HANGZHOU, China, Nov. 16, 2017 /PRNewswire/ -- BEST Inc. (NYSE:
BSTI) ("BEST" or the "Company"), a leading Smart Supply Chain
service provider in China, today
announced its unaudited financial results for the quarter ended
September 30, 2017.
"The rise of middle class, emergence of New Retail, and
consumption upgrade in lower tier cities in China, together with increasing cross-border
activities present huge market opportunities for us," said
Johnny Chou, BEST Inc.'s Chairman
and Chief Executive Officer. "We are the only player with leading
market positions across supply chain management, express and
freight delivery, and last-mile services in China, and we have achieved the fastest growth
among major players across multiple service lines, creating a
significant competitive advantage. Going forward, we will continue
to invest in people, technology and business innovation, and focus
on executing our strategy to expand market shares, as well as
enhance operational efficiency to achieve quality growth and create
long term value for our shareholders and ecosystem."
"We delivered a very strong September quarter. Total revenue
increased by 133.9% year-over-year, led by robust growth in all
segments," said Alice Guo, BEST
Inc.'s Chief Accounting Officer and Vice President of Finance. "We
enjoyed significant margin expansion in this quarter, benefiting
from economies of scale, continuous network optimization, increased
operational efficiency and business synergies across our platform.
Our gross profit margin improved by 7.6 percentage points YoY to
3.8%. Looking ahead, we aim to continue delivering solid top-line
growth while improving our margins."
THIRD QUARTER 2017 FINANCIAL HIGHLIGHTS
- Total revenue was RMB5,354.4
million (US$804.8 million), an
increase of 133.9% year-over-year ("YoY").
-
- Supply Chain Management Service revenue increased by 28.3% YoY
to RMB386.2 million (US$58.1 million).
- Express Service revenue increased by 147.6% YoY to RMB3,265.7 million (US$490.8 million).
- Freight Service revenue increased by 100.0% YoY to RMB874.4 million (US$131.4
million).
- Store+ Service revenue increased by 244.0% YoY to
RMB767.9 million (US$115.4 million).
- Gross profit was RMB201.7 million
(US$30.3 million), or gross margin of
3.8%, compared to gross loss of RMB88.1
million, or gross margin of negative 3.8%, in the same
period of 2016.
- Net loss was RMB466.6 million
(US$70.1 million), compared to
RMB321.3 million in the same period
of 2016.
- Non-GAAP net loss (1) (2) was RMB183.8 million (US$27.6
million), compared to RMB321.3
million in the same period of 2016.
- EBITDA (3) was negative RMB366.3 million (negative US$55.1 million), compared to negative
RMB265.9 million in the same period
of 2016.
- Adjusted EBITDA (4) was negative RMB85.6 million (negative US$12.9 million), compared to negative
RMB265.9 million in the same period
of 2016.
- Net cash generated from operating activities was RMB108.7 million (US$16.3
million), compared to net cash used in operating activities
of RMB89.7 million in the same period
of 2016.
- Capital expenditures ("CAPEX") was RMB175.6 million (US$26.4
million), or 3.3% of total revenue, compared to CAPEX of
RMB128.9 million, or 5.6% of total
revenue, in the same period of 2016.
THIRD QUARTER 2017 BUSINESS SEGMENT HIGHLIGHTS
BEST Supply Chain Management
- The number of orders fulfilled by self-operated Cloud Order
Fulfillment Centers ("OFCs") increased by 55.0% YoY to 32.5 million
and the number of orders fulfilled by franchised Cloud OFCs
increased by 31.8% YoY to 10.5 million.
- Opened five new self-operated Cloud OFCs and the number of
franchised Cloud OFCs increased to 231 from 215 as of June 30, 2017.
- Further strengthened partnership with Cainiao Smart Logistics
Network Limited ("Cainiao") and Alibaba Group Holding Limited
("Alibaba"); added over 180,000 square meters of OFC space to
further enhance customer experience and to meet the rising demands
for Singles' Day promotion in November.
BEST Express
- Parcel volume increased by 92.6% YoY to 1,010.5 million,
compared to a 28.4% industry-wide YoY growth (5).
Express market share (6) increased to 10.0%, compared to
9.4% in the quarter ended June 30,
2017, and 6.7% in the quarter ended September 30, 2016.
- The Company continued to optimize its express service network.
Total number of hubs and sortation centers decreased to 153 from
181 as of June 30, 2017.
- Driven by significant growth in parcel volume, network
optimization, as well as increased operational efficiency resulting
from proactive cost-control measures and continuous technology
improvements and applications, cost of revenue per parcel,
excluding the impact of service scope expansion(7),
decreased 29.3% YoY. Gross profit per parcel was RMB0.13 (US$0.02),
compared to gross loss per parcel of RMB0.08 in the same period of 2016.
BEST Freight
- Freight volume increased by 44.7% YoY to 1,194 thousand
tonnes.
- Average revenue per tonne increased by 38.2% YoY due to a
greater proportion of long-distance freight volumes in connection
with the expansion of the Company's freight network, upward
adjustments of service prices in various provinces and cities, and
the expansion of the Company's service scope(7).
- Similar to express service network, the Company continued to
optimize its freight service network. Total number of hubs and
sortation centers decreased to 133 from 143 as of June 30, 2017.
BEST Store+
- The Company continued to expand its Store+ network.
