51job, Inc. Reports Second Quarter 2013 Financial Results

SHANGHAI, Aug. 8, 2013 /PRNewswire/ -- 51job, Inc.(Nasdaq:JOBS), a leading provider of integrated human resource services in China, announced today its unaudited financial results for the second quarter of 2013 ended June 30, 2013.

Second Quarter 2013 Financial Highlights:

• Total revenues increased 12.2% over Q2 2012 to RMB404.4 million (US$65.9 million), within the Company's guidance range
• Online recruitment services revenues increased 14.3% over Q2 2012 to RMB269.5 million (US$43.9 million)
• Gross margin increased to 73.7% compared with 72.6% in Q2 2012
• Income from operations increased 5.9% over Q2 2012 to RMB125.5 million (US$20.4 million)
• Fully diluted earnings per common share were RMB1.99 (US$0.65 per ADS)
• Excluding share-based compensation expense and loss from foreign currency translation as well as their related tax impact, non-GAAP adjusted fully diluted earnings per common share were RMB2.28 (US$0.74 per ADS), within the Company's guidance range
• Cash and short-term investments increased to RMB2,872.0 million (US$468.0 million) as of June 30, 2013

Commenting on the results, Rick Yan, President and Chief Executive Officer of 51job, Inc., said, "Building on the momentum of an active post-Chinese New Year period, market demand for our online recruitment services maintained a positive trend in the second quarter.  Through strengthened sales and marketing efforts, we made further strides in expanding our corporate customer base, achieving 25% year-over-year growth in the number of unique online employers.  Recent feedback we have received from enterprises continues to be favorable regarding their hiring plans for white collar workers.  We remain optimistic about market outlook as we focus on strategy execution and capturing opportunities in the evolving HR services industry in China."

Second Quarter 2013 Unaudited Financial Results

Total revenues for the second quarter ended June 30, 2013 were RMB404.4 million (US$65.9 million), an increase of 12.2% from RMB360.4 million for the same quarter in 2012.

Online recruitment services revenues for the second quarter of 2013 were RMB269.5 million (US$43.9 million), representing a 14.3% increase from RMB235.9 million for the same quarter of the prior year.  The growth was principally due to an increase in the number of unique employers using the Company's online recruitment services, which was partially offset by a decrease in average revenue per unique employer.  Unique employers increased 25.1% to 231,011 in the second quarter of 2013 compared with 184,667 in the same quarter of the prior year driven by aggressive customer acquisition efforts and increased usage of online recruitment services by employers.  However, average revenue per unique employer decreased 8.6% in the second quarter of 2013 as compared to the same quarter in 2012 due to a greater number of new customers and employers who purchased lower priced services.

Print advertising revenues for the second quarter of 2013 decreased 50.1% to RMB11.0 million (US$1.8 million) compared with RMB22.1 million for the same quarter in 2012 primarily due to the ongoing shift in demand away from print advertising services.  The estimated number of print advertising pages generated in the second quarter of 2013 declined 46.5% to 355 from 664 pages in the same quarter in 2012.  In addition, due to the Company's strategic decision to discontinue certain newspaper editions, the number of cities where 51job Weekly is publisheddecreased to five as of June 30, 2013 compared with ten cities as of June 30, 2012.

Other human resource related revenues for the second quarter of 2013 increased 20.8% to RMB123.8 million (US$20.2 million) from RMB102.5 million in the same quarter of 2012 primarily due to greater customer adoption and usage of business process outsourcing and training services.

Gross profit for the second quarter of 2013 increased 14.0% to RMB286.0 million (US$46.6 million) from RMB250.8 million for the same quarter of the prior year.  Gross margin, which is gross profit as a percentage of net revenues, increased to 73.7% in the second quarter of 2013 compared with 72.6% in the same quarter in 2012.

Operating expenses for the second quarter of 2013 increased 21.3% to RMB160.6 million (US$26.2 million) from RMB132.4 million for the same quarter of 2012.  Sales and marketing expenses for the second quarter of 2013 increased 25.1% to RMB111.1 million (US$18.1 million) from RMB88.8 million for the same quarter of the prior year primarily due to higher employee compensation expenses, headcount additions, and greater advertising and promotion expenses.  General and administrative expenses for the second quarter of 2013 increased 13.4% to RMB49.4 million (US$8.1 million) from RMB43.6 million in the second quarter of 2012 primarily due to higher employee compensation, office and depreciation expenses.

Income from operations for the second quarter of 2013 increased 5.9% to RMB125.5 million (US$20.4 million) from RMB118.4 million for the same quarter of the prior year.  Operating margin, which is income from operations as a percentage of net revenues, was 32.3% in the second quarter of 2013 compared with 34.3% in the same quarter of 2012.  Excluding share-based compensation expense, operating margin would be 36.2% in the second quarter of 2013 compared with 37.5% in the same quarter of 2012.

