Parcel Volume of 8.5 Billion Packages for Full
Year 2018, Market Share Increased
to 16.8%
2019 Parcel Volume Growth Target Accelerated to Further Expand
Market Lead
US$0.24 per Share Dividend Announced
for 2018
SHANGHAI, March 12, 2019 /PRNewswire/ -- ZTO Express
(Cayman) Inc. (NYSE: ZTO) ("ZTO" or the "Company"), a leading
and fast-growing express delivery company in China, today announced its unaudited financial
results for the fourth quarter and fiscal year ended December 31, 2018[1]. The Company
generated parcel volume growth which surpassed the market average
by 10.5 percentage points and expanded its market share in terms of
parcel volume to 16.8% by the end of 2018. Full year adjusted net
income beat consensus and was RMB4.2
billion with RMB4.4billion in
cash generated from operating activities.
Fourth Quarter 2018 Financial Highlights
- Revenues[2] were RMB5,627.5
million (US$818.5 million), an
increase of 29.9% from RMB4,331.0
million in the same period of 2017.
- Gross profit was RMB1,550.2
million (US$225.5 million), an
increase of 14.6% from RMB1,353.3
million in the same period of 2017.
- Net income was RMB1,278.9 million
(US$186.0 million), an increase of
4.7% from RMB1,221.9 million in the
same period of 2017.
- Adjusted EBITDA[3] was RMB1,766.0 million (US$256.8 million), an increase of 24.0% from
RMB1,424.3 million in the same period
of 2017.
- Adjusted net income[4] was RMB1,289.7 million (US$187.6 million), an increase of 1.9% from
RMB1,265.4 million in the same period
of 2017.
- Basic and diluted earnings per American depositary share
("ADS"[5]) were RMB1.62
(US$0.24), a decrease of 5.8% and
5.3% from RMB1.72 and RMB1.71 in the same period of 2017,
respectively.
- Net cash provided by operating activities was RMB1,802.3 million (US$262.1million), compared with RMB1,371.5 million in the same period of
2017.
Fiscal Year 2018 Financial Highlights
- Revenues[2] were RMB17,604.5
million (US$2,560.5 million),
an increase of 34.8% from RMB13,060.1
million in 2017.
- Gross profit was RMB5,364.9
million (US$780.3 million), an
increase of 23.5% from RMB4,345.6
million in 2017.
- Net income was RMB4,387.9 million
(US$638.2 million), an increase of
38.9% from RMB3,158.9 million in
2017.
- Adjusted EBITDA[3] was RMB5,858.4 million (US$852.1 million), an increase of 31.6% from
RMB4,452.0 million in 2017.
- Adjusted net income[4] was RMB4,201.1 million (US$611.0 million), an increase of 30.1% from
RMB3,229.6 million in 2017.
- Basic and diluted earnings per American depositary share
("ADS"[5])were RMB5.83
(US$0.85) and RMB 5.82 (US$0.85),
respectively, an increase of 32.2% and 32.3% from RMB4.41 and RMB4.40
in 2017.
- Net cash provided by operating activities was RMB4,404.1 million (US$640.5 million), compared with RMB3,630.7 million in 2017.
Operational Highlights for Fourth Quarter 2018
- Parcel volume was 2,714 million, an increase of 34.7% from
2,015 million in the same period of 2017.
- Number of pickup/delivery outlets was approximately 30,100 as
of December 31, 2018.
- Number of direct network partners was over 4,500 as of
December 31, 2018.
- Number of line-haul vehicles was over 5,500 as of December 31, 2018, which included over 4,500
self-owned vehicles and over 900 vehicles owned and operated by
Tonglu Tongze Logistics Ltd., a transportation operator that works
exclusively for ZTO.
- Number of self-owned trucks increased to around 4,500 as of
December 31, 2018 from 4,000 as of
September 30, 2018. Among the self-owned trucks, over 2,800
were high capacity 15-17 meter long models as of December 31, 2018, compared to over 2,270 as of
September 30, 2018.
- Number of line-haul routes between sorting hubs was over 2,100
as of December 31, 2018.
- Number of sorting hubs was 86 as of December 31, 2018, among which 78 are operated by
the Company and 8 by the Company's network partners.
|
[1] An investor relations
presentation accompanies this earnings release and can be found at
ir.zto.com.
|
[2]
Starting from January 1, 2018, the Company adopted a newly enacted
revenue accounting standard (ASC 606), which requires its delivery
services revenue
to be recognized over time, and uses a modified retrospective
approach to adopt this standard. The January 1, 2018 balance of
retained earnings was not
adjusted due to the immaterial cumulative net impact of adopting
ASC 606. The impact of applying ASC 606 as compared with previous
guidance applied to
revenues and costs was not material for the fiscal year ended
December 31, 2018.
|
[3] Adjusted EBITDA is a
non-GAAP financial measure, which is defined as net income before
depreciation, amortization, interest expenses and income tax
expenses, and further adjusted to exclude the shared-based
compensation expense and non-recurring items such as the gain on
disposal of equity investees and
subsidiary which management aims to better represent the underlying
business operations.
|
[4] Adjusted net income is a
non-GAAP financial measure, which is defined as net income before
share-based compensation expense and non-recurring items
such as gain on disposal of equity investees and subsidiary in
which management aims to better represent the underlying business
operations.
|
[5] One ADS represents one
Class A ordinary share.
|
|
Mr. Meisong Lai, Founder, Chairman and Chief Executive
Officer of ZTO, commented "ZTO delivered a strong fourth quarter
and closed out 2018 with a 1.3 percentage point increase in market
share to 16.8%. We maintained our leadership position in the
Chinese express delivery industry in terms of parcel volume,
customer satisfaction and profit
generation."
