ZTO - Earnings call transcript Q1 2022 | ZTO Express (Cayman) Inc.

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Operator

Good day. And welcome to the ZTO Express First Quarter Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. to Officer. conference like Yan, to now Financial Chief would turn over the Huiping I ahead. go Please

Huiping Yan

Thank you, investor Hello, on call The released operator today may. today the company's us for earlier ir.zto.com. results today. company's joining from website and On are an and relations at are everyone. presentation available Thank a you remarks and ZTO, Meisong Lai, will and will Chief Yan, Huiping Mr. through or and Chairman Lai Officer the operations, Mr. guidance. Financial through go highlighting then go prepared his I, I and Chief business Officer, financials Executive

available answer that be both will Q&A the question session We to your during follows.

that his in entirety I him please now statements Lai. does these Mr. Lai company regarding a introduce not As filings into Meisong of included statements of result in undertake materially company's on with uncertainties involve obligations which go relate in actual risks, the in before management's a as to of except information as Further Mr. unknown remarks The made provisions future the statements Private of the differ cause forward-looking or translate my current difficult view predict results, and It events Securities forward-looking required are any based and and the are those its statements. Act call market that through reminder, update all pleasure factors, go Such conditions English. company's company's may expectations performances otherwise, which and Litigation under Exchange to of and the achievements risks, operating contain other uncertainties Chinese for factors other Lai, known XXXX. to and harbor forward-looking is under the may or the any to or law. safe Reform events ahead. Commission. are and this new from U.S. beyond information, in many of will Mr. are control, the to prepared Securities

Meisong Lai

RMBX.X joining us Chairman. a Thank you, which net Hello, quarter first the spread X.X parcel to everyone. that industry. Adjusted XXXX, share increased level Quarterly delivered the the X.X XX.X% market In March, industry's of today. XX.X%. country XX.X% to early of delivery momentum, volume Omicron in points express billion, volume you for thank grew expanding our infections Starting below erupted billion. by stoppage in was And across income growth expectations. ZTO causing delays and in parcel disrupted

prevention possible. the in action that continued time, During effort, this out and tightened continued coordinated and beginning protocols stringent on the our while of and achieving operations goals to extraordinary measures, operations maintained we set year. focus objectives ZTO provincial plans headquarter wherever and We carried safety forth

the prevention and in network prioritized couriers and of delivery standardized and passing increase insisted and the free grassroots, we added the into insurance in strengthened through couriers. interests in in and measures, accidental the delivery supportive resilience funds. care on rights renewal its as hands pickup equitable special detailed its procedures, of group use vitality. outlets, foundation delivery such schedule, reallocation lending Through entirety designated First, protecting for of We fee that ensuring on and the

and from timeliness managerial of Second, management. improving establishing comprehensive of bond enhancement effectiveness. areas we an and to parcel centers outlet On rural from raised bars outlet-by-outlet, urban routes for sorting to direct to for

of tuning one Model management fine the partner Matrix are We outlets. tier for

network can profitable, place and result, a of measures that As appropriate stable, our more more so and performance sustainable. become put outlets are policies in

for of and we to scientific operations provide critical resource solutioning outlet all monitoring to maximize more process, the initiatives approach close Third, effectiveness of end-to-end drive to was accelerated digitization allowing to Technology utilization coordination efficiencies. streamline there from stages and and and associated previous have integrated mechanisms. evaluation we game, activity performance transformed system process the driven reward perspective, an operating reprimand Fourth, management toolkit Development improved task the safe framework. into and operations. an applications of

