UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of November 2018

 


 

Commission File Number: 001-37922

 


 

ZTO Express (Cayman) Inc.

 

Building One, No. 1685 Huazhi Road

Qingpu District

Shanghai, 201708

People’s Republic of China

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F         x         Form 40-F         o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

 

 

 


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

ZTO Express (Cayman) Inc.

 

 

 

 

 

 

 

By

:

/s/ Huiping Yan

 

Name

:

Huiping Yan

 

Title

:

Chief Financial Officer

 

 

 

 

Date: November 16, 2018

 

 

 

 

2


 

Exhibit Index

 

Exhibit 99.1 — Press Release

Exhibit 99.2 — Press Release

 

3


Exhibit 99.1

 

ZTO Announces up to US$500 Million Share Repurchase Program

 

Shanghai, China, November 14, 2018 — ZTO Express (Cayman) Inc. (the “Company” or “ZTO”) (NYSE: ZTO), a leading and fast-growing express delivery company in China, today announced that the board of directors of the Company has authorized a new share repurchase program whereby ZTO is authorized to repurchase its own class A ordinary shares in the form of American depository shares with an aggerate value of up to US$500 million during the next 18-month period. The Company expects to fund the repurchase out of its existing cash balance. The proposed share repurchase may be effected on the open market at prevailing market prices and/or in negotiated transactions off the market from time to time as market conditions warrant in accordance with applicable requirements of Rule 10b5-1 and/or Rule 10b-18 under the U.S. Securities Exchange Act of 1934, as amended.

 

“This share repurchase program reflects our confidence in the overall market opportunities as well as ZTO’s solid operating fundamentals and financial strength for sustained profitable growth and value creation for our shareholders.” commented Mr. Meisong Lai, the Founder and the Chief Executive Officer of ZTO.

 

Safe Harbor Statement

 

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confidence” and similar statements. ZTO may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about ZTO’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement. Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and ZTO undertakes no duty to update such information, except as required under applicable law.

 

About ZTO

 

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.

 

Contacts:

 

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

 


Exhibit 99.2

 

ZTO Reports Third Quarter 2018 Unaudited Financial Results

 

2.1 Billion Parcel — Clear Volume Leader Expanding Market Share to 16.6%

RMB 1.06 Billion Net Income Increased 47.7% - Profitable Growth with Improving Scale & Cost Efficiency

ZTO Reports Third Quarter 2018 Unaudited Financial Results

 

Shanghai, China, November 14, 2018 — 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, 20181. Parcel volume grew 36.5%, outpacing the industry average of 25.7%.  Adjusted net income exceeded the high end of guidance, increasing 44.9% to RMB 1.06 billion. The Company puts emphasis on the effectiveness of its approach to profitable volume growth and steady market share gain and expresses confidence in the overall business prospects of the express delivery industry, its team of people, financial strength and ability to further enhance core competitive advantages for sustainable long-term value creation.

 

Third Quarter 2018 Financial Highlights

 

·                                Revenues2 were RMB4,234.6 million (US$616.6 million), an increase of 34.7% from RMB3,143.1 million in the same period of 2017.

·                                Gross profit was RMB1,325.3 million (US$193.0 million), an increase of 16.5% from RMB1,137.8 million in the same period of 2017.

·                                Net income was RMB1,059.4 million (US$154.2 million), an increase of 47.7% from RMB717.2 million in the same period of 2017.

·                                Adjusted EBITDA3 was RMB1,473.1 million (US$214.5 million), an increase of 31.8% from RMB1,118.1 million in the same period of 2017.

·                                Adjusted net income4 was RMB1,058.5 million (US$154.1 million), an increase of 44.9% from RMB730.7 million in the same period of 2017.

·                                Basic and diluted earnings per American depositary share (“ADS”5) were RMB1.35 (US$0.20) and RMB 1.34 (US$0.20), respectively, an increase of 35.0% and 34.0% from RMB1.00 in the same period of 2017.

·                                Net cash provided by operating activities was RMB911.7 million (US$132.8 million), compared with RMB1,024.4 million in the same period of 2017.

 

Operational Highlights for Third Quarter 2018

 

·                                Parcel volume was 2,096 million, an increase of 36.5% from 1,536 million in the same period of 2017.

·                                Number of pickup/delivery outlets was approximately 30,000 as of September 30, 2018.

