PR Newswire | Nov 18, 2020 05:01PM EST

11/18 16:00 CST

Expanded Market Share to 20.8%, Grew Volume 51.2% to 4.6 Billion Parcels SHANGHAI, Nov. 18, 2020

Achieved RMB1.2 Billion Adjusted Net Income Amidst Fierce CompetitionZTO Reports Third Quarter 2020 Unaudited Financial Results

SHANGHAI, Nov. 18, 2020 /PRNewswire/ -- ZTO Express (Cayman) Inc. (NYSE: ZTO and HKEX: 2057), a leading and fast-growing express delivery company in China ("ZTO" or the "Company"), today announced its unaudited financial results for the third quarter ended September 30, 2020(1). The Company maintained high quality of service and customer satisfaction, and expanded parcel volume market share by 1.9 percentage points to 20.8%.

Third Quarter 2020 Financial Highlights

* Revenues were RMB6,638.8 million (US$977.8 million), an increase of 26.1% from RMB5,265.8 million in the same period of 2019. * Gross profit was RMB1,391.0 million (US$204.9 million), a decrease of 12.9% from RMB1,596.9 million in the same period of 2019. * Net income was RMB1,210.3 million (US$178.3 million), a decrease of 7.4% from RMB1,307.7 million in the same period of 2019. * Adjusted EBITDA(2) was RMB1,675.4 million (US$246.8 million), a decrease of 11.2% from RMB1,887.5 million in the same period of 2019. * Adjusted net income(3) was RMB1,210.3 million (US$178.3 million), a decrease of 8.2% from RMB1,318.5 million in the same period of 2019. * Basic and diluted earnings per American depositary share ("ADS"(4)) were RMB1.53 (US$0.23), a decrease of 8.4% from RMB1.67 in the same period of 2019. * Adjusted basic and diluted earnings per American depositary share(5) attributable to ordinary shareholders were RMB1.53 (US$0.23), a decrease of 9.5% from RMB1.69 in the same period of 2019. * Net cash provided by operating activities was RMB1,480.4 million (US$218.0 million), compared with RMB1,417.7 million in the same period of 2019.

Operational Highlights for Third Quarter 2020

* Parcel volume was 4,623 million, an increase of 51.2% from 3,058 million in the third quarter of 2019. * Number of pickup/delivery outlets was approximately 30,000 as of September 30, 2020. * Number of direct network partners was over 5,150 as of September 30, 2020. * Number of line-haul vehicles was over 10,100 as of September 30, 2020, which included approximately 9,250 self-owned vehicles, increased from 9,900 as of June 30, 2020, and approximately 850 vehicles owned and operated by Tonglu Tongze Logistics Ltd., a transportation operator that works exclusively for ZTO. * Out of the self-owned trucks, over 7,400 were high capacity 15 to 17-meter-long models as of September 30, 2020, compared to over 7,100 as of June 30, 2020. * Number of line-haul routes between sorting hubs was approximately 3,400 as of September 30, 2020, compared to over 3,400 as of June 30, 2020. * Number of sorting hubs was 91 as of September 30, 2020, among which 82 are operated by the Company and 9 by the Company's network partners.

(1) An investor relations presentation accompanies this earnings release andcan be found at http://zto.investorroom.com.

(2) Adjusted EBITDA is a non-GAAP financial measure, which is defined as netincome before depreciation, amortization, interest expenses and income taxexpenses, and further adjusted to exclude the shared-based compensation expenseand non-recurring items such as the gain on disposal of equity investees andsubsidiary which management aims to better represent the underlying businessoperations.

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

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

(5) Adjusted basic and diluted earnings per American depositary shareattributable to ordinary shareholders is a non-GAAP financial measure. It isdefined as adjusted net income divided by weighted average number of basic anddiluted shares, respectively.

