Market Overview

BEST Inc. Announces Unaudited Third Quarter 2018 Financial Results

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HANGZHOU, China, Nov. 9, 2018 /PRNewswire/ -- BEST Inc. (NYSE:BSTI) ("BEST" or the "Company"), a leading smart supply chain and logistics solutions and services provider in China, today announced its unaudited financial results for the quarter ended September 30, 2018.

BEST Inc. Logo (PRNewsfoto/BEST Inc.)

"BEST continued to generate strong growth in the third quarter, benefitting greatly from demand for our integrated supply chain services and solutions as a result of healthy e-commerce and New Retail growth, further industry consolidation, and our sharp strategic focus and execution," said Johnny Chou, Chairman and Chief Executive Officer of BEST. "Despite competitive market conditions, our growth continued to outpace the market thanks to our superior platform that is better equipped to capture the opportunities created by the trend towards digital commerce. BEST's platform, with its robust technology and nationwide services networks, enriches the lives of consumers by making possible an omni-channel shopping experience and empowers businesses by providing one-stop total supply chain solutions."   

"We continued with our solid progress on the path to profitability while prioritizing growth and market shares gain. I am pleased to announce that we delivered another solid quarter. Our revenue increased by 34% year-over-year to RMB7.2 billion, with our businesses demonstrating strong growth momentum," said Alice Guo, BEST's Chief Accounting Officer and Senior Vice President of Finance. "For the second consecutive quarter, BEST recorded positive EBITDA and Adjusted EBITDA. Moreover, net loss was reduced by 89% year-over-year to RMB51 million, and non-GAAP net loss was reduced by 45% year-over-year to RMB101 million. As we enter fourth quarter peak season, we will continue to execute our strategy of focusing on strong top-line growth and operational efficiencies enhancement to drive margin expansion."    

FINANCIAL HIGHLIGHTS

For the Quarter Ended September 30, 2018:

  • Revenue was RMB7,189.3 million (US$1,046.8 million), an increase of 34.3% year-over-year ("YoY").
    - Express Service Revenue increased 33.4% YoY to RMB4,357.5 million (US$634.5 million).
    - Freight Service Revenue increased 25.0% YoY to RMB1,093.3 million (US$159.2 million).
    - Supply Chain Management Service Revenue increased 27.3% YoY to RMB491.6 million (US$71.6 million).
    - Store+ Service Revenue increased 15.3% YoY to RMB885.5 million (US$128.9 million). 
    - Others (1) Service Revenues increased 499.9% YoY to RMB361.3 million (US$52.6 million).
  • Gross Profit was RMB389.9 million (US$56.8 million), an increase of 93.3% YoY; and Gross Profit Margin was 5.4%, an improvement of 1.6 percentage points YoY.
  • Net Loss was RMB51.1 million (US$7.4 million), a decrease of 89.1% YoY; and Non-GAAP Net Loss (2)(3) was RMB101.4 million (US$14.8 million), a decrease of 44.9% YoY.
  • Diluted EPS (4) was negative RMB0.13 (US$0.02) and Non-GAAP diluted EPS (3)(5) was negative RMB0.26 (US$0.04).
  • EBITDA (3)(6) was RMB54.7 million (US$8.0 million) and Adjusted EBITDA (3)(6) was RMB1.3 million (US$0.2 million).
  • Net Cash Generated From Operating Activities was RMB86.3 million (US$12.6 million).

