updated 5/10/2010 5:00:46 PM ET 2010-05-10T21:00:46

BEIJING, May 10, 2010 (GLOBE NEWSWIRE) -- ChinaCast Education Corporation (Nasdaq:CAST), (the "Company" or "ChinaCast"), a leading for-profit, post-secondary education and e-Learning services provider in China, today announced its financial results for the first quarter ended March 31, 2010.

"ChinaCast generated continued strong growth in revenues and profits in the first quarter of 2010 as we successfully and efficiently executed our strategy to further establish our leadership position in China's rapidly growing post secondary education market," stated Ron Chan, Chairman and CEO. "A major factor in our performance during the quarter was the contribution from Lijiang College ("LJC") in Guilin, which we acquired in October 2009. Today we now have over 20,400 students enrolled at our university campuses in Chongqing and Guilin focused on career-oriented degree programs, in addition to 141,000 e-learning students in partnership with 15 state-owned universities serviced through our nationwide e-Learning network.

"During the first quarter we continued to pursue growth through strategic acquisitions of established accredited universities by entering into a MOU to acquire Hubei Industrial University Business College (HIUBC), a private, accredited university located in Wuhan, China. HIBUC had 9,929 students enrolled on-campus for the academic year starting September 2009, with expected pro forma revenues of approximately $15.9 million and EBITDA of $7.4 million for the academic year, as well as a campus encompassing 47 acres and over 2.2 million square feet of building floor space.

"In addition to our acquisition strategy, we also focused aggressively during the first quarter on increasing enrollment through expanded educational offerings, such as summer exchange and international degree offerings that complement our domestic accredited degree programs. With our growing enterprise of high-quality universities and expanding educational offerings, coupled with our strong financial condition and ability to leverage our existing asset base, we believe we are well positioned to capitalize on China's growing education sector, now the world's largest post-secondary education market, driven in part by the government's goal to double post secondary student enrollment to over 40 million students by 2020."

Antonio Sena, Chief Financial Officer added, "We continued to exercise efficient operational and fiscal management during the first quarter as we further integrated LJC, and as we continued to pursue additional opportunities to optimize our growth and profit potential. Our cash position and cash flow from operations remained strong during the quarter, and following the planned acquisition of HIBUC, we expect to remain in a strong cash and working capital position as we continue to seek additional accretive acquisitions."

(1) See financial tables below and the GAAP to non-GAAP reconciliation attached to this press release. The U.S. dollar figures presented in this release are derived from the corresponding RMB figures from the Company's Form 10Q for the period ended March 31, 2010, and are based on the historical exchange rate of US$1.0 = 6.8 RMB at March 31, 2010.

First Quarter 2010 Financial Results

Total Revenues -- Total revenues for the quarter increased 42% to $15.9 million from $11.3 million in the first quarter of 2009. ChinaCast is organized into two business segments: the Traditional University Group ("TUG"), offering accredited bachelor and diploma degree programs to students from the Foreign Trade and Business College ("FTBC") campus in Chongqing and the Lijiang College ("LJC") campus in Guilin, and the e-Learning Group ("ELG"), encompassing the Company's e-Learning education service businesses. TUG revenue for the quarter increased 108% to $9.1 million from $4.4 million in the first quarter of 2009 primarily due to the acquisition of LJC. ELG revenue for the quarter decreased 1% to $6.8 million from $6.9 million in the first quarter of 2009 primarily due to a decrease in equipment sales. The Company also reports revenue by service and equipment revenue. Service revenue for the quarter increased 47% to $15.9 million from $10.8 million in the first quarter of 2009 primarily due to the acquisition of LJC while equipment revenue decreased 99% to $0.01 million from $0.42 million in the first quarter of 2009.

Cost of Sales -- Cost of sales for the quarter increased 60% to $7.1 million from $4.4 million in the first quarter of 2009.

Gross Profit and Gross Margin -- Gross profit for the quarter increased 30% to $8.8 million from $6.8 million in the first quarter of 2009. Gross profit margin for the quarter was 55% compared to 61% in the first quarter of 2009.

Share Based Compensation -- Share based compensation for the quarter decreased 56% to $0.43 million from $0.97 million in the first quarter of 2009.

Operating Expenses -- Operating expenses for the quarter increased 6% to $2.8 million from $2.6 million in the first quarter of 2009.

Operating Income, Operating Income Margin -- Operating income for the quarter increased 45% to $6.1 million from $4.2 million in the first quarter of 2009. Operating income margin for the quarter was 38% compared to 37% in the first quarter of 2009.

Net Income, Net Income Margin -- Net income attributable to the Company for the quarter increased 58% to $4.6 million from $2.9 million in the first quarter of 2009. Net income margin for the quarter was 29%.

