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, 2021.
Johnny Chou, Founder, Chairman and Chief Executive Officer of BEST, commented, “In the third quarter, we remained steadfast in driving the Company’s realignment around our core competencies and unlocking value for our shareholders. As we proceed with our transaction with J&T Express Co., Ltd. (J&T Express China), we are excited about our roadmap ahead to deliver integrated supply chain, freight and global logistics services for our customers.”
“Against a challenging backdrop with COVID-19 flare ups, we continued to enhance Best Freight’s business capabilities of serving e-commerce customers and leveraging synergies with our Supply Chain Management. Supply Chain Management further strengthened its operations by prioritizing higher margin customers, expanding the OFCs network and leveraging our technologies to deliver quality services. On the Global front, our cross-border and local business in the Southeast Asia region continued to press forward, achieving a 78.7% year-over-year increase in parcel volume for the quarter despite the ongoing pandemic.”
“Looking forward, we will continue to synergize among our business units in a strategic, value-creating way and further enhance our integrated logistic service offerings to capture the enormous growth opportunities from e-commerce and the booming demand for integrated supply chain services.”
Gloria Fan, BEST’s Chief Financial Officer, added, “Revenue for the quarter was RMB6.8 billion, a decrease of 14.6% year over year, as market dynamics weighed on the volume and average selling price for Express and Freight. Our balance of cash and cash equivalents, restricted cash and short-term investments were RMB3.4 billion at the end of the third quarter of 2021. The strategic transaction with J&T Express China will significantly improve our liquidity and provide us with financial flexibility to reduce leverage and increase investments, laying a solid foundation for us to return to profitability and a growth trajectory.”
FINANCIAL HIGHLIGHTS[1]
For the Quarter Ended September 30, 2021:
- Revenue was RMB6,812.4 million (US$1,057.3 million), a decrease of 14.6% year-over-year (“YoY”). The decrease was primarily due to a decrease in average selling price (“ASP”) in Express and Freight business segments.
- Gross Loss was RMB505.1 million (US$78.4 million), compared to gross loss of RMB58.5 million in the same period of 2020. Gross Loss Margin was 7.4%, decreased by 6.7 percentage points (“ppts”) YoY.
- Net Loss was RMB654.9 million (US$101.6 million), compared to a net loss of RMB565.9 million in the same period of 2020. Non-GAAP Net Loss[2] [3] was RMB684.2 million (US$106.2 million), compared to non-GAAP net loss of RMB541.9 million in the same period of 2020.
- Diluted EPS[4] was negative RMB1.65 (US$0.26), compared to negative RMB1.45 in the same period of 2020. Non-GAAP Diluted EPS[3] [4] was negative RMB1.73 (US$0.27), compared to negative RMB1.39 in the same period of 2020.
- EBITDA[5] was negative RMB451.8 million (US$70.1 million), compared to negative RMB392.6 million in the same period of 2020. Adjusted EBITDA[3][5] was negative RMB481.1 million (US$74.7 million), compared to negative RMB369.5 million in the same period of 2020.
BUSINESS HIGHLIGHTS[6]
BEST Express – During the quarter, parcel volume decreased by 10.9% YoY to 2.1 billion. Gross margin contracted by 7.6 ppts due to a decline in ASP per parcel of 12.0% YoY, partially offset by a decrease in average cost per parcel of 5.5% YoY despite higher oil prices and rising labor costs.
On October 29, 2021, the Company announced to sell its express delivery business in China (the “Business”) to J&T Express China, at approximately RMB6.8 billion (US$1.1 billion) enterprise value. The sale does not include any of BEST’s other businesses, namely, Supply Chain Management, Freight, UCargo and Global. The consideration to be paid for the Business is subject to certain adjustments and conditions under the terms of a definitive agreement entered into by the parties. This sale is subject to certain closing conditions and applicable regulatory approvals, and is currently expected to close in the first quarter of 2022.
BEST Freight – During the quarter, the Company continued its effort to grow its e-commerce related transactions. The e-commerce business accounted for 20.4% of total volume compared with 15.9% in the third quarter of 2020. Freight volume decreased by 1.5% YoY and its gross margin was negative 5.4% in the quarter; 6.7 ppts lower YoY primarily due to a 7.5% YoY decline in ASP, offset by a 1.3% YoY decrease in average cost per tonne.
BEST Supply Chain Management – Supply Chain Management remained focused on projects with higher margins and clients with strong credit profiles, while continuing to expand franchised cloud OFC network. The total number of orders fulfilled by Cloud OFCs increased by 1.4% YoY to 103.6 million in the third quarter of 2021, of which the total number of orders fulfilled by franchised Cloud OFCs increased by 27.1% YoY to 68.0 million. The number of franchised OFCs increased by 1.7% YoY to 351.
