Q4 2020 Quhuo Ltd Earnings Call
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Good day, ladies and gentlemen, welcome to Chew halls fourth quarter and fiscal year 2020 earnings conference call.
At this time all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session.
Today's conference call is being recorded if.
If you have any objections you may disconnect at this time I'd now like to turn the conference over to your host for today's conference call Anderson Investor Relations Director of true who please go ahead.
Thank you. Thank you operator, Hello, everyone and welcome to Chew for fourth quarter on the fiscal year 2020 earnings conference call. The Congress.
The company's results were released earlier today and we are available on our IR website on the call today are Leslie chairman on the C. O co founder of Barry bonds on the sample the center of the Leslie We'll review of business operation on the company highlights followed by the Thunder, the who will discuss financials on.
Of the guidance they will be they will be both available to answer your question. During the Q&A session. Afterwards before we begin I'd like to remind you. This call may contain forward looking statements made under the safe Harbor provision of private security of legislation reforms Act of 1995.
Such statements are based on management's current expectation on the current market on the operationalization unrelated to the the events that involve known or unknown risks uncertainties and other factors all of which are difficult to predict and many of them would be choppy out of the company's control.
Which may cause the company's actual results performance or achievements to differ materially from those in the forward looking statements for the information regarding these and other risks uncertainties and factors is included in the Companys filing with the U S. U S Securities on X.
Commission the company doesn't undertake on obligation to update on the forward looking statements other results of new information future events or otherwise, except as required under law.
With that I will now turn the call over to our chairman and CEO. Mr. Alessi. Please go ahead.
Thank you any other thank you for all for joining all of our fourth quarter of out of fiscal year 2000, attuned to the earnings conference call.
We are pleased though to get to sort of the book.
All the Cros all been the set towards the end of close to four years out of it seems we piloted the poverty range, what I totally.
We experienced a extremely difficult a year of deals what are your types of all because of COVID-19, which disrupted the lives on the girl beat economy. It's the old pegged all of the business of all on the populism that pivotal year for.
For our operations.
Having a set of it I'm proud of the data we overcame many obstacles on the so all of your car the improvement in financial performance.
So for all of our teams of work under the management system all of the Triple props.
For the for yield for 2000 of a ton to our revenues inquiries the by 25% year over year to RMB, two 6 billion.
Although the euro was extremely challenging when managed other delivers solely of the girls.
All of our jobs to the net income increase goodbye for the year over year to RMB 17, six medium of.
Adjusted EBITDA increased by 44% of the year over year to RMB 100 of suited for media weight.
We believe the set of such improvement of our profitability.
Our capability in the official seeking placement all of the management of Opel largest scale economy.
In 2000, the 10-K, we encountered the multi trenches the combined the impact of COVID-19, and the related to the containment measures.
Adverse impact of course, they are risk doing this segments.
The economy throw the domestic trouble on the data at the tip of tastes of all the deals on the many people prefer the to stay home for safety reasons, all of which has dramatically affected some morbidity in the hotel business.
The addition travel restrictions for myriad of popular till the quarter why those for all I can do is Sylvia.
On the subsequent of labor shortage, Joe Bob overall labor costs.
However, leveraging our strong operational capabilities. So on the industrial leading tech power of the medical system. We have taken this change as an opportunity to further increase the GAAP with our peers on.
Solid five of our leading position in the work Force operations Center share of Iowa will highlight of some of the measures we took to mitigate the through the top of much environment.
Firstly, we're managing to maintain our revenue growth through in lots of the business scope on the coverage.
Such as the fresh food delivery for the Bulks project with made part of on a yearly.
On the sort of cooperating with new customers, such as Harold share buyback on the mcdonalds on a sort.
Extending to new service sector for us by acquisition, such as acquiring a lot of other twin tool.
Yes.
Secondary we kept investing all of IMD till the fun shoot World class management system to improve our operational efficiency on the restructuring of our workflow on the reduced mainly management the efforts.
On the same time, we kept on investing in our people sort of online channel system on all ground of the head to head of practice will have developed extensive momentum on that walk of kind of 15, we'll buy bought the 1000 the experience for all of the end of managers, who are expert in with the workforce management of SaaS service.
The operating capabilities to promptly adjusted to changing market dynamics.
Thanks for that and we are able to achieve lower operating from Benjamin cost of five point.
CLO five per cent year over year on even in such difficult situation of COVID-19.
