BEST - Earnings call transcript Q3 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to BEST Incorporated Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Following the management’s prepared remarks, there will be a Q&A Session. With us today are Johnny Chou, BEST Incorporated’s Chairman and CEO and Gloria Fan, Chief Financial Officer.

will highlights. a Johnny business overview agenda, operational and today’s be brief giving of For will the Gloria Then explain financial results. details of the

the available being available website. may this Following A is replay IR you also questions. call ir.best-inc.com. call. remarks, note will An this Please presentation be website ask at IR call the on on webcast your also the of BEST after Inc.’s is prepared investor

obligation uncertainties non-GAAP financial applicable BEST Incorporated. uses and we on based required update statement as also note all a many except EBITDA statement net risks, of management’s Before any They of predict I on statements. are forward-looking the will which difficult any on results expectations. Incorporated’s adjusted beyond are the others, discussion result Harbor to GAAP Safe press as certain that Today’s BEST The of found and of a does or new law. are These be such factors, basis, expressed to release. reconciliation begin, Please read current other of Company control. can involve loss. to forward-looking which and statements events, The this contain inherent and as will GAAP call future measures the under information, are undertake earnings non-GAAP in that not non-GAAP on Company a measures behalf forward-looking management’s EBITDA,

this Finally, call please note that RMB. all mentioned otherwise unless conference figures stated, are in the during

Johnny, please Chairman call to Chou, Incorporated. CEO turn and of the to like ahead. BEST would over I Now, go Johnny

Johnny Chou

third dedicated competencies today. the and the around to everyone, third value shareholders. operator. quarter, core BEST's you, Hello, you call remained thank In unlocking our our for realigning company for we and earnings Thank quarter joining

of Express at We with to after valuation transaction this recent at J&T very thorough our to RMBX.X our a sell various billion. XX, arrived alternatives. the On about October Express J&T Business talk first in evaluation of Delivery we announced China. agreement Let's China decision

customers. China As backdrop, you to the in our core efforts network exceedingly services, must concrete These transaction our allocate making. out pricing this business loss service execute be to supply quality chain us with competitive for all our and by new in as freight mix efficiently our and Against logistic focus product leading enables allowing to our chain strove further strategies. Express and the improvements in network The been aware, taking strategic both Express pandemic. COVID-XX global aggressive roadmap, logistics, we the their more us entrants chain not enhance competencies stability and and has but of and been on market situation on to to as supply led services. the has This integrated compounded supply the towards well players optimize our resources

higher in expansion invest per continued service X.X% volume in cost decreased costs. Next, improve percentage key I to in in parcel average XX%, due performance customer of Express, XXXX, amidst a will labor offset points and year-over-year, year-over-year by billion rising competitive in third service while quality, RMBX.X efficiency the and continue transaction, its BEST costs our with prices upgraded operating parcel Gross experience to X.X the developments With reduction due network and e-commerce-related of enhance margin and a during by quarter. our to per ASP we contracted talk measure oil respect decline to Freight improvement. partially to operational a reduce decrease quarter year-over-year of by quality the about and parcel XX.X% cost landscape. grow despite to third

XX.X% oil per cost labor of despite and ton cost third volume by decreased costs. points decreased rising quarter in X.X% growth of The higher for affected year-over-year in up due with the dedicated volume by total, freight XXXX, season prices control. and team's quarter X.X X.X% third year-over-year. However, Thanks low average freight the e-commerce percentage to traditionally pandemic, macroeconomic year-over-year to our accounting a by

gross was a X.X% margin X.X year-over-year. points decline quarter, ASP to primarily the percentage due year-over-year, the of However, negative in X.X% the lower

total to and by Thailand, in Malaysia, expanded primarily by growth improved driven network services increased our by cost growing Global Moving year-over-year to our of robust the XXX. RMBXXX.X by respectively. to particular the we with quarter, X.X while of chain as margin The third with X.X from our X.X% number as solutions economic its lower-margin Its percentage the franchise's was OFC gross quarter cloud to the on the remain impact clients closing X.X% reduction points year-over-year, million BEST increased increased of fulfilled volume Southeast BEST orders Asia the Parcel franchised cloud related despite by by strength of XXX%, profile, underpinned margins by year-over-year projects of realized the higher continued Global's management. quarter Southeast focused our RMBXX gross increased as OFCs and Cambodia, and expanding year-over-year credit OFC supply XX.X% In in XXXX network margin and of total XXXX, XXXX, with strong fulfilled million third to Asia RMBXX.X third implementing percentage lower which in measures. number XXX.X% in volume number in of to one-off by points the parcel maintained where well orders comps. cross-border XX.X% the cloud in The increased XXX.X% enriched scale, of COVID-XX. rose we million. charges by with year-over-year, year-over-year OFC region. X.X% quarter margins franchised and in

