Q2 2023 BEST Inc Earnings Call

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Yeah.

But Jay and welcome to the best second quarter 2023 results Conference call.

All participants will be in listen only mode.

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First of all I would call principal Hello, my preference with Barclays.

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There will be an opportunity to ask questions.

The question you May Press Star then one on your telephone keypad.

How are you.

Your question. Please press Star then.

Two.

This event is recorded.

I'd now like to turn the conference over to Johnny Chou, Chairman and CEO . Please go ahead.

Thank you operator.

Hello, everyone and thank you for joining <unk> second quarter of 2000 2023 earnings call today.

We are reporting another rep outperformed the quarter, achieving both topline growth and bottom line improvements across our business.

Oh, good gross margin kind of positive four 2% in the second quarter and we narrowed our net loss by.

At 48, 7% year over year.

Best freight and the best supply chain management, each reaching non-GAAP profitability and generated positive cash operating cash flow for.

For the quarter.

Meanwhile.

Best Global continued to bounce back from the impact from Covid.

<unk> improved the revenue and gross margin with ongoing momentum in cross border volume and revenue quarter.

Quarter over quarter basis.

Now, let me review each our business units in more details.

Best freight Chinese economies gradually recovering optical which continue to weight on the industry.

This recovery.

With our focus on quality and operating excellence.

Best freight second quarter volume and the revenue grew by seven 2% and 15, 2% year over year, respectively.

We have also made.

Considerable gain with <unk> gross margin.

<unk> grew five 3% in Q2 compared with NEC to seven 8% in the same period a year ago.

In addition, freight achieved profitability for the quarter.

As service quality remains the cornerstone of our freight services.

Our focus moving forward will be on further improving our core competencies in the market.

We will continue to develop digital transformation to improve our operating efficiency and ability to provide our key accounts with high quality services.

In addition, we will continue to synergize with best supply chain management to capitalize additional business opportunities.

We expect that rate to continue to be profitable in Q3 and Q4 this year with positive operating cash flow for the full year of 2023.

Moving onto best supply chain management.

We will continue to benefit from the market increases demand for.

Or third party integrate logistics services products with a higher level of service offerings.

With our capabilities in technology and integrated services, we are becoming more efficient and further differentiating bass cross market.

In the second quarter.

Revenue from best supply chain management increased by six 7% year over year.

So gross margin reached to a record high of 10, 9%.

Furthermore, we continue to expand our customer base in Q2. It brought in 36, new key accounts and the 33 you tend to wings.

Best supply chain management robust growth showcases that our strategy.

To continuously invest in and improve our digital transformation capabilities and drive synergies across our business is working.

We are extending.

Our services to corner cover more market segments and are maximizing overlapping opportunities was best global by utilizing our cross border and fulfillment capabilities.

We expect best supply chain management to generate ongoing profit and positive cash flow for the remaining quarters this year and for full year 2023.

Looking at our best Global.

As we continue optimizing our organizational efficiency and developing our integrated logistics services capabilities in southeast Asia.

We are improving the service quality network coverage and expanding our reach in cross border opportunities.

On the heels of Covid.

Best Global business is showing clear signs of recovery.

During the second quarter.

Our key.

Our business has grown 25% quarter over quarter.

Driving by our robust cross border capabilities.

Volume for our cross border business in the second quarter.

<unk> increased by approximately 50, 154% quarter over quarter.

We believe the steps we have taken place best global.

Affirmed paas to growth and profitability.

As we continue to execute on our strategy in the second half of 2023.

We expect global parcel volume to continue to increase quarter over quarter and its operating margin in the bottom right we show steady improvement.

For the remainder of the year.

In summary.

We saw remarkable improvements across our business lines in the second quarter.

Dedication in delivering best in class services quality and digital transformation continues to be our primary focus.

In addition, <unk>.

Leveraging the synergies among our business units.

Differentiate our offerings and it gives us clear competitive advantage.

We are confident that with this growth momentum, we are able to drive sustainable growth and the profitability is in near future.

With that I would like to turn the call over to our CFO Gloria.

As a review of our second quarter financials go ahead, Laurie Thank you Jonnie and Hello to everyone.

We continue to accelerate the recovery of our business in the second quarter, both tax rate and the best supply chain management delivered robust growth momentum and the reach non-GAAP comparability.

<unk> gross margin turned positive and our net loss narrowed about 48, 7% year over year. In addition, we have significantly reduced our selling general and administrative expenses by 31, 4% year over year due to our continuous effort in cost reductions and operating efficiency.

The improvement.

Our balance of cash and cash equivalents restricted cash and short term investments remained strong at $3 2 billion RMB at the end of the second quarter.

Moving to the details of our financials. Our total revenue for the second quarter was approximately $2 1 billion RMB compared with $1 9 billion in the same period of 2022.

The increase was primarily due to increased revenue off that rate and the best supply chain management.

Our ongoing work to improve our organizational efficiency and to reduce costs continue to bear fruit, we reported gross profit of $88.

RMB for the quarter compared with a net.

Compared with a gross loss of $89 3 million in the same period of last year.

Accordingly, our gross margin percentage reached four 2% compared with a negative four 6% in the same period of last year.

Our net loss from continuing operations in the second quarter narrowed by $165 7 million RMB, two $174 4 million for a net loss of $340 1 million in the same period of 2022.

Adjusted EBITDA from continuing operations improved in the second quarter to negative $124 9 million RMB compared with negative $217 3 million for the same period of last year.

With that overview, let's move on to the key financial highlights for our business units.

That's great second quarter revenue was approximately $1 4 billion RMB compared with $1 2 billion for the same period of last year. The increase was primarily due to increased freight volume and higher average selling price per ton.

<unk> gross margin percentage was five 3%.

13 percentage points improvement.

From the same period last year adjusted.

Adjusted EBITDA for best freight $20 4 million RMB compared with negative $34 5 million in Q2 last year.

Revenue for best supply chain management increased by six 7% year over year in Q2 to $481 2 million RMB in the gross margin improved by two seven percentage points to 10, 9%.

Excluding the tax advantage up 18 million recognized in Q2 last year.

The EBITDA for back supply chain management improved by $13 5 million compared with the same periods of last year.

For <unk> global we are gradually recovering from the impact of Covid Q2 revenue of four at bats, global decreased by <unk>, 7% year over year to 239 point Formula RMB.

Primarily due to the decrease in volume in Thailand.

This gross margin percentage was negative 22% a decrease of five five percentage points year over year.

Q2, adjusted EBITDA for basketball, what was negative 100 million RMB compared with negative 97 7 million in Q2 last year.

Our operating expenses, excluding share based compensation totaled $245 7 million RMB or 11, Hypersound revenue compared with $356 1 million or 18, 4% of the revenue in the same period last year.

Operating expenses decreased by $110 4 million, representing a 31% decrease year over year.

Selling general and administrative expenses for Q2 were $216 6 million RMB or 10, 1% of our total revenue.

Each represented 31, 3% decrease year over year due to reduced head count and the bad debt expenses.

R&D expenses were $29 1 million RMB or one 4% over the total revenue this compared with 49 million RMB or 2.1 personnel for total revenue in Q2 last year.

In summary, our stellar second quarter results highlight the effectiveness of our quality focused and technology driven strategies and we believe that is on track and the staffing firmly on a clear path toward our next stage of growth.

For the second half of 2023, we expect best freight and best supply chain management to continue delivering profitability and positive operating cash flows for Bath global weakness.

That's a fast recovery of parcel volume and the much improved the bottom line.

This concludes our financial update.

We will now open the call to questions. Thank you operator.

Yeah.

We will now begin the question and answer session.

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This.

A question and answer session I would like to turn the conference back over to John Lee Childs for any closing remarks.

Thank you for joining our call. We appreciate your support of best.

Reach out to our Investor Relations team. If you have any further questions and we look forward to speaking with you soon thank you very much.

Yeah.

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

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