So the rate in front of us the hardness of labor shortage of what continuously upgrade of our total all on the free system based on YY has established a larger labor pool on the disk helped us to maintain strong equivalent of the capabilities without significantly increasing acquisition cost during the pandemic.
At the same time all of our workers follow the easy to seek growing job opportunities in our platform across all of what they are establishing which effectively increases the label of thickness on the reduce the cost.
2020 was Chilean challenge of year, but it was also filled with opportunities to scale our business. We adjusted we adjust the challenges head on and adapted our strategy to diversify into more service offerings and the made a solid progress across tied to pay for in the new segments.
Our core all demand for the delivery of business maintained its leading position in the sector with about the plenty Bob said the year over year increase the number of average miles a day deliver all of those in 2000 of 'twenty revenue was from the all of the amount of Filipino based solutions increased by 30% of the year over year during the year with low debt.
Out of our grocery on the fresh food business on the contribute 15 meeting on be fully new revenue in 2000. The pending we are confident the oldest getting lots of business with an accelerated growth rate in 2000 the 21.
For mobility et cetera.
The issue with follow on the D D and achieved a 45 per cent of revenue growth year over year for us.
Sorry, the Fi our presence on the mobility of sub sector in 2000 of 'twenty, one we will extend to our mobility service to retail other consuming customers.
For the whole keep on solution business, we made a significant progress in 2000 the 10-K.
Turning to investment agreement to acquire a majority of stapling lilac, which of specializing housekeeping of solutions for hotels that appear on the beat.
Total of 2022 October 2010 day during the fourth quarter, we also invested in <unk>.
Eating homestay service provider in China, we even started this investment will accelerate our pace and allow us to establish a solid foothold in the housekeeping solutions sector too.
To date, our service cover although went south on the hotels two style of them to settle college of the B on the beef national wide <unk>.
Operating synergies with the lilac on the 'twenty two we expect our housekeeping on solutions to make a meaningful contribution to both our revenue on the module in 2021.
In 2000 10-K, we have closed the adapted our.
Diversified it solutions the strategy and the made strategic investment at the scale up of certain business sectors weighted.
He was that COVID-19 has profoundly on the permanent reach into the lifestyle of Chinese customers and the consumers, which will benefit us on the amount of the workforce business on the shared economy Marquise.
What is the adverse impact of the pandemic of gradually subsiding, we expect to get it for better performance with the execution of our proven strategy in 2020.
Leveraging our largest scale workforce pour on the extensive all of the growth infrastructure. We will further invest in employment exchange on the professional training service to provide a flow to end the career service for Chinese workforce. We believe we are well positioned to capture more growth opportunities ahead.
On the deliver sustainable long term growth for our shareholders.
This concludes my prepared remarks, I will now turn of the call over to our sales force et cetera, who will discuss our key financial results for the quarter and the fiscal year.
The.
Thanks for the message Hello, everyone and welcome to coupons on Odyssey in the fourth quarter on the physical year of tons of times you've call. Please be reminded of the that's all amounts quoted of here will be even be on that stated otherwise I will start with our Q4 numbers for revenues were 871 point of southern milling.
Representing the increase of 32 for signs of year over year, primarily due to the increase in revenue generated from our on demand for delivery of solutions revenues from on demand for food with the universe solution for 800 reported said I'm, calling 5 million representing the increase of 30% from 600.
The 52 moving in the in the first quarter of tons of 19, primarily due to the increase in delivery orders are fulfilled at the result of the continued expansion into new geographic markets and some of it.
Rapid growth of our growth around the flash foods.
For a business waste.
Which contributed revenues of 36, the milling English quarter revenues for on the share of bikes solutions for some calling segmenting, representing the increase of 119 point swing from for.
For Knight of 4.8, moving in the first quarter of 2019, primarily due to our expenses expanding customer base on the service scopes revenues for on ride hailing of solutions work for point 6 million, representing the increase of 55, 2% from sort of anything in the first quarter of 2019.
Primarily due to the increase in a number of vehicles, we lapsed the true right hitting travelers on our platform revenue.
We're on the housekeeping solutions on the other services were eight point for milling, representing the increase increase a significant increase from 205000 in the first quarter of 2019, primarily due to our enlarged the customer base for provision of of our husky keeping solutions, including hotels on the.
The N B's.
All of our gross profits were $40 1 million, representing a decrease of 7% of year over year, primarily due to the decrease in gross profit of empty miles for the delivery solution.
The growth is.
Gross profit on the mountain for delivery solutions was 35 points during the range, representing the increase of <unk> 15 for $15 four per cent compared to the first quarter of 2019, primarily due to an increase in service fees paid to our writers issuance of <unk>.