Mr. Lai added, "The Chinese express
delivery industry continued to demonstrate healthy growth momentum
with an increase of over 10 billion parcels in 2018. Fueled by the
steady expansion of the Chinese economy, express delivery industry
will further improve scale and efficiency allowing consumers to
spend less for more with faster delivery, and enabling adjacent
industries to innovate in supply chain management. ZTO's consistent
strategy is to build a sorting and transit platform with superior
scale and efficiency which is also well-integrated with our
nationwide outlets with the highest density and best-in-kind
profitability. We will accelerate our growth for 2019 with a goal
to increase our parcel volume 15 percentage points faster than the
industry average to seize market opportunities and further expand
our competitive lead. Through increased investments in
infrastructure and technology, effective implementation of policies
that reach the frontiers of our network, plus strategic placement
and development of new product and services, we aim to achieve
increase in quality of services, market share and profit
generation, and ultimately deliver consistent and sustainable
long-term value to our shareholders."
Ms. Huiping Yan, Chief Financial Officer of ZTO, added, "We
beat consensus expectations for both parcel volume growth and
earnings during the fourth quarter and the full year of 2018.
Through sound execution of our corporate initiatives, the impact of
intensifying competition on core express delivery ASP was kept in
check to stay below 7% for the year, and cost productivity allowed
us to drive down combined unit line-haul transportation and sorting
hub costs per parcel by RMB0.11 for
the year. Gross margin for our core express delivery business was
32.6% in 2018 compared to 33.9% last year. SG&A costs as a
percentage of total revenue increased from 6.0% last year to 6.9%,
which included the lump sum share-based compensation charge
representing 1.1% of total revenue. Our corporate cost structure
remains effective and provides healthy leverage. Adjusted net income grew 30.1% to 4.2
billion in 2018 while cash generated from operating activities was
4.4 billion. ZTO is well positioned to deliver stronger growth in 2019."
Fourth Quarter 2018 Financial Results
|
Three Months Ended December
31,
|
|
Year Ended December 31,
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
RMB
|
|
%
|
|
RMB
|
|
US$
|
|
%
|
|
RMB
|
|
%
|
|
RMB
|
|
US$
|
|
%
|
|
(in thousands, except percentages)
|
Express delivery
services
|
3,834,522
|
|
88.5
|
|
4,960,190
|
|
721,431
|
|
88.1
|
|
12,173,690
|
|
93.2
|
|
15,400,080
|
|
2,239,850
|
|
87.5
|
Freight forwarding
services
|
269,557
|
|
6.2
|
|
392,525
|
|
57,090
|
|
7.0
|
|
269,557
|
|
2.1
|
|
1,278,741
|
|
185,985
|
|
7.3
|
Sale of
accessories
|
201,764
|
|
4.7
|
|
252,806
|
|
36,769
|
|
4.5
|
|
591,716
|
|
4.5
|
|
812,866
|
|
118,226
|
|
4.6
|
Others
|
25,110
|
|
0.6
|
|
22,011
|
|
3,201
|
|
0.4
|
|
25,110
|
|
0.2
|
|
112,764
|
|
16,400
|
|
0.6
|
Total
revenues
|
4,330,953
|
|
100.0
|
|
5,627,532
|
|
818,491
|
|
100.0
|
|
13,060,073
|
|
100.0
|
|
17,604,451
|
|
2,560,461
|
|
100.0
|
|
Revenues were RMB5,627.5
million (US$818.5 million), an
increase of 29.9% from RMB4,331.0
million in the same period of 2017. Revenue from express
delivery services increased by 29.4% compared to the same period of
2017, mainly driven by a 34.7% increase in parcel volume and
partially offset by a decrease in unit price per parcel resulted
from incremental volume incentives in response to competition.
Revenue from freight forwarding services, which the Company
acquired during the fourth quarter of 2017, increased 45.6% when
compared to the same period of 2017. The increase in revenue from
sales of accessories was consistent with increase in the sale of
thermal paper used for the printing of digital waybills. Other
revenues are composed of new service offerings such as financing
and advertising services.
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
RMB
|
|
% of
revenues
|
|
RMB
|
|
US$
|
|
% of
revenues
|
|
RMB
|
|
% of
revenues
|
|
RMB
|
|
US$
|
|
% of
revenues
|
|
(in thousands, except percentages)
|
Line-haul
transportation
cost
|
1,511,259
|
|
35.0
|
|
1,947,587
|
|
283,264
|
|
34.6
|
|
4,797,799
|
|
36.7
|
|
5,757,701
|
|
837,422
|
|
32.7
|
Sorting hub
cost
|
768,641
|
|
17.7
|
|
1,043,404
|
|
151,757
|
|
18.5
|
|
2,438,754
|
|
18.7
|
|
3,197,667
|
|
465,081
|
|
18.2
|
Freight forwarding
cost
|
260,429
|
|
6.0
|
|
385,454
|
|
56,062
|
|
6.8
|
|
260,429
|
|
2.0
|
|
1,239,439
|
|
180,269
|
|
7.0
|
Cost of accessories
sold
|
127,718
|
|
3.0
|
|
158,071
|
|
22,990
|
|
2.8
|
|
366,859
|
|
2.8
|
|
491,722
|
|
71,518
|
|
2.8
|
Other costs
|
309,649
|
|
7.1
|
|
542,827
|
|
78,952
|
|
9.8
|
|
850,648
|
|
6.5
|
|
1,553,039
|
|
225,881
|
|
8.8
|
Total cost of
revenues
|
2,977,696
|
|
68.8
|
|
4,077,343
|
|
593,025
|
|
72.5
|
|
8,714,489
|
|
66.7
|
|
12,239,568
|
|
1,780,171
|
|
69.5
|
|
Total cost of revenues was RMB4,077.3 million (US$593.0 million), an increase of 36.9% from
RMB2,977.7 million in the same period
last year.