balance in we strengthened systems sheet, be equipped our services. with forward, to investment increase Going and to enhance our will automation

their service accelerate supply integrated to to supply transformation. serve smart chain well further will operating of digital efficiency that we pioneer companies and chain to larger a be their positioned As the provider, and seek improve

pharmaceuticals. services fast-moving consumer and parts the for of we advantages such goods For and management, at continue industry, supply higher higher gross industries, in expand with it chain as apparel to a reputation our auto margin

the to improve infrastructure, continue warehouses fulfillment experience. such delivery as network and in also to centers customer invest We further system and

We supply in and are optimistic profitability logistics will achieve XXXX. chain that the

For leader will where Freight, is full-year pricing an supply management, synergies enhancing business for industry in by we of further the space, we to profitable as be solidify XXXX. attractive capabilities, leveraging position and our chain the e-commerce the also Freight's to Freight continue with our serving customers the expect more

Asia double-digit be our to penetration Southeast e-commerce a and As China, Global deepens the will cross-border rate, continue driver grow for company. at in trades Asian growth

our supply chain capabilities to local both Asia. the supply conclusion, and of importance cross-border Southeast utilization of world further business. for logistics solutions brought light provide management In and smart around promote has strong will smart the chain We in every and for vital solutions larger operations conditions services

units continue strategically our synergies explore create business to will to we and among develop forward, Looking value.

realignment to confident on capture us. enormous that our our the focuses are lie We and opportunities will before enable streamlined the us that core strengths

I like further review the over to CFO, turn financials. Now, third to call of quarter our would our Gloria, for

Gloria Fan

the the Freight. Revenue decrease macroeconomics to market RMBX.X Thank weighed as selling volume and you, on and XX.X% billion, Express of third Johnny, was for quarter and average price year-over-year, hello a dynamics for everyone. and

establish significantly excelled investment, liquidity worldwide with The logistics J&T leverage provide growth a our will strategic to flexibility the to the profitability solid a return and and quarter, financial the our us for Global However, transaction BEST in maintaining foundation and despite shipping China Express improve pandemics with to strong effect increase disruptions. growth reduce and in us lingering laying trajectory.

end Our balance equivalents, cash cash investments the at quarter. of the short-term and RMBX.X cash, of billion restricted third were

me results let in you Now, of quarter through third our walk financial the XXXX.

to pricing to same quarter negative was million in million operations QX negative of of loss RMBXXX.X gross intense negative last continuing compared Adjusted QX the our the was EBITDA XXXX. Gross environment, the RMBXXX for compared million same year. million RMBXXX was X.X% in Within negative to period for for X.X%. RMBXX.X compared margin

Express business decrease last primarily Next, for to a due the in by Express year. parcel of on negative XX.X% the RMBXXX.X parcel BEST to per key EBITDA ASP revenue basis, compared to Adjusted in year-over-year third billion decrease financial negative quarter million for a period XX% for same million year-over-year was On year-over-year moving in BEST a and our units. XXXX, of volume. decreased to XX.X% RMBX RMBXXX.X highlights

business year-over-year For to volume year-over-year X% other was same negative BEST the RMBXX.X by increased Freight, of for Adjusted million invest million ASP Freight volumes in to X.X% the QX increased chain BEST for million for million quality. e-commerce-related expansion X% revenue we a management RMBXX.X of for EBITDA Adjusted the and year. compared RMBXX.X compared to BEST per was others to QX was RMBXXX.X negative compared by year-over-year to million year. for RMBXXX network in BEST XX.X% in period by RMBXX and Global Adjusted UCargo million due freight Southeast last same Its compared Capital to to by revenue EBITDA RMBXX.X grouped growth decrease continue parcel service ton. of revenue and improve by Asia. the Supply its year-over-year for decrease billion, negative year. million. RMBXX.X for of grow our decreased primarily EBITDA a X.X% decreased million negative effort period revenue was EBITDA for for segments million negative in Adjusted last in period the last to to QX year-over-year million. driven year. for RMBXXX.X to negative sustained BEST million, XX.X% Global in same period RMBXXX.X RMBXX negative negative to same QX momentum RMBX.X last

