BEST Inc. Announces Unaudited Third Quarter 2020 Financial Results
HANGZHOU, China, Nov. 19, 2020 /PRNewswire/ -- BEST Inc. (NYSE: BEST) ("BEST" or the "Company"), a leading integrated smart supply chain solutions and logistics services provider in China, today announced its unaudited financial results for the quarter ended September 30, 2020.
Johnny Chou, Founder, Chairman and Chief Executive Officer of BEST, commented, "We had a challenging third quarter amid intensified industry competition. Our Express segment execution did not meet the fast-changing market dynamics in both operation and pricing strategy, which led to lower volume growth and margin. Facing strong industry headwinds, we are taking steps to make major strategic adjustments and organizational changes to our business, focusing on our core logistics and supply chain management businesses, emphasizing service quality, enhancing operating efficiency, with the goal of putting us back on a path to profitability."
Gloria Fan, BEST's Chief Financial Officer, commented, "Our third-quarter performance reflects both the challenges and resiliency of our business. Revenue was RMB8.7 billion, relatively stable compared with the same period last year, while our gross margin contracted 5.4 percentage points year-over-year due to a challenging pricing environment that offset our volume growth across multiple business units, resulting in a net loss of RMB640 million. Despite the net loss, we generated net operating cash inflow of RMB115 million during the third quarter and maintained a healthy balance of cash and cash equivalents, restricted cash and short-term investments of RMB4.8 billion."
FINANCIAL HIGHLIGHTS([1])
For the Quarter Ended September 30, 2020:
-- Revenue was RMB8,693.3 million (US$1,280.4 million), a decrease of 0.6%
year-over-year ("YoY"). The decrease was primarily due to a decrease in
average selling price ("ASP") of Express business, partially offset by
an increase in Express volume.
-- Gross Profit was RMB37.6 million (US$5.5 million), a decrease of 92.6%
YoY compared to gross profit of RMB507.1 million in the same period of
2019. The decrease was primarily due to decreased ASP and increased
costs of Express and Freight units. Gross Margin was 0.4%, a decrease of
5.4 percentage points ("ppts") YoY.
-- Net Loss was RMB639.5 million (US$94.2 million), compared to a net loss
of RMB6.7 million in the same period of 2019. Non-GAAP Net Loss([2] [3]
)was RMB612.0 million (US$90.1 million), compared to non-GAAP Net Income
of RMB16.7 million in the same period of 2019.
-- Diluted EPS([4]) was negative RMB1.64 (US$0.24), compared to negative
RMB0.01 in the same period of 2019. Non-GAAP diluted EPS([3] [5] )was
negative RMB1.57 (US$0.23), compared to RMB0.05 in the same period of
2019.
-- EBITDA([3]) ([6]) was negative RMB462.9 million (US$68.2 million),
compared to RMB93.4 million in the same period of 2019. Adjusted
EBITDA([3]) ([6] )was negative RMB437.7 million (US$64.5 million),
compared to RMB114.3 million in the same period of 2019.
Strategic Refocusing Plan
Following a comprehensive review of the Company's business operations, BEST plans to implement extensive strategic adjustments to refocus its core businesses with a view to driving long-term growth and profitability.
1. Core businesses: The Company will focus on its core logistics and supply chain management businesses.
a) Express: BEST will refocus its Express business on sustainable long-term growth and profitability by focusing on optimizing its product structure, improving operating efficiency, enhancing service quality and customer experience, and gaining market share.
b) Freight: BEST will continue to emphasize the e-commerce aspect of its freight services and solidify the Company's competitive position by expanding its market share, improving operating efficiency and increasing profitability.
c) Supply Chain Management: BEST will focus on quality growth and profitability, continue to implement an improved asset-light model and grow the Company's franchised Cloud OFC business.
2. Non-core businesses: The Company announced the winding down of Store(+) on November 15, 2020. The Company believes that by phasing out Store(+), it can eliminate the significant cash-flow requirements associated with this early-stage business, allowing the Company to further prioritize capital allocation towards its core businesses. For its other non-core businesses, including UCargo, Capital and Global, the Company is considering all available strategic options with the goal of improving the Company's profitability to maximize shareholder value.
3. Management: BEST took significant steps to realign its management team to support the refocusing plan for its core businesses. As announced on November 15, 2020, and effective the same day, Mr. Xiaoqing Wang, former general manager of BEST's Jiangsu province branch, assumed the position of vice president, general manager of Express, replacing Mr. Shaohua Zhou, who took up a new role in the Company.
4. Cost measures: As part of the company-wide strategic refocusing plan, the Company intends to optimize its SG&A and R&D expenses to focus its resources on core businesses, anticipating estimated cost savings of approximately RMB200 million by the end of 2021. The savings will create a leaner and more focused organization by prioritizing expense control as well as optimizing efficiencies across the organization.
Johnny Chou, Founder, Chairman and Chief Executive Officer of BEST, commented, "After a comprehensive review, we decided to take steps to refocus and streamline our operations, creating a leaner organization with greater financial flexibility. With a continued emphasis on our core capabilities, including Express, Freight and Supply Chain Management, we are evaluating strategic options available for our non-core businesses to eliminate or significantly reduce their capital requirements and capital losses. As we prioritize and deploy capital towards our core businesses, the goal is to improve our business fundamentals and competitive position. We believe with appropriate adjustments to our organization and cost structure, we can be on a path to profitability in the near future.
