BEST - Earnings call transcript Q4 2021

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Operator

Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to BEST Inc.’s Fourth Quarter and Fiscal Year 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 Inc.’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 webcasted your also the of BEST after Inc.’s is prepared investor

obligation uncertainties non-GAAP financial applicable BEST Inc. 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. Inc.’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,

Chou, I CEO this the now BEST turn Finally, Chairman call please like note that RMB. Johnny go Johnny, all please of over mentioned otherwise unless would and to ahead. Inc. conference conference figures stated, are in the during to

Johnny Chou

organization, earnings our BEST’s Express year Delivery our well for as to quarter, to Business focused parties and much are support thank and growth successfully a capital year positioned the and of collaborative everyone, efforts Express leaner stronger from sustainable a exit the level with our Hello, strategies. refined operator. growth both We today. fourth to transferred full J&T our you in more reach China. the future fourth next and base Thanks profitability. joining China as we we better with call quarter In a you, Thank XXXX to now the

underpinned integrate Our chain in management core competencies in is solutions. new by global logistic XXXX our beginning supply freight, and

I investing dive Before and first plans business me year Freight, improving our development focused these walk recent quarter. coverage let service BEST with the e-commerce remained into developments fourth you in through our operational fruitful. network our freight’s each proved in here, for and during we reducing quality. cost segments, Further the Starting on related performance of of

percentage to five offering contributed we and is up out important during approximately part becoming the points our volume fourth As year-over-year. e-commerce this quarter, of XX% continue business total increasing of an build

challenging by continue other We and such environment price macro oil of as be impacted challenges. to continuous increasing impact the COVID-XX,

by month-over-month handover smooth loss significantly many net by were basis. China, volume for its began Just X.X operations, rebounded clear of growth our we narrowing along year suppliers. quarter. Express of in year-over-year. But on a with decreased X.X% With balance up path freed the business percentage and since share of by Freight full certain and our year-over-year improved the performance this resources navigating volume sheet Freight franchises XX% the Express difficulty and Express for significantly impact BEST by a a fourth Freight increased in with Freight in December.

acquisition. – for prioritize the new Cloud prioritize higher higher Moving to margin OFCs we and continued margin quarter, preparation network Supply to Chain BEST accounts contributed franchised Management, grow customers to in during our in

in total margin the legacy to OFC Cloud decreased by year-over-year of certain number As discontinuous of million by X.X% fulfilled low a customers, XXX.X result the fourth orders quarter.

numbers supply total incurred of gross also the million, affected total Cloud our points discontinuing year-over-year. accounts margin decreased one-off up by The by orders cost margin were orders, franchised chains quarter, XX% lower fulfilled half percentage However, XX.X in year-over-year. OFCs OFC fourth by which the

We that to are gains. short-term are our right trade-offs leading the long-term these confident

so freed better have up We focus long-term maximize that pursuing and resources opportunities management actively shareholder we bandwidth can will value. on

improvements COVID-XX, Global. three core volume a percentage during continued these and competencies. approximately growth share BEST control. strategic XX% local Southeast to and of Asia, to Turning these down Asia in geographies respect to around expansion cross impact expanded much the increased solid and million We year-over-year. economics to With in progress continuous cost the in of Global Despite with ongoing and Global’s volume and scale improved our in business margin Southeast Capital, business in gross business the increased are margin Global from winding we made of part points our parcel border as our in service XX lines with process quality plan realign approximately refocus market by quarter. of achieving by UCargo

of With our let’s forward. fourth plans the the review going talk quarter, about

we As solutions. chain growing demand progress services smart for supply integrated see XXXX, in market logistic we

sheets, improve that growth to our can pain quality. are their customers organization and industry well significantly we more customers, enabled points address, we the providing expand data and Here empower and by provide offerings, and business a service operations. focused our efficiently technology driven positioned solutions strengthen the products With different balance

services. invest our advance to optimize technologies supply logistic We based integrated continue and equipment upgrades. will first chain in They

we’ll our industry First, leading position. solidify for Freight, further

and e-commerce emphasis pricing chain on our leverages with ongoing better supply Our management. natural offers synergies business related