During to and and burden the network confidence designed services user-friendly our We diversified for varying products were demands. COVID ease partners. scorecards boost set to more customer up disruption, meet

service Our presence affected service among border higher enrichment. operations, while definite all as have mainstream capabilities being been to effort was are to and areas time gradually and as part sorting that across outlets expanded and products, introduced we ecommerce more as such more for and and under outbreaks volume the cross the product continued Recently, premium developed the tested. as Contrast standard a become year-on-year [indiscernible], with companies control. nicknamed other on April, more holiday recorded X.X% The In May increase proactively centers agencies increase of among resuming operations the in have nation by restart industry. to and paying express to challenges few day-to-day ZTO and May. XX% close normal. the their was governing break sorting a decline during companies coordinating logistics through attention different in gradually working blockages. the logistic policies of for Shanghai been bodies, volume industries, conflicts timeliness parcel Government Volume are first and nearly trending from end early

growth are central strong. goal network’s an support economic consumer overcome ensuring the in anticipate endure our of safe companies directives hardship We the that will and operations, and must economy our will must of government scale that to the smooth Express remain in role epidemic competitive must will advantages be And has challenges. growth. to and daily part active with expect believe Before prevention ability and in demand entire which The We the logistic we confident delivery be zeroing will efficiency. norm. dynamic procedures we the established achieved, is safe. stabilized continue become be contained. The clear play

re-establish records prevention, and momentum opportunities timely precise Looking enhance ahead, to be through XXth and routines gain [ph] We year-to-years Achieving XX year need quantity. goals in marked odds, design, we our accelerate data driven taking against as for and while May ourselves to so all profitability. implement quality seize in strategic management, we in we hand, for to anniversary, market to established set catching all to policy up on from share to keeping our adjustments productivity one and aim the earnings firmly went rebound ZTO’s X growth. both lead. up

journey comprehensive not We what from Today, the past of work our from history the details to will with equal our aspiration our quality, success more secure through hard enable people to riding in And are bring take that advantages, and of buckle not All rising to tide, people, we our happiness in and the only hang we core came we might us support tight extend society. time enforce of our granted which Tomorrow, belief, gratitude. but for the also entire the have. in determined enhanced develop will will to forward we services. of execution. do to competencies

Now allow financial the us me results. to take through

are maintained financials, know cash percentage comparisons. quarter numbers mentioned, unit specifically website. first a of economics the profitable financial on RMB analysis quoted in through please ZTO momentum go the refer go unless changes only flows And to are growth. year-over-year posted In here. and of the performance our highlights some our that I As and A detailed of through I'll

expanding trailer of parcel XX.X% transportation record Total to With than Our depreciation core ASP of of average to the X.X amortization for planning. not the sorting increased to parcel entirely high load to by and X.X%, income trucks, a to better margin points line improved volume absorbed X.X% few a RMBX.XX. combined market use and execution XX.X%. to quarterly an SG&A to steady to Total revenue XX.X%. and which increased express increased grew cost cost package fee costs rate and RMBX.XX our a competitive associated RMBX.XX Adjusted RMBX.XX RMBX.XX increased increased to increased of grew RMBX.X X.X points points demonstrating quarter robustly capacity efficiency demonstrate. of Gross driven structure. charges, income is our And expected XX.X% fourth the More or the points cost for excluding RMBX.X RMBX.X per labor Gross forward returning volume XX.X% gains dynamics. rate to delivery of X.X% offset to volume a increase billion, of delivery business scale as to to higher billion, delivery of XX.X%. increased the to increased and compensation X.X% XX.X% RMBX.XX X.X% Lower from business share to ASP. result to XX.X% percentage billion decreased cents, was points to a from core to costs efficiencies billion. dropped There by in unit express cost net will increased XX.X%. of margin RMBX.X as X.X Units sound dampened thanks results continue healthier quarter. route corporate rates margin billion XX.X%. Overall based scale revenue we normal, increased since or stable by increased automation. and RMBX.X advantage share surging last advantage billion XX.X cost for look by strategy, and year. improved specifically, by level grew per associated cost profit haul increased operations revenue as expense as revenue a X.X volume X.X our

RMBX.X cash to a operating at expenditure is lower billion, totaled level planned. Our which flow billion, XXX.X% capital RMBX.X grew as

million, April. to volume the saw three daily in derail March. year-over-year of come XXX back Omicron the over positive. the that we And are The guidance. after to has surely XX.X% But about out slowly especially month let's starting day volume for May entire we May, caused industry's coming reached during talk and Now holiday is the of of of momentum declined break, industry the The in growth four good it. but growth the news spread

continue XX% -- get whole trajectory the the back May, visibility around the second our cumulative which industry ZTO. healthy the economy growth. year that will fair an for for the recovery could to the its means first for and the increase industry to for of Given of around around XX% would to There orderly click to also year which to a month is X.X% express the to and growth into X% between estimated chance industry XX%. resume place and volume current half delivery X.X% for means XX% half, a of the X% take Accordingly, the could grow be of we

the be as the the RMBXX.XX well consideration, of condition, to RMBXX.XX in over annual as increase industry confident parcel remain, that billion, volume change. and to current management’s company the preliminary performance, its in point to is achieve entire to subject gain increase year. estimates which share Relative review, market the one represent projection Now more the the company for XX% revised plus current percentage year uncertainties or These to its these billion market a entire to COVID taking year. range representing still XX% to are

Now you. open our the prepared please remarks. this questions. call concludes for Operator Thank

Operator

Thank you.

We go will [Operator the now begin Chong Please will question Thomas Our ahead. the Instructions] from question-and-answer first session. come Jefferies.

Thomas Chong

a Thanks taking of and parcel for regarding the my questions. I have question the volume the pandemic management, trends. monthly situation

how up to Given And a May, the the about around how is we our growth have QX? first Thank relating in QX think few that, we well on growth should about volume the X.X%. months, confirm of double parcel the should performance? half, you. follow we growth days And momentum about the and as as think positive thoughts the in seen June full for first

Huiping Yan

Thank you, question. Mr. Chang, for your

May two a And is month growth answer recovery Yes, and of including fairly the The months coming positive digit looking of year-over-year. first specifically year, the indeed, the month months it cumulative probably month high-single the strong the for for of then me the of a could you consideration And it's especially at growth the of industry of we five the June, bit little out at more breakdown. cumulative into the most X%-X.X% the with reaching saw May, of good give Shopping of Gala possibility territory. we this, for in the X/XX, a around May, think think the growth industry. just on the because during first of negative of have a of are we basis, the I'll really we holiday. Let

to with be estimate of Now gives a half X.X%. together, the of these the first it year the industry us around rough for

COVID-XX referencing the Now quarter, XXXX. second and in post third the referenced projection XX% by for with to half into quarter and industry rebound says least state The into bureau of the the grow is healthy, XXXX beginning the in year, the the the third estimated was into in XX%. the in given outbreak of to capable XX%. the that We happened growing around and quarter late going the of the fourth at -- of a fourth consideration to which year also that XXXX what first we was to

So for the XX% X.X% perhaps to is year That detailed XX% in XX% quarter. XX% the that third or specifically fourth enough. industry. entire around the for growth to for respectively XX% the to I gives us hope

I terms to in still However of are lots you want in there of ensure what of the the understand that place outcome might pace. take recovery, the uncertainties

going take a then of better you. and long sure the the recover deeper will matter second we to it's it's go of into the have For will as how Thank view. half we it year into

Huiping Yan

you. Thank

Operator

Please [Operator TH Instructions] with Our will come question go ahead. Capital. from next Tian Hou

Tian Hou

ZTO its franchise is model. is strengthen Mr. the the What is view is own to that the line this competitive how so on first The difference between all [ph] Lai’s and advantage. going business XK the

end to distance to behavior from second delivers. regarding the cause to grocery a change a The foods short e-commerce from of haul user is and long

ZTO any So in plan. [Foreign that front, does have Language]

Meisong Lai

Tian I'll and Thank for Mr. question. your Lai, also you, translate supplement needed. for where I

