PR Newswire | Aug 12, 2020 09:10PM EDT

08/12 20:09 CDT

/C O R R E C T I O N -- ZTO Express (Cayman) Inc./ SHANGHAI, Aug. 12, 2020

In the news release, Market Share Expanded to 21.5% Volume Grew 47.9% to 4.6 Billion Parcels, issued 12-Aug-2020 by ZTO Express (Cayman) Inc. over PR Newswire, we are advised by the company that the [5th] paragraph, [2nd] sentence, should read "[We remain steadfast on market share gain, and are raising our full year volume target to be between 16.2 to 17.0 billion parcels.]" rather than "[We remain steadfast on market share gain, and are raising our full year volume target to be between 162 to 170 billion parcels.]" as originally issued inadvertently. The complete, corrected release follows:

Market Share Expanded to 21.5% Volume Grew 47.9% to 4.6 Billion Parcels Adjusted Net Income Reached RMB 1.45 Billion

ZTO Reports Second Quarter 2020 Unaudited Financial Results

SHANGHAI, Aug. 12, 2020 /PRNewswire/ -- ZTO Express (Cayman) Inc. (NYSE: ZTO), a leading and fast-growing express delivery company in China ("ZTO" or the "Company"), today announced its unaudited financial results for the second quarter ended June 30, 20201. The Company maintained high quality of service and customer satisfaction, and expanded parcel volume market share by 1.6 percentage points to 21.5%. Adjusted net income increased 5.6% to reach RMB1,453.6 million.

Second Quarter 2020 Financial Highlights

* Revenues were RMB6,402.4 million (US$906.2 million), an increase of 18.0% from RMB5,423.6 million in the same period of 2019. * Gross profit was RMB1,769.2 million (US$250.4 million), relatively flat compared to RMB1,768.6 million in the same period of 2019. * Net income was RMB1,453.6 million (US$205.7 million), an increase of 6.5% from RMB1,365.1 million in the same period of 2019. * Adjusted EBITDAwas RMB2,187.0 million (US$309.6 million), an increase of 11.4% from RMB1,962.8 million in the same period of 2019. * Adjusted net income? was RMB1,453.6 million (US$205.7 million), an increase of 5.6% from RMB1,375.9 million in the same period of 2019. * Basic and diluted earnings per American depositary share ("ADS"?) were RMB1.85 (US$0.26), an increase of 6.9% from RMB1.73 in the same period of 2019. * Adjusted basic and diluted earnings per American depositary share? attributable to ordinary shareholders were RMB1.85 (US$0.26), an increase of 6.3% from RMB1.74 in the same period of 2019. * Net cash provided by operating activities was RMB1,252.3 million (US$177.2 million), compared with RMB1,992.8 million in the same period of 2019.

Operational Highlights for Second Quarter 2020

* Parcel volume was 4,595 million, an increase of 47.9% from 3,107 million in the second quarter of 2019. * Number of pickup/delivery outlets was approximately 30,000 as of June 30, 2020. * Number of direct network partners was over 5,000 as of June 30, 2020. * Number of line-haul vehicles was over 9,900 as of June 30, 2020, which included approximately 9,050 self-owned vehicles, increased from 6,800 as of March 31, 2020, and over 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 7,100 were high capacity 15 to 17-meter-long models as of June 30, 2020, compared to over 5,000 as of March 31, 2020. * Number of line-haul routes between sorting hubs was over 3,400 as of June 30, 2020, compared to over 2,900 as of March 31, 2020. * Number of sorting hubs was 90 as of June 30, 2020, among which 81 are operated by the Company and 9 by the Company's network partners.

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

Adjusted EBITDA is a non-GAAP financial measure, which is defined as net income before depreciation, amortization, interest expenses and income (2)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.

