HANGZHOU, China, Nov. 9, 2018 /PRNewswire/ -- BEST Inc. (NYSE:
BSTI) ("BEST" or the "Company"), a leading smart supply chain and
logistics solutions and services provider in China, today announced its unaudited financial
results for the quarter ended September 30,
2018.
"BEST continued to generate strong growth in the third quarter,
benefitting greatly from demand for our integrated supply chain
services and solutions as a result of healthy e-commerce and New
Retail growth, further industry consolidation, and our sharp
strategic focus and execution," said Johnny
Chou, Chairman and Chief Executive Officer of BEST. "Despite
competitive market conditions, our growth continued to outpace the
market thanks to our superior platform that is better equipped to
capture the opportunities created by the trend towards digital
commerce. BEST's platform, with its robust technology and
nationwide services networks, enriches the lives of consumers by
making possible an omni-channel shopping experience and empowers
businesses by providing one-stop total supply chain
solutions."
"We continued with our solid progress on the path to
profitability while prioritizing growth and market shares gain. I
am pleased to announce that we delivered another solid quarter. Our
revenue increased by 34% year-over-year to RMB7.2 billion, with our businesses demonstrating
strong growth momentum," said Alice
Guo, BEST's Chief Accounting Officer and Senior Vice
President of Finance. "For the second consecutive quarter, BEST
recorded positive EBITDA and Adjusted EBITDA. Moreover, net loss
was reduced by 89% year-over-year to RMB51
million, and non-GAAP net loss was reduced by 45%
year-over-year to RMB101 million. As
we enter fourth quarter peak season, we will continue to execute
our strategy of focusing on strong top-line growth and operational
efficiencies enhancement to drive margin
expansion."
FINANCIAL HIGHLIGHTS
For the Quarter Ended September 30,
2018:
- Revenue was RMB7,189.3
million (US$1,046.8 million),
an increase of 34.3% year-over-year ("YoY").
- Express Service Revenue increased 33.4% YoY to RMB4,357.5 million (US$634.5 million).
- Freight Service Revenue increased 25.0% YoY to RMB1,093.3 million (US$159.2 million).
- Supply Chain Management Service Revenue increased 27.3% YoY to
RMB491.6 million (US$71.6 million).
- Store+ Service Revenue increased 15.3% YoY to
RMB885.5 million (US$128.9 million).
- Others (1) Service Revenues increased 499.9% YoY to
RMB361.3 million (US$52.6 million).
- Gross Profit was RMB389.9
million (US$56.8 million), an
increase of 93.3% YoY; and Gross Profit Margin was 5.4%, an
improvement of 1.6 percentage points YoY.
- Net Loss was RMB51.1
million (US$7.4 million), a
decrease of 89.1% YoY; and Non-GAAP Net Loss
(2)(3) was RMB101.4
million (US$14.8 million), a
decrease of 44.9% YoY.
- Diluted EPS (4) was negative RMB0.13 (US$0.02)
and Non-GAAP diluted EPS (3)(5) was negative
RMB0.26 (US$0.04).
- EBITDA (3)(6) was RMB54.7 million (US$8.0
million) and Adjusted EBITDA (3)(6) was
RMB1.3 million (US$0.2 million).
- Net Cash Generated From Operating Activities was
RMB86.3 million (US$12.6 million).
BUSINESS HIGHLIGHTS (7)
BEST Express:
Table 1 - BEST
Express Key Operating Metrics
|
|
|
Three Months
Ended
|
%
Change
|
|
September 30,
2017
|
September 30,
2018
|
YoY
|
Parcel Volume (in
'000)
|
1,010,512
|
1,371,055
|
35.7%
|
BEST Express Market
Share (8) (%)
|
10.0%
|
10.8%
|
0.8ppts
|
Gross Profit per
Parcel (RMB)
|
0.13
|
0.16
|
22.3%
|
Average Revenue Per
Parcel (RMB)
|
3.23
|
3.18
|
(1.7%)
|
Average Cost Per
Parcel (RMB)
|
3.10
|
3.02
|
(2.7%)
|
Hubs & Sortation
Centers (as of period end)
|
153
|
117
|
(23.5%)
|
- Increased parcel volume by 35.7% YoY, approximately 1.4 times
the industry-wide growth rate of 25.6%(9); increased
express market share to 10.8%, compared to 10.0% in the same period
of 2017.
- Improved gross profit per parcel by 22.3% YoY to RMB0.16 (US$0.02),
as the reduction in cost per parcel continued to outpace the
decrease in revenue per parcel.
- Improved operational efficiency by ongoing network
optimization, investment in automation and digitization:
- Reduced total number of hubs and sortation centers by 23.5% YoY
to 117.
- Continued to invest in and upgrade the automation system in major
hubs and sortation centers. Added eight high-speed automated
sorting lines and 226 dimension & weight scanning systems
during the third quarter of 2018.
- Further improved digital waybill usage to 99.0% from 90.4% in the
same quarter of 2017.