Mr. Meisong Lai, Founder, Chairman and Chief Executive Officer of ZTO, commented "During the third quarter, driven by a steady economic recovery, China express delivery industry maintained its strong growth momentum from previous quarter and achieved a 37.8% parcel volume increase over last year. ZTO grew 51.2% with 4.6 billion parcels and expanded its market share by 1.9 percentage points to 20.8%. Our 3Q performance resulted from consistent focus on investing in infrastructure, improving capacity and operating efficiency on one hand, and at the same time, addressing our network partners' interest and needs fairly so that our entire network can remain stable and thrive."

Mr. Lai added, "ZTO's recent secondary listing on Hong Kong stock exchange gave us an opportunity to review what contributed to our success in the past and think deep and clear about what's crucial for us to expand our competitive edge and transform ultimately into a world-class comprehensive logistic service provider. We firmly believe in the long-term growth prospects of the express delivery market as well as the tremendous opportunities in the logistic industries in China and overseas. Express delivery has increasingly become an essential part of our daily lives for its ability and potential to efficiently connect a vast array of supply and demand with wide coverage and deep penetration. We are preparing for that pinnacle moment to arrive when the express delivery industry can start to receive deserved payback."

Ms. Huiping Yan, Chief Financial Officer of ZTO, commented, "Impacted by competition that remained fierce during the period, ZTO's adjusted net income was RMB1.2 billion and the 8.2% decrease was relatively moderate given an 18.4% price decline which was at the low end of the market range of price decline. We were more effective in managing competing priorities of accelerated volume growth and market share gain, sustained network partners' confidence and trust in our brand, and solid corporate earnings. Meanwhile, scale leverage and cost productivity initiatives continued to dampen the impact of price decline where our combined sorting and transportation costs per unit dropped 9.0% or 8 cents, and corporate SG&A cost as a percentage of total revenues remained low at 5.6%."

Ms. Yan added, "Cash from operating activities increased 4.4% to RMB1.48 billion for the quarter. The cumulative capital spending for the year was RMB6.2 billion as we have accelerated infrastructure development in response to the steady increase in demand. Together with the proceeds received this quarter for our secondary listing in Hong Kong, ZTO has RMB 22.7 billionavailable cash including those on deposits. With a strong balance sheet, we intend to further build-out scale and capacity, to support our network partners to expand and grow with us, and to form advantages in comprehensive logistic service capabilities.

Third Quarter 2020 Financial Results

Three Months Ended September 30, Nine Months Ended September 30,

2019 2020 2019 2020

RMB % RMB US$ % RMB % RMB US$ %

(in thousands, except percentages)

Expressdelivery 4,675,993 88.8 5,780,410 851,362 87.1 13,499,267 88.4 14,727,484 2,169,124 86.9services

Freightforwarding 274,356 5.2 481,188 70,871 7.2 913,758 6.0 1,243,759 183,186 7.3services

Sale of 276,452 5.3 298,871 44,019 4.5 777,859 5.1 797,084 117,398 4.7accessories

Others 38,959 0.7 78,367 11,543 1.2 72,546 0.5 188,819 27,810 1.1

Total 5,265,760 100 6,638,836 977,795 100 15,263,430 100 16,957,146 2,497,518 100revenues

Total Revenueswere RMB6,638.8 million (US$977.8 million), an increase of 26.1% from RMB5,265.8 million in the same period of 2019. Revenue from the core express delivery business increased by 23.4% compared to the same period of 2019, as a combined result of an increase of 51.2% in parcel volume and a decrease of 18.4% in parcel unit price mainly driven by competition and the decrease in average parcel weight. Revenue from freight forwarding services increased by 75.4% compared to the same period of 2019, driven by increased cross border e-commerce demand and improved pricing as a result of the COVID-19 outbreak globally. Revenue from sales of accessories, largely consisting of the sales of thermal paper used for digital waybills' printing, increased by 8.1% due to increased usage of lower-priced single-sheet digital waybill since second half of last year. Other revenues were mainly derived from financing services and advertising services.