BEST Global – Global maintained its robust growth in Southeast Asia with improved margin. Despite the continued impact from COVID-19, parcel volume in Southeast Asia increased by 78.7% to 37.1 million in the third quarter of 2021, with growth rate of 123.0%, 933.2% and 264.5% YoY in Thailand, Malaysia and Cambodia respectively. Global’s gross margin rose by 4.1 ppts YoY, primarily driven by our growing economies of scale.
Others – For UCargo, as of September 30, 2021, the number of registered drivers on the UCargo mobile app increased by 40.2% YoY to 404,336.
| [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 income/loss 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] 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). |
| [6] All numbers presented have been rounded to the nearest integer, tenth, or hundredth, and year-over-year comparisons are based on figures before rounding. |
Key Operational Metrics
| Three Months Ended | % Change YoY | ||||||||
| Express Parcel Volume (in ‘000) | September 30, 2019 | September 30, 2020 | September 30, 2021 | 2020 vs 2019 | 2021 vs 2020 | ||||
| 1,890,842 | 2,359,773 | 2,103,200 | 24.8% | -10.9% | |||||
| Freight Volume (Tonne in ‘000) | 1,885 | 2,464 | 2,427 | 30.7% | -1.5% | ||||
| Supply Chain Management Orders Fulfilled (in ‘000) | 86,371 | 102,171 | 103,638 | 18.3% | 1.4% | ||||
| Global Parcel Volume in Southeast Asia (in ‘000) | 2,607 | 20,754 | 37,082 | 696.0% | 78.7% | ||||
| UCargo Number of Transactions (in ‘000) | 170 | 233 | 218 | 37.2% | -6.5% |
FINANCIAL RESULTS
For the Quarter Ended September 30, 2021:
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, 2020 | September 30, 2021 | |||||||
| (In ‘000, except for %) | RMB | % of Revenue | RMB | US$ | % of Revenue | % Change YoY | ||
| Express | 5,090,682 | 63.8% | 3,988,291 | 618,973 | 58.5% | (21.7 %) | ||
| Freight | 1,492,965 | 18.7% | 1,358,305 | 210,806 | 19.9% | (9.0%) | ||
| Supply Chain Management | 452,691 | 5.7% | 400,551 | 62,165 | 5.9% | (11.5 %) | ||
| Global | 216,017 | 2.7% | 298,267 | 46,290 | 4.4% | 38.1% | ||
| Others[7] | 723,784 | 9.1% | 766,969 | 119,032 | 11.3% | 6.0% | ||
| Total Revenue | 7,976,139 | 100.0% | 6,812,383 | 1,057,266 | 100.0% | (14.6%) |
| [7] “Others” Segment represents UCargo and Capital business units. |
- Express Service Revenue decreased by 21.7% YoY to RMB3,988.3 million (US$619.0 million) from RMB5,090.7 million, primarily due to a 12.0% YoY decrease in ASP per parcel and a 10.9% YoY decrease in parcel volume. The decreases were primarily attributable to competitive market dynamics.
- Freight Service Revenue decreased by 9.0% YoY to RMB1,358.3 million (US$210.8 million) from RMB1,493.0 million, primarily due to a 7.5% decrease in ASP per tonne and a 1.5% YoY decrease in freight volume.
- Supply Chain Management Service Revenue decreased by 11.5% YoY to RMB400.6 million (US$62.2 million) from RMB452.7 million, primarily due to discontinuation of service to certain low-margin legacy customers, partially offset by a 1.4% YoY increase in the total number of orders fulfilled by Cloud OFCs.
- Global Service Revenue increased by 38.1% YoY to RMB298.3 million (US$46.3 million) from RMB216.0 million, primarily due to strong growth in parcel volumes in Southeast Asia.
- Others Services Revenue increased by 6.0% YoY to RMB767.0 million (US$119.0 million) from RMB723.8 million.
Cost of Revenue
The following table sets forth a breakdown of cost of revenue by business segment for the periods indicated.