BEST Freight:
Table 2 -
BEST Freight Key Operating Metrics
|
|
|
Three Months
Ended
|
%
Change
|
|
September 30,
2017
|
September 30,
2018
|
YoY
|
Freight Volume (Tonne
in '000)
|
1,194
|
1,474
|
23.5%
|
Average Revenue per
Tonne (RMB)
|
732.3
|
741.7
|
1.3%
|
Average Cost Per
Tonne (RMB)
|
768.9
|
707.5
|
(8.0%)
|
Hubs & Sortation
Centers (as of period end)
|
133
|
120
|
(9.8%)
|
Last-mile Service
Stations (as of period end)
|
7,590
|
11,698
|
54.1%
|
- Achieved solid growth with freight revenue increased by 25.0%
YoY and freight volume increased by 23.5% YoY.
- Improved gross profit margin by 9.6 percentage points YoY to
4.6%. Focused on growing e-commerce related transactions, which
resulted in an increase in revenue per tonne and a decrease in cost
per tonne.
- Continued to optimize freight network to improve operating
efficiency and reduce costs:
- Reduced total number of hubs and sortation centers by 9.8% YoY to
120, which contributed to lower transportation, labor, lease costs
and shortened delivery time.
- Expanded service coverage significantly by increasing the total
number of franchisees-operated last-mile service stations by 54.1%
YoY to 11,698.
(1) Others include BEST Global,
BEST Capital, BEST UCargo and other new initiatives.
|
(2) Non-GAAP net loss represents
net loss excluding share-based compensation expense, amortization
of intangible assets resulting from business acquisitions, and fair
value change of equity investments.
|
(3) See the sections entitled "Use
of Non-GAAP Financial Measures" and "Reconciliations of Non-GAAP
Measures to the Nearest Comparable GAAP Measures" for more
information about the non-GAAP measures referred to within this
results announcement.
|
(4) Diluted earnings per share, or
Diluted EPS, is calculated by dividing net profit attributable to
ordinary shareholders as adjusted for the effect of dilutive
ordinary equivalent shares, if any, by the weighted average number
of ordinary and dilutive ordinary equivalent shares outstanding
during the period.
|
(5)
Non-GAAP diluted earnings per share, or non-GAAP diluted EPS,
represents diluted earnings per share excluding share-based
compensation expense, amortization of intangible assets resulting
from business acquisitions, and fair value change of equity
investments.
|
(6) EBITDA represents net loss
excluding depreciation, amortization, interest expense and income
tax expense and minus interest income. Adjusted EBITDA represents
EBITDA excluding share-based compensation expenses and fair value
change of equity investments.
|
(7) All numbers presented have
been rounded to the nearest integer, tenth, or hundredth, and Year
Over Year comparisons are based on figures before
rounding.
|
(8) 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.
|
(9) Based on data published
by State Post Bureau of the PRC.
- For July 2018 data, see State Post Bureau of the PRC Published
Post Industry Operation Statistics for July 2018, State Post Bureau
of the PRC, August 14, 2018, available in Chinese at
http://www.spb.gov.cn/xw/dtxx_15079/201808/t20180814_1628704.html
- For August 2018 data, see State Post Bureau of the PRC Published
Post Industry Operation Statistics for August 2018, State Post
Bureau of the PRC, September 12, 2018, available in Chinese at
http://www.spb.gov.cn/xw/dtxx_15079/201809/t20180912_1654656.html
- For September 2018 data, see State Post Bureau of the PRC
Published Post Industry Operation Statistics for September 2018,
State Post Bureau of the PRC, October 13, 2018, available in
Chinese at
http://www.spb.gov.cn/xw/dtxx_15079/201810/t20181015_1674326.html
|
BEST Supply Chain Management:
- Increased the total number of orders fulfilled by Cloud OFCs by
31.4% YoY to 56.6 million, of which the total number of orders
fulfilled by franchised Cloud OFCs increased by 81.1% YoY to 19.0
million.
- Increased the total number of Cloud OFCs by 4.6% YoY to 341;
increased gross floor area ("GFA") of Cloud OFCs by 11.6% YoY from
2.4 million square meters as of September
30, 2017 to approximately 2.6 million square meters as of
September 30, 2018, of which 1.0
million square meters were owned and operated by franchised
OFCs.
BEST Store+:
- Continued to invest in and expand Store+ network.
The number of membership stores increased 19.3% YoY to 414,923 as
of September 30, 2018.
- Focused on opening branded stores. The number of branded stores
including BEST Neighbor and WoWo increased by 258.4% YoY to 1,308
as of September 30, 2018.
- Increased the total number of store orders fulfilled by 17.2%
YoY to 934,936, representing over 18,000 SKUs.
Others:
- BEST UCargo
- Increased the number of registered agents by approximately 69.0%
YoY to over 4,200 as of September 30,
2018 from approximately 2,500 as of September 30, 2017, and the number of registered
trucks by approximately 61.0% YoY to over 241,000 as of
September 30, 2018 from approximately
150,000 as of September 30, 2017.
- Increased the cumulative total number of transactions by
approximately 309.0% YoY to over 135,000 as of September 30, 2018, with revenue generated from
external customers increased significantly to RMB256.6 million (US$37.4
million) in the quarter ended September 30, 2018.
- BEST Global - continued to develop cross border
solutions and broaden service offerings in international markets.