Three Months Ended September 30. Nine Months Ended September 30.

2019 2020 2019 2020

% of % of % of % of RMB RMB US$ RMB RMB US$ revenues revenues revenues revenues

(in thousands, except percentages)

Line-haul transportation cost 1,783,180 33.9 2,446,793 360,373 36.9 5,073,052 33.2 5,740,772 845,524 33.9

Sorting hub operating cost 978,417 18.6 1,353,754 199,386 20.4 2,823,387 18.5 3,573,787 526,362 21.1

Freight forwarding cost 265,426 5.0 447,047 65,843 6.7 893,823 5.9 1,151,319 169,571 6.8

Cost of accessories sold 138,112 2.6 95,007 13,993 1.4 414,169 2.7 281,965 41,529 1.7

Other costs 503,686 9.6 905,283 133,335 13.6 1,433,901 9.4 2,230,528 328,521 13.0

Total cost of revenues 3,668,821 69.7 5,247,884 772,930 79.0 10,638,332 69.7 12,978,371 1,911,507 76.5

Total cost of revenues was RMB5,247.9 million (US$772.9 million), an increase of 43.0% from RMB3,668.8 million in the same period last year.

Line haul transportation costwas RMB2,446.8 million (US$360.4 million), an increase of 37.2% from RMB1,783.2 million in the same period last year. The line-haul transportation cost per parcel declined 9.2% to RMB0.53. The decrease resulted mainly from increased usage of self-owned vehicles with a greater number of higher-capacity trailer trucks. Approximately 86.0% of the line-haul transportation costs were associated with self-owned fleet compared to that of 66.2% in the same period last year.

Sorting hub operating costwas RMB1,353.8 million (US$199.4 million), an increase of 38.4% from RMB978.4 million in the same period last year. The increase was primarily due to (i) an RMB274.0 million (US$40.4 million) increase in labor associated costs, and (ii) an RMB80.3 million (US$11.8 million) increase in depreciation and amortization costs due to the increased number of installed automated sorting equipment. As of September 30, 2020, 300 sets of automated sorting equipment have been placed into service, compared to 208 sets as of September 30, 2019. The sorting hub operating cost per parcel decreased 8.5% to RMB0.29 as a result of increased level of automation and improved economies of scale.

Cost of accessoriessold was RMB95.0 million (US$14.0 million), a decrease of 31.2% from RMB138.1 million in the same period last year. The decrease was mainly driven by the increased use of lower-cost single-sheet digital waybills since the second half of 2019.

Other costs were RMB905.3 million (US$133.3 million), an increase of RMB401.6 million (US$59.1 million) compared to the same period last year. The increase was mainly consisted of (i) an increase of RMB304.8 million (US$44.9 million) in dispatching costs serving enterprise customers associatedwith a similar level of volume increase of 99.7%, and (ii) an increase of RMB80.2million (US$11.8 million) in technology related expenses.

Gross Profitwas RMB1,391.0 million (US$204.9 million), a decrease of 12.9% from RMB1,596.9 million in the same period last year. Gross margin rate was 21.0% compared to 30.3% in the same period last year as a net result of competition-led core express delivery ASP decline of 18.4% and related unit cost decline of 6.7%.

Total Operating Expenseswere RMB221.8 million (US$32.7 million), compared to RMB196.4 million in the same period last year.

Selling, general and administrative expenseswere RMB373.7 million (US$55.0 million), increased by 28.5% from RMB290.9 million in the same period last year. The increase was mainly due to (i) an increase of RMB70.1 million (US$10.3 million) in salaries and accrued performance-based bonuses, and (ii) an increase of RMB9.7 million (US$1.4 million) in depreciation and amortization expenses.