Net income for the second quarter of 2013 increased 4.0% to RMB119.2 million (US$19.4 million) from RMB114.6 million for the same quarter in 2012.  Fully diluted earnings per common share for the second quarter of 2013 were RMB1.99(US$0.32) compared with RMB1.93 for the same quarter in 2012.  Fully diluted earnings per ADS for the second quarter of 2013 were RMB3.98(US$0.65) compared with RMB3.86 in the second quarter of 2012.

In the second quarter of 2013, the Company recognized total share-based compensation expense of RMB14.8 million (US$2.4 million) compared with RMB11.2 million in the second quarter of 2012.  The Company also recognized a loss from foreign currency translation of RMB2.4 million (US$0.4 million) in the second quarter of 2013 compared with a gain of RMB1.0 million in the second quarter of 2012.

Excluding share-based compensation expense and loss/gain from foreign currency translation as well as their related tax impact, non-GAAP adjusted net income for the second quarter of 2013 increased 9.3% to RMB136.4 million (US$22.2 million) compared with RMB124.9 million for the second quarter of 2012.  Non-GAAP adjusted fully diluted earnings per common share were RMB2.28(US$0.37) in the second quarter of 2013 compared with RMB2.10 in the second quarter of 2012.  Non-GAAP adjusted fully diluted earnings per ADS in the second quarter of 2013 were RMB4.56(US$0.74) compared with RMB4.21 in the second quarter of 2012.

Six Months 2013 Unaudited Financial Results

Total revenues for the six months ended June 30, 2013 were RMB784.7 million (US$127.9 million), an increase of 5.9% from RMB741.2 million for the same period in 2012.  Income from operations for the six months ended June 30, 2013 decreased 3.3% to RMB241.0 million (US$39.3 million) from RMB249.2 million for the same period in 2012.

Net income for the six months ended June 30, 2013 decreased 3.0% to RMB228.0 million (US$37.2 million) from RMB235.1 million for the same period in 2012.  Fully diluted earnings per common share for the six months ended June 30, 2013 was RMB3.81(US$0.62) compared with RMB3.96 for the same period in 2012.  Fully diluted earnings per ADS for the six months ended June 30, 2013 were RMB7.63(US$1.24) compared with RMB7.92 for the same period in 2012.

Excluding share-based compensation expense and loss/gain from foreign currency translation as well as their related tax impact, non-GAAP adjusted net income for the six months ended June 30, 2013 increased 1.1% to RMB260.1 million (US$42.4 million) from RMB257.2 million for the six months ended June 30, 2012.  Non-GAAP adjusted fully diluted earnings per common share were RMB4.35(US$0.71) for the six months ended June 30, 2013 compared with RMB4.33 in the same period in 2012.  Non-GAAP adjusted fully diluted earnings per ADS for the six months ended June 30, 2013 were RMB8.70(US$1.42) compared with RMB8.67 in the same period in 2012.

As of June 30, 2013, the Company had cash and short-term investments totaling RMB2,872.0 million (US$468.0 million) compared with RMB2,531.4 million as of December 31, 2012.  Short-term investments consist of certificates of deposit with original maturities from three months to one year.

Business Outlook

Based on current market conditions and an expected significant year-over-year decrease in print advertising revenues as the Company transitions away from this business, the Company's revenue target for the third quarter of 2013 is in the estimated range of RMB405 million to RMB420 million (US$66.0 million to US$68.4 million).  Excluding share-based compensation expense and any loss or gain from foreign currency translation as well as their related tax impact, the Company's non-GAAP fully diluted earnings target for the third quarter of 2013 is in the estimated range of RMB2.10 to RMB2.25 per common share (US$0.68 to US$0.73 per ADS).  The Company expects total share-based compensation expense in the third quarter of 2013 to be approximately RMB18 million to RMB19 million (US$2.9 million to US$3.1 million).

Other Company News

In June 2013, the Company discontinued the publication of 51job Weekly in Guangzhou but continues to maintain its facilities and all other operations in the city.

In July 2013, the Company completed the acquisition of a new, 12,900 square meter office building in Wuhan to accommodate its growing sales and customer service team.  The total purchase price for the building was RMB69.7 million (US$11.4 million), which was funded from the Company's existing cash resources.  The Company had already made several installment payments to the seller in 2011 and 2012 for this purchase and paid the remaining balance of RMB7.6 million (US$1.2 million) this year.  The Company is making plans to prepare, outfit and furnish the premises for occupancy in 2014.

Currency Convenience Translation

For the convenience of readers, certain Renminbi amounts have been translated into U.S. dollars at the rate of RMB6.1374 to US$1.00, the noon buying rate on June 28, 2013 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board.