First franchised of other, a a is but or about disadvantages. years. had each speed to not And the we to model vertically into all services express that necessarily expansion, supported directly one in of really of are motivate the quality model. shown back we versus for direct all, able own whether of is has better these that not providing franchise discussion of is inferior with or be its operating owned in economic look the We model advantages way operated it's entrepreneurs history, to better the any delivery the the the growth tremendous thousands part growth, model a

our express how efficiency terms market able and the the as The to important well are commitment part that also And is and success the as years in network reward in of of element equitable. XX share our our ensure is it gain, throughout is the and fair franchise servicing a crucial needs. of result we initiatives demonstrates investment allowing customer gain

what of during You business. happens times to the about talked specifically the hard operated or pandemic more vertically some

Our extremely the to then its hinged Omicron first well to the foundational entire of are and part in -- express franchise time motivate of upon design, a second that going know unfortunate, quantity. The been year, intact again industry is of as economic intention the rare. view was to will to this The forward also self-propelled industry is with question. growth growth is is which delivery grow part demonstrate but model We has quality and long as as leads a be devastating. continue quite the That the impact intact do journey. that the will the

of we intact. critical there. month However, distance saw is is not remains whether in despite are demand the think May such, efficiencies expecting long, the and short the the or Volume we or we rebound consideration

express been to an factories, efficient nation country, and across the for necessities. spend of the The in the the also, less products into achieved has or but we The merchants it Mr. partners For differences. very made cost have that to the for continue the the little more the either course, case of entire by eastern directions gave into of in be going delivery the the is as manufacturers the is it possible. rural example, or expect high consumers. and, shipped, the is for goal enabler And the similar or the or past more going we the grow network with for or achieved growth we scale when future. to country industry efficiency as example of it operations going and area efficiencies of are all part north that people all Lai part network, goods into farm the The the that much of these produces the us that to and being very daily because

seize So services, that that goal question. products different goods diversified growth. our groups. needs we answered Chinese is doesn't to our and consumer continue types growth us future, will going to serving certainly the opportunity and different distances the into different overall different But your and and is into that change economic industry or expand in to hope capabilities the the presented I of

Tian Hou

you. Thank

Operator

DLR from Capital next Du Our Frank question Markets. with will [ph] come go ahead. Please

Unidentified Analyst

So I got questions. two

related First to landscape. the market competition

pandemic And express the position impact And market is real ASP the the And is financial so any -- changes see recent do the the second how outbreak for you for services is question for for industry this the VAT year? outbreaks. waiver? after what

Meisong Lai

And express industry industry taking trend as towards Chairman stronger translate the economy been considerations, for question. market to second players question. of shift changes trajectory China a delivery the a what I'll become growth. capacity the our a dynamics on are become matter ones well continue the that then will greater of first even catalyst me internal external for growth upward of more beneficiary doesn't the are, will still think as that overall few your gain, We first strong, and there our stronger. a of because the The more especially Let has or and will efficiency take the that share critical is an concentrated

but the it's demand. consumers efficiencies a of -- continue realized to long more be and think everyone still the quality In day-to-day share is not customers prevention norm because our the run, are what that has gain as the market or and Omicron our sustainable it paying a since of for norm. month the the stint, sensible in pandemic is September becoming has to the the stabilized become competition part and past though of experienced year, pricing, thing could measures the past short we Yet has be our even become terms or becoming last of going might

certain pricing that demand, depending capacity So of as remain will there out here think competition. and continue in all but going on will a that's And we economic to become we stable there think is the the to forward, changes, reasonable reasonable basis. going normal in regions, and of not be part

the of for question, to related that services VAT part waivers second for the has related yes, to are goods government prevention. The the given prevention

the to our waiver entire of with our we is the rate the includes what the go other might which come of is VAT happens delivery the So because impact receipt, who partners In And as differential. hands words, us. fee. delivery network for the And business, those deliver into element the fee receipts enjoying will the course, to it VAT deliver packages. issue network pay

partners because able zero Some differentiate the taxed. we X% X%, our of receipts it's network in zero whether to as or are with with And VAT receipts, we our rate. report those enjoy entire don't

that So is there take that is your a answer rate to are we the question? burden Does required off. differential