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

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

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

Mr. Meisong Lai, Founder, Chairman and Chief Executive Officer of ZTO, commented "Benefited from a strong e-commerce-driven consumption rebound subsequent to the COVID-19 containment in China, the Chinese express delivery industry generated more than 5.7 billion incremental parcels year over year during the second quarter. According to the State Post Bureau, the express industry grew 36.7%, a quarterly record high since the first quarter of 2017. ZTO grew volume 47.9% and expanded our volume market share by 1.6 points to reach 21.5%. During this record-breaking quarter, our industry also witnessed escalated price erosion and we observed insensibly low pricing in a number of key markets. As the Company prioritized quality of service and market share gains, we boosted support to our network partners who faced-off price erosions and maintained confidence in our unified goals and positive business outlook."

Mr. Lai added, "Despite an over 80% volume concentration by a handful scaled express delivery companies in China, the few leading ones are in relatively close range, and competition is to be expected. It is all the more compelling for us to focus on strengthening and leveraging our competitive advantages in scale, capacity and cost efficiency to expand our lead. Our track record has consistently demonstrated our strong determination, execution and stamina. We are confident in our ability to achieve preeminence in market share with high customer satisfaction and profit generation as we journey ahead towards our goal of becoming a world-leading comprehensive logistic services provider."

Ms. Huiping Yan, Chief Financial Officer of ZTO, added, "In response to intense price competition during the quarter, our core express delivery price per parcel declined 20.9% year over year given more aggressive yet necessary subsidies to incentivize volume growth. The negative price impact was dampened by a corresponding 13.9% cost productivity gain, and together with healthy corporate cost leverage, adjusted net income increased 5.6% to reach 1.45 billion. Cash from operating activities was 1.25 billion."

Ms. Yan added, "Nearly halfway into the third quarter, we observed steady parcel volume growth yet persistent price competition. We remain steadfast on market share gain, and are raising our full year volume target to be between 16.2 to 17.0 billion parcels. We have adjusted down our earnings estimates to anchor our conviction to protect our market share gain and maintain network stability. Looking beyond the next few quarters, China express delivery industry volume is likely to reach 300 million daily in the next 2-3 years, and we aim to capture a lion share of that volume and associated pricing power."

Second Quarter 2020 Financial Results

Three Months Ended June 30, Six Months Ended June 30,

2019 2020 2019 2020

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

(in thousands, except percentages)

Express delivery 4,763,902 87.8 5,540,664 784,230 86.5 8,823,274 88.3 8,947,074 1,266,376 86.7services

Freightforwarding 350,088 6.5 467,095 66,113 7.3 639,402 6.4 762,571 107,935 7.4services

Sale of 292,570 5.4 321,189 45,461 5.0 501,407 5.0 498,214 70,518 4.8accessories

Others 17,080 0.3 73,473 10,400 1.2 33,588 0.3 110,451 15,633 1.1

Total revenues 5,423,640 100.0 6,402,421 906,204 100.0 9,997,671 100.0 10,318,310 1,460,462 100.0

Revenueswere RMB6,402.4 million (US$906.2 million), an increase of 18.0% from RMB5,423.6 million in the same period of 2019. Revenue from the core express delivery business increased by 17.0% compared to the same period of 2019, as a combined result of an increase of 47.9% in parcel volume and a decrease of 20.9% in parcel unit price in response to competition. Revenue from freight forwarding services increased 33.4% 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. The increase in revenue from sales of accessories was in-line with the increase in the sale of thermal paper used for digital waybills, portable scanning devices and uniforms. Other revenues were mainly derived from financing services and advertising services.

Three Months Ended June 30, Six Months Ended June 30,

2019 2020 2019 2020

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

(in thousands, except percentages)

Line-haultransportation 1,695,866 31.3 1,996,562 282,595 31.2 3,289,873 32.9 3,293,979 466,232 31.9cost

Sorting hub cost 953,901 17.6 1,254,278 177,532 19.6 1,844,970 18.5 2,220,035 314,225 21.5

Freight 345,283 6.4 416,659 58,974 6.5 628,397 6.3 704,273 99,683 6.8forwarding cost

Cost of 156,371 2.9 112,483 15,921 1.8 276,057 2.8 186,958 26,462 1.8accessories sold

Other costs 503,651 9.2 853,276 120,773 13.3 930,214 9.2 1,325,242 187,577 12.9

Total cost of 3,655,072 67.4 4,633,258 655,795 72.4 6,969,511 69.7 7,730,487 1,094,179 74.9revenues

Total cost of revenueswas RMB4,633.3 million (US$655.8 million), an increase of 26.8% from RMB3,655.1 million in the same period last year.