·                                Number of network partners was over 9,500, which included over 4,150 direct network partners and over 5,350 indirect network partners as of September 30, 2018.

·                                Number of line-haul vehicles was over 4,900 as of September 30, 2018, which included over 4,000 self-owned vehicles and over 900 vehicles owned and operated by Tonglu Tongze Logistics Ltd., a transportation operator that works exclusively for ZTO.

·                                Number of self-owned trucks increased to around 4,000 as of September 30, 2018 from 3,800 as of June 30, 2018. Among the self-owned trucks, over 2,270 were high capacity 15-17 meter long models as of September 30, 2018, compared to over 2,070 as of June 30, 2018.

·                                Number of line-haul routes between sorting hubs was over 2,000 as of September 30, 2018.

·                                Number of sorting hubs was 83 as of September 30, 2018, among which 76 are operated by the Company and 7 by the Company’s network partners.

 


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

(2)   Starting from January 1, 2018, the Company adopted a newly enacted revenue accounting standard (ASC 606), which requires its delivery services revenue to be recognized over time, and uses a modified retrospective approach to adopt this standard. The January 1, 2018 balance of retained earnings was not adjusted due to the immaterial cumulative net impact of adopting ASC 606. The impact of applying ASC 606 as compared with previous guidance applied to revenues and costs was not material for the three months ended September 30, 2018.

(3)   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 the shared-based compensation expense and non-recurring items such as the gain on disposal of equity investees and subsidiary which management aims to better represent the underlying business operations.

(4)    Adjusted net income is a non-GAAP financial measure, which is defined as net income before share-based compensation expense and non-recurring items such as gain on disposal of equity investees and subsidiary in which management aims to better represent the underlying business operations.

(5)    One ADS represents one Class A ordinary share.

 

1


 

Mr. Meisong Lai, Founder, Chairman and Chief Executive Officer of ZTO, commented “ZTO achieved strong volume growth and generated sound financial performances during this quarter.  Our market share increased steadily to 16.6% by the end of the quarter from 15.2% for the same time last year.  According to a survey conducted by the China Postal Bureau, ZTO ranked first among China’s leading express delivery companies for having the least customer complaints in the June through September period. Our strategy of achieving profitable volume growth and consistent market expansion is working effectively.”

 

Mr. Lai added, “Despite uncertainties in the near-term macro-economic environment, we believe China’s express delivery industry will continue to play an important role in the continued growth of Chinese domestic consumption even as overall growth moderates. Over the years, we have systemically made investments in infrastructure, people and technology, and have established scale and cost advantage, fortified operational know-how and strengthened financial position. We will monitor the market conditions and continue to focus on scaling up capabilities, operational efficiencies and overall network stability. Our track record has proven that we are able to achieve profitable growth and expand market share while enhancing brand recognition through consistent quality of service and customer satisfaction.”

 

Ms. Huiping Yan, Chief Financial Officer of ZTO, added, “ZTO continued to expand scale capacity and improve operational efficiency during the quarter which allowed us to drive down unit cost to partially offset the effects of a decline in unit price. Combined unit line-haul transportation and sorting hub costs for the quarter decreased by RMB 9 cents which help absorbed a portion of the decline in per parcel price. As a result, gross margin was 31.3% for the current quarter, which included a 2.1 percentage points dilutive impact from the freight forwarding business that we acquired in the fourth quarter 2017. SG&A costs as a percentage of total revenue decreased to 5.9% from 6.2% last year demonstrating the healthy leverage of corporate structure. The consistent execution of our strategy to achieve profitable market expansion resulted in RMB 1.06 billion in net income for the quarter, a 47.7% year-over-year increase which was faster than the revenue growth.”

 

2


 

Third Quarter 2018 Financial Results

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2017

 

2018

 

2017

 

2018

 

 

 

RMB

 

%

 

RMB

 

US$

 

%

 

RMB

 

%

 

RMB

 

US$

 

%

 

 

 

(in thousands, except percentages)

 

Express delivery services

 

2,990,801

 

95.2

 

3,688,358

 

537,035

 

87.1

 

8,339,167

 

95.5

 

10,439,890

 

1,520,077

 

87.2

 

Freight forwarding services

 

 

 

291,153

 

42,393

 

6.9

 

 

 

886,216

 

129,036

 

7.4

 

Sale of accessories

 

152,290

 

4.8

 

199,997

 