BUSINESS HIGHLIGHTS (7)

BEST Express:

Table 1 - BEST Express Key Operating Metrics



Three Months Ended

% Change


September 30, 2017

September 30, 2018

YoY

Parcel Volume (in '000)

1,010,512

1,371,055

35.7%

BEST Express Market Share (8) (%)

10.0%

10.8%

0.8ppts

Gross Profit per Parcel (RMB)

0.13

0.16

22.3%

Average Revenue Per Parcel (RMB) 

3.23

3.18

(1.7%)

Average Cost Per Parcel (RMB)

3.10

3.02

(2.7%)

Hubs & Sortation Centers (as of period end)

153

117

(23.5%)

  • Increased parcel volume by 35.7% YoY, approximately 1.4 times the industry-wide growth rate of 25.6%(9); increased express market share to 10.8%, compared to 10.0% in the same period of 2017.
  • Improved gross profit per parcel by 22.3% YoY to RMB0.16 (US$0.02), as the reduction in cost per parcel continued to outpace the decrease in revenue per parcel.
  • Improved operational efficiency by ongoing network optimization, investment in automation and digitization:
    - Reduced total number of hubs and sortation centers by 23.5% YoY to 117.
    - Continued to invest in and upgrade the automation system in major hubs and sortation centers. Added eight high-speed automated sorting lines and 226 dimension & weight scanning systems during the third quarter of 2018.
    - Further improved digital waybill usage to 99.0% from 90.4% in the same quarter of 2017.

BEST Freight:

Table 2 - BEST Freight Key Operating Metrics



Three Months Ended

% Change


September 30, 2017

September 30, 2018

YoY

Freight Volume (Tonne in '000)

1,194

1,474

23.5%

Average Revenue per Tonne (RMB)

732.3

741.7

1.3%

Average Cost Per Tonne (RMB)

768.9

707.5

(8.0%)

Hubs & Sortation Centers (as of period end)

133

120

(9.8%)

Last-mile Service Stations (as of period end)

7,590

11,698

54.1%

  • Achieved solid growth with freight revenue increased by 25.0% YoY and freight volume increased by 23.5% YoY.
  • Improved gross profit margin by 9.6 percentage points YoY to 4.6%. Focused on growing e-commerce related transactions, which resulted in an increase in revenue per tonne and a decrease in cost per tonne.
  • Continued to optimize freight network to improve operating efficiency and reduce costs:
    - Reduced total number of hubs and sortation centers by 9.8% YoY to 120, which contributed to lower transportation, labor, lease costs and shortened delivery time.
    - Expanded service coverage significantly by increasing the total number of franchisees-operated last-mile service stations by 54.1% YoY to 11,698.

(1) Others include BEST Global, BEST Capital, BEST UCargo and other new initiatives.

(2) Non-GAAP net loss represents net loss excluding share-based compensation expense, amortization of intangible assets resulting from business acquisitions, and fair value change of equity investments.

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

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

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

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

(7) All numbers presented have been rounded to the nearest integer, tenth, or hundredth, and Year Over Year comparisons are based on figures before rounding.

(8) Express market share calculated as the Company's parcel volume as a percentage of aggregate national express delivery parcel volume for the relevant period, based on data published by State Post Bureau of the PRC.

(9) Based on data published by State Post Bureau of the PRC.
- For July 2018 data, see State Post Bureau of the PRC Published Post Industry Operation Statistics for July 2018, State Post Bureau of the PRC, August 14, 2018, available in Chinese at
http://www.spb.gov.cn/xw/dtxx_15079/201808/t20180814_1628704.html 
- For August 2018 data, see State Post Bureau of the PRC Published Post Industry Operation Statistics for August 2018, State Post Bureau of the PRC, September 12, 2018, available in Chinese at
http://www.spb.gov.cn/xw/dtxx_15079/201809/t20180912_1654656.html 
- For September 2018 data, see State Post Bureau of the PRC Published Post Industry Operation Statistics for September 2018, State Post Bureau of the PRC, October 13, 2018, available in Chinese at
http://www.spb.gov.cn/xw/dtxx_15079/201810/t20181015_1674326.html 

BEST Supply Chain Management:

  • Increased the total number of orders fulfilled by Cloud OFCs by 31.4% YoY to 56.6 million, of which the total number of orders fulfilled by franchised Cloud OFCs increased by 81.1% YoY to 19.0 million.
  • Increased the total number of Cloud OFCs by 4.6% YoY to 341; increased gross floor area ("GFA") of Cloud OFCs by 11.6% YoY from 2.4 million square meters as of September 30, 2017 to approximately 2.6 million square meters as of September 30, 2018, of which 1.0 million square meters were owned and operated by franchised OFCs.