Line haul transportation costwas RMB1,996.6 million (US$282.6 million), an increase of 17.7% from RMB1,695.9 million in the same period last year. The line-haul transportation cost per parcel declined 20.4% to RMB0.43. The decrease resulted from (i) reduced toll road fee charges based on a federal waiver policy which took effect in mid-February and lasted through early May, and (ii) higher usage of self-owned vehicles with an increasing number of higher-capacity trailer trucks. As a percentage of total line haul transportation costs, the self-owned portion increased to 84.6% from 66.3% in the same period last year.

Sorting hub operating costwas RMB1,254.3 million (US$177.5 million), an increase of 31.5% from RMB953.9 million in the same period last year. The increase was primarily due to (i) an RMB207.5 million (US$29.4 million) increase in labor associated costs, and (ii) an RMB65.5 million (US$9.3 million) increase in depreciation and amortization costs associated with the increased number of installed automated sorting equipment. As of June 30, 2020, 282 sets of automated sorting equipment have been placed into service, compared to 155 sets as of June 30, 2019. The sorting hub operating cost per parcel decreased 11.1% to RMB0.27 as the result of increased level of automation and less labor dependencies.

Cost of accessorieswas RMB112.5 million (US$15.9 million), a decrease of 28.1% from RMB156.4 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 costswere RMB853.3 million (US$120.8 million), an increase of RMB349.6 million (US$49.5 million) compared to the same period last year. The increase was mainly consisted of (i) an increase of RMB255.5 million (US$36.2 million) in dispatching costs serving enterprise customers with an associated volume increase of 80.4%, and (ii) an increase of RMB75.1million (US$10.6 million) in technology related expenses.

Gross Profitwas RMB1,769.2 million (US$250.4million), which remained flat compared to RMB1,768.6 million in the same period last year. Gross margin rate decreased to 27.6% from 32.6% in the same period last year as net effects of 47.9% volume growth, competition-led ASP decline of 20.2% and unit cost productivity gain of 14.3%.

Total Operating Expenseswere RMB122.6 million (US$17.3 million), compared to RMB275.8 million in the same period last year.

Selling, general and administrative expenseswere RMB312.4 million (US$44.2 million), increased 2.3% from RMB305.4 million in the same period last year. SG&A as a percentage of total revenue decreased to 4.9% from 5.6% from second quarter 2019 demonstrating healthy corporate structure and positive scale leverage.

Other operating income, netwas RMB189.9 million (US$26.9 million) for the second quarter, compared to RMB29.5 million in the same period last year. Other operating income mainly consisted of (i) government subsidies and tax rebates of RMB95.4 million (US$13.5 million) received, (ii) RMB60.0 million (US$8.5 million) of VAT super deduction recognized, and (iii) RMB23.6 million (US$3.3 million) ADR fee rebate.

Income from operationswas RMB1,646.6 million (US$233.1 million), an increase of 10.3% from RMB1,492.7 million for the same period last year. Operating margin rate decreased to 25.7% from 27.5% in the same period last year, as a net result of decrease in gross margin and increase in other operating income.

Interest incomewas RMB114.3 million (US$16.2 million), compared with RMB144.5 million in the same period last year.

Foreign currency exchange gain, before taxwas RMB2.6million (US$0.4 million) in the second quarter of 2020.

Income tax expenseswere RMB298.3 million (US$42.2 million) compared to RMB288.8 million in the same period last year. The effective income tax rate was 17.0%, compared with 17.4% in the same period last year.

Net incomewas RMB1,453.6 million (US$205.7 million), an increase of 6.5% from RMB1,365.1 million in the same period last year.

