HANGZHOU, China, March 1, 2018 /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 fourth
quarter and fiscal year ended December
31, 2017.
"In 2017, BEST Inc. continued to deliver strong growth as a
leading Smart Supply Chain service provider by investing in people,
technology and business innovation, and by effectively executing on
our plan to achieve scale and drive efficiency." said Johnny Chou, Chairman and Chief Executive
Officer of BEST Inc. "Looking ahead, the continuous growth of
e-commerce and New Retail will create tremendous market
opportunities for integrated services and solutions. The
fundamental strength of our business model and technology
infrastructure makes us confident that we are well positioned to
capture these opportunities, deliver sustainable high-quality
growth and achieve long-term value creation."
"We delivered another excellent quarter with revenue increasing
by 111.7% year-over-year thanks to strong growth momentum across
all segments," said Alice Guo, BEST
Inc.'s Chief Accounting Officer and Vice President of Finance. "We
continued to achieve significant margin expansion. In this quarter,
our gross profit margin improved by 9.8 percentage points, and our
net loss margin improved by 11.1 percentage points year-over-year.
We are very excited about the prospects for 2018. We expect to
continue delivering solid top-line growth while significantly
improving margins."
BUSINESS HIGHLIGHTS
In the quarter ended December 31,
2017:
- Revenue was RMB6,531.0
million (US$1,003.8 million),
an increase of 111.7% year-over-year ("YoY").
o Express Service
revenue increased by 139.8% YoY to RMB4,347.5 million (US$668.2 million).
o Supply Chain Management Service revenue increased by
27.5% YoY to RMB529.5 million
(US$81.4 million).
o Freight Service revenue increased by 70.4% YoY to
RMB963.7 million (US$148.1 million).
o Store+ Service revenue increased by 115.9%
YoY to RMB591.7 million (US$90.9 million).
o Others Service revenue increased by 478.9% YoY to
RMB98.6 million (US$15.2 million).
- Gross profit was RMB288.3
million (US$44.3 million), or
gross margin of 4.4%, compared to gross loss of RMB167.2 million, or gross margin of negative
5.4%, in the same period of 2016. This represents an improvement of
9.8 percentage points in gross margin.
o BEST Express – Gross
profit per parcel was RMB0.15
(US$0.02), compared to negative
RMB0.11 in the same period of
2016.
o BEST Freight – Gross margin improved significantly by
18.7 percentage points to negative 0.1% from negative 18.8% in the
same period of 2016.
- Net loss was RMB136.9
million (US$21.0 million),
compared to RMB407.4 million in the
same period of 2016. Non-GAAP net loss (1) (2)
was RMB115.6 million (US$17.8 million), compared to RMB407.4 million in the same period of 2016.
- EBITDA (3) was negative RMB42.3 million (negative US$6.5 million), compared to negative
RMB332.6 million in the same period
of 2016. Adjusted EBITDA (4) was negative
RMB24.0 million (negative
US$3.7 million), compared to negative
RMB332.6 million in the same period
of 2016.
- Net cash used in operating activities was RMB12.4 million (US$1.9
million), compared to RMB91.4
million in the same period of 2016.
- BEST Express – Express parcel volume increased by 67.8%
YoY to 1,270.2 million, compared to a 24.3% industry-wide YoY
growth (5).
- BEST Supply Chain Management – The number of orders
fulfilled by Cloud Order Fulfillment Centers ("OFCs") increased by
28.8% YoY to 60.6 million.
- BEST Freight – Freight volume increased by 21.9% YoY to
1,237 thousand tonnes.
- BEST Store+ - The number of membership stores
increased by 46.9% YoY to 363,755, covering 51 cities in 24
provinces. The number of store orders fulfilled increased by 89.6%
YoY to 647,044.
(1)
Non-GAAP net loss represents net loss excluding 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 fourth quarter of 2017, the Company recorded share-based
compensation expense of RMB18.3 million, of which approximately
RMB0.8 million was allocated to cost of revenue, RMB1.1 million was
allocated to selling expenses, RMB14.1 million was allocated to
general and administrative expenses, and RMB2.3 million was
allocated to research and development expenses.
|
(3)
EBITDA represents net loss excluding depreciation, amortization,
interest expense and income tax expense and minus interest
income.
|
(4)
Adjusted EBITDA represents EBITDA excluding share-based
compensation expenses.
|
(5)
Based on data published by State Post Bureau of the
PRC.
- For October 2017 data, see State Post
Bureau of the PRC Published Post Industry Operation Statistics for
October 2017, State Post Bureau of the PRC, November 15, 2017,
available in Chinese at
http://www.spb.gov.cn/xw/dtxx_15079/201711/t20171115_1428564.html
- For November 2017 data, see State Post
Bureau of the PRC Published Post Industry Operation Statistics for
November 2017, State Post Bureau of the PRC, December 14, 2017,
available in Chinese at
http://www.spb.gov.cn/xw/dtxx_15079/201712/t20171214_1448471.html
- For December 2017 data, see State Post
Bureau of the PRC Published Post Industry Operation Statistics for
December 2017, State Post Bureau of the PRC, January 13, 2018,
available in Chinese at
http://www.spb.gov.cn/xw/dtxx_15079/201801/t20180112_1467556.html
|
In the fiscal year ended December 31,
2017:
- Revenue was RMB19,989.6
million (US$3,072.3 million),
an increase of 126.0% year-over-year ("YoY").
o Express Service
revenue increased by 137.3% YoY to RMB12,786.3 million (US$1,965.2 million).
o Supply Chain Management Service revenue increased by
29.0% YoY to RMB1,601.0 million
(US$246.1 million).
o Freight Service revenue increased by 98.1% YoY to
RMB3,178.0 million (US$488.5 million).
o Store+ Service revenue increased by 297.3%
YoY to RMB2,226.0 million
(US$342.1 million).
o Others Service revenue increased by 303.4% YoY to
RMB198.3 million (US$30.5 million).
- Gross profit was RMB485.6
million (US$74.6 million), or
gross margin of 2.4%, compared to gross loss of RMB532.4 million, or gross margin of negative
6.0%, in 2016. This represents an improvement of 8.4 percentage
points in gross margin.
o BEST Express –
Gross profit per parcel was RMB0.09
(US$0.01), compared to negative
RMB0.13 in 2016.
o BEST Freight – Gross margin improved significantly by
13.0 percentage points to negative 5.8% from negative 18.8% in
2016.
- Net loss was RMB1,228.1
million (US$188.7 million),
compared to RMB1,363.5 million in
2016. Non-GAAP net loss (6) (7) was RMB922.5 million (US$141.8
million), compared to RMB1,363.5
million in 2016.
- EBITDA (8) was negative RMB882.2 million (negative US$135.6 million), compared to negative
RMB1,119.6 million in 2016.
Adjusted EBITDA (9) was negative RMB583.2 million (negative US$89.6 million), compared to negative
RMB1,119.6 million in 2016.
- Net cash generated from operating activities was
RMB117.0 million (US$18.0 million), compared to net cash used in
operating activities of RMB788.8
million in 2016.
- BEST Express – Express parcel volume increased by 74.1%
YoY to 3,769.4 million, compared to a 28.0% industry-wide YoY
growth (10).
- BEST Supply Chain Management – The number of orders
fulfilled by Cloud OFCs increased by 49.6% YoY to 180.5
million.
- BEST Freight – Freight volume increased by 44.7% YoY to
4,316 thousand tonnes.