BEST Store+:

  • Continued to invest in and expand Store+ network. The number of membership stores increased 19.3% YoY to 414,923 as of September 30, 2018.
  • Focused on opening branded stores. The number of branded stores including BEST Neighbor and WoWo increased by 258.4% YoY to 1,308 as of September 30, 2018.
  • Increased the total number of store orders fulfilled by 17.2% YoY to 934,936, representing over 18,000 SKUs.

Others:

  • BEST UCargo
    - Increased the number of registered agents by approximately 69.0% YoY to over 4,200 as of September 30, 2018 from approximately 2,500 as of September 30, 2017, and the number of registered trucks by approximately 61.0% YoY to over 241,000 as of September 30, 2018 from approximately 150,000 as of September 30, 2017.
    - Increased the cumulative total number of transactions by approximately 309.0% YoY to over 135,000 as of September 30, 2018, with revenue generated from external customers increased significantly to RMB256.6 million (US$37.4 million) in the quarter ended September 30, 2018.
  • BEST Global - continued to develop cross border solutions and broaden service offerings in international markets. Initiated new coverage in India and Indonesia through partners. It serves 15 countries and regions outside of Mainland China in the quarter ended September 30, 2018.
  • BEST Capital - continued to expand its financial services to support the BEST ecosystem. As of September 30, 2018, it had provided cumulative total financing solutions to over 6,000 trucks, an increase of over 50.0% YoY.

FINANCIAL RESULTS

Revenue

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

Table 3 - Breakdown of Revenue by Business Segment



Three Months Ended



September 30, 2017

September 30, 2018


(In '000, Except for %)

RMB

% of
Revenue

RMB

US$

% of
Revenue

% Change
YoY

Express

3,265,688

61.0%

4,357,527

634,468

60.6%

33.4%

Freight

874,352

16.3%

1,093,331

159,192

15.2%

25.0%

Supply Chain Mgmt.

386,244

7.2%

491,633

71,583

6.9%

27.3%

Store+

767,903

14.4%

885,518

128,934

12.3%

15.3%

Others

60,225

1.1%

361,293

52,605

5.0%

499.9%

Revenue

5,354,412

100.0%

7,189,302

1,046,782

100.0%

34.3%

  • Express Service Revenue increased by 33.4% YoY to RMB4,357.5 million (US$634.5 million) from RMB3,265.7 million, primarily due to 35.7% YoY increase in parcel volume.
  • Freight Service Revenue increased by 25.0% YoY to RMB1,093.3 million (US$159.2 million) from RMB874.4 million, primarily due to 23.5% YoY increase in freight volume and 1.3% YoY increase in average revenue per tonne.
  • Supply Chain Management Service Revenue increased by 27.3% YoY to RMB491.6 million (US$71.6 million) from RMB386.2 million, primarily due to an increase in fulfillment and transportation revenue from both existing and new customers.
  • BEST Store+ Service Revenue increased by 15.3% YoY to RMB885.5 million (US$128.9 million) from RMB767.9 million, primarily due to an increase in merchandise sales to membership and branded stores.
  • Others Service Revenues increased by 499.9% YoY to RMB361.3 million (US$52.6 million) from RMB60.2 million, primarily due to increased revenue generated from BEST UCargo's external customers, BEST Global's expanded operations and BEST Capital's financing solutions to ecosystem participants.

Costs and Expenses

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

Table 4 - Breakdown of Cost of Revenue by Business Segment



Three Months Ended

% of
Revenue

Change
YoY


September 30, 2017

September 30, 2018

(in '000, Except for %)

RMB

% of
Revenue

RMB

US$

% of
Revenue

Express

(3,134,376)

96.0%

(4,139,558)

(602,731)

95.0%

(1.0ppts)

Freight

(918,121)

105.0%

(1,042,820)

(151,838)

95.4%

(9.6ppts)

Supply Chain Mgmt.