29,120

 

4.7

 

389,952

 

4.5

 

560,059

 

81,546

 

4.7

 

Others

 

 

 

55,088

 

8,021

 

1.3

 

 

 

90,754

 

13,214

 

0.7

 

Total revenues

 

3,143,091

 

100.0

 

4,234,596

 

616,569

 

100.0

 

8,729,119

 

100.0

 

11,976,919

 

1,743,873

 

100.0

 

 

Revenues were RMB4,234.6 million (US$616.6 million), an increase of 34.7% from RMB3,143.1 million in the same period of 2017. Revenue from express delivery services increased by 23.3% compared to the same period of 2017, mainly driven by a 36.5% increase in parcel volume which was partially offset by a decrease in unit price per parcel as a result of a decrease in weight per parcel and an increase in incremental volume incentives. Freight forwarding services acquired during the fourth quarter of 2017 contributed revenue of RMB291.2 million (US$42.4 million) during the third quarter of 2018. The increase in revenue from sales of accessories was mainly due to an increase in sales of thermal paper used for printing of digital waybills. Other revenues are composed of exploratory new service offerings such as financing services, advertising services and cloud warehousing solutions.

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2017

 

2018

 

2017

 

2018

 

 

 

RMB

 

% of
revenues

 

RMB

 

US$

 

% of
revenues

 

RMB

 

% of
revenues

 

RMB

 

US$

 

% of
revenues

 

 

 

(in thousands, except percentages)

 

Line-haul transportation cost

 

1,103,947

 

35.1

 

1,354,209

 

197,177

 

32.0

 

3,286,540

 

37.7

 

3,810,114

 

554,763

 

31.8

 

Sorting hub cost

 

586,060

 

18.6

 

765,863

 

111,512

 

18.1

 

1,670,114

 

19.1

 

2,154,262

 

313,667

 

18.0

 

Freight forwarding cost

 

 

 

281,967

 

41,055

 

6.7

 

 

 

853,985

 

124,343

 

7.1

 

Cost of accessories sold

 

93,008

 

3.0

 

119,211

 

17,357

 

2.8

 

239,141

 

2.7

 

333,651

 

48,581

 

2.8

 

Other costs

 

222,308

 

7.1

 

388,032

 

56,499

 

9.2

 

540,998

 

6.2

 

1,010,213

 

147,089

 

8.4

 

Total cost of revenues

 

2,005,323

 

63.8

 

2,909,282

 

423,600

 

68.8

 

5,736,793

 

65.7

 

8,162,225

 

1,188,443

 

68.1

 

 

Total cost of revenues was RMB2,909.3 million (US$423.6 million), an increase of 45.1% from RMB2,005.3 million in the same period last year. Total cost of revenues includes RMB282.0 million (US$41.1 million) in costs associated with the freight forwarding business acquired during the fourth quarter of 2017, which is mainly composed of shipping, last-mile delivery, and cargo handling costs.

 

·                  Line haul transportation cost was RMB1,354.2 million (US$197.2 million), an increase of 22.7% from RMB1,103.9 million in the same period last year. As a percentage of revenues, line-haul transportation cost decreased to 32.0% from 35.1% in the same period last year, which was mainly driven by (i) a decrease in weight per parcel, (ii) increased usage of self-owned and more efficient high capacity trailer trucks, and (iii) improved route planning. Total transportation cost of self-owned trucks accounted for 66.5% of the total truck transportation cost for the quarter, compared to 53.9% in the same period last year.

 

·                  Sorting hub operating cost was RMB765.9 million (US$111.5 million), an increase of 30.7% from RMB586.1 million in the same period last year. As a percentage of revenues, sorting hub cost decreased to 18.1% from 18.6% in the same period last year, mainly due to an increased level of automation in the Company’s sorting facilities which offset a portion of the continuous increase in labor cost per headcount. As of September 30, 2018, 78 sets of automated sorting equipment have been put into use, compared to 41 sets as of September 30, 2017. As a result, the average number of sorting hub workers increased by only 17.2% when compared to the third quarter of 2017, significantly less than the 36.5% increase in parcel volume during the third quarter of 2018.

 

·                  Cost of accessories was RMB119.2 million (US$17.4 million), an increase of 28.2% from RMB93.0 million in the same period last year. The increase was in line with the increase in the sale of thermal paper for waybill printing by 57.1% compared to the same period last year.