The number of membership stores increased by 97.5% YoY to 347,682,
covering 50 cities in 24 provinces.
- The number of store orders fulfilled increased by 155.2% YoY to
702,815.
- The Company fully integrated WOWO after its acquisition in
May 2017. WOWO's network and name
recognition have further strengthened the Company's market position
and accelerated its Store+ network expansion in
Southwest China.
(1)
Non-GAAP net loss represents net loss plus share-based
compensation expense and amortization of intangible assets
resulting
from business acquisitions. 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.
|
(2)
In the third quarter of 2017, the Company recorded total
share-based compensation expense of RMB280.7 million, of which
RMB6.0
million was allocated to cost of revenue, RMB13.2 million was
allocated to selling expenses, RMB237.2 million was allocated
to
general and administrative expenses, and RMB24.3 million was
allocated to research and development expenses.
|
(3)
EBITDA represents net loss plus depreciation, amortization,
interest expense and income tax expense and minus interest
income.
|
(4)
Adjusted EBITDA represents EBITDA plus share-based compensation
expenses.
|
(5)
Based on data published by State Post Bureau of the
PRC:
|
- For July 2017 data, see State Post Bureau of the PRC Published
Post Industry Operation Statistics for July 2017, State
Post Bureau of the PRC, August 15, 2017, available in Chinese
at
http://www.spb.gov.cn/xw/dtxx_15079/201708/t20170814_1277166.html
|
- For August 2017 data, see State Post Bureau of the PRC
Published Post Industry Operation Statistics for August 2017,
State Post Bureau of the PRC, September 12, 2017, available in
Chinese at
http://www.spb.gov.cn/xw/dtxx_15079/201709/t20170912_1306570.html
|
- For September 2017 data, see State Post Bureau of the PRC
Published Post Industry Operation Statistics for September
2017, State Post Bureau of the PRC, October 17, 2017, available in
Chinese at
http://www.spb.gov.cn/xw/dtxx_15079/201710/t20171017_1375341.html
|
(6)
Express market share calculated as the Company's parcel volume
as a percentage of aggregate national express delivery parcel
volume for the relevant period, based on data published by State
Post Bureau of the PRC.
|
(7)
Starting in 2017, the Company revised its arrangements with
franchisees and the scope of its service. As a result, the
Company
became the principal that is directly responsible for last-mile
delivery of all parcels and freight processed through its network,
and the
Company is liable to senders for damage to or loss of parcels and
freight in connection with last-mile delivery. Therefore, in
consideration of such expanded scope of services and increased
responsibilities, the Company increased the fee it charges to
pick-
up service stations and incurred additional cost of revenue that
were attributable to fees for destination franchised service
stations
that the Company engaged for the provision of last-mile delivery
service.
|
KEY OPERATING METRICS OF MAJOR SERVICE LINES
|
Three Months
Ended
|
%
Change
|
|
Sept 30,
2016
|
Sept 30,
2017
|
YoY
|
BEST Supply Chain
Management
|
|
|
|
Number of Orders
Fulfilled by Self-operated
Cloud OFCs (in '000)(8)
|
20,991
|
32,537
|
55.0%
|
Number of orders
Fulfilled by Franchised
Cloud OFCs (in '000) (8)
|
7,980
|
10,514
|
31.8%
|
BEST
Express
|
|
|
|
Parcel Volume (in
'000)(8)
|
524,800
|
1,010,512
|
92.6%
|
BEST
Freight
|
|
|
|
Freight Volume
(Tonnage in '000)(8)
|
825
|
1,194
|
44.7%
|
BEST
Store+
|
|
|
|
Number of Store
Orders Fulfilled
|
275,375
|
702,815
|
155.2%
|
(8)
Includes services performed for external customers both directly
and indirectly through our other segments.
|
SUMMARY FINANCIAL RESULTS
|
Three Months
Ended
|
%
Change
|
(RMB million,
except for %)
|
Sept 30,
2016
|
Sept 30,
2017
|
YoY
|
Revenue
|
2,289
|
5,354
|
133.9%
|
Supply Chain Management
|
301
|
386
|
28.3%
|
Express
|
1,319
|
3,266
|
147.6%
|
Freight
|
437
|
874
|
100.0%
|
Store+
|
223
|
768
|
244.0%
|
Others(9)
|
9
|
60
|
555.3%
|
Gross
(Loss)/Profit
|
(88)
|
202
|
n/m
|
Gross
(Loss)/Profit Margin
|
(3.8%)
|
3.8%
|
7.6ppts
|
Supply Chain Management
|
|
|
|
Gross (Loss)/Profit
|
24
|
29
|
19.3%
|
Gross (Loss)/Profit
Margin
|
8.0%
|
7.4%
|
(0.6ppts)
|
Express
|
|
|
|
Gross (Loss)/Profit
|
(39)
|
131
|
n/m
|
Gross (Loss)/Profit
Margin
|
(3.0%)
|
4.0%
|
7.0ppts
|
Freight
|
|
|
|
Gross (Loss)/Profit
|
(65)
|
(44)
|
n/m
|
Gross (Loss)/Profit
Margin
|
(14.8%)
|
(5.0%)
|
9.8ppts
|
Store+
|
|
|
|
Gross (Loss)/Profit
|
(7)
|
65
|
n/m
|
Gross (Loss)/Profit
Margin
|
(3.3%)
|
8.4%
|
11.7ppts
|
Others(10)
|
|
|
|
Gross (Loss)/Profit
|
(1)
|
21
|
n/m
|
Gross (Loss)/Profit
Margin
|
(6.5%)
|
34.9%
|
41.3ppts
|
EBITDA
|
(266)
|
(366)
|
n/m
|
Adjusted
EBITDA
|
(266)
|
(86)
|
n/m
|
Net
Loss
|
(321)
|
(467)
|
n/m
|
Net Loss
Margin
|
(14.0%)
|
(8.7%)
|
5.3ppts
|
Non-GAAP Net
Loss
|
(321)
|
(184)
|
n/m
|
Non-GAAP Net Loss
Margin
|
(14.0%)
|
(3.4%)
|
10.6ppts
|
(9)
Others include BEST Global, BEST Capital and BEST
UCargo.
