 |
HANGZHOU, China, March 1, 2018 /PRNewswire/ -- BEST Inc. (NYSE: BSTI) ("BEST" or the "Company"), a leading Smart Supply Chain service provider in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2017.
"In 2017, BEST Inc. continued to deliver strong growth as a leading Smart Supply Chain service provider by investing in people, technology and business innovation, and by effectively executing on our plan to achieve scale and drive efficiency." said Johnny Chou, Chairman and Chief Executive Officer of BEST Inc. "Looking ahead, the continuous growth of e-commerce and New Retail will create tremendous market opportunities for integrated services and solutions. The fundamental strength of our business model and technology infrastructure makes us confident that we are well positioned to capture these opportunities, deliver sustainable high-quality growth and achieve long-term value creation."
"We delivered another excellent quarter with revenue increasing by 111.7% year-over-year thanks to strong growth momentum across all segments," said Alice Guo, BEST Inc.'s Chief Accounting Officer and Vice President of Finance. "We continued to achieve significant margin expansion. In this quarter, our gross profit margin improved by 9.8 percentage points, and our net loss margin improved by 11.1 percentage points year-over-year. We are very excited about the prospects for 2018. We expect to continue delivering solid top-line growth while significantly improving margins."
BUSINESS HIGHLIGHTS
In the quarter ended December 31, 2017:
o Express Service revenue increased by 139.8% YoY to RMB4,347.5 million (US$668.2 million).
o Supply Chain Management Service revenue increased by 27.5% YoY to RMB529.5 million (US$81.4 million).
o Freight Service revenue increased by 70.4% YoY to RMB963.7 million (US$148.1 million).
o Store+ Service revenue increased by 115.9% YoY to RMB591.7 million (US$90.9 million).
o Others Service revenue increased by 478.9% YoY to RMB98.6 million (US$15.2 million).
o BEST Express – Gross profit per parcel was RMB0.15 (US$0.02), compared to negative RMB0.11 in the same period of 2016.
o BEST Freight – Gross margin improved significantly by 18.7 percentage points to negative 0.1% from negative 18.8% in the same period of 2016.
| (1) Non-GAAP net loss represents net loss excluding share-based compensation expense and amortization of intangible assets resulting from business acquisitions. See the sections entitled "Use of Non-GAAP Financial Measures" and "Reconciliations of Non-GAAP Measures to the Nearest Comparable GAAP Measures" for more information about the non-GAAP measures referred to within this results announcement. |
| (2) In the fourth quarter of 2017, the Company recorded share-based compensation expense of RMB18.3 million, of which approximately RMB0.8 million was allocated to cost of revenue, RMB1.1 million was allocated to selling expenses, RMB14.1 million was allocated to general and administrative expenses, and RMB2.3 million was allocated to research and development expenses. |
| (3) EBITDA represents net loss excluding depreciation, amortization, interest expense and income tax expense and minus interest income. |
| (4) Adjusted EBITDA represents EBITDA excluding share-based compensation expenses. |
| (5) Based on data published by State Post Bureau of the PRC.
|
In the fiscal year ended December 31, 2017:
o Express Service revenue increased by 137.3% YoY to RMB12,786.3 million (US$1,965.2 million).
o Supply Chain Management Service revenue increased by 29.0% YoY to RMB1,601.0 million (US$246.1 million).
o Freight Service revenue increased by 98.1% YoY to RMB3,178.0 million (US$488.5 million).
o Store+ Service revenue increased by 297.3% YoY to RMB2,226.0 million (US$342.1 million).
o Others Service revenue increased by 303.4% YoY to RMB198.3 million (US$30.5 million).
o BEST Express – Gross profit per parcel was RMB0.09 (US$0.01), compared to negative RMB0.13 in 2016.
o BEST Freight – Gross margin improved significantly by 13.0 percentage points to negative 5.8% from negative 18.8% in 2016.
| (6) Non-GAAP net loss represents net loss excluding share-based compensation expense and amortization of intangible assets resulting from business acquisitions. See the sections entitled "Use of Non-GAAP Financial Measures" and "Reconciliations of Non-GAAP Measures to the Nearest Comparable GAAP Measures" for more information about the non-GAAP measures referred to within this results announcement. |
| (7) In the fourth quarter of 2017, the Company recorded share-based compensation expense of RMB18.3 million, of which approximately RMB0.8 million was allocated to cost of revenue, RMB1.1 million was allocated to selling expenses, RMB14.1 million was allocated to general and administrative expenses, and RMB2.3 million was allocated to research and development expenses. |
| (8) EBITDA represents net loss excluding depreciation, amortization, interest expense and income tax expense and minus interest income. |
| (9) Adjusted EBITDA represents EBITDA excluding share-based compensation expenses. |
| (10) Based on data published by State Post Bureau of the PRC.
|
BUSINESS AND STRATEGIC UPDATES
BEST Express - Rapid Growth Driving Continued Margin Improvement
o Total number of hubs and sortation centers decreased to 145, representing a reduction of eight for the fourth quarter of 2017 and a reduction of 86 for fiscal year of 2017.
o Since launching swap-body operation in four hubs and sortation centers in Jiangsu Province in June 2017, the Company rolled out swap-body operation to 19 hubs and sortation centers in Jiangsu, Zhejiang and Guangdong Provinces.
o Total number of automated sorting lines increased to 47 as of end of 2017, representing an increase of three for the fourth quarter of 2017 and 14 for fiscal year of 2017.