- BEST Store+ –The number of store orders
fulfilled increased by 249.5% YoY to 2,403,538.
(6)
Non-GAAP net loss represents net loss excluding 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.
|
(7)
In the fourth quarter of 2017, the Company recorded share-based
compensation expense of RMB18.3 million, of which approximately
RMB0.8 million was allocated to cost of revenue, RMB1.1 million was
allocated to selling expenses, RMB14.1 million was allocated to
general and administrative expenses, and RMB2.3 million was
allocated to research and development expenses.
|
(8)
EBITDA represents net loss excluding depreciation, amortization,
interest expense and income tax expense and minus interest
income.
|
(9)
Adjusted EBITDA represents EBITDA excluding share-based
compensation expenses.
|
(10) Based on data published by
State Post Bureau of the PRC.
- For full year 2017 data, see State Post
Bureau of the PRC Published Post Industry Operation Statistics for
December 2017, State Post Bureau of the PRC, January 13, 2018,
available in Chinese at
http://www.spb.gov.cn/xw/dtxx_15079/201801/t20180112_1467556.html
|
BUSINESS AND STRATEGIC UPDATES
BEST Express - Rapid Growth Driving Continued Margin
Improvement
- In the fourth quarter of 2017, parcel volume increased by 67.8%
YoY to 1,270.2 million, compared to a 24.3% industry-wide YoY
growth. In fiscal year 2017, parcel volume increased by 74.1% YoY
to 3,769.4 million, compared to a 28.0% industry-wide YoY growth.
The Company's express market share (11) was 10.0% in the
fourth quarter of 2017.
- Excluding the impact of service scope expansion
(12), the average revenue per parcel in the fourth
quarter of 2017 was RMB2.07
(US$0.32), representing an increase
of 5.4% when compared with third quarter 2017. The recent quarter's
increase in average revenue per parcel was primarily due to the
upward price adjustments.
- In the fourth quarter of 2017, cost of revenue per parcel,
excluding the impact of service scope expansion (12),
decreased 23.5% YoY. The continuing decrease in cost of revenue per
parcel was 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 such as swap-body operation, dynamic
routing and further facility automation.
o Total number of hubs
and sortation centers decreased to 145, representing a reduction of
eight for the fourth quarter of 2017 and a reduction of 86 for
fiscal year of 2017.
o Since launching swap-body operation in four hubs and
sortation centers in Jiangsu
Province in June 2017, the
Company rolled out swap-body operation to 19 hubs and sortation
centers in Jiangsu, Zhejiang and Guangdong Provinces.
o Total number of automated sorting lines increased to
47 as of end of 2017, representing an increase of three for the
fourth quarter of 2017 and 14 for fiscal year of 2017.
- Gross profit per parcel was RMB0.15 (US$0.02)
in the fourth quarter of 2017, compared to gross loss per parcel of
RMB0.11 in the same period of 2016.
In fiscal year 2017, cost of revenue per parcel, excluding the
impact of service scope expansion (9), decreased 24.4%
YoY. Gross profit per parcel was RMB0.09(US$0.01) in
2017, compared to gross loss per parcel of RMB0.13 in 2016.
(11) 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.
|
(12) 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.
|
BEST Supply Chain Management - Integrated Solutions
- In the fourth quarter of 2017, the number of orders fulfilled
by Cloud OFCs increased by 28.8% YoY to 60.6 million. In fiscal
year 2017, the number of orders fulfilled by Cloud OFCs increased
by 49.6% YoY to 180.5 million.
- As of December 31, 2017, total
number of self-operated Cloud OFCs and franchised Cloud OFCs were
99 and 228, respectively.
- As of December 31, 2017, total
gross floor area ("GFA") of Cloud OFCs reached approximately 2.4
million square meters, representing a 38.4% YoY
increase.
- The Company continued to strengthen its partnership with
Cainiao Smart Logistics Network Limited ("Cainiao") and Alibaba
Group Holding Limited ("Alibaba"). In the fourth quarter of 2017,
the Company managed 12 Cloud OFCs for Cainiao and Alibaba with a
total GFA of more than 400,000 square meters.
BEST Freight - Growth Supported by Continuous Network and
Service Offering Expansion
- In the fourth quarter of 2017, freight volume increased by
21.9% YoY to 1,237 thousand tonnes. In fiscal year 2017, freight
volume increased by 44.7% YoY to 4,316 thousand tonnes.
- Average revenue per tonne continued to increase, due to upward
price adjustments, a greater proportion of long-distance freight
volumes in connection with the expansion of the Company's freight
network, and the expansion of the Company's service scope
(13). In the fourth quarter of 2017, average revenue per
tonne increased by 39.8% YoY. In fiscal year 2017, average revenue
per tonne increased by 36.8% YoY.
- The Company continued to optimize its freight service network.
As of December 31, 2017, total number
of hubs and sortation centers decreased to 132, representing a
reduction of one for the fourth quarter of 2017, and a reduction of
48 for fiscal year 2017.
(13) 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.
|
BEST Store+ - Building Last-Mile
Capabilities
- The Company continued to expand its Store+ network.
As of December 31, 2017, the number
of membership stores increased by 46.9% YoY to 363,755, covering 51
cities in 24 provinces.
- In the fourth quarter of 2017, the number of store orders
fulfilled increased by 89.6% YoY to 647,044. In fiscal year 2017,
the number of store orders fulfilled increased by 249.5% YoY to
2,403,538.
- Starting from the fourth quarter of 2017, the Company has also
focused on deepening engagement with existing membership stores as
well as optimizing merchandise selection and product
offerings.
Others
- BEST Capital, BEST Global and BEST UCargo have been growing
rapidly to support the BEST ecosystem, and are expected to become
new growth engines for the Company.
2018 STRATEGIC FOCUSES
The Company has built a leading Smart Supply Chain platform by
leveraging technology and business model innovation. In 2018, the
Company intends to further expand market share, enhance
cross-segment synergies and improve operational efficiency to
achieve quality growth by focusing on the following areas:
- Continuing to build a last-mile service
network: working with BEST Express and BEST Supply
Chain, the Company intends to make BEST Store+ an
integral part of its last-mile services network which will
significantly improve efficiency and enhance consumer
experiences.
- Creating additional synergies and efficiencies among core
supply chain and logistics businesses: the Company
will further integrate its Express, Freight, and Supply Chain
Management's service networks. BEST
Freight and BEST Express have centralized routes planning to reduce
cost and improve delivery time. BEST Supply Chain and BEST Express
will also work together to improve intra-city delivery network in
major cities.
- Expanding global reach: through BEST
Global, the Company will continue to work with domestic and
international partners to grow its cross-border businesses and
broaden the Company's service offerings in international markets.
The Company intends to further expand its footprint and achieve
meaningful growth in Southeast
Asia and the U.S. through acquisitions and strategic
investments.
- Monetizing the Company's existing technology
infrastructure: the Company has launched Baizhihui, a proprietary B2B cloud-based
SaaS platform, which integrates ordering management system ("OMS"),
warehouse management system ("WMS"), transportation management
system ("TMS") and enterprise resource planning ("ERP") solutions
into one holistic and intelligent logistics management application.
Baizhihui enables paying users such as distributors, manufacturers,
logistics and transportation companies to manage their supply chain
and logistics process with better transparency and efficiency.
- Continuing to broaden service offerings: through
BEST Capital and BEST UCargo, the Company will further expand
financial, truckload capacity sourcing and other services to a
wider range of customers.
