BEST Inc. Announces Unaudited Third Quarter 2020 Financial Results


    Company Announces Strategic Refocusing Plan

    HANGZHOU, China, Nov. 20, 2020 /PRNewswire/ -- BEST Inc. (NYSE: BEST) ("BEST" or the "Company"), a leading integrated smart supply chain solutions and logistics services provider in China, today announced its unaudited financial results for the quarter ended September 30, 2020.

    Johnny Chou, Founder, Chairman and Chief Executive Officer of BEST, commented, "We had a challenging third quarter amid intensified industry competition. Our Express segment execution did not meet the fast-changing market dynamics in both operation and pricing strategy, which led to lower volume growth and margin. Facing strong industry headwinds, we are taking steps to make major strategic adjustments and organizational changes to our business, focusing on our core logistics and supply chain management businesses, emphasizing service quality, enhancing operating efficiency, with the goal of putting us back on a path to profitability."

    Gloria Fan, BEST's Chief Financial Officer, commented, "Our third-quarter performance reflects both the challenges and resiliency of our business. Revenue was RMB8.7 billion, relatively stable compared with the same period last year, while our gross margin contracted 5.4 percentage points year-over-year due to a challenging pricing environment that offset our volume growth across multiple business units, resulting in a net loss of RMB640 million. Despite the net loss, we generated net operating cash inflow of RMB115 million during the third quarter and maintained a healthy balance of cash and cash equivalents, restricted cash and short-term investments of RMB4.8 billion."

    FINANCIAL HIGHLIGHTS[1]

    For the Quarter Ended September 30, 2020:

    • Revenue was RMB8,693.3 million (US$1,280.4 million), a decrease of 0.6% year-over-year ("YoY"). The decrease was primarily due to a decrease in average selling price ("ASP") of Express business, partially offset by an increase in Express volume.
    • Gross Profit was RMB37.6 million (US$5.5 million), a decrease of 92.6% YoY compared to gross profit of RMB507.1 million in the same period of 2019. The decrease was primarily due to decreased ASP and increased costs of Express and Freight units. Gross Margin was 0.4%, a decrease of 5.4 percentage points ("ppts") YoY.
    • Net Loss was RMB639.5 million (US$94.2 million), compared to a net loss of RMB6.7 million in the same period of 2019. Non-GAAP Net Loss[2] [3] was RMB612.0 million (US$90.1 million), compared to non-GAAP Net Income of RMB16.7 million in the same period of 2019.
    • Diluted EPS[4] was negative RMB1.64 (US$0.24), compared to negative RMB0.01 in the same period of 2019. Non-GAAP diluted EPS[3] [5] was negative RMB1.57 (US$0.23), compared to RMB0.05 in the same period of 2019.
    • EBITDA[3] [6] was negative RMB462.9 million (US$68.2 million), compared to RMB93.4 million in the same period of 2019. Adjusted EBITDA[3] [6] was negative RMB437.7 million (US$64.5 million), compared to RMB114.3 million in the same period of 2019.

    Strategic Refocusing Plan

    Following a comprehensive review of the Company's business operations, BEST plans to implement extensive strategic adjustments to refocus its core businesses with a view to driving long-term growth and profitability.   

    1.   Core businesses: The Company will focus on its core logistics and supply chain management businesses.

    a)     Express: BEST will refocus its Express business on sustainable long-term growth and profitability by focusing on optimizing its product structure, improving operating efficiency, enhancing service quality and customer experience, and gaining market share.

    b)     Freight: BEST will continue to emphasize the e-commerce aspect of its freight services and solidify the Company's competitive position by expanding its market share, improving operating efficiency and increasing profitability.

    c)     Supply Chain Management: BEST will focus on quality growth and profitability, continue to implement an improved asset-light model and grow the Company's franchised Cloud OFC business.

    2.    Non-core businesses: The Company announced the winding down of Store+ on November 15, 2020. The Company believes that by phasing out Store+, it can eliminate the significant cash-flow requirements associated with this early-stage business, allowing the Company to further prioritize capital allocation towards its core businesses. For its other non-core businesses, including UCargo, Capital and Global, the Company is considering all available strategic options with the goal of improving the Company's profitability to maximize shareholder value.   

    3.    Management: BEST took significant steps to realign its management team to support the refocusing plan for its core businesses. As announced on November 15, 2020, and effective the same day, Mr. Xiaoqing Wang, former general manager of BEST's Jiangsu province branch, assumed the position of vice president, general manager of Express, replacing Mr. Shaohua Zhou, who took up a new role in the Company.

    4.    Cost measures: As part of the company-wide strategic refocusing plan, the Company intends to optimize its SG&A and R&D expenses to focus its resources on core businesses, anticipating estimated cost savings of approximately RMB200 million by the end of 2021. The savings will create a leaner and more focused organization by prioritizing expense control as well as optimizing efficiencies across the organization.

    Johnny Chou, Founder, Chairman and Chief Executive Officer of BEST, commented, "After a comprehensive review, we decided to take steps to refocus and streamline our operations, creating a leaner organization with greater financial flexibility. With a continued emphasis on our core capabilities, including Express, Freight and Supply Chain Management, we are evaluating strategic options available for our non-core businesses to eliminate or significantly reduce their capital requirements and capital losses. As we prioritize and deploy capital towards our core businesses, the goal is to improve our business fundamentals and competitive position. We believe with appropriate adjustments to our organization and cost structure, we can be on a path to profitability in the near future.

    "As we look ahead, we remain confident in the strength of demand driven by e-commerce for integrated smart supply chain solutions and logistics services. We aim to achieve strong growth for Express and Freight, while seeking to further integrate our core business units. We expect this integration to create more cross-selling opportunities and maximize revenue and cost synergies, while also allowing us to focus on enhancing our product structure, stability and flexibility of our network, quality of services and overall operating efficiencies, which, taken as a whole, will enable BEST to deliver long-term value for our shareholders," concluded Mr. Chou.