<unk> expenses and the higher expenses as a percentage of revenues our operating expenses consist of G&A expenses in the R&D expenses and G&A expenses of accounts.
Accounts for a majority of caution wage war for two storey appointment of representing the increase of 26 point points to 8% from 34.
One of them in first quarter of 2019, the increase was primarily due to increases in share based compensation rents on the opex expenses.
Excluding share based compensation, our current expenses increased by 19, 1% of year over year as a percentage of revenues declined two four points to reap the plans from four 7% in the fourth quarter of 2019 as such with any of that.
We achieved unit cost saving along with our business growth.
Our net income attributable to Chew on limited was tough milling compared with the net loss of.
214, as you saw that in the first quarter of 2019, adjusted EBITDA was $15 5 million represent an increase of 663 of calling six.
And from $9 5 million and of course culture of 2019, the adjusted them net income was $15 million, representing an increase of 481, 9% from true.
Coupon of 6 million in the first quarter of 2019 now let's move over to the four year of 10, two tranches of spun out of the resolve the revenues were $2 six of the billing representing the increase of $75 five year over year, primarily due to the increase in revenues generated from on demand for the universe.
Solutions revenues from on the amount of the food delivery of solutions work to volume to calling for bidding representing the increase of 21 per cent from.
Two bidding in 2019, primarily due to the increase in delivery orders for build as a result as of the continuing expansion into new geographic markets because of the rapid growth of grocer in the fresh food deliveries.
Revenues for all of Michele Bachmann, two net solutions for 'twenty, one five minute way should remain relatively stable on a comparative waves of $21 2 million in 2019 revenue from ride hailing solution for were $10 1 million, representing an increase of.
For 257% from $6 9 million in 2019, primarily due to the increase in number of vehicles. We listed to ride hailing drivers on our platform revenues from housekeeping solution for the other services for south calling for moving comparator of ways to have true.
The 60, some 62 sub debt in 2019, primarily due to our expanded provision on the housekeeping solutions two hotels on the BNP.
Gross profit was $192 5 million, representing an increase of 86.
Yeah.
Yeah.
Sales of food delivery of solutions in 2020.
G&A expenses were 200.
Two to 200, and the soy point story of moving.
Representing the increase of 26, 1% from 161.2 moving in 2019. The increase was primarily due to increase in staff costs share based compensation. He runs on the office expenses, partially offset by the decrease in professional fees.
Excluding share based compensation, our G&A expenses increased by $37 four per cent from 96 point for many of the intensity.
Net income attribute to chew on limited the one three points for of mailing compared with the net loss of.
The latter 0.8 moving in 2019 adjusted the EBITDA once the 130 for 30 points six of the meeting representing the increase of 40 per cent from $93 1 million in 2019, adjusted net income was $77 1 million representing an increase of.
T point.
One per cent from $51 4 million in 2019 of this concludes our prepared remarks. Thank you for your attention we are not happy to take your questions. Operator. Please go ahead.
Thank you we will now.
I will begin the question and answer session.
Ask the question you will need to press star one on your telephone.
Your question. Please press the pound of Hashed E P.
Please standby, while we compile the question and answer the roster.
Your first question comes from Darren <unk> from Roth capital partner.
The question.
Hi, good evening, Thanks for taking my questions the come on.
If I may could you speak to the declines in gross margin and I think in particular, the the foodservice piece.
Whats kind of the the reasoning behind that and is that something we should expect going forward.
Yeah.
Yeah, Yeah, that's the cloud gross margin for our on demand for the other solution for was mainly due true.
And in the fourth quarter of this year, all with me and I do to the debt.
The increase of out of our service.
So, let's please pay Chihuahua Rogers as the percentage of of of total revenues and the ends of the increase the of the hiring of expenses as a percentage of revenues because in the force called her yeah in the markets that give the kotex.
Of the of the hiring Hum hiring new writers or keeping increasing so away of habits, you pay them extra phase to a true high more of writers.
True up of fail, the increasing others, that's the memorize it.
I think Chad the when more part of victim.
On the most of the delivery a pretty large percentage of our orders in the north part of charter in the Q4 and two of them 20, the part of China, especially of nausea used the power of charter on the sheet quite seriously.
Net search.
Search on the Big cities, Shanghai, Harbin, a dollar of major cities on.
We have people containment of policies during that period of time, so the cost of serious shortage of the labors and sort of.
The major reason why.
There was a big difficulty to recruit those flavors and the increased our equipment cost.