KEY OPERATING METRICS OF MAJOR SERVICE LINES
Fourth Quarter 2017
|
Three Months
Ended
|
%
Change
|
|
December 31,
2016
|
December 31,
2017
|
YoY
|
BEST Supply Chain
Management
|
|
|
|
Number of Orders
Fulfilled by Self-operated
Cloud OFCs (in '000)(14)
|
33,318
|
43,570
|
30.8%
|
Number of Orders
Fulfilled by Franchised
Cloud OFCs (in '000) (14)
|
13,725
|
17,007
|
23.9%
|
BEST
Express
|
|
|
|
Parcel Volume (in
'000)(14)
|
757,179
|
1,270,168
|
67.8%
|
BEST
Freight
|
|
|
|
Freight Volume
(Tonnage in '000)(14)
|
1,015
|
1,237
|
21.9%
|
BEST
Store+
|
|
|
|
Number of Store
Orders Fulfilled
|
341,287
|
647,044
|
89.6%
|
Fiscal Year 2017
|
Year
Ended
|
%
Change
|
|
December 31,
2016
|
December 31,
2017
|
YoY
|
BEST Supply Chain
Management
|
|
|
|
Number of Orders
Fulfilled by Self-operated
Cloud OFCs (in '000)(14)
|
88,063
|
132,245
|
50.2%
|
Number of Orders
Fulfilled by Franchised
Cloud OFCs (in '000) (14)
|
32,602
|
48,232
|
47.9%
|
BEST
Express
|
|
|
|
Parcel Volume (in
'000)(14)
|
2,165,521
|
3,769,385
|
74.1%
|
BEST
Freight
|
|
|
|
Freight Volume
(Tonnage in '000)(14)
|
2,982
|
4,316
|
44.7%
|
BEST
Store+
|
|
|
|
Number of Store
Orders Fulfilled
|
687,692
|
2,403,538
|
249.5%
|
(14) Includes services performed
for external customers both directly and indirectly through our
other segments.
|
SUMMARY FINANCIAL RESULTS
Fourth Quarter 2017
|
Three Months
Ended
|
%
Change
|
(RMB million,
except for %)
|
December 31,
2016
|
December 31,
2017
|
YoY
|
Revenue
|
3,085
|
6,531
|
111.7%
|
Supply Chain Management
|
415
|
530
|
27.5%
|
Express
|
1,813
|
4,347
|
139.8%
|
Freight
|
565
|
964
|
70.4%
|
Store+
|
274
|
592
|
115.9%
|
Others(15)
|
18
|
99
|
478.9%
|
Gross
(Loss)/Profit
|
(167)
|
288
|
n/m
|
Gross
(Loss)/Profit Margin
|
(5.4%)
|
4.4%
|
9.8ppts
|
Supply Chain Management
|
|
|
|
Gross (Loss)/Profit
|
23
|
16
|
(28.3%)
|
Gross (Loss)/Profit Margin
|
5.5%
|
3.1%
|
(2.4ppts)
|
Express
|
|
|
|
Gross (Loss)/Profit
|
(85)
|
189
|
n/m
|
Gross (Loss)/Profit Margin
|
(4.7%)
|
4.4%
|
9.1ppts
|
Freight
|
|
|
|
Gross (Loss)/Profit
|
(106)
|
(1)
|
98.7%
|
Gross (Loss)/Profit Margin
|
(18.8%)
|
(0.1%)
|
18.7ppts
|
Store+
|
|
|
|
Gross (Loss)/Profit
|
0
|
54
|
215,332.0
%
|
Gross (Loss)/Profit Margin
|
(0.0%)
|
9.1%
|
9.1ppts
|
Others(15)
|
|
|
|
Gross (Loss)/Profit
|
1
|
30
|
2,417.5%
|
Gross (Loss)/Profit Margin
|
7.1%
|
30.7%
|
23.6ppts
|
EBITDA
|
(333)
|
(42)
|
87.3%
|
Adjusted
EBITDA
|
(333)
|
(24)
|
92.8%
|
Net
Loss
|
(407)
|
(137)
|
66.4%
|
Net Loss
Margin
|
(13.2%)
|
(2.1%)
|
11.1ppts
|
Non-GAAP Net
Loss
|
(407)
|
(116)
|
71.6%
|
Non-GAAP Net Loss
Margin
|
(13.2%)
|
(1.8
%)
|
11.4ppts
|
(15) Others include BEST Global,
BEST Capital and BEST UCargo.
|
Fiscal Year 2017
|
Year
Ended
|
%
Change
|
(RMB million,
except for %)
|
December 31,
2016
|
December 31,
2017
|
YoY
|
Revenue
|
8,844
|
19,990
|
126.0%
|
Supply Chain Management
|
1,241
|
1,601
|
29.0%
|
Express
|
5,389
|
12,786
|
137.3%
|
Freight
|
1,605
|
3,178
|
98.1%
|
Store+
|
560
|
2,226
|
297.3%
|
Others(16)
|
49
|
199
|
303.4%
|
Gross
(Loss)/Profit
|
(532)
|
486
|
n/m
|
Gross
(Loss)/Profit Margin
|
(6.0%)
|
2.4%
|
8.4ppts
|
Supply Chain Management
|
|
|
|
Gross (Loss)/Profit
|
58
|
98
|
69.3%
|
Gross (Loss)/Profit Margin
|
4.7%
|
6.1%
|
1.4ppts
|
Express
|
|
|
|
Gross (Loss)/Profit
|
(283)
|
351
|
n/m
|
Gross (Loss)/Profit Margin
|
(5.2%)
|
2.7%
|
7.9ppts
|
Freight
|
|
|
|
Gross (Loss)/Profit
|
(302)
|
(185)
|
38.9%
|
Gross (Loss)/Profit Margin
|
(18.8%)
|
(5.8%)
|
13.0ppts
|
Store+
|
|
|
|
Gross (Loss)/Profit
|
(9)
|
153
|
n/m
|
Gross (Loss)/Profit Margin
|
(1.7%)
|
6.9%
|
8.6ppts
|
Others(16)
|
|
|
|
Gross (Loss)/Profit
|
4
|
69
|
1,750.8%
|
Gross (Loss)/Profit Margin
|
7.5%
|
34.3%
|
26.8ppts
|
EBITDA
|
(1,120)
|
(882)
|
21.2%
|
Adjusted
EBITDA
|
(1,120)
|
(583)
|
47.9%
|
Net
Loss
|
(1,363)
|
(1,228)
|
9.9%
|
Net Loss
Margin
|
(15.4%)
|
(6.1%)
|
9.3ppts
|
Non-GAAP Net
Loss
|
(1,363)
|
(923)
|
32.3%
|
Non-GAAP Net Loss
Margin
|
(15.4%)
|
(4.6%)
|
10.8ppts
|
(16) Others include BEST Global,
BEST Capital and BEST UCargo.
|
FOURTH QUARTER OPERATIONAL AND FINANCIAL RESULTS
Revenue in the fourth quarter of 2017 increased by 111.7%
to RMB6,531.0 million (US$1,003.8 million) from RMB3,084.6 million in the same period of 2016.
The increase was primarily attributable to increases in revenue
across the various service lines, as discussed below.
The following table sets forth a breakdown of revenue by
business segment for the periods indicated.
|
Three Months Ended
December 31,
|
|
2016
|
2017
|
(in '000, Except
for %)
|
RMB
|
% of
Revenue
|
RMB
|
US$
|
% of
Revenue
|
Supply Chain
Management
|
415,228
|
13.5%
|
529,518
|
81,385
|
8.1%
|
Express
|
1,812,850
|
58.8%
|
4,347,485
|
668,196
|
66.5%
|
Freight
|
565,409
|
18.3%
|
963,666
|
148,113
|
14.8%
|
Store+
|
274,084
|
8.9%
|
591,743
|
90,949
|
9.1%
|
Others
|
17,031
|
0.5%
|
98,592
|
15,153
|
1.5%
|
Revenue
|
3,084,602
|
100.0%
|
6,531,004
|
1,003,796
|
100.0%
|
- Express Service Revenue increased by 139.8% to
RMB4,347.5 million (US$668.2 million) in the fourth quarter of 2017
from RMB1,812.9 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 67.8% 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 fourth quarter of 2017 increased by 43.0%
to RMB3.42 (US$0.53), 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.
- Supply Chain Management Service Revenue increased by
27.5% to RMB529.5 million
(US$81.4 million) in the fourth
quarter of 2017 from RMB415.2 million
in the same period of 2016. Such increase was primarily
attributable to the addition of new customers and the increasing
business volume of existing customers.
- Freight Service Revenue increased by 70.4% to
RMB963.7 million (US$148.1 million) in the fourth quarter of 2017
from RMB565.4 million in the same
period of 2016. This increase was the result of greater freight
volume which increased by 21.9% and a 39.8% increase in average
revenue per tonne, compared to the same period in 2016. The
increase in average revenue per tonne was primarily due to upward
price adjustments, a greater proportion of long-distance freight
volumes in connection with the expansion of the Company's freight
network, and the expansion of the Company's service scope to
include last-mile delivery services starting in 2017.
- BEST Store+ Service Revenue increased by
115.9% to RMB591.7 million
(US$90.9 million) in the fourth
quarter of 2017 from RMB274.1 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
89.6% compared to the same period of 2016.
- Other Service Revenues increased by 478.9% to
RMB98.6 million (US$15.2 million) in the fourth quarter of 2017
from RMB17.0 million in the same
period of 2016, primarily due to increased revenue generated from
BEST Capital, BEST Global and BEST UCargo.
Cost of Revenue and Operating Expenses:
The following table sets forth a breakdown of cost of revenue by
business segment for the periods indicated.
|
Three Months Ended
December 31,
|
|
2016
|
2017
|
(in '000, Except
for %)
|
RMB
|
% of
Revenue
|
RMB
|
US$
|
% of
Revenue
|
Supply Chain
Management
|
(392,306)
|
94.5%
|
(513,090)
|
(78,860)
|
96.9%
|
Express
|
(1,897,823)
|
104.7%
|
(4,158,328)
|
(639,123)
|
95.6%
|
Freight
|
(671,807)
|
118.8%
|
(965,005)
|
(148,319)
|
100.1%
|
Store+
|
(274,059)
|
100.0%
|
(537,885)
|
(82,671)
|
90.9%
|
Others
|
(15,830)
|
92.9%
|
(68,357)
|
(10,506)
|
69.3%
|
Cost of
Revenue
|
(3,251,825)
|
105.4%
|
(6,242,665)
|
(959,479)
|
95.6%
|
|
Note: In the
fourth quarter of 2017, the Company recorded share-based
compensation expense of RMB18.3 million, of which
approximately RMB0.8 million was allocated to cost of revenue.
Among the RMB0.8 million of share-based compensation
expense, approximately RMB132,000 was allocated to Supply Chain
Management, RMB409,000 was allocated to Express,
RMB25,000 was allocated to Freight, and RMB216,000 was allocated to
others.
|
The following table sets forth a breakdown of operating expenses
by category for the periods indicated.
|
Three Months Ended
December 31,
|
|
2016
|
2017
|
(in '000, Except
for %)
|
RMB
|
% of
Revenue
|
RMB
|
US$
|
% of
Revenue
|
Selling
Expenses
|
121,574
|
3.9%
|
207,613
|
31,910
|
3.2%
|
General and
Administrative Expenses
|
140,923
|
4.6%
|
211,092
|
32,444
|
3.2%
|
Research and
Development Expenses
|
24,114
|
0.8%
|
28,956
|
4,450
|
0.5%
|
Other Operating
Income
|
(40,491)
|
(1.3%)
|
–
|
–
|
–
|
Operating
Expenses
|
246,120
|
8.0%
|
447,661
|
68,804
|
6.9%
|
|
Note: In the
fourth quarter of 2017, the Company recorded share-based
compensation expense of RMB18.3 million, of which
RMB1.1 million was allocated to selling expenses, RMB14.1 million
was allocated to general and
administrative expenses, and RMB2.3 million was allocated to
research and development expenses.
|
Cost of Revenue increased by 92.0% to RMB6,242.7 million (US$959.5 million) in the fourth quarter of 2017
from RMB3,251.8 million in the same
period of 2016. The increase was primarily attributable to increase
in lease, transportation and labor costs in connection to
significant volume growth, the expansion of the Company's service
scope(17) to include last-mile delivery services, as
well as increase in the amount of merchandise sold by
Store+ services. Cost of Revenue as a Percentage of
Revenue decreased to 95.6% in the fourth quarter of 2017 from
105.4% in the same period of 2016, primarily due to economies of
scale, network optimization, as well as increased operational
efficiency resulting from proactive cost-control measures and
continuous technology improvements and applications.
(17) 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. Starting
in 2017, the Company revised its arrangements with franchisees and
the scope of its service. As a proxy, in the fourth quarter of
2017, Express and Freight incurred approx. RMB1,721.4 million and
RMB157.7 million of last-mile delivery service 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.
|
Operating Expenses in the fourth quarter of 2017
increased by 81.9% to RMB447.7
million (US$68.8 million) from
RMB246.1 million in the same period
of 2016. Operating Expenses as a Percentage of Revenue
decreased to 6.9% in the fourth quarter of 2017 from 8.0% in the
same period of 2016, and would have further decreased to 6.6%
when excluding the impact of share-based compensation expense. This
decrease was mainly due to the faster growth in revenue and
economies of scale.
- Selling Expenses increased by 70.8% to RMB207.6 million (US$31.9
million) in the fourth quarter of 2017 from RMB121.6 million in the same period of 2016. This
increase was primarily attributable to an increase in shipping and
handling costs to RMB51.5 million
(US$7.9 million) in the fourth
quarter of 2017 from RMB33.8 million
in the same period of 2016, relating to delivery of merchandise to
the Company's membership stores and staff costs in connection with
the expansion of BEST Store+ network, the addition of
retail store occupancy cost of RMB27.2
million (US$4.2 million) as a
result of the acquisition of WOWO in May
2017 and the inclusion of share-based compensation expense
of RMB1.1 million (US$0.2 million).
- General and Administrative Expenses increased by 49.8%
to RMB211.1 million (US$32.4 million) in the fourth quarter of 2017
from RMB140.9 million in the same
period of 2016. This increase is primarily attributable to the
increased staff costs in connection with the growth of the
Company's operations and the inclusion of share-based compensation
expense of RMB14.1 million
(US$2.2 million).
- Research and Development Expenses increased by 20.1% to
RMB29.0 million (US$4.5 million) in the fourth quarter of 2017
from RMB24.1 million in the same
period of 2016. This increase was primarily due to increased
research and development activities and the inclusion of
share-based compensation expense of RMB2.3
million (US$0.4 million).