    BUSINESS HIGHLIGHTS[7]

    Core Logistics and Supply Chain

    BEST Express – The Express segment execution did not meet the fast-changing market dynamics in both operation and pricing strategy, which led to lower volume growth and margin. Parcel volume increased by 24.8% YoY, representing market share of 10.6% during the quarter, which was 0.1 ppt lower compared with the second quarter. Gross margin contracted by 7.2 ppts due to an ASP decline of 21.9% YoY, partially offset by a decrease in average cost per parcel of 15.9% YoY. 

    BEST Freight – Freight continued its strong growth and achieved a growth rate higher than the industry average. Freight volume increased by 30.7% YoY in the third quarter of 2020. Its gross margin declined 5.3 ppts YoY, primarily due to a pricing lag after the government reinstated highway tolls in the second quarter. Average cost per tonne decreased by 12.6% YoY while ASP declined by 17.3% YoY.

    BEST Supply Chain Management – Supply Chain Management focused on expanding the franchised Cloud OFC business, while targeting projects with higher margins and clients with strong credit profiles. Its gross margin decreased by 4.0 ppts YoY to 4.4%, primarily due to high cost structures associated with legacy key account customers, which are in the process of being terminated. The total number of orders fulfilled by Cloud OFCs increased by 18.3% YoY to 102.2 million in the third quarter of 2020, of which the total number of orders fulfilled by franchised Cloud OFCs increased by 32.0% YoY to 53.5 million. The number of franchised OFCs increased by 23.2% YoY to 345.

    BEST UCargo – The number of registered drivers on the UCargo mobile app increased by 84.5% YoY to 288,322. The total number of transactions on the trucking brokerage platform increased by 37.2% YoY to 233,480.

    BEST Capital – As of September 30, 2020, BEST Capital had provided financing solutions to 13,607 trucks in total, a quarter-over-quarter ("QoQ") increase of 10.0% compared to June 30, 2020.

    BEST Store+

    The Store+ business continued to execute on its strategy of partnership model and enhancing order quality, allowing it to improve gross margin and reduce losses. Gross margin increased by 2.9 ppts YoY to 13.4%, while adjusted EBITDA margin improved by 1.8 ppts YoY to negative 9.5%. Despite these improving results, we decided to wind down Store+ operations by the end of 2020, except for self-operated WoWo stores, which the Company plans to continue running while evaluating various strategic options.

    BEST Global

    Global continued its strong momentum in Southeast Asia. In the third quarter, parcel volume in Thailand increased by 513.5% YoY to approximately 10 million, while parcel volume in Vietnam increased by 932.4% YoY to 10.3 million. The Company also made progress in expanding its express delivery services in Malaysia, Cambodia and Singapore.

    Key Operational Metrics


    Three Months Ended

    % Change YoY

     

     

    Express Parcel Volume (in '000)

    September 30,
    2018


    September 30,
    2019


    September 30,
    2020


    2019 vs
    2018


    2020 vs
    2019

    1,371,055

    1,890,842

    2,359,773

    37.9%

    24.8%

    Freight Volume (Tonne in '000)

    1,474

    1,885

    2,464


    27.9%

    30.7%

    Supply Chain Management
    Orders Fulfilled (in '000)

    56,572

    86,371

    102,171


    52.7%

    18.3%

    UCargo Number of
    Transactions (in '000)

    136


    170


    233


    25.3%


    37.2%

    Store+ Total Number of Orders
    Fulfilled (in '000)

    935


    903


    820


    (3.4%)


    (9.2%)

    Global Parcel Volume in
    Southeast Asia (in '000)

    -


    2,607


    20,754


    -


    696.0%

     

    FINANCIAL RESULTS

    For the Quarter Ended September 30, 2020:

    Revenue

    The following table sets forth a breakdown of revenue by business segment for the periods indicated.

    Table 1 – Breakdown of Revenue by Business Segment



    Three Months Ended



    September 30, 2019


    September 30, 2020



    (In '000, except for %)

    RMB

    % of
    Revenue


    RMB

    US$

    % of
    Revenue


    % Change
    YoY

    Core logistics and supply chain:

    Express

    5,209,139

    59.5%


    5,076,101

    747,629

    58.5%


    (2.6%)

    Freight

    1,375,411

    15.7%


    1,487,654

    219,108

    17.1%


    8.2%

    Supply Chain Management

    452,328

    5.2%


    452,691

    66,674

    5.2%


    0.1%

    UCargo

    702,150

    8.0%


    688,951

    101,472

    7.9%


    (1.9%)

    Capital

    48,672

    0.6%


    54,725

    8,060

    0.6%


    12.4%

    Total for core logistics
    and supply chain

    7,787,700

    89.0%


    7,760,122

    1,142,943

    89.3%


    (0.4%)

    Store+

    861,964

    9.9%


    717,115

    105,620

    8.2%


    (16.8%)

    Global

    95,632

    1.1%


    216,017

    31,816

    2.5%


    125.9%

    Total Revenue

    8,745,296

    100%


    8,693,254

    1,280,379

    100%


    (0.6%)

     

    Core Logistics and Supply Chain

    • Express Service Revenue decreased by 2.6% YoY to RMB5,076.1 million (US$747.6 million) from RMB5,209.1 million, primarily due to a 21.9% YoY decrease in ASP per parcel, partially offset by a 24.8% YoY increase in parcel volume. The decrease in ASP is primarily attributable to competitive market dynamics.
    • Freight Service Revenue increased by 8.2% YoY to RMB1,487.7 million (US$219.1 million) from RMB1,375.4 million, primarily due to a 30.7% YoY increase in freight volume, partially offset by a 17.3% YoY decrease in ASP per tonne.
    • Supply Chain Management Service Revenue increased by 0.1% YoY to RMB452.7 million (US$66.7 million) from RMB452.3 million.
    • UCargo Service Revenue decreased by 1.9% YoY to RMB689.0 million (US$101.5 million) from RMB702.2 million, primarily due to discontinuation of several key account customers to minimize credit exposure.
    • Capital Service Revenue increased by 12.4% YoY to RMB54.7 million (US$8.1 million) from RMB48.7 million.