- Line haul transportation cost was RMB1,947.6 million (US$283.3 million), an increase of 28.9% from
RMB1,511.3 million in the same period
last year. As a percentage of revenues, line-haul transportation
cost decreased to 34.6% from 35.0% in the same period last year, as
a net result of (i) an increase in the usage of cost-advantaged
self-owned and more efficient high capacity trailer trucks and (ii)
increase in costs by third-party transportation during peak season.
Total transportation cost of self-owned trucks accounted for 52.7%
of the total truck transportation cost for the quarter, compared to
44.9% in the same period last year.
- Sorting hub operating cost was RMB1,043.4 million (US$151.8 million), an increase of 35.7% from
RMB768.6 million in the same
period last year. The increase was primarily due to (i) an increase
of RMB214.4 million (US$31.2 million) in labor costs from wage hikes
and additional hiring to handle increased parcel volumes during
peak online shopping season and (ii) a RMB36.0 million (US$5.2
million) increase in depreciation and amortization costs
associated with the newly installed automated sorting equipment. As
of December 31, 2018, 120 sets of
automated sorting equipment have been put into use, compared to 58
sets as of December 31, 2017.
- Cost of accessories was RMB158.1 million (US$23.0 million), an increase of 23.8% from
RMB127.7 million in the same
period last year. The increase was in line with the increase in the
sale of accessories for thermal paper usage of which grew by 55.7%
compared to the same period last year.
- Other costs were RMB542.8 million (US$79.0 million), an increase of
RMB233.2 million compared to the same
period last year. The increase was primarily due to (i) an increase
of RMB165.1 million (US$24.0 million) in dispatching costs associated
with serving enterprise customers, (ii) an increase of RMB49.0 million (US$7.1
million) in expenses related to IT and technology
development, and (iii) an increase of RMB33.6 million (US$4.9
million) in tax surcharges.
Gross Profit was RMB1,550.2 million (US$225.5million), an increase of 14.6% from
RMB1,353.3 million in the same period
last year. Gross margin decreased to 27.5% from 31.2% in the same
period last year. The decrease in gross margin was mainly driven by
parcel volume growth but partially offset by (i) a decrease in unit
price per parcel due to competition; (ii) an increase in services
to large enterprise customers at a relatively lower margin; and
(iii) an increase in third-party
transportation cost during peak seasons. In addition, the
lower-margin freight forwarding business caused minor dilution.
Total Operating Expenses were RMB197.0 million (US$28.6
million), compared to RMB127.5
million in the same period last year.
- Selling, general and administrative expenses were
RMB276.4 million (US$40.2 million), compared to RMB222.5 million in the same period last year.
The increase was mainly due to (i) an increase of RMB39.9 million (US$5.8
million) in salaries and accrued bonuses and (ii) an
increase of RMB9.7 million
(US$1.4 million) in depreciation and
amortization expenses. As a percentage of revenue, selling, general
and administrative expenses accounted for 4.9%, compared to 5.1%
during the same period last year, indicating corporate cost
leverage.
- Other operating income, net was RMB79.5 million (US$11.6
million) for the quarter. Other operating income mainly
consisted of government subsidies of RMB28.7
million (US$4.2 million)
received in the fourth quarter of 2018 and a RMB43.6 million (US$6.3
million) rebate of fees from the Company's ADR bank.
Income from operations was RMB1,353.2 million (US$196.8 million), an increase of 10.4% from
RMB1,225.7 million for the same
period last year. Operating margin decreased to 24.0% from 28.3% in
the same period last year, mainly driven by the decrease in gross
margin by 3.7 percentage points.
Interest income was RMB146.1
million (US$21.3 million),
compared with RMB53.0 million in the
same period in 2017, resulting from an increase in the amount of
cash and interest-bearing bank deposits.
Interest expense was zero compared with RMB2.5 million in the same period in 2017. There
was no borrowing during the fourth quarter of 2018.
Impairment of investment in equity investee was zero for
the quarter, compared with RMB30.0
million in the same period in 2017.
Foreign currency exchange gain, before tax was
RMB1.7million (US$0.2 million) in the fourth quarter of
2018.
Income tax expenses were RMB222.6 million (US$32.4
million) and the effective income tax rate was 14.8% for the
fourth quarter of 2018. The income tax expenses of RMB8.8 million in the fourth quarter of 2017
reflected the full year income tax credit of RMB285.9 million as one of the Company's
subsidiaries was recognized as a High and New Technology Enterprise
("HNTE") by relevant PRC authorities in December 2017 which can enjoy a reduced income
tax rate of 15% from a statutory rate of 25% for a three-year
period starting January 1, 2017
through December 31,
2019.
Net income was RMB1,278.9
million (US$186.0 million), an
increase of 4.7% from RMB1,221.9
million in the same period last year.
Basic and diluted earnings per ADS were RMB1.62 (US$0.24),
compared with basic and diluted earnings per ADS of RMB1.72 and RMB1.71, respectively, in the same period last
year.
Adjusted net income was RMB1,289.7 million (US$187.6 million), compared with adjusted net
income of RMB1,265.4 million during
the same quarter last year.
EBITDA was RMB1,755.1
million (US$255.3 million),
compared with RMB1,380.8 million in
the same period last year.