(357,675)

92.6%

(472,045)

(68,731)

96.0%

3.4ppts

Store+

(703,311)

91.6%

(814,299)

(118,564)

92.0%

0.4ppts

Others

(39,234)

65.1%

(330,659)

(48,145)

91.5%

26.4ppts

Cost of Revenue

(5,152,717)

96.2%

(6,799,381)

(990,009)

94.6%

(1.6ppts)

Cost of Revenue was RMB6,799.4 million (US$990.0 million) or 94.6% of revenue in the quarter ended September 30, 2018, compared to RMB5,152.7 million or 96.2% of revenue in the same quarter of 2017. The reduction of 1.6 percentage points in cost of revenue as a percentage of revenue was primarily attributable to increased operating leverage.

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

Table 5 - Breakdown of Operating Expenses and Adjusted Operating Expenses by Category



Three Months Ended

% of
Revenue
Change
YoY


September 30, 2017

September 30, 2018

(in '000, Except for %)

RMB

% of
Revenue

RMB

US$

% of
Revenue

Selling Expenses

(213,547)

4.0%

(235,681)

(34,316)

3.3%

(0.7ppts)

   including SBC Expenses

(13,172)

0.3%

(1,837)

(267)

0.0%

(0.3ppts)

Adjusted Selling Expenses

(200,375)

3.7%

(233,844)

(34,048)

3.3%

(0.4ppts)

General and Administrative Expenses

(405,925)

7.6%

(264,784)

(38,553)

3.7%

(3.9ppts)

   including SBC Expense

(237,232)

4.4%

(20,500)

(2,985)

0.3%

(4.1ppts)

Adjusted General and Administrative Expenses

(168,693)

3.2%

(244,284)

(35,568)

3.4%

0.2ppts

Research and Development Expenses

(56,155)

1.0%

(42,922)

(6,250)

0.6%

(0.4ppts)

   including SBC Expense

(24,268)

0.4%

(2,240)

(326)

0.0%

(0.4ppts)

Adjusted Research and Development Expenses

(31,887)

0.6%

(40,682)

(5,923)

0.6%

0.0ppts

Selling Expenses was RMB235.7 million (US$34.3 million) or 3.3% of revenue in the quarter ended September 30, 2018, compared to RMB213.5 million or 4.0% of revenue in the same quarter of 2017. The decrease in selling expenses as a percentage of revenue was primarily attributable to improved operating efficiencies and the reduction in share-based compensation ("SBC") expense.

General and Administrative Expenses was RMB264.8 million (US$38.6 million) or 3.7% of revenue in the quarter ended September 30, 2018, compared to RMB405.9 million or 7.6% of revenue in the same quarter of 2017. The significant decrease in general and administrative expenses as a percentage of revenue was primarily attributable to the reduction in SBC expense, partially offset by investments in the growth of the Company's operations.

Research and Development Expenses was RMB42.9 million (US$6.3 million) or 0.6% of revenue in the quarter ended September 30, 2018, compared to RMB56.2 million, or 1.0% of revenue in the same quarter of 2017. The decrease in research and development expenses as a percentage of revenue was primarily attributable to the reduction in SBC expense.

SBC Expense included in the cost and expense items above in the quarter ended September 30, 2018 was RMB25.2 million (US$3.7 million), compared to RMB280.7 million in the same quarter of 2017. In the third quarter of 2018, approximately RMB0.6 million (US$0.09 million) was allocated to cost of revenue, RMB1.8 million (US$0.3 million) was allocated to selling expenses, RMB20.5 million (US$3.0 million) was allocated to general and administrative expenses, and RMB2.2 million (US$0.3 million) was allocated to research and development expenses.