share-based the Our excluding with million period year. revenue operating the million last X.X% X.X% RMBXXX.X of revenue same RMBXXX.X the expenses, in or of compared of compensation or totaled

compared revenue RMBXX.X recent X.X% major same leveraging operations share-based a from allows RMBXXX.X administrative compared of total of million of in same to the RMBXXX.X the We the Please deliver year. open or This of all in in for in to same J&T third This million profitable million of million X.X% quarter our revenue some X.X% of expenses or become the the compared last concludes overview. linear at the for chapter third believe last CapEx Selling, long-term and will focus expense our was technology the look financial RMBXXX.X us or to third were of new RMBXXX.X expenses RMBXX.X company. revenue to in quarter of compensation. were third items transaction continuing revenue to or quarter million or continued period sustainable XXXX. the revenue year. of quarter for a quarter. operations R&D and these quarter note, expenses our X.X% of exclude strength growth. or take million X.X% let's X.X% with Now on general operating revenue the and

solutions, logistic digital Operator? success chain-based our supply creative invent move industry customers Thank the call the and innovate into achieve that, helping era. the open explore, we to continue With to will you. We as now will questions.

Operator

Thank you.

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

Thomas Chong

Hi. competition of how regard the from you. achieve to questions. regard the should with the about out my our think and different morning. I about from edge? for the in different competitive for think freight, And should supply region competitive global. XXXX to the with question highlight. KPI segments outlook our Thanks How use segments Thank landscape we deal, Good positive the regarding management and And the [indiscernible] we have stand cash? how and for business taking a chain we

Johnny Chou

Okay, Thomas.

some to XXXX as landscape as regarding global and is question in chains the advantages. and well competitive supply first our landscape Your

in talk of driven also have significant between Global. very both Southeast China cross-border about e-commerce advantage. all, a the a in has of the a we of this, trade. penetration little a bit terms Asia's Global fast and basically let's and growth more in Southeast growth Asia fast First In

spent already. in First in have of countries, local the all, we each market few years

network in close in centers so In about or I all development we done Singapore and it's then infrastructure. XX; we and eight, do the engaging buildup Malaysia, nine believe been to about hubs; have and have Vietnam, as Cambodia. seven had sorting about We Thailand, in

continuing been in have couple we invest the and infrastructure build of years. the to are these So past

especially that fairly both entrant we a in all, build have the almost of had in network, we XXX% all Vietnam, – completed of Thailand, early these Second markets. in these coverage countries, covered into

major cetera, in Third also manufacturers Express for capability et supply up multiple services. for with helped one that our network, set the supply Freight cross-border, Asian countries have trade both the delivery, cross-border, we the chain and door-to-door business, example, is leverage chain services the last-mile both logistics Recently, direct we China warehousing, and in a China. the in of

many services – last-mile Asia end-to-end the multiple bulky to warehouse needs delivery, larger in parcel enter see continue – in well both we So Southeast as to of market. the China-based a items as companies a want into requires

of supply a So pioneers us have these supply large in I developing that more chain, Back think give terms been years we ago. chain markets. XX in very China advantages in services to the than

first many the more China who the BXB, development, selective we successful digital BXC one services. or consumer on we're parts we done base goods in really in out picked choosy pharmaceutical, customer So apparels up the macro rolled as have and supply chain. on and services the a have the we Based been past, – into concentrate. In clients. manufacture we in the of the Recently, electric terms fast area some and vehicle our this industry

services see marketplace. BXC – we strong side, So for BXB, quite services a on supply a the integrated demand in the chain

focus markets, because chain these and And had quite freight some supply will chain or requires companies customers aspire actually resellers, along to their into both the global of with these to supply lot Freight. of deliver distributors, So a who as synergy expansion. to global customers as stores we well the a XXXX, they on the the a services

supply XXXX the In from exit the our well better use one are business, chain, competitive for as the used your second have on terms in cash be of chain. global Express supply the automation. of – will very future about of both advantage will the I good freight, After good especially question regarding we as very global – area, that a China's for cash. the outlook So With that. as area think, multiple in be the market, is the remaining growing

well and using labor to reduce the I capital automation some expansion on on as side. a also, Global in this automation operations network. expenditures think as to will invested we well the same more the that. of the have also more And thing, been as we as Freight the has more chain, need our efficiency supply cost

So of that's one It's automation, digitization more side. network. the

will further customer network digital R&D be transformation enhance expansion Some some of development and as the the the well our acquisition. the of Thomas? to as

Thomas Chong

Very it. you. Thank clear. Got

Operator

Goldman Ronald with Sachs. next Instructions] comes [Operator question go from The Keung Please ahead.