|
THIRD QUARTER 2017 FINANCIAL RESULTS
Total Revenue in the third quarter of 2017 increased by
133.9% to RMB5,354.4 million
(US$804.8 million) from RMB2,289.4 million in the same period of 2016.
The increase was primarily attributable to increases in revenue
across the various service lines, as discussed below.
- Supply Chain Management Service Revenue increased by
28.3% to RMB386.2 million
(US$58.1 million) in the third
quarter of 2017 from RMB301.0 million
in the same period of 2016, primarily due to the increase in order
fulfillment service revenue. Revenues from order fulfillment
service increased by 33.0% to RMB278.7
million (US$41.9 million) in
the third quarter of 2017 from RMB209.5
million in the same period of 2016. Such increase was
primarily attributable to increasing business volume of existing
customers and the addition of new customers.
- Express Service Revenue increased by 147.6% to
RMB3,265.7 million (US$490.8 million) in the third quarter of 2017
from RMB1,318.8 million in the same
period of 2016. This increase in revenue was primarily due to the
expansion of the Company's service scope to include last-mile
delivery services starting in 2017 and a 92.6% YoY increase in
parcel volume, as a result of greater demand for express delivery
services and increase in the Company's market share. The average
revenue per parcel in the third quarter of 2017 increased by 28.6%
compared to the same period of 2016, primarily due to the Company's
service scope expansion, partially offset by a decrease in average
parcel weight.
- Freight Service Revenue increased by 100.0% to
RMB874.4 million (US$131.4 million) in the third quarter of 2017
from RMB437.2 million in the same
period of 2016. This increase was the result of greater freight
volume which increased by 44.7% and a 38.2% increase in average
revenue per tonne, compared to the same period in 2016. The
increase in average revenue per tonne was primarily due to a
greater proportion of long-distance freight volumes in connection
with the expansion of the Company's freight network, the expansion
of the Company's service scope to include last-mile delivery
services starting in 2017, and upward adjustments of the Company's
service prices in various provinces and cities.
- BEST Store+ Service Revenue increased by
244.0% to RMB767.9 million
(US$115.4 million) in the third
quarter of 2017 from RMB223.2 million
in the same period of 2016, primarily due to an increase in the
number of store orders fulfilled in connection with the rapid
expansion of the Company's BEST Store+ network as well
as the Company's acquisition of WOWO in May
2017. The number of store orders fulfilled increased by
155.2% compared to the same period of 2016. Revenue attributable to
WOWO in the third quarter of 2017 was RMB162.7 million (US$24.5
million).
- Other Service Revenues increased by 555.3% to
RMB60.2 million (US$9.1 million) in the third quarter of 2017 from
RMB9.2 million in the same period of
2016, primarily due to increased revenue generated from BEST
Capital, BEST Global and BEST UCargo.
Total Cost of Revenue: The following tables set forth a
breakdown of total cost of revenue and share-based compensation
expense included in cost of revenue by business segment for the
periods indicated. Before the completion of the Company's IPO in
September 2017, no share-based
compensation expense had been recognized. Upon completion of the
IPO, the Company immediately recognized a substantial amount of
share-based compensation expense associated with vested share-based
awards.
I. Cost of Revenue by Business Segments
|
Three Months Ended
September 30,
|
|
2016
|
2017
|
(in '000, Except
for %)
|
RMB
|
% of
Revenue
|
RMB
|
US$
|
% of
Revenue
|
Supply Chain
Management
|
(277,037)
|
92.0%
|
(357,675)
|
(53,759)
|
92.6%
|
Express
|
(1,358,316)
|
103.0%
|
(3,134,376)
|
(471,101)
|
96.0%
|
Freight
|
(501,692)
|
114.8%
|
(918,121)
|
(137,995)
|
105.0%
|
Store+
|
(230,674)
|
103.3%
|
(703,311)
|
(105,709)
|
91.6%
|
Others
|
(9,783)
|
106.5%
|
(39,234)
|
(5,897)
|
65.1%
|
Total Cost of
Revenue
|
(2,377,502)
|
103.8%
|
(5,152,717)
|
(774,461)
|
96.2%
|
II. Share-based Compensation Expense Included in Cost of
Revenue by Business Segments
|
Three Months Ended
September 30,
|
|
2016
|
2017
|
(in '000, Except
for %)
|
RMB
|
% of
Revenue
|
RMB
|
US$
|
% of
Revenue
|
Supply Chain
Management
|
NA
|
NA
|
(1,002)
|
(151)
|
0.3%
|
Express
|
NA
|
NA
|
(3,744)
|
(563)
|
0.1%
|
Freight
|
NA
|
NA
|
(251)
|
(38)
|
0.0%
|
Store+
|
NA
|
NA
|
NA
|
NA
|
NA
|
Others
|
NA
|
NA
|
(1,020)
|
(153)
|
0.1%
|
Total
Share-Based
Compensation Expense
Included in Cost of Revenue
|
NA
|
NA
|
(6,017)
|
(904)
|
0.1%
|
Total Cost of Revenue increased by 116.7% to RMB5,152.7 million (US$774.5 million) in the third quarter of 2017
from RMB2,377.5 million in the same
period of 2016. The increase was primarily attributable to
increases in cost of revenue across various service lines, as
discussed below. As a percentage of total revenue, cost of revenue
decreased to 96.2% in the third quarter of 2017 from 103.8% in the
same period of 2016.