| (11) Express market share calculated as the Company's parcel volume as a percentage of aggregate national express delivery parcel volume for the relevant period, based on data published by State Post Bureau of the PRC. |
| (12) Starting in 2017, the Company revised its arrangements with franchisees and the scope of its service. As a result, the Company became the principal that is directly responsible for last-mile delivery of all parcels and freight processed through its network, and the Company is liable to senders for damage to or loss of parcels and freight in connection with last-mile delivery. Therefore, in consideration of such expanded scope of services and increased responsibilities, the Company increased the fee it charges to pick-up service stations and incurred additional cost of revenue that were attributable to fees for destination franchised service stations that the Company engaged for the provision of last-mile delivery service. |
BEST Supply Chain Management - Integrated Solutions
BEST Freight - Growth Supported by Continuous Network and Service Offering Expansion
| (13) Starting in 2017, the Company revised its arrangements with franchisees and the scope of its service. As a result, the Company became the principal that is directly responsible for last-mile delivery of all parcels and freight processed through its network, and the Company is liable to senders for damage to or loss of parcels and freight in connection with last-mile delivery. Therefore, in consideration of such expanded scope of services and increased responsibilities, the Company increased the fee it charges to pick-up service stations and incurred additional cost of revenue that were attributable to fees for destination franchised service stations that the Company engaged for the provision of last-mile delivery service. |
BEST Store+ - Building Last-Mile Capabilities
Others
2018 STRATEGIC FOCUSES
The Company has built a leading Smart Supply Chain platform by leveraging technology and business model innovation. In 2018, the Company intends to further expand market share, enhance cross-segment synergies and improve operational efficiency to achieve quality growth by focusing on the following areas:
KEY OPERATING METRICS OF MAJOR SERVICE LINES
Fourth Quarter 2017
| Three Months Ended |
% Change |
||
| December 31, 2016 |
December 31, 2017 |
YoY |
|
| BEST Supply Chain Management |
|||
| Number of Orders Fulfilled by Self-operated |
33,318 |
43,570 |
30.8% |
| Number of Orders Fulfilled by Franchised |
13,725 |
17,007 |
23.9% |
| BEST Express |
|||
| Parcel Volume (in '000)(14) |
757,179 |
1,270,168 |
67.8% |
| BEST Freight |
|||
| Freight Volume (Tonnage in '000)(14) |
1,015 |
1,237 |
21.9% |
| BEST Store+ |
|||
| Number of Store Orders Fulfilled |
341,287 |
647,044 |
89.6% |
Fiscal Year 2017
| Year Ended |
% Change |
||
| December 31, 2016 |
December 31, 2017 |
YoY |
|
| BEST Supply Chain Management |
|||
| Number of Orders Fulfilled by Self-operated |
88,063 |
132,245 |
50.2% |
| Number of Orders Fulfilled by Franchised |
32,602 |
48,232 |
47.9% |
| BEST Express |
|||
| Parcel Volume (in '000)(14) |
2,165,521 |
3,769,385 |
74.1% |
| BEST Freight |
|||
| Freight Volume (Tonnage in '000)(14) |
2,982 |
4,316 |
44.7% |
| BEST Store+ |
|||
| Number of Store Orders Fulfilled |
687,692 |
2,403,538 |
249.5% |
| (14) Includes services performed for external customers both directly and indirectly through our other segments. |
SUMMARY FINANCIAL RESULTS
Fourth Quarter 2017
| Three Months Ended |
% Change |
||
| (RMB million, except for %) |
December 31, 2016 |
December 31, 2017 |
YoY |
| Revenue |
3,085 |
6,531 |
111.7% |
| Supply Chain Management |
415 |
530 |
27.5% |
| Express |
1,813 |
4,347 |
139.8% |
| Freight |
565 |
964 |
70.4% |
| Store+ |
274 |
592 |
115.9% |
| Others(15) |
18 |
99 |
478.9% |
| Gross (Loss)/Profit |
(167) |
288 |
n/m |
| Gross (Loss)/Profit Margin |
(5.4%) |
4.4% |
9.8ppts |
| Supply Chain Management |
|||
| Gross (Loss)/Profit |
23 |
16 |
(28.3%) |
| Gross (Loss)/Profit Margin |
5.5% |
3.1% |
(2.4ppts) |
| Express |
|||
| Gross (Loss)/Profit |
(85) |
189 |
n/m |
| Gross (Loss)/Profit Margin |
(4.7%) |
4.4% |
9.1ppts |
| Freight |
|||
| Gross (Loss)/Profit |
(106) |
(1) |
98.7% |
| Gross (Loss)/Profit Margin |
(18.8%) |
(0.1%) |
18.7ppts |
| Store+ |
|||
| Gross (Loss)/Profit |
0 |
54 |
215,332.0 % |
| Gross (Loss)/Profit Margin |
(0.0%) |
9.1% |
9.1ppts |
| Others(15) |
|||
| Gross (Loss)/Profit |
1 |
30 |
2,417.5% |
| Gross (Loss)/Profit Margin |
7.1% |
30.7% |
23.6ppts |
| EBITDA |
(333) |
(42) |
87.3% |
| Adjusted EBITDA |
(333) |
(24) |
92.8% |
| Net Loss |
(407) |
(137) |
66.4% |
| Net Loss Margin |
(13.2%) |
(2.1%) |
11.1ppts |
| Non-GAAP Net Loss |
(407) |
(116) |
71.6% |
| Non-GAAP Net Loss Margin |
(13.2%) |
(1.8 %) |
11.4ppts |
| (15) Others include BEST Global, BEST Capital and BEST UCargo. |
Fiscal Year 2017
| Year Ended |
% Change |
||
| (RMB million, except for %) |
December 31, 2016 |
December 31, 2017 |
YoY |
| Revenue |
8,844 |
19,990 |
126.0% |
| Supply Chain Management |
1,241 |
1,601 |
29.0% |
| Express |
5,389 |
12,786 |
137.3% |
| Freight |
1,605 |
3,178 |
98.1% |
| Store+ |
560 |
2,226 |
297.3% |
| Others(16) |
49 |
199 |
303.4% |
| Gross (Loss)/Profit |
(532) |
486 |
n/m |
| Gross (Loss)/Profit Margin |
(6.0%) |
2.4% |
8.4ppts |
| Supply Chain Management |
|||
| Gross (Loss)/Profit |
58 |
98 |
69.3% |
| Gross (Loss)/Profit Margin |
4.7% |
6.1% |
1.4ppts |
| Express |
|||
| Gross (Loss)/Profit |
(283) |
351 |
n/m |
| Gross (Loss)/Profit Margin |
(5.2%) |
2.7% |
7.9ppts |
| Freight |