Other operating income, netwas RMB151.8 million (US$22.4 million), compared to RMB94.5 million in the same period last year. Other operating income mainly consisted of (i) RMB69.0 million (US$10.2 million) ADR fee adjustment, (ii) RMB43.5 million (US$6.4 million) of VAT super deduction recognized, and (iii) government subsidies and tax rebates of RMB24.5 million (US$3.6 million) received.

Income from operationswas RMB1,169.1 million (US$172.2 million), a decrease of 16.5% from RMB1,400.5 million for the same period last year. Operating margin rate decreased to 17.6% from 26.6% in the same period last year, derived from the 9.4 percentage points decrease in gross margin rate.

Interest incomewas RMB96.7 million (US$14.2 million), compared with RMB146.4 million in the same period last year.

Foreign currency exchange loss, before taxwas RMB64.4 million (US$9.5 million) in the third quarter of 2020.

Income tax expenseswere negative RMB27.8 million (US$4.1 million) compared to RMB266.3 million in the same period last year. An income tax refund of RMB200.7 million (US$29.6 million) was received during the quarter by Shanghai Zhongtongji Network, a wholly-owned subsidiary, for being recognized as a "Key Software Enterprise" that qualified for a preferential tax rate of 10% fortax year 2019.

Net incomewas RMB1,210.3 million (US$178.3 million), which decreased by 7.4% from RMB1,307.7 million year over year mainly due to intensified price competition while the Company's scale and cost leverage remained strong.

Basic and diluted earnings per ADS attributable to ordinary shareholderswere RMB1.53(US$0.23), compared to RMB1.67 in the same period last year.

Adjusted basic and diluted earnings per ADS attributable to ordinary shareholderswere RMB1.53(US$0.23), compared with RMB1.69 in the same period last year.

Adjusted net incomewas RMB1,210.3 million (US$178.3 million), compared with RMB1,318.5 million during the same period last year.

EBITDAwas RMB1,675.4 million (US$246.8 million), compared with RMB1,876.7 million in the same period last year.

Adjusted EBITDAwas RMB1,675.4 million (US$246.8 million), compared to RMB1,887.5 million in the same period last year.

Net cash provided by operating activitieswas RMB1,480.4 million (US$218.0 million), compared with RMB1,417.7 million in the same period last year.

Business Outlook

The Company makes no changes to its previously stated annual guidance: parcel volume for 2020 is expected to be in the range of 16.2 billion to 17.0 billion, representing a 33.7% to 40.3% increase year over year, and the Company's adjusted net income is expected to be in the range of RMB4.8 billion to RMB5.2 billion, representing a 1.7% to 9.3% decrease year over year. These above estimates are based on management's current and preliminary view and subject to change.

Company Share Purchase

On November 15, 2018, the Company announced a share repurchase program whereby ZTO was 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. On March 13, 2020, the board of directors of the Company approved the extension of the current share repurchase program to June 30, 2021. The Company expects to fund the repurchases out of its existing cash balance. As of September 30, 2020, the Company has purchased an aggregate of 7,716,436 ADSs at an average purchase price of US$17.33, including repurchase commissions.

Initial Public Offering in Hong Kong

On September 29, 2020, the Company successfully listed on the Main Board of the Hong Kong Stock Exchange ("HKEX") under the stock code of "2057" with a global offering of 51,750,000 Class A ordinary shares (including the exercise of the over-allotment option on October 22, 2020) at the public offering price of HK$218 per share (the "Global Offering"). The Hong Kong-listed shares are fully fungible with the Company's American depositary shares (ADSs) listed on the New York Stock Exchange ("NYSE") (one ADS representing one Class A ordinary share). Gross proceeds from the Global Offering before any underwriting fees and other offering expenses, were HK$11,281.5 million (US$1,455.7 million).

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 RMB6.7896 to US$1.00, the noon buying rate on September 30, 2020 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 compare 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.

Conference Call Information

ZTO's management team will host an earnings conference call at 8:00 PM U.S. Eastern Time on Wednesday, November 18, 2020 (9:00 AM Beijing Time on November 19, 2020).

