BEST Inc. Announces Unaudited First Quarter 2024 Financial Results

HANGZHOU, China, June 6, 2024 /PRNewswire/ -- BEST Inc. (NYSE: BEST) ("BEST" or the "Company"), a leading integrated smart supply chain solutions and logistics services provider in China and Southeast Asia ("SEA"), today announced its unaudited financial results for the first quarter ended March 31, 2024.

FINANCIAL HIGHLIGHTS ⁽¹⁾

For the First Quarter Ended March 31, 2024:⁽²⁾

• Revenue was RMB1,942.0 million (US$269.0 million), compared to RMB1,715.3 million in the first quarter of 2023. The increase was primarily due to increased revenue of BEST Freight and BEST Global.
• Gross Profit was RMB55.2 million (US$7.6 million), compared to gross loss of RMB8.5 million in the first quarter of 2023. The increase was primarily due to increased volume and further improvements of operating efficiency for both BEST Freight and BEST Global. Gross Profit Margin was 2.8% for the first quarter of 2024, compared to Gross Loss Margin of 0.5% in the same period of 2023.
• Net Loss from continuing operations was RMB172.1 million (US$23.8 million), compared to RMB257.6 million in the first quarter of 2023; which represented approximately 33% improvement year over year. Non-GAAP Net Loss from continuing operations⁽³⁾⁽⁴⁾ was RMB164.9 million (US$22.8 million), compared to RMB245.5 million in the first quarter of 2023.
• Diluted loss per ADS⁽⁵⁾ from continuing operations was RMB8.69 (US$1.20), compared to RMB12.38 in the first quarter of 2023. Non-GAAP diluted loss per ADS⁽³⁾⁽⁴⁾ from continuing operations was RMB8.30 (US$1.15), compared to RMB11.77 in the first quarter of 2023.
• EBITDA⁽⁶⁾ from continuing operations was negative RMB133.5 million (US$18.5 million), compared to negative RMB218.9 million in the first quarter of 2023. Adjusted EBITDA⁽⁶⁾ from continuing operations was negative RMB126.3 million (US$17.5 million), compared to negative RMB206.8 million in the first quarter of 2023.

BEST Freight – BEST Freight recorded a revenue growth of 16.3% in the first quarter of 2024, year over year. Freight's gross margin was 3.4%, representing a 3.6 percentage points improvement from the same period of 2023 as we continued to reduce operating expenses and improve efficiency.

BEST Supply Chain Management – BEST Supply Chain Management's revenue decreased by 6.6% in the first quarter of 2024 compared with the same period of last year as we discontinued certain not-profitable key account customers.

BEST Global – In the first quarter of 2024, BEST Global continued its robust e-commerce growth. BEST Global's first quarter's revenue increased by 42.6% while its parcel volumes increased by 39.4% compared with the same quarter of 2023. In additional, for the first quarter of 2024, parcel volumes in Vietnam and Malaysia increased by 120.0% and 23.8%, respectively and total volume of the cross-border business increased by 256.4%; year over year.

Key Operational Metrics 

FINANCIAL RESULTS ⁽⁷⁾ 

For the First Quarter Ended March 31, 2024:

Revenue

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

• Freight Service Revenue was RMB1,223.5 million (US$169.5 million) for the first quarter of 2024, compared to RMB1,051.9 million in the same period of last year. Freight service revenue increased by 16.3% year over year, primarily due to increase in both volume and average selling price per tonne.
• Supply Chain Management Service Revenue decreased by 6.6% year over year to RMB411.0 million (US$56.9 million) for the first quarter of 2024 from RMB440.3 million in the same period of last year as we discontinued certain not-profitable key account customers.
• Global Service Revenue increased by 42.6% year over year to RMB280.9 million (US$38.9 million) for the first quarter of 2024 from RMB197.0 million in the same period of last year, primarily due to volume growth in Vietnam, Malaysia and cross-border business.

Cost of Revenue

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

• Cost of Revenue for Freight was RMB1,182.4 million (US$163.8 million), or 96.6% of revenue in the first quarter of 2024. The 3.6 percentage points year-over-year decrease in cost of revenue as a percentage of revenue was mainly due to higher volume and improved efficiency.
• Cost of Revenue for Supply Chain Management was RMB383.3 million (US$53.1 million), or 93.3% of revenue, in the first quarter of 2024, compared to cost of revenue as a percentage of revenue of 91.8% in the first quarter of 2023. The increase of cost of revenue was mainly due to new business development with lower growth margin.
• Cost of Revenue for Global was RMB313.8 million (US$43.5 million), or 111.7% of revenue, in the first quarter of 2024. The 14.8 percentage points year-over-year decrease in cost of revenue as a percentage of revenue due to increased parcel volume and operating efficiency.