Interest Income increased to RMB24.1 million (US$3.7
million) in the fourth quarter of 2017 from RMB10.5 million in the same period of 2016,
primarily due to a higher yield generated from the Company's cash
balance.
Interest Expense increased to RMB14.4 million (US$2.2
million) in the fourth quarter of 2017 from RMB7.2 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 Gain was RMB0.8
million (US$0.1 million) in
the fourth quarter of 2017, compared to foreign exchange loss of
RMB1.2 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 increased to RMB21.1
million (US$3.2 million) in
the fourth quarter of 2017 from RMB8.1
million in the same period of 2016, primarily due to
increases in other miscellaneous fees.
Other Expense increased to RMB4.9
million (US$0.8 million) in
the fourth quarter of 2017 from RMB3.9
million in the same period of 2016, primarily due to
increases in various miscellaneous expenses.
Income Tax Expense increased to RMB3.4 million (US$0.5
million) in the fourth quarter of 2017 from RMB0.5 million in the same period of 2016,
reflecting tax payable in the fourth quarter of 2017 by certain of
the Company's PRC subsidiaries which had taxable income during the
period, primarily WOWO.
Gross Profit was RMB288.3
million (US$44.3 million) in
the fourth quarter of 2017, compared to gross loss of RMB167.2 million in the same period of 2016.
Gross Profit Margin improved by 9.8 percentage points to
4.4% in the fourth quarter of 2017 from negative 5.4% in the same
period of 2016.
Net Loss was RMB136.9
million (US$21.0 million) in
the fourth quarter of 2017, compared to RMB407.4 million in the same period of 2016.
Non-GAAP Net Loss (18) was
RMB115.6 million (US$17.8 million) in the fourth quarter of 2017,
compared to RMB407.4 million in the
same period of 2016.
EBITDA (19) was negative RMB42.3 million (negative US$6.5 million) in the fourth quarter of 2017,
compared to negative RMB332.6 million
in the same period of 2016.
Adjusted EBITDA (20) was negative
RMB24.0 million (negative
US$3.7 million) in the fourth quarter
of 2017, compared to negative RMB332.6
million in the same period of 2016.
(18) 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.
|
(19) EBITDA represents net loss
excluding depreciation, amortization, interest expense and income
tax expense and minus interest income.
|
(20) Adjusted EBITDA represents
EBITDA excluding share-based compensation expenses.
|
Net Cash Used in Operating Activities was RMB12.4 million (US$1.9
million) in the fourth quarter of 2017, compared to
RMB91.4 million in the same period of
2016.
As of December 31, 2017, the
Company had Cash and Cash Equivalents, Restricted Cash
and Short-term Investments of RMB5,336.5 million (US$820.2 million).
FISCAL YEAR 2017 FINANCIAL RESULTS
Revenue in fiscal year 2017 increased by 126.0% to
RMB19,989.6 million (US$3,072.3 million) from RMB8,844.1 million in 2016. The increase was
primarily attributable to increases in revenue across the various
service lines, as discussed below.
The following table sets forth a breakdown of revenue by
business segment for the periods indicated.
|
Year Ended
December 31,
|
|
2016
|
2017
|
(in '000, Except
for %)
|
RMB
|
% of
Revenue
|
RMB
|
US$
|
% of
Revenue
|
Supply Chain
Management
|
1,241,356
|
14.0%
|
1,600,952
|
246,062
|
8.0%
|
Express
|
5,388,833
|
60.9%
|
12,786,279
|
1,965,215
|
64.0%
|
Freight
|
1,604,573
|
18.2%
|
3,178,044
|
488,456
|
15.9%
|
Store+
|
560,226
|
6.3%
|
2,226,034
|
342,135
|
11.1%
|
Others
|
49,149
|
0.6%
|
198,253
|
30,471
|
1.0%
|
Revenue
|
8,844,137
|
100.0%
|
19,989,562
|
3,072,339
|
100.0%
|
- Express Service Revenue increased by 137.3% to
RMB12,786.3 million (US$1,965.2 million) in fiscal year 2017 from
RMB5,388.8 million in 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 74.1% 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
fiscal year 2017 increased by 36.3% to RMB3.39 (US$0.52),
compared to 2016, primarily due to the Company's service scope
expansion, partially offset by a decrease in average parcel weight.
Average revenue per parcel excluding the impact of service scope
expansion decreased to RMB2.07 from
RMB2.49 in 2016.
- Supply Chain Management Service Revenue increased by
29.0% to RMB1,601.0 million
(US$246.1 million) in fiscal year
2017 from RMB1,241.4 million in 2016.
Such increase was primarily attributable to the addition of new
customers and increasing business volume of existing
customers.
- Freight Service Revenue increased by 98.1% to
RMB3,178.0 million (US$488.5 million) in fiscal year 2017 from
RMB1,604.6 million in 2016. This
increase was the result of greater freight volume which increased
by 44.7% and a 36.8% increase in average revenue per tonne,
compared to 2016. The increase in average revenue per tonne was
primarily due to upward price adjustments, a greater proportion of
long-distance freight volumes in connection with the expansion of
the Company's freight network, and the expansion of the Company's
service scope to include last-mile delivery services starting in
2017.
- BEST Store+ Service Revenue increased by
297.3% to RMB2,226.0 million
(US$342.1 million) in fiscal year
2017 from RMB560.2 million in 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 249.5% compared to 2016.
- Other Service Revenues increased by 303.4% to
RMB198.3 million (US$30.5 million) in fiscal year 2017 from
RMB49.1 million in 2016, primarily
due to increased revenue generated from BEST Capital, BEST Global
and BEST UCargo.
Cost of Revenue and Operating Expenses:
The following tables set forth a breakdown of cost of revenue
and share-based compensation expense included in cost of revenue by
business segment for the periods indicated. Before the completion
of the Company's IPO in September
2017, no share-based compensation expense had been
recognized. Upon completion of the IPO, the Company immediately
recognized a substantial amount of share-based compensation expense
associated with vested share-based awards, especially in the third
quarter of 2017.
I. Cost of Revenue by Business Segments
|
Year Ended
December 31,
|
|
2016
|
2017
|
(in '000, Except
for %)
|
RMB
|
% of
Revenue
|
RMB
|
US$
|
% of
Revenue
|
Supply Chain
Management
|
(1,183,245)
|
95.3%
|
(1,502,570)
|
(230,941)
|
93.9%
|
Express
|
(5,671,356)
|
105.2%
|
(12,435,550)
|
(1,911,309)
|
97.3%
|
Freight
|
(1,906,930)
|
118.8%
|
(3,362,652)
|
(516,830)
|
105.8%
|
Store+
|
(569,557)
|
101.7%
|
(2,072,912)
|
(318,601)
|
93.1%
|
Others
|
(45,479)
|
92.5%
|
(130,327)
|
(20,031)
|
65.7%
|
Cost of
Revenue
|
(9,376,567)
|
106.0%
|
(19,504,011)
|
(2,997,712)
|
97.6%
|
II. Share-based Compensation Expense Included in Cost of
Revenue by Business Segments
|
Year Ended
December 31,
|
|
2016
|
2017
|
(in '000, Except
for %)
|
RMB
|
% of
Revenue
|
RMB
|
US$
|
% of
Revenue
|
Supply Chain
Management
|
NA
|
NA
|
(1,134)
|
(174)
|
0.1%
|
Express
|
NA
|
NA
|
(4,153)
|
(638)
|
0.0%
|
Freight
|
NA
|
NA
|
(276)
|
(42)
|
0.0%
|
Store+
|
NA
|
NA
|
NA
|
NA
|
NA
|
Others
|
NA
|
NA
|
(1,236)
|
(190)
|
0.6%
|
Share-Based
Compensation
Expense Included in Cost of
Revenue
|
NA
|
NA
|
(6,799)
|
(1,045)
|
0.0%
|
The following tables set forth a breakdown of operating expenses
and share-based compensation expense included in operating expenses
by category for the periods indicated.
