ZTO Reports Third Quarter 2017 Unaudited Financial Results

SHANGHAI, Nov. 20, 2017 /PRNewswire/ -- ZTO Express (Cayman) Inc. (NYSE: ZTO) ("ZTO" or the "Company"), a leading and fast-growing express delivery company in China, today announced its unaudited financial results for the third quarter ended September 30, 20171.

Third Quarter 2017 Financial Highlights

  • Revenues were RMB3,143.1 million (US$472.4 million), an increase of 33.6% from the same period of 2016, exceeding the higher end of the Company's guidance of RMB3.0 billion for the third quarter of 2017.
  • Gross profit was RMB1,137.8 million (US$171.0 million), an increase of 33.5% from RMB852.5 million in the same period of 2016.
  • Net income was RMB717.2 million (US$107.8 million), an increase of 31.1% from RMB547.2 million in the same period of 2016.
  • Adjusted EBITDA2 was RMB1,118.1 million (US$168.1 million), an increase of 34.2% from RMB833.1 million in the same period of 2016.
  • Adjusted net income3 was RMB730.7 million (US$109.8million), an increase of 33.5% from RMB547.4 million in the same period of 2016.
  • Basic and diluted earnings per American depositary share ("ADS"4) were RMB1.00 (US$0.15), an increase of 28.2% from RMB0.78 in the same period of 2016.
  • Net cash provided by operating activities was RMB1,024.4 million (US$154.0 million), compared with RMB846.9 million in the same period of 2016.

Third Quarter 2017 Operational Highlights

  • Parcel volume in the third quarter of 2017 was 1,535.9 million, an increase of 39.4% from 1,102.0 million in the same period of 2016.
  • Number of pickup/delivery outlets was approximately 28,900 as of September 30, 2017.
  • Number of network partners was over 9,400, which included over 3,800 direct network partners and over 5,600 indirect network partners as of September 30, 2017.
  • Number of line-haul vehicles was over 4,410 as of September 30, 2017, which included around 3,250 self-operated vehicles and around 1,160 vehicles owned and operated by Tonglu Tongze Logistics Ltd., a transportation operator that works exclusively for ZTO.
  • Number of self-operated trucks increased to around 3,250 as of September 30, 2017 from 3,190 as of June 30, 2017. Among the self-operated trucks, over 1,400 were high capacity 15-17-meter-long models as of September 30, 2017, compared to over 1,260 as of June 30, 2017.
  • Number of line-haul routes between sorting hubs was over 1,920 as of September 30, 2017.
  • Number of sorting hubs was 79 as of September 30, 2017, among which 73 are operated by the Company and 6 by the Company's network partners.

1 An investor relations presentation accompanies this earnings release and can be found at ir.zto.com

2 Adjusted EBITDA is a non-GAAP financial measure, which is defined as net income before depreciation, amortization, interest expenses and income tax expenses, and further adjusted to exclude (i) shared-based compensation expense; and (ii) gain on deemed disposal of equity method investments.

3 Adjusted net income is a non-GAAP financial measure, which is defined as net income before (i) share-based compensation expense and (ii) gain on deemed disposal of equity method investments.

4 One ADS represents one Class A ordinary share.

"I'm pleased to report that our revenues for the third quarter of 2017 came in at RMB3,143.1 million, exceeding the high end of our guidance for the quarter by 4.8% as we continue to gain growth momentum," commented Mr. Meisong Lai, Founder, Chairman and Chief Executive Officer of ZTO. "Parcel volume growth also accelerated sequentially, increasing 39.4% year-over-year to 1,535.9 million during the quarter. Both our revenues and parcel volume outgrew the industry average as our market share steadily expands when compared to the same period last year. According to data published by the PRC State Post Bureau, ZTO once again received one of the highest scores for customer satisfaction among the major express delivery companies in China during the third quarter. As part of our strategy of aligning the interests of our network partners with ZTO while carefully balancing growth with service quality and profitability, we announced certain increases in the prices of our delivery services last month, which we expect will further enhance service quality, protect the interests of our customers, and offset rising costs for our network partners. I am confident that this increase in price will aid in further improving the stability of our network and enhancing service quality, while helping to create a healthier and more sustainable market environment. We continue to further strengthen our cost leadership position through greater economies of scale and cost cutting initiatives. As part of our efforts to prepare for China's peak e-commerce season, we have been reinvesting in our infrastructure and capacity by installing more automated sorting equipment, expanding our self-owned fleet of high-capacity trucks and increasing the use of digital waybills. According to data from the State Post Bureau, total parcel volume during China's Singles' Day was 331 million, an increase of 31.5% when compared to the same day of last year. Our parcel volume was approximately 65.7 million on the Singles' Day this year, outgrowing the industry average by over 10 percentage points from the same period last year."