Initiated new coverage in India
and Indonesia through partners. It
serves 15 countries and regions outside of Mainland China in the
quarter ended September 30,
2018.
- BEST Capital - continued to expand its financial
services to support the BEST ecosystem. As of September 30, 2018, it had provided cumulative
total financing solutions to over 6,000 trucks, an increase of over
50.0% YoY.
FINANCIAL RESULTS
Revenue
The following table sets forth a breakdown of revenue by
business segment for the periods indicated.
Table 3 -
Breakdown of Revenue by Business Segment
|
|
|
Three Months
Ended
|
|
|
September 30,
2017
|
September 30,
2018
|
|
(In '000, Except
for %)
|
RMB
|
% of
Revenue
|
RMB
|
US$
|
% of
Revenue
|
% Change
YoY
|
Express
|
3,265,688
|
61.0%
|
4,357,527
|
634,468
|
60.6%
|
33.4%
|
Freight
|
874,352
|
16.3%
|
1,093,331
|
159,192
|
15.2%
|
25.0%
|
Supply Chain
Mgmt.
|
386,244
|
7.2%
|
491,633
|
71,583
|
6.9%
|
27.3%
|
Store+
|
767,903
|
14.4%
|
885,518
|
128,934
|
12.3%
|
15.3%
|
Others
|
60,225
|
1.1%
|
361,293
|
52,605
|
5.0%
|
499.9%
|
Revenue
|
5,354,412
|
100.0%
|
7,189,302
|
1,046,782
|
100.0%
|
34.3%
|
- Express Service Revenue increased by 33.4% YoY to RMB4,357.5 million (US$634.5 million) from RMB3,265.7 million, primarily due to 35.7% YoY
increase in parcel volume.
- Freight Service Revenue increased by 25.0% YoY to RMB1,093.3 million (US$159.2 million) from RMB874.4 million, primarily due to 23.5% YoY
increase in freight volume and 1.3% YoY increase in average revenue
per tonne.
- Supply Chain Management Service Revenue increased by 27.3% YoY
to RMB491.6 million (US$71.6 million) from RMB386.2 million, primarily due to an increase in
fulfillment and transportation revenue from both existing and new
customers.
- BEST Store+ Service Revenue increased by 15.3% YoY
to RMB885.5 million (US$128.9 million) from RMB767.9 million, primarily due to an increase in
merchandise sales to membership and branded stores.
- Others Service Revenues increased by 499.9% YoY to RMB361.3 million (US$52.6
million) from RMB60.2 million,
primarily due to increased revenue generated from BEST UCargo's
external customers, BEST Global's expanded operations and BEST
Capital's financing solutions to ecosystem participants.
Costs and Expenses
The following table sets forth a breakdown of cost of revenue by
business segment for the periods indicated.
Table 4 -
Breakdown of Cost of Revenue by Business Segment
|
|
|
Three Months
Ended
|
% of
Revenue
Change
YoY
|
|
September 30,
2017
|
September 30,
2018
|
(in '000, Except
for %)
|
RMB
|
% of
Revenue
|
RMB
|
US$
|
% of
Revenue
|
Express
|
(3,134,376)
|
96.0%
|
(4,139,558)
|
(602,731)
|
95.0%
|
(1.0ppts)
|
Freight
|
(918,121)
|
105.0%
|
(1,042,820)
|
(151,838)
|
95.4%
|
(9.6ppts)
|
Supply Chain
Mgmt.
|
(357,675)
|
92.6%
|
(472,045)
|
(68,731)
|
96.0%
|
3.4ppts
|
Store+
|
(703,311)
|
91.6%
|
(814,299)
|
(118,564)
|
92.0%
|
0.4ppts
|
Others
|
(39,234)
|
65.1%
|
(330,659)
|
(48,145)
|
91.5%
|
26.4ppts
|
Cost of
Revenue
|
(5,152,717)
|
96.2%
|
(6,799,381)
|
(990,009)
|
94.6%
|
(1.6ppts)
|
Cost of Revenue was RMB6,799.4
million (US$990.0 million) or
94.6% of revenue in the quarter ended September 30, 2018, compared to RMB5,152.7 million or 96.2% of revenue in the
same quarter of 2017. The reduction of 1.6 percentage points in
cost of revenue as a percentage of revenue was primarily
attributable to increased operating leverage.
The following table sets forth a breakdown of operating expenses
and adjusted operating expenses by category for the
periods indicated.
