GlobeNewswire Inc | Aug 27, 2020 04:54AM EDT

August 27, 2020

BEIJING, China, Aug. 27, 2020 (GLOBE NEWSWIRE) -- Quhuo Limited (NASDAQ: QH) (Quhuo, the Company, we or our), a leading tech-enabled workforce operational solution platform in China, today announced its unaudited financial results for the second quarter ended June 30, 2020.

Key Second Quarter 2020 Financial Highlights

-- Revenues were RMB547.6 million (US$77.5 million), representing a 33.5% year-over-year increase and a 39.5% increase compared to the first quarter of 2020. -- Gross profit was RMB60.4 million (US$8.5 million), representing a 24.8% year-over-year increase and a 441.7% increase compared to the first quarter of 2020. Gross margin was 11.0%, relatively stable as compared to 11.8% in the second quarter of 2019. -- Adjusted net income was RMB21.0 million (US$3.0 million), compared with an adjusted net loss of RMB20.3 million in the first quarter of 2020, and an adjusted net income of RMB29.9 million in the same period last year. -- Adjusted EBITDA was RMB40.3 million (US$5.7 million), relatively stable as compared to the same period last year and representing a 487.7% increase compared to the first quarter of 2020.

Second Quarter 2020 Operating Highlights

-- Sustained growth of on-demand food delivery. The number of average monthly delivery orders was 24.3 million, representing a 46.1% increase from the same period last year and a 44.0% increase from the first quarter of 2020. The Companys core business has maintained growth momentum throughout the COVID-19 pandemic. -- Expanded service scope. The Company fulfilled a total of 345,000 delivery orders for grocery and fresh food category, representing a 95.3% increase the first quarter of 2020. The COVID-19 pandemic increased demand for online grocery and fresh food shopping. In response, the Company expanded its service scope to satisfy the increasing demand for delivery service of grocery and fresh food for existing and new industry customers. -- Continuing geographical expansion. The number of delivery areas reached 952 by the end of June 2020, representing a 62.2% increase from the same period last year. The number of average monthly active workers was 40,721, representing a 57.6% increase from the same period last year.

Leslie Yu, Chairman and Chief Executive Officer of the Company, commented, We are pleased to report strong financial and operational growth for the second quarter of 2020, in this our first earnings release as a public company. During the second quarter, we increased the number of delivery areas to 952, expanded our geographical coverage to 75 cities and extended our service scope, all of which resulted in a larger customer base. As the outbreak of COVID-19 intensified, we capitalized on the surge in demand for local grocery and fresh food delivery services and successfully penetrated a new market as we further diversify our service offerings and maximize the efficiency of our platform. We plan to explore more opportunities in other industries in which we have existing operations, such as shared-bike maintenance, housekeeping and ride-hailing, by cooperating with new blue-chip industry customers.

Going forward, we will continue to actively expand our operations geographically, diversify our service offerings and expand our industry customer base to lay a solid foundation for future business growth. For example, we are currently exploring partnership opportunities with hotel chains and property management companies to provide them with housekeeping solutions, and we expect to achieve significant business growth through provision of those solutions in the third quarter. Meanwhile, we will continue to focus on improving our operational efficiency and flexibility in an effort to expand our margins as we create long-term sustainable growth for shareholders.

Second Quarter 2020 Financial Results

Revenues were RMB547.6 million (US$77.5 million), representing an increase of 33.5% year over year, primarily due to the increase in revenues generated from on-demand food delivery solutions.