Mr. James Guo, Chief Financial Officer of ZTO, added, "Our gross margin during the quarter remained unchanged at 36.2% this quarter compared with the same period last year despite rising labor and fuel costs. Adjusted EBITDA margin also improved to 35.6% from 35.4% in the same period last year as a result of our growing economies of scale and cost cutting initiatives."          

Third Quarter 2017 Financial Results



Three Months Ended September 30,


Nine Months Ended September 30,




2016


2017


2016


2017




RMB


%


RMB


US$


%


RMB


%


RMB


US$


%




(in thousands, except percentages)


Express delivery services


2,254,803


95.8


2,990,801


449,521


95.2


6,338,210


96.1


8,339,167


1,253,388


95.5


Sale of accessories


98,269


4.2


152,290


22,890


4.8


260,039


3.9


389,952


58,610


4.5


Total revenues


2,353,072


100.0


3,143,091


472,411


100.0


6,598,249


100.0


8,729,119


1,311,998


100.0


Revenues were RMB3,143.1 million (US$472.4 million), an increase of 33.6% from RMB2,353.1 million in the same period of 2016. The increase was mainly driven by an increase in parcel volume as a result of overall market growth and an increase in the Company's market share in terms of parcel volume. The Company's parcel volume grew to 1,535.9 million during the third quarter of 2017, an increase of 39.4% from 1,102.0 million in the same period of 2016. Revenue from the sale of accessories were RMB152.3 million, an increase of 55.0% from the same period of 2016, primarily due to increased sales of thermal paper used for digital waybill printing.



Three Months Ended September 30,


Nine Months Ended September 30,




2016


2017


2016


2017




RMB


% of
revenues


RMB


US$


% of
revenues


RMB


% of
revenues


RMB


US$


% of
revenues




(in thousands, except percentages)


Line-haul transportation
     cost


880,186


37.4


1,103,947


165,925


35.1


2,484,403


37.7


3,286,540


493,972


37.7


Sorting hub cost


473,118


20.1


586,060


88,086


18.6


1,358,481


20.6


1,670,114


251,020


19.1


Cost of accessories sold


67,846


2.9


93,008


13,979


3.0


186,385


2.8


239,141


35,943


2.7


Other costs


79,446


3.4


222,308


33,413


7.1


287,237


4.4


540,998


81,313


6.2


Total cost of revenues


1,500,596


63.8


2,005,323


301,403


63.8


4,316,506


65.5


5,736,793


862,248


65.7


Total cost of revenues was RMB2,005.3 million (US$301.4 million), an increase of 33.6% from RMB1,500.6 million in the same period last year. The increase was primarily a result of increases in line-haul transportation costs, sorting hub operating costs, cost of accessories sold, and other costs, which were partially offset by a decrease in waybill material cost due to the increased use of digital waybills by the Company's end customers which bear lower costs than paper waybills. The percentage of ZTO's end customers using digital waybills was approximately 88.0% during the third quarter of 2017, an increase from approximately 73.0% during the same period of 2016.