Table 5 -
Breakdown of Operating Expenses and Adjusted Operating Expenses by
Category
|
|
|
Three Months
Ended
|
% of
Revenue
Change
YoY
|
|
September 30,
2017
|
September 30,
2018
|
(in '000, Except
for %)
|
RMB
|
% of
Revenue
|
RMB
|
US$
|
% of
Revenue
|
Selling
Expenses
|
(213,547)
|
4.0%
|
(235,681)
|
(34,316)
|
3.3%
|
(0.7ppts)
|
including SBC Expenses
|
(13,172)
|
0.3%
|
(1,837)
|
(267)
|
0.0%
|
(0.3ppts)
|
Adjusted Selling
Expenses
|
(200,375)
|
3.7%
|
(233,844)
|
(34,048)
|
3.3%
|
(0.4ppts)
|
General and
Administrative Expenses
|
(405,925)
|
7.6%
|
(264,784)
|
(38,553)
|
3.7%
|
(3.9ppts)
|
including SBC Expense
|
(237,232)
|
4.4%
|
(20,500)
|
(2,985)
|
0.3%
|
(4.1ppts)
|
Adjusted General and
Administrative Expenses
|
(168,693)
|
3.2%
|
(244,284)
|
(35,568)
|
3.4%
|
0.2ppts
|
Research and
Development Expenses
|
(56,155)
|
1.0%
|
(42,922)
|
(6,250)
|
0.6%
|
(0.4ppts)
|
including SBC Expense
|
(24,268)
|
0.4%
|
(2,240)
|
(326)
|
0.0%
|
(0.4ppts)
|
Adjusted Research and
Development Expenses
|
(31,887)
|
0.6%
|
(40,682)
|
(5,923)
|
0.6%
|
0.0ppts
|
Selling Expenses was RMB235.7
million (US$34.3 million) or
3.3% of revenue in the quarter ended September 30, 2018, compared to RMB213.5 million or 4.0% of revenue in the same
quarter of 2017. The decrease in selling expenses as a percentage
of revenue was primarily attributable to improved operating
efficiencies and the reduction in share-based compensation ("SBC")
expense.
General and Administrative Expenses was RMB264.8 million (US$38.6
million) or 3.7% of revenue in the quarter ended
September 30, 2018, compared to
RMB405.9 million or 7.6% of revenue
in the same quarter of 2017. The significant decrease in general
and administrative expenses as a percentage of revenue was
primarily attributable to the reduction in SBC expense, partially
offset by investments in the growth of the Company's
operations.
Research and Development Expenses was RMB42.9 million (US$6.3
million) or 0.6% of revenue in the quarter ended
September 30, 2018, compared to
RMB56.2 million, or 1.0% of revenue
in the same quarter of 2017. The decrease in research and
development expenses as a percentage of revenue was primarily
attributable to the reduction in SBC expense.
SBC Expense included in the cost and expense items above
in the quarter ended September 30,
2018 was RMB25.2 million
(US$3.7 million), compared to
RMB280.7 million in the same quarter
of 2017. In the third quarter of 2018, approximately RMB0.6 million (US$0.09
million) was allocated to cost of revenue, RMB1.8 million (US$0.3
million) was allocated to selling expenses, RMB20.5 million (US$3.0
million) was allocated to general and administrative
expenses, and RMB2.2 million
(US$0.3 million) was allocated to
research and development expenses.
Net Loss and Non-GAAP Net Loss
Net Loss in the quarter ended September
30, 2018 was RMB51.1 million
(US$7.4 million), a decrease of 89.1%
compared to RMB466.6 million in the
same quarter of 2017. Excluding the impact of SBC expense,
amortization of intangible assets resulting from business
acquisitions, and fair value change of equity investments, non-GAAP
Net Loss in the quarter ended September 30,
2018 was RMB101.4 million
(US$14.8 million), a decrease of
44.9% compared to RMB183.8 million in
the same quarter of 2017.
In the quarter ended September 30,
2018, BEST recorded RMB78.5
million (US$11.4 million) in
other income, due to fair value change of the Company's equity
investment in an AI solutions provider.
Diluted EPS and non-GAAP diluted EPS
Diluted EPS in the quarter ended September 30, 2018 was negative RMB0.13 (US$0.02)
based on a weighted average of 387.1 million diluted shares
outstanding during the quarter. Excluding SBC expense, amortization
of intangible assets resulting from business acquisitions, and fair
value change of equity investments, non-GAAP diluted EPS in the
quarter ended September 30, 2018 was
negative RMB0.26 (US$0.04). A reconciliation of diluted EPS to
non-GAAP diluted EPS is included at the end of this results
announcement.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA was RMB1.3
million (US$0.2 million),
improved from negative RMB 85.6
million in the quarter ended September 30, 2017. Adjusted EBITDA margin was
0.02%, improved from negative 1.6% in the quarter ended
September 30, 2017. The improvement
of RMB87.0 million (US$12.7 million) or 1.6 percentage points was
primarily attributable to strong revenue growth and improved
operating efficiency.
Cash and Cash Equivalents, Restricted Cash and Short-term
Investments
As of September 30, 2018, cash and
cash equivalents, restricted cash and short-term investments were
RMB3,911.4 million (US$569.5 million), compared to RMB4,349.6 million as of June 30, 2018. The decrease in cash and cash
equivalents, restricted cash and short-term investments was
primarily due to CAPEX and investment activities, partially offset
by net cash generated from operating activities.
Cash Flow from Operating Activities
Net Cash Generated from Operating Activities was RMB86.3 million (US$12.6
million) in the quarter ended September 30, 2018, an increase of 162.0%
compared to RMB32.9 million in the
same quarter of 2017.