Net Loss and Non-GAAP Net Loss

Net Loss in the quarter ended September 30, 2018 was RMB51.1 million (US$7.4 million), a decrease of 89.1% compared to RMB466.6 million in the same quarter of 2017. Excluding the impact of SBC expense, amortization of intangible assets resulting from business acquisitions, and fair value change of equity investments, non-GAAP Net Loss in the quarter ended September 30, 2018 was RMB101.4 million (US$14.8 million), a decrease of 44.9% compared to RMB183.8 million in the same quarter of 2017.

In the quarter ended September 30, 2018, BEST recorded RMB78.5 million (US$11.4 million) in other income, due to fair value change of the Company's equity investment in an AI solutions provider.

Diluted EPS and non-GAAP diluted EPS

Diluted EPS in the quarter ended September 30, 2018 was negative RMB0.13 (US$0.02) based on a weighted average of 387.1 million diluted shares outstanding during the quarter. Excluding SBC expense, amortization of intangible assets resulting from business acquisitions, and fair value change of equity investments, non-GAAP diluted EPS in the quarter ended September 30, 2018 was negative RMB0.26 (US$0.04). A reconciliation of diluted EPS to non-GAAP diluted EPS is included at the end of this results announcement.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA was RMB1.3 million (US$0.2 million), improved from negative RMB 85.6 million in the quarter ended September 30, 2017. Adjusted EBITDA margin was 0.02%, improved from negative 1.6% in the quarter ended September 30, 2017. The improvement of RMB87.0 million (US$12.7 million) or 1.6 percentage points was primarily attributable to strong revenue growth and improved operating efficiency.

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

As of September 30, 2018, cash and cash equivalents, restricted cash and short-term investments were RMB3,911.4 million (US$569.5 million), compared to RMB4,349.6 million as of June 30, 2018. The decrease in cash and cash equivalents, restricted cash and short-term investments was primarily due to CAPEX and investment activities, partially offset by net cash generated from operating activities.

Cash Flow from Operating Activities

Net Cash Generated from Operating Activities was RMB86.3 million (US$12.6 million) in the quarter ended September 30, 2018, an increase of 162.0% compared to RMB32.9 million in the same quarter of 2017.

Capital Expenditures ("CAPEX")

CAPEX was RMB412.2 million (US$60.0 million), or 5.7% of total revenue in the quarter ended September 30, 2018, compared to CAPEX of RMB175.6 million, or 3.3% of total revenue, in the same period of 2017. The increase in CAPEX was primarily due to the upgrade of automation system in major hubs and sortation centers, including investments in high-speed automated sorting lines and dimension and weight scanning systems.

Shares Outstanding

As of the date of this press release, the Company had approximately 387.2 million ordinary shares outstanding (10). Each ADS represents one Class A ordinary share.

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

FINANCIAL GUIDANCE

Based on current market conditions and current operations, revenue for the fourth quarter of 2018 is expected to be in the range of RMB7.9 billion to RMB8.1 billion; and revenue for full fiscal year 2018 is expected to be in the range of RMB26.8 billion to RMB27.0 billion. This represents management's current and preliminary expectation, which is subject to change.

WEBCAST AND CONFERENCE CALL INFORMATION

The Company will hold a conference call at 7:30 am U.S. Eastern Time on November 9, 2018 (8:30 pm Beijing Time, the same day), to discuss its financial results and operating performance for the third quarter of 2018.

Participants may access the call by dialing the following numbers:

United States:

+1-888-317-6003

Hong Kong:

800-963976 or +852-5808-1995

China:

4001-206115

International:

+1-412-317-6061

Participant Elite Entry Number:

8893478

A replay of the conference call will be accessible through November 16, 2018 by dialing the following numbers:

United States:

+1-877-344-7529

International:

+1-412-317-0088

Replay Access Code:

10125776

Please visit the Company's investor relations website http://ir.best-inc.com/ on November 9, 2018 to view the earnings release prior to the conference call. A live and archived webcast of the conference call and an accompanying slide presentation will be available at the same site.