I. Operating Expenses by Category
|
Year Ended
December 31,
|
|
2016
|
2017
|
(in '000, Except
for %)
|
RMB
|
% of
Revenue
|
RMB
|
US$
|
% of
Revenue
|
Selling
Expenses
|
370,017
|
4.2%
|
694,852
|
106,797
|
3.5%
|
General and
Administrative Expenses
|
521,237
|
5.9%
|
928,188
|
142,660
|
4.6%
|
Research and
Development Expenses
|
80,326
|
0.9%
|
139,009
|
21,365
|
0.7%
|
Other Operating
Income
|
(104,047)
|
(1.2%)
|
–
|
–
|
–
|
Operating
Expenses
|
867,533
|
9.8%
|
1,762,049
|
270,822
|
8.8%
|
II. Share-based Compensation Expense Included in Operating
Expenses by Category
|
Year Ended
December 31,
|
|
2016
|
2017
|
(in '000, Except
for %)
|
RMB
|
% of
Revenue
|
RMB
|
US$
|
% of
Revenue
|
Selling
Expenses
|
NA
|
NA
|
14,244
|
2,189
|
0.1%
|
General and
Administrative Expenses
|
NA
|
NA
|
251,312
|
38,626
|
1.3%
|
Research and
Development Expenses
|
NA
|
NA
|
26,607
|
4,089
|
0.1%
|
Other Operating
Income
|
NA
|
NA
|
NA
|
NA
|
NA
|
Share-Based
Compensation
Expense Included in
Operating Expenses
|
NA
|
NA
|
292,163
|
44,904
|
1.5%
|
Cost of Revenue increased by 108.0% to RMB19,504.0 million (US$2,997.7 million) in fiscal year 2017 from
RMB9,376.6 million in 2016. The
increase was primarily attributable to increase in lease,
transportation and labor costs in connection to significant volume
growth, the expansion of the Company's service scope(21)
to include last-mile delivery services, as well as increase in the
amount of merchandise sold by Store+ services. Cost
of Revenue as a Percentage of Revenue decreased to 97.6% in
fiscal year 2017 from 106.0% in 2016, primarily due to economies of
scale, network optimization, as well as increased operational
efficiency resulting from proactive cost-control measures and
continuous technology improvements and applications
(21) 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. Starting
in 2017, the Company revised its arrangements with franchisees and
the scope of its service. As a proxy, in fiscal year 2017, Express
and Freight incurred approx. RMB4,973.4 million and RMB529.1
million of last-mile delivery service 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.
|
Operating Expenses in fiscal year 2017 increased by
103.1% to RMB1,762.0 million
(US$270.8 million) from RMB867.5 million in 2016. Operating Expenses
as a Percentage of Revenue decreased to 8.8% in fiscal year
2017 from 9.8% in 2016, and would have further decreased to
7.4% when excluding the impact of share-based compensation expense.
This decrease was mainly due to the faster growth in revenue and
economies of scale.
- Selling Expenses increased by 87.8% to RMB694.9 million (US$106.8
million) in fiscal year 2017 from RMB370.0 million in 2016. This increase was
primarily attributable to an increase in shipping and handling
costs to RMB203.9 million
(US$31.3 million) in fiscal year 2017
from RMB74.0 million in 2016,
relating to delivery of merchandise to the Company's membership
stores and staff costs in connection with the expansion of BEST
Store+ network, the addition of retail store occupancy cost of
RMB70.5 million (US$10.8 million) as a result of the acquisition
of WOWO in May 2017 and the inclusion
of share-based compensation expense of RMB14.2 million (US$2.2
million).
- General and Administrative Expenses increased by 78.1%
to RMB928.2 million (US$142.7 million) in fiscal year 2017 from
RMB521.2 million in 2016. This
increase is primarily attributable to the inclusion of share-based
compensation expense of RMB251.3
million (US$38.6 million) and
increased staff costs in connection with the growth of the
Company's operations.
- Research and Development Expenses increased by 73.1% to
RMB139.0 million (US$21.4 million) in fiscal year 2017 from
RMB80.3 million in 2016. This
increase was primarily due to the inclusion of share-based
compensation expense of RMB26.6
million (US$4.1 million) and
increased research and development activities.
Interest Income increased to RMB75.1 million (US$11.5
million) in fiscal year 2017 from RMB24.4 million in 2016, primarily due to a
higher yield generated from the Company's cash balance.
Interest Expense increased to RMB47.2 million (US$7.2
million) in fiscal year 2017 from RMB21.4 million in 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 RMB6.3
million (US$1.0 million) in
fiscal year 2017, compared to RMB1.9
million in 2016. This is primarily due to changes in
exchange rates between Renminbi and U.S. dollars during the
respective periods.
Other Income increased to RMB56.0
million (US$8.6 million) in
fiscal year 2017 from RMB44.4 million
in 2016, primarily due to increases in other miscellaneous
fees.
Other Expense increased to RMB18.5
million (US$2.8 million) in
fiscal year 2017 from RMB8.5 million
in 2016, primarily due to increases in various miscellaneous
expenses.
Income Tax Expense increased to RMB9.9 million (US$1.5
million) in fiscal year 2017 from RMB0.6 million in 2016, reflecting tax payable in
fiscal year 2017 by certain of the Company's PRC subsidiaries which
had taxable income during the period, primarily WOWO.
Gross Profit was RMB485.6
million (US$74.6 million) in
fiscal year 2017, compared to gross loss of RMB532.4 million in 2016. Gross Profit
Margin improved by 8.4 percentage points to 2.4% in fiscal year
2017 from negative 6.0% in 2016.
Net Loss was RMB1,228.1
million (US$188.7 million) in
fiscal year 2017, compared to RMB1,363.5
million in 2016.
Non-GAAP Net Loss (22) was
RMB922.5 million (US$141.8 million) in fiscal year 2017, compared
to RMB1,363.5 million in 2016.
EBITDA (23) was negative RMB882.2 million (negative US$135.6 million) in fiscal year 2017, compared
to negative RMB1,119.6 million in
2016.
Adjusted EBITDA (24) was negative
RMB583.2 million (negative
US$89.6 million) in fiscal year 2017,
compared to negative RMB1,119.6
million in 2016.
Net Cash Generated from Operating Activities was
RMB117.0 million (US$18.0 million) in fiscal year 2017, compared to
net cash used in operating activities of RMB788.8 million in 2016.
SHARES OUTSTANDING
As of the date of this press release, the Company had
approximately 374.5 million ordinary shares outstanding
(25). Each ADS represents one Class A ordinary
share.