 

·                  Other costs were RMB388.0 million (US$56.5 million), increased by RMB165.7 million compared to the same period last year, primarily due to (i) an increase of RMB91.8 million (US$13.4 million) in dispatching costs associated with serving enterprise customers, (ii) an increase of RMB45.7 million (US$6.7 million) in the IT expenses related to IT and technology development, and (iii) an increase of RMB18.3 million (US$2.7 million) in tax surcharges

 

3


 

Gross Profit was RMB1,325.3 million (US$193.0million), an increase of 16.5% from RMB1,137.8 million in the same period last year. Gross margin decreased to 31.3% from 36.2% in the same period last year, driven by parcel volume growth plus cost of goods sold efficiency gain and partially offset by a decrease in unit price per parcel. In addition, the lower-margin freight forwarding business caused minor dilution.

 

Total Operating Expenses were RMB233.6 million (US$34.0 million), compared to RMB193.0 million in the same period last year.

 

·                  Selling, general and administrative expenses were RMB249.5 million (US$36.3 million), compared to RMB193.4 million in the same period last year. The increase was mainly due to (i) an increase of RMB33.1 million in salaries and accrued bonuses, and (ii) an increase of RMB5.3 million in depreciation and amortization expenses, and (iii) an increase of RMB3.0 million in rental costs. As a percentage of revenue, selling, general and administrative expenses accounted for 5.9%, compared to 6.2% during the same period last year, indicating corporate cost leverage.

 

·                  Other operating income, net was RMB15.9 million (US$2.3 million) for the quarter. Other operating income mainly includes the subsidy income of RMB12.3 million (US$1.8 million) received in the third quarter of 2018.

 

Income from operations was RMB1,091.7 million (US$159.0 million), an increase of 15.6% from RMB944.7 million for the same period last year. Operating margin decreased to 25.8% from 30.1% in the same period last year, mainly driven by the decrease in gross margin by 4.9 percentage points.

 

Interest income was RMB124.0 million (US$18.1 million), compared with RMB45.2 million in the same period in 2017, resulting from an increased amount of cash and interest-earning bank deposits.

 

Interest expense was zero on bank borrowings, compared with RMB2.5 million in the same period in 2017. There was no borrowing during the third quarter of 2018.

 

Gain on disposal of equity investees and subsidiary was RMB12.9 million (US$1.9 million), from sale of equity shares of Shanghai Zhongtongji Electronic Commerce Co., Ltd. for a cash consideration of RMB10 million (US$1.5 million).

 

Foreign currency exchange gain, before tax was RMB40.4million (US$5.9 million), resulted from the appreciation of the U.S. dollar against the Chinese renminbi in the third quarter of 2018.

 

Income tax expenses were RMB201.4 million (US$29.3 million), which were associated with an effective income tax rate of 15.9% for the third quarter of 2018. The lower than normal effective tax rate was mainly due to the offshore interest income which was subject to zero income tax.

 

Net income was RMB1,059.4 million (US$154.2 million), an increase of 47.7% from RMB717.2 million in the same period last year.

 

Basic and diluted earnings per ADS were RMB1.35 (US$0.20) and RMB1.34 (US$0.20), respectively, compared with basic and diluted earnings per ADS of RMB1.00 in the same period last year.

 

Adjusted net income was RMB1,058.5 million (US$154.1 million), compared with adjusted net income of RMB730.7 million during the same quarter last year.

 

EBITDA was RMB1,475.7 million (US$214.9 million), compared with RMB1,104.6 million in the same period last year.

 

Adjusted EBITDA was RMB1,473.1 million (US$214.5 million), compared to RMB1,118.1 million in the same period last year.

 

Net cash provided by operating activities was RMB911.7 million (US$132.8 million), compared with RMB1,024.4 million in the same period last year. There was an approximately RMB 130 million year-over-year increase in short-term cash used to support selected network partners for operational and business expansion needs.

 

4


 

Business Outlook

 

Based on the current market conditions and current operations, the Company’s parcel volume for the fourth quarter of 2018 is expected to be in the range of 2,620 million to 2,660 million, representing a 30% to 32% increase year over year, and the Company’s adjusted net income is expected to be in the range of RMB1.2 billion to RMB1.3 billion, representing a normalized 13.4% to 22.8% increase from the same period of 2017. Note that the adjusted net income for the fourth quarter of 2017 included a one-time full year income tax benefit of RMB285.9 million by one of the Company’s subsidiaries that qualified for the 15% reduced HNTE tax rate from the 25% statutory rate in December 2017. Approximately RMB207.2 million of this tax benefit was attributed to the first three quarters of 2017. These estimates represent management’s current and preliminary view, which are subject to change.