Table 2 – Breakdown of Cost of Revenue by Business Segment
| Three Months Ended | % of Revenue ChangeYoY | |||||||
| September 30, 2020 | September 30, 2021 | |||||||
| (In ‘000, except for %) | RMB | % of Revenue | RMB | US$ | % of Revenue | |||
| Express | (5,205,390) | 102.3% | (4,384,494) | (680,463) | 109.9% | 7.6ppts | ||
| Freight | (1,473,252) | 98.7% | (1,431,988) | (222,241) | 105.4% | 6.7ppts | ||
| Supply Chain Management | (432,945) | 95.6% | (385,443) | (59,820) | 96.2% | 0.6ppts | ||
| Global | (239,653) | 110.9% | (318,420) | (49,418) | 106.8% | (4.1ppts) | ||
| Others | (683,361) | 94.4% | (797,136) | (123,714) | 103.9% | 9.5ppts | ||
| Total Cost of Revenue | (8,034,601) | 100.7% | (7,317,481) | (1,135,656) | 107.4% | 6.7ppts |
Cost of Revenue was RMB7,317.5 million (US$1,135.7 million) or 107.4% of revenue in the third quarter of 2021, compared to RMB8,034.6 million or 100.7% of revenue in the same quarter of 2020. The increase of 6.7 ppts in cost of revenue as a percentage of revenue was primarily attributable to a decrease in ASP which was partially offset by reduced unit cost for Express and Freight business units.
Table 3 – Breakdown of Average Cost Per Parcel and Average Cost Per Tonne
| Three Months Ended | % Change | |||
| (in RMB) | September 30, 2020 | September 30, 2021 | YoY | |
| Express: | ||||
| Average Cost Per Parcel | 2.21 | 2.08 | (5.5%) | |
| Average Transportation Cost Per Parcel | 0.65 | 0.59 | (9.2%) | |
| Average Labor Cost Per Parcel | 0.18 | 0.21 | 16.7% | |
| Average Lease Cost Per Parcel | 0.10 | 0.11 | 10.0% | |
| Average Other Cost Per Parcel | 0.10 | 0.06 | (40.0%) | |
| Average Last-mile Cost Per Parcel | 1.18 | 1.11 | (5.9%) | |
| Freight: | ||||
| Average Cost Per Tonne | 597.8 | 590.0 | (1.3%) |
Gross Loss was RMB505.1 million (US$78.4 million) in the third quarter of 2021, compared to gross loss of RMB58.5 million in the same period of 2020. Gross Loss Margin was 7.4%.
Operating Expenses
The following table sets forth a breakdown of operating expenses and adjusted operating expenses by category for the periods indicated.
Table 4 – Breakdown of Operating Expenses and Adjusted Operating Expenses by Category
| Three Months Ended | ||||||||
| September 30, 2020 | September 30, 2021 | |||||||
| (In ‘000, except for %) | RMB | % of Revenue | RMB | US$ | % of Revenue | % of Revenue Change YoY | ||
| Selling, General and Administrative Expenses | (453,463) | 5.7% | (423,424) | (65,714) | 6.2% | 0.5ppts | ||
| Adjusted for SBC Expenses | (30,145) | 0.4% | (26,984) | (4,188) | 0.4% | 0.0ppts | ||
| Adjusted Selling, General and Administrative Expenses | (423,318) | 5.3% | (396,440) | (61,526) | 5.8% | 0.5ppts | ||
| Research and Development Expenses | (44,935) | 0.5% | (61,159) | (9,492) | 0.9% | 0.4ppts | ||
| Adjusted for SBC Expenses | (2,135) | 0.0% | (2,056) | (319) | 0.0% | 0.0ppts | ||
| Adjusted Research and DevelopmentExpenses | (42,800) | 0.5% | (59,103) | (9,173) | 0.9% | 0.4ppts | ||
| Total Operating Expenses | (498,398) | 6.2% | (484,583) | (75,206) | 7.1% | 0.9ppts | ||
| Adjusted for SBC Expenses | (32,280) | 0.4% | (29,040) | (4,507) | 0.4% | 0.0ppts | ||
| Adjusted Total Operating Expenses | (466,118) | 5.8% | (455,543) | (70,699) | 6.7% | 0.9ppts |
Selling, General and Administrative (“SG&A”) Expenses were RMB423.4 million (US$65.7 million) or 6.2% of revenue in the third quarter of 2021, compared to RMB453.5million or 5.7% of revenue in the same quarter of 2020.
Research and Development (“R&D”) Expenses were RMB61.2 million (US$9.5 million) or 0.9% of revenue in the third quarter of 2021, compared to RMB44.9 million, or 0.5% of revenue in the same quarter of 2020. The increase in research and development expenses was due to increased employee compensation and benefits.
Share-based Compensation (“SBC”) Expenses included in the cost and expense items above in the third quarter of 2021 were RMB29.4 million (US$4.6 million), compared to RMB32.9 million in the same quarter of 2020. In the third quarter of 2021, RMB0.3 million (US$0.05 million) was allocated to cost of revenue, RMB1.9 million (US$0.3 million) was allocated to selling expenses, RMB25.1 million (US$3.9 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 Loss
Net Loss in the third quarter of 2021 was RMB654.9 million (US$101.6 million), compared to a net loss of RMB565.9 million in the same period of 2020. 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 third quarter of 2021 was RMB684.2 million (US$106.2 million), compared to non-GAAP net loss of RMB541.9 million in the same period of 2020.