(22)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.
|
(23) EBITDA represents net loss
excluding depreciation, amortization, interest expense and income
tax expense and minus interest income.
|
(24) Adjusted EBITDA represents
EBITDA excluding share-based compensation expenses.
|
(25) The total number of shares
outstanding excludes shares reserved for future issuances of ADSs
upon exercise or vesting of awards granted under the Company's
share incentive plans.
|
EMPLOYEES
As of December 31, 2017, the
Company had a total of 8,784 employees, compared to 10,061
employees as of December 31,
2016.
RECENT DEVELOPMENTS
The Company made recent management changes:
- Mr. Tao Liu has replaced Mr. Jun
Zhou as the vice president and general manager of its
freight service line.
- Mr. Sheng Qiu has been appointed
as the vice president of marketing and public relations.
REVENUE GUIDANCE
Based on current market conditions and current operations,
revenues for the first quarter of 2018 is expected to be in the
range of RMB4.8 billion to
RMB5.0 billion, representing a 47.8%
to 53.9% increase from the same period of 2017. This represents
management's current and preliminary expectation, which is subject
to change.
WEBCAST AND CONFERENCE CALL INFORMATION
The Company will hold a conference call at 7:30 am U.S. Eastern Time on March 1, 2018 (8:30
pm Beijing Time, the same day), to discuss its financial
results and operating performance for the fourth quarter and fiscal
year of 2017.
Participants may access the call by dialing the following
numbers:
United
States:
|
+1-888-346-8982
|
Hong Kong:
|
+852-301-84992 or
800-905945
|
China
Domestic:
|
4001-201203
|
International:
|
+1-412-902-4272
|
Participant Elite
Entry Number:
|
6800428
|
A replay of the conference call will be accessible through
March 8, 2017 by dialing the
following numbers:
United States Toll
Free:
|
+1-877-344-7529
|
International:
|
+1-412-317-0088
|
Replay Access
Code:
|
10117114
|
In addition, 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/, along with the earnings press release
and slide presentation.
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:
Kobe Ge
+852 3611 2562
ir@best-inc.com
For Media:
Jill Mao
+852 3611 2564
mmj@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 RMB6.5063 to US$1.00, the effective noon buying rate for
December 31, 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
December 31,
|
Year Ended
December 31,
|
|
2016
|
2017
|
2016
|
2017
|
(In
'000)
|
RMB
|
RMB
|
US$
|
RMB
|
RMB
|
US$
|
Net
loss
|
(407,440)
|
(136,852)
|
(21,033)
|
(1,363,480)
|
(1,228,060)
|
(188,749)
|
Add
|
|
|
|
|
|
|
Depreciation & Amortization
|
77,763
|
100,934
|
15,513
|
246,311
|
363,909
|
55,932
|
Interest Expense
|
7,173
|
14,355
|
2,206
|
21,379
|
47,154
|
7,247
|
Income Tax Expense
|
467
|
3,420
|
526
|
570
|
9,856
|
1,515
|
Subtract
|
|
|
|
|
|
|
Interest Income
|
(10,539)
|
(24,115)
|
(3,706)
|
(24,386)
|
(75,056)
|
(11,536)
|
EBITDA
|
(332,576)
|
(42,258)
|
(6,494)
|
(1,119,606)
|
(882,197)
|
(135,591)
|
Add
|
|
|
|
|
|
|
Share-based
Compensation Expense
|
–
|
18,274
|
2,809
|
–
|
298,963
|
45,950
|
Adjusted
EBITDA
|
(332,576)
|
(23,984)
|
(3,685)
|
(1,119,606)
|
(583,234)
|
(89,641)
|
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
December 31,
|
Year Ended
December 31,
|
|
2016
|
2017
|
2016
|
2017
|
(In
'000)
|
RMB
|
RMB
|
US$
|
RMB
|
RMB
|
US$
|
Net
loss
|
(407,440)
|
(136,852)
|
(21,033)
|
(1,363,480)
|
(1,228,060)
|
(188,749)
|
Share-based
Compensation Expense
|
–
|
18,274
|
2,809
|
–
|
298,963
|
45,950
|
Amortization of
Intangible
Assets Resulting from
Business Acquisitions
|
–
|
3,027
|
465
|
–
|
6,580
|
1,011
|
Non-GAAP Net
Loss
|
(407,440)
|
(115,551)
|
(17,759)
|
(1,363,480)
|
(922,517)
|
(141,788)
|
Non-GAAP Net
Loss Margin
|
(13.2%)
|
(1.8%)
|
(1.8%)
|
(15.4%)
|
(4.6%)
|
(4.6%)
|
UNAUDITED
CONSOLIDATED FINANCIAL DATA
|
|
Summary of
Unaudited Statement of Operations Data
|
(in thousands
)
|
|
|
Three Months Ended
December 31,
|
Year Ended
December 31,
|
|
2016
|
2017
|
2016
|
2017
|
|
RMB
|
RMB
|
US$
|
RMB
|
RMB
|
US$
|
Revenue
|
|
|
|
|
|
|
Supply chain
management
|
415,228
|
529,518
|
81,385
|
1,241,356
|
1,600,952
|
246,062
|
Express
|
1,812,850
|
4,347,485
|
668,196
|
5,388,833
|
12,786,279
|
1,965,215
|
Freight
|
565,409
|
963,666
|
148,113
|
1,604,573
|
3,178,044
|
488,456
|
Store+
|
274,084
|
591,743
|
90,949
|
560,226
|
2,226,034
|
342,135
|
Others
|
17,031
|
98,592
|
15,153
|
49,149
|
198,253
|
30,471
|
Total
revenue
|
3,084,602
|
6,531,004
|
1,003,796
|
8,844,137
|
19,989,562
|
3,072,339
|
Cost of
revenue
|
|
|
|
|
|
|
Supply chain
management
|
392,306
|
513,090
|
78,860
|
1,183,245
|
1,502,570
|
230,941
|
Express
|
1,897,823
|
4,158,328
|
639,123
|
5,671,356
|
12,435,550
|
1,911,309
|
Freight
|
671,807
|
965,005
|
148,319
|
1,906,930
|
3,362,652
|
516,830
|
Store+
|
274,059
|
537,885
|
82,671
|
569,557
|
2,072,912
|
318,601
|
Others
|
15,830
|
68,357
|
10,506
|
45,479
|
130,327
|
20,031
|
Total cost of
revenue
|
3,251,825
|
6,242,665
|
959,479
|
9,376,567
|
19,504,011
|
2,997,712
|
Gross
(loss)/profit
|
(167,223)
|
288,339
|
44,317
|
(532,430)
|
485,551
|
74,627
|
Selling
expenses
|
(121,574)
|
(207,613)
|
(31,910)
|
(370,017)
|
(694,852)
|
(106,797)
|
General and
administrative
expenses
|
(140,923)
|
(211,092)
|
(32,444)
|
(521,237)
|
(928,188)
|
(142,660)
|
Research and
development
expenses
|
(24,114)
|
(28,956)
|
(4,450)
|
(80,326)
|
(139,009)
|
(21,365)
|
Other operating
income
|
40,491
|
–
|
–
|
104,047
|
–
|
–
|
Total operating
expenses
|
(246,120)
|
(447,661)
|
(68,804)
|
(867,533)
|
(1,762,049)
|
(270,822)
|
Loss from
operations
|
(413,343)
|
(159,322)
|
(24,487)
|
(1,399,963)
|
(1,276,498)
|
(196,195)
|
Interest
income
|
10,539
|
24,115
|
3,706
|
24,386
|
75,056
|
11,536
|
Interest
expense
|
(7,173)
|
(14,355)
|
(2,206)
|
(21,379)
|
(47,154)
|
(7,247)
|
Foreign exchange
(loss)/
gain
|
(1,184)
|
778
|
120
|
(1,864)
|
(6,320)
|
(971)
|
Other
income
|
8,054
|
21,101
|
3,243
|
44,409
|
56,035
|
8,612
|
Other
expense
|
(3,897)
|
(4,933)
|
(758)
|
(8,542)
|
(18,507)
|
(2,844)
|
Loss before income
tax
and share of net
income/(loss) of
equity investees
|
(407,004)
|
(132,616)
|
(20,382)
|
(1,362,953)
|
(1,217,388)
|
(187,109)
|
Income tax
expense
|
(467)
|
(3,420)
|
(526)
|
(570)
|
(9,856)
|
(1,515)
|
Loss before share
of net
income/(loss) of equity
investees
|
(407,471)
|
(136,036)
|
(20,908)
|
(1,363,523)
|
(1,227,244)
|
(188,624)
|
Share of net
income/(loss) of
equity investees
|
31
|
(816)
|
(125)
|
43
|
(816)
|
(125)
|
Net
loss
|
(407,440)
|
(136,852)
|
(21,033)
|
(1,363,480)
|
(1,228,060)
|
(188,749)
|
Net loss attributable
to
non-controlling interests
|
–
|
(160)
|
(25)
|
–
|
(167)
|
(26)
|
Net loss
attributable to BEST Inc.