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

United States: 1-888-317-6003

Hong Kong: 852-5808-1995

Mainland China: 4001-206-115

Singapore: 800-120-5863

International: 1-412-317-6061

Passcode: 2473190

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 25, 2020:

United States: 1-877-344-7529

International: 1-412-317-0088

Passcode: 10149585

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 and HKEX:2057) ("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 the Company's unaudited results for the third quarter of 2020, 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 2020 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 Sept 30, Nine Months Ended Sept 30.

2019 2020 2019 2020

RMB RMB US$ RMB RMB US$

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

Revenues 5,265,760 6,638,836 977,795 15,263,430 16,957,146 2,497,518

Cost of revenues (3,668,821) (5,247,884) (772,930) (10,638,332) (12,978,371) (1,911,507)

Gross profit 1,596,939 1,390,952 204,865 4,625,098 3,978,775 586,011

Operating income -(expenses):

Selling, general (290,893) (373,668) (55,035) (1,154,021) (1,246,140) (183,537)and administrative

Other operating 94,469 151,836 22,363 182,102 455,106 67,030income, net

Total operating (196,424) (221,832) (32,672) (971,919) (791,034) (116,507)expenses

Income from 1,400,515 1,169,120 172,193 3,653,179 3,187,741 469,504operations

Other income(expenses):

Interest income 146,372 96,654 14,236 437,313 337,138 49,655

Interest expense - (13,707) (2,019) - (23,132) (3,407)

Loss on disposalof equity - - - (529) - -investees and subsidiary

Foreign currencyexchange gain/ 28,511 (64,354) (9,478) 24,850 (45,307) (6,673)(loss), before tax

Income beforeincome tax, andshare of 1,575,398 1,187,713 174,932 4,114,813 3,456,440 509,079 loss in equitymethod investments

Income tax expense (266,297) 27,845 4,101 (746,958) (400,228) (58,947)

Share of loss inequity method (1,420) (5,268) (776) (13,433) (21,378) (3,149) investments

Net income 1,307,681 1,210,290 178,257 3,354,422 3,034,834 446,983

Net loss (income)attributable to (153) (9,271) (1,365) (6,700) (10,762) (1,585)noncontrolling interests

Net incomeattributable to 1,307,528 1,201,019 176,892 3,347,722 3,024,072 445,398ZTO Express (Cayman) Inc.

Net incomeattributable to ordinaryshareholders

Basic 1.67 1.53 0.23 4.27 3.86 0.57

Diluted 1.67 1.53 0.23 4.26 3.86 0.57

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

Basic 782,011,037 784,872,994 784,872,994 784,701,835 783,711,509 783,711,509

Diluted 782,389,377 784,872,994 784,872,994 784,981,054 783,778,138 783,778,138

Other comprehensive income,net of tax of nil:

Foreign currencytranslation 480,712 (326,880) (48,144) 429,859 (173,511) (25,555)adjustment

Comprehensive 1,788,393 883,410 130,113 3,784,281 2,861,323 421,428income

Comprehensiveincomeattributable to (153) (9,271) (1,365.47) (6,700) (10,762) (1,585) noncontrollinginterests

Comprehensiveincomeattributable to 1,788,240 874,139 128,748 3,777,581 2,850,561 419,843 ZTO Express(Cayman) Inc.

Unaudited Consolidated Balance Sheets Data:

As of

December 31, Sept 30, 2020 2019

RMB RMB US$

(in thousands)

ASSETS

Current assets:

Cash and cash equivalents 5,270,204 16,408,906 2,416,771

Restricted cash 7,210 8,070 1,189

Accounts receivable, net 675,567 606,462 89,322

Financing receivables, net 511,124 1,046,286 154,101

Short-term investment 11,113,217 4,804,528 707,630

Inventories 43,845 49,929 7,354

Advances to suppliers 438,272 711,853 104,845

Prepayments and other current assets 1,964,506 2,224,856 327,688

Amounts due from related parties 74,312 63,620 9,370

Total current assets 20,098,257 25,924,510 3,818,270

Investments in equity investee 3,109,494 3,271,612 481,856

Property and equipment, net 12,470,632 16,477,106 2,426,815

Land use rights, net 2,508,860 4,105,231 604,635

Intangible assets, net 48,029 43,381 6,389

Operating lease right-of-use assets 901,956 844,208 124,338

Goodwill 4,241,541 4,241,541 624,711

Deferred tax assets 403,587 701,942 103,385

Long-term investment 946,180 1,472,960 216,944

Long-term financing receivables, net 549,775 1,355,041 199,576

Other non-current assets 612,191 465,375 68,542

TOTAL ASSETS 45,890,502 58,902,907 8,675,461

LIABILITIES AND EQUITY

Current liabilities

Short-term bank borrowing - 2,084,430 307,003

Accounts payable 1,475,258 1,468,675 216,312

Notes payable - 720,420 106,106

Advances from customers 1,210,887 1,137,709 167,566

Income tax payable 80,272 39,269 5,784

Amounts due to related parties 38,943 21,082 3,105

Operating lease liabilities 298,728 267,348 39,376

Acquisition consideration payable 22,942 22,942 3,379

Dividends payable 1,629 12,304 1,812

Other current liabilities 3,552,288 4,083,074 601,372

Total current liabilities 6,680,947 9,857,253 1,451,815

Non-current operating lease liabilities 504,442 459,518 67,680

Deferred tax liabilities 207,896 214,382 31,575

Other non-current liabilities 93,820 - -

TOTAL LIABILITIES 7,487,105 10,531,153 1,551,070

Shareholders' equity

Ordinary shares (US$0.0001 par value; 10,000,000,000 shares authorized, 803,551,115 shares issued and 781,947,464 shares outstanding as of 517 548 81 December 31, 2019; 848,551,115 shares issued and 828,894,733 shares outstanding as of September 30, 2020)

Additional paid-in capital 22,336,594 29,357,326 4,323,867

Treasury shares, at cost (1,436,767) (1,350,529) (198,911)

Retained earnings 16,726,540 19,750,612 2,908,951

Accumulated other comprehensive income 675,720 502,207 73,967

ZTO Express (Cayman) Inc. shareholders' equity 38,302,604 48,260,164 7,107,955

Noncontrolling interests 100,793 111,590 16,435

Total Equity 38,403,397 48,371,754 7,124,390

TOTAL LIABILITIES AND EQUITY 45,890,502 58,902,907 8,675,460

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses(Topic 326), which requires all entities to disclosetheir current estimate of all expected credit losses. The Group adopted thisASU on January 1, 2020 using the modified retrospectivetransition method and no material adjustment to the opening balance of retainedearnings of 2020 was necessary. The adoption of thisnew ASU has no material impact on its consolidated financial position, resultsof operations or cashflow.

Summary of Unaudited Consolidated Cash Flow Data:

Three Months Ended September 30. Nine Months Ended September 30.

2019 2020 2019 2020

RMB RMB US$ RMB RMB US$

(in thousands)

Net cash provided by operating activities 1,417,706 1,480,429 218,044 4,043,780 2,910,490 428,669

Net cash (used in) provided by/ investing (4,015,458) 1,179,946 173,787 (1,621,341) (632,608) (93,173) activities

Net cash / provided by (used in) financing 511,528 8,602,624 1,267,030 (1,995,524) 8,965,576 1,320,487 activities

Effect of exchange rate changes on cash, 33,113 (109,243) (16,090) 9,683 (89,783) (13,224) cash equivalents and restricted cash

Net (decrease) / increase in cash, cash (2,053,111) 11,153,756 1,642,771 436,598 11,153,675 1,642,759 equivalents and restricted cash