-- Revenues from on-demand food delivery solutions were RMB541.3 million (US$76.6 million), representing an increase of 34.8% from RMB401.7 million in the second quarter of 2019, primarily due to the increase in delivery orders fulfilled as a result of the continuing expansion into new geographical markets and the rapid growth of new service offerings, namely the grocery and fresh food delivery, which contributed revenues of RMB2.6 million (US$362,000) in this quarter. -- Revenues from shared-bike maintenance solutions were RMB4.6 million (US$651,000), representing a decrease of 32.8% from RMB6.8 million in the second quarter of 2019, primarily due to (1) the decrease in the geographical coverage of the shared-bike maintenance solutions as the Company strategically withdrew its operations from a few cities where it underperformed, and (2) the adverse impact of the COVID-19 pandemic on the overall shared-bike business as a result of government-mandated quarantine measures. -- Revenues from ride-hailing solutions were RMB1.3 million (US$180,000), representing a decrease of 16.7% from RMB1.5 million in the second quarter of 2019, primarily due to the preferential rental policy the Company offered to ride-hailing drivers on its platform during the COVID-19 outbreak, following the industry-wide relief measures. -- Revenues from housekeeping solutions and other services were RMB379,000 (US$54,000), representing an increase of 560.9% from RMB57,000 in the second quarter of 2019, primarily due to the increases in the number of the Companys collaborated industry customers and service offerings.

Cost of revenues were RMB487.2 million (US$69.0 million), representing an increase of 34.7% year over year, primarily due to the increased cost of revenues from on-demand food delivery solutions, ride-hailing solutions and housekeeping solutions and other services.

-- Cost of revenues related to on-demand food delivery solutions was RMB480.3 million (US$68.0 million), representing an increase of 35.5% from RMB354.4 million in the second quarter of 2019, primarily due to the increase in 1) service fees paid to riders and team leaders in line with the increase in the delivery orders fulfilled, 2) hiring expenses for riders, 3) insurance expenses for riders and 4) rental fees paid to lease the workplace for additional service stations. -- Cost of revenues related to shared-bike maintenance solutions was RMB3.6 million (US$512,000), representing a decrease of 39.4% from RMB6.0 million in the second quarter of 2019, which was generally in line with the decline of the business volume of shared-bike maintenance solutions. -- Cost of revenues related to ride-hailing solutions was RMB2.9 million (US$409,000), representing an increase of 121.8% from RMB1.3 million in the second quarter of 2019, primarily due to the increase in the number of vehicles leased from third parties. -- Cost of revenues related to housekeeping solutions and other services increased significantly to RMB459,000 (US$65,000) from RMB56,000 in the second quarter of 2019, primarily due to the increased service fees paid to workers in line with the business growth.

Gross profit was RMB60.4 million (US$8.5 million), representing an increase of 24.8% year over year, primarily due to the increase in gross profit of on-demand food delivery solutions and shared-bike maintenance solutions.

Gross margin was 11.0%, compared with 11.8% for the second quarter of 2019.

-- Gross margin of on-demand food delivery solutions was 11.3%, a slight decrease compared with 11.8% in the second quarter of 2019, primarily due to the increase in hiring expenses, insurance expenses and rental fees as a percentage of revenues. -- Gross margin of shared-bike maintenance solutions was 21.4%, compared with 12.9% in the second quarter of 2019, primarily because the Company withdrew its operations from those cities where it underperformed. -- Gross margin of ride-hailing solutions was negative 127.2%, compared with 14.6% in the second quarter of 2019, primarily due to the reasons discussed above. -- Gross margin of house-keeping solutions and other services was negative 21.1%, compared with 2.3% in the second quarter of 2019, primarily due to the reasons discussed above.

Operating expenses were RMB30.8 million (US$4.4 million), representing an increase of 38.0% year over year.

-- General and administrative expenses were RMB29.5 million (US$4.2 million) (including share-based compensation of RMB1.3 million), representing an increase of 32.9% from RMB22.2 million (including share-based compensation of RMB3.4 million) in the second quarter of 2019. The increase was primarily due to the (1) the increase in staff costs as a result of an increased number of operating staffs, (2) the increase in professional service fees related to the Companys IPO, and (3) losses incurred relating to a law suit. Excluding the effect of share-based compensation, professional service fees related to the IPO and losses incurred relating to a law suit, the general and administrative expenses would have increased by 25.6% from RMB 18.1 million in the second quarter of 2019 and, as a percentage of revenues, would have declined to 4.1% from 4.4% in the second quarter of 2019. As such, the Company obtained unit cost savings along with business growth. -- Research and development expenses were RMB2.7 million (US$387,000), which remained relatively stable as compared to RMB2.7 million in the second quarter of 2019.