    BEST Store+ Revenue decreased by 16.8% YoY to RMB717.1 million (US$105.6 million) from RMB862.0 million, primarily due to efforts to enhance order quality to improve margins. 

    BEST Global – Revenue increased by 125.9% YoY to RMB216.0 million (US$31.8 million) from RMB95.6 million, primarily due to strong growth in parcel volumes in Southeast Asia.

    Cost of Revenue

    The following table sets forth a breakdown of cost of revenue by business segment for the periods indicated.

    Table 2 – Breakdown of Cost of Revenue by Business Segment



    Three Months Ended


    % of
    Revenue
    Change

    YoY


    September 30, 2019


    September 30, 2020


    (In '000, except for %)

    RMB

    % of
    Revenue


    RMB

    US$

    % of
    Revenue


    Core logistics and supply chain:

    Express

    (4,962,151)

    95.3%


    (5,205,390)

    (766,671)

    102.5%


    7.2 ppt

    Freight

    (1,289,098)

    93.7%


    (1,473,252)

    (216,987)

    99.0%


    5.3 ppt

    Supply Chain Management

    (414,197)

    91.6%


    (432,945)

    (63,766)

    95.6%


    4.0 ppt

    UCargo

    (688,305)

    98.0%


    (675,295)

    (99,460)

    98.0%


    0.0 ppt

    Capital

    (16,522)

    33.9%


    (8,066)

    (1,188)

    14.7%


    (19.2 ppt)

    Total for core logistics
    and supply chain

    (7,370,273)

    94.6%


    (7,794,948)

    (1,148,072)

    100.4%


    5.8 ppt

    Store+

    (771,078)

    89.5%


    (621,059)

    (91,472)

    86.6%


    (2.9 ppt)

    Global

    (96,889)

    101.3%


    (239,653)

    (35,297)

    110.9%


    9.6 ppt

    Total Cost of Revenue

    (8,238,240)

    94.2%


    (8,655,660)

    (1,274,841)

    99.6%


    5.4 ppt

     

    Cost of Revenue was RMB8,655.7 million (US$1,274.8 million) or 99.6% of revenue in the quarter ended September 30, 2020, compared to RMB8,238.2 million or 94.2% of revenue in the same quarter of 2019. The increase of 5.4 ppts in cost of revenue as a percentage of revenue was primarily attributable to increased costs of Express and Freight businesses.

    Table 3 – Breakdown of Average Cost Per Parcel and Average Cost Per Tonne



    Three Months Ended


    % Change

    (in RMB)

    September 30, 2019

    September 30, 2020


    YoY

    Express:





    Average Cost Per Parcel

    2.62

    2.21


    (15.9%)

    Average Transportation Cost Per Parcel

    0.75

    0.65


    (13.3%)

    Average Labor Cost Per Parcel

    0.23

    0.18


    (21.7%)

    Average Lease Cost Per Parcel

    0.10

    0.10


    (0.0%)

    Average Other Cost Per Parcel

    0.11

    0.10


    (9.1%)

    Average Last-mile Cost Per Parcel

    1.43

    1.18


    (17.5%)

    Freight:





    Average Cost Per Tonne

    683.9

    597.8


    (12.6%)

     

    • Express Service Average Cost per Parcel decreased by 15.9%, primarily due to improved operating efficiency and economies of scale.
    • Freight Service Average Cost per Tonne decreased by 12.6% YoY, primarily due to improved operating efficiency, network optimization and economies of scale.

    Gross Profit was RMB37.6 million (US$5.5 million), compared to gross profit of RMB507.1 million in the same quarter of 2019; Gross Margin was 0.4%, compared to 5.8% in the same quarter of 2019.

    Operating Expenses

    The following table sets forth a breakdown of operating expenses and adjusted operating expenses by category for the periods indicated.

    Table 4 – Breakdown of Operating Expenses and Adjusted Operating Expenses by Category



    Three Months Ended




    September 30, 2019


    September 30, 2020


    (In '000, except for %)

    RMB

    % of
    Revenue


    RMB

    US$

    % of
    Revenue


    % of Revenue
    Change
    YoY

    Selling, General and
    Administrative Expenses

    (488,381)

    5.6%


    (612,849)

    (90,263)

    7.0%


    1.4 ppt

        Adjusted for SBC
      Expenses

    (18,166)

    0.2%


    (32,256)

    (4,751)

    0.3%


    0.1 ppt

    Adjusted Selling, General
    and
    Administrative Expenses

    (470,215)

    5.4%


    (580,593)

    (85,512)

    6.7%


    1.3 ppt

    Research and
    Development Expenses

    (64,522)

    0.7%


    (53,361)

    (7,859)

    0.6%


    (0.1 ppt)

        Adjusted for
      SBC Expenses

    (2,291)

    0.0%


    (2,135)

    (314)

    0.0%


    0.0 ppt

    Adjusted Research and
    Development Expenses

    (62,231)

    0.7%


    (51,226)

    (7,545)

    0.6%


    (0.1 ppt)

    Total Operating Expenses

    (552,903)

    6.3%


    (666,210)

    (98,122)

    7.6%


    1.3 ppt

       Adjusted for
        SBC Expenses

    (20,457)

    0.2%


    (34,391)

    (5,065)

    0.3%


    0.1 ppt

    Adjusted Total
    Operating Expenses

    (532,446)

    6.1%


    (631,819)

    (93,057)

    7.3%


    1.2 ppt











     

    Selling, General and Administrative Expenses were RMB612.8 million (US$90.3 million) or 7.0% of revenue in the quarter ended September 30, 2020, compared to RMB488.4 million or 5.6% of revenue in the same quarter of 2019. The increase in selling, general and administrative expenses was primarily attributable to an accrued provision for certain trade receivables and losses on disposal of fixed assets due to an upgrade of Express's equipment.