- Cost of Revenue for the Supply Chain Management
Services increased by 29.1% to RMB357.7 million (US$53.8
million) in the third quarter of 2017 from RMB277.0 million in the same period of 2016. The
increase was primarily due to a 55.0% YoY increase in the number of
orders fulfilled by self-operated Cloud OFCs and the addition of
new self-operated Cloud OFCs to 95 as of September 30, 2017 from 81 as of September 30, 2016, which resulted in additional
lease, transportation and labor costs. Cost of Revenue as a
Percentage of Revenue from Supply Chain Management Services
increase to 92.6% in the third quarter of 2017 from 92.0% in the
same period of 2016, primarily due to the ramp-up of certain
self-operated Cloud OFCs and share-based compensation expense.
- Cost of Revenue for Express Services increased by
130.8% to RMB3,134.4 million
(US$471.1 million) in the third
quarter of 2017 from RMB1,358.3
million in the same period of 2016. This increase was
primarily attributable to an increase in parcel volume, which
resulted in higher transportation and labor costs, as well as the
expansion of the Company's service scope(10) to include
last-mile delivery services starting in 2017. Such service scope
expansion resulted in RMB1,282.8
million (US$192.8 million) of
cost of revenue attributable to fees for franchisee partners
operating the last-mile delivery service stations in the third
quarter of 2017. Cost of Revenue as a Percentage of Revenue from
Express Services decreased to 96.0% in the third quarter of
2017 from 103.0% in the same period of 2016, primarily due to
economies of scale resulting from the significant increase in
parcel volume, network optimization, as well as increased
operational efficiency resulting from proactive cost-control
measures and continuous technology improvements and applications.
Cost of Revenue per Parcel for Express Services,
excluding the impact of service scope expansion(10),
decreased by 29.3% to RMB1.83
(US$0.27) in the third quarter of
2017 from RMB2.59 in the same period
of 2016.
- Cost of Revenue for Freight Services increased by
83.0% to RMB918.2 million
(US$138.0 million) in the third
quarter of 2017 from RMB501.7 million
in the same period of 2016. This increase was primarily
attributable to an increase in freight volume, resulting in greater
transportation, labor and lease costs, and to a lesser extent, the
expansion of the Company's service scope (10) to include
last-mile delivery services starting in 2017. Such service scope
expansion resulted in RMB145.1
million (US$21.8 million) of
cost of revenue attributable to fees for franchisee partners
operating the last-mile delivery service stations in the third
quarter of 2017. Cost of Revenue as a Percentage of Revenue from
Freight Services decreased to 105.0% in the third quarter of
2017 from 114.8% in the same period of 2016, primarily due to
economies of scale resulting from the increase in freight volume,
network optimization, as well as increased operational efficiency
resulting from the proactive cost-control measures and continuous
technology improvements and applications. Cost of Revenue per
Tonne for Freight Services, excluding the impact of
service scope expansion(10), increased by 6.4% to
RMB647.2 (US$97.3) in the third quarter of 2017 from
RMB608.1 in the same period of
2016.
- Cost of Revenue for BEST Store+ Services
increased by 204.9% to RMB703.3
million (US$105.7 million) in
the third quarter of 2017 from RMB230.7
million in the same period of 2016, primarily due to the
significant increase in the amount of merchandise sold to
membership stores, and the RMB111.6
million (US$16.8 million) in
the cost of revenue attributable to WOWO following its acquisition
in May 2017. Cost of Revenue as a
Percentage of Revenue from BEST Store+ Services
decreased to 91.6% in the third quarter of 2017 from 103.3% in the
same period of 2016, primarily due to a reduction in average
procurement cost driven by the significant increase in merchandise
sales to membership stores, as well as direct sales to consumers
following the acquisition of WOWO in May
2017.
- Cost of Revenue for Other Services increased by 301.0%
to RMB39.2 million (US$5.9 million) in the third quarter of 2017 from
RMB9.8 million in the same period of
2016 in connection with business growth from BEST Capital, BEST
Global and BEST UCargo.
Gross Profit was RMB201.7
million (US$30.3 million),
compared to gross loss of RMB88.1
million in the same period of 2016. Gross Profit
Margin improved to 3.8% from negative 3.8% in the same period
of 2016.
Total Operating Expenses: The following tables set forth
a breakdown of the Company's total operating expenses and
share-based compensation expense included in operating expenses by
category for the periods indicated.