Capital Expenditures ("CAPEX")
CAPEX was RMB412.2 million
(US$60.0 million), or 5.7% of total
revenue in the quarter ended September 30,
2018, compared to CAPEX of RMB175.6
million, or 3.3% of total revenue, in the same period of
2017. The increase in CAPEX was primarily due to the upgrade of
automation system in major hubs and sortation centers, including
investments in high-speed automated sorting lines and dimension and
weight scanning systems.
Shares Outstanding
As of the date of this press release, the Company had
approximately 387.2 million ordinary shares outstanding
(10). Each ADS represents one Class A ordinary
share.
(10) The total number of shares
outstanding excludes shares reserved for future issuances upon
exercise or vesting of awards granted under the Company's share
incentive plans.
|
FINANCIAL GUIDANCE
Based on current market conditions and current operations,
revenue for the fourth quarter of 2018 is expected to be in the
range of RMB7.9 billion to
RMB8.1 billion; and revenue for full
fiscal year 2018 is expected to be in the range of RMB26.8 billion to RMB27.0
billion. 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 November 9, 2018 (8:30
pm Beijing Time, the same day), to discuss its financial
results and operating performance for the third quarter of
2018.
Participants may access the call by dialing the following
numbers:
United
States:
|
+1-888-317-6003
|
Hong Kong:
|
800-963976 or
+852-5808-1995
|
China:
|
4001-206115
|
International:
|
+1-412-317-6061
|
Participant Elite
Entry Number:
|
8893478
|
A replay of the conference call will be accessible through
November 16, 2018 by dialing the
following numbers:
United
States:
|
+1-877-344-7529
|
International:
|
+1-412-317-0088
|
Replay Access
Code:
|
10125776
|
Please visit the Company's investor relations website
http://ir.best-inc.com/ on November 9,
2018 to view the earnings release prior to the conference
call. A live and archived webcast of the conference call and an
accompanying slide presentation will be available at the
same site.
ABOUT BEST INC.
BEST Inc. is a leading smart supply chain and logistics
solutions and services provider. BEST's mission is to empower
businesses and enrich the lives of consumers by leveraging
technology and business model innovation to create a smarter, more
efficient supply chain. For more information, please visit:
http://www.best-inc.com/en/.
For investor and media inquiries, please contact:
For Investors:
Kobe Ge
ir@best-inc.com
SAFE HARBOR STATEMENT
This announcement contains forward-looking statements. These
statements are made under the "safe harbor" provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as
"will," "expects," "anticipates," "future," "intends," "plans,"
"believes," "estimates" and similar statements. Among other things,
the business outlook and quotations from management in this
announcement, as well as BEST's strategic and operational plans,
contain forward-looking statements. BEST may also make written or
oral forward-looking statements in its periodic reports to the U.S.
Securities and Exchange Commission (the "SEC"), in its annual
report to shareholders, in press releases and other written
materials and in oral statements made by its officers, directors or
employees to third parties. Statements that are not historical
facts, including statements about BEST's beliefs and expectations,
are forward-looking statements. Forward-looking statements involve
inherent risks and uncertainties. A number of factors could cause
actual results to differ materially from those contained in any
forward-looking statement, including but not limited to the
following: BEST's goals and strategies; BEST's future business
development, results of operations and financial condition; BEST 's
ability to maintain and enhance its ecosystem; BEST 's ability to
continue to innovate, meet evolving market trends, adapt to
changing customer demands and maintain its culture of innovation;
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, adjusted EBITDA margin, EBITDA, adjusted selling
expenses, adjusted general and administrative expenses, adjusted
research and development expenses, and non-GAAP diluted EPS, as
supplemental measures in the evaluation of the Company's operating
results and in the Company's financial and operational
decision-making. The Company believes these non-GAAP financial
measures that help identify underlying trends in the Company's
business that could otherwise be distorted by the effect of the
expenses and gains that the Company includes in loss from
operations and net loss. The Company believes that these non-GAAP
financial measures provide useful information about its operating
results, enhance the overall understanding of its past performance
and future prospects and allow for greater visibility with respect
to key metrics used by the Company's management in its financial
and operational decision-making. The presentation of these non-GAAP
financial measures is not intended to be considered in isolation or
as a substitute for the financial information prepared and
presented in accordance with U.S. GAAP. For more information on
these non-GAAP financial measures, please see the table captioned
"Reconciliations of Non-GAAP Measures to the Nearest Comparable
GAAP Measures" in the results announcement.
The non-GAAP financial measures are provided as additional
information to help investors compare business trends among
different reporting periods on a consistent basis and to enhance
investors' overall understanding of the Company's current financial
performance and prospects for the future. These non-GAAP financial
measures should be considered in addition to results prepared in
accordance with U.S. GAAP, but should not be considered a
substitute for, or superior to, U.S. GAAP results. In addition, the
Company's calculation of the non-GAAP financial measures may be
different from the calculation used by other companies, and
therefore comparability may be limited.
BEST INC.