 

5


 

Company Share Purchase

 

On November 15, 2018, 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$500 million during an 18-month period thereafter. The Company expects to fund the repurchase out of its existing cash balance.

 

The Company believes that the share repurchase program represents ZTO’s confidence in the overall market opportunities as well as ZTO’s solid operating fundamentals and financial strength for sustained profitable growth and value creation for its shareholders.

 

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 RMB6.8680 to US$1.00, the noon buying rate on September 28, 2018 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 adjusted EBITDA and adjusted net income, 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 adjusted EBITDA and adjusted net income 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 adjusted EBITDA and adjusted net income 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.

 

Adjusted EBITDA and adjusted net income 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. Adjusted EBITDA and adjusted net income 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.

 

6


 

Conference Call Information

 

ZTO’s management team will host an earnings conference call at 8:00 PM U.S. Eastern Time on Wednesday, November 14, 2018 (9:00 AM Beijing Time on November 15, 2018).

 

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

 

United States:

1-888-317-6003

Hong Kong:

852-5808-1995

Mainland China:

4001-201203

International:

1-412-317-6061

Passcode:

2612461

 

Please dial in 15 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 21, 2018:

 

United States:

1-877-344-7529

International:

1-412-317-0088

Passcode:

10125874

 

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.

 

7


 

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 the Company’s unaudited results for the first quarter of 2018, 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 first quarter of 2018 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.

 

8


 

UNAUDITED CONSOLIDATED FINANCIAL DATA

 

Summary of Unaudited Consolidated Comprehensive Income Data:

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2017

 

2018

 

2017

 

2018

 

 

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

 

 

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

 

Revenues

 

3,143,091

 

4,234,596

 

616,569

 

8,729,119

 

11,976,919

 

1,743,873

 

Cost of revenues

 

(2,005,323

)

(2,909,282

)

(423,600

)

(5,736,793

)

(8,162,225

)

(1,188,443

)

Gross profit

 

1,137,768

 

1,325,314

 

192,969

 

2,992,326

 

3,814,694

 

555,430

 

Operating income (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

(193,422

)

(249,493

)

(36,327

)

(558,060

)

(934,292

)

(136,036

)

Other operating income, net

 

398

 

15,918

 

2,318

 

88,455

 

98,598

 

14,356

 

Total operating expenses

 

(193,024

)

(233,575

)

(34,009

)

(469,605

)

(835,694

)

(121,680

)

Income from operations

 

944,744

 

1,091,739

 

158,960

 

2,522,721

 

2,979,000

 

433,750

 

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

45,177

 

123,995

 

18,054

 

113,374

 

255,024

 

37,132

 

Interest expense

 

(2,479

)

(4

)

(1

)

(13,216

)

(780

)

(114

)

Gain on disposal of equity investees and subsidiary

 

 

12,904

 

1,879

 

 

562,637

 

81,922

 

Foreign currency exchange gain/(loss), before tax

 

(27,542

)

40,382

 

5,880

 

(33,386

)

39,530

 

5,756

 

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

 

959,900

 

1,269,016

 

184,772

 

2,589,493

 

3,835,411

 

558,446

 

Income tax expense

 

(237,670

)

(201,355

)

(29,318

)

(637,602

)

(706,494

)

(102,868

)

Share of loss in equity method investments

 

(5,000

)

(8,286

)

(1,206

)

(14,868

)

(19,859

)

(2,892

)

Net income

 

717,230

 

1,059,375

 

154,248

 

1,937,023

 

3,109,058

 

452,686

 

Net loss (income) attributable to noncontrolling interests

 

(260

)

262

 

38

 

333

 

(1,575

)

(229

)

Net income attributable to ZTO Express (Cayman) Inc.