"As we look ahead, we remain confident in the strength of demand driven by e-commerce for integrated smart supply chain solutions and logistics services. We aim to achieve strong growth for Express and Freight, while seeking to further integrate our core business units. We expect this integration to create more cross-selling opportunities and maximize revenue and cost synergies, while also allowing us to focus on enhancing our product structure, stability and flexibility of our network, quality of services and overall operating efficiencies, which, taken as a whole, will enable BEST to deliver long-term value for our shareholders," concluded Mr. Chou.
BUSINESS HIGHLIGHTS([7])
Core Logistics and Supply Chain
BEST Express - The Express segment execution did not meet the fast-changing market dynamics in both operation and pricing strategy, which led to lower volume growth and margin. Parcel volume increased by 24.8% YoY, representing market share of 10.6% during the quarter, which was 0.1 ppt lower compared with the second quarter. Gross margin contracted by 7.2 ppts due to an ASP decline of 21.9% YoY, partially offset by a decrease in average cost per parcel of 15.9% YoY.
BEST Freight - Freight continued its strong growth and achieved a growth rate higher than the industry average. Freight volume increased by 30.7% YoY in the third quarter of 2020. Its gross margin declined 5.3 ppts YoY, primarily due to a pricing lag after the government reinstated highway tolls in the second quarter. Average cost per tonne decreased by 12.6% YoY while ASP declined by 17.3% YoY.
BEST Supply Chain Management - Supply Chain Management focused on expanding the franchised Cloud OFC business, while targeting projects with higher margins and clients with strong credit profiles. Its gross margin decreased by 4.0 ppts YoY to 4.4%, primarily due to high cost structures associated with legacy key account customers, which are in the process of being terminated. The total number of orders fulfilled by Cloud OFCs increased by 18.3% YoY to 102.2 million in the third quarter of 2020, of which the total number of orders fulfilled by franchised Cloud OFCs increased by 32.0% YoY to 53.5 million. The number of franchised OFCs increased by 23.2% YoY to 345.
BEST UCargo - The number of registered drivers on the UCargo mobile app increased by 84.5% YoY to 288,322. The total number of transactions on the trucking brokerage platform increased by 37.2% YoY to 233,480.
BEST Capital - As of September 30, 2020, BEST Capital had provided financing solutions to 13,607 trucks in total, a quarter-over-quarter ("QoQ") increase of 10.0% compared to June 30, 2020.
BEST Store(+)
The Store(+) business continued to execute on its strategy of partnership model and enhancing order quality, allowing it to improve gross margin and reduce losses. Gross margin increased by 2.9 ppts YoY to 13.4%, while adjusted EBITDA margin improved by 1.8 ppts YoY to negative 9.5%. Despite these improving results, we decided to wind down Store+ operations by the end of 2020, except for self-operated WoWo stores, which the Company plans to continue running while evaluating various strategic options.
BEST Global
Global continued its strong momentum in Southeast Asia. In the third quarter, parcel volume in Thailand increased by 513.5% YoY to approximately 10 million, while parcel volume in Vietnam increased by 932.4% YoY to 10.3 million. The Company also made progress in expanding its express delivery services in Malaysia, Cambodia and Singapore.
Key Operational Metrics
Three Months Ended % Change YoY
September 30,
September 30,
September 30, 2019 vs 2020 vs
2018 2019 2020 2018 2019
Express Parcel Volume (in '000)
1,371,055 1,890,842 2,359,773 37.9% 24.8%
Freight Volume (Tonne in '000) 1,474 1,885 2,464 27.9% 30.7%
Supply Chain Management 56,572 86,371 102,171 52.7% 18.3%
Orders Fulfilled (in '000)
UCargo Number of 136 170 233 25.3% 37.2%
Transactions (in '000)
Store+ Total Number of Orders 935 903 820 (3.4%) (9.2%)
Fulfilled (in '000)
Global Parcel Volume in 2,607 20,754 696.0%
Southeast Asia (in '000)
---
FINANCIAL RESULTS
For the Quarter Ended September 30, 2020:
Revenue
The following table sets forth a breakdown of revenue by business segment for the periods indicated.
Table 1 - Breakdown of Revenue by Business Segment
Three Months Ended
September 30, 2019 September 30, 2020
(In '000, except for %)
RMB % of
RMB
US$ % of % Change
Revenue Revenue YoY
--- ---
Core logistics and supply chain:
Express 5,209,139 59.5% 5,076,101 747,629 58.5% (2.6%)
Freight 1,375,411 15.7% 1,487,654 219,108 17.1% 8.2%
Supply Chain Management 452,328 5.2% 452,691 66,674 5.2% 0.1%
UCargo 702,150 8.0% 688,951 101,472 7.9% (1.9%)
Capital 48,672 0.6% 54,725 8,060 0.6% 12.4%
Total for core logistics 7,787,700 89.0% 7,760,122 1,142,943 89.3% (0.4%)
and supply chain
Store+ 861,964 9.9% 717,115 105,620 8.2% (16.8%)
Global 95,632 1.1% 216,017 31,816 2.5% 125.9%
Total Revenue 8,745,296 100% 8,693,254 1,280,379 100% (0.6%)
---
Core Logistics and Supply Chain
-- Express Service Revenue decreased by 2.6% YoY to RMB5,076.1 million
(US$747.6 million) from RMB5,209.1 million, primarily due to a 21.9% YoY
decrease in ASP per parcel, partially offset by a 24.8% YoY increase in
parcel volume. The decrease in ASP is primarily attributable to
competitive market dynamics.