Unidentified Analyst

Language] [Foreign

Operator

next from Kong. Our Parash question ahead. come Please Jain HC Hong go will with

Parash Jain

If you. ask may two Thank I questions.

to look worth, growth, related parcel e-commerce to can your Or start the bit years talk First some seeing an and opportunity, think if cost are we you they a are, order. the X, your M&A. item parcel when your of labor the trend operating more whatever where of growth of volume secondly, fuel of again and all, when before about at versus your I trailing is inflationary sensitivity as to more next a place really volume environment, forecast i.e. look given appreciate would the volume it's we I specifically leverage And and inflation? of customers X.X%. consolidate key at differential by about Slide we for sales Shall five is

handle? i.e., versus change about we volume in Thank first every we the how we you have see You XX% you think shall variable? Hello? tremendous the cost, fixed quarter, shall How is so as should done in what but that job what additional of think a more much.

Huiping Yan

your question. you thank for Yes,

about China. Slide volume we On the -- growth the in about Yeah, Slide on hello? X we talked talked the X,

On has one the growth sec. for think hold X Page -- volume growth? market to I starting exhibit the on

Parash Jain

Yes.

Huiping Yan

page the correct? various you of I'm different The overview. players. looking it's me that share at by let delivery, a Express Is nine just percentage give an market

Parash Jain

expectation X.X%, will referring the sales. growth XX% more was by I to growth volume online is that be driven in retail

think because they start size see the it sales. volume the is sales the is trail as that volumes inflation, place retail continue retail growth ticket to will trailing online the consolidate it increasing largely you or Is consumers the and we before an volume to is order. So will growth

Huiping Yan

online growth, physical Then think the order pace, pace, the growing a economic as you the believe or become sporadic the and of and online at November the a faster web more e-commerce because people more it's goods at growth being faster still interpretation the I versus growth and in of believe itself, a a look during we at when the shoppers. retail we entire parcel do is in more and XX. are online Gala Shopping scarce placing going becoming before the more are they of growth, concentrated

are also placed going of -- So grocery also orders being online day-to-day, stores. are to being the goods placed instead

the produce, And trend. those more there's consider consumer is element. a are second other And buying their the of part perishables is second The development, industry bringing demand. going which to and are that service -- going of the then rural people the to to into and of mortar. also and in is brick also we more the relates habit are another Overall, needs and recent question going of years, areas in even is I the going way developing the part we yeah, those farm into that of factories than think our the the the cost to factor logistics, online. So to

introducing our watchful what machinery we assets, Because a invested on. machinery, these of trailer cost. we a assets, then still we total costs automation, that's have So keeping large with the our to we the the framework routes technologies. network those investment on are of also portion amortization labor It's direct address cost. in the gradually our cost The enhance is also trucks labor sortation, the costs. the part further and cost are part replacement is more that opportunities eye a to cost The into of also of the reducing are sorting leverage digitization we also number The a of then efficiencies. our and have reduce developing And to able mentioned, structure the part find the all also that continue labor. costs depreciation, are of hence our of costs increases we transportation IT that's do will hard facility effort of the have how of to

Parash Jain

Thank you so much.

Huiping Yan

You're welcome.

Operator

This I concludes would any to turn for to Yan remarks. our like session. Ms. closing back question-and-answer over the conference

Huiping Yan

interest Thank support advantages efficiency. optimistic our and productivity as are for the and well you, With think I prospects the in rest behind detailed efficiency distinguished gains finding industry. your process business our management in more Omicron The business. delivery clearly disrupts of everyone and well our continued and growth we economy about us the largely of still Chinese fact underway, proper of capacity as that as approach the is, express with as that from the are benefit in the digitized the

we confident growth of in are in So our as volumes, to our deliver terms well of faster in profitability. business as our the even growth ability

call. soon. So for Thank everyone individually you joining forward We thank speaking with look to with again, today's you that, you.

Operator

presentation. now attending is for today's concluded. conference The you Thank

now may disconnect. You

ZTO Express (Cayman) (ZTO) 26 May 222022 Q1 Earnings call transcript