  • Line haul transportation cost was RMB1,103.9 million (US$165.9 million), an increase of 25.4% from RMB880.2 million in the same period last year. The increase was mainly due to an increase of RMB188.1 million (US$28.3 million) in costs associated with the Company's self-owned fleet which includes fuel, tolls, drivers' compensation, depreciation and maintenance expenses, and an increase of RMB51.9 million (US$7.8 million) in outsourced transportation costs. As a percentage of revenues, line haul transportation cost accounted for 35.1%, a decrease from 37.4% in the same period last year, mainly due to (i) economies of scale, (ii) increased use of self-owned, more cost-efficient, higher capacity trailer trucks in place of third-party trucks and outsourced transportation, and (iii) increased truck utilization through optimized route planning and back-haul transportation.
  • Sorting hub operating cost was RMB586.1 million (US$88.1 million), an increase of 23.9% from RMB473.1 million in the same period last year. The increase was mainly due to (i) increased labor costs of RMB71.7 million (US$10.8 million) as a result of an increase in wages and headcount; (ii) an RMB22.4 million (US$3.4 million) increase in depreciation and amortization costs, and (iii) an increase of RMB12.3 million (US$1.8 million) in rental and related utilities costs. As a percentage of revenues, sorting hub operating cost accounted for 18.6%, a decrease from 20.1% in the same period last year, mainly due to economies of scale and improved operating efficiency as a result of the increased use of automation in the Company's sorting facilities.
  • Cost of accessories was RMB93.0 million (US$14.0 million), an increase of 37.2% from RMB67.8 million in the same period last year. The increase was in line with growth in the Company's revenue from the sale of accessories to its network partners, which includes thermal paper for digital waybill printing, portable bar code readers, and ZTO-branded packaging materials and uniforms. As a percentage of revenues, cost of accessories accounted for 3.0%, an increase from 2.9% in the same period last year.
  • Other costs were RMB222.3 million (US$33.4 million), an increase of 180.0% from RMB79.4 million in the same period last year, primarily due to an increase in dispatching costs associated with serving enterprise customers, which were partially offset by a decrease in costs associated with the increased use of digital waybills.

Gross Profit was RMB1,137.8 million (US$171.0 million), an increase of 33.5% from RMB852.5 million in the same period last year. Gross margin remained unchanged at 36.2% compared with the same period last year.

Total Operating Expenses were RMB193.0 million (US$29.0 million), an increase of 66.3% from RMB116.0 million in the same period last year.

  • Selling, general and administrative expenses were RMB193.4 million (US$29.1 million), an increase of 50.6% from RMB128.4 million in the same period last year. The increase was mainly due to increases in (i) share-based compensation expenses from RMB0.3 million in the third quarter of 2016 to RMB13.5 million (US$2.0 million) in the third quarter of 2017; (ii) payroll and social welfare costs of RMB26.6 million (US$4.0 million) due to an increase in headcount and wages; and (iii) accrual for annual performance bonuses and incentives associated with cost-cutting initiatives of RMB16.5 million (US$2.5 million) in the third quarter of 2017.
  • Other operating income, net was RMB0.4 million (US$0.1 million), compared with RMB12.4 million in the same period last year. The decrease was mainly due to a decrease in government subsidies.

Income from operations was RMB944.7 million (US$142.0 million), an increase of 28.3% from RMB736.4 million in the same period last year. Operating margin decreased to 30.1% from 31.3% in the same period last year, primarily due to an increase in employee compensation expenses.

Interest income was RMB45.2 million (US$6.8 million), compared with RMB9.7 million in the same period in 2016, primarily due to the increased amount of cash and bank deposits available for investment since the Company's initial public offering in October 2016.

Interest expense was RMB2.5 million (US$0.4 million), compared with RMB3.8 million in the same period in 2016. The decrease was mainly due to the repayment of bank loans during the previous quarters.

Foreign currency exchange loss, before tax was RMB27.5 million (US$4.1 million), primarily arising from the remeasurement of U.S. dollar denominated bank deposits at the Company's balance sheet date due to the depreciation of the U.S. dollar against the Chinese Renminbi.

Net income was RMB717.2 million (US$107.8 million), compared with RMB547.2 million in the same period last year. Net margin decreased slightly to 22.8% from 23.3% in the same period last year.