Income tax expense was RMB11.5 million (US$1.6 million), representing an increase of 43.7% from RMB8.0 million in the second quarter of 2019, primarily due to the increase in the taxable income generated from on-demand food delivery solutions.

Net income was RMB19.7 million (US$2.8 million), representing a decrease of 25.6% from RMB26.4 million in the second quarter of 2019.

Adjusted EBITDA was RMB40.3 million (US$5.7 million), relatively stable as compared to RMB42.1 million in the second quarter of 2019.(1)Adjusted net income was RMB21.0 million (US$3.0 million), representing a decrease of 29.8% from RMB29.9 million in the second quarter of 2019.(1)

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(1) See Use of Non-GAAP Financial Measures.

Balance SheetAs of June 30, 2020, the Company had cash and short-term investments of RMB155.1 million (US$22.0 million) and short-term debt of RMB113.3 million (US$16.0 million).

CONFERENCE CALL

Quhuo will hold a conference call on Thursday, August 27, 2020 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Beijing/Hong Kong time on the same day) to discuss the financial results.

Participant can register for the conference call by navigating to http://apac.directeventreg.com/registration/event/3478235. Once preregistration has been completed, participants will receive dial-in numbers, a direct event passcode, and a unique registrant ID.

To join the conference, please dial the number you receive, enter the direct event passcode followed by your unique registrant ID, and you will be joined to the conference instantly.

A live and archived webcast of the conference call will also be available at the Company's investor relations website at https://ir.quhuo.cn/.

A replay will be accessible through 9:59 a.m. Eastern Time on September 4, 2020 by dialing the following numbers:

United States: +1-646-254-3697International: +61-2-8199-0299China Domestic: 400-6322-162Hong Kong: +852-3051-2780Conference ID: 3478235#

USE OF NON-GAAP FINANCIAL MEASURES

Quhuo has provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (GAAP).

Quhuo uses adjusted net income (loss) and adjusted EBITDA, which are non-GAAP financial measures, in evaluating our operating results and for financial and operational decision-making purposes. Adjusted net income (loss) represents net income (loss) before share-based compensation expenses. Adjusted EBITDA represents adjusted net income(loss) before income tax benefit(expense), amortization, depreciation and interest. Quhuo believes that these non-GAAP financial measures help identify underlying trends in its business that could otherwise be distorted by the effect of share-based compensation expenses, income tax benefits or expenses, amortization, depreciation and interest. Quhuo believes that such non-GAAP financial measures also 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 its management in its financial and operational decision-making.

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. They should not be considered in isolation or construed as alternatives to net loss or any other measure of performance or as an indicator of Quhuos operating performance. Further, these non-GAAP financial measures 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 the Companys data. Quhuo encourages investors and others to review the Companys financial information in its entirety and not rely on a single financial measure. Investors are encouraged to compare the historical non-GAAP financial measures with the most directly comparable GAAP measures. Quhuo mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating its performance. The following table sets forth a reconciliation of our net income (loss) to adjusted net income and adjusted EBITDA, respectively.

Reconciliation of GAAP and Non-GAAP Results For the Three Months Ended For the Six Months Ended June 30, June 30, June 30, June 30, June 30, June 30, 2019 2020 2020 2019 2020 2020 (RMB?000) (RMB?000) (RMB?000) (US$?000) (RMB?000) (US$?000) Net income 26,447 19,680 2,784 (19,920) (1,899) (269) (loss)Less:Share-based (3,443) (1,290) (183) (57,480) (2,580) (365) Compensation Adjusted net 29,890 20,970 2,967 37,560 681 96 income Less: Income (8,017) (11,518) (1,630) (9,011) (14,436) (2,043) tax expenseDepreciation (685) (2,640) (374) (1,325) (4,113) (582) Amortization (2,902) (2,977) (421) (5,485) (6,033) (854) Interest (648) (2,223) (315) (1,987) (4,663) (660) Adjusted 42,142 40,328 5,707 55,368 29,926 4,235 EBITDA