|||
| Gross (Loss)/Profit |
(302) |
(185) |
38.9% |
| Gross (Loss)/Profit Margin |
(18.8%) |
(5.8%) |
13.0ppts |
| Store+ |
|||
| Gross (Loss)/Profit |
(9) |
153 |
n/m |
| Gross (Loss)/Profit Margin |
(1.7%) |
6.9% |
8.6ppts |
| Others(16) |
|||
| Gross (Loss)/Profit |
4 |
69 |
1,750.8% |
| Gross (Loss)/Profit Margin |
7.5% |
34.3% |
26.8ppts |
| EBITDA |
(1,120) |
(882) |
21.2% |
| Adjusted EBITDA |
(1,120) |
(583) |
47.9% |
| Net Loss |
(1,363) |
(1,228) |
9.9% |
| Net Loss Margin |
(15.4%) |
(6.1%) |
9.3ppts |
| Non-GAAP Net Loss |
(1,363) |
(923) |
32.3% |
| Non-GAAP Net Loss Margin |
(15.4%) |
(4.6%) |
10.8ppts |
| (16) Others include BEST Global, BEST Capital and BEST UCargo. |
FOURTH QUARTER OPERATIONAL AND FINANCIAL RESULTS
Revenue in the fourth quarter of 2017 increased by 111.7% to RMB6,531.0 million (US$1,003.8 million) from RMB3,084.6 million in the same period of 2016. The increase was primarily attributable to increases in revenue across the various service lines, as discussed below.
The following table sets forth a breakdown of revenue by business segment for the periods indicated.
| Three Months Ended December 31, |
|||||
| 2016 |
2017 |
||||
| (in '000, Except for %) |
RMB |
% of Revenue |
RMB |
US$ |
% of Revenue |
| Supply Chain Management |
415,228 |
13.5% |
529,518 |
81,385 |
8.1% |
| Express |
1,812,850 |
58.8% |
4,347,485 |
668,196 |
66.5% |
| Freight |
565,409 |
18.3% |
963,666 |
148,113 |
14.8% |
| Store+ |
274,084 |
8.9% |
591,743 |
90,949 |
9.1% |
| Others |
17,031 |
0.5% |
98,592 |
15,153 |
1.5% |
| Revenue |
3,084,602 |
100.0% |
6,531,004 |
1,003,796 |
100.0% |
Cost of Revenue and Operating Expenses:
The following table sets forth a breakdown of cost of revenue by business segment for the periods indicated.
| Three Months Ended December 31, |
|||||
| 2016 |
2017 |
||||
| (in '000, Except for %) |
RMB |
% of Revenue |
RMB |
US$ |
% of Revenue |
| Supply Chain Management |
(392,306) |
94.5% |
(513,090) |
(78,860) |
96.9% |
| Express |
(1,897,823) |
104.7% |
(4,158,328) |
(639,123) |
95.6% |
| Freight |
(671,807) |
118.8% |
(965,005) |
(148,319) |
100.1% |
| Store+ |
(274,059) |
100.0% |
(537,885) |
(82,671) |
90.9% |
| Others |
(15,830) |
92.9% |
(68,357) |
(10,506) |
69.3% |
| Cost of Revenue |
(3,251,825) |
105.4% |
(6,242,665) |
(959,479) |
95.6% |
| Note: In the fourth quarter of 2017, the Company recorded share-based compensation expense of RMB18.3 million, of which |
|||||
The following table sets forth a breakdown of operating expenses by category for the periods indicated.
| Three Months Ended December 31, |
|||||
| 2016 |
2017 |
||||
| (in '000, Except for %) |
RMB |
% of Revenue |
RMB |
US$ |
% of Revenue |
| Selling Expenses |
121,574 |
3.9% |
207,613 |
31,910 |
3.2% |
| General and Administrative Expenses |
140,923 |
4.6% |
211,092 |
32,444 |
3.2% |
| Research and Development Expenses |
24,114 |
0.8% |
28,956 |
4,450 |
0.5% |
| Other Operating Income |
(40,491) |
(1.3%) |
– |
– |
– |
| Operating Expenses |
246,120 |
8.0% |
447,661 |
68,804 |
6.9% |
| Note: In the fourth quarter of 2017, the Company recorded share-based compensation expense of RMB18.3 million, of which |
|||||
Cost of Revenue increased by 92.0% to RMB6,242.7 million (US$959.5 million) in the fourth quarter of 2017 from RMB3,251.8 million in the same period of 2016. The increase was primarily attributable to increase in lease, transportation and labor costs in connection to significant volume growth, the expansion of the Company's service scope(17) to include last-mile delivery services, as well as increase in the amount of merchandise sold by Store+ services. Cost of Revenue as a Percentage of Revenue decreased to 95.6% in the fourth quarter of 2017 from 105.4% in the same period of 2016, primarily due to economies of scale, network optimization, as well as increased operational efficiency resulting from proactive cost-control measures and continuous technology improvements and applications.
| (17) Starting in 2017, the Company revised its arrangements with franchisees and the scope of its service. As a result, the Company became the principal that is directly responsible for last-mile delivery of all parcels and freight processed through its network, and the Company is liable to senders for damage to or loss of parcels and freight in connection with last-mile delivery. Therefore, in consideration of such expanded scope of services and increased responsibilities, the Company increased the fee it charges to pick-up service stations and incurred additional cost of revenue that were attributable to fees for destination franchised service stations that the Company engaged for the provision of last-mile delivery service. Starting in 2017, the Company revised its arrangements with franchisees and the scope of its service. As a proxy, in the fourth quarter of 2017, Express and Freight incurred approx. RMB1,721.4 million and RMB157.7 million of last-mile delivery service cost of revenue that were attributable to fees for destination franchised service stations that the Company engaged for the provision of last-mile delivery service. |
Operating Expenses in the fourth quarter of 2017 increased by 81.9% to RMB447.7 million (US$68.8 million) from RMB246.1 million in the same period of 2016. Operating Expenses as a Percentage of Revenue decreased to 6.9% in the fourth quarter of 2017 from 8.0% in the same period of 2016, and would have further decreased to 6.6% when excluding the impact of share-based compensation expense. This decrease was mainly due to the faster growth in revenue and economies of scale.