Basic and diluted earnings per ADS attributable to ordinary shareholderswere RMB1.85(US$0.26), compared with basic and diluted earnings per ADS of RMB1.73 in the same period last year.

Adjusted basic and diluted earnings per ADS attributable to ordinary shareholderswere RMB1.85(US$0.26), compared with RMB1.74 in the same period last year.

Adjusted net incomewas RMB1,453.6 million (US$205.7 million), compared with RMB1,375.9 million during the same period last year.

EBITDAwas RMB2,187.0 million (US$309.6 million), compared with RMB1,952.0 million in the same period last year.

Adjusted EBITDAwas RMB2,187.0 million (US$309.6 million), compared to RMB1,962.8 million in the same period last year.

Net cash provided by operating activitieswas RMB1,252.3 million (US$177.2 million), compared with RMB1,992.8 million in the same period last year. The decrease in net cash provided by operating activities resulted mainly from (i) RMB270.2 million (US$38.2 million) increase in loans to qualified network partners, and (ii) RMB245.2 million (US$34.7 million) increase in prepaid fuel and toll cost driven by increased self-owned vehicles.

Business Outlook

The Company raises its 2020 annual parcel volume projection 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 lowers the adjusted net income for 2020 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 estimates represent management's current and preliminary view, which takes into consideration the current market condition, the negative impact from COVID-19, price competition and the Company's prioritized goal to achieve accelerated market share gains while maintaining a targeted level of earnings, and are 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 June 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.

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 RMB7.0651 to US$1.00, the noon buying rate on June 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 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.

Conference Call Information

ZTO's management team will host an earnings conference call at 9:00 PM U.S. Eastern Time on Wednesday, August 12, 2020 (9:00 AM Beijing Time on August 13, 2020).

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

United States: 1-888-317-6003

Hong Kong: 852-5808-1995

China: 4001-206-115

Singapore: 800-120-5863

International: 1-412-317-6061

Passcode: 4219745

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 August 19, 2020:

United States: 1-877-344-7529

International: 1-412-317-0088

Passcode: 10146155

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

About ZTO Express (Cayman) Inc.

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

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

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

Safe Harbor Statement

This news release contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include but are not limited to the Company's unaudited results for the second 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 second 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 June 30, Six Months Ended June 30,

2019 2020 2019 2020

RMB RMB US$ RMB RMB US$

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

Revenues 5,423,640 6,402,421 906,204 9,997,671 10,318,310 1,460,462

Cost of revenues (3,655,072) (4,633,258) (655,795) (6,969,511) (7,730,487) (1,094,179)

Gross profit 1,768,568 1,769,163 250,409 3,028,160 2,587,823 366,283

Operating income (expenses):

Selling, general and administrative (305,350) (312,421) (44,220) (863,128) (872,472) (123,490)

Other operating income, net 29,531 189,867 26,874 87,633 303,270 42,924

Total operating expenses (275,819) (122,554) (17,346) (775,495) (569,202) (80,566)

Income from operations 1,492,749 1,646,609 233,063 2,252,665 2,018,621 285,717

Other income (expenses):

Interest income 144,470 114,258 16,172 290,941 240,485 34,038

Interest expense - (9,135) (1,293) - (9,426) (1,334)

Loss on disposal of equity investees and - - - (529) - - subsidiary

Foreign currency exchange gain/(loss), before 22,293 2,594 367 (3,662) 19,047 2,696 tax

Income before income tax, and share of

loss in equity method investments 1,659,512 1,754,326 248,309 2,539,415 2,268,727 321,117

Income tax expense (288,803) (298,302) (42,222) (480,661) (428,074) (60,590)

Share of loss in equity method

investments (5,614) (2,453) (347) (12,013) (16,109) (2,280)

Net income 1,365,095 1,453,571 205,740 2,046,741 1,824,544 258,247

Net income attributable to noncontrolling (5,614) (5,217) (738) (6,547) (1,490) (211) interests