Adjusted EBITDA was RMB1,766.0 million (US$256.8 million), compared to RMB1,424.3 million in the same period last
year.
Net cash provided by operating activities was
RMB1,802.3 million (US$262.1 million), compared with RMB1,371.5 million in the same period last
year.
Fiscal Year 2018 Financial Results
Revenues were RMB17,604.5
million (US$2,560.5 million),
an increase of 34.8% from RMB13,060.1
million last year. The increase was mainly driven by a
growth in parcel volume to 8,524 million during 2018 from 6,219
million in 2017. The COE Business acquired on October 1, 2017 contributed RMB1,278.7 million (US$186.0 million) full year revenue in 2018,
compared with RMB269.6 million for
the fourth quarter of 2017.
Total cost of revenues was RMB12,239.6 million (US$1,780.2 million), an increase of 40.5% from
RMB8,714.5 million in the same period
last year. Combined line-haul transportation cost and sorting hub
operating cost per unit express delivery service decreased
11 cents for the year of 2018 driven
by cost effective initiatives.
- Line-haul transportation cost was RMB5,757.7 million (US$837.4 million), an increase of 20.0% from
RMB4,797.8 million last year. The
increase was in line with the increase in parcel volume and was
mainly due to an increase of RMB1,068.7
million (US$155.4 million)
associated with the Company's self-owned fleet which includes fuel,
tolls, drivers' compensation, depreciation and maintenance
expenses, and a decrease of RMB46.2
million (US$6.7 million) in
outsourced transportation costs. In 2018, the Company increased use
of self-owned and operated, more cost-efficient higher capacity
trucks in place of third party outsourced trucks to enhance
transportation efficiency. Depreciation expenses relating to the
Company's expanded self-owned fleet increased by RMB127.7 million (US$18.6
million) after partially offset increases in fuel price,
especially during peak season such as Singles Day. As a percentage
of revenues, line haul transportation cost accounted for 32.7% of
total revenues, a decrease from 36.7% last year.
- Sorting hub operating cost was RMB3,197.7 million (US$465.1 million), an increase of 31.1% from
RMB2,438.8 million last year.
The increase was mainly due to (i) increased labor costs of
RMB544.7 million (US$79.2 million) as a result of wage increases
and the hiring of additional employees to support parcel volume
growth, (ii) an increase of RMB119.4
million (US$17.4 million) in
depreciation expenses driven by the expansion of sorting hubs and
installation of more automated sorting equipment, and (iii) an
increase of RMB78.8 million
(US$11.5 million) in rental costs and
related utilities cost. As of December 31,
2018, 120 sets of automated sorting equipment have been
installed and put into operation. As a percentage of revenues,
sorting hub operating cost accounted for 18.2%, a decrease from
18.7% last year, primarily due to economies of scale and an
improvement in operating efficiency.
- Cost of accessories sold was RMB491.7 million (US$71.5 million), an increase from
RMB366.9 million last year. The
increase was in line with growth in the Company's revenue from the
sale of accessories to its network partners which includes thermal
paper for digital waybill printing, portable bar code readers,
ZTO-branded packaging materials and uniforms. As a percentage of
revenues, cost of accessories accounted for 2.8% in 2018, slightly
lower than in 2017.
- Other costs were RMB1,553.0 million (US$225.9 million), an increase from
RMB850.6 million in 2017,
primarily due to (i) an increase in costs associated with serving
key enterprise customers of RMB428.8
million (US$62.4 million);
(ii) an increase of RMB155.1 million
(US$22.6 million) in the IT expenses
related to IT and technology development, and (iii) an increase of
RMB137.4 million (US$20.0 million) in tax surcharges.
Gross Profit was RMB5,364.9 million (US$780.3 million), an increase of 23.5% from
RMB4,345.6 million last year. Gross
profit margin decreased to 30.5% from 33.3% in 2017, and was
primarily attributable to parcel volume growth and productivity
gain partially offset by (i) decrease in unit price; (ii) increase
in lower margin full-year consolidated freight forwarding and lower
margin enterprise customers business.
Total Operating Expenses were RMB1,032.7 million (US$150.2 million), compared to RMB597.1 million last year.
- Selling, general and administrative expenses were
RMB1,210.7 million (US$176.1 million), an increase of 55.1% from
RMB780.5 million in the last year.
The increase was primarily due to (i) an increase of RMB208.8 million (US$30.4
million) in share-based compensation expenses of which
RMB188.6 million (US$27.4 million) was a lump sum charge for 2017
grant in contrast to 2016 grant that is vested over three years;
(ii) an increase of RMB104.3 million
(US$15.2 million) in wages and social
welfare expenses; (iii) an increase of RMB24.5 million (US$3.6
million) in professional service charges; (iv) an increase
of RMB23.2 million (US$3.4 million) in depreciation and amortization
expenses, and (v) an increase of RMB30.2
million (US$4.4 million) in
sundry office, utilities and communication
charges.
- Other operating income, net was RMB178.1 million (US$25.9
million), compared with RMB183.4
million last year, which is mainly composed of rebate of
fees from the Company's ADRs bank, government subsidies and
sublease income.
Income from operations was RMB4,332.2 million (US$630.1 million), an increase of 15.6% from
RMB3,748.4 million last year.
Operating margin decreased to 24.6% from 28.7% last year, primarily
due to the decrease in gross margin by 2.8 percentage points.
Interest income was RMB401.2
million (US$58.3 million),
compared with RMB166.3 million in
2017, primarily due to the increased amount of cash and
interest-earning bank deposits.