Summary of
Unaudited Consolidated Income Statements
|
(In
Thousands)
|
|
|
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2017
|
2018
|
2017
|
2018
|
|
RMB
|
RMB
|
US$
|
RMB
|
RMB
|
US$
|
Revenue
|
|
|
|
|
|
|
Express
|
3,265,688
|
4,357,527
|
634,468
|
8,438,794
|
11,759,488
|
1,712,214
|
Freight
|
874,352
|
1,093,331
|
159,192
|
2,214,378
|
2,886,028
|
420,214
|
Supply Chain
Management
|
386,244
|
491,633
|
71,583
|
1,071,434
|
1,388,662
|
202,193
|
Store+
|
767,903
|
885,518
|
128,934
|
1,634,291
|
2,229,436
|
324,612
|
Others
|
60,225
|
361,293
|
52,605
|
99,661
|
661,783
|
96,357
|
Total
Revenue
|
5,354,412
|
7,189,302
|
1,046,782
|
13,458,558
|
18,925,397
|
2,755,590
|
Cost of
Revenue
|
|
|
|
|
|
|
Express
|
(3,134,376)
|
(4,139,558)
|
(602,731)
|
(8,277,222)
|
(11,283,283)
|
(1,642,878)
|
Freight
|
(918,121)
|
(1,042,820)
|
(151,838)
|
(2,397,647)
|
(2,798,694)
|
(407,498)
|
Supply Chain
Management
|
(357,675)
|
(472,045)
|
(68,731)
|
(989,480)
|
(1,311,021)
|
(190,888)
|
Store+
|
(703,311)
|
(814,299)
|
(118,564)
|
(1,535,027)
|
(2,038,955)
|
(296,878)
|
Others
|
(39,234)
|
(330,659)
|
(48,145)
|
(61,970)
|
(576,363)
|
(83,920)
|
Total Cost of
Revenue
|
(5,152,717)
|
(6,799,381)
|
(990,009)
|
(13,261,346)
|
(18,008,316)
|
(2,622,062)
|
Gross
Profit
|
201,695
|
389,921
|
56,773
|
197,212
|
917,081
|
133,528
|
Selling
Expenses
|
(213,547)
|
(235,681)
|
(34,316)
|
(487,239)
|
(655,775)
|
(95,483)
|
General and
Administrative
Expenses
|
(405,925)
|
(264,784)
|
(38,553)
|
(717,096)
|
(747,181)
|
(108,792)
|
Research and
Development Expenses
|
(56,155)
|
(42,922)
|
(6,250)
|
(110,053)
|
(126,436)
|
(18,409)
|
Total Operating
Expenses
|
(675,627)
|
(543,387)
|
(79,119)
|
(1,314,388)
|
(1,529,392)
|
(222,684)
|
Loss from
Operations
|
(473,932)
|
(153,466)
|
(22,346)
|
(1,117,176)
|
(612,311)
|
(89,156)
|
Interest
Income
|
16,883
|
28,436
|
4,140
|
50,941
|
77,126
|
11,230
|
Interest
Expense
|
(12,078)
|
(18,960)
|
(2,761)
|
(32,799)
|
(53,759)
|
(7,827)
|
Foreign Exchange
Loss
|
(2,619)
|
(375)
|
(55)
|
(7,098)
|
(7,607)
|
(1,108)
|
Other
Income
|
12,592
|
104,620
|
15,233
|
34,934
|
136,042
|
19,808
|
Other
Expense
|
(3,528)
|
(8,362)
|
(1,218)
|
(13,574)
|
(16,658)
|
(2,425)
|
Loss before Income
Tax
and Share of Net
Income/(Loss) of
Equity Investees
|
(462,682)
|
(48,107)
|
(7,007)
|
(1,084,772)
|
(477,167)
|
(69,478)
|
Income Tax
Expense
|
(3,949)
|
(2,971)
|
(433)
|
(6,436)
|
(6,971)
|
(1,015)
|
Loss before Share
of Net
Income/(Loss) of Equity
Investees
|
(466,631)
|
(51,078)
|
(7,440)
|
(1,091,208)
|
(484,138)
|
(70,493)
|
Share of Net
Income/(Loss)
of Equity Investees
|
–
|
24
|
3
|
–
|
(266)
|
(39)
|
Net
Loss
|
(466,631)
|
(51,054)
|
(7,437)
|
(1,091,208)
|
(484,404)
|
(70,532)
|
Net Gain/(Loss)
Attributable
to Non-controlling Interests
|
756
|
141
|
21
|
(7)
|
141
|
21
|
Net Loss
Attributable to
BEST Inc.