    Research and Development Expenses were RMB53.4 million (US$7.9 million) or 0.6% of revenue in the quarter ended September 30, 2020, compared to RMB64.5 million, or 0.7% of revenue in the same quarter of 2019. The decrease in research and development expenses was primarily attributable to capitalization of certain research and development expenditure to intangible assets, as well as reduction in travel expenses.

    Share-based Compensation ("SBC") Expenses included in the cost and expense items above in the quarter ended September 30, 2020 were RMB35.0 million (US$5.2 million), compared to RMB21.0 million in the same quarter of 2019. In the third quarter of 2020, RMB0.6 million (US$0.1 million) was allocated to cost of revenue, RMB1.5 million (US$0.2 million) was allocated to selling expenses, RMB30.8 million (US$4.6 million) was allocated to general and administrative expenses, and RMB2.1 million (US$0.3 million) was allocated to research and development expenses.

    Net Loss and Non-GAAP Net Income 

    Net Loss in the quarter ended September 30, 2020 was RMB639.5 million (US$94.2 million), compared to Net Loss of RMB6.7 million in the same period of 2019. Excluding SBC expenses, amortization of intangible assets resulting from business acquisitions and gain from appreciation of investment (if any for a given period), non-GAAP Net Loss in the quarter ended September 30, 2020 was RMB612.0 million (US$90.1 million), compared to non-GAAP Net Income of RMB16.7 million in the same quarter of 2019.

    The following table sets forth a breakdown of non-GAAP net loss for the three months ended September 30, 2020 by segment.

    Table 5 – Breakdown of non-GAAP Net Loss by Segment



    Three Months Ended September 30, 2020




    Core logistics and supply chain







    (In RMB'000)

    Express

    Freight

    Supply Chain

    UCargo

    Capital


    Store+

    Global

    Unallocated[8]

    Total



    Non-GAAP Net
    Income/(Loss)

    (311,199)

    (61,000)

    (36,781)

    (31,368)

    28,447


    (70,013)

    (63,830)

    (66,209)

    (611,953)



     

    Diluted EPS and non-GAAP diluted EPS

    Diluted EPS in the quarter ended September 30, 2020 was negative RMB1.64 (US$0.24), based on a weighted average of 385.4 million diluted shares outstanding during the quarter. This is compared to negative RMB0.01 on a weighted average of 388.8 million diluted shares outstanding in the same period of 2019. Excluding SBC expenses, amortization of intangible assets resulting from business acquisitions and gain from appreciation of investment (if any for a given period), non-GAAP diluted EPS in the quarter ended September 30, 2020 was negative RMB1.57 (US$0.23), compared to RMB0.05 in the same period of 2019. A reconciliation of non-GAAP diluted EPS to diluted EPS is included at the end of this results announcement.

    Adjusted EBITDA and Adjusted EBITDA Margin

    Adjusted EBITDA was negative RMB437.7 million (US$64.5 million), compared to RMB114.3 million in the quarter ended September 30, 2019. Adjusted EBITDA Margin was negative 5.0%, compared to 1.3% in the quarter September 30, 2019.

    Adjusted EBITDA and Adjusted EBITDA Margin by Segment

    The following table sets forth a breakdown of adjusted EBITDA and adjusted EBITDA margin for the three months ended September 30, 2020 by segment.

    Table 6 – Breakdown of Adjusted EBITDA and Adjusted EBITDA Margin by Segment




    Three Months Ended September 30, 2020




    Core logistics and supply chain







    (In RMB'000)

    Express

    Freight

    Supply Chain

    UCargo

    Capital


    Store+

    Global

    Unallocated[9]

    Total



    Adjusted EBITDA

    (211,289)

    (44,643)

    (26,661)

    (29,976)

    34,482


    (68,213)

    (60,699)

    (30,727)

    (437,726)


    Adjusted EBITDA
    Margin

    (4.2%)

    (3.0%)

    5.9%

    (4.4%)

    63.0%


    (9.5%)

    (28.1%)

    -

    (5.0%)



    Core Logistics and Supply Chain - Adjusted EBITDA was negative RMB278.1 million (US$41.0 million), compared to RMB266.9 million in the quarter ended September 30, 2019. Adjusted EBITDA Margin was negative 3.6%, compared to 3.4% in the quarter ended September 30, 2019.

    Store+ - Adjusted EBITDA was negative RMB68.2 million (US$10.0 million), compared to negative RMB97.6 million in the quarter ended September 30, 2019. Adjusted EBITDA Margin was negative 9.5%, compared to negative 11.3% in the quarter ended September 30, 2019.

    Global - Adjusted EBITDA was negative RMB60.7 million (US$8.9 million), compared to negative RMB30.9 million in the quarter ended September 30, 2019. Adjusted EBITDA Margin was negative 28.1%, compared to negative 32.3% in the quarter ended September  30, 2019.  

    Cash and Cash Equivalents, Restricted Cash and Short-term Investments

    As of September 30, 2020, cash and cash equivalents, restricted cash and short-term investments were RMB4,756.3 million (US$700.5 million), compared to RMB5,141.9 million as of June 30, 2020.

    Net Cash Generated from Operating Activities

    Net cash generated from operating activities was RMB115.4 million (US$17.0 million), compared to RMB237.3 million in the same period of 2019. The decrease in net cash generated from operating activities was mainly due to decreasing ASP in Express and Freight businesses.

    Capital Expenditures ("CAPEX")

    CAPEX was RMB486.6 million (US$71.7 million), or 5.6% of total revenue in the quarter ended September 30, 2020, compared to CAPEX of RMB523.0 million, or 6.0% of total revenue, in the same period of 2019. The decrease in CAPEX was primarily due to payment timing differences.

    SHARES OUTSTANDING

    As of the date of this press release, the Company had approximately 385.4 million ordinary shares outstanding[10]. Each American Depositary Share represents one Class A ordinary share.

    FINANCIAL GUIDANCE

    Due to its ongoing strategic refocusing plan, BEST is unable to provide financial guidance at this time. The Company currently plans to resume providing financial guidance in 2021.