(10) Starting in 2017, the
Company revised its arrangements with franchisees and the scope of
its service. As a result, the Company became the principal that is
directly responsible for last-mile delivery of all parcels and
freight processed through its network, and the Company is liable to
senders for damage to or loss of parcels and freight in connection
with last-mile delivery. Therefore, in consideration of such
expanded scope of services and increased responsibilities, the
Company increased the fee it charges to pick-up service stations
and incurred additional cost of revenue that were attributable to
fees for destination franchised service stations that the Company
engaged for the provision of last-mile delivery
service.
|
I. Operating Expenses by Category
|
Three Months Ended
September 30,
|
|
2016
|
2017
|
(in '000, Except
for %)
|
RMB
|
% of
Revenue
|
RMB
|
US$
|
% of
Revenue
|
Selling
Expenses
|
112,428
|
4.9%
|
213,547
|
32,096
|
4.0%
|
General and
Administrative Expenses
|
152,761
|
6.7%
|
405,925
|
61,011
|
7.6%
|
Research and
Development Expenses
|
20,743
|
0.9%
|
56,155
|
8,440
|
1.0%
|
Other Operating
Income
|
(24,242)
|
(1.1%)
|
–
|
–
|
0.0%
|
Total Operating
Expenses
|
261,690
|
11.4%
|
675,627
|
101,548
|
12.6%
|
II. Share-based Compensation Expense Included in Operating
Expenses by Category
|
Three Months Ended
September 30,
|
|
2016
|
2017
|
(in '000, Except
for %)
|
RMB
|
% of
Revenue
|
RMB
|
US$
|
% of
Revenue
|
Selling
Expenses
|
NA
|
NA
|
13,172
|
1,980
|
0.2%
|
General and
Administrative Expenses
|
NA
|
NA
|
237,232
|
35,656
|
4.4%
|
Research and
Development Expenses
|
NA
|
NA
|
24,268
|
3,648
|
0.5%
|
Other Operating
Income
|
NA
|
NA
|
NA
|
NA
|
NA
|
Total
Share-Based
Compensation Expense
Included in Operating
Expenses
|
NA
|
NA
|
274,672
|
41,284
|
5.1%
|
Total Operating Expenses in the third quarter of 2017
increased by 158.2% to RMB675.6
million (US$101.5 million)
from RMB261.7 million in the same
period of 2016. Total Operating Expenses as a Percentage of
Total Revenue increased to 12.6% in the third quarter of 2017
from 11.4% in the same period of 2016 mainly due to share-based
compensation expense recorded in the third quarter of 2017.
Excluding the impact of share-based compensation expense, Total
Operating Expenses as a Percentage of Total Revenue would
have decreased to 7.5% in the third quarter of 2017 from 11.4%
in the same period of 2016, primarily due to the faster growth in
total revenue and economies of scale.
- Selling Expenses increased by 89.9% to RMB213.5 million (US$32.1
million) in the third quarter of 2017 from RMB112.4 million in the same period of 2016. This
increase was primarily attributable to an increase in shipping and
handling costs to RMB65.8 million
(US$9.9 million) in the third quarter
of 2017 from RMB33.0 million in the
same period of 2016, the addition of retail store occupancy cost of
RMB24.9 million (US$3.7 million) as a result of the acquisition of
WOWO in May 2017 and the inclusion of
share-based compensation expense of RMB13.2
million (US$2.0 million). The
shipping and handling costs were related to delivery of merchandise
to the Company's membership stores and staff costs in connection
with the expansion of BEST Store+ network.
- General and Administrative Expenses increased by 165.7%
to RMB405.9 million (US$61.0 million) in the third quarter of 2017
from RMB152.8 million in the same
period of 2016. This increase is primarily attributable to the
inclusion of share-based compensation expense of RMB237.2 million (US$35.7
million) and increased staff costs in connection with the
growth of the Company's operations.
- Research and Development Expenses increased by 170.7% to
RMB56.2 million (US$8.4 million) in the third quarter of 2017 from
RMB20.7 million in the same period of
2016. This increase was primarily due to the inclusion of
share-based compensation expense of RMB24.3
million (US$3.6 million) and
increased research and development activities.
Interest Income increased to RMB16.9 million (US$2.5
million) in the third quarter of 2017 from RMB7.8 million in the same period of 2016,
primarily due to a higher yield generated from the Company's cash
balance.
Interest Expense increased to RMB12.1 million (US$1.8
million) in the third quarter of 2017 from RMB2.7 million in the same period of 2016,
primarily as a result of an increase in the Company's
Renminbi-denominated bank borrowings to satisfy working capital
requirements as the Company held a significant amount of bank
deposits in foreign currencies outside China.
Foreign Exchange Loss was RMB2.6
million (US$0.4 million) in
the third quarter of 2017, compared to foreign exchange gain of
RMB2.6 million in the same period of
2016. This is primarily due to changes in exchange rates between
Renminbi and U.S. dollars during the respective periods.
Other Income decreased to RMB12.6
million (US$1.9 million) in
the third quarter of 2017 from RMB21.9
million in the same period of 2016, primarily due to
decreases in other miscellaneous fees.
Other Expense increased to RMB3.5
million (US$0.5 million) in
the third quarter of 2017 from RMB1.0
million in the same period of 2016, primarily due to
increases in various miscellaneous expenses.