The following table sets forth a breakdown of non-GAAP net (loss)/income for the three months ended September 30, 2021 by segment.
Table 5 – Breakdown of non-GAAP Net (Loss)/Income by Segment
| Three Months Ended September 30, 2021 | |||||||
| (In RMB’000) | Express | Freight | Supply Chain | Global | Others | Unallocated[8] | Total |
| Non-GAAP Net Income/(Loss) | (471,332) | (157,155) | (24,909) | (66,801) | (84,104) | 120,150 | (684,151) |
| [8] Unallocated expenses are primarily related to corporate administrative expenses and other miscellaneous items that are not allocated to individual segments. |
Diluted EPS and Non-GAAP Diluted EPS
Diluted EPS in the third quarter of 2021 was negative RMB1.65 (US$0.26), based on a weighted average of 388.5 million diluted shares outstanding during the quarter. This is compared to negative RMB1.45 on a weighted average of 385.4 million diluted shares outstanding in the same period of 2020. 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 third quarter of 2021 was negative RMB1.73 (US$0.27), compared to negative RMB1.39 in the same period of 2020. 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 in the third quarter of 2021 was negative RMB481.1million (US$74.7 million), compared to negative RMB369.5 million in same quarter of 2020. Adjusted EBITDA Margin was negative 7.1% in the third quarter of 2021, compared to negative 4.6% in the same quarter of 2020.
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, 2021 by segment.
Table 6 – Breakdown of Adjusted EBITDA and Adjusted EBITDA Margin by Segment
| Three Months Ended September 30, 2021 | ||||||||
| (In RMB’000) | Express | Freight | Supply Chain | Global | Others | Unallocated[9] | Total | |
| Adjusted EBITDA | (348,474) | (140,422) | (15,984) | (61,820) | (78,491) | 164,055 | (481,136) | |
| Adjusted EBITDA Margin | (8.7%) | (10.3%) | (4.0%) | (20.7%) | (10.2%) | – | (7.1%) |
| [9] Unallocated expenses are primarily related to corporate administrative expenses and other miscellaneous items that are not allocated to individual segments. |
Cash and Cash Equivalents, Restricted Cash and Short-term Investments
As of September 30, 2021, cash and cash equivalents, restricted cash and short-term investments were RMB3,378.3 million (US$524.3 million), compared to RMB3,413.3 million as of June 30, 2021. The decrease in cash and cash equivalents, restricted cash and short-term investments was primarily due to net cash used in operations.
Net Cash Used in Operating Activities
Net cash used in continuing operating activities was RMB1,157.2 million (US$179.6 million), compared to net cash generated from continuing operating activities of RMB140.9 million in the same period of 2020, mainly due to decreased ASP for Express and Freight business segments.
Capital Expenditures (“CAPEX”)
CAPEX was RMB116.9 million (US$18.1million), or 1.7% of total revenue in the third quarter ended September 30, 2021, compared to CAPEX of RMB484.3 million, or 6.1% of total revenue, in the same period of 2020.
SHARES OUTSTANDING
As of the date of this press release, the Company had approximately 388.7 million ordinary shares outstanding[10]. Each American Depositary Share 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 operations, the Company expects its revenue for the full fiscal year of 2021 to be between RMB28 billion and RMB32 billion. This forecast reflects management’s current and preliminary expectation, which is subject to change.
WEBCAST AND CONFERENCE CALL INFORMATION
The Company will hold a conference call at 8:00 pm U.S. Eastern Time on November 16, 2021 (9:00 am Beijing Time on November 17, 2021), to discuss its financial results and operating performance for the third quarter of 2021.
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: | 4267111 |
A replay of the conference call will be accessible through November 23, 2021 by dialing the following numbers:
| United States: | +1-877-344-7529 |
| International: | +1-412-317-0088 |
| Replay Access Code: | 10161418 |
Please visit the Company’s investor relations website, located at http://ir.best-inc.com/, 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/.