Interest Income increased to RMB24.1 million (US$3.7 million) in the fourth quarter of 2017 from RMB10.5 million in the same period of 2016, primarily due to a higher yield generated from the Company's cash balance.
Interest Expense increased to RMB14.4 million (US$2.2 million) in the fourth quarter of 2017 from RMB7.2 million in the same period of 2016, primarily as a result of an increase in the Company's Renminbi-denominated bank borrowings to satisfy working capital requirements as the Company held a significant amount of bank deposits in foreign currencies outside China.
Foreign Exchange Gain was RMB0.8 million (US$0.1 million) in the fourth quarter of 2017, compared to foreign exchange loss of RMB1.2 million in the same period of 2016. This is primarily due to changes in exchange rates between Renminbi and U.S. dollars during the respective periods.
Other Income increased to RMB21.1 million (US$3.2 million) in the fourth quarter of 2017 from RMB8.1 million in the same period of 2016, primarily due to increases in other miscellaneous fees.
Other Expense increased to RMB4.9 million (US$0.8 million) in the fourth quarter of 2017 from RMB3.9 million in the same period of 2016, primarily due to increases in various miscellaneous expenses.
Income Tax Expense increased to RMB3.4 million (US$0.5 million) in the fourth quarter of 2017 from RMB0.5 million in the same period of 2016, reflecting tax payable in the fourth quarter of 2017 by certain of the Company's PRC subsidiaries which had taxable income during the period, primarily WOWO.
Gross Profit was RMB288.3 million (US$44.3 million) in the fourth quarter of 2017, compared to gross loss of RMB167.2 million in the same period of 2016. Gross Profit Margin improved by 9.8 percentage points to 4.4% in the fourth quarter of 2017 from negative 5.4% in the same period of 2016.
Net Loss was RMB136.9 million (US$21.0 million) in the fourth quarter of 2017, compared to RMB407.4 million in the same period of 2016.
Non-GAAP Net Loss (18) was RMB115.6 million (US$17.8 million) in the fourth quarter of 2017, compared to RMB407.4 million in the same period of 2016.
EBITDA (19) was negative RMB42.3 million (negative US$6.5 million) in the fourth quarter of 2017, compared to negative RMB332.6 million in the same period of 2016.
Adjusted EBITDA (20) was negative RMB24.0 million (negative US$3.7 million) in the fourth quarter of 2017, compared to negative RMB332.6 million in the same period of 2016.
| (18) See the sections entitled "Use of Non-GAAP Financial Measures" and "Reconciliations of Non-GAAP Measures to the Nearest Comparable GAAP Measures" for more information about the non-GAAP measures referred to within this results announcement. |
| (19) EBITDA represents net loss excluding depreciation, amortization, interest expense and income tax expense and minus interest income. |
| (20) Adjusted EBITDA represents EBITDA excluding share-based compensation expenses. |
Net Cash Used in Operating Activities was RMB12.4 million (US$1.9 million) in the fourth quarter of 2017, compared to RMB91.4 million in the same period of 2016.
As of December 31, 2017, the Company had Cash and Cash Equivalents, Restricted Cash and Short-term Investments of RMB5,336.5 million (US$820.2 million).
FISCAL YEAR 2017 FINANCIAL RESULTS
Revenue in fiscal year 2017 increased by 126.0% to RMB19,989.6 million (US$3,072.3 million) from RMB8,844.1 million in 2016. The increase was primarily attributable to increases in revenue across the various service lines, as discussed below.
The following table sets forth a breakdown of revenue by business segment for the periods indicated.
| Year Ended December 31, |
|||||
| 2016 |
2017 |
||||
| (in '000, Except for %) |
RMB |
% of Revenue |
RMB |
US$ |
% of Revenue |
| Supply Chain Management |
1,241,356 |
14.0% |
1,600,952 |
246,062 |
8.0% |
| Express |
5,388,833 |
60.9% |
12,786,279 |
1,965,215 |
64.0% |
| Freight |
1,604,573 |
18.2% |
3,178,044 |
488,456 |
15.9% |
| Store+ |
560,226 |
6.3% |
2,226,034 |
342,135 |
11.1% |
| Others |
49,149 |
0.6% |
198,253 |
30,471 |
1.0% |
| Revenue |
8,844,137 |
100.0% |
19,989,562 |
3,072,339 |
100.0% |
Cost of Revenue and Operating Expenses:
The following tables set forth a breakdown of cost of revenue and share-based compensation expense included in cost of revenue by business segment for the periods indicated. Before the completion of the Company's IPO in September 2017, no share-based compensation expense had been recognized. Upon completion of the IPO, the Company immediately recognized a substantial amount of share-based compensation expense associated with vested share-based awards, especially in the third quarter of 2017.