Basic and diluted earnings per ADS were RMB1.00 (US$0.15), compared with basic and diluted earnings per ADS of RMB0.78 in the same period last year.

Adjusted net income was RMB730.7 million (US$109.8 million), compared with adjusted net income of RMB547.4 million during the same quarter last year. Adjusted net margin decreased slightly to 23.2% from 23.3% in the same period last year.

EBITDA5 was RMB1,104.6 million (US$166.0 million), compared with RMB832.9 million in the same period last year. EBITDA margin decreased slightly to 35.1% from 35.4% in the same period last year.

Adjusted EBITDA was RMB1,118.1 million (US$168.1 million), compared to RMB833.1 million in the same period last year. Adjusted EBITDA margin increased to 35.6% from 35.4% in the same period last year.

Net cash provided by operating activities was RMB1,024.4 million (US$154.0 million), compared with 846.9 million in the same period last year, mainly attributable to growth in net income and increased deposits for last-mile delivery fees.

5 EBITDA is a non-GAAP financial measure, which is defined as net income before depreciation, amortization, interest expenses and income tax expenses.

Business Outlook

Based on current market conditions and current operations, revenues for the fourth quarter of 2017 is expected to be in the range of RMB3.9 billion (US$586.2 million) to RMB4.1 billion (US$616.2 million), representing a 22.2% to 28.5% increase from the same period of 2016. This represents management's current and preliminary view, which is subject to change.

Company Share Purchase

On May 21, 2017, the Company announced a new share repurchase program whereby ZTO is authorized to repurchase its own Class A ordinary shares in the form of ADSs with an aggregate value of up to US$300 million during the 12-month period thereafter. As of September 30, 2017, the Company has purchased an aggregate of 7,240,865 ADSs at an average purchase price of US$13.89, net of repurchase commissions.

The Company believes that the share repurchase program represents ZTO's confidence in its cash flow and the long-term outlook for the express delivery industry in China. ZTO's fast-growing strategy, asset-light business model and solid operation sallow the Company to generate strong cash flow. The Company believes that the share repurchase program is consistent with the goal of increasing shareholders' value.

Exchange Rate

This announcement contains translation of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars were made at the exchange rate of RMB6.6533 to US$1.00, the noon buying rate on September 30, 2017 as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve Systems.

Use of Non-GAAP Financial Measures

The Company uses EBITDA, adjusted EBITDA, adjusted net income, adjusted EBITDA margin and adjusted net margin, each a non-GAAP financial measure, in evaluating ZTO's operating results and for financial and operational decision-making purposes.

Reconciliations of the Company's non-GAAP financial measures to its U.S. GAAP financial measures are shown in tables at the end of this earnings release, which provide more details about the non-GAAP financial measures.

The Company believes that EBITDA, adjusted EBITDA, adjusted net income, adjusted EBITDA margin and net margin help identify underlying trends in ZTO's business that could otherwise be distorted by the effect of the expenses and gains that the Company includes in income from operations and net income. The Company believes that EBITDA, adjusted EBITDA, adjusted net income, adjusted EBITDA margin and adjusted net margin provide useful information about its operating results, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by ZTO's management in its financial and operational decision-making.

EBITDA, adjusted EBITDA, adjusted net income, adjusted EBITDA margin and adjusted net margin should not be considered in isolation or construed as an alternative to net income or any other measure of performance or as an indicator of the Company's operating performance. Investors are encouraged to review the historical non-GAAP financial measures to the most directly comparable GAAP measures. EBITDA, adjusted EBITDA, adjusted net income, adjusted EBITDA margin and adjusted net margin presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to ZTO's data. ZTO encourages investors and others to review the Company's financial information in its entirety and not rely on a single financial measure.

Conference Call Information

ZTO's management team will host an earnings conference call at 8:00 PM U.S. Eastern Time on Monday, November 20 (9:00 AM Beijing Time on November 21, 2017).

Dial-in details for the earnings conference call are as follows:

United States:

1-888-317-6003

Hong Kong:

852-5808-1995

China:

4001-206115

International:

1-412-317-6061

Passcode:

4787417

Please dial in ten minutes before the call is scheduled to begin and provide the passcode to join the call.