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 compete effectively; 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/income 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, | |||||
| 2020 | 2021 | 2020 | 2021 | |||
| RMB | RMB | US$ | RMB | RMB | US$ | |
| Revenue | ||||||
| Express | 5,090,682 | 3,988,291 | 618,973 | 13,631,990 | 11,982,738 | 1,859,692 |
| Freight | 1,492,965 | 1,358,305 | 210,806 | 3,551,074 | 3,931,359 | 610,137 |
| Supply Chain Management | 452,691 | 400,551 | 62,165 | 1,369,991 | 1,327,767 | 206,066 |
| Global | 216,017 | 298,267 | 46,290 | 524,305 | 863,291 | 133,981 |
| Others | 723,784 | 766,969 | 119,032 | 1,662,310 | 2,578,565 | 400,187 |
| Total Revenue | 7,976,139 | 6,812,383 | 1,057,266 | 20,739,670 | 20,683,720 | 3,210,063 |
| Cost of Revenue | ||||||
| Express | (5,205,390) | (4,384,494) | (680,463) | (13,570,902) | (12,854,832) | (1,995,039) |
| Freight | (1,473,252) | (1,431,988) | (222,241) | (3,532,534) | (3,971,496) | (616,367) |
| Supply Chain Management | (432,945) | (385,443) | (59,820) | (1,297,689) | (1,245,479) | (193,295) |
| Global | (239,653) | (318,420) | (49,418) | (602,511) | (912,119) | (141,559) |
| Others | (683,361) | (797,136) | (123,714) | (1,547,948) | (2,542,866) | (394,647) |
| Total Cost of Revenue | (8,034,601) | (7,317,481) | (1,135,656) | (20,551,584) | (21,526,792) | (3,340,907) |
| Gross (Loss)/ Profit | (58,462) | (505,098) | (78,390) | 188,086 | (843,072) | (130,844) |
| Selling Expenses | (120,783) | (119,255) | (18,508) | (352,935) | (340,702) | (52,876) |
| General and Administrative Expenses | (332,680) | (304,169) | (47,206) | (888,483) | (957,807) | (148,649) |
| Research and Development Expenses | (44,935) | (61,159) | (9,492) | (137,629) | (175,798) | (27,283) |
| Total Operating Expenses | (498,398) | (484,583) | (75,206) | (1,379,047) | (1,474,307) | (228,808) |
| Loss from Operations | (556,860) | (989,681) | (153,596) | (1,190,961) | (2,317,379) | (359,652) |
| Interest Income | 18,106 | 11,188 | 1,736 | 58,106 | 44,736 | 6,943 |
| Interest Expense | (46,583) | (48,731) | (7,563) | (121,134) | (142,903) | (22,178) |
| Foreign Exchange (Loss)/Gain | (7,577) | 1,081 | 168 | (7,335) | 653 | 101 |
| Other Income | 40,211 | 391,630 | 60,780 | 109,430 | 738,181 | 114,564 |
| Other Expense | (6,187) | (19,280) | (2,992) | (22,269) | (47,355) | (7,349) |
| Loss before Income Tax and Share of Net Loss of Equity Investees | (558,890) | (653,793) | (101,467) | (1,174,163) | (1,724,067) | (267,571) |
| Income Tax Expense | (6,997) | (1,051) | (163) | (15,856) | (2,698) | (419) |
| Loss before Share of Net loss of Equity Investees | (565,887) | (654,844) | (101,630) | (1,190,019) | (1,726,765) | (267,990) |
| Share of Net Loss of Equity Investees | (40) | (16) | (2) | (114) | (58) | (9) |
| Net Loss from continuing operations | (565,927) | (654,860) | (101,632) | (1,190,133) | (1,726,823) | (267,999) |
| Net (loss)/income from discontinued operations | (73,582) | 4,025 | 624 | (231,027) | (8,804) | (1,365) |
| Net Loss | (639,509) | (650,835) | (101,008) | (1,421,160) | (1,735,627) | (269,364) |
| Net Loss from continuing operations attributable to non-controlling interests | (5,959) | (12,623) | (1,959) | (20,390) | (23,552) | (3,655) |
| Net Loss attributable to Best Inc. | (633,550) | (638,212) | (99,049) | (1,400,770) | (1,712,075) | (265,709) |
| Summary of Unaudited Condensed Consolidated Balance Sheets | ||||
| (In Thousands) | ||||
| As of December 31, 2020 | As of September 30, 2021 | |||
| RMB | RMB | US$ | ||
| Assets | ||||
| Current Assets | ||||
| Cash and Cash Equivalents | 1,383,317 | 966,026 | 149,925 | |
| Restricted Cash | 2,102,426 | 1,902,703 | 295,295 | |