Income Tax Expense increased to RMB3.9 million (US$0.6
million) in the third quarter of 2017 from RMB0.1 million in the same period of 2016,
reflecting tax payable in the third quarter of 2017 by certain of
the Company's PRC subsidiaries which had taxable income during the
period, primarily WOWO.
Net Loss was RMB466.6
million (US$70.1 million),
compared to RMB321.3 million in the
same period of 2016.
Non-GAAP Net Loss (11) was
RMB183.8 million (US$27.6 million), compared to RMB321.3 million in the same period of 2016.
EBITDA (11) was negative RMB366.3 million (negative US$55.1 million), compared to negative
RMB265.9 million in the same period
of 2016.
Adjusted EBITDA (11) was negative
RMB85.6 million (negative
US$12.9 million), compared to
negative RMB265.9 million in the same
period of 2016.
Net Cash Generated from Operating Activities was
RMB108.7 million (US$16.3 million) in the third quarter of 2017,
compared to net cash used in operating activities of RMB89.7 million in the same period of 2016.
As of September 30, 2017, the
Company had Cash and Cash Equivalents, Restricted Cash
and Short-term Investments of RMB5,487.3 million (US$824.8 million).
(11)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.
|
SHARES OUTSTANDING
As of the date of this press release, the Company had
approximately 373.8 million ordinary shares, or the equivalent of
373.8 million ADSs outstanding.
EMPLOYEES
As of September 30, 2017, the
Company had a total of 9,914 employees.
OUTLOOK
Based on current market conditions and current operations,
revenues for the fourth quarter of 2017 is expected to be in the
range of RMB6,300 million
(US$947 million) to RMB6,600 million
(US$992 million), representing a
104.2% to 114.0% increase from the same period of 2016. This
represents management's current and preliminary expectation, which
is subject to change.
CONFERENCE CALL
The Company will hold a conference call at 7:30 am U.S. Eastern Time on November 16, 2017 (8:30
pm Beijing Time, the same day), to discuss its financial
results and operating performance for the third quarter of
2017.
Participants may access the call by dialing the following
numbers:
United
States:
1-888-346-8982
International:
1-412-902-4272
Hong Kong:
800-905945
China
Domestic:
4001-201203
Conference
ID:
BEST Inc.
A replay of the conference call will be accessible through
November 23, 2017 by dialing the
following numbers:
United States Toll Free:
1-877-344-7529
International:
1-412-317-0088
Access Code:
10114179
A live and archived webcast of the conference call will also be
available at the Company's investor relations website at
http://ir.best-inc.com/.
EXCHANGE RATE
This announcement contains translations of certain Renminbi
amounts into U.S. dollars at specified rates solely for the
convenience of the reader. Unless otherwise noted, all translations
from Renminbi to U.S. dollars are made at a rate of RMB6.6533 to US$1.00, the effective noon buying rate for
September 30, 2017 as set forth in
the H.10 statistical release of the Federal Reserve Board. The
percentages stated in this announcement are calculated based on the
RMB amounts.
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;
and fluctuations in general economic and business conditions in
China 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, non-GAAP net loss margin,
adjusted EBITDA, and EBITDA, 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
that EBITDA, adjusted EBITDA, non-GAAP net loss and non-GAAP net
loss margin are 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 EBITDA,
adjusted EBITDA, non-GAAP net loss and non-GAAP net loss margin
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.
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 and adjusted EBITDA for the periods indicated:
|
Three Months Ended
Sept 30
|
(In
'000)
|
2016
|
2017
|
RMB
|
RMB
|
US$
|
Net
loss
|
(321,286)
|
(466,631)
|
(70,135)
|
Add
|
|
|
|
Depreciation & Amortization
|
60,384
|
101,182
|
15,208
|
Interest Expense
|
2,654
|
12,078
|
1,815
|
Income Tax Expense
|
102
|
3,949
|
594
|
Subtract
|
|
|
|
Interest Income
|
(7,784)
|
(16,883)
|
(2,538)
|
EBITDA
|
(265,930)
|
(366,305)
|
(55,056)
|
Add
|
|
|
|
Share-based Compensation Expense
|
–
|
280,689
|
42,188
|
Adjusted
EBITDA
|
(265,930)
|
(85,616)
|
(12,868)
|
The table below sets forth a reconciliation of the Company's net
loss to non-GAAP net loss and non-GAAP net loss margin for the
periods indicated:
|
Three Months Ended
Sept 30
|
(In
'000)
|
2016
|
2017
|
RMB
|
RMB
|
US$
|
Net
loss
|
(321,286)
|
(466,631)
|
(70,135)
|
Share-based Compensation Expense
|
–
|
280,689
|
42,188
|
Amortization of
Intangible Assets
Resulting from Business Acquisitions
|
–
|
2,132
|
320
|
Non-GAAP Net
Loss
|
(321,286)
|
(183,810)
|
(27,627)
|
Non-GAAP Net
Loss Margin
|
(14.0%)
|
(3.4%)
|
(3.4%)
|
ABOUT BEST INC.
BEST Inc. (NYSE: BSTI) is a leading Smart Supply Chain service
provider that aims to transform China's logistics and supply chain industry.
BEST provides express and freight delivery, integrated supply chain
management solutions, merchandise sourcing and fulfilment services
for convenience stores, financial and other value-added services.
BEST leverages technology and business model innovation to create a
smarter, more efficient supply chain that empowers businesses and
enriches the lives of consumers in the New Retail era.