A replay of the conference call may be accessed by phone at the following numbers until November 27, 2017:

United States:

1-877-344-7529

International:

1-412-317-0088

Passcode:

10114011

Additionally, a live and archived webcast of the conference call will be available at http://zto.investorroom.com.

About ZTO Express (Cayman) Inc.

ZTO Express (Cayman) Inc. (NYSE: ZTO) ("ZTO" or the "Company") is a leading and fast-growing express delivery company in China. ZTO provides express delivery service as well as other value-added logistics services through its extensive and reliable nationwide network coverage in China.

ZTO operates a highly scalable network partner model, which the Company believes is best suited to support the significant growth of e-commerce in China. The Company leverages its network partners to provide pickup and last-mile delivery services, while controlling the mission-critical line-haul transportation and sorting network within the express delivery service value chain.

For more information, please visit http://zto.investorroom.com.

Safe Harbor Statement

This news release contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include but are not limited to ZTO management quotes and the Company's financial outlook.

These forward-looking statements are not historical facts but instead represent only the Company's belief regarding expected results and events, many of which, by their nature, are inherently uncertain and outside of its control. The Company's actual results and other circumstances may differ, possibly materially, from the anticipated results and events indicated in these forward-looking statements. Announced results for the third quarter of 2017 are preliminary, unaudited and subject to audit adjustment. In addition, the Company may not meet its financial outlook included in this news release and may be unable to grow its business in the manner planned. The Company may also modify its strategy for growth. In addition, there are other risks and uncertainties that could cause the Company's actual results to differ from what it currently anticipates, including those relating to the development of the e-commerce industry in China, its significant reliance on the Alibaba ecosystem, risks associated with its network partners and their employees and personnel, intense competition which could adversely affect the Company's results of operations and market share, any service disruption of the Company's sorting hubs or the outlets operated by its network partners or its technology system. For additional information on these and other important factors that could adversely affect the Company's business, financial condition, results of operations, and prospects, please see its filings with the U.S. Securities and Exchange Commission.

All information provided in this press release and in the attachments is as of the date of the press release. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, after the date of this release, except as required by law. Such information speaks only as of the date of this release.

 

 

UNAUDITED CONSOLIDATED FINANCIAL DATA

Summary of Unaudited Consolidated Comprehensive Income Data:




Three Months Ended September 30,


Nine Months Ended September 30,



2016


2017


2016


2017



RMB


RMB


US$


RMB


RMB


US$



(in thousands, except for share and per share data)














Revenues


2,353,072


3,143,091


472,411


6,598,249


8,729,119


1,311,998

Cost of revenues


(1,500,596)


(2,005,323)


(301,403)


(4,316,506)


(5,736,793)


(862,248)

Gross profit


852,476


1,137,768


171,008


2,281,743


2,992,326


449,750

Operating income (expenses):













Selling, general and administrative


(128,396)


(193,422)


(29,072)


(509,124)


(558,060)


(83,877)

Other operating income, net


12,354


398


60


20,377


88,455


13,295

Total operating expenses


(116,042)


(193,024)


(29,012)


(488,747)


(469,605)


(70,582)

Income from operations


736,434


944,744


141,996


1,792,996


2,522,721


379,168

Other income (expenses):













Interest income


9,717


45,177


6,790


30,528


113,374


17,040

Interest expense


(3,766)


(2,479)


(373)


(12,152)


(13,216)


(1,986)

Gain on deemed disposal of equity method
     investments





9,551



Foreign currency exchange loss, before tax


5,021


(27,542)


(4,139)


5,021


(33,386)


(5,018)

Income before income tax, and share of loss in
     equity method investments


747,406


959,900


144,274


1,825,944


2,589,493


389,204

Income tax expense


(186,468)


(237,670)


(35,722)


(480,440)


(637,602)


(95,832)

Share of loss in equity method investments


(13,761)


(5,000)


(751)


(33,711)


(14,868)


(2,235)

Net income


547,177


717,230


107,801


1,311,793


1,937,023


291,137

Net loss (income) attributable to
     noncontrolling interests


(115)


(260)


(39)


1,863


333


50

Net income attributable to ZTO Express
     (Cayman) Inc.