| Accounts and Notes Receivables | 983,601 | 903,947 | 140,290 | |
| Inventories | 44,133 | 33,963 | 5,271 | |
| Prepayments and Other Current Assets | 3,304,670 | 3,246,803 | 503,896 | |
| Short–term Investments | 268,647 | 3,233 | 502 | |
| Amounts Due from Related Parties | 274,395 | 146,798 | 22,783 | |
| Lease Rental Receivables | 497,127 | 378,811 | 58,791 | |
| Assets held for sale | 509,395 | 496,811 | 77,104 | |
| Total Current Assets | 9,367,711 | 8,079,095 | 1,253,857 | |
| Non–current Assets | ||||
| Property and Equipment, Net | 4,079,235 | 4,314,550 | 669,608 | |
| Intangible Assets, Net | 12,198 | 10,217 | 1,586 | |
| Long–term Investments | 221,426 | 174,171 | 27,031 | |
| Goodwill | 295,758 | 295,758 | 45,901 | |
| Non–current Deposits | 129,645 | 130,987 | 20,329 | |
| Other Non–current Assets | 543,949 | 249,748 | 38,760 | |
| Restricted Cash | 709,848 | 506,317 | 78,579 | |
| Lease Rental Receivables | 647,678 | 311,006 | 48,267 | |
| Operating Lease Right-of-use Assets | 3,863,375 | 3,726,884 | 578,403 | |
| Total non–current Assets | 10,503,112 | 9,719,638 | 1,508,464 | |
| Total Assets | 19,870,823 | 17,798,733 | 2,762,321 | |
| Liabilities and Shareholders’ Equity | ||||
| Current Liabilities | ||||
| Securitization Debt | 95,149 | 168,312 | 26,122 | |
| Secured Borrowings | – | 171,658 | 26,641 | |
| Convertible Senior Notes held by related parties | – | 642,825 | 99,765 | |
| Convertible Senior Notes held by third parties | – | 642,825 | 99,765 | |
| Short–term Bank Loans | 3,082,537 | 1,728,990 | 268,335 | |
| Accounts and Notes Payable | 4,144,948 | 3,840,533 | 596,041 | |
| Income Tax Payable | 14,550 | 1,029 | 160 | |
| Customer Advances and Deposits and Deferred Revenue | 1,526,051 | 1,402,773 | 217,707 | |
| Accrued Expenses and Other Liabilities | 2,507,917 | 2,908,613 | 451,410 | |
| Financing Lease Liabilities | 1,581 | 1,374 | 213 | |
| Operating Lease Liabilities | 1,032,461 | 1,079,335 | 167,510 | |
| Amounts Due to Related Parties | 35,623 | 619,616 | 96,163 | |
| Liabilities held for sale | 193,432 | 205,754 | 31,933 | |
| Total Current Liabilities | 12,634,249 | 13,413,637 | 2,081,765 |
| Summary of Unaudited Condensed Consolidated Balance Sheets (Cont’d) | ||||
| (In Thousands) | ||||
| As of December 31, 2020 | As of September 30, 2021 | |||
| RMB | RMB | US$ | ||
| Non-current Liabilities | ||||
| Convertible Senior Notes held by related parties | 1,617,846 | 971,042 | 150,703 | |
| Secured Borrowings | – | 109,466 | 16,989 | |
| Convertible Senior Notes held by third parties | 642,121 | – | – | |
| Operating Lease Liabilities | 2,995,173 | 2,850,987 | 442,466 | |
| Financing Lease Liabilities | 2,698 | 1,695 | 263 | |
| Other Non–current Liabilities | 175,584 | 121,353 | 18,834 | |
| Long-term Bank Loans | 78,548 | 75,918 | 11,782 | |
| Total Non–current Liabilities | 5,511,970 | 4,130,461 | 641,037 | |
| Total Liabilities | 18,146,219 | 17,544,098 | 2,722,802 | |
| Mezzanine Equity: | ||||
| Convertible Non-controlling Interests | – | 184,421 | 28,622 | |
| Total mezzanine equity | – | 184,421 | 28,622 | |
| Shareholders’ Equity | ||||
| Ordinary Shares | 25,988 | 25,988 | 4,033 | |
| Treasury Shares | (211,352) | (126,190) | (19,584) | |
| Additional Paid–In Capital | 19,487,232 | 19,490,101 | 3,024,816 | |
| Statutory Reserves | 8,038 | 5,103 | 792 | |
| Accumulated Deficit | (17,710,964) | (19,420,104)[11] | (3,013,953) | |
| Accumulated Other Comprehensive Income | 151,677 | 135,637 | 21,051 | |
| BEST Inc. Shareholders’ Equity | 1,750,619 | 110,535 | 17,155 | |
| Non-controlling Interests | (26,015) | (40,321) | (6,258) | |
| Total Shareholders’ Equity | 1,724,604 | 70,214 | 10,897 | |