Interest expense was RMB0.8
million (US$0.1 million),
compared with RMB15.7 million in
2017. There was no borrowing since the second quarter of 2018.
Impairment of investment in equity investee was zero for
this year, compared with RMB30.0
million in 2017 associated with the Company's investment in
Wheat Commune Group Inc., a campus-focused delivery and retail
service provider in China, as it
revamped its business model.
Gain on disposal of equity investees was RMB562.6 million (US$81.8
million) and was mainly composed of the share disposal of
the Hive Box investment for a cash consideration of RMB697.9 million (US$105.5
million) in 2018.
Foreign currency exchange net gain was RMB41.2 million (US$6.0
million) was mainly due to the appreciation of the onshore
U.S. dollar-denominated bank deposits against the Chinese
Renminbi.
Net income increased 38.9% to RMB4,387.9 million (US$638.2 million) from RMB3,158.9 million in 2017. Net income margin
increased to 24.9% from 24.2% in 2017.
Basic and diluted earnings per ADS were RMB5.83 (US$0.85)
and RMB5.82 (US$0.85), respectively, compared with basic and
diluted earnings per ADS of RMB4.41
and RMB4.40 last year.
Adjusted net income was RMB4,201.1 million (US$611.0 million), compared with adjusted net
income of RMB3,229.6 million during
last year.
EBITDA was RMB6,171.5
million (US$897.6 million),
compared with RMB4,381.3 million last
year.
Adjusted EBITDA was RMB5,858.4 million (US$852.1 million), compared with RMB4,452.0 million last year.
Net cash provided by operating activities was
RMB4,404.1million (US$640.5 million), compared with RMB3,630.7 million last year.
Business Outlook
Based on the current market conditions and current operations,
the Company's parcel volume for 2019 is expected to be in the range
of 11.51 billion to 11.93 billion, representing a 35% to 40%
increase year over year, and the Company's adjusted net income is
expected to be in the range of RMB4.8
billion to RMB5.2 billion,
representing a 14.3% to 23.8% increase from the same period of
2018. The Company will no longer provide quarterly estimates going
forward. Above estimates represent management's current and
preliminary view, which are subject to change.
Special Dividend
The board of directors has approved a special dividend of
US$0.24 per ADS for 2018, which is
expected to be paid on April 8, 2019
to shareholders of record as of the close of business on
April 1, 2019.
Company Share Purchase
On November 15, 2018, the Company
announced a new share repurchase program whereby ZTO is authorized
to repurchase its own Class A ordinary shares in the form of ADSs
with an aggregate value of up to US$500
million during an 18-month period thereafter. The Company
expects to fund the repurchase out of its existing cash
balance. During the fourth quarter of 2018, the Company has
purchased an aggregate of 1,700,000 ADSs at an average purchase
price of US$15.85 per ADS, including
repurchase commissions.
The Company believes that the share repurchase program
represents ZTO's confidence in the overall market opportunities as
well as ZTO's solid operating fundamentals and financial strength
for sustained profitable growth and value creation for its
shareholders.
Exchange Rate
This announcement contains translation of certain Renminbi
amounts into U.S. dollars at specified rates solely for the
convenience of readers. Unless otherwise noted, all translations
from Renminbi to U.S. dollars were made at the exchange rate of
RMB6.8755 to US$1.00, the noon buying rate on December 28, 2018 as set forth in the H.10
statistical release of the Board of Governors of the Federal
Reserve Systems.
Use of Non-GAAP Financial Measures
The Company uses adjusted EBITDA and adjusted net income, each a
non-GAAP financial measure, in evaluating ZTO's operating results
and for financial and operational decision-making purposes.
Reconciliations of the Company's non-GAAP financial measures to
its U.S. GAAP financial measures are shown in tables at the end of
this earnings release, which provide more details about the
non-GAAP financial measures.
The Company believes that adjusted EBITDA and adjusted net
income help identify underlying trends in ZTO's business that could
otherwise be distorted by the effect of the expenses and gains that
the Company includes in income from operations and net income. The
Company believes that adjusted EBITDA and adjusted net income
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 ZTO's management in its financial and operational
decision-making.
Adjusted EBITDA and adjusted net income should not be considered
in isolation or construed as an alternative to net income or any
other measure of performance or as an indicator of the Company's
operating performance. Investors are encouraged to review the
historical non-GAAP financial measures to the most directly
comparable GAAP measures. Adjusted EBITDA and adjusted net income
presented here may not be comparable to similarly titled measures
presented by other companies. Other companies may calculate
similarly titled measures differently, limiting their usefulness as
comparative measures to ZTO's data. ZTO encourages investors and
others to review the Company's financial information in its
entirety and not rely on a single financial measure.
Conference Call Information
ZTO's management team will host an earnings conference call at
9:00 PM U.S. Eastern Time on
Tuesday, March 12, 2019 (9:00 AM Beijing Time on March 13, 2019).
Dial-in details for the earnings conference call are as
follows:
United
States:
|
1-888-317-6003
|
Hong Kong:
|
852-5808-1995
|
China:
|
4001-201203
|
International:
|
1-412-317-6061
|
Passcode:
|
1062029
|
Please dial in 15 minutes before the call is scheduled to begin
and provide the passcode to join the call.
A replay of the conference call may be accessed by phone at the
following numbers until March 19,
2019:
United
States:
|
1-877-344-7529
|
International:
|
1-412-317-0088
|
Passcode:
|
10128825
|
Additionally, a live and archived webcast of the conference call
will be available at http://zto.investorroom.com.
About ZTO Express (Cayman) Inc.