ABOUT BEST INC.

BEST Inc. is a leading smart supply chain and logistics solutions and services provider. BEST's mission is to empower businesses and enrich the lives of consumers by leveraging technology and business model innovation to create a smarter, more efficient supply chain. For more information, please visit: http://www.best-inc.com/en/.

For investor and media inquiries, please contact:

For Investors:  
Kobe Ge
ir@best-inc.com

SAFE HARBOR STATEMENT

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

USE OF NON-GAAP FINANCIAL MEASURES

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

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

BEST INC.

 

Summary of Unaudited Consolidated Income Statements

(In Thousands)





Three Months Ended September 30,

Nine Months Ended September 30,


2017

2018

2017

2018


RMB

RMB

US$

RMB

RMB

US$

Revenue







Express

3,265,688

4,357,527

634,468

8,438,794

11,759,488

1,712,214

Freight

874,352

1,093,331

159,192

2,214,378

2,886,028

420,214

Supply Chain Management

386,244

491,633

71,583

1,071,434

1,388,662

202,193

Store+

767,903

885,518

128,934

1,634,291

2,229,436

324,612

Others

60,225

361,293

52,605

99,661

661,783

96,357

Total Revenue

5,354,412

7,189,302

1,046,782

13,458,558

18,925,397

2,755,590

Cost of Revenue







Express

(3,134,376)

(4,139,558)

(602,731)

(8,277,222)

(11,283,283)

(1,642,878)

Freight

(918,121)

(1,042,820)

(151,838)

(2,397,647)

(2,798,694)

(407,498)

Supply Chain Management

(357,675)

(472,045)

(68,731)

(989,480)

(1,311,021)

(190,888)

Store+

(703,311)

(814,299)

(118,564)

(1,535,027)

(2,038,955)

(296,878)

Others

(39,234)

(330,659)

(48,145)

(61,970)

(576,363)

(83,920)

Total Cost of Revenue

(5,152,717)

(6,799,381)

(990,009)

(13,261,346)

(18,008,316)

(2,622,062)

Gross Profit

201,695

389,921

56,773

197,212

917,081

133,528

Selling Expenses

(213,547)

(235,681)

(34,316)

(487,239)

(655,775)

(95,483)

General and Administrative
Expenses

(405,925)

(264,784)

(38,553)

(717,096)

(747,181)

(108,792)

Research and
Development Expenses

(56,155)

(42,922)

(6,250)

(110,053)

(126,436)

(18,409)

Total Operating Expenses

(675,627)

(543,387)

(79,119)

(1,314,388)

(1,529,392)

(222,684)

Loss from Operations

(473,932)

(153,466)

(22,346)

(1,117,176)

(612,311)

(89,156)

Interest Income

16,883

28,436

4,140

50,941

77,126

11,230

Interest Expense

(12,078)

(18,960)

(2,761)

(32,799)

(53,759)

(7,827)

Foreign Exchange Loss

(2,619)

(375)

(55)

(7,098)

(7,607)

(1,108)

Other Income

12,592

104,620

15,233

34,934

136,042

19,808

Other Expense

(3,528)

(8,362)

(1,218)

(13,574)

(16,658)

(2,425)

Loss before Income Tax
and Share of Net
Income/(Loss) of
Equity Investees

(462,682)

(48,107)

(7,007)

(1,084,772)

(477,167)

(69,478)

Income Tax Expense

(3,949)

(2,971)

(433)

(6,436)

(6,971)

(1,015)

Loss before Share of Net
Income/(Loss) of Equity
Investees

(466,631)

(51,078)

(7,440)

(1,091,208)

(484,138)

(70,493)

Share of Net Income/(Loss)
of Equity Investees

24

3

(266)

(39)

Net Loss

(466,631)

(51,054)

(7,437)

(1,091,208)

(484,404)

(70,532)

Net Gain/(Loss) Attributable
to Non-controlling Interests

756

141

21

(7)

141

21

Net Loss Attributable to
BEST Inc.