-- Freight Service Revenue increased by 8.2% YoY to RMB1,487.7 million
(US$219.1 million) from RMB1,375.4 million, primarily due to a 30.7% YoY
increase in freight volume, partially offset by a 17.3% YoY decrease in
ASP per tonne.
-- Supply Chain Management Service Revenue increased by 0.1% YoY to
RMB452.7 million (US$66.7 million) from RMB452.3 million.
-- UCargo Service Revenue decreased by 1.9% YoY to RMB689.0 million
(US$101.5 million) from RMB702.2 million, primarily due to
discontinuation of several key account customers to minimize credit
exposure.
-- Capital Service Revenue increased by 12.4% YoY to RMB54.7 million
(US$8.1 million) from RMB48.7 million.
BEST Store(+) - Revenue decreased by 16.8% YoY to RMB717.1 million (US$105.6 million) from RMB862.0 million, primarily due to efforts to enhance order quality to improve margins.
BEST Global - Revenue increased by 125.9% YoY to RMB216.0 million (US$31.8 million) from RMB95.6 million, primarily due to strong growth in parcel volumes in Southeast Asia.
Cost of Revenue
The following table sets forth a breakdown of cost of revenue by business segment for the periods indicated.
Table 2 - Breakdown of Cost of Revenue by Business Segment
Three Months Ended % of
Revenue
Change
YoY
---
September 30, 2019 September 30, 2020
(In '000, except for %)
RMB % of
RMB
US$ % of
Revenue Revenue
---
Core logistics and supply chain:
Express (4,962,151) 95.3% (5,205,390) (766,671) 102.5%
7.2 ppt
Freight (1,289,098) 93.7% (1,473,252) (216,987) 99.0%
5.3 ppt
Supply Chain Management (414,197) 91.6% (432,945) (63,766) 95.6%
4.0 ppt
UCargo (688,305) 98.0% (675,295) (99,460) 98.0%
0.0 ppt
Capital (16,522) 33.9% (8,066) (1,188) 14.7%
(19.2 ppt)
Total for core logistics (7,370,273) 94.6% (7,794,948) (1,148,072) 100.4% 5.8 ppt
and supply chain
Store+ (771,078) 89.5% (621,059) (91,472) 86.6%
(2.9 ppt)
Global (96,889) 101.3% (239,653) (35,297) 110.9%
9.6 ppt
Total Cost of Revenue (8,238,240) 94.2% (8,655,660) (1,274,841) 99.6% 5.4 ppt
--- ---
Cost of Revenue was RMB8,655.7 million (US$1,274.8 million) or 99.6% of revenue in the quarter ended September 30, 2020, compared to RMB8,238.2 million or 94.2% of revenue in the same quarter of 2019. The increase of 5.4 ppts in cost of revenue as a percentage of revenue was primarily attributable to increased costs of Express and Freight businesses.
Table 3 - Breakdown of Average Cost Per Parcel and Average Cost Per Tonne
Three Months Ended % Change
(in RMB)
September 30, 2019
September 30, 2020
YoY
--- ---
Express:
Average Cost Per Parcel 2.62 2.21 (15.9%)
Average Transportation Cost Per Parcel 0.75 0.65 (13.3%)
Average Labor Cost Per Parcel 0.23 0.18 (21.7%)
Average Lease Cost Per Parcel 0.10 0.10 (0.0%)
Average Other Cost Per Parcel 0.11 0.10 (9.1%)
Average Last-mile Cost Per Parcel 1.43 1.18 (17.5%)
Freight:
Average Cost Per Tonne 683.9 597.8 (12.6%)
---
-- Express Service Average Cost per Parcel decreased by 15.9%, primarily
due to improved operating efficiency and economies of scale.
-- Freight Service Average Cost per Tonne decreased by 12.6% YoY, primarily
due to improved operating efficiency, network optimization and economies
of scale.
Gross Profit was RMB37.6 million (US$5.5 million), compared to gross profit of RMB507.1 million in the same quarter of 2019; Gross Margin was 0.4%, compared to 5.8% in the same quarter of 2019.
Operating Expenses
The following table sets forth a breakdown of operating expenses and adjusted operating expenses by category for the periods indicated.
Table 4 - Breakdown of Operating Expenses and Adjusted Operating Expenses by Category
Three Months Ended
September 30, 2019 September 30, 2020
(In '000, except for %)
RMB % of
RMB US$ % of
% of Revenue
Revenue Revenue Change
YoY
--- ---
Selling, General and (488,381) 5.6% (612,849) (90,263) 7.0%
1.4 ppt
Administrative Expenses
Adjusted for SBC (18,166) 0.2% (32,256) (4,751) 0.3%
0.1 ppt
Expenses
Adjusted Selling, General (470,215) 5.4% (580,593) (85,512) 6.7%
1.3 ppt
and
Administrative Expenses
Research and (64,522) 0.7% (53,361) (7,859) 0.6%
(0.1 ppt)
Development Expenses
Adjusted for (2,291) 0.0% (2,135) (314) 0.0%
0.0 ppt
SBC Expenses
Adjusted Research and (62,231) 0.7% (51,226) (7,545) 0.6%
(0.1 ppt)
Development Expenses
Total Operating Expenses (552,903) 6.3% (666,210) (98,122) 7.6%
1.3 ppt
Adjusted for (20,457) 0.2% (34,391) (5,065) 0.3%
0.1 ppt
SBC Expenses
Adjusted Total (532,446) 6.1% (631,819) (93,057) 7.3%
1.2 ppt
Operating Expenses
---
Selling, General and Administrative Expenses were RMB612.8 million (US$90.3 million) or 7.0% of revenue in the quarter ended September 30, 2020, compared to RMB488.4 million or 5.6% of revenue in the same quarter of 2019. The increase in selling, general and administrative expenses was primarily attributable to an accrued provision for certain trade receivables and losses on disposal of fixed assets due to an upgrade of Express's equipment.