Gross Profit was RMB55.2 million (US$7.6 million) in the first quarter of 2024, compared to gross loss of RMB8.5 million in the first quarter of 2023; Gross Margin was 2.8%, compared to negative 0.5% in the first quarter of 2023.

Operating Expenses

Selling, General and Administrative ("SG&A") Expenses were RMB220.4 million (US$30.5 million), or 11.3% of revenue in the first quarter of 2024, compared to RMB247.7 million, or 14.4% of revenue in the same quarter of 2023, as we continued to optimize our organizational structure.

Research and Development Expenses were RMB29.3 million (US$4.1 million), or 1.5% of revenue in the first quarter of 2024, compared to RMB28.7 million, or 1.7% of revenue in the first quarter of 2023.

Share-based Compensation ("SBC") Expenses included in the cost and expense items above were RMB7.2 million (US$1.0 million) in the first quarter of 2024, compared to RMB12.1 million in the same period of 2023. Of the total SBC expenses, RMB0.04 million (US$0.01 million) was allocated to cost of revenue, RMB0.3 million (US$0.03 million) was allocated to selling expenses, RMB6.3 million (US$0.9 million) was allocated to general and administrative expenses, and RMB0.7 million (US$0.09 million) was allocated to research and development expenses.

Net Loss and Non-GAAP Net Loss from continuing operations

Net Loss from continuing operations in the first quarter of 2024 was RMB172.1 million (US$23.8 million), compared to RMB257.6 million in the same period of 2023. Non-GAAP Net Loss from continuing operations in the first quarter of 2024 was RMB164.9 million (US$22.8 million), compared to RMB245.5 million in the first quarter of 2023.

Diluted loss per ADS and Non-GAAP diluted loss per ADS from continuing operations

Diluted loss per ADS from continuing operations in the first quarter of 2024 was RMB8.69 (US$1.20), compared to a loss of RMB12.38 in the same period of 2023. Non-GAAP diluted loss per ADS from continuing operations in the first quarter of 2024 was RMB8.30 (US$1.15), compared to a loss of RMB11.77 in the first quarter of 2023. A reconciliation of non-GAAP diluted loss per ADS to diluted loss per ADS is included at the end of this results announcement.

Adjusted EBITDA and Adjusted EBITDA Margin from continuing operations 

Adjusted EBITDA from continuing operations in the first quarter of 2024 was negative RMB126.3 million (US$17.5 million), compared to negative RMB206.8 million in the same period of 2023. Adjusted EBITDA Margin from continuing operations in the first quarter of 2024 was negative 6.5%, compared to negative 12.1% in the same period of 2023.

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

As of March 31, 2024, cash and cash equivalents, restricted cash and short-term investments were RMB2,095.8 million (US$290.3 million), compared to RMB3,171.8 million as of March 31, 2023. In July 2023, the Company repurchased approximately US$75 million (RMB542 million) aggregate principal amount of its existing Convertible Senior Notes due 2024.

Net Cash Used In Continuing Operating Activities 

Net cash used in continuing operating activities in the first quarter of 2024 was RMB138.5 million (US$19.2 million), compared to RMB163.2 million of net cash used in continuing operating activities in the same period of 2023.

SHARES OUTSTANDING

As of May 17, 2024, the Company had approximately 401.9 million ordinary shares outstanding⁽⁹⁾. Each American Depositary Share represents twenty (20) Class A ordinary shares.

As previously announced, effective from April 4, 2023, the Company changed the ratio of its American Depositary Shares to its Class A ordinary shares, par value US$0.01 per share, from the original ADS ratio of one (1) ADS to five (5) Class A ordinary share, to a new ADS ratio of one (1) ADS to twenty (20) Class A ordinary shares.

Effective as of September 25, 2023, the Company's board of directors terminated its previously announced share repurchase program, under which the Company could repurchase up to US$20 million worth of its outstanding American Depositary Shares over a 12-month period. Prior to the program's termination, the Company repurchased a total of 1,265,685 ADSs for a total amount paid of approximately US$3.3 million (excluding commissions) under the program.

ABOUT BEST INC.

BEST Inc. (NYSE: BEST) is a leading integrated smart supply chain solutions and logistics services provider in China and SEA. Through its proprietary technology platform and extensive networks, BEST offers a comprehensive set of logistics and value-added services, including freight delivery, supply chain management, cross-border and global logistics services. BEST's mission is to empower business and enrich life by leveraging technology and business model innovation to create a smarter, more efficient integrated supply chain management eco-system. 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, and non-GAAP Diluted earnings/loss per ADS, 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.

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

For the Company's continuing operations, 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:

For the Company's continuing operations, 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:

For the Company's continuing operations, the table below sets forth a reconciliation of the Company's diluted loss per ADS to Non-GAAP diluted loss per ADS for the periods indicated: