Q1 2023 BEST Inc. Earnings Call
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Ladies and gentlemen, this is the conference operator. The conference will commence shortly. Please continue to hold. Thank you..
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Good morning, good afternoon, good evening. Welcome to the best incorporation first quarter 2020 results conference call. All participants will be in a listen only mode. Should you need any assistance, please signal our operator by pressing the star key followed by zero.
After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Mr. Johnny Cho, CEO . Please go ahead.
Thank you, operator. Hello everyone and thank you for joining BESS first quarter 2023 earnings call today. We delivered an exceptionally strong Q1 2023.
demonstrating financial improvements across our business.
despite the scenery's slow first-quarter lingering effects of COVID.
The group's bottom line has improved significantly.
By narrowing the net loss by 32.2% compared to Q1 2022,
with best supply chain management delivering net profit in a quarter and the best freight reaching profitability in February and March.
The global has also turned a corner.
Delivering improved financial and operational results compared with Q4 2022.
In addition,
Both supply chain management and Freight's Q1 operating cash flows were positive and respect both business units to maintain this momentum and achieve positive cash flow for the year.
Now let's review each of our business units in more detail.
For best freight, we have seen a strong recovery trend in consumer consumption post-COVID pandemic and demand for freight services is increasing. Best freight's commitment to service quality and operational excellence in the past 18 times.
are clearly paying off and we have vastly improved our capabilities in order to meet increased market demand. Phrase volume for the first quarter increased by 5.1% year over year, while April's volume soared to 20.3%.
First, growth loss for the quarter narrowed by 96.4%, and its net loss also improved by 53.6% year-over-year in Q1.
Our service quality remains a cornerstone of our free services.
Our focus moving forward will be on further improving our core competencies in the market.
First, we will continue to develop digital transformation to improve our operating efficiency and ability to provide our key customers with high quality services.
Second, we will continue to synergize with best supply chain management.
by leveraging our massive supply chain management's key account customer base.
to capitalize additional business opportunities. Third, we will be developed and leverage fulfillment franchisee.
to further enhance our service network.
posting profitability in February and March Best phrase, momentum is ongoing
and the volume will continue to improve. Looking ahead, we expect...
These differentiated drivers will improve phrase of profitability.
and generate positive cash flow throughout the rest of the year.
Moving on to the best patching management.
As many enterprises are developing into multiple sales channels to expand their market coverage and look to optimize their supply chain management capability to meet the growing market, the demand for third-party integrated largest service partners with higher-level service capabilities is escalating.
Best supply chain management.
superb service quality, technical know-how, and digital transformation capabilities place us in a strong position to capture these growing opportunities.
in the first quarter.
Best supply chain management revenue increased by 7.7% and the growth margin increased by 3.7 percentage points year over year. Our customer base grew as well.
with the addition of 32 new key accounts.
and 36 new tender wings in the first quarter. As the pressure management remains the center
of our syngenic logistic ecosystem.
We have been focusing heavily on the digital transformation to improve our operating efficiency and enhance the system.
interconnectivities with our customers.
These capabilities differentiate our market offerings and bring us additional competitive advantage.
differentiates our market offerings and brings us additional competitive advantages. At the same time,
we are continuing to develop and accelerate our franchise fulfillment capabilities.
to broaden our network and service capabilities even further.
With this in mind, we respect supply chain management.
to remain profitable throughout the 2023 with significant gross margin improvement while generating positive cash flow for the year.
Finally, let's move to best global.
post COVID.
Economic of the Southeast Asia recovered rapidly and the volume of the e-commerce business surged.
The growth of cross-border activities between China and Southeast Asia also accelerated, and China is the number one trade partner with the Association of Southeast Asian Nations.
with adjusted business strategy and reliant organization.
Best Global is now more resilient and in a strong position.
to take on this growing opportunity.
The volume of our cross-border business increased from Q1 to Q2.
by approximately 60% quarter over quarter, serviced by our robust cross-border capabilities and our coverage for small and medium-sized enterprises in Q1 increased by approximately 15%.
We believe we have weathered the worst of the COVID fallout.
the steps we have taken in our global business unit to enhance our service capabilities.
have gone through with recurring possible volumes and an increasing number of new key cards.
while following our adjusted business strategy places on the right path.
More execution time is needed to fully recognize improvements in global financial results.
What this looks like for global in 2023 is volume growth throughout the year and growth margin break even in southern countries by year end.
for global in 2023 is volume growth throughout the year and growth margin break even in southern countries by the end. In conclusion,
We have seen clear upward trends in the first quarter across our business lines.
and achieved sustainable profit improvement.
in two of our three business, core businesses.
We are offered off to a good start and are very optimistic about the best ability to demonstrate continued recovery and growth in 2023.
We will continue to focus on our service quality, digital transformation, and synergies among our business lines. With our improved and differentiated core competencies, we will continue to focus on our service quality, digital transformation, and synergies among our business lines.