Research and Development Expenses were RMB53.4 million (US$7.9 million) or 0.6% of revenue in the quarter ended September 30, 2020, compared to RMB64.5 million, or 0.7% of revenue in the same quarter of 2019. The decrease in research and development expenses was primarily attributable to capitalization of certain research and development expenditure to intangible assets, as well as reduction in travel expenses.
Share-based Compensation ("SBC") Expenses included in the cost and expense items above in the quarter ended September 30, 2020 were RMB35.0 million (US$5.2 million), compared to RMB21.0 million in the same quarter of 2019. In the third quarter of 2020, RMB0.6 million (US$0.1 million) was allocated to cost of revenue, RMB1.5 million (US$0.2 million) was allocated to selling expenses, RMB30.8 million (US$4.6 million) was allocated to general and administrative expenses, and RMB2.1 million (US$0.3 million) was allocated to research and development expenses.
Net Loss and Non-GAAP Net Income
Net Loss in the quarter ended September 30, 2020 was RMB639.5 million (US$94.2 million), compared to Net Loss of RMB6.7 million in the same period of 2019. Excluding SBC expenses, amortization of intangible assets resulting from business acquisitions and gain from appreciation of investment (if any for a given period), non-GAAP Net Loss in the quarter ended September 30, 2020 was RMB612.0 million (US$90.1 million), compared to non-GAAP Net Income of RMB16.7 million in the same quarter of 2019.
The following table sets forth a breakdown of non-GAAP net loss for the three months ended September 30, 2020 by segment.
Table
5
-
Breakdown of non-GAAP Net Loss by Segment
Three Months Ended September 30, 2020
Core logistics and supply chain
(In RMB'000) Express Freight Supply Chain UCargo Capital Store+ Global Unallocated
[8] Total
---
Non-GAAP Net (311,199) (61,000) (36,781) (31,368) 28,447 (70,013) (63,830) (66,209) (611,953)
Income/(Loss)
---
Diluted EPS and non-GAAP diluted EPS
Diluted EPS in the quarter ended September 30, 2020 was negative RMB1.64 (US$0.24), based on a weighted average of 385.4 million diluted shares outstanding during the quarter. This is compared to negative RMB0.01 on a weighted average of 388.8 million diluted shares outstanding in the same period of 2019. Excluding SBC expenses, amortization of intangible assets resulting from business acquisitions and gain from appreciation of investment (if any for a given period), non-GAAP diluted EPS in the quarter ended September 30, 2020 was negative RMB1.57 (US$0.23), compared to RMB0.05 in the same period of 2019. A reconciliation of non-GAAP diluted EPS to diluted EPS is included at the end of this results announcement.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA was negative RMB437.7 million (US$64.5 million), compared to RMB114.3 million in the quarter ended September 30, 2019. Adjusted EBITDA Margin was negative 5.0%, compared to 1.3% in the quarter September 30, 2019.
Adjusted EBITDA and Adjusted EBITDA Margin by Segment
The following table sets forth a breakdown of adjusted EBITDA and adjusted EBITDA margin for the three months ended September 30, 2020 by segment.
Table
6
-
Breakdown of Adjusted EBITDA and Adjusted EBITDA Margin by Segment
Three Months Ended September 30, 2020
Core logistics and supply chain
(In RMB'000) Express Freight Supply Chain UCargo Capital Store+ Global Unallocated
[9] Total
---
Adjusted EBITDA (211,289) (44,643) (26,661) (29,976) 34,482 (68,213) (60,699) (30,727) (437,726)
Adjusted EBITDA (4.2%) (3.0%) ?
5.9%
? (4.4%) 63.0% (9.5%) (28.1%) (5.0%)
Margin
---
Core Logistics and Supply Chain - Adjusted EBITDA was negative RMB278.1 million (US$41.0 million), compared to RMB266.9 million in the quarter ended September 30, 2019. Adjusted EBITDA Margin was negative 3.6%, compared to 3.4% in the quarter ended September 30, 2019.
Store(+) - Adjusted EBITDA was negative RMB68.2 million (US$10.0 million), compared to negative RMB97.6 million in the quarter ended September 30, 2019. Adjusted EBITDA Margin was negative 9.5%, compared to negative 11.3% in the quarter ended September 30, 2019.
Global - Adjusted EBITDA was negative RMB60.7 million (US$8.9 million), compared to negative RMB30.9 million in the quarter ended September 30, 2019. Adjusted EBITDA Margin was negative 28.1%, compared to negative 32.3% in the quarter ended September 30, 2019.
Cash and Cash Equivalents, Restricted Cash and Short-term Investments
As of September 30, 2020, cash and cash equivalents, restricted cash and short-term investments were RMB4,756.3 million (US$700.5 million), compared to RMB5,141.9 million as of June 30, 2020.
Net Cash Generated from Operating Activities
Net cash generated from operating activities was RMB115.4 million (US$17.0 million), compared to RMB237.3 million in the same period of 2019. The decrease in net cash generated from operating activities was mainly due to decreasing ASP in Express and Freight businesses.
Capital Expenditures ("CAPEX")
CAPEX was RMB486.6 million (US$71.7 million), or 5.6% of total revenue in the quarter ended September 30, 2020, compared to CAPEX of RMB523.0 million, or 6.0% of total revenue, in the same period of 2019. The decrease in CAPEX was primarily due to payment timing differences.
SHARES OUTSTANDING
As of the date of this press release, the Company had approximately 385.4 million ordinary shares outstanding([10]). Each American Depositary Share represents one Class A ordinary share.
FINANCIAL GUIDANCE
Due to its ongoing strategic refocusing plan, BEST is unable to provide financial guidance at this time. The Company currently plans to resume providing financial guidance in 2021.
WEBCAST AND CONFERENCE CALL INFORMATION
The Company will hold a conference call at 9:00 pm U.S. Eastern Time on November 19, 2020 (10:00 am Beijing Time on November 20), to discuss its financial results and operating performance for the third quarter of 2020.
Participants may access the call by dialing the following numbers:
United States : +1-888-317-6003
Hong Kong : 800-963976 or
+852-5808-1995
Mainland China
: 4001-206115
International : +1-412-317-6061
Participant Elite Entry Number
: 6127097
A replay of the conference call will be accessible through November 26, 2020 by dialing the following numbers:
United States : +1-877-344-7529
International : +1-412-317-0088
Replay Access Code
: 10149943
Please visit the Company's investor relations website http://ir.best-inc.com/ on November 19, 2020 to view the earnings release prior to the conference call. A live and archived webcast of the conference call and a corporate presentation will be available at the same site.
ABOUT BEST INC.
BEST Inc. (NYSE: BEST) is a leading integrated smart supply chain solutions and logistics services provider in China. Through its proprietary technology platform and extensive networks, BEST offers a comprehensive set of logistics and value-add services, including express and freight delivery, supply chain management and last-mile services, truckload service brokerage, international logistics and financial services. BEST's mission is to empower business and enrich life by leveraging technology and business model innovation to create a smarter, more efficient supply chain. For more information, please visit: http://www.best-inc.com/en/.
For investor and media inquiries, please contact:
BEST Inc.
Investor relations team
ir@best-inc.com
The Piacente Group, Inc.
Yang Song
Tel: +86-10-6508-0677
E-mail: best@tpg-ir.com
The Piacente Group, Inc.
Brandi Piacente
Tel: +1-212-481-2050
E-mail:??best@tpg-ir.com
SAFE HARBOR STATEMENT
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as BEST's strategic and operational plans, contain forward-looking statements. BEST may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about BEST's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: BEST's goals and strategies; BEST's future business development, results of operations and financial condition; BEST 's ability to maintain and enhance its ecosystem; BEST 's ability to continue to innovate, meet evolving market trends, adapt to changing customer demands and maintain its culture of innovation; fluctuations in general economic and business conditions in China and other countries in which BEST operates, and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in BEST's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and BEST does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
USE OF NON-GAAP FINANCIAL MEASURES
In evaluating its business, BEST considers and uses non-GAAP measures, such as non-GAAP net loss/income, non-GAAP net loss/profit margin, adjusted EBITDA, adjusted EBITDA margin, EBITDA, adjusted selling expenses, adjusted general and administrative expenses, adjusted research and development expenses, and non-GAAP diluted EPS, as supplemental measures in the evaluation of the Company's operating results and in the Company's financial and operational decision-making. The Company believes these non-GAAP financial measures that help identify underlying trends in the Company's business that could otherwise be distorted by the effect of the expenses and gains that the Company includes in loss from operations and net loss. The Company believes that these non-GAAP financial measures provide useful information about its operating results, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company's management in its financial and operational decision-making. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of Non-GAAP Measures to the Nearest Comparable GAAP Measures" in the results announcement.
The non-GAAP financial measures are provided as additional information to help investors compare business trends among different reporting periods on a consistent basis and to enhance investors' overall understanding of the Company's current financial performance and prospects for the future. These non-GAAP financial measures should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for, or superior to, U.S. GAAP results. In addition, the Company's calculation of the non-GAAP financial measures may be different from the calculation used by other companies, and therefore comparability may be limited.