    WEBCAST AND CONFERENCE CALL INFORMATION

    The Company will hold a conference call at 9:00 pm U.S. Eastern Time on November 19, 2020 (10:00 am Beijing Time on November 20), to discuss its financial results and operating performance for the third quarter of 2020.

    Participants may access the call by dialing the following numbers:

    United States                                     

    : +1-888-317-6003

    Hong Kong                                         

    : 800-963976 or +852-5808-1995

    Mainland China                                  

    : 4001-206115

    International                                       

    : +1-412-317-6061

    Participant Elite Entry Number          

    : 6127097

    A replay of the conference call will be accessible through November 26, 2020 by dialing the following numbers:

    United States                                      

    : +1-877-344-7529

    International                                        

    : +1-412-317-0088

    Replay Access Code                         

    : 10149943

    Please visit the Company's investor relations website http://ir.best-inc.com/ on November 19, 2020 to view the earnings release prior to the conference call. A live and archived webcast of the conference call and a corporate presentation will be available at the same site.

    ABOUT BEST INC.

    BEST Inc. (NYSE: BEST) is a leading integrated smart supply chain solutions and logistics services provider in China. Through its proprietary technology platform and extensive networks, BEST offers a comprehensive set of logistics and value-add services, including express and freight delivery, supply chain management and last-mile services, truckload service brokerage, international logistics and financial services. BEST's mission is to empower business and enrich life by leveraging technology and business model innovation to create a smarter, more efficient supply chain. For more information, please visit: http://www.best-inc.com/en/.  

    For investor and media inquiries, please contact:

    BEST Inc.
    Investor relations team                         
    ir@best-inc.com

    The Piacente Group, Inc.
    Yang Song
    Tel: +86-10-6508-0677
    E-mail: best@tpg-ir.com

    The Piacente Group, Inc.
    Brandi Piacente
    Tel: +1-212-481-2050
    E-mail:  best@tpg-ir.com  

    SAFE HARBOR STATEMENT

    This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as BEST's strategic and operational plans, contain forward-looking statements. BEST may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about BEST's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: BEST's goals and strategies; BEST's future business development, results of operations and financial condition; BEST 's ability to maintain and enhance its ecosystem; BEST 's ability to continue to innovate, meet evolving market trends, adapt to changing customer demands and maintain its culture of innovation; fluctuations in general economic and business conditions in China and other countries in which BEST operates, and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in BEST's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and BEST does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

    USE OF NON-GAAP FINANCIAL MEASURES

    In evaluating its business, BEST considers and uses non-GAAP measures, such as non-GAAP net loss/income, non-GAAP net loss/profit margin, adjusted EBITDA, adjusted EBITDA margin, EBITDA, adjusted selling expenses, adjusted general and administrative expenses, adjusted research and development expenses, and non-GAAP diluted EPS, as supplemental measures in the evaluation of the Company's operating results and in the Company's financial and operational decision-making. The Company believes these non-GAAP financial measures that help identify underlying trends in the Company's business that could otherwise be distorted by the effect of the expenses and gains that the Company includes in loss from operations and net loss. The Company believes that these non-GAAP financial measures provide useful information about its operating results, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company's management in its financial and operational decision-making. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of Non-GAAP Measures to the Nearest Comparable GAAP Measures" in the results announcement.

    The non-GAAP financial measures are provided as additional information to help investors compare business trends among different reporting periods on a consistent basis and to enhance investors' overall understanding of the Company's current financial performance and prospects for the future. These non-GAAP financial measures should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for, or superior to, U.S. GAAP results. In addition, the Company's calculation of the non-GAAP financial measures may be different from the calculation used by other companies, and therefore comparability may be limited.

     

     

    Summary of Unaudited Condensed Consolidated Income Statements

    (In Thousands)



    Three Months Ended September 30,

    Nine Months Ended September 30,



    2019

    2020

    2019

    2020



    RMB

    RMB

    US$

    RMB

    RMB

    US$

    Revenue







    Express

    5,209,139

    5,076,101

    747,629

    14,925,574

    13,594,633

    2,002,273

    Freight

    1,375,411

    1,487,654

    219,108

    3,669,126

    3,536,163

    520,821

    Supply Chain Management

    452,328

    452,691

    66,674

    1,587,176

    1,369,991

    201,778

    Store+

    861,964

    717,115

    105,620

    2,206,044

    1,837,314

    270,607

    Global

    95,632

    216,017

    31,816

    201,451

    524,305

    77,222

    UCargo

    702,150

    688,951

    101,472

    1,665,167

    1,562,054

    230,066

    Capital

    48,672

    54,725

    8,060

    153,462

    152,524

    22,464

    Total Revenue

    8,745,296

    8,693,254

    1,280,379

    24,408,000

    22,576,984

    3,325,231

    Cost of Revenue








    Express

    (4,962,151)

    (5,205,390)

    (766,671)

    (14,303,701)

    (13,570,902)

    (1,998,778)

    Freight

    (1,289,098)

    (1,473,252)

    (216,987)

    (3,466,109)

    (3,532,534)

    (520,286)

    Supply Chain Management

    (414,197)

    (432,945)

    (63,766)

    (1,474,029)

    (1,297,689)

    (191,129)

    Store+

    (771,078)

    (621,059)

    (91,472)

    (1,962,020)

    (1,594,696)

    (234,873)

    Global

    (96,889)

    (239,653)

    (35,297)

    (215,376)

    (602,511)

    (88,740)

    UCargo

    (688,305)

    (675,295)

    (99,460)

    (1,620,980)

    (1,528,280)

    (225,091)

    Capital

    (16,522)

    (8,066)

    (1,188)

    (45,956)

    (19,668)

    (2,897)

    Total Cost of Revenue

    (8,238,240)

    (8,655,660)

    (1,274,841)

    (23,088,171)

    (22,146,280)

    (3,261,794)

    Gross Profit

    507,056

    37,594

    5,538

    1,319,829

    430,704

    63,437

    Selling Expenses

    (212,714)

    (244,925)

    (36,074)

    (619,203)