Diluted EPS -- Diluted earnings per share for the quarter were $0.10 compared to $0.08 in the first quarter of 2009 primarily due to an increase in net income partially offset by a year-over-year increase in shares used in the computation. The fully diluted share count for the quarter was 46,312,165 compared to 35,648,251 in the first quarter of 2009.

Adjusted Net Income, Adjusted Net Income Margin -- Adjusted net income excluding share based compensation and amortization of intangibles (non-GAAP) for the quarter increased 41% to $6.3 million from $4.5 million in the first quarter of 2009. Adjusted net income margin (non-GAAP) for the quarter was 39% compared to 40% in the first quarter of 2009.

Adjusted Diluted EPS -- Adjusted diluted earnings per share excluding share based compensation, amortization of intangibles and impairment expenses (non-GAAP) for the quarter were $0.14 compared to $0.13 in the first quarter of 2009.

Adjusted EBITDA and Adjusted EBITDA Margin -- Adjusted EBITDA excluding share based compensation expenses (non-GAAP) for the quarter increased 43% to $9.5 million from $6.7 million in the first quarter of 2009. Adjusted EBITDA margin (non-GAAP) for the quarter was 60% compared to 59% in the first quarter of 2009.

Cash and Bank Balances together with Term Deposits -- Cash and bank balances together with term deposits totaled $132.7 million as of March 31, 2010, compared to $122.7 million as of December 31, 2009.

Financial Outlook for 2010

For the full year ending December 31, 2010, the Company reaffirmed the following previously provided guidance:

This is the Company's current and preliminary view, which is subject to change.

Conference Call Information

ChinaCast's management team will host an earnings conference call at 8:30 am ET, Tuesday, May 11, 2010. The dial-in details for the earnings conference call are as follows:

Earnings Call Telephone Numbers: U.S./Canada Toll Free: +1-877-303-9226 International: +1-760-666-3566

A replay of the earnings conference call will be available at the following numbers:

Replay Telephone Numbers: U.S./Canada Toll Free: +1-800-642-1687 International: +1-706-645-9291 Replay Pass Code: 70868347

The replay will be available starting at 11:30 am ET, Tuesday, May 11, 2010, through 11:59 pm ET, Tuesday, May 25, 2010.

Additionally, a live and archived version of the earnings call will be available at www.chinacasteducation.com. Please access the website approximately 10 minutes prior to the start time in order to download and install any necessary software.

About ChinaCast Education Corporation

Established in 1999, ChinaCast Education Corporation is a leading for-profit, post-secondary education and e-learning services provider in China. The Company provides post-secondary degree and diploma programs through its two universities in China: The Foreign Trade and Business College of Chongqing Normal University and the Lijiang College of Guangxi Normal University. These universities offer fully accredited, career-oriented bachelor's degree and diploma programs in business, economics, law, IT/computer engineering, hospitality and tourism management, advertising, language studies, art and music. The Company provides its e-learning services to post-secondary institutions, K-12 schools, government agencies and corporate enterprises via its nationwide satellite/fiber broadband network. These services include interactive distance learning applications, multimedia education content delivery, English language training and vocational training courses. The company is listed on the NASDAQ with the ticker symbol CAST.

Safe Harbor Statement

This press release may contain statements that are forward-looking, as that term is defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements express our current expectations or forecasts of possible future results or events, including projections of future performance, statements of management's plans and objectives, future contracts, and forecasts of trends and other matters. These projections, expectations and trends are dependent on certain risks and uncertainties including such factors, among others, as growth in demand for education services, smooth and timely implementation of new training centers and other risk factors listed in the Company's Annual Report on Form 10K for the fiscal year ended December 31, 2009. Forward-looking statements speak only as of the date of this filing, and we undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur. You can identify these statements by the fact that they do not relate strictly to historic or current facts and often use words such as "anticipate", "estimate," "expect," "believe," "will likely result," "outlook," "project" and other words and expressions of similar meaning. No assurance can be given that the results in any forward-looking statements will be achieved and actual results could be affected by one or more factors, which could cause them to differ materially. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act.

About Non-GAAP Financial Measures

To supplement our consolidated financial statements, which statements are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: adjusted net income, adjusted net-income margin, adjusted EPS (basic and diluted), adjusted EBITDA and adjusted EBITDA margin. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures" included at the end of this release.

We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenses and expenditures that may not be indicative of our recurring core business operating results." These non-GAAP financial measures exclude from our operating performance not only non-cash charges, such as stock-based compensation, but also discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business. The accompanying tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.

GlobeNewswire, Inc.2010

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