I. Cost of Revenue by Business Segments
| Year Ended December 31, |
|||||
| 2016 |
2017 |
||||
| (in '000, Except for %) |
RMB |
% of Revenue |
RMB |
US$ |
% of Revenue |
| Supply Chain Management |
(1,183,245) |
95.3% |
(1,502,570) |
(230,941) |
93.9% |
| Express |
(5,671,356) |
105.2% |
(12,435,550) |
(1,911,309) |
97.3% |
| Freight |
(1,906,930) |
118.8% |
(3,362,652) |
(516,830) |
105.8% |
| Store+ |
(569,557) |
101.7% |
(2,072,912) |
(318,601) |
93.1% |
| Others |
(45,479) |
92.5% |
(130,327) |
(20,031) |
65.7% |
| Cost of Revenue |
(9,376,567) |
106.0% |
(19,504,011) |
(2,997,712) |
97.6% |
II. Share-based Compensation Expense Included in Cost of Revenue by Business Segments
| Year Ended December 31, |
|||||
| 2016 |
2017 |
||||
| (in '000, Except for %) |
RMB |
% of Revenue |
RMB |
US$ |
% of Revenue |
| Supply Chain Management |
NA |
NA |
(1,134) |
(174) |
0.1% |
| Express |
NA |
NA |
(4,153) |
(638) |
0.0% |
| Freight |
NA |
NA |
(276) |
(42) |
0.0% |
| Store+ |
NA |
NA |
NA |
NA |
NA |
| Others |
NA |
NA |
(1,236) |
(190) |
0.6% |
| Share-Based Compensation |
NA |
NA |
(6,799) |
(1,045) |
0.0% |
The following tables set forth a breakdown of operating expenses and share-based compensation expense included in operating expenses by category for the periods indicated.
I. Operating Expenses by Category
| Year Ended December 31, |
|||||
| 2016 |
2017 |
||||
| (in '000, Except for %) |
RMB |
% of Revenue |
RMB |
US$ |
% of Revenue |
| Selling Expenses |
370,017 |
4.2% |
694,852 |
106,797 |
3.5% |
| General and Administrative Expenses |
521,237 |
5.9% |
928,188 |
142,660 |
4.6% |
| Research and Development Expenses |
80,326 |
0.9% |
139,009 |
21,365 |
0.7% |
| Other Operating Income |
(104,047) |
(1.2%) |
– |
– |
– |
| Operating Expenses |
867,533 |
9.8% |
1,762,049 |
270,822 |
8.8% |
II. Share-based Compensation Expense Included in Operating Expenses by Category
| Year Ended December 31, |
|||||
| 2016 |
2017 |
||||
| (in '000, Except for %) |
RMB |
% of Revenue |
RMB |
US$ |
% of Revenue |
| Selling Expenses |
NA |
NA |
14,244 |
2,189 |
0.1% |
| General and Administrative Expenses |
NA |
NA |
251,312 |
38,626 |
1.3% |
| Research and Development Expenses |
NA |
NA |
26,607 |
4,089 |
0.1% |
| Other Operating Income |
NA |
NA |
NA |
NA |
NA |
| Share-Based Compensation |
NA |
NA |
292,163 |
44,904 |
1.5% |
Cost of Revenue increased by 108.0% to RMB19,504.0 million (US$2,997.7 million) in fiscal year 2017 from RMB9,376.6 million in 2016. The increase was primarily attributable to increase in lease, transportation and labor costs in connection to significant volume growth, the expansion of the Company's service scope(21) to include last-mile delivery services, as well as increase in the amount of merchandise sold by Store+ services. Cost of Revenue as a Percentage of Revenue decreased to 97.6% in fiscal year 2017 from 106.0% in 2016, primarily due to economies of scale, network optimization, as well as increased operational efficiency resulting from proactive cost-control measures and continuous technology improvements and applications
| (21) Starting in 2017, the Company revised its arrangements with franchisees and the scope of its service. As a result, the Company became the principal that is directly responsible for last-mile delivery of all parcels and freight processed through its network, and the Company is liable to senders for damage to or loss of parcels and freight in connection with last-mile delivery. Therefore, in consideration of such expanded scope of services and increased responsibilities, the Company increased the fee it charges to pick-up service stations and incurred additional cost of revenue that were attributable to fees for destination franchised service stations that the Company engaged for the provision of last-mile delivery service. Starting in 2017, the Company revised its arrangements with franchisees and the scope of its service. As a proxy, in fiscal year 2017, Express and Freight incurred approx. RMB4,973.4 million and RMB529.1 million of last-mile delivery service cost of revenue that were attributable to fees for destination franchised service stations that the Company engaged for the provision of last-mile delivery service. |
Operating Expenses in fiscal year 2017 increased by 103.1% to RMB1,762.0 million (US$270.8 million) from RMB867.5 million in 2016. Operating Expenses as a Percentage of Revenue decreased to 8.8% in fiscal year 2017 from 9.8% in 2016, and would have further decreased to 7.4% when excluding the impact of share-based compensation expense. This decrease was mainly due to the faster growth in revenue and economies of scale.
Interest Income increased to RMB75.1 million (US$11.5 million) in fiscal year 2017 from RMB24.4 million in 2016, primarily due to a higher yield generated from the Company's cash balance.
Interest Expense increased to RMB47.2 million (US$7.2 million) in fiscal year 2017 from RMB21.4 million in 2016, primarily as a result of an increase in the Company's Renminbi-denominated bank borrowings to satisfy working capital requirements as the Company held a significant amount of bank deposits in foreign currencies outside China.
Foreign Exchange Loss was RMB6.3 million (US$1.0 million) in fiscal year 2017, compared to RMB1.9 million in 2016. This is primarily due to changes in exchange rates between Renminbi and U.S. dollars during the respective periods.
Other Income increased to RMB56.0 million (US$8.6 million) in fiscal year 2017 from RMB44.4 million in 2016, primarily due to increases in other miscellaneous fees.
Other Expense increased to RMB18.5 million (US$2.8 million) in fiscal year 2017 from RMB8.5 million in 2016, primarily due to increases in various miscellaneous expenses.
Income Tax Expense increased to RMB9.9 million (US$1.5 million) in fiscal year 2017 from RMB0.6 million in 2016, reflecting tax payable in fiscal year 2017 by certain of the Company's PRC subsidiaries which had taxable income during the period, primarily WOWO.