ZTO Express (Cayman) Inc. (NYSE: ZTO) ("ZTO" or the "Company")
is a leading and fast-growing express delivery company in
China. ZTO provides express
delivery service as well as other value-added logistics services
through its extensive and reliable nationwide network coverage in
China.
ZTO operates a highly scalable network partner model, which the
Company believes is best suited to support the significant growth
of e-commerce in China. The
Company leverages its network partners to provide pickup and
last-mile delivery services, while controlling the mission-critical
line-haul transportation and sorting network within the express
delivery service value chain.
For more information, please visit
http://zto.investorroom.com.
Safe Harbor Statement
This news release contains "forward-looking" statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of
1934, as amended, and as defined in the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
include but are not limited to the Company's unaudited results for
the fourth quarter of 2018, ZTO management quotes and the Company's
financial outlook.
These forward-looking statements are not historical facts but
instead represent only the Company's belief regarding expected
results and events, many of which, by their nature, are inherently
uncertain and outside of its control. The Company's actual results
and other circumstances may differ, possibly materially, from the
anticipated results and events indicated in these forward-looking
statements. Announced results for the fourth quarter and fiscal
year of 2018 are preliminary, unaudited and subject to audit
adjustment. In addition, the Company may not meet its financial
outlook included in this news release and may be unable to grow its
business in the manner planned. The Company may also modify its
strategy for growth. In addition, there are other risks and
uncertainties that could cause the Company's actual results to
differ from what it currently anticipates, including those relating
to the development of the e-commerce industry in China, its significant reliance on the Alibaba
ecosystem, risks associated with its network partners and their
employees and personnel, intense competition which could
adversely affect the Company's results of operations and
market share, any service disruption of the Company's sorting
hubs or the outlets operated by its network partners or its
technology system. For additional information on these and other
important factors that could adversely affect the Company's
business, financial condition, results of operations, and
prospects, please see its filings with the U.S. Securities and
Exchange Commission.
All information provided in this press release and in the
attachments is as of the date of the press release. The Company
undertakes no obligation to update any forward-looking statement,
whether as a result of new information, future events or otherwise,
after the date of this release, except as required by law. Such
information speaks only as of the date of this release.
For investor and media inquiries, please contact:
ZTO
Investor Relations Department
E-mail: ir@zto.com
Christensen
In China
Mr. Christian Arnell
Phone: +86-10-5900-1548
E-mail: carnell@christensenir.com
In US
Mr. Tip Fleming
Phone: +1-917-412-3333
Email: tfleming@Christensenir.com
UNAUDITED
CONSOLIDATED FINANCIAL DATA
|
|
|
|
Summary of
Unaudited Consolidated Comprehensive Income Data:
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
(in thousands, except for share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
4,330,953
|
|
5,627,532
|
|
818,491
|
|
13,060,073
|
|
17,604,451
|
|
2,560,461
|
|
Cost of
revenues
|
|
(2,977,696)
|
|
(4,077,343)
|
|
(593,025)
|
|
(8,714,489)
|
|
(12,239,568)
|
|
(1,780,171)
|
|
Gross profit
|
|
1,353,257
|
|
1,550,189
|
|
225,466
|
|
4,345,584
|
|
5,364,883
|
|
780,290
|
|
Operating income
(expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
(222,459)
|
|
(276,424)
|
|
(40,204)
|
|
(780,517)
|
|
(1,210,717)
|
|
(176,091)
|
|
Other operating
income, net
|
|
94,913
|
|
79,458
|
|
11,557
|
|
183,368
|
|
178,057
|
|
25,897
|
|
Total operating
expenses
|
|
(127,546)
|
|
(196,966)
|
|
(28,647)
|
|
(597,149)
|
|
(1,032,660)
|
|
(150,194)
|
|
Income from
operations
|
|
1,225,711
|
|
1,353,223
|
|
196,819
|
|
3,748,435
|
|
4,332,223
|
|
630,096
|
|
Other income
(expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
52,950
|
|
146,139
|
|
21,255
|
|
166,325
|
|
401,162
|
|
58,347
|
|
Interest
expense
|
|
(2,452)
|
|
—
|
|
—
|
|
(15,668)
|
|
(780)
|
|
(113)
|
|
Gain on disposal of
equity investees and
subsidiary
|
|
—
|
|
—
|
|
—
|
|
—
|
|
562,637
|
|
81,832
|
|
Impairment of
investment in equity investee
|
|
(30,000)
|
|
—
|
|
—
|
|
(30,000)
|
|
—
|
|
—
|
|
Foreign currency
exchange gain/(loss),
before tax
|
|
(14,763)
|
|
1,659
|
|
241
|
|
(48,149)
|
|
41,189
|
|
5,991
|
|
Income before income
tax, and share of loss in
equity method investments
|
|
1,231,446
|
|
1,501,021
|
|
218,315
|
|
3,820,943
|
|
5,336,431
|
|
776,153
|
|
Income tax
expense
|
|
(8,759)
|
|
(222,639)
|
|
(32,381)
|
|
(646,361)
|
|
(929,133)
|
|
(135,137)
|
|
Share of gain/(loss)
in equity method
investments
|
|
(813)
|
|
472
|
|
69
|
|
(15,682)
|
|
(19,386)
|
|
(2,820)
|
|
Net income
|
|
1,221,874
|
|
1,278,854
|
|
186,003
|
|
3,158,900
|
|
4,387,912
|
|
638,196
|
|
Net loss (income)
attributable to
noncontrolling interests
|
|
431
|
|
(3,312)
|
|
(482)
|
|
763
|
|
(4,887)
|
|
(711)
|
|
Net income attributable
to ZTO Express
(Cayman) Inc.