Net income attributable to ZTO Express

(Cayman) Inc. 1,359,481 1,448,354 205,002 2,040,194 1,823,054 258,036

Net earnings per share attributable to

ordinary shareholders

Basic 1.73 1.85 0.26 2.60 2.33 0.33

Diluted 1.73 1.85 0.26 2.59 2.33 0.33

Weighted average shares used in

calculating net earnings per ordinary

share

Basic 786,106,219 783,894,733 783,894,733 786,069,533 783,124,385 783,124,385

Diluted 786,385,711 783,894,733 783,894,733 786,262,099 783,224,329 783,224,329

Other comprehensive income, net of tax of

nil:

Foreign currency translation adjustment 293,376 (23,558) (3,334) (50,852) 153,368 21,708

Comprehensive income 1,658,471 1,430,013 202,406 1,995,889 1,977,912 279,955

Comprehensive income attributable to (5,614) (5,217) (738) (6,547) (1,490) (211) noncontrolling interests

Comprehensive income attributable to 1,652,857 1,424,796 201,668 1,989,342 1,976,422 279,744 ZTO Express (Cayman) Inc.

Unaudited Consolidated Balance Sheets Data:

As of

December 31, June 30, 2020 2019

RMB RMB US$

ASSETS

Current assets:

Cash and cash equivalents 5,270,204 5,261,920 744,776

Restricted cash 7,210 1,300 184

Accounts receivable, net 675,567 628,466 88,954

Financing receivables, net 511,124 471,837 66,784

Short-term investment 11,113,217 8,437,887 1,194,305

Inventories 43,845 64,152 9,080

Advances to suppliers 438,272 631,220 89,343

Prepayments and other current assets 1,964,506 2,239,249 316,945

Amounts due from related parties 74,312 81,529 11,540

Total current assets 20,098,257 17,817,560 2,521,911

Investments in equity investees 3,109,494 3,319,697 469,873

Property and equipment, net 12,470,632 14,651,069 2,073,724

Land use rights, net 2,508,860 3,829,158 541,982

Intangible assets, net 48,029 44,930 6,359

Operating lease right-of-use assets 901,956 784,780 111,078

Goodwill 4,241,541 4,241,541 600,351

Deferred tax assets 403,587 552,671 78,226

Long-term investment 946,180 1,390,510 196,814

Long-term financing receivables, net 549,775 1,240,680 175,607

Other non-current assets 612,191 607,178 85,940

TOTAL ASSETS 45,890,502 48,479,774 6,861,865

LIABILITIES AND EQUITY

Current liabilities

Short-term bank borrowing - 1,690,000 239,204

Accounts payable 1,475,258 1,105,673 156,498

Notes payable - 496,200 70,232

Advances from customers 1,210,887 1,208,970 171,119

Income tax payable 80,272 166,035 23,501

Amounts due to related parties 38,943 23,101 3,270

Operating lease liabilities 298,728 240,240 34,004

Acquisition consideration payable 22,942 22,942 3,247

Dividends payable 1,629 334,313 47,319

Other current liabilities 3,552,288 3,490,285 494,015

Total current liabilities 6,680,947 8,777,759 1,242,409

Non-current operating lease liabilities 504,442 420,310 59,491

Deferred tax liabilities 207,896 215,617 30,519

Other non-current liabilities 93,820 71,409 10,107

TOTAL LIABILITIES 7,487,105 9,485,095 1,342,526

Shareholders' equity

Ordinary shares (US$0.0001 par value;10,000,000,000 shares authorized,

803,551,115 shares issued and781,947,464 shares outstanding as of

December 31, 2019; 803,551,115 sharesissued and 783,894,733 shares

outstanding as of June 30, 2020) 517 517 73

Additional paid-in capital 22,336,594 20,852,513 2,951,482

Treasury shares, at cost (1,436,767) (1,350,529) (191,155)

Retained earnings 16,726,540 18,549,594 2,625,525

Accumulated other comprehensive income 675,720 829,087 117,350

ZTO Express (Cayman) Inc. shareholders' 38,302,604 38,881,182 5,503,275equity

Noncontrolling interests 100,793 113,497 16,064

Total Equity 38,403,397 38,994,679 5,519,339

TOTAL LIABILITIES AND EQUITY 45,890,502 48,479,774 6,861,865

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires all entities to disclose their current estimate of all expected credit losses. The Group adopted this ASU on January 1, 2020 using the modified retrospective transition method and no material adjustment to the opening balance of retained earnings of 2020 was necessary. The adoption of this new ASU has no material impact on its consolidated financial position, results of operations or cashflow.