We expect it to achieve group level profitability by the end of 2023.
With that, I would like to turn the call over to our CEO Gloria for further review of our first quarter financials. Thank you Johnny and hello to everyone. We commenced 2023 on a strong note, improving our bottom line by narrowing total net loss from continuous operations by 32.2%.
and started a great momentum for growth and profitability.
Best supply chain management achieved profitability in the first quarter, and the best rate was profitable in February and March.
Both business units are recovering quickly and growing. We expect this growing trend throughout 2023.
Best Global is also picking up steam in the Southeast Asia market, particularly with its cross-border activities showing a 60% growth compared with last quarter. This demonstrated the best drone recovery capability and the effectiveness of our reorganization and cost control measures.
Our balance sheet remains healthy with a net cash position of 1 billion RMB at the end of March. And we expect both best-fraid and supply chain management will generate positive cash flow throughout the year.
Reviewing all financial results for the first quarter. Total revenue was approximately 1.7 billion RMB.
compared with $1.8 billion in the same period of last year.
The decline was primarily due to a lower global volume and a continued impact on COVID.
Our cost control measures are improved, our profit making ability and
improving all margins. Our growth loss narrowed by 68.4 million RMB and the growth margin percentage improved by 3.8 percent compared with the same quarter last year.
The continued discipline of tightening our expenses and improving our operating efficiency further narrow our net loss from continuing operations in the first quarter to 257.6 million RMB.
compared with $379.9 million in the same period of last year. Adjusted EBITDA for continuing operations in Q1 also improved to negative 206.8 million RMB, compared to negative 294.6 million for the same quarter last year.
with that overview.
Now let's move on the key financial highlights for our business units. For best rates.
First quarter revenue was approximately 1.05 billion RMB, compared with 1.09 billion for the same period of last year. The decline was primarily due to the wind down of Yukago Business Line.
First quarter revenue was approximately 1.05 billion RMB, compared with 1.09 billion for the same period of last year. The decline was primarily due to the wind down of Yukako Business Line.
Growth margin was negative 0.3%, a 6.8 percentage point improvement from the same period last year.
Adjust the EBITDA for best rates was negative 59.1 million RMB compared with negative 149.9 million in Q1 of last year.
Revenue for best supply chain management in Q1 increased by 7.7% year-over-year to 440.3 million RMB, and the gross margin improved by 3.9 percentage points to 8.2%, primarily driven by increasing distribution volume and the expansion of our customer base. Adjusted EBITDA for best supply chain management was 9.8 million RMB.
A decrease of 20.2 percentage points year over year.
The decrease was primarily driven by the lingering impact from COVID and the reduced volume of certain key accounts.
Q1 adjusted EBITDA for best global with negative 102 million RMB, compared with negative 63.4 million in Q1 last year. Our operating expenses, excluding share-based compensation, totaled 264.3 million RMB, or 15.4% of our revenue.
compared with 267.5 million RMB or 14.8% of the revenue in the same period of 2022.
There was a one-off charge of 36.9 million RMB included in the first quarter's operating expenses.
Excluding such one-off charge, our operating expenses decrease by 40 million RMB year over year.
Selling general and administrative expenses for Q1 were 199.8 million RMB or 11.6% of our total revenue, excluding the 36.9 million one-off charge. The Q1 SGMA expenses, excluding one-off charge, decreased by 15% again.
compared with the same period of last year due to the reduction of headcount.
R&D expenses were 27.7 million R&D or 1.6% of our total revenue, compared with 31.9 million or 1.8% of total revenue in Q1 of last year.
In summary, our Q1 results show the improved health of our business and how we are driving profitability. Our operations are more efficient and we are prudently managing our costs.
Looking forward, industry-wide recovery trends bode well for us, and we are well positioned to grow our business on a sturdier base.
Our dedication to quality and efficiency have produced strong results, and we believe we have weathered the worst of the COVID impacts.
Moving through 2023, we will further strengthen our capability in technology and domestic and global supply chain management and logistics to drive growth. The U.S. Department of Energy is well prepared and positioned to capture the rising market opportunities.
and achieve sustainable profitability.
This concludes our financial update. We will now open the call to questions. Thank you. Operator.
Thank you. We will now begin the question and answer section. To ask a question, you may press start and one on your touch tone phone. If you are using a speakerphone, please take up your handset before pressing the keys.
To withdraw your questions, please press star then 2. At this time, we will now pause for a brief moment to assemble our roster. Please press star then 2.
Once again, if you wish to ask a question, please press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.
I have notpr.
Thank you.
There are no questions at this time. I'll now turn the conference back to Mr. Shou for closing remarks. Thank you for joining our call. We appreciate your support of FAST.
Please reach out to our investor relations team if you have any further questions.
We look forward to speaking with you soon. Thank you very much.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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