|
|
1,222,305
|
|
1,275,542
|
|
185,521
|
|
3,159,663
|
|
4,383,025
|
|
637,485
|
|
Net income attributable
to ordinary
shareholders
|
|
1,222,305
|
|
1,275,542
|
|
185,521
|
|
3,159,663
|
|
4,383,025
|
|
637,485
|
|
Net earnings per
share/ADS attributable to
ordinary shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
1.72
|
|
1.62
|
|
0.24
|
|
4.41
|
|
5.83
|
|
0.85
|
|
Diluted
|
|
1.71
|
|
1.62
|
|
0.24
|
|
4.40
|
|
5.82
|
|
0.85
|
|
Weighted average shares
used in calculating
net earnings per ordinary
share/ADS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
712,237,048
|
|
786,966,574
|
|
786,966,574
|
|
717,138,526
|
|
751,814,077
|
|
751,814,077
|
|
Diluted
|
|
712,788,475
|
|
787,966,142
|
|
787,966,142
|
|
717,599,562
|
|
752,672,956
|
|
752,672,956
|
|
Other comprehensive
income, net of tax of nil:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
(177,137)
|
|
23,488
|
|
3,416
|
|
(590,545)
|
|
867,612
|
|
126,189
|
|
Comprehensive
income
|
|
1,044,737
|
|
1,302,342
|
|
189,419
|
|
2,568,355
|
|
5,255,524
|
|
764,385
|
|
Comprehensive loss
(income) attributable to
noncontrolling interests
|
|
431
|
|
(3,312)
|
|
(482)
|
|
763
|
|
(4,887)
|
|
(711)
|
|
Comprehensive income
attributable to ZTO
Express (Cayman) Inc.
|
|
1,045,168
|
|
1,299,030
|
|
188,937
|
|
2,569,118
|
|
5,250,637
|
|
763,674
|
|
Unaudited
Consolidated Balance Sheets Data:
|
|
|
|
|
|
|
As of
|
|
|
|
December 31,
2017
|
|
December
31, 2018
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
(in thousands, except for share and per share data)
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
5,425,024
|
|
4,622,554
|
|
672,323
|
|
Restricted
cash
|
|
348,710
|
|
400
|
|
58
|
|
Accounts receivable,
net of allowance for doubtful accounts of
RMB13,798 and RMB13,996 at December 31,
2017 and December
31, 2018, respectively
|
|
287,835
|
|
596,995
|
|
86,829
|
|
Financing
receivables
|
|
64,030
|
|
517,983
|
|
75,339
|
|
Short-term
investment
|
|
5,224,559
|
|
13,599,852
|
|
1,978,017
|
|
Inventories
|
|
34,231
|
|
43,813
|
|
6,372
|
|
Advances to
suppliers
|
|
263,574
|
|
337,874
|
|
49,142
|
|
Prepayments and other
current assets
|
|
719,983
|
|
1,507,996
|
|
219,329
|
|
Amounts due from
related parties
|
|
9,900
|
|
6,600
|
|
960
|
|
Total current
assets
|
|
12,377,846
|
|
21,234,067
|
|
3,088,369
|
|
Investments in equity
investees
|
|
610,160
|
|
2,207,410
|
|
321,054
|
|
Property and
equipment, net
|
|
6,473,010
|
|
9,035,704
|
|
1,314,190
|
|
Land use rights,
net
|
|
1,602,908
|
|
1,969,176
|
|
286,405
|
|
Intangible assets,
net
|
|
60,424
|
|
54,227
|
|
7,887
|
|
Goodwill
|
|
4,241,541
|
|
4,241,541
|
|
616,907
|
|
Deferred tax
assets
|
|
152,763
|
|
318,063
|
|
46,260
|
|
Other non-current
assets
|
|
308,986
|
|
622,669
|
|
90,563
|
|
TOTAL
ASSETS
|
|
25,827,638
|
|
39,682,857
|
|
5,771,635
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
Short-term bank
borrowing
|
|
250,000
|
|
—
|
|
—
|
|
Accounts
payable
|
|
889,139
|
|
1,311,807
|
|
190,794
|
|
Advances from
customers
|
|
258,965
|
|
436,710
|
|
63,517
|
|
Income tax
payable
|
|
221,926
|
|
405,683
|
|
59,004
|
|
Amounts due to
related parties
|
|
114,913
|
|
132,216
|
|
19,230
|
|
Acquisition
consideration payable
|
|
130,004
|
|
19,581
|
|
2,848
|
|
Dividends
payable
|
|
—
|
|
1,699
|
|
247
|
|
Other current
liabilities
|
|
2,281,067
|
|
2,833,769
|
|
412,157
|
|
Total current
liabilities
|
|
4,146,014
|
|
5,141,465
|
|
747,797
|
|
Deferred tax
liabilities
|
|
157,320
|
|
157,940
|
|
22,971
|
|
Acquisition
consideration payable
|
|
22,942
|
|
22,942
|
|
3,337
|
|
Other non-current
liabilities
|
|
60,045
|
|
90,961
|
|
13,231
|
|
TOTAL
LIABILITIES
|
|
4,386,321
|
|
5,413,308
|
|
787,336
|
|
|
|
As of
|
|
|
|
December 31,
2017
|
|
December
31, 2018
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares
(US$0.0001 par value; 10,000,000,000 shares authorized,
731,406,440 shares issued and 710,804,716 shares
outstanding as of
December 31, 2017; 811,267,551 shares
issued and 785,463,859 shares
outstanding as of December 31, 2018)
|
|
471
|
|
523
|
|
76
|
|
Additional paid-in
capital
|
|
15,975,979
|
|
24,137,681
|
|
3,510,680
|
|
Treasury shares, at
cost
|
|
(914,611)
|
|
(1,545,077)
|
|
(224,722)
|
|
Retained
earnings