 

716,970

 

1,059,637

 

154,286

 

1,937,356

 

3,107,483

 

452,457

 

Change in redemption value of convertible redeemable preferred shares

 

 

 

 

 

 

 

Net income attributable to ordinary shareholders

 

716,970

 

1,059,637

 

154,286

 

1,937,356

 

3,107,483

 

452,457

 

Net earnings per share/ADS attributable to ordinary shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

1.00

 

1.35

 

0.20

 

2.70

 

4.20

 

0.61

 

Diluted

 

1.00

 

1.34

 

0.20

 

2.69

 

4.19

 

0.61

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

716,138,386

 

787,163,859

 

787,163,859

 

718,790,306

 

739,967,814

 

739,967,814

 

Diluted

 

716,478,593

 

788,144,763

 

788,144,763

 

719,221,212

 

740,779,797

 

740,779,797

 

Other comprehensive income, net of tax of nil:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

(179,986

)

556,140

 

80,976

 

(413,408

)

844,123

 

122,907

 

Comprehensive income

 

537,244

 

1,615,515

 

235,224

 

1,523,615

 

3,953,181

 

575,593

 

Comprehensive loss (income) attributable to noncontrolling interests

 

(260

)

262

 

38

 

333

 

(1,575

)

(229

)

Comprehensive income attributable to ZTO Express (Cayman) Inc.

 

536,984

 

1,615,777

 

235,262

 

1,523,948

 

3,951,606

 

575,364

 

 

9


 

Unaudited Consolidated Balance Sheets Data:

 

 

 

As of

 

 

 

December 31,
2017

 

September 30, 2018

 

 

 

RMB

 

RMB

 

US$

 

 

 

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

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

5,425,024

 

6,271,359

 

913,127

 

Restricted cash

 

348,710

 

 

 

Accounts receivable, net of allowance for doubtful accounts of RMB13,798 and RMB13,815 at December 31, 2017 and September 30, 2018, respectively

 

287,835

 

404,747

 

58,932

 

Financing receivables

 

64,030

 

429,327

 

62,511

 

Short-term investment

 

5,224,559

 

11,895,376

 

1,732,000

 

Inventories

 

34,231

 

37,409

 

5,447

 

Advances to suppliers

 

263,574

 

341,673

 

49,749

 

Prepayments and other current assets

 

719,983

 

1,182,955

 

172,242

 

Amounts due from related parties

 

9,900

 

24,600

 

3,582

 

Total current assets

 

12,377,846

 

20,587,446

 

2,997,590

 

Investments in equity investees

 

610,160

 

1,709,801

 

248,952

 

Property and equipment, net

 

6,473,010

 

7,981,433

 

1,162,119

 

Land use rights, net

 

1,602,908

 

1,942,027

 

282,765

 

Intangible assets, net

 

60,424

 

55,776

 

8,121

 

Goodwill

 

4,241,541

 

4,241,541

 

617,580

 

Deferred tax assets

 

152,763

 

288,618

 

42,024

 

Other non-current assets

 

308,986

 

487,758

 

71,019

 

TOTAL ASSETS

 

25,827,638

 

37,294,400

 

5,430,170

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Short-term bank borrowing

 

250,000

 

 

 

Accounts payable

 

889,139

 

837,297

 

121,913

 

Advances from customers

 

258,965

 

410,865

 

59,823

 

Income tax payable

 

221,926

 

258,436

 

37,629

 

Amounts due to related parties

 

114,913

 

117,039

 

17,041

 

Acquisition consideration payable

 

130,004

 

19,616

 

2,856

 

Dividends payable

 

 

1,697

 

247

 

Other current liabilities

 

2,281,067

 

2,279,669

 

331,928

 

Total current liabilities

 

4,146,014

 

3,924,619

 

571,437

 

Deferred tax liabilities

 

157,320

 

153,628

 

22,369

 

Acquisition consideration payable

 

22,942

 

22,942

 

3,340

 

Other non-current liabilities

 

60,045

 

63,384

 

9,229

 

TOTAL LIABILITIES

 

4,386,321

 

4,164,573

 

606,375

 

 


 

 

 

As of

 

 

 

December 31,
2017

 

September 30, 2018

 

 

 

RMB

 

RMB

 

US$

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ordinary shares (US$0.0001 par value; 10,000,000,000 shares authorized, 731,406,440 shares issued and 710,804,716 shares outstanding as of December 31, 2017; 811,267,551 shares issued and 787,163,859 shares outstanding as of September 30, 2018)

 

471

 

523

 

76

 

Additional paid-in capital

 

15,975,979

 

24,126,869

 

3,512,940

 