CONTACT:
For Investors:
+852 3611 2562
ir@best-inc.com
UNAUDITED
CONSOLIDATED FINANCIAL DATA
|
Summary of
Unaudited Statement of Comprehensive Loss Data
|
(in
thousands)
|
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2016
|
2017
|
2016
|
2017
|
|
RMB
(Unaudited)
|
RMB
(Unaudited)
|
US$
(Unaudited)
|
RMB
(Unaudited)
|
RMB
(Unaudited)
|
US$
(Unaudited)
|
Revenue
|
|
|
|
|
|
|
Supply chain
management
|
300,986
|
386,244
|
58,053
|
826,128
|
1,071,434
|
161,038
|
Express
|
1,318,842
|
3,265,688
|
490,837
|
3,575,983
|
8,438,794
|
1,268,362
|
Freight
|
437,171
|
874,352
|
131,416
|
1,039,164
|
2,214,378
|
332,824
|
Store+
|
223,226
|
767,903
|
115,417
|
286,142
|
1,634,291
|
245,636
|
Others
|
9,190
|
60,225
|
9,052
|
32,118
|
99,661
|
14,979
|
Total
revenue
|
2,289,415
|
5,354,412
|
804,775
|
5,759,535
|
13,458,558
|
2,022,839
|
Cost of
revenue
|
|
|
|
|
|
|
Supply chain
management
|
(277,037)
|
(357,675)
|
(53,759)
|
(790,939)
|
(989,480)
|
(148,720)
|
Express
|
(1,358,316)
|
(3,134,376)
|
(471,101)
|
(3,773,533)
|
(8,277,222)
|
(1,244,078)
|
Freight
|
(501,692)
|
(918,121)
|
(137,995)
|
(1,235,123)
|
(2,397,647)
|
(360,370)
|
Store+
|
(230,674)
|
(703,311)
|
(105,709)
|
(295,498)
|
(1,535,027)
|
(230,717)
|
Others
|
(9,783)
|
(39,234)
|
(5,897)
|
(29,649)
|
(61,970)
|
(9,314)
|
Total cost of
revenue
|
(2,377,502)
|
(5,152,717)
|
(774,461)
|
(6,124,742)
|
(13,261,346)
|
(1,993,199)
|
Gross
(loss)/profit
|
(88,087)
|
201,695
|
30,314
|
(365,207)
|
197,212
|
29,640
|
Selling
expenses
|
(112,428)
|
(213,547)
|
(32,069)
|
(248,443)
|
(487,239)
|
(73,233)
|
General and
administrative
expenses
|
(152,761)
|
(405,925)
|
(61,011)
|
(380,314)
|
(717,096)
|
(107,780)
|
Research and
development
expenses
|
(20,743)
|
(56,155)
|
(8,440)
|
(56,212)
|
(110,053)
|
(16,541)
|
Other operating
income
|
24,242
|
–
|
–
|
63,556
|
–
|
–
|
Total operating
expenses
|
(261,690)
|
(675,627)
|
(101,547)
|
(621,413)
|
(1,314,388)
|
(197,554)
|
Loss from
operations
|
(349,777)
|
(473,932)
|
(71,233)
|
(986,620)
|
(1,117,176)
|
(167,914)
|
Interest
income
|
7,784
|
16,883
|
2,538
|
13,847
|
50,941
|
7,657
|
Interest
expense
|
(2,654)
|
(12,078)
|
(1,815)
|
(14,206)
|
(32,799)
|
(4,930)
|
Foreign exchange
gain/(loss)
|
2,586
|
(2,619)
|
(394)
|
(680)
|
(7,098)
|
(1,067)
|
Other
income
|
21,871
|
12,592
|
1,893
|
36,355
|
34,934
|
5,251
|
Other
expense
|
(994)
|
(3,528)
|
(530)
|
(4,645)
|
(13,574)
|
(2,040)
|
Loss before income
tax and
share of net income of
equity investees
|
(321,184)
|
(462,682)
|
(69,541)
|
(955,949)
|
(1,084,772)
|
(163,043)
|
Income tax
expense
|
(102)
|
(3,949)
|
(594)
|
(103)
|
(6,436)
|
(967)
|
Loss before share
of net income
of equity investees
|
(321,286)
|
(466,631)
|
(70,135)
|
(956,052)
|
(1,091,208)
|
(164,010)
|
Share of net income
of equity
investees
|
–
|
–
|
–
|
12
|
–
|
–
|
Net
loss
|
(321,286)
|
(466,631)
|
(70,135)
|
(956,040)
|
(1,091,208)
|
(164,010)
|
Net gain/(loss)
attributable to
non-controlling interests
|
–
|
756
|
114
|
–
|
(7)
|
(1)
|
Net loss
attributable to BEST Inc.