Conference Call Information

Management will hold a conference call at 9:00 p.m. Eastern Time on August 8, 2013 (9:00 a.m.Shanghai / Hong Kong time zone on August 9, 2013) to discuss its second quarter 2013 financial results, operating performance and business outlook.  To dial in to the call, please use conference ID 4632162 and the following telephone numbers:

The call will also be available live and on replay through 51job's investor relations website, http://ir.51job.com.  Please go to the website at least fifteen minutes early to register or install any necessary audio software.

Use of Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles (GAAP), 51job uses non-GAAP measures of income before income tax expense, income tax expense, adjusted net income, adjusted earnings per share and adjusted earnings per ADS, which are adjusted from results based on GAAP to exclude share-based compensation expense and loss/gain from foreign currency translation as well as their related tax impact.  The Company believes excluding share-based compensation expense and its related tax impact 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 expense is not directly attributable to the underlying performance of the Company's business operations and do not impact its cash earnings.  The Company believes excluding loss/gain from foreign currency translation and its related tax impact from its non-GAAP financial measures is useful for its management and investors as such translation loss/gain is not indicative of the Company's core business operations and will not result in cash settlement nor impact the Company's cash earnings.  51job also believes these non-GAAP measures excluding share-based compensation expense and loss/gain from foreign currency translation, as well as their related tax impact, are important in helping investors to understand the Company's current financial performance and future prospects and to compare business trends among different reporting periods on a consistent basis.  The presentation of these additional measures should not be considered a substitute for or superior to GAAP results or as being comparable to results reported or forecasted by other companies.  The non-GAAP measures have been reconciled to GAAP measures in the attached financial statements.

About 51job

51job, Inc. (Nasdaq: JOBS) is a leading provider of integrated human resource services in China with a strong focus on recruitment related services.  Through online recruitment services at http://www.51job.com and print advertisements in 51job Weekly, 51job enables enterprises to attract, identify and recruit employees and connects millions of job seekers with employment opportunities.  51job also provides a number of other value-added human resource services, including business process outsourcing, training, executive search and compensation and benefits analysis.  51job has a call center in Wuhan and a nationwide sales office network spanning 25 cities across China.

Safe Harbor Statement

Statements in this release regarding targets for the third quarter of 2013, future business and operating results constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995.  These statements are based upon management's current expectations, and actual results could differ materially.  Among the factors that could cause actual results to differ are the number of recruitment advertisements placed, sales orders received and customer contracts executed during the remaining weeks of the third quarter of 2013; any accounting adjustments that may occur during the quarterly close; fluctuations in the value of the Renminbi against the U.S. dollar and other currencies; behavioral and operational changes of customers in meeting their human resource needs as they respond to evolving social, economic, regulatory and political changes in China as well as stock market volatilities; introduction by its competitors of new or enhanced products or services; price competition in the market for the various human resource services that the Company provides in China; acceptance of new products and services developed or introduced by the Company outside of the human resources industry; and fluctuations in general economic conditions.  For additional information on these and other factors that may affect the Company's financial results, please refer to the Company's filings with the Securities and Exchange Commission.  51job undertakes no obligation to update these targets prior to announcing final results for the third quarter of 2013 or as a result of new information, future events or otherwise.

Contact:

Linda Chien
Investor Relations
51job, Inc.
+(86-21) 6879-6250
ir@51job.com

Notes:

1.   The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.1374 to US$1.00 on June 28, 2013 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board.
2.   Includes share-based compensation expense of RMB1,795 and RMB2,375(US$387) for the three months ended June 30, 2012 and 2013, respectively.
3.   Includes share-based compensation expense of RMB1,543 and RMB2,041(US$333) for the three months ended June 30, 2012 and 2013, respectively.
4.   Includes share-based compensation expense of RMB7,867 and RMB10,403(US$1,695) for the three months ended June 30, 2012 and 2013, respectively.
5.   Each ADS represents two common shares.

Notes:

1.   The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.1374 to US$1.00 on June 28, 2013 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board.
2.   Includes share-based compensation expense of RMB3,497 and RMB4,531(US$738) for the six months ended June 30, 2012 and 2013, respectively.
3.   Includes share-based compensation expense of RMB3,006 and RMB3,895(US$635) for the six months ended June 30, 2012 and 2013, respectively.
4.   Includes share-based compensation expense of RMB16,364 and RMB19,853(US$3,235) for the six months ended June 30, 2012 and 2013, respectively.
5.   Each ADS represents two common shares.

Notes:

1.   The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.1374 to US$1.00 on June 28, 2013 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board.
2.   Each ADS represents two common shares.

Note 1: The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.1374 to US$1.00 on June 28, 2013 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board.

SOURCE 51job, Inc.