Gross Profit was RMB485.6 million (US$74.6 million) in fiscal year 2017, compared to gross loss of RMB532.4 million in 2016. Gross Profit Margin improved by 8.4 percentage points to 2.4% in fiscal year 2017 from negative 6.0% in 2016.
Net Loss was RMB1,228.1 million (US$188.7 million) in fiscal year 2017, compared to RMB1,363.5 million in 2016.
Non-GAAP Net Loss (22) was RMB922.5 million (US$141.8 million) in fiscal year 2017, compared to RMB1,363.5 million in 2016.
EBITDA (23) was negative RMB882.2 million (negative US$135.6 million) in fiscal year 2017, compared to negative RMB1,119.6 million in 2016.
Adjusted EBITDA (24) was negative RMB583.2 million (negative US$89.6 million) in fiscal year 2017, compared to negative RMB1,119.6 million in 2016.
Net Cash Generated from Operating Activities was RMB117.0 million (US$18.0 million) in fiscal year 2017, compared to net cash used in operating activities of RMB788.8 million in 2016.
SHARES OUTSTANDING
As of the date of this press release, the Company had approximately 374.5 million ordinary shares outstanding (25). Each ADS represents one Class A ordinary share.
| (22)See the sections entitled "Use of Non-GAAP Financial Measures" and "Reconciliations of Non-GAAP Measures to the Nearest Comparable GAAP Measures" for more information about the non-GAAP measures referred to within this results announcement. |
| (23) EBITDA represents net loss excluding depreciation, amortization, interest expense and income tax expense and minus interest income. |
| (24) Adjusted EBITDA represents EBITDA excluding share-based compensation expenses. |
| (25) The total number of shares outstanding excludes shares reserved for future issuances of ADSs upon exercise or vesting of awards granted under the Company's share incentive plans. |
EMPLOYEES
As of December 31, 2017, the Company had a total of 8,784 employees, compared to 10,061 employees as of December 31, 2016.
RECENT DEVELOPMENTS
The Company made recent management changes:
REVENUE GUIDANCE
Based on current market conditions and current operations, revenues for the first quarter of 2018 is expected to be in the range of RMB4.8 billion to RMB5.0 billion, representing a 47.8% to 53.9% increase from the same period of 2017. This represents management's current and preliminary expectation, which is subject to change.
WEBCAST AND CONFERENCE CALL INFORMATION
The Company will hold a conference call at 7:30 am U.S. Eastern Time on March 1, 2018 (8:30 pm Beijing Time, the same day), to discuss its financial results and operating performance for the fourth quarter and fiscal year of 2017.
Participants may access the call by dialing the following numbers:
| United States: |
+1-888-346-8982 |
| Hong Kong: |
+852-301-84992 or 800-905945 |
| China Domestic: |
4001-201203 |
| International: |
+1-412-902-4272 |
| Participant Elite Entry Number: |
6800428 |
A replay of the conference call will be accessible through March 8, 2017 by dialing the following numbers:
| United States Toll Free: |
+1-877-344-7529 |
| International: |
+1-412-317-0088 |
| Replay Access Code: |
10117114 |
In addition, a live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.best-inc.com/, along with the earnings press release and slide presentation.
ABOUT BEST INC.
BEST Inc. (NYSE: BSTI) is a leading Smart Supply Chain service provider that aims to transform China's logistics and supply chain industry. BEST provides express and freight delivery, integrated supply chain management solutions, merchandise sourcing and fulfilment services for convenience stores, financial and other value-added services. BEST leverages technology and business model innovation to create a smarter, more efficient supply chain that empowers businesses and enriches the lives of consumers in the New Retail era.
CONTACT:
For Investors:
Kobe Ge
+852 3611 2562
ir@best-inc.com
For Media:
Jill Mao
+852 3611 2564
mmj@best-inc.com
EXCHANGE RATE
This announcement contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from Renminbi to U.S. dollars are made at a rate of RMB6.5063 to US$1.00, the effective noon buying rate for December 31, 2017 as set forth in the H.10 statistical release of the Federal Reserve Board. The percentages stated in this announcement are calculated based on the RMB amounts.
SAFE HARBOR STATEMENT
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as BEST's strategic and operational plans, contain forward-looking statements. BEST may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about BEST's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: BEST's goals and strategies; BEST's future business development, results of operations and financial condition; BEST 's ability to maintain and enhance its ecosystem; BEST 's ability to continue to innovate, meet evolving market trends, adapt to changing customer demands and maintain its culture of innovation; and fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in BEST's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and BEST does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
USE OF NON-GAAP FINANCIAL MEASURES
In evaluating its business, BEST considers and uses non-GAAP measures, such as non-GAAP net loss, non-GAAP net loss margin, adjusted EBITDA, and EBITDA, as supplemental measures in the evaluation of the Company's operating results and in the Company's financial and operational decision-making. The Company believes that EBITDA, adjusted EBITDA, non-GAAP net loss and non-GAAP net loss margin are measures that help identify underlying trends in the Company's business that could otherwise be distorted by the effect of the expenses and gains that the Company includes in loss from operations and net loss. The Company believes that EBITDA, adjusted EBITDA, non-GAAP net loss and non-GAAP net loss margin provide useful information about its operating results, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company's management in its financial and operational decision-making. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of Non-GAAP Measures to the Nearest Comparable GAAP Measures" in the results announcement.
The non-GAAP financial measures are provided as additional information to help investors compare business trends among different reporting periods on a consistent basis and to enhance investors' overall understanding of the Company's current financial performance and prospects for the future. These non-GAAP financial measures should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for, or superior to, U.S. GAAP results. In addition, the Company's calculation of the non-GAAP financial measures may be different from the calculation used by other companies, and therefore comparability may be limited.
RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES
The table below sets forth a reconciliation of the Company's net loss to EBITDA and adjusted EBITDA for the periods indicated:
| Three Months Ended December 31, |
Year Ended December 31, |
|||||
| 2016 |
2017 |
2016 |
2017 |
|||
| (In '000) |
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
| Net loss |
(407,440) |
(136,852) |
(21,033) |
(1,363,480) |
(1,228,060) |
(188,749) |
| Add |
||||||
| Depreciation & Amortization |
77,763 |
100,934 |
15,513 |
246,311 |
363,909 |
55,932 |
| Interest Expense |
7,173 |
14,355 |
2,206 |
21,379 |
47,154 |
7,247 |
| Income Tax Expense |
467 |
3,420 |
526 |
570 |
9,856 |
1,515 |
| Subtract |
||||||
| Interest Income |
(10,539) |
(24,115) |
(3,706) |
(24,386) |
(75,056) |
(11,536) |
| EBITDA |
(332,576) |
(42,258) |
(6,494) |
(1,119,606) |
(882,197) |
(135,591) |
| Add |
||||||
| Share-based |
– |
18,274 |
2,809 |
– |
298,963 |
45,950 |
| Adjusted EBITDA |
(332,576) |
(23,984) |
(3,685) |
(1,119,606) |
(583,234) |
(89,641) |
The table below sets forth a reconciliation of the Company's net loss to non-GAAP net loss and non-GAAP net loss margin for the periods indicated:
| Three Months Ended December 31, |
Year Ended December 31, |
|||||
| 2016 |
2017 |
2016 |
2017 |
|||
| (In '000) |
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
| Net loss |
(407,440) |
(136,852) |
(21,033) |
(1,363,480) |
(1,228,060) |
(188,749) |
| Share-based |
– |
18,274 |
2,809 |
– |
298,963 |
45,950 |
| Amortization of Intangible |
– |
3,027 |
465 |
– |
6,580 |
1,011 |
| Non-GAAP Net Loss |
(407,440) |
(115,551) |
(17,759) |
(1,363,480) |
(922,517) |
(141,788) |
| Non-GAAP Net Loss Margin |
(13.2%) |
(1.8%) |
(1.8%) |
(15.4%) |
(4.6%) |
(4.6%) |
| UNAUDITED CONSOLIDATED FINANCIAL DATA |
||||||
| Summary of Unaudited Statement of Operations Data |
||||||
| (in thousands ) |
||||||
| Three Months Ended December 31, |
Year Ended December 31, |
|||||
| 2016 |
2017 |
2016 |
2017 |
|||
| RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
|
| Revenue |
||||||
| Supply chain management |
415,228 |
529,518 |
81,385 |
1,241,356 |
1,600,952 |
246,062 |
| Express |
1,812,850 |
4,347,485 |
668,196 |
5,388,833 |
12,786,279 |
1,965,215 |
| Freight |
565,409 |
963,666 |
148,113 |
1,604,573 |
3,178,044 |
488,456 |
| Store+ |
274,084 |
591,743 |
90,949 |
560,226 |
2,226,034 |
342,135 |
| Others |
17,031 |
98,592 |
15,153 |
49,149 |
198,253 |
30,471 |
| Total revenue |
3,084,602 |
6,531,004 |
1,003,796 |
8,844,137 |
19,989,562 |
3,072,339 |
| Cost of revenue |
||||||
| Supply chain management |
392,306 |
513,090 |
78,860 |
1,183,245 |
1,502,570 |
230,941 |
| Express |
1,897,823 |
4,158,328 |
639,123 |
5,671,356 |
12,435,550 |
1,911,309 |
| Freight |
671,807 |
965,005 |
148,319 |
1,906,930 |
3,362,652 |
516,830 |
| Store+ |
274,059 |
537,885 |
82,671 |
569,557 |
2,072,912 |
318,601 |
| Others |
15,830 |
68,357 |
10,506 |
45,479 |
130,327 |
20,031 |
| Total cost of revenue |
3,251,825 |
6,242,665 |
959,479 |
9,376,567 |
19,504,011 |
2,997,712 |
| Gross (loss)/profit |
(167,223) |
288,339 |
44,317 |
(532,430) |
485,551 |
74,627 |
| Selling expenses |
(121,574) |
(207,613) |
(31,910) |
(370,017) |
(694,852) |
(106,797) |
| General and administrative |
(140,923) |
(211,092) |
(32,444) |
(521,237) |
(928,188) |
(142,660) |
| Research and development |
(24,114) |
(28,956) |
(4,450) |
(80,326) |
(139,009) |
(21,365) |
| Other operating income |
40,491 |
– |
– |
104,047 |
– |
– |
| Total operating expenses |
(246,120) |
(447,661) |
(68,804) |
(867,533) |
(1,762,049) |
(270,822) |
| Loss from operations |
(413,343) |
(159,322) |
(24,487) |
(1,399,963) |
(1,276,498) |
(196,195) |
| Interest income |
10,539 |
24,115 |
3,706 |
24,386 |
75,056 |
11,536 |
| Interest expense |
(7,173) |
(14,355) |
(2,206) |
(21,379) |
(47,154) |
(7,247) |
| Foreign exchange (loss)/ |
(1,184) |
778 |
120 |
(1,864) |
(6,320) |
(971) |
| Other income |
8,054 |
21,101 |
3,243 |
44,409 |
56,035 |
8,612 |
| Other expense |
(3,897) |
(4,933) |
(758) |
(8,542) |
(18,507) |
(2,844) |
| Loss before income tax |
(407,004) |
(132,616) |
(20,382) |
(1,362,953) |
(1,217,388) |
(187,109) |
| Income tax expense |
(467) |
(3,420) |
(526) |
(570) |
(9,856) |
(1,515) |
| Loss before share of net |
(407,471) |
(136,036) |
(20,908) |
(1,363,523) |
(1,227,244) |
(188,624) |
| Share of net income/(loss) of |
31 |
(816) |
(125) |
43 |
(816) |
(125) |
| Net loss |
(407,440) |
(136,852) |