|
(321,286)
|
(467,387)
|
(70,249)
|
(956,040)
|
(1,091,201)
|
(164,009)
|
Summary of
Unaudited Consolidated Balance Sheets Data
|
(in
thousands)
|
|
|
As
of
|
|
December 31,
2016
|
September 30,
2017
|
|
RMB
|
RMB
(Unaudited)
|
US$
(Unaudited)
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
2,927,581
|
1,009,817
|
151,777
|
Restricted
cash
|
374,363
|
676,641
|
101,700
|
Derivative
|
3,149
|
–
|
–
|
Accounts and notes
receivable
|
432,654
|
568,667
|
85,471
|
Inventories
|
82,083
|
189,967
|
28,552
|
Prepayments and other
current assets
|
793,935
|
1,375,332
|
206,715
|
Short‑term
investments
|
62,000
|
3,721,126
|
559,290
|
Amounts due from
related parties
|
83,302
|
69,917
|
10,509
|
Total current
assets
|
4,759,067
|
7,611,467
|
1,144,014
|
Non‑current
assets
|
|
|
|
Property and
equipment, net
|
947,505
|
1,225,056
|
184,128
|
Intangible assets,
net
|
13,516
|
140,905
|
21,178
|
Long‑term
investments
|
24,081
|
37,331
|
5,611
|
Goodwill
|
247,203
|
428,379
|
64,386
|
Non‑current
deposits
|
50,947
|
56,192
|
8,446
|
Other non‑current
assets
|
174,946
|
793,483
|
119,262
|
Restricted
cash
|
78,588
|
79,749
|
11,986
|
Total non‑current
assets
|
1,536,786
|
2,761,095
|
414,997
|
Total
Assets
|
6,295,853
|
10,372,562
|
1,559,011
|
Liabilities,
Mezzanine Equity and
Shareholders' (Deficit)/Equity
|
|
|
|
Current
liabilities
|
|
|
|
Short‑term bank
loans
|
458,000
|
909,000
|
136,624
|
Accounts and notes
payable
|
1,575,793
|
2,411,925
|
362,516
|
Income tax
payable
|
467
|
6,409
|
963
|
Customer advances and
deposits
|
676,319
|
922,690
|
138,682
|
Accrued expenses and
other liabilities
|
1,225,611
|
1,752,010
|
263,329
|
Capital lease
obligation
|
13,215
|
7,898
|
1,187
|
Amounts due to
related parties
|
891
|
891
|
134
|
Total current
liabilities
|
3,950,296
|
6,010,823
|
903,435
|
Non‑current
liabilities
|
|
|
|
Capital lease
obligation
|
7,535
|
1,488
|
224
|
Deferred tax
liabilities
|
–
|
29,376
|
4,415
|
Other non‑current
liabilities
|
3,917
|
62,139
|
9,340
|
Total non‑current
liabilities
|
11,452
|
93,003
|
13,979
|
Total
Liabilities
|
3,961,748
|
6,103,826
|
917,414
|
Mezzanine
equity
|
|
|
|
Total mezzanine
equity
|
15,842,210
|
–
|
–
|
Summary of
Unaudited Consolidated Balance Sheets Data (Cont'd)
|
(in
thousands)
|
|
|
As
of
|
|
December 31,
2016
|
September 30,
2017
|
|
RMB
|
RMB
(Unaudited)
|
US$
(Unaudited)
|
Shareholders'
deficit
|
|
|
|
Ordinary
shares
|
4,116
|
24,422
|
3,671
|
Additional paid‑in
capital
|
–
|
18,921,187
|
2,843,880
|
Accumulated
deficit
|
(13,658,321)
|
(14,749,522)
|
(2,216,873)
|
Accumulated other
comprehensive income
|
146,100
|
71,811
|
10,793
|
BEST Inc.
shareholders' (deficit)/equity
|
(13,508,105)
|
4,267,898
|
641,471
|
Non-controlling
interests
|
–
|
838
|
126
|
Total
shareholders' (deficit)/equity
|
(13,508,105)
|
4,268,736
|
641,597
|
Total liabilities,
mezzanine equity and
shareholders' (deficit)/equity
|
6,295,853
|
10,372,562
|
1,559,011
|
Summary of
Unaudited Condensed Consolidated Statements of Cash Flows
Data
|
(in
thousands)
|
|
|
Three months ended
September 30,
|
Nine Months Ended
September 30,
|
|
2016
|
2017
|
2016
|
2017
|
|
RMB
(Unaudited)
|
RMB
(Unaudited)
|
US$
(Unaudited)
|
RMB
(Unaudited)
|
RMB
(Unaudited)
|
US$
(Unaudited)
|
Net cash (used
in)/generated
from operating activities
|
(89,711)
|
108,711
|
16,339
|
(697,393)
|
129,415
|
19,452
|
Net cash
generated
from/ (used) in
investing activities
|
63,422
|
(2,995,362)
|
(450,207)
|
(931,827)
|
(4,838,397)
|
(727,218)
|
Net cash (used
in)/generated
from financing activities
|
(104,444)
|
2,803,888
|
421,428
|
3,958,177
|
2,869,439
|
431,281
|
Exchange rate effect
on cash and
cash equivalents
|
21,979
|
(22,093)
|
(3,320)
|
61,053
|
(78,221)
|
(11,757)
|
Net
(decrease)/increase in cash
and cash equivalents
|
(108,754)
|
(104,856)
|
(15,760)
|
2,390,010
|
(1,917,764)
|
(288,242)
|
Cash and cash
equivalents at
beginning of period
|
2,789,828
|
1,114,673
|
167,537
|
291,064
|
2,927,581
|
440,019
|
Cash and cash
equivalents at
end of period
|
2,681,074
|
1,009,817
|
151,777
|
2,681,074
|
1,009,817
|
151,777
|
|
|
|
|
|
|
|
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SOURCE BEST Inc