    (694,135)

    (102,235)

    General and Administrative
    Expenses

    (275,667)

    (367,924)

    (54,189)

    (863,913)

    (993,627)

    (146,345)

    Research and
    Development Expenses

    (64,522)

    (53,361)

    (7,859)

    (181,058)

    (164,175)

    (24,180)

    Total Operating Expenses

    (552,903)

    (666,210)

    (98,122)

    (1,664,174)

    (1,851,937)

    (272,760)

    Loss from Operations

    (45,847)

    (628,616)

    (92,584)

    (344,345)

    (1,421,233)

    (209,323)

    Interest Income

    21,242

    18,106

    2,667

    71,291

    58,106

    8,558

    Interest Expense

    (12,023)

    (46,583)

    (6,861)

    (52,767)

    (121,134)

    (17,841)

    Foreign Exchange







    Gain/(Loss)

    661

    (9,199)

    (1,355)

    (3,405)

    (9,014)

    (1,328)

    Other Income

    38,225

    40,700

    5,994

    91,860

    112,569

    16,580

    Other Expense

    (5,216)

    (7,244)

    (1,067)

    (13,136)

    (25,605)

    (3,771)

    Loss before Income Tax
       and Share of Net Loss
       of Equity Investees

    (2,958)

    (632,836)

    (93,206)

    (250,502)

    (1,406,311)

    (207,125)

    Income Tax Expense

    (3,691)

    (6,633)

    (977)

    (11,793)

    (14,735)

    (2,170)

    Loss before Share of Net
       loss of Equity Investees

    (6,649)

    (639,469)

    (94,183)

    (262,295)

    (1,421,046)

    (209,295)

    Share of Net Loss of Equity Investees

    (47)

    (40)

    (6)

    (183)

    (114)

    (17)

    Net Loss

    (6,696)

    (639,509)

    (94,189)

    (262,478)

    (1,421,160)

    (209,312)

    Net Loss attributable to non-
       controlling interests

    (3,214)

    (5,959)

    (878)

    (8,644)

    (20,390)

    (3,003)

    Net loss attributable to
       Best Inc.

    (3,482)

    (633,550)

    (93,311)

    (253,834)

    (1,400,770)

    (206,309)

    Net loss attributable to
       ordinary shareholders

    (3,482)

    (633,550)

    (93,311)

    (253,834)

    (1,400,770)

    (206,309)

     

     

    Summary of Unaudited Condensed Consolidated Balance Sheets

    (in thousands)



    As of December 31, 2019


    As of September 30, 2020


    RMB


    RMB


    US$

    Assets






    Current Assets






    Cash and Cash Equivalents

    1,994,683


    1,814,016


    267,176

    Restricted Cash

    1,786,832


    2,008,550


    295,827

    Accounts and Notes Receivables

    1,229,083


    931,411


    137,180

    Inventories

    140,006


    166,402


    24,508

    Prepayments and Other Current Assets

    2,750,126


    3,383,635


    498,356

    Short–term Investments

    1,057,598


    306,490


    45,141

    Lease Rental Receivables

    483,363


    528,317


    77,813

    Amounts Due from Related Parties

    246,758


    156,522


    23,053

    Total Current Assets

    9,688,449


    9,295,343


    1,369,054

    Non–current Assets






    Property and Equipment, Net

    2,939,379


    3,836,048


    564,989

    Intangible Assets, Net

    121,587


    111,800


    16,466

    Goodwill

    490,986


    499,433


    73,559

    Long–term Investments

    230,855


    240,580


    35,434

    Non–current Deposits

    127,191


    137,525


    20,255

    Other Non–current Assets

    346,645


    584,015


    86,016

    Operating Lease Right-of-use Assets

    4,378,804


    4,123,906


    607,386

    Lease Rental Receivables

    993,260


    784,057


    115,479

    Restricted Cash

    175,700


    627,218


    92,379

    Total non–current Assets

    9,804,407


    10,944,582


    1,611,963

    Total Assets

    19,492,856


    20,239,925


    2,981,017

    Liabilities and Shareholders' Equity






    Current Liabilities 






    Short–term Bank Loans

    2,510,500


    3,099,750


    456,544

    Securitization Debt

    104,899


    193,260


    28,464

    Accounts and Notes Payable

    3,391,383


    3,770,913


    555,395

    Accrued Expenses and Other Liabilities

    2,019,634


    2,264,224


    333,484

    Customer Advances and Deposits and
       Deferred Revenue

    1,489,510


    1,585,970


    233,588

    Operating Lease Liabilities

    1,035,252


    1,104,411


    162,662

    Financing Lease Liabilities

    1,363


    529


    78

    Amounts Due to Related Parties

    9,769


    21,919


    3,228

    Income Tax Payable

    7,358


    10,662


    1,570

    Total Current Liabilities

    10,569,668


    12,051,638


    1,775,013

    Non-current Liabilities






    Securitization Debt

    -


    23,766


    3,500

    Convertible senior notes held by
      
    related parties

    680,104


    1,684,166


    248,051

    Convertible Senior Notes held by third
       parties

    680,104


    668,630


    98,479

    Operating Lease Liabilities

    3,482,634


    3,167,567


    466,532

    Financing Lease Liabilities

    2,072


    4,366


    643

    Deferred Tax Liabilities

    25,806


    23,857


    3,514

    Other Non–current Liabilities

    137,184


    196,585


    28,954

    Long-term Bank Loans

    -


    79,333


    11,684

    Total Non–current Liabilities

    5,007,904


    5,848,270


    861,357

    Total Liabilities

    15,577,572


    17,899,908


    2,636,370

    Shareholders' Equity






    Ordinary Shares

    25,988


    25,988


    3,828

    Treasury Shares

    -


    (211,352)


    (31,129)

    Additional Paid–In Capital

    19,353,400


    19,458,478


    2,865,924

    Statutory reserves

    7,865


    10,267


    1,512

    Accumulated Deficit

    (15,629,537)


     (17,088,455) [11]  