Ronald Keung

I Thank you, questions. ask Johnny Can a few and Gloria.

Firstly, is RMBX.X the BEST consideration. of Express, billion

You mentioned cash. that in is earlier billion it RMBX.X

remaining will in that that kind pass-through Just of kind want make RMBX.X to billion, is that and is entity sure in of which what J&T. Express debt rest, the BEST will kind pass-through the the of

network freight through So cross-border. do BEST is months? Freight that And to the we situation? last at third consideration any about to quarter. one COVID least something the positive global of in decline we're my or actually forwarding see aspects of is question up? our still And Is back we whole seeing growth benefit two global slight question, in or thinking getting your and improvement could We recent proceeds second alongside that volume we the we the any then business of thinking billion. Are building the of more go Express that due at trends. can Are some a RMBX.X

Johnny Chou

Yes. Okay.

debt expected and So the value. total some we the of pay first of the we transaction, carryout, on all, yes, approximately working the enterprise reception everything Express When consideration have about RMBX.X the would expected capital, said the debt, some the the is million, cash of remaining a else. basically down is so X.X%

the payments still So some have Express working the some – company's the need the payment or book, some of that of the including so to transportation debts, that capital – unpaid still is we basically the other settle. on they and

from deducted RMBX.X be million. will that that So

cash is the basically back to group. a So clean RMBX.X million

the little the is right? is will actually they're the when and and closed a things, will our we of Freight, basically is The part about One flaring being on and a – it basically, the the tough also hubs somewhere was goods, impact flaring based up volumes. three some that deliver the pandemic third of Second bit quarter lot Freight. in up was that and receiving be our of areas, cannot impact will also

the is, especially everything in light the also light, a during time, quarter that and see always curb third past on August been some electricity is traditionally, else side. will heard, improvement an is compounded Second stuff some of also always quarter macro this. volume impact have month have July, into some third quarter, of is And happening, and all already. June, summer curb the as have probably pandemic, and our other electricity the you fourth with they do we third But the

recently, COVID-XX flared fact, November during I recovered see bit. so the eased, past Freight in [WXX], especially little in a we think pandemic, our the also the has the electricity But far, been significantly. has has lately, but up curb October, also volume

expecting on So a side. Freight I'm gradual recovery the

freight because question actively to side, we network we network is focus about the are had network. you development, we in start On freight that that Global a like want development into Thailand, Vietnam, to of with looking on but not local local third the now forwarding, type right Express in on, combining one just a

if up other in in typically parcel and Thailand, look than can XX the less words, we So Vietnam you to China, kilos quite at Express, small, XX-kilo. kilos. in XXX to the maybe go is But

market – So a to competitive very help more us will in a and us service that give product.

– talking be about we of warehouses, supply we in Freight be be that plan it, the an looking more chain, looking we've Southeast the next expand where have at some China, was year. last will concentrated at the active it, right chain, in XXXX forwarding, to coverage. clients now. on wanted we'll don't supply services, of Asia. And is at a border mile been but cross-border looking cross our major be of we'll more there – large So And second we'll a in

Ronald Keung

question Express one are with our we follow-up more and regulatory with approval expected the Can for Okay. the is disposal. I completion? process BEST How

Johnny Chou

have I the any the comments expected on filed still We have time. don't for and waiting we're result.

Ronald Keung

Thank you.

Operator

[Operator to Johnny Instructions] would turn for remarks. This concludes our I over closing any like question-and-answer to Chou the conference session. back

Johnny Chou

and you, our you look call, questions. team operator. to BEST. Relations for appreciate Thank Yes. you speaking We our to Investor you Thank any you to further have support soon. out much. we Thank if joining all very your forward reach of Please

Operator

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

may disconnect. now You

BEST (BEST) 17 Nov 212021 Q3 Earnings call transcript