|
(467,387)
|
(51,195)
|
(7,458)
|
(1,091,201)
|
(484,545)
|
(70,553)
|
|
|
|
|
|
|
|
|
|
|
Summary of
Consolidated Balance Sheets
|
(in
thousands)
|
|
|
|
(Audited)
|
(Unaudited)
|
|
As of
December 31, 2017
|
As of September
30, 2018
|
|
RMB
|
RMB
|
US$
|
Assets
|
|
|
|
Current
Assets
|
|
|
|
Cash and Cash
Equivalents
|
1,240,431
|
610,962
|
88,958
|
Restricted
Cash
|
1,652,653
|
1,135,259
|
165,297
|
Accounts and Notes
Receivables
|
734,252
|
858,658
|
125,023
|
Inventories
|
156,974
|
164,268
|
23,918
|
Prepayments and Other
Current Assets
|
1,459,755
|
1,892,305
|
275,525
|
Short‑term
Investments
|
2,353,663
|
2,082,201
|
303,174
|
Amounts Due from
Related Parties
|
164,894
|
104,943
|
15,280
|
Lease Rental
Receivables
|
193,703
|
388,479
|
56,564
|
Total Current
Assets
|
7,956,325
|
7,237,075
|
1,053,739
|
Non‑current
Assets
|
|
|
|
Property and
Equipment, Net
|
1,307,470
|
1,818,441
|
264,770
|
Intangible Assets,
Net
|
158,556
|
139,636
|
20,331
|
Long‑term
Investments
|
37,167
|
228,334
|
33,246
|
Goodwill
|
448,584
|
457,514
|
66,615
|
Non‑current
Deposits
|
69,125
|
69,186
|
10,074
|
Other Non‑current
Assets
|
62,314
|
46,551
|
6,778
|
Restricted
Cash
|
89,745
|
82,955
|
12,078
|
Lease Rental
Receivables
|
749,243
|
1,114,904
|
162,333
|
Total non‑current
Assets
|
2,922,204
|
3,957,521
|
576,225
|
Total
Assets
|
10,878,529
|
11,194,596
|
1,629,964
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
Liabilities
|
|
|
|
Short‑term Bank
Loans
|
1,216,384
|
1,454,900
|
211,838
|
Accounts and Notes
Payable
|
2,388,393
|
2,326,568
|
338,755
|
Income Tax
Payable
|
629
|
3,356
|
489
|
Customer Advances and
Deposits
|
910,383
|
1,200,973
|
174,865
|
Accrued Expenses and
Other Liabilities
|
1,841,273
|
1,946,259
|
283,380
|
Capital Lease
Obligation
|
7,227
|
2,851
|
415
|
Amounts Due to
Related Parties
|
12,902
|
13,265
|
1,931
|
Total Current
Liabilities
|
6,377,191
|
6,948,172
|
1,011,673
|
Non-current
Liabilities
|
|
|
|
Capital Lease
Obligation
|
1,828
|
872
|
127
|
Deferred Tax
Liabilities
|
31,688
|
29,425
|
4,284
|
Other Non‑current
Liabilities
|
75,327
|
79,126
|
11,521
|
Total Non‑current
Liabilities
|
108,843
|
109,423
|
15,932
|
|
|
|
|
Summary of
Consolidated Balance Sheets (Cont'd)
|
(In
Thousands)
|
|
|
|
|
(Audited)
|
(Unaudited)
|
|
As of
December 31, 2017
|
As of September
30, 2018
|
|
RMB
|
RMB
|
US$
|
Total
Liabilities
|
6,486,034
|
7,057,595
|
1,027,605
|
Shareholders'
Equity
|
|
|
|
Ordinary
Shares
|
24,786
|
25,988
|
3,784
|
Additional Paid‑In
Capital
|
19,240,912
|
19,379,591
|
2,821,723
|
Accumulated
Deficit
|
(14,886,214)
|
(15,395,813)(11)
|
(2,241,673)
|
Accumulated Other
Comprehensive Income
|
12,333
|
124,471
|
18,123
|
BEST Inc.
Shareholders' Equity
|
4,391,817
|
4,134,237
|
601,957
|
Non-controlling
Interests
|
678
|
2,764
|
402
|
Total
Shareholders' Equity
|
4,392,495
|
4,137,001
|
602,359
|
Total Liabilities
and
Shareholders' Equity
|
10,878,529
|
11,194,596
|
1,629,964
|
(11) Including accumulated
accretion to redemption value and deemed dividend in relation to
redeemable convertible preferred shares of RMB9,493,807 and
accumulated loss from operations of RMB5,902,006.