Treasury shares, at cost

 

(914,611

)

(1,359,404

)

(197,933

)

Retained earnings

 

6,669,370

 

9,776,853

 

1,423,537

 

Accumulated other comprehensive (loss) income

 

(295,896

)

548,227

 

79,823

 

ZTO Express (Cayman) Inc. shareholders’ equity

 

21,435,313

 

33,093,068

 

4,818,443

 

Noncontrolling interests

 

6,004

 

36,759

 

5,352

 

Total Equity

 

21,441,317

 

33,129,827

 

4,823,795

 

TOTAL LIABILITIES AND EQUITY

 

25,827,638

 

37,294,400

 

5,430,170

 

 

10


 

Summary of Unaudited Consolidated Cash Flow Data:

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2017

 

2018

 

2017

 

2018

 

 

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

1,024,381

 

911,741

 

132,750

 

2,259,137

 

2,601,711

 

378,817

 

Net cash used in investing activities6

 

(1,128,970

)

(2,295,672

)

(334,255

)

(7,572,212

)

(9,542,593

)

(1,389,429

)

Net cash provided by/(used in) financing activities7

 

(403,295

)

1,380,280

 

200,972

 

(859,685

)

7,195,347

 

1,047,662

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(117,917

)

101,353

 

14,758

 

(312,106

)

243,160

 

35,405

 

Net increase/(decrease) in cash, cash equivalents and restricted cash

 

(625,801

)

97,702

 

14,225

 

(6,484,866

)

497,625

 

72,455

 

Cash, cash equivalents and restricted cash at beginning of period

 

6,064,090

 

6,173,657

 

898,902

 

11,923,155

 

5,773,734

 

840,672

 

Cash, cash equivalents and restricted cash at end of period

 

5,438,289

 

6,271,359

 

913,127

 

5,438,289

 

6,271,359

 

913,127

 

 


(6)         The amount of cash used in investing activities mainly includes purchases of the fixed term bank deposits with an original maturity of three months to one year. For the third quarter of 2017 and 2018, the amounts of net cashflow out for purchasing the short-term investment are approximately RMB397.8 million and RMB1,857.9 million (US$270.5 million) of such deposits, respectively.

 

(7)         The amount of cash provided by/(used in) financing activities mainly includes the proceeds from Alibaba’s investment, which are approximately RMB7.6 billion (US$1.2 billion) received before June 30, 2018, while the rest of approximately RMB1.3 billion (US$0.2 billion) were received in early July 2018.

 

11


 

Reconciliations of GAAP and Non-GAAP Results

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2017

 

2018

 

2017

 

2018

 

 

 

RMB

 

RMB

 

US$

 

RMB

 

RMB

 

US$

 

 

 

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

 

Net income

 

717,230

 

1,059,375

 

154,248

 

1,937,023

 

3,109,058

 

452,686

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation expense

 

13,492

 

10,876

 

1,584

 

27,235

 

238,603

 

34,741

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on disposal of equity investees and subsidiary, net of income taxes

 

 

(11,756

)

(1,712

)

 

(436,277

)

(63,524

)

Adjusted net income

 

730,722

 

1,058,495

 

154,120

 

1,964,258

 

2,911,384

 

423,903

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

717,230

 

1,059,375

 

154,248

 

1,937,023

 

3,109,058

 

452,686

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

138,757

 

202,669

 

29,509

 

387,851

 

565,066

 

82,275

 

Amortization

 

8,455

 

11,709

 

1,705

 

24,752

 

35,072

 

5,107

 

Interest expenses

 

2,479

 

4

 

1

 

13,216

 

780

 

114

 

Income tax expenses

 

237,670

 

201,355

 

29,318

 

637,602

 

706,494

 

102,868

 

EBITDA

 

1,104,591

 

1,475,112

 

214,781

 

3,000,444

 

4,416,470

 

643,050

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation expense

 

13,492

 

10,876

 

1,584

 

27,235

 

238,603

 

34,741

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on disposal of equity investees and subsidiary, before income taxes

 

 

(12,904

)

(1,879

)

 

(562,637

)

(81,922

)

Adjusted EBITDA

 

1,118,083

 

1,473,084

 

214,486

 

3,027,679

 

4,092,436

 

595,869

 

 

12


 

For investor and media inquiries, please contact:

 

ZTO

 

Investor Relations Department

 

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

 

13