Thanks for that the bearing sovereign so if I could.
Yeah.
Has that changed at all in 2021 year to date in terms of the the cost of the high writers in the northern part of China.
I think Inc. First culture of touches a touch of trying to one yeah. The situation S deal there, especially.
Especially in the spring back in February during Spring Festival due to the government policy.
The last people stay.
And what do they all are in just a true spent of the holiday rather of the going back to the hometown. So yeah. Yeah. As a result, the author of the others are more of it was inquiries. The rapid so they are compared to last year so to.
In order to fit to fulfill all of that as others successful anyway have true pay much higher fees.
These two part time riders to do that work so in the in the.
The first quarter of this of year of the situation.
Well what did on to see you know Ah.
A better Chad but in.
I think in Q, a second cause her yeah, the things are getting better.
Right and then as we look at 2000 kind of.
On 'twenty one.
Can you just talk about just the broader strategy.
Amongst fresh food.
Keeping an on demand food delivery of it kind of what your growth initiatives are and are there any kind of residual setbacks from from COVID-19 that would inhibit <unk>.
Growth in any of those segments.
Yeah for 2000 of 'twenty, one on the portfolio.
For the early part of the way I expect to use the steel keep grossing on.
The for housekeeping on the morbidity of where you expect the would it be a dramatic rate on the craziness of the outgrowth.
Of course, the pandemic impacting China is getting subsiding and the people are getting back to normal on the this is a good chance for us to growth for things, a new two sectors, which including the mobility and like bike sharing on the ride hailing on no so for the.
Housekeeping sections of the like for the hotel on the same time in 2020 went on and we will bill.
Buildings, the infrastructure, which will support us for a series of services from.
Recruiting blue collar workers, providing vocational training that will increase the opportunities for bad for a job in true core platform on the way believes that the gross well much better than 2000, the 10-K on the under our initial tubes the welding heads.
The thickness of pool of.
Label ensure platform on do we expect the long term competitive advantage across the various industrial yep. Thank you.
For you.
Great and just last one for me as a result of COVID-19.
You know of at least from the United States things like logistics. There have been these put on you know by folks like Fedex and the Etfs that have increased the cost of.
Kind of a logistical platform.
Are you seeing anything in your.
Sort of sourcing of.
Workforce, where fees have increased as a result of COVID-19 and they're gonna be permanent whether its by the Chinese government or any regulatory body.
Our sales force a whole of marquee the national wide on does the labor cost in the event for us of recruiting fee of trees, the increasing on the comparing with the last year.
But for true core platform, we are being a benefit to the problem of our internal references to them and also benefited from our penetration into the recruiting service to broke all of us on the so considering the turnover rate on the recruiting cost of you can chew.
First our management of Costa of ways still seen King's that is a reasonable on the always that's the reason for why we cannot shoot lower management costs and also we are true.
On a bad total week holidays.
The EBITDA in 2000 the yep.
Yeah.
Thank you.
Great. Thank you.
Thank you. Our next question comes from Thomas <unk> from Nomura. Please ask your question.
Hi management. Thank you for taking my question.
For a question regarding all of our revenue for the order.
Especially for the for the delivery of this is how do we see the trend towards the 'twenty one on.
For the revenue per order for the trends of the grocery on the fresh food.
Thank you.
For the territory and we can see does the growth and we're still keeping if we quoted the number of from our our major customers made one on the which is from maybe I'll call. It like 30%, but for a fresh food on the growth rate it nobody really can say.
Or is it the growth rate of one of them would be much higher because in 2020 of trees that are grocery and kind of the for the fresh for the deliveries of for a new sector in Iowa.
Revenue of about <unk>.
This contribute to of.
Most of them.
The $10 million in revenue in 2010 day.
Yeah.
Thank you.
Okay.
Thank you and as a reminder, ladies and gentlemen, if you wish you asked the question. Please press star one on your telephone keypad.
Yeah.
Yeah.
Yeah.
Okay.
Hi, there. Thanks for Sanjay just the gentle reminder, well uploads of the Excel version of all of the financial statements and the key financial and operating status.
On our IR website, you'll kind of check the details upturn of this cost thing.
Once again, ladies and gentlemen to ask the question. Please press star one on your telephone.
Yeah.
Okay.
Yes.
Yeah.
Hi, Hello Speaker, so if there's no money on our read on the question. So that's the the conference. Please.
Thank you.
With that we conclude our conference for today. Thank you for participating you may all disconnect.
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Yeah.