results. Revenue increased by RMB13.5 million [Phonetic] to RMB103.5 million for the third quarter of fiscal year 2020 from RMB91.2 million in the same period of last year, primarily attributable to the healthy ramp up of new learning centers, which the company opened during fiscal year 2019.

Cost of revenue increased by 17.2% to RMB50.5 million for the third quarter of fiscal year 2020 from RMB43.1 million in the same period of last year, primarily attributable to the increase in faculty staff cost.

Gross profit increased by 10.2% to RMB53 million for the third quarter of fiscal year 2020 from RMB48.1 million

from RMB48.1 million in the same period of last year.

General and administrative expenses increased by 4.1% to RMB33.4 million from the third quarter of fiscal year 2020 from RMB32.1 million in the same period of last year. Sales and marketing expenses increased by 5% to RMB8.8 million for the third quarter of fiscal year 2020 from RMB8.3 million in the same period of last year.

Operating income increased by 41.5% to RMB10.9 million from the third quarter of fiscal year 2020 from RMB7.7 million in the same period of last year. Adjusted operating income, which excluded share-based compensation expenses increased by 1.5% to RMB17 million from the third quarter of fiscal year 2020, from RMB16.7 million in the same period of last year.

Interest income, net was RMB1.5 million from the third quarter of fiscal year 2020 compared with RMB1.2 million in the same period of last year. Other income, net was RMB4.1 million for the third quarter of fiscal year 2020 compared with other expenses of RMB2.6 million in the same period of last year, primarily due to investment fair value change and foreign exchange.

Net income increased by 321.6% to RMB11.3 million during the third quarter of fiscal year 2020, compared with RMB2.7 million in the same period of last year. Adjusted net income increased by 6% to RMB14.5 million compared with RMB13.7 million in the same period of last year.

Basic and diluted net income per ADS attributable to ordinary shareholders for the third quarter of fiscal year 2020 were RMB0.24 and RMB0.23 compared with RMB0.06 and RMB0.05 respectively, for the same period of last year. Non-GAAP basic and diluted net income per ADS attributable to ordinary shareholders for the third quarter of fiscal year 2020 were RMB0.31 and RMB0.30 compared

compared with RMB0.28 and RMB0.27 respectively, for the same period of last year.

Cash and the cash equivalents as of November 30, 2019, the company had cash and cash equivalents of RMB564.6 million, an increase of 28.4% compared with RMB439.6 million as of February 20 [Phonetic], 2018 -- 2019.

To be mindful of the length of our earnings call. For the first nine months of fiscal year 2020 financial results, I