| Total Liabilities, Mezzanine Equity and Shareholders’Equity | 19,870,823 | 17,798,733 | 2,762,321 |
| [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 RMB9,926,297 |
| Summary of Unaudited Condensed Consolidated Statements of Cash Flows | ||||||
| (In Thousands) | ||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||
| 2020 | 2021 | 2020 | 2021 | |||
| RMB | RMB | US$ | RMB | RMB | US$ | |
| Net cash generated from/(used in) continuing operating activities | 140,915 | (1,157,227) | (179,599) | (335,749) | (1,848,381) | (286,864) |
| Net cash used in discontinued operating activities | (25,564) | (1,019) | (158) | (119,807) | (59,408) | (9,220) |
| Net cash generated from/(used in) operating activities | 115,351 | (1,158,246) | (179,757) | (455,556) | (1,907,789) | (296,084) |
| Net cash (used in)/generated from continuing investing activities | (540,706) | 1,054,911 | 163,720 | (709,472) | 1,403,281 | 217,786 |
| Net cash generated from/(used in) discontinued Investing activities | 1,047 | – | – | 646 | (217) | (34) |
| Net cash (used in) /generated from investing activities | (539,659) | 1,054,911 | 163,720 | (708,826) | 1,403,064 | 217,752 |
| Net cash generated from/(used in) continuing financing activities | 421,217 | 59,389 | 9,217 | 1,933,283 | (18,525) | (2,875) |
| Net cash used in discontinued financing activities | (50,000) | – | – | (195,000) | (280,000) | (43,455) |
| Net cash generated from /(used in) financing activities | 371,217 | 59,389 | 9,217 | 1,738,283 | (298,525) | (46,330) |
| Exchange Rate Effect on Cash, Cash Equivalents, and Restricted Cash | (106,521) | 3,895 | 604 | (81,332) | (26,520) | (4,116) |
| Net (decrease)/increase in Cash and Cash Equivalents, and Restricted Cash | (159,612) | (40,051) | (6,216) | 492,569 | (829,770) | (128,778) |
| Cash and Cash Equivalents, and Restricted Cash at Beginning of Period | 4,609,396 | 3,419,402 | 530,683 | 3,957,215 | 4,209,121 | 653,245 |
| Cash and Cash Equivalents, and Restricted Cash at End of Period | 4,449,784 | 3,379,351 | 524,467 | 4,449,784 | 3,379,351 | 524,467 |
| Less: Cash and Cash Equivalents, and Restricted Cash held for sales at end of the Period | 1,404 | 4,305 | 668 | 1,404 | 4,305 | 668 |
| Cash and Cash Equivalents, and Restricted Cash from continuing operations at End of Period | 4,448,380 | 3,375,046 | 523,799 | 4,448,380 | 3,375,046 | 523,799 |
RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES
The table below sets forth a reconciliation of the Company’s net (loss)/income 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, 2021 | |||||||
| (In RMB’000) | Express | Freight | Supply Chain | Global | Others | Unallocated[12] | Total |
| Net (Loss)/Profit | (473,788) | (160,060) | (27,069) | (68,869) | (84,829) | 159,755 | (654,860) |
| Add: | |||||||
| Depreciation & Amortization | 122,858 | 16,733 | 9,055 | 4,981 | 4,431 | 6,363 | 164,421 |
| Interest Expense | – | – | – | – | – | 48,731 | 48,731 |
| Income Tax (Benefit)/Expense | – | – | (130) | – | 1,182 | (1) | 1,051 |
| Subtract: | |||||||
| Interest Income | – | – | – | – | – | (11,188) | (11,188) |
| EBITDA | (350,930) | (143,327) | (18,144) | (63,888) | (79,216) | 203,660 | (451,845) |
| Add: | |||||||
| Share-based Compensation Expenses | 2,456 | 2,905 | 2,160 | 2,068 | 725 | 19,038 | 29,352 |
| Subtract: | |||||||
| Gain from appreciation of investments | – | – | – | – | – | (58,643) | (58,643) |
| Adjusted EBITDA | (348,474) | (140,422) | (15,984) | (61,820) | (78,491) | 164,055 | (481,136) |
| Adjusted EBITDA Margin | (8.7%) | (10.3%) | (4.0%) | (20.7%) | (10.2%) | – | (7.1%) |
| Three Months Ended September 30, 2020 | |||||||
| (In RMB’000) | Express | Freight | Supply Chain | Global | Others | Unallocated[13] | Total |