(21,033) |
(1,363,480) |
(1,228,060) |
(188,749) |
| Net loss attributable to |
– |
(160) |
(25) |
– |
(167) |
(26) |
| Net loss attributable to BEST Inc. |
(407,440) |
(136,692) |
(21,008) |
(1,363,480) |
(1,227,893) |
(188,723) |
| Summary of Unaudited Consolidated Balance Sheets Data |
|||
| (in thousands) |
|||
| As of |
|||
| December 31, |
December 31, |
||
| RMB |
RMB |
US$ |
|
| Assets |
|||
| Current assets |
|||
| Cash and cash equivalents |
2,927,581 |
1,240,431 |
190,651 |
| Restricted cash |
374,363 |
1,652,653 |
254,008 |
| Derivative |
3,149 |
– |
– |
| Accounts and notes receivables |
432,654 |
734,252 |
112,852 |
| Inventories |
82,083 |
156,974 |
24,126 |
| Prepayments and other current assets |
770,643 |
1,459,755 |
224,360 |
| Short‑term investments |
62,000 |
2,353,663 |
361,751 |
| Amounts due from related parties |
83,302 |
164,894 |
25,344 |
| Lease rental receivables due within a year |
23,292 |
193,703 |
29,772 |
| Total current assets |
4,759,067 |
7,956,325 |
1,222,864 |
| Non‑current assets |
|||
| Property and equipment, net |
947,505 |
1,307,470 |
200,954 |
| Intangible assets, net |
13,516 |
158,556 |
24,370 |
| Long‑term investments |
24,081 |
37,167 |
5,712 |
| Goodwill |
247,203 |
448,584 |
68,946 |
| Non‑current deposits |
50,947 |
69,125 |
10,624 |
| Other non‑current assets |
87,395 |
62,314 |
9,577 |
| Restricted cash |
78,588 |
89,745 |
13,794 |
| Lease rental receivable |
87,551 |
749,243 |
115,157 |
| Total non‑current assets |
1,536,786 |
2,922,204 |
449,134 |
| Total Assets |
6,295,853 |
10,878,529 |
1,671,998 |
| Liabilities, Mezzanine Equity and |
|||
| Current liabilities |
|||
| Short‑term bank loans |
458,000 |
1,216,384 |
186,955 |
| Accounts and notes payable |
1,575,793 |
2,388,393 |
367,089 |
| Income tax payable |
467 |
629 |
97 |
| Customer advances and deposits |
676,319 |
910,383 |
139,923 |
| Accrued expenses and other liabilities |
1,225,611 |
1,841,273 |
282,996 |
| Capital lease obligation |
13,215 |
7,227 |
1,111 |
| Amounts due to related parties |
891 |
12,902 |
1,983 |
| Total current liabilities |
3,950,296 |
6,377,191 |
980,154 |
| Non-current liabilities |
|||
| Capital lease obligation |
7,535 |
1,828 |
281 |
| Deferred tax liabilities |
- |
31,688 |
4,870 |
| Other non‑current liabilities |
3,917 |
75,327 |
11,578 |
| Total non‑current liabilities |
11,452 |
108,843 |
16,729 |
| Summary of Unaudited Consolidated Balance Sheets Data (Cont'd) |
|||
| (in thousands) |
|||
| As of |
|||
| December 31, |
December 31, |
||
| RMB |
RMB |
US$ |
|
| Total Liabilities |
3,961,748 |
6,486,034 |
996,883 |
| Mezzanine equity: |
|||
| Total mezzanine equity |
15,842,210 |
– |
– |
| Shareholders' (deficit)/equity |
|||
| Ordinary shares |
4,116 |
24,786 |
3,810 |
| Additional paid‑in capital |
- |
19,240,912 |
2,957,274 |
| Accumulated deficit |
(13,658,321) |
(14,886,214)(26) |
(2,287,969) |
| Accumulated other comprehensive income |
146,100 |
12,333 |
1,896 |
| BEST Inc. shareholders' (deficit)/equity |
(13,508,105) |
4,391,817 |
675,011 |
| Non-controlling interests |
– |
678 |
104 |
| Total shareholders' (deficit)/equity |
(13,508,105) |
4,392,495 |
675,115 |
| Total liabilities, mezzanine equity and |
6,295,853 |
10,878,529 |
1,671,998 |
| (26) Including accumulated accretion to redemption value and deemed dividend in relation to redeemable convertible preferred shares of RMB 9,493,807 and accumulated loss from operations of RMB 5,392,407. |
| Summary of Unaudited Condensed Consolidated Statements of Cash Flows Data |
||||||
| (in thousands) |
||||||
| Three months ended December 31, |
Year Ended December 31, |
|||||
| 2016 |
2017 |
2016 |
2017 |
|||
| RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
|
| Net cash (used in)/generated |
(91,401) |
(12,379) |
(1,903) |
(788,794) |
117,036 |
17,988 |
| Net cash generated |
87,983 |
632,474 |
97,209 |
(843,844) |
(4,205,923) |
(646,439) |
| Net cash generated from/(used |
152,321 |
(448,951) |
(69,003) |
4,110,498 |
2,420,488 |
372,022 |
| Exchange rate effect on cash and |
97,604 |
59,470 |
9,142 |
158,657 |
(18,751) |
(2,881) |
| Net increase/(decrease) in cash |
246,507 |
230,614 |
35,445 |
2,636,517 |
(1,687,150) |
(259,310) |
| Cash and cash equivalents at |
2,681,074 |
1,009,817 |
155,206 |
291,064 |
2,927,581 |
449,961 |
| Cash and cash equivalents at |
2,927,581 |
1,240,431 |
190,651 |
2,927,581 |
1,240,431 |
190,651 |
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