547,062


716,970


107,762


1,313,656


1,937,356


291,187

Change in redemption value of convertible
     redeemable preferred shares


(40,269)




(119,992)



Net income attributable to ordinary
     shareholders


506,793


716,970


107,762


1,193,664


1,937,356


291,187

Net earnings per share/ADS attributable to
     ordinary shareholders













Basic


0.78


1.00


0.15


1.85


2.70


0.40

Diluted


0.78


1.00


0.15


1.85


2.69


0.40

Weighted average shares used in calculating
     net earnings per ordinary share/ADS













Basic


618,384,686


716,138,386


716,138,386


615,406,907


718,790,306


718,790,306

Diluted


618,384,686


716,478,593


716,478,593


615,406,907


719,221,212


719,221,212

Other comprehensive income, net of tax of nil:













Foreign currency translation adjustment


3,701


(179,986)


(27,052)


29,530


(413,408)


(62,136)

Comprehensive income


550,878


537,244


80,749


1,341,323


1,523,615


229,001

Comprehensive loss (income) attributable to
     noncontrolling interests


(115)


(260)


(39)


1,863


333


50

Comprehensive income attributable to ZTO
     Express (Cayman) Inc.


550,763


536,984


80,710


1,343,186


1,523,948


229,051

 

 

Unaudited Consolidated Balance Sheets Data:




As of



December 31,
2016


September 30, 2017



RMB


RMB


US$



(in thousands, except for share and per share data)








ASSETS







Current assets:







Cash and cash equivalents


11,287,789


5,180,344


778,613

Restricted cash


635,366


257,945


38,769

Accounts receivable, net of allowance for doubtful accounts of
     RMB5,124and RMB13,867 at December 31, 2016 and September 30,
     2017, respectively


197,803


198,908


29,896

Short-term investment



5,522,239


830,000

Inventories


33,959


28,549


4,291

Advances to suppliers


646,666


245,556


36,907

Prepayments and other current assets


379,055


655,658


98,547

Amounts due from related parties


5,400


9,900


1,488

Total current assets


13,186,038


12,099,099


1,818,511

Investments in equity investees


537,175


556,556


83,651

Property and equipment, net


4,065,562


5,839,191


877,638

Land use rights, net


1,302,869


1,512,024


227,259

Goodwill


4,157,111


4,157,111


624,819

Deferred tax assets


109,030


185,197


27,835

Other non-current assets


45,953


123,550


18,571

TOTAL ASSETS


23,403,738


24,472,728


3,678,284

LIABILITIES AND EQUITY







Current liabilities







Short-term bank borrowing


450,000


250,000


37,575

Accounts payable


636,422


572,145


85,994

Advances from customers


229,724


247,824


37,248

Income tax payable


418,310


290,269


43,628

Amounts due to related parties


131,425


94,219


14,161

Other current liabilities


1,656,590


2,191,011


329,313

Total current liabilities


3,522,471


3,645,468


547,919

Deferred tax liabilities


130,520


128,315


19,286

Other non-current liabilities



73,980


11,119

TOTAL LIABILITIES


3,652,991


3,847,763


578,324




As of



December 31,
2016


September 30, 2017



RMB


RMB


US$








Shareholders' equity







Ordinary shares (US$0.0001 par value; 10,000,000,000 shares authorized,
     731,406,440 shares issued and 720,564,604 shares outstanding as of
     December 31, 2016, and 713,323,739 shares outstanding as of September
     30, 2017)


471


471


71

Additional paid-in capital


15,940,206


15,963,031


2,399,265

Treasury shares, at cost



(671,733)


(100,962)

Retained earnings


3,509,707


5,447,063


818,701

Accumulated other comprehensive (loss) income


294,649


(118,759)


(17,850)