    (2,516,857)

    Accumulated Other
       Comprehensive Income

    163,196


    165,778


    24,416

    BEST Inc. Shareholders' Equity

    3,920,912


    2,360,704


    347,694

    Non-controlling Interests

    (5,628)


    (20,687)


    (3,047)

    Total Shareholders' Equity

    3,915,284


    2,340,017


    344,647

    Total Liability and Shareholders'
       Equity

    19,492,856


    20,239,925


    2,981,017


     

     

    Summary of Unaudited Condensed Consolidated Statements of Cash Flows

    (In Thousands)



    Three Months Ended September 30,

    Nine Months Ended September 30,


    2019

    2020

    2019

    2020


    RMB

    RMB

    US$

    RMB

    RMB

    US$

    Net Cash Generated from/
      (Used in) Operating Activities

    237,337

    115,351

    16,989

    366,029

    (455,556)

    (67,096)

    Net Cash Used in
    Investing Activities

    (556,306)

    (539,659)

    (79,483)

    (1,383,557)

    (708,826)

    (104,399)

    Net Cash  Generated from
    Financing Activities

    897,235

    371,217

    54,674

    1,558,732

    1,738,283

    256,021

    Exchange Rate Effect on Cash,
    Cash Equivalents, and
    Restricted Cash

    41,930

    (106,521)

    (15,689)

    41,860

    (81,332)

    (11,979)

    Net Increase/(Decrease) in
    Cash and Cash Equivalents,
    and Restricted Cash

    620,196

    (159,612)

    (23,509)

    583,064

    492,569

    72,547

    Cash and Cash Equivalents,
    and Restricted Cash at
    Beginning of Period

    2,962,276

    4,609,396

    678,891

    2,999,408

    3,957,215

    582,835

    Cash and Cash Equivalents,
    and Restricted Cash at End
    of Period

    3,582,472

    4,449,784

    655,382

    3,582,472

    4,449,784

    655,382

     

    RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES

    The table below sets forth a reconciliation of the Company's net loss to EBITDA, adjusted EBITDA and adjusted EBITDA margin for the periods indicated:

    Table 7 – Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin







    Three Months Ended September 30, 2020





    Core logistics and supply chain








    (In RMB'000)

    Express

    Freight

    Supply Chain

    UCargo

    Capital


    Store+

    Global

    Unallocated[12]

    Total




    Net Income/(Loss)

    (314,911)

    (63,702)

    (39,729)

    (32,235)

    28,379


    (73,582)

    (66,984)

    (76,745)

    (639,509)



    Add













    Depreciation &
    Amortization

    98,294

    16,357

    10,120

    1,392

    381


    3,622

    4,320

    7,005

    141,491



    Interest Expense

    -

    -

    -

    -

    -


    -

    -

    46,583

    46,583



    Income Tax Expense

    1,616

    -

    -

    -

    5,654


    (364)

    (273)

    -

    6,633



    Subtract













    Interest Income

    -

    -

    -

    -

    -


    -

    -

    (18,106)

    (18,106)



    EBITDA

    (215,001)

    (47,345)

    (29,609)

    (30,843)

    34,414


    (70,324)

    (62,937)

    (41,263)

    (462,908)



    Add













    Share-based
    Compensation
    Expenses

    3,712

    2,702

    2,948

    867

    68


    2,111

    2,238

    20,374

    35,020



    Subtract













    Gain from
    appreciation of
    investments

    -

    -

    -

    -

    -


    -

    -

    (9,838)

    (9,838)



    Adjusted EBITDA

    (211,289)

    (44,643)

    (26,661)

    (29,976)

    34,482


    (68,213)

    (60,699)

    (30,727)

    (437,726)



    Adjusted EBITDA
    Margin

    (4.2%)

    (3.0%)

    (5.9%)

    (4.4%)

    63.0%


    (9.5%)

    (28.1%)

    -

    (5.0%)



     




    Three Months Ended September 30, 2019





    Core logistics and supply chain








    (In RMB'000)

    Express

    Freight

    Supply Chain

    UCargo

    Capital


    Store+

    Global

    Unallocated[13]

    Total




    Net Income/(Loss)

    117,440

    26,579

    (10,651)

    (7,033)

    28,534


    (102,365)

    (35,275)

    (23,925)

    (6,696)



    Add













    Depreciation &
    Amortization

    63,765

    13,492

    13,895

    72

    530


    3,570

    2,373

    7,904

    105,601



    Interest Expense

    -

    -

    -

    -

    -


    -

    -

    12,023

    12,023



    Income Tax Expense

    -

    -

    9

    -

    4,345


    (385)

    (278)

    -

    3,691



    Subtract













    Interest Income

    -

    -

    -

    -

    -


    -

    -

    (21,242)

    (21,242)



    EBITDA

    181,205

    40,071

    3,253

    (6,961)

    33,409


    (99,180)

    (33,180)

    (25,240)

    93,377



    Add













    Share-based
    Compensation
    Expenses

    10,363

    2,332

    2,474

    655

    60


    1,617

    2,263

    1,195

    20,959



    Adjusted EBITDA

    191,568

    42,403

    5,727

    (6,306)

    33,469


    (97,563)

    (30,917)

    (24,045)

    114,336



    Adjusted EBITDA
    Margin

    3.7%

    3.1%

    1.3%

    (0.9%)

    68.8%


    (11.3%)

    (32.3%)

    -

    1.3%



     

    The table below sets forth a reconciliation of the Company's net loss to non-GAAP net loss, non-GAAP net loss margin for the periods indicated:

    Table 8 – Reconciliation of Non-GAAP Net Loss and Non-GAAP Net Loss Margin





    Three Months Ended September 30, 2020





    Core logistics and supply chain








    (In RMB'000)

    Express

    Freight

    Supply Chain

    UCargo

    Capital


    Store+

    Global

    Unallocated[14]

    Total




    Net Income/(Loss)

    (314,911)

    (63,702)

    (39,729)

    (32,235)

    28,379


    (73,582)

    (66,984)