|
|
6,669,370
|
|
11,052,395
|
|
1,607,504
|
|
Accumulated other
comprehensive (loss) income
|
|
(295,896)
|
|
571,716
|
|
83,153
|
|
ZTO Express
(Cayman) Inc. shareholders' equity
|
|
21,435,313
|
|
34,217,238
|
|
4,976,691
|
|
Noncontrolling
interests
|
|
6,004
|
|
52,311
|
|
7,608
|
|
Total
Equity
|
|
21,441,317
|
|
34,269,549
|
|
4,984,299
|
|
TOTAL LIABILITIES
AND EQUITY
|
|
25,827,638
|
|
39,682,857
|
|
5,771,635
|
|
Summary of
Unaudited Consolidated Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating
activities
|
|
1,371,547
|
|
1,802,342
|
|
262,140
|
|
3,630,684
|
|
4,404,051
|
|
640,543
|
|
Net cash used in
investing
activities[6]
|
|
(722,335)
|
|
(3,330,041)
|
|
(484,334)
|
|
(8,294,547)
|
|
(12,872,633)
|
|
(1,872,247)
|
|
Net cash provided
by/(used in)
financing activities[7]
|
|
(201,873)
|
|
(153,225)
|
|
(22,286)
|
|
(1,061,558)
|
|
7,042,122
|
|
1,024,234
|
|
Effect of exchange rate
changes
on cash, cash equivalents and
restricted cash
|
|
(111,894)
|
|
32,519
|
|
4,730
|
|
(424,000)
|
|
275,680
|
|
40,096
|
|
Net increase/(decrease)
in cash,
cash equivalents and restricted
cash
|
|
335,445
|
|
(1,648,405)
|
|
(239,750)
|
|
(6,149,421)
|
|
(1,150,780)
|
|
(167,374)
|
|
Cash, cash equivalents
and
restricted cash at beginning of
period
|
|
5,438,289
|
|
6,271,359
|
|
912,131
|
|
11,923,155
|
|
5,773,734
|
|
839,755
|
|
Cash, cash equivalents
and
restricted cash at end of period
|
|
5,773,734
|
|
4,622,954
|
|
672,381
|
|
5,773,734
|
|
4,622,954
|
|
672,381
|
|
[6] The amount of cash used in
investing activities mainly includes purchases of the fixed term
bank deposits with an original maturity of three
months to one year. For the fourth quarter of 2017 and 2018, the
amounts of net cashflow out for purchasing the short-term
investment are
approximately RMB2,472.4 million and RMB1,701.6 million (US$247.5
million) of such deposits, respectively.
|
[7] The amount of cash
provided by/(used in) financing activities mainly includes the
proceeds from Alibaba's investment, which are
approximately RMB7.6 billion (US$1.2 billion) received before June
30, 2018, while the rest of approximately RMB1.3 billion
(US$0.2
billion) were received in early July 2018.
|
Reconciliations of
GAAP and Non-GAAP Results
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
(in thousands, except for share and per share data)
|
|
|
|
|
|
Net income
|
|
1,221,874
|
|
1,278,854
|
|
186,003
|
|
3,158,900
|
|
4,387,912
|
|
638,196
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expense
|
|
13,492
|
|
10,876
|
|
1,582
|
|
40,727
|
|
249,478
|
|
36,285
|
|
Impairment of
investment in equity
investee
|
|
30,000
|
|
—
|
|
—
|
|
30,000
|
|
—
|
|
—
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal of
equity
investees and subsidiary, net of
income taxes
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(436,277)
|
|
(63,454)
|
|
Adjusted net
income
|
|
1,265,366
|
|
1,289,730
|
|
187,585
|
|
3,229,627
|
|
4,201,113
|
|
611,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
1,221,874
|
|
1,278,854
|
|
186,003
|
|
3,158,900
|
|
4,387,912
|
|
638,196
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
135,002
|
|
243,940
|
|
35,480
|
|
522,853
|
|
809,005
|
|
117,665
|
|
Amortization
|
|
12,760
|
|
9,641
|
|
1,402
|
|
37,512
|
|
44,713
|
|
6,503
|
|
Interest
expenses
|
|
2,452
|
|
—
|
|
—
|
|
15,668
|
|
780
|
|
113
|
|
Income tax
expenses
|
|
8,759
|
|
222,639
|
|
32,381
|
|
646,361
|
|
929,133
|
|
135,137
|
|
EBITDA
|
|
1,380,847
|
|
1,755,074
|
|
255,266
|
|
4,381,294
|
|
6,171,543
|
|
897,614
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expense
|
|
13,492
|
|
10,876
|
|
1,582
|
|
40,727
|
|
249,478
|
|
36,285
|
|
Impairment of
investment in equity
investee
|
|
30,000
|
|
—
|
|
—
|
|
30,000
|
|
—
|
|
—
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal of
equity
investees and subsidiary, before
income taxes
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(562,637)
|
|
(81,832)
|
|
Adjusted
EBITDA
|
|
1,424,339
|
|
1,765,950
|
|
256,848
|
|
4,452,021
|
|
5,858,384
|
|
852,067
|
|
View original
content:http://www.prnewswire.com/news-releases/zto-reports-fourth-quarter-and-fiscal-year-2018-unaudited-financial-results-300811046.html
SOURCE ZTO Express (Cayman) Inc.