EXCHANGE RATE INFORMATION

This press release contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB 7.0651 to US$1.00, the rate in effect as of June 30, 2020 as set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

SAFE HARBOR STATEMENT

This press 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 the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current fact included in this press release are forward-looking statements, including but not limited to statements regarding Quhuos financial outlook, beliefs and expectations. Forward-looking statements include statements containing words such as expect, anticipate, believe, project, will and similar expressions intended to identify forward-looking statements. Among other things, the guidance on [the total revenues] of the third quarter of 2020 in this press release contain forward-looking statements. These forward-looking statements are based on Quhuos current expectations and involve risks and uncertainties. Quhuos actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks related to Quhuos abilities to (1) address any or all of the risks and challenges in the future in light of its limited operating history and evolving business portfolios, (2) remain its competitive position in the on-demand food delivery market or further diversify its solution offerings, (3) maintain relationships with major customers and to find replacement customers on commercially desirable terms or in a timely manner or at all, (4) maintain relationship with existing industry customers or attract new customers, (5) attract, retain and manage workers on its platform, and (6) maintain its market shares to competitors in existing markets and its success in expansion into new markets, as well as the length and severity of the recent COVID-19 outbreak and its impact on Quhuos business and industry. Other risks and uncertainties are included under the caption Risk Factors and elsewhere in the Companys filings with the Securities and Exchange Commission, including, without limitation, the final prospectus related to the IPO filed with the SEC on July 10, 2020. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and Quhuo undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date hereof.

ABOUT QUHUO LIMITED

Quhuo Limited (NASDAQ: QH) was the largest workforce operational solution platform in China in 2019*. Quhuo provides tech-enabled, end-to-end operational solutions to blue-chip on-demand consumer service businesses in industries with significant e-commerce exposure, including food delivery, ride-hailing, housekeeping and bike-sharing. Quhuos platform helps its industry customers mobilize a large team of workers and utilizes a combination of training, performance monitoring and refinement, and incentives to transform them into skilled workers who can follow industry-specific, standardized and highly efficient service procedures. Within the on-demand consumer service ecosystem, the Company plays a unique and indispensable role as the link between consumer service businesses and the end consumers to enable the delivery of goods, services and experiences to consumers.

* According to an industry report prepared by Frost & Sullivan in 2019, as measured by the number of average monthly active workers in 2019.

For more information about Quhuo, please visit https://ir.quhuo.cn/.

CONTACTS:

Investor RelationsQuhuo LimitedAnnia SunE-mail: ir@meishisong.cn

ChristensenIn ChinaMr. Eric YuanPhone: +86-13801110739E-mail: Eyuan@christensenir.com

In USMs. Linda BergkampPhone: +1-480-614-3004E-mail: lbergkamp@christensenir.com

QUHUO LIMITEDUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in thousands of Renminbi (?RMB?) and U.S. dollars (?US$?), except fornumber of shares and per share data) As of December As of June 30, 2020 31, 2019 (RMB) (RMB) (US$)Assets Current assets Cash 126,779 107,676 15,241Short-term investments 56,275 47,428 6,713Accounts receivable, net of allowance 276,966 220,615 31,226Prepayments and other current assets 43,058 43,199 6,114Amounts due from related parties 18,392 - -Total current assets 521,470 418,918 59,294 Non-current assets Property and equipment, net 25,632 28,462 4,029Intangible assets, net 66,818 70,745 10,013Long-term investments 1,715 1,065 151Goodwill 26,231 26,231 3,713Deferred tax assets 3,893 2,389 338Other non-current assets 98,137 85,987 12,171Total non-current assets 222,426 214,879 30,415 TOTAL ASSETS 743,896 633,797 89,709 Liabilities, mezzanine equity and shareholders? deficitCurrent liabilities Accounts payable 232,276 156,016 22,083Accrued expenses and other current 75,825 74,196 10,504liabilitiesShort-term debt 143,979 113,348 16,043Amounts due to a related party - 3,134 444Total current liabilities 452,080 346,694 49,074 Non-current liabilities Deferred tax liabilities 2,556 2,263 320Long-term debt 11,942 8,652 1,225Other non-current liabilities 22,766 20,244 2,865Total non-current liabilities 37,264 31,159 4,410 Total liabilities 489,344 377,853 53,484 Total mezzanine equity 1,031,001 1,031,001 145,928

