Noah Education Holdings' CEO Discusses F3Q2012 Results - Earnings Call Transcript

Noah Education Holdings Ltd. (NED)

F3Q12 Earnings Conference Call

May 15, 2012 8:00 AM ET

Executives

Mr. Dong Xu – Chairman and CEO

Ms. Dora Li – CFO

Presentation

Operator

Good morning and good evening, ladies and gentlemen. Welcome to Noah Education Holdings Ltd Third Quarter of Fiscal 2012 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following management’s prepared remarks, there will be a Q&A session. As a reminder, this conference is being recorded.

Joining the conference today are Mr. Dong Xu, CEO and Ms. Dora Li, CFO. After the U.S. markets had closed yesterday afternoon, Noah issued a press release announcing its financial results for the third quarter of fiscal year 2012. The release is available on the Company’s IR website at ir.noaheducation.com along with the presentation for today’s call. This call is also being broadcast live over the internet.

Before management’s presentation, I would like to refer to the Safe Harbor statement in connection with today’s conference call. This call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including certain expectations and goals which are subject to numerous assumptions and risks.

Forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond their control, which may cause actual results to differ materially from any future results or achievements implied by such forward-looking statements. The Company’s actual results could differ materially from those contained in the Risk Factors section of the Company’s final prospectus or recent filings filed with the Securities and Exchange Commission. Unless required by law, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

I would now like to turn the conference over to Noah’s Chairman and CEO, Mr. Dong Xu. Mr. Xu, please go ahead.

Dong Xu

(Foreign Language)

(Interpreted)

Thank you for joining us today on our third quarter fiscal year 2012 earnings conference call. I hope you’ve all had a chance to read our earnings press release.

(Foreign Language)

(Interpreted)

I am very pleased to report that we have delivered another strong quarter, with revenue growing at 61% and exceeding the top end of our guidance by 16%. This is particularly encouraging, considering that the third quarter is traditionally (inaudible), due to the presence of the Winter break. And we were only able to rectify two months revenue.

(Foreign Language)

(Interpreted)

The robust topline growth was given by our Kindergarten operation, the largest contributor of all of our businesses. The year-over-year growth of 220%, by organic and (inaudible) from Yuanbo. This impressive increase is a testimony to our growth strategy.

Kindergarten is a vital entry point for student’s lifelong education and will also form the entry base of our lifelong education model, which will pave the way for broader (inaudible) offerings in the future. Kindergarten is the core of our three focus areas and will continue to be a key growth driver down the line.

(Foreign Language)

(Interpreted)

Well, we will further (inaudible) through our financial outcome, but I’d like to highlight that in this quarter, we were able to improve our growth margin to our guided level, while continuing to invest to ramp up our schools in Kindergarten. This improvement is mainly strength to the progress made by the Kindergarten operations.

(Foreign Language)

(Interpreted)

Looking ahead, we are confident that we will see another strong performance in the fourth quarter in terms of revenue growth. And this will lead us to achieve our full year guidance of 56 to 76% increase in revenue. Meanwhile, we’ll continue to strike a sound balance between approved profitability and sustain reinvestment for growth. Through a continuous ramping up with the best new schools in Kindergarten, we aim to achieve higher utilization rate and operating efficiency in the next academic year.--

(Foreign Language)

(Interpreted)

Dora Li, our CFO will now walk you through our financial and operational performance as well as guidance for the next quarter. Dora, please.

Dong Xu

Thank you Mr. Xu. We are very pleased to report that Noah has continued its brand momentum into the third quarter of fiscal 2012, with prolonged year-over-year improvement, in both top line and bottom line.

Turning to the detailed financial results for the third quarter of fiscal 2012, as they are available in our earnings release, I would like to highlight a few key financial metrics with you. I’ll be focusing on a year-over-year comparison, and all members will be in RMB unless otherwise stated.

On slide four, net revenue for the quarter was up 61% to 37% million, despite only booking two months of revenue due to the Winter break. The strong improvement was mainly driven by the growth of our Kindergarten operations across all brands, which will breakdown the net revenue by business segments. . Revenues from our Kindergarten operations, was up 220% to about 21 million, accounting for 55% of net revenue. The total Kindergarten network increased from 10 in the third quarter of fiscal 2011 to 33 in third quarter of fiscal 2012, under the pre-existing Kindergarten continued to show healthy organic growth.

Revenues from primary and the secondary school operations were up 2% to 9 million accounting for 23% of net revenue. The motive gross was attributable to an increase in tuition fees and incremental revenue, from newly opened schools, all setting a slight decrease in enrollment from one existing school.

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