|
Summary of
Unaudited Condensed Consolidated Statements of Cash
Flows
|
(In
Thousands)
|
|
|
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2017
|
2018
|
2017
|
2018
|
|
RMB
|
RMB
|
US$
|
RMB
|
RMB
|
US$
|
Net Cash Generated
from
/(Used in) Operating Activities
|
32,949
|
86,310
|
12,567
|
34,905
|
(91,784)
|
(13,364)
|
Net Cash
Used in
Investing Activities
|
(2,995,362)
|
(1,610,214)
|
(234,452)
|
(4,722,782)
|
(1,343,500)
|
(195,617)
|
Net Cash Generated
from
Financing Activities
|
2,668,388
|
150,667
|
21,938
|
3,151,773
|
230,219
|
33,521
|
Exchange Rate Effect
on Cash
and Cash Equivalents, and
Restricted Cash
|
(22,093)
|
50,150
|
7,302
|
(78,221)
|
51,412
|
7,485
|
Net Decrease in
Cash and
Cash Equivalents, and
Restricted Cash
|
(316,118)
|
(1,323,087)
|
(192,645)
|
(1,614,325)
|
(1,153,653)
|
(167,975)
|
Cash and Cash
Equivalents,
and Restricted Cash at
Beginning of Period
|
2,082,325
|
3,152,263
|
458,978
|
3,380,532
|
2,982,829
|
434,308
|
Cash and Cash
Equivalents,
and Restricted Cash at End
of Period
|
1,766,207
|
1,829,176
|
266,333
|
1,766,207
|
1,829,176
|
266,333
|
RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST
COMPARABLE GAAP MEASURES
The table below sets forth a reconciliation of the Company's net
loss to EBITDA, adjusted EBITDA and adjusted EBITDA margin for the
periods indicated:
Table
6 - Reconciliation of EBITDA, Adjusted EBITDA
and Adjusted EBITDA Margin
|
|
|
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2017
|
2018
|
2017
|
2018
|
(In
'000)
|
RMB
|
RMB
|
US$
|
RMB
|
RMB
|
US$
|
Net
loss
|
(466,631)
|
(51,054)
|
(7,437)
|
(1,091,208)
|
(484,404)
|
(70,532)
|
Add
|
|
|
|
|
|
|
Depreciation &
Amortization
|
101,182
|
112,241
|
16,342
|
262,975
|
329,148
|
47,925
|
Interest
Expense
|
12,078
|
18,960
|
2,761
|
32,799
|
53,759
|
7,827
|
Income Tax
Expense
|
3,949
|
2,971
|
433
|
6,436
|
6,971
|
1,015
|
Subtract
|
|
|
|
|
|
|
Interest
Income
|
(16,883)
|
(28,436)
|
(4,140)
|
(50,941)
|
(77,126)
|
(11,230)
|
EBITDA
|
(366,305)
|
54,682
|
7,959
|
(839,939)
|
(171,652)
|
(24,995)
|
Add
|
|
|
|
|
|
|
Share-based
Compensation Expense
|
280,689
|
25,185
|
3,667
|
280,689
|
81,927
|
11,929
|
Subtract
|
|
|
|
|
|
|
Fair Value Change of
Equity Investments
|
–
|
(78,528)
|
(11,434)
|
–
|
(78,528)
|
(11,434)
|
Adjusted
EBITDA
|
(85,616)
|
1,339
|
192
|
(559,250)
|
(168,253)
|
(24,500)
|
Adjusted EBITDA
Margin
|
(1.6%)
|
0.02%
|
0.02%
|
(4.2%)
|
(0.9%)
|
(0.9%)
|
|
|
|
|
|
|
|
|
|
|
The table below sets forth a reconciliation of the Company's net
loss to non-GAAP net loss, non-GAAP net loss margin for the periods
indicated:
Table
7 - Reconciliation of non-GAAP Net Loss and
Non-GAAP Net Loss Margin
|
|
|
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2017
|
2018
|
2017
|
2018
|
(In
'000)
|
RMB
|
RMB
|
US$
|
RMB
|
RMB
|
US$
|
Net
loss
|
(466,631)
|
(51,054)
|
(7,437)
|
(1,091,208)
|
(484,404)
|
(70,532)
|
Add
|
|
|
|
|
|
|
Share-based
Compensation Expense
|
280,689
|
25,185
|
3,667
|
280,689
|
81,927
|
11,929
|
Amortization of
Intangible
Assets Resulting from
Business Acquisitions
|
2,132
|
3,040
|
443
|
3,553
|
8,991
|
1,309
|
Subtract
|
|
|
|
|
|
|
Fair Value Change
of
Equity Investments
|
–
|
(78,528)
|
(11,434)
|
–
|
(78,528)
|
(11,434)
|
Non-GAAP Net
Loss
|
(183,810)
|
(101,357)
|
(14,761)
|
(806,966)
|
(472,014)
|
(68,728)
|
Non-GAAP Net
Loss Margin
|
(3.4%)
|
(1.4%)
|
(1.4%)
|
(6.0%)
|
(2.5%)
|
(2.5%)
|
|
|
|
|
|
|
|
|
The table below sets forth a reconciliation of the Company's
diluted EPS to non-GAAP diluted EPS for the periods indicated:
Table 8 -
Reconciliation of Diluted EPS and Non-GAAP Diluted
EPS
|
|
|
|
Three Months Ended
September 30,
|
|
2018
|
(In
'000)
|
RMB
|
US$
|
Net loss attributable
to ordinary shareholders
|
(51,195)
|
(7,458)
|
Add
|
|
|
Share-based
Compensation Expense
|
25,185
|
3,667
|
Amortization of
Intangible Assets Resulting from
Business Acquisitions
|
3,040
|
443
|
Subtract
|
|
|
Fair Value Change of
Equity Investments
|
(78,528)
|
(11,434)
|
Non-GAAP net loss
attributable to ordinary
shareholders for computing non-GAAP diluted EPS
|
(101,498)
|
(14,782)
|
Weighted average
diluted shares outstanding during
the quarter
|
387,134,896
|
387,134,896
|
Diluted
EPS
|
(0.13)
|
(0.02)
|
Add
|
|
|
Share-based
Compensation Expense
|
0.06
|
0.01
|
Amortization of
Intangible Assets Resulting from
Business Acquisitions
|
0.01
|
0.00
|
Subtract
|
|
|
Fair Value Change of
Equity Investments
|
(0.20)
|
(0.03)
|
Non-GAAP Diluted
EPS
|
(0.26)
|
(0.04)
|
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SOURCE BEST Inc