QUHUO LIMITEDUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)(Amounts in thousands of Renminbi (?RMB?) and U.S. dollars (?US$?), except fornumber of shares and per share data) As of December 31, As of June 30, 2020 2019 (RMB) (RMB) (US$)Shareholders? deficit Ordinary shares 17 17 2 Additional paid-in capital 434,151 436,731 61,815 Accumulated deficit (1,212,257) (1,211,200) (171,434) Accumulated other comprehensive (1,231) (520) (74) lossTotal Quhuo Limited shareholders? (779,320) (774,972) (109,691) deficitNon-controlling interests 2,871 (85) (12) Total shareholders? deficit (776,449) (775,057) (109,703) Total liabilities, mezzanine 743,896 633,797 89,709 equity and shareholders? deficit

QUHUO LIMITEDUNAUDITED CONDENSEDCONSOLIDATED STATEMENTS OF COMPREHENSIVEINCOME(LOSS)(Amounts in thousands of Renminbi (?RMB?) and U.S. dollars (?US$?), except fornumber of shares and per share data) For the Three Months Ended For the Six Months Ended June 30, June 30, June 30, June 30, June 30, June 30, 2019 2020 2020 2019 2020 2020 (RMB) (RMB) (US$) (RMB) (RMB) (US$) Revenues 410,122 547,577 77,504 758,798 940,195 133,076 Cost of (361,758) (487,224) (68,962) (687,131) (868,700) (122,957) revenuesGross profit 48,364 60,353 8,542 71,667 71,495 10,119 Operating expensesGeneral and (22,189) (29,487) (4,174) (93,907) (57,014) (8,070) administrativeResearch and (2,732) (2,732) (387) (4,395) (5,317) (753) developmentGains ondisposal of 2,610 1,437 203 3,663 1,292 183 intangibleassets, netTotaloperating (22,311) (30,782) (4,358) (94,639) (61,039) (8,640) expenses ?? ?? ?? ?? ?? ??Operating 26,053 29,571 4,184 (22,972) 10,456 1,479 income (loss) Interest 8 254 36 10 515 73 incomeInterest (648) (2,223) (315) (1,987) (4,663) (660) expenseOther income, 9,062 3,601 510 13,918 6,930 981 netShare of netincome from - - - 162 - - equity methodinvesteesForeign (11) (5) (1) (40) (701) (99) exchange lossIncome (loss)before income 34,464 31,198 4,414 (10,909) 12,537 1,774 taxIncome tax (8,017) (11,518) (1,630) (9,011) (14,436) (2,043) expenseNet income 26,447 19,680 2,784 (19,920) (1,899) (269) (loss) Net lossattributable to 177 980 139 1,271 2,956 418 non-controllinginterestsNet income(loss)attributable to 26,624 20,660 2,923 (18,649) 1,057 149 ordinaryshareholders ofQuhuo Limited Income(loss) per shareBasic 0.68 0.53 0.07 (1.25) 0.03 0.00 Diluted 0.59 0.53 0.07 (1.25) 0.03 0.00 Shares used in income (loss) per share computationBasic 14,972,760 14,972,760 14,972,760 14,972,760 14,972,760 14,972,760 Diluted 44,872,963 39,103,860 39,103,860 14,972,760 39,103,860 39,103,860 Othercomprehensive income:Foreigncurrency - 63 9 - 711 101 translationadjustment:Comprehensive 26,447 19,743 2,793 (19,920) (1,188) (168) income (loss)Less:Comprehensiveloss 177 980 139 1,271 2,956 418 attributable tonon-controllinginterestsComprehensiveincome (loss)attributable to 26,624 20,723 2,932 (18,649) 1,768 250 ordinaryshareholders ofQuhuo Limited