|
(407,440)
|
(136,692)
|
(21,008)
|
(1,363,480)
|
(1,227,893)
|
(188,723)
|
Summary of
Unaudited Consolidated Balance Sheets Data
|
(in
thousands)
|
|
|
As
of
|
|
December 31,
2016
|
December 31,
2017
|
|
RMB
|
RMB
|
US$
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
2,927,581
|
1,240,431
|
190,651
|
Restricted
cash
|
374,363
|
1,652,653
|
254,008
|
Derivative
|
3,149
|
–
|
–
|
Accounts and notes
receivables
|
432,654
|
734,252
|
112,852
|
Inventories
|
82,083
|
156,974
|
24,126
|
Prepayments and other
current assets
|
770,643
|
1,459,755
|
224,360
|
Short‑term
investments
|
62,000
|
2,353,663
|
361,751
|
Amounts due from
related parties
|
83,302
|
164,894
|
25,344
|
Lease rental
receivables due within a year
|
23,292
|
193,703
|
29,772
|
Total current
assets
|
4,759,067
|
7,956,325
|
1,222,864
|
Non‑current
assets
|
|
|
|
Property and
equipment, net
|
947,505
|
1,307,470
|
200,954
|
Intangible assets,
net
|
13,516
|
158,556
|
24,370
|
Long‑term
investments
|
24,081
|
37,167
|
5,712
|
Goodwill
|
247,203
|
448,584
|
68,946
|
Non‑current
deposits
|
50,947
|
69,125
|
10,624
|
Other non‑current
assets
|
87,395
|
62,314
|
9,577
|
Restricted
cash
|
78,588
|
89,745
|
13,794
|
Lease rental
receivable
|
87,551
|
749,243
|
115,157
|
Total non‑current
assets
|
1,536,786
|
2,922,204
|
449,134
|
Total
Assets
|
6,295,853
|
10,878,529
|
1,671,998
|
Liabilities,
Mezzanine Equity and
Shareholders' (Deficit)/Equity
|
|
|
|
Current
liabilities
|
|
|
|
Short‑term bank
loans
|
458,000
|
1,216,384
|
186,955
|
Accounts and notes
payable
|
1,575,793
|
2,388,393
|
367,089
|
Income tax
payable
|
467
|
629
|
97
|
Customer advances and
deposits
|
676,319
|
910,383
|
139,923
|
Accrued expenses and
other liabilities
|
1,225,611
|
1,841,273
|
282,996
|
Capital lease
obligation
|
13,215
|
7,227
|
1,111
|
Amounts due to
related parties
|
891
|
12,902
|
1,983
|
Total current
liabilities
|
3,950,296
|
6,377,191
|
980,154
|
Non-current
liabilities
|
|
|
|
Capital lease
obligation
|
7,535
|
1,828
|
281
|
Deferred tax
liabilities
|
-
|
31,688
|
4,870
|
Other non‑current
liabilities
|
3,917
|
75,327
|
11,578
|
Total non‑current
liabilities
|
11,452
|
108,843
|
16,729
|
Summary of
Unaudited Consolidated Balance Sheets Data (Cont'd)
|
(in
thousands)
|
|
|
As
of
|
|
December 31,
2016
|
December 31,
2017
|
|
RMB
|
RMB
|
US$
|
Total
Liabilities
|
3,961,748
|
6,486,034
|
996,883
|
Mezzanine
equity:
|
|
|
|
Total mezzanine
equity
|
15,842,210
|
–
|
–
|
Shareholders'
(deficit)/equity
|
|
|
|
Ordinary
shares
|
4,116
|
24,786
|
3,810
|
Additional paid‑in
capital
|
-
|
19,240,912
|
2,957,274
|
Accumulated
deficit
|
(13,658,321)
|
(14,886,214)(26)
|
(2,287,969)
|
Accumulated other
comprehensive income
|
146,100
|
12,333
|
1,896
|
BEST Inc.
shareholders' (deficit)/equity
|
(13,508,105)
|
4,391,817
|
675,011
|
Non-controlling
interests
|
–
|
678
|
104
|
Total
shareholders' (deficit)/equity
|
(13,508,105)
|
4,392,495
|
675,115
|
Total liabilities,
mezzanine equity and
shareholders' (deficit)/equity
|
6,295,853
|
10,878,529
|
1,671,998
|
(26) Including accumulated
accretion to redemption value and deemed dividend in relation to
redeemable convertible preferred shares of RMB 9,493,807 and
accumulated loss from operations of RMB 5,392,407.
|
Summary of
Unaudited Condensed Consolidated Statements of Cash Flows
Data
|
(in
thousands)
|
|
|
Three months ended
December 31,
|
Year Ended
December 31,
|
|
2016
|
2017
|
2016
|
2017
|
|
RMB
|
RMB
|
US$
|
RMB
|
RMB
|
US$
|
Net cash (used
in)/generated
from operating activities
|
(91,401)
|
(12,379)
|
(1,903)
|
(788,794)
|
117,036
|
17,988
|
Net cash
generated
from/ (used in)
investing activities
|
87,983
|
632,474
|
97,209
|
(843,844)
|
(4,205,923)
|
(646,439)
|
Net cash generated
from/(used
in) financing activities
|
152,321
|
(448,951)
|
(69,003)
|
4,110,498
|
2,420,488
|
372,022
|
Exchange rate effect
on cash and
cash equivalents
|
97,604
|
59,470
|
9,142
|
158,657
|
(18,751)
|
(2,881)
|
Net
increase/(decrease) in cash
and cash equivalents
|
246,507
|
230,614
|
35,445
|
2,636,517
|
(1,687,150)
|
(259,310)
|
Cash and cash
equivalents at
beginning of period
|
2,681,074
|
1,009,817
|
155,206
|
291,064
|
2,927,581
|
449,961
|
Cash and cash
equivalents at
end of period
|
2,927,581
|
1,240,431
|
190,651
|
2,927,581
|
1,240,431
|
190,651
|
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SOURCE BEST Inc