Summary of Unaudited Condensed Consolidated Income Statements
(In Thousands)
Three Months Ended September 30, Nine Months Ended September 30,
2019 2020 2019 2020
RMB
RMB
US$
RMB RMB US$
---
Revenue
Express 5,209,139 5,076,101 747,629 14,925,574 13,594,633 2,002,273
Freight 1,375,411 1,487,654 219,108 3,669,126 3,536,163 520,821
Supply Chain Management 452,328 452,691 66,674 1,587,176 1,369,991 201,778
Store+ 861,964 717,115 105,620 2,206,044 1,837,314 270,607
Global 95,632 216,017 31,816 201,451 524,305 77,222
UCargo 702,150 688,951 101,472 1,665,167 1,562,054 230,066
Capital 48,672 54,725 8,060 153,462 152,524 22,464
Total Revenue 8,745,296 8,693,254 1,280,379 24,408,000 22,576,984 3,325,231
Cost of Revenue
Express (4,962,151) (5,205,390) (766,671) (14,303,701) (13,570,902) (1,998,778)
Freight (1,289,098) (1,473,252) (216,987) (3,466,109) (3,532,534) (520,286)
Supply Chain Management (414,197) (432,945) (63,766) (1,474,029) (1,297,689) (191,129)
Store+ (771,078) (621,059) (91,472) (1,962,020) (1,594,696) (234,873)
Global (96,889) (239,653) (35,297) (215,376) (602,511) (88,740)
UCargo (688,305) (675,295) (99,460) (1,620,980) (1,528,280) (225,091)
Capital (16,522) (8,066) (1,188) (45,956) (19,668) (2,897)
Total Cost of Revenue (8,238,240) (8,655,660) (1,274,841) (23,088,171) (22,146,280) (3,261,794)
Gross Profit 507,056 37,594 5,538 1,319,829 430,704 63,437
Selling Expenses (212,714) (244,925) (36,074) (619,203) (694,135) (102,235)
General and Administrative (275,667) (367,924) (54,189) (863,913) (993,627) (146,345)
Expenses
Research and (64,522) (53,361) (7,859) (181,058) (164,175) (24,180)
Development Expenses
Total Operating Expenses (552,903) (666,210) (98,122) (1,664,174) (1,851,937) (272,760)
Loss from Operations (45,847) (628,616) (92,584) (344,345) (1,421,233) (209,323)
Interest Income 21,242 18,106 2,667 71,291 58,106 8,558
Interest Expense (12,023) (46,583) (6,861) (52,767) (121,134) (17,841)
Foreign Exchange
Gain/(Loss) 661 (9,199) (1,355) (3,405) (9,014) (1,328)
Other Income 38,225 40,700 5,994 91,860 112,569 16,580
Other Expense (5,216) (7,244) (1,067) (13,136) (25,605) (3,771)
Loss before Income Tax (2,958) (632,836) (93,206) (250,502) (1,406,311) (207,125)
and Share of Net Loss
of Equity Investees
Income Tax Expense (3,691) (6,633) (977) (11,793) (14,735) (2,170)
Loss before Share of Net (6,649) (639,469) (94,183) (262,295) (1,421,046) (209,295)
loss of Equity Investees
Share of Net Loss of Equity Investees (47) (40) (6) (183) (114) (17)
Net Loss (6,696) (639,509) (94,189) (262,478) (1,421,160) (209,312)
Net Loss attributable to non- (3,214) (5,959) (878) (8,644) (20,390) (3,003)
controlling interests
Net loss attributable to (3,482) (633,550) (93,311) (253,834) (1,400,770) (206,309)
Best Inc.
Net loss attributable to (3,482) (633,550) (93,311) (253,834) (1,400,770) (206,309)
ordinary shareholders
---
Summary of Unaudited Condensed Consolidated Balance Sheets
(in thousands)
As of December 31, 2019 As of September 30, 2020
RMB
RMB
US$
---
Assets
Current Assets
Cash and Cash Equivalents 1,994,683 1,814,016 267,176
Restricted Cash 1,786,832 2,008,550 295,827
Accounts and Notes Receivables 1,229,083 931,411 137,180
Inventories 140,006 166,402 24,508
Prepayments and Other Current Assets 2,750,126 3,383,635 498,356
Short?term Investments 1,057,598 306,490 45,141
Lease Rental Receivables 483,363 528,317 77,813
Amounts Due from Related Parties 246,758 156,522 23,053
Total Current Assets 9,688,449 9,295,343 1,369,054
Non?current Assets
Property and Equipment, Net 2,939,379 3,836,048 564,989
Intangible Assets, Net 121,587 111,800 16,466
Goodwill 490,986 499,433 73,559
Long?term Investments 230,855 240,580 35,434
Non?current Deposits 127,191 137,525 20,255
Other Non?current Assets 346,645 584,015 86,016
Operating Lease Right-of-use Assets 4,378,804 4,123,906 607,386
Lease Rental Receivables 993,260 784,057 115,479
Restricted Cash 175,700 627,218 92,379
Total non?current Assets 9,804,407 10,944,582 1,611,963
Total Assets 19,492,856 20,239,925 2,981,017
Liabilities and Shareholders' Equity
Current Liabilities
Short?term Bank Loans 2,510,500 3,099,750 456,544
Securitization Debt 104,899 193,260 28,464
Accounts and Notes Payable 3,391,383 3,770,913 555,395
Accrued Expenses and Other Liabilities 2,019,634 2,264,224 333,484
Customer Advances and Deposits and 1,489,510 1,585,970 233,588
Deferred Revenue
Operating Lease Liabilities 1,035,252 1,104,411 162,662
Financing Lease Liabilities 1,363 529 78
Amounts Due to Related Parties 9,769 21,919 3,228
Income Tax Payable 7,358 10,662 1,570
Total Current Liabilities 10,569,668 12,051,638 1,775,013
Non-current Liabilities
Securitization Debt - 23,766 3,500
Convertible senior notes held by 680,104 1,684,166 248,051
related parties
Convertible Senior Notes held by third 680,104 668,630 98,479
parties
Operating Lease Liabilities 3,482,634 3,167,567 466,532
Financing Lease Liabilities 2,072 4,366 643
Deferred Tax Liabilities 25,806 23,857 3,514
Other Non?current Liabilities 137,184 196,585 28,954
Long-term Bank Loans - 79,333 11,684
Total Non?current Liabilities 5,007,904 5,848,270 861,357
Total Liabilities 15,577,572 17,899,908 2,636,370
Shareholders' Equity
Ordinary Shares 25,988 25,988 3,828
Treasury Shares - (211,352) (31,129)
Additional Paid?In Capital 19,353,400 19,458,478 2,865,924
Statutory reserves 7,865 10,267 1,512
Accumulated Deficit (15,629,537)
(17,088,455) [11] (2,516,857)
Accumulated Other 163,196 165,778 24,416
Comprehensive Income
BEST Inc. Shareholders' Equity 3,920,912 2,360,704 347,694
Non-controlling Interests (5,628) (20,687) (3,047)
Total Shareholders' Equity 3,915,284 2,340,017 344,647
Total Liability and Shareholders' 19,492,856 20,239,925 2,981,017
Equity
---
Summary of Unaudited Condensed Consolidated Statements of Cash Flows
(In Thousands)
Three Months Ended September 30, Nine Months Ended September 30,
---
2019 2020 2019 2020
RMB
RMB US$
RMB
RMB US$
---
Net Cash Generated from/ 237,337 115,351 16,989 366,029 (455,556) (67,096)
(Used in) Operating Activities
Net Cash Used in (556,306) (539,659) (79,483) (1,383,557) (708,826) (104,399)
Investing Activities
Net Cash Generated from 897,235 371,217 54,674 1,558,732 1,738,283 256,021
Financing Activities
Exchange Rate Effect on Cash, 41,930 (106,521) (15,689) 41,860 (81,332) (11,979)
Cash Equivalents, and
Restricted Cash
Net Increase/(Decrease) in 620,196 (159,612) (23,509) 583,064 492,569 72,547
Cash and Cash Equivalents,
and Restricted Cash
Cash and Cash Equivalents, 2,962,276 4,609,396 678,891 2,999,408 3,957,215 582,835
and Restricted Cash at
Beginning of Period
Cash and Cash Equivalents, 3,582,472 4,449,784 655,382 3,582,472 4,449,784 655,382
and Restricted Cash at End
of Period
---
RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES
The table below sets forth a reconciliation of the Company's net loss to EBITDA, adjusted EBITDA and adjusted EBITDA margin for the periods indicated:
Table 7 -
Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin
Three Months Ended September 30, 2020
Core logistics and supply chain
(In RMB'000) Express Freight Supply Chain UCargo Capital Store+ Global Unallocated
[12] Total
Net Income/(Loss) (314,911) (63,702) (39,729) (32,235) 28,379 (73,582) (66,984) (76,745) (639,509)
Add
Depreciation & 98,294 16,357 10,120 1,392 381 3,622 4,320 7,005 141,491
Amortization
Interest Expense 46,583 46,583
Income Tax Expense 1,616 5,654 (364) (273) 6,633
Subtract
Interest Income (18,106) (18,106)
EBITDA (215,001) (47,345) (29,609) (30,843) 34,414 (70,324) (62,937) (41,263) (462,908)
Add
Share-based 3,712 2,702 2,948 867 68 2,111 2,238 20,374 35,020
Compensation
Expenses
Subtract
Gain from (9,838) (9,838)
appreciation of
investments
Adjusted EBITDA (211,289) (44,643) (26,661) (29,976) 34,482 (68,213) (60,699) (30,727) (437,726)
Adjusted EBITDA (4.2%) (3.0%) (5.9%) (4.4%) 63.0% (9.5%) (28.1%) (5.0%)
Margin
Three Months Ended September 30, 2019
Core logistics and supply chain
(In RMB'000) Express Freight Supply Chain UCargo Capital Store+ Global Unallocated
[13] Total
Net Income/(Loss) 117,440 26,579 (10,651) (7,033) 28,534 (102,365) (35,275) (23,925) (6,696)
Add
Depreciation & 63,765 13,492 13,895 72 530 3,570 2,373 7,904 105,601
Amortization
Interest Expense 12,023 12,023
Income Tax Expense 9 4,345 (385) (278) 3,691
Subtract
Interest Income (21,242) (21,242)
EBITDA 181,205 40,071 3,253 (6,961) 33,409 (99,180) (33,180) (25,240) 93,377
Add
Share-based 10,363 2,332 2,474 655 60 1,617 2,263 1,195 20,959
Compensation
Expenses
Adjusted EBITDA 191,568 42,403 5,727 (6,306) 33,469 (97,563) (30,917) (24,045) 114,336
Adjusted EBITDA 3.7% 3.1% 1.3% (0.9%) 68.8% (11.3%) (32.3%) 1.3%
Margin
The table below sets forth a reconciliation of the Company's net loss to non-GAAP net loss, non-GAAP net loss margin for the periods indicated:
Table 8 -
Reconciliation of Non-GAAP Net Loss and Non-GAAP Net Loss Margin
Three Months Ended September 30, 2020
Core logistics and supply chain
(In RMB'000) Express Freight Supply Chain UCargo Capital Store+ Global Unallocated
[14] Total
Net Income/(Loss) (314,911) (63,702) (39,729) (32,235) 28,379 (73,582) (66,984) (76,745) (639,509)
Add
Share-based 3,712 2,702 2,948 867 68 2,111 2,238 20,374 35,020
Compensation
Expenses
Amortization of 1,458 916 2,374
Intangible Assets
Resulting from
Business
Acquisition
Subtract
Gain from (9,838) (9,838)
appreciation of
investments
Non-GAAP Net (311,199) (61,000) (36,781) (31,368) 28,447 (70,013) (63,830) (66,209) (611,953)
Income/(Loss)
Non-GAAP Net (6.1%) (4.1%) (8.1%) (4.6%) 52.0% (9.8%) (29.5%) (7.0%)
Income/(Loss)
Margin
Three Months Ended September 30, 2019