ZTO Express (Cayman) Inc. shareholders' equity


19,745,033


20,620,073


3,099,225

Noncontrolling interests


5,714


4,892


735

Total Equity


19,750,747


20,624,965


3,099,960

TOTAL LIABILITIES AND EQUITY


23,403,738


24,472,728


3,678,284

 

 

Summary of Unaudited Consolidated Cash Flow Data:




Three Months Ended September 30,


Nine Months Ended September 30,



2016


2017


2016


2017



RMB


RMB


US$


RMB


RMB


US$



(in thousands)














Net cash provided by operating
     activities


846,932


1,024,381


153,966


1,388,992


2,259,137


339,551

Net cash used in investing
     activities6


(888,202)


(1,128,970)


(169,686)


(1,996,929)


(7,572,212)


(1,138,114)

Net cash provided by financing
     activities


(26,754)


(403,295)


(60,616)


71,246


(859,685)


(129,211)

Effect of exchange rate changes
     on cash and cash equivalents


2,732


(117,917)


(17,723)


22,417


(312,106)


(46,910)

Net decrease in cash and cash
     equivalents


(65,292)


(625,801)


(94,059)


(514,274)


(6,484,866)


(974,684)

Cash and cash equivalents at
     beginning of period7


2,269,780


6,064,090


911,441


2,718,762


11,923,155


1,792,066

Cash and cash equivalents at end
     of period7


2,204,488


5,438,289


817,382


2,204,488


5,438,289


817,382

 

6 The amount of cash used in investing activities mainly includes purchases of the fixed term bank deposits with an original maturity of six to nine months. For the third quarter of 2017, the Company purchased approximately RMB2.4 billion (US$365.0 million) of such deposits.

7 In November 2016, the FASB issued ASU No. 2016-18 ("ASU 2016-18"), Statement of Cash Flows (Topic 230) - Restricted Cash. This ASU requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The provisions of ASU 2016-18 are effective for reporting periods beginning after December 15, 2017 and are to be applied retrospectively; early adoption is permitted. We elected, as permitted by the standards, to early adopt ASU 2016-18 in the first quarter of 2017.In connection with the adoption of this update, we have reclassified RMB15.2 million and RMB39.6 million of restricted cash from operating activities to the cash, cash equivalents, and restricted cash balance in the three-month and nine-month periods ended September 30, 2016, respectively, to be consistent with the 2017 presentation.

 

Reconciliations of GAAP and Non-GAAP Results




Three Months Ended September 30,


Nine Months Ended September 30,



2016


2017


2016


2017



RMB


RMB


US$


RMB


RMB


US$



(in thousands, except for share and per share data)




Net income


547,177


717,230


107,801


1,311,793


1,937,023


291,137

Add:













Share-based compensation expense


251


13,492


2,028


122,251


27,235


4,093

Less:













Gain on deemed disposal of equity
     method investment





(9,551)



Adjusted net income


547,428


730,722


109,829


1,424,493


1,964,258


295,230














Net income


547,177


717,230


107,801


1,311,793


1,937,023


291,137

Add:













Depreciation


89,174


138,757


20,855


202,635


387,851


58,295

Amortization


6,310


8,455


1,271


16,347


24,752


3,720

Interest expenses


3,766


2,479


373


12,152


13,216


1,986

Income tax expenses


186,468


237,670


35,722


480,440


637,602


95,832

EBITDA


832,895


1,104,591


166,022


2,023,367


3,000,444


450,970














Add:













Share-based compensation expense


251


13,492


2,028


122,251


27,235


4,093

Less:













Gain on deemed disposal of equity
     method investments





(9,551)



Adjusted EBITDA


833,146


1,118,083


168,050


2,136,067


3,027,679


455,063

 

 

For investor and media inquiries, please contact:

ZTO

Ms. Sophie Li
Investor Relations Director
E-mail: ir@zto.com

Christensen

In China
Mr. Christian Arnell
Phone: +86-10-5900-1548
E-mail: carnell@christensenir.com

In US
Mr. Tip Fleming
Phone: +1-917-412-3333
Email: tfleming@Christensenir.com

SOURCE ZTO Express (Cayman) Inc.


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