We are volume. service focused quality improving on our our and growing

network a experience largely better consultation quality, has automation. efficiency operating the regained firm franchise stability Specifically further that With with handover, in investment hub and completed respected on express provides utilizing the growth. for to freight routing, and along service centers, future the improving foundation optimizer through customer

freight achieve of to growth XXXX. We to XX% for revenue expected XX% in

on expanding chain including and industry high and auto cloud the distribution pharmaceuticals our focus higher management will we and our the supply capabilities. started to same OFC continue In will customers to to parts. on where growing our chain XXXX, one we and of services network Next supply margin is we At continue Cloud time, competencies. core quality be

discontinuing our we XXXX, to versus expect the this be profitability account, XXXX year-over-year. legacy we relatively revenue segment will While margin but flat improve from in lower

As for expansion, be on quality network and focus will growth. XXXX main for the coverage our global, share service market

networks We coverage and to will expertise out continue capability Cloud business. OFC for e-commerce to build utilize to our supply improve management chain expand our our

also Asia will We increase and global efficiency end-to-end reduce continue logistic operations. cross Southeast state costs service border among and countries to in enable

realignment realized we’re looking even from In XX% business operating We is over units greater expect global time. forward our to XX% summary, Each we realized gaining the are of by gain opportunities. businesses, to strategic efficiency, to XXXX. synergetic revenue already in while momentum, and positive increase our gross impact

ahead, Looking to for freight profitability XXXX chain objectives. our for supply expect path management the next to a level growth corner have of core our XX% revenue our increase by XX% to segments. segments the on we re-rounding achieve right The us we and and put stress business are for we taken

As for continue future we teams, to investors. grow, partners, see a and customers, BEST, bold our

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

Gloria Fan

everyone. year we business The to of of Johnny, main the strength quarter business pillars. on adjustments, a are fourth decisive you, our and Thank cap hello of critical

lower our growth. has a We level significantly completed our for transactional on a sheet. developing J&T, We balance future business. which have paved improved us core now allowing the cash way and have debt to We BEST’s focus our sufficient

now a As approximately investments XXXX short-term of provide RMBX.X billion. I our cash, were brief restricted cash will XX, our of quarter results. equivalents, December XXXX, fourth cash and review financial

our I call, as our comparison. you be we press Please time our financial for limited completed presenting sale to through reports financial I and results express a year-over-year today’s financial further on release some highlights. the the note, abbreviated will today express’s that earlier our Given are business, issued excluding details. we of China read – encourage in

for obstacles, the revenue the with continuing a gross compared offset X.X%, EBITDA the to The transitioning revenue of But organization, fourth while in negative freight up by linear decrease of growth year. XXXX. the incurred due negative a year-over-year. were was Global’s margin XX% RMBXX.X RMBXXX we XXXX. compared million, operations RMBXXX the growth year-over-year. was partially RMBX.X Our negative environment our business last million million of the RMBXXX in was of to for revenue. QX the compared primarily winding for was compared billion, macro Gross to year, – RMBXXX to in operations loss profit in to percentage million costs, from along total of X.X% loss profit Again, decline backdrop in of continuing X.X% billion a down quarter Adjusted revenue down full and to the same QX was about UCargo quarter revenue fourth the the quarter

with due Global same million was for negative to decreased RMBXX But Southeast such revenue million, for approximately for segment supply volume to period quarter compared to year. negative BEST was last resources off recovery by units, X.X% negative full by same increased period of due highlights in macro others RMBXXX strong increased Adjusted million. XX% by QX RMBXXX decreased fourth fourth management as express for chain on negative volume has QX for by in decrease after discontinuation the and and year-over-year for Johnny million, Freight margin of in year-over-year volume, was revenue are express million last EBITDA our This RMBX.X affected management to all is others year operations for key RMBXX.X year-over-year by Asia. the XX%. Adjusted due was for period due same chain incurred December margin share to of BEST business negative to supply and year. RMBXXX since RMBXXX the increased primarily possible by freight compared gross and of the there freight to to BEST franchisees Moving EBITDA million that X.X% to by continuing environment. decreased the XX.X% million for completed. X.X% by a suppliers. full winding to by million X%. BEST Adjusted million the was QX revenue discontinuing for positive quick Adjusted negative primarily lower it’s But financial accounts. was increased encouraged accounts. driven mentioned revenue in year-over-year including year. the year of RMBXX.X improved year-over-year a BEST margin RMBXX Freight RMBXX.X a Global for largely to business the growth EBITDA billion by gross And express cost X% the last million EBITDA Capital in we the QX by units. difficulty from but RMBXXX the for the certain the primarily XX% one BEST UCargo freight turnover to our challenging approximately down quarter,