    (76,745)

    (639,509)



    Add













    Share-based
    Compensation
    Expenses

    3,712

    2,702

    2,948

    867

    68


    2,111

    2,238

    20,374

    35,020



    Amortization of
    Intangible Assets
    Resulting from
    Business
    Acquisition

    -

    -

    -

    -

    -


    1,458

    916

    -

    2,374



    Subtract













    Gain from
    appreciation of
    investments

    -

    -

    -

    -

    -


    -

    -

    (9,838)

    (9,838)



    Non-GAAP Net
    Income/(Loss)

    (311,199)

    (61,000)

    (36,781)

    (31,368)

    28,447


    (70,013)

    (63,830)

    (66,209)

    (611,953)



    Non-GAAP Net
    Income/(Loss)
    Margin

    (6.1%)

    (4.1%)

    (8.1%)

    (4.6%)

    52.0%


    (9.8%)

    (29.5%)

    -

    (7.0%)



     






    Three Months Ended September 30, 2019







    Core logistics and supply chain






    (In RMB'000)

    Express

    Freight

    Supply Chain

    UCargo

    Capital


    Store+

    Global

    Unallocated

    Total



    Net Income/(Loss)

    117,440

    26,579

    (10,651)

    (7,033)

    28,534


    (102,365)

    (35,275)

    (23,925)

    (6,696)



    Add













    Share-based Compensation Expenses

    10,363

    2,332

    2,474

    655

    60


    1,617

    2,263

    1,195

    20,959



    Amortization of Intangible Assets Resulting from Business Acquisitions

    -

    -

    -

    -

    -


    1,541

    930

    -

    2,471



    Non-GAAP Net Income/(Loss)

    127,803

    28,911

    (8,177)

    (6,378)

    28,594


    (99,207)

    (32,082)

    (22,730)

    16,734



    Non-GAAP Net Loss Margin

    2.5%

    2.1%

    (1.8%)

    (0.9%)

    58.7%


    (11.5%)

    (33.5%)

    -

    0.2%















     

    The table below sets forth a reconciliation of the Company's diluted EPS to non-GAAP diluted EPS for the periods indicated:

    Table 9 – Reconciliation of Diluted EPS and Non-GAAP Diluted EPS



    Three Months Ended September 30,


    Nine Months Ended September 30,


    2020


    2020

    (In '000)

            RMB

           US$


    RMB

    US$

    Net Loss Attributable to Ordinary
    Shareholders

    (633,550)

    (93,311)


    (1,400,770)

    (206,309)

    Add






    Share-based Compensation
    Expenses

    35,020

    5,158


    110,954

    16,342

    Amortization of Intangible Assets
    Resulting from Business
    Acquisitions

    2,374

    350


    7,266

    1,070

    Subtract






    Gain from appreciation of
    investments

    (9,838)

    (1,449)


    (9,838)

    (1,449)

    Non-GAAP Net Loss Attributable to
    Ordinary Shareholders for
    Computing
    Non-GAAP Diluted EPS

    (605,994)

    (89,252)


    (1,292,388)

    (190,346)

    Weighted Average Diluted Shares
    Outstanding During the Quarter






    Diluted

    385,430,134

    385,430,134


    388,136,651

    388,136,651

    Diluted (Non-GAAP)

    385,430,134

    385,430,134


    388,136,651

    388,136,651

    Diluted EPS

    (1.64)

    (0.24)


    (3.61)

    (0.53)

    Add






    Non-GAAP adjustment to net loss
    per share

    0.07

    0.01


    0.28

    0.04

    Non-GAAP Diluted EPS

    (1.57)

    (0.23)


    (3.33)

    (0.49)

     

     

    [1] All numbers presented have been rounded to the nearest integer, tenth, or hundredth, and year-over-year comparisons are based on figures before rounding.  

    [2] Non-GAAP net income/loss represents net income/loss excluding share-based compensation expenses, amortization of intangible assets resulting from business acquisitions, and fair value change of equity investments (if any).

    [3] See the sections entitled "Use of Non-GAAP Financial Measures" and "Reconciliations of Non-GAAP Measures to the Nearest Comparable GAAP Measures" for more information about the non-GAAP measures referred to within this results announcement.

    [4] Diluted earnings per share, or Diluted EPS, is calculated by dividing net profit attributable to ordinary shareholders as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the period.

    [5] Non-GAAP diluted earnings per share, or non-GAAP diluted EPS, represents diluted earnings per share excluding share-based compensation expenses, amortization of intangible assets resulting from business acquisitions, and fair value change of equity investments (if any).

    [6] EBITDA represents net loss excluding depreciation, amortization, interest expense and income tax expense and minus interest income. Adjusted EBITDA represents EBITDA excluding share-based compensation expenses and fair value change of equity investments (if any).

    [7] All numbers presented have been rounded to the nearest integer, tenth, or hundredth, and year-over-year comparisons are based on figures before rounding.        

    [8] Unallocated expenses are primarily related to corporate administrative expenses and other miscellaneous items that are not allocated to individual segments.

    [9] Unallocated expenses are primarily related to corporate administrative expenses and other miscellaneous items that are not allocated to individual segments.

    [10] The total number of shares outstanding excludes shares reserved for future issuances upon exercise or vesting of awards granted under the Company's share incentive plans.

    [11] Including accumulated accretion to redemption value and deemed dividend in relation to redeemable convertible preferred shares of RMB9,493,807, and accumulated loss from operations of RMB7,594,648   

    [12] Unallocated expenses are primarily related to corporate administrative expenses and other miscellaneous items that are not allocated to individual segments.

    [13] Unallocated expenses are primarily related to corporate administrative expenses and other miscellaneous items that are not allocated to individual segments.

    [14] Unallocated expenses are primarily related to corporate administrative expenses and other miscellaneous items that are not allocated to individual segments.

    [15] Unallocated expenses are primarily related to corporate administrative expenses and other miscellaneous items that are not allocated to individual segments.

     

     

    Related Links :

    https://www.best-inc.com/

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