Cash, cash equivalents and restricted cash 7,112,663 5,277,333 777,267 4,622,954 5,277,414 777,279 at beginning of period

Cash, cash equivalents and restricted cash 5,059,552 16,431,089 2,420,038 5,059,552 16,431,089 2,420,038 at end of period

The following table provides a reconciliation of cash, cash equivalents andrestricted cash reported within the condensed consolidated balance sheets thatsum tothe total of the same such amounts shown in the condensed consolidatedstatements of cash flows:



As of

September 30, 2019 September 30, 2020

RMB RMB US$

(in thousands)

Cash and cash equivalents 5,058,640 16,408,906 2,416,771

Restricted cash, current 912 8,070 1,189

Restricted cash, non-current - 14,113 2,079

Total cash, cash equivalents and restricted cash 5,059,552 16,431,089 2,420,038

Reconciliations of GAAP and Non-GAAP Results

Three Months Ended Sept 30, Nine Months Ended Sept 30.

2019 2020 2019 2020

RMB RMB US$ RMB RMB US$

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

Net income 1,307,681 1,210,290 178,257 3,354,422 3,034,834 446,983

Add:

Share-basedcompensation 10,800 - - 305,865 264,154 38,906expense

Loss ondisposal ofequityinvestees - - - 529 - - andsubsidiary,net of incometaxes

Adjusted net 1,318,481 1,210,290 178,257 3,660,816 3,298,988 485,889income

Net income 1,307,681 1,210,290 178,257 3,354,422 3,034,834 446,983

Add:

288,749 453,818 66,840 843,581 1,254,824 184,816Depreciation

13,951 25,390 3,740 39,920 58,640 8,637Amortization

Interest - 13,707 2,019 - 23,132 3,407expenses

Income tax 266,297 (27,845) (4,101) 746,958 400,228 58,947expenses

EBITDA 1,876,678 1,675,360 246,755 4,984,881 4,771,658 702,790

Add:

Share-basedcompensation 10,800 - - 305,865 264,154 38,906expense

Loss ondisposal ofequityinvestees - - - 529 - - andsubsidiary,before incometaxes

Adjusted 1,887,478 1,675,360 246,755 5,291,275 5,035,812 741,696EBITDA

Three Months Ended Sept 30, Nine Months Ended Sept 30.

2019 2020 2019 2020

RMB RMB US$ RMB RMB US$

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

Net incomeattributableto ordinary

1,307,528 1,201,019 176,892 3,347,722 3,024,072 445,398shareholders

Add:

Share-basedcompensation 10,800 - - 305,865 264,154 38,906expense

Impairment ofinvestment inequity

Loss ondisposal ofequityinvestees - - - 529 - - andsubsidiary,net of incometaxes

Adjusted Netincomeattributable 1,318,328 1,201,019 176,892 3,654,116 3,288,226 484,304to ordinaryshareholders

Weightedaverageshares usedin calculatingnet earningsper ordinary share/ADS

Basic 782,011,037 784,872,994 784,872,994 784,701,835 783,711,509 783,711,509

Diluted 782,389,377 784,872,994 784,872,994 784,981,054 783,778,138 783,778,138

Net earningsper share/ADSattributable toordinaryshareholders

Basic 1.67 1.53 0.23 4.27 3.86 0.57

Diluted 1.67 1.53 0.23 4.26 3.86 0.57

Adjusted netearnings pershare/ADS attributableto ordinaryshareholders

Basic 1.69 1.53 0.23 4.66 4.20 0.62

Diluted 1.69 1.53 0.23 4.66 4.20 0.62

For investor and media inquiries, please contact:

ZTO Express (Cayman) Inc.Investor RelationsE-mail: ir@zto.comPhone: +86 21 5980 4508

View original content: http://www.prnewswire.com/news-releases/expanded-market-share-to-20-8-grew-volume-51-2-to-4-6-billion-parcels-301176050.html

SOURCE ZTO Express Cayman Inc.