same operating of million operations expenses, revenue for the of share with revenue or or of year. XX% compensation million excluding the QX in XX% the Our period based continuing totaled RMBXXX RMBXXX last compared

revenue or Let’s to for and the R&D administrative quarter or of million in compared X% continuing this incurred in our general to X.X% express increase Capital additional China asset quarter. X.X% share to the expenses due XXXX. RMBXXX revenue review some in in Please RMBXXX The primarily or fourth in business. fixed same of at million disposal due of the business. expense operations RMBXX.X incurred fourth major of year, were primarily China the last operating and of to the operations of transitional same based expenses the note BEST certain exclude or XX.X% quarter the for the all expense compared of RMBXX Selling, in the quarter of expenses transitioning express compensation. revenue million items expenses was continuing were revenue million

more please full year further For refer our of release earnings our financial to details. for results, XXXX

billion. operating cost will our now efficiency as operations outlook optimizing on our among business for units, and synergies revenue subject change. corporate supply This RMBXX represents forward, are and to focus to chain to we and all global for Moving our our business based And between the business spending. expect current to to core improving estimates, which rate, well be RMBXX as preliminary management billion maximizing continue XXXX current by the we conditions, our market on

This transition We by to growth are capital our efficient XXXX quarter in organization. sufficient clear concludes roadmap, and fresh strategic guided update. financial excited the fourth and of year to a our start

the now you. Operator, ready Thank call your We our open question. are question. will we for to first

Operator

Thank you.

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

Thomas Chong

Thanks have management my for I two taking question. questions.

share market? price? So should competitive is how and any we supply think Thank you. margin first, and second domestic we question the how the considering market the chain cost have and we high affect the oil share. should other freight Or my landscape about do in And

Johnny Chou

Okay.

I faceting is freight, the larger to on several been e-commerce by things, transportation that growing in Regarding the being now basically has one that of in the the years traditional driven think economics for many that traditionally bulky growth items freight. freight the continued is being used

So the the growth e-commerce Tier the and for driven X, they drive X, X, will by freight. Tier cities lower tier Tier all

that we two the is top tier the seen last the volume have other the – business year or a concentration on The on players. to

the actually gradually the on skills for has for and first the players quarter that that the part we coming especially economical has the the landscape this see last So due partially concentration the that. showing on of been and also to top back pricing later year,

has most We BEST are players or this this XXXX. on earliest started been we for the have – of So – – the market. the one segment we

still market. we position leading in So a very good maintain this

continue So faster the we expecting, we’re will than grow to market.

said, we XX% as are expecting So about there. we XX% growth to

good that more needs. logistic of to that integrated manufacturers – for more new and They’ll On now require and streaming, direct the for supply a people the everything see broadcast of more streaming which for the a chain their and else, strong provide are outsourcing right customers general, more In want more pretty supply integrated us for and chain fragmented, e-commerce drive have customer outsourced we solutions. more are a development the that brands brands services. base the is side,

in right price. a On the XXXX, cost seeing again, the general one number is gross also from the actually increasing, oil margin we’re And price the side the side, increased the and XXXX. that trend oil being on year, is price. on cost the fair Actually oil and the significantly cost one has this specifically increase on in – now, the

cost. is Second the labor

also the especially And As the things this a do. for pricing actually this need seen the labor our and that as more compensate somewhat. automation. is partially has that have that January plan To – to XX% year we industry see the is the there’s center I microeconomics mature two we year, to the semi-automated find that on the somewhat. to to can costs more harder few efficiency we workers is labor the than it’s more and One getting and more for sorting a we also increased ASP that to being increase March be more now, of have And increased the major use Number of reduce of have will the – XX% cost. level.

side of ASP using other we cost. labor to reduce have the Overall, well cost the I the in fleet on self – this to pricing will as reduction the year, balancing will we well cost, is cost. more we think transportation operate that our transportation side, as especially as be as measure, The will the

Thomas Chong

Thank lot. you a

Operator

like closing concludes our questions, more no are remarks. back conference any question-and-answer there to Chou this to session. the Johnny As for Instructions] turn [Operator I would

Johnny Chou

Thank our today. operator. you, call for joining Thank you

Please our you investor As always, further appreciate to questions. to to to look much. and your soon. we our reach if We you relations progress, support. you team have we forward watch out speaking invite you Thank very any

Operator

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

You disconnect. now may

BEST (BEST) 9 Mar 222021 Q4 Earnings call transcript