(467,387)

(51,195)

(7,458)

(1,091,201)

(484,545)

(70,553)











 

Summary of Consolidated Balance Sheets

(in thousands)




(Audited)

(Unaudited)


As of December 31, 2017

As of September 30, 2018


RMB

RMB

US$

Assets




Current Assets




Cash and Cash Equivalents

1,240,431

610,962

88,958

Restricted Cash

1,652,653

1,135,259

165,297

Accounts and Notes Receivables

734,252

858,658

125,023

Inventories

156,974

164,268

23,918

Prepayments and Other Current Assets

1,459,755

1,892,305

275,525

Short‑term Investments

2,353,663

2,082,201

303,174

Amounts Due from Related Parties

164,894

104,943

15,280

Lease Rental Receivables

193,703

388,479

56,564

Total Current Assets

7,956,325

7,237,075

1,053,739

Non‑current Assets




Property and Equipment, Net

1,307,470

1,818,441

264,770

Intangible Assets, Net

158,556

139,636

20,331

Long‑term Investments

37,167

228,334

33,246

Goodwill

448,584

457,514

66,615

Non‑current Deposits

69,125

69,186

10,074

Other Non‑current Assets

62,314

46,551

6,778

Restricted Cash

89,745

82,955

12,078

Lease Rental Receivables

749,243

1,114,904

162,333

Total non‑current Assets

2,922,204

3,957,521

576,225

Total Assets

10,878,529

11,194,596

1,629,964

Liabilities and Shareholders' Equity




Current Liabilities




Short‑term Bank Loans

1,216,384

1,454,900

211,838

Accounts and Notes Payable

2,388,393

2,326,568

338,755

Income Tax Payable

629

3,356

489

Customer Advances and Deposits

910,383

1,200,973

174,865

Accrued Expenses and Other Liabilities

1,841,273

1,946,259

283,380

Capital Lease Obligation

7,227

2,851

415

Amounts Due to Related Parties

12,902

13,265

1,931

Total Current Liabilities

6,377,191

6,948,172

1,011,673

Non-current Liabilities




Capital Lease Obligation

1,828

872

127

Deferred Tax Liabilities

31,688

29,425

4,284

Other Non‑current Liabilities

75,327

79,126

11,521

Total Non‑current Liabilities

108,843

109,423

15,932






 

Summary of Consolidated Balance Sheets (Cont'd)

(In Thousands)





(Audited)

(Unaudited)


As of December 31, 2017

As of September 30, 2018


RMB

RMB

US$

Total Liabilities

6,486,034

7,057,595

1,027,605

Shareholders' Equity




Ordinary Shares

24,786

25,988

3,784

Additional Paid‑In Capital

19,240,912

19,379,591

2,821,723

Accumulated Deficit

(14,886,214)

(15,395,813)(11)

(2,241,673)

Accumulated Other Comprehensive Income

12,333

124,471

18,123

BEST Inc. Shareholders' Equity

4,391,817

4,134,237

601,957

Non-controlling Interests

678

2,764

402

Total Shareholders' Equity

4,392,495

4,137,001

602,359

Total Liabilities and
Shareholders'
 Equity

10,878,529

11,194,596

1,629,964

 

(11) Including accumulated accretion to redemption value and deemed dividend in relation to redeemable convertible preferred shares of RMB9,493,807 and accumulated loss from operations of RMB5,902,006.

