ATA Creativity Global (AACG) on Q1 2021 Results - Earnings Call Transcript
Operator: Greetings, and welcome to ATA Creativity Global's First Quarter 2021 Financial Results Conference Call. At this time all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I would now like to turn the conference over to your host, Carolyne Sohn of The Equity Group. Thank you. You may begin.
Carolyne Sohn: Thank you, operator, and hello, everyone. Thank you for joining us. The press release announcing ATA Creatively Global's or ACG's results for the first quarter ended March 31, 2021, is available at the IR section of the company's website at www.atai.net.cn. As part of this conference call, the company has an accompanying slide presentation available on its website. A replay of this broadcast will also be made available at ACG's website for the next 90 days.
Amy Tung: Thank you, Caroline. And welcome everyone. Good evening to those in America. We appreciate everyone's time. We are pleased to have gotten off to a strong start to the year, reporting a 41.6% increase in terms of student enrollment to 964 students in the first quarter of the year. In the promising sign that we are fully in the post-pandemic recovery we saw significant year-over-year growth across our major programs, portfolio training, overseas study counselling, research-based learning and foreign language training. Our primary offering in the portfolio training program in-built 528 students during the period, an increase of 30.7% from 4.04% in the same period last year. Credit hours benefit for portfolio training increased 5.5% to 27,865. Having rising to meet the challenges of the 2020 pandemic, which will give us an opportunity to reinforce the foundation of our business and explore additional growth areas. We are gratified to begin realizing some of the tangible results of these efforts here in the first quarter of 2021, which is generally impacted by some seasonality due to the Chinese Spring Festival holiday. We are hopeful that the road to recovery will continue on a positive trajectory as vaccinations against COVID-19 progress globally. At this time, we are working closely with our overseas partners’ institutions to our summer programs. Given the current circumstances of the global pandemic, we have determined with our partners to offer alternative programming to students this summer. International travel continues to be in a place of uncertainty and we feel this is the best way to maintain the health and safety of our students. We are pleased to be offering domestic learning experiences in China, as well as various online bootcamps in partnership with overseas institutions. With that let's look to financials for the quarter. Total net revenues for the first quarter of 2021 increased 15% to RMB37.6 million from RMB32.7 million in the first quarter of 2020. This top line improvement was primarily driven by an overall increase in services delivered across our major programs as we continues to recover in the post-pandemic environment. Gross margin was 39.6% during the 2021 first quarter up from 35.8% in the prior-year period. Net loss attributable to ACG improved to RMB19 million, from RMB20.5 million in the prior year period. This was primarily a result of an approximate RMB3.2 million improvement in loss from operations during the period, which was offset by an RMB1.7 million in reduced benefit from non-redeemable non-controlling interests.
Kevin Ma: Thank you, Amy. We are extremely pleased to see that turnaround demonstrated by the elements we achieve that during the first quarter of 2021. Our 40% year-over-year growth in total elements with increased across all lines of business. It’s a very promising start to the year. As the public health situation in China remain stable over the past several months. We are optimistic that this will continue over the course of the year, the more and more of the global population and vaccinated against the COVID-19 and the way maintain this have to a poster demand recovery. This will be aided about our – you centralize the system for monitoring sales leads as well as when you are offering we have matched in the past year. ACG’s stellar reputation has been applicable by the consistent courage of our curriculum and the teaching staff as well as a positive outcomes we have hear the students who are pursuing creative study achieve. This is regarding of where coursework is delivered in-person or online. Our mission is to provide students with all the tools and the support that they need for success at ACG. And then we are better equipped to deliver on this promise than before. In the post-pandemic, I believe most everyone’s looking to take advantage of real world experience, where we can fully interact with one another face to face. It’s partnering is an excellent match offer a great deal of less speed, but we can’t experience the place if you don’t actually go there in person. That being said, many students continue to be interested in pursue study abroad and we are prepared to meet that demand when it’s safe to do so. As Andy mentioned, it’s I like that we’ll be offering international study abroad programs, it’s our partner is fishing has decided this is a better path forward and the current circumstance, we are pleased with that students and enjoying the new domestic travel programs and online bootcamp alternatives we have developed and look forward to us again, working with our partners to make those options available this summer.
Jun Zhang: Thank you, Kevin. During the first quarter of 2021, we continued to offer in-person delivery of coursework with an option to complete some courses online. We anticipate expanding our online course offerings and continue to develop completely new programming as well. In response to the pandemic, we put a great deal of effort into developing our research-based learning services and have been quite pleased with the positive reception of our new domestic educational tours and online boot camps and internship opportunities. We found new and innovative ways to continue partnering with overseas institutions, despite the restrictions on international travel and can anticipate continuing to do so as we head into summer 2021. We are prepared to support the demand for research-based learning experiences, regardless of how worldwide travel is impacted and look forward to working with our partner institutions on virtual programming for this summer. We continue looking at ways in which we can leverage technology throughout the ECG organization. It is now a crucial component of our education delivery method, as well as our sales process and will enable us to better utilize the talents of our teaching staff in 2021. With the help of technology, we look forward to serving a larger population of students across China and providing them with opportunities to study the creative arts that may not otherwise – they may not otherwise have had access to. With that, I'll turn it back over to Kevin.
Kevin Ma: Thanks, Jun and Carolyne. At AACG, we are well positioned in both operationally and financially to capitalize on the various groups opportunities before us, particularly as the work continues on the roads to recovery Post Panamax students that decided to postpone their studies gradually resuming the coursework and throughout the Panamax with great success. We are honored to have played a role in their success. Everyone please stay safe and health. With that operator, let’s open it up for questions.
Q - :
Operator: There seems to be no questions at this time. So, I would pass it back over to management for any closing remarks.
Amy Tung: Thanks again to all of you for joining us. If anyone has questions for us, please feel free to reach our directly to us or our Investor Relations firm the Equity Group. We are always available to speak to investors and look forward to speaking with you during our next quarterly call. Thank you.
Operator: This concludes today's teleconference. You may now disconnect your line at this time. Thank you for your participation. And have a wonderful day.