| Net Loss | (291,365) | (56,027) | (39,729) | (66,984) | (35,077) | (76,745) | (565,927) |
| Add: | |||||||
| Depreciation & Amortization | 98,294 | 16,357 | 10,120 | 4,320 | 1,773 | 7,005 | 137,869 |
| Interest Expense | – | – | – | – | – | 46,583 | 46,583 |
| Income Tax Expense/(Benefit) | 1,616 | – | – | (273) | 5,654 | – | 6,997 |
| Subtract: | |||||||
| Interest Income | – | – | – | – | – | (18,106) | (18,106) |
| EBITDA | (191,455) | (39,670) | (29,609) | (62,937) | (27,650) | (41,263) | (392,584) |
| Add: | |||||||
| Share-based Compensation Expenses | 3,712 | 2,702 | 2,948 | 2,238 | 935 | 20,374 | 32,909 |
| Subtract: | |||||||
| Gain from appreciation of investments | – | – | – | – | – | (9,838) | (9,838) |
| Adjusted EBITDA | (187,743) | (36,968) | (26,661) | (60,699) | (26,715) | (30,727) | (369,513) |
| Adjusted EBITDA Margin | (3.7%) | (2.5%) | (5.9%) | (28.1%) | (3.7%) | – | (4.6%) |
| [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. |
The table below sets forth a reconciliation of the Company’s net (loss)/income to non-GAAP net (loss)/income, non-GAAP net (loss)/income margin for the periods indicated:
Table 8 – Reconciliation of Non-GAAP Net (Loss)/Income and Non-GAAP Net (Loss)/Income Margin
| Three Months Ended September 30, 2021 | |||||||
| (In RMB’000) | Express | Freight | Supply Chain | Global | Others | Unallocated[14] | Total |
| Net (Loss)/Profit | (473,788) | (160,060) | (27,069) | (68,869) | (84,829) | 159,755 | (654,860) |
| Add: | |||||||
| Share-based Compensation Expenses | 2,456 | 2,905 | 2,160 | 2,068 | 725 | 19,038 | 29,352 |
| Subtract: | |||||||
| Gain from appreciation of investments | – | – | – | – | – | (58,643) | (58,643) |
| Non-GAAP Net (Loss)/Profit | (471,332) | (157,155) | (24,909) | (66,801) | (84,104) | 120,150 | (684,151) |
| Non-GAAP Net (Loss)/ProfitMargin | (11.8%) | (11.6%) | (6.2%) | (22.4%) | (11.0%) | – | (10.0%) |
| Three Months Ended September 30, 2020 | |||||||
| (In RMB’000) | Express | Freight | Supply Chain | Global | Others | Unallocated[15] | Total |
| Net Profit/(Loss) | (291,365) | (56,027) | (39,729) | (66,984) | (35,077) | (76,745) | (565,927) |
| Add: | |||||||
| Share-based Compensation Expenses | 3,712 | 2,702 | 2,948 | 2,238 | 935 | 20,374 | 32,909 |
| Amortization of Intangible Assets Resulting from Business | – | – | – | 916 | – | – | 916 |
| Subtract: | |||||||
| Gain from appreciation of investments | – | – | – | – | – | (9,838) | (9,838) |
| Non-GAAP Net Profit/(Loss) | (287,653) | (53,325) | (36,781) | (63,830) | (34,142) | (66,209) | (541,940) |
| Non-GAAP Net Profit/(Loss)Margin | (5.7%) | (3.6%) | (8.1%) | (29.5%) | (4.7%) | – | (6.8%) |
| [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. |
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, | ||||
| 2021 | 2021 | ||||
| (In ‘000) | RMB | US$ | RMB | US$ | |
| Net Loss Attributable to Ordinary Shareholders | (642,237) | (99,673) | (1,703,271) | (264,344) | |
| Add: | |||||
| Share-based Compensation Expenses | 29,352 | 4,556 | 90,052 | 13,976 | |
| Subtract: | |||||
| Gain from appreciation of investments | (58,643) | (9,101) | (64,205) | (9,964) | |
| Non-GAAP Net Loss Attributable to Ordinary Shareholders for Computing Non-GAAP Diluted EPS | (671,528) | (104,218) | (1,677,424) | (260,332) | |
| Weighted Average Diluted Shares Outstanding During the Period | |||||
| Diluted | 388,538,709 | 388,538,709 | 387,814,480 | 387,814,480 | |
| Diluted (Non-GAAP) | 388,538,709 | 388,538,709 | 387,814,480 | 387,814,480 | |
| Diluted EPS | (1.65) | (0.26) | (4.39) | (0.68) | |
| Add: | |||||
| Non-GAAP adjustment to net loss per share | (0.08) | (0.01) | 0.06 | 0.01 | |
| Non-GAAP Diluted EPS | (1.73) | (0.27) | (4.33) | (0.67) |
SOURCE BEST Inc.