 

Summary of Unaudited Condensed Consolidated Statements of Cash Flows

(In Thousands)





Three Months Ended September 30,

Nine Months Ended September 30,


2017

2018

2017

2018


RMB

RMB

US$

RMB

RMB

US$

Net Cash Generated from
/(Used in) Operating Activities

32,949

86,310

12,567

34,905

(91,784)

(13,364)

Net Cash Used in
Investing Activities

(2,995,362)

(1,610,214)

(234,452)

(4,722,782)

(1,343,500)

(195,617)

Net Cash Generated from
Financing Activities

2,668,388

150,667

21,938

3,151,773

230,219

33,521

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

(22,093)

50,150

7,302

(78,221)

51,412

7,485

Net Decrease in Cash and
Cash Equivalents, and
Restricted Cash

(316,118)

(1,323,087)

(192,645)

(1,614,325)

(1,153,653)

(167,975)

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

2,082,325

3,152,263

458,978

3,380,532

2,982,829

434,308

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

1,766,207

1,829,176

266,333

1,766,207

1,829,176

266,333

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

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

Table 6 - Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin





Three Months Ended September 30,

Nine Months Ended September 30,


2017

2018

2017

2018

(In '000)

RMB

RMB

US$

RMB

RMB

US$

Net loss

(466,631)

(51,054)

(7,437)

(1,091,208)

(484,404)

(70,532)

Add







Depreciation & Amortization

101,182

112,241

16,342

262,975

329,148

47,925

Interest Expense

12,078

18,960

2,761

32,799

53,759

7,827

Income Tax Expense

3,949

2,971

433

6,436

6,971

1,015

Subtract







Interest Income

(16,883)

(28,436)

(4,140)

(50,941)

(77,126)

(11,230)

EBITDA

(366,305)

54,682

7,959

(839,939)

(171,652)

(24,995)

Add







Share-based
Compensation Expense

280,689

25,185

3,667

280,689

81,927

11,929

Subtract







Fair Value Change of Equity Investments

(78,528)

(11,434)

(78,528)

(11,434)

Adjusted EBITDA

(85,616)

1,339

192

(559,250)

(168,253)

(24,500)

Adjusted EBITDA Margin

(1.6%)

0.02%

0.02%

(4.2%)

(0.9%)

(0.9%)











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

Table 7 - Reconciliation of non-GAAP Net Loss and Non-GAAP Net Loss Margin





Three Months Ended September 30,

Nine Months Ended September 30,


2017

2018

2017

2018

(In '000)

RMB

RMB

US$

RMB

RMB

US$

Net loss

(466,631)

(51,054)

(7,437)

(1,091,208)

(484,404)

(70,532)

Add







Share-based Compensation Expense

280,689

25,185

3,667

280,689

81,927

11,929

Amortization of Intangible
Assets Resulting from
Business Acquisitions

2,132

3,040

443

3,553

8,991

1,309

Subtract







Fair Value Change of
Equity Investments

(78,528)

(11,434)

(78,528)

(11,434)

Non-GAAP Net Loss

(183,810)

(101,357)

(14,761)

(806,966)

(472,014)

(68,728)

Non-GAAP Net Loss Margin

(3.4%)

(1.4%)

(1.4%)

(6.0%)

(2.5%)

(2.5%)









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

Table 8 - Reconciliation of Diluted EPS and Non-GAAP Diluted EPS




Three Months Ended September 30,


2018

(In '000)

RMB

US$

Net loss attributable to ordinary shareholders

(51,195)

(7,458)

Add



Share-based Compensation Expense

25,185

3,667

Amortization of Intangible Assets Resulting from
Business Acquisitions

3,040

443

Subtract



Fair Value Change of Equity Investments

(78,528)

(11,434)

Non-GAAP net loss attributable to ordinary
shareholders for computing non-GAAP diluted EPS

(101,498)

(14,782)

Weighted average diluted shares outstanding during
the quarter

387,134,896

387,134,896

Diluted EPS

(0.13)

(0.02)

Add



Share-based Compensation Expense

0.06

0.01

Amortization of Intangible Assets Resulting from
Business Acquisitions

0.01

0.00

Subtract



Fair Value Change of Equity Investments

(0.20)

(0.03)

Non-GAAP Diluted EPS

(0.26)

(0.04)

 

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