Core logistics and supply chain
(In RMB'000) Express Freight
Supply Chain UCargo Capital
Store+ Global Unallocated Total
Net Income/(Loss) 117,440 26,579 (10,651) (7,033) 28,534 (102,365) (35,275) (23,925) (6,696)
Add
Share-based Compensation Expenses 10,363 2,332 2,474 655 60 1,617 2,263 1,195 20,959
Amortization of Intangible Assets Resulting
from Business Acquisitions 1,541 930 2,471
Non-GAAP Net Income/(Loss) 127,803 28,911 (8,177) (6,378) 28,594 (99,207) (32,082) (22,730) 16,734
Non-GAAP Net Loss Margin 2.5% 2.1% (1.8%) (0.9%) 58.7% (11.5%) (33.5%) 0.2%
The table below sets forth a reconciliation of the Company's diluted EPS to non-GAAP diluted EPS for the periods indicated:
Table 9 - Reconciliation of Diluted EPS and Non-GAAP Diluted EPS
Three Months Ended September 30, Nine Months Ended September 30,
2020 2020
(In '000)
RMB US$
RMB
US$
--- ---
Net Loss Attributable to Ordinary (633,550) (93,311) (1,400,770) (206,309)
Shareholders
Add
Share-based Compensation 35,020 5,158 110,954 16,342
Expenses
Amortization of Intangible Assets 2,374 350 7,266 1,070
Resulting from Business
Acquisitions
Subtract
Gain from appreciation of (9,838) (1,449) (9,838) (1,449)
investments
Non-GAAP Net Loss Attributable to (605,994) (89,252) (1,292,388) (190,346)
Ordinary Shareholders for
Computing
Non-GAAP Diluted EPS
Weighted Average Diluted Shares
Outstanding During the Quarter
Diluted 385,430,134 385,430,134 388,136,651 388,136,651
Diluted (Non-GAAP) 385,430,134 385,430,134 388,136,651 388,136,651
Diluted EPS (1.64) (0.24) (3.61) (0.53)
Add
Non-GAAP adjustment to net loss 0.07 0.01 0.28 0.04
per share
Non-GAAP Diluted EPS (1.57) (0.23) (3.33) (0.49)
---
[1]
All numbers presented have been rounded
to the nearest integer, tenth, or
hundredth, and year-over-year
comparisons are based on figures before
rounding.
[2]
Non-GAAP net income/loss represents
net income/loss excluding share-based
compensation expenses, amortization of
intangible assets resulting from business
acquisitions, and fair value change of
equity investments (if any).
[3]
See the
sections entitled "Use of Non-GAAP
Financial Measures" and "Reconciliations
of Non-GAAP Measures to the Nearest
Comparable GAAP Measures" for more
information about the non-GAAP measures
referred to within this results
announcement.
[4]
Diluted earnings per share, or Diluted
EPS, is calculated by dividing net profit
attributable to ordinary shareholders as
adjusted for the effect of dilutive
ordinary equivalent shares, if any, by
the weighted average number of ordinary
and dilutive ordinary equivalent shares
outstanding during the period.
[5]
Non-GAAP
diluted earnings per share, or non-GAAP
diluted EPS, represents diluted earnings
per share excluding share-based
compensation expenses, amortization of
intangible assets resulting from business
acquisitions, and fair value change of
equity investments (if any).
[6]
EBITDA represents net loss excluding
depreciation, amortization, interest
expense and income tax expense and minus
interest income. Adjusted EBITDA
represents EBITDA excluding share-based
compensation expenses and fair value
change of equity investments (if any).
[7]
All numbers
presented have been rounded to the
nearest integer, tenth, or hundredth, and
year-over-year comparisons are based on
figures before rounding.
[8]
Unallocated expenses are primarily
related to corporate administrative
expenses and other miscellaneous items
that are not allocated to individual
segments.
[9]
Unallocated expenses are primarily
related to corporate administrative
expenses and other miscellaneous items
that are not allocated to individual
segments.
[10]
The total number of shares outstanding
excludes shares reserved for future
issuances upon exercise or vesting of
awards granted under the Company's share
incentive plans.
[11]
Including accumulated accretion to
redemption value and deemed dividend in
relation to redeemable convertible
preferred shares of RMB9,493,807, and
accumulated loss from operations of
RMB7,594,648
[12]
Unallocated expenses are primarily
related to corporate administrative
expenses and other miscellaneous items
that are not allocated to individual
segments.
[13]
Unallocated expenses are primarily
related to corporate administrative
expenses and other miscellaneous items
that are not allocated to individual
segments.
[14]
Unallocated expenses are primarily
related to corporate administrative
expenses and other miscellaneous items
that are not allocated to individual
segments.
[15]
Unallocated expenses are primarily
related to corporate administrative
expenses and other miscellaneous items
that are not allocated to individual
segments.
View original content to download multimedia:http://www.prnewswire.com/news-releases/best-inc-announces-unaudited-third-quarter-2020-financial-results-301177470.html
SOURCE BEST Inc.