Summary of Unaudited Consolidated Cash Flow Data:

Three Months Ended June 30, Six Months Ended June 30,

2019 2020 2019 2020

RMB RMB US$ RMB RMB US$

(in thousands)

Net cash provided by operating activities 1,992,804 1,252,270 177,247 2,626,074 1,430,061 202,415

Net cash provided by/(used in) investing 1,498,752 (1,097,851) (155,390) 2,394,117 (1,812,554) (256,552) activities

Net cash (used in)/ provided by financing

activities (2,493,043) 65,298 9,242 (2,507,052) 362,952 51,372

Effect of exchange rate changes on cash,

cash equivalents and restricted cash 21,803 2,145 304 (23,430) 19,460 2,754

Net increase/(decrease) in cash, cash

equivalents and restricted cash 1,020,316 221,862 31,403 2,489,709 (81) (11)

Cash, cash equivalents and restricted cash

at beginning of period 6,092,347 5,055,471 715,555 4,622,954 5,277,414 746,969

Cash, cash equivalents and restricted cash 7,112,663 5,277,333 746,958 7,112,663 5,277, 333 746,958at end of period

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows:

As of

June 30, June 30, 2019 2020

RMB RMB US$

(in thousands)

Cash and cash equivalents 7,111,684 5,261,920 744,776

Restricted cash, current 979 1,300 184

Restricted cash, non-current - 14,113 1,998

Total cash, cash equivalents and restricted 7,112,663 5,277,333 746,958cash

Reconciliations of GAAP and Non-GAAP Results

Three Months Ended June 30, Six Months Ended June 30,

2019 2020 2019 2020

RMB RMB US$ RMB RMB US$



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

Net income 1,365,095 1,453,571 205,740 2,046,741 1,824,544 258,247

Add:

Share-based compensation expense 10,800 - - 295,065 264,154 37,389

Loss on disposal of equity

investees and subsidiary, net of

income taxes - - - 529 - -

Adjusted net income 1,375,895 1,453,571 205,740 2,342,335 2,088,698 295,636

Net income 1,365,095 1,453,571 205,740 2,046,741 1,824,544 258,247

Add:

Depreciation 283,409 408,426 57,809 554,832 801,006 113,375

Amortization 14,676 17,602 2,491 25,969 33,250 4,706

Interest expenses - 9,135 1,293 - 9,426 1,334

Income tax expenses 288,803 298,302 42,222 480,661 428,074 60,590

EBITDA 1,951,983 2,187,036 309,555 3,108,203 3,096,300 438,252

Add:

Share-based compensation expense 10,800 - - 295,065 264,154 37,389

Loss on disposal of equity

investees and subsidiary, before

income taxes - - - 529 - -

Adjusted EBITDA 1,962,783 2,187,036 309,555 3,403,797 3,360,454 475,641

Three Months Ended June 30, Six Months Ended June 30,

2019 2020 2019 2020

RMB RMB US$ RMB RMB US$

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

Net income attributable to ordinary

shareholders 1,359,481 1,448,354 205,002 2,040,194 1,823,054 258,036

Add:

Share-based compensation expense 10,800 - - 295,065 264,154 37,389

Impairment of investment in equity

Loss on disposal of equity

investees and subsidiary, net of

income taxes - - - 529 - -

Adjusted Net income attributable to 1,370,281 1,448,354 205,002 2,335,788 2,087,208 295,425ordinary shareholders

Weighted average shares used in

calculating net earnings per ordinary

share/ADS

Basic 786,106,219 783,894,733 783,894,733 786,069,533 783,124,385 783,124,385

Diluted 786,385,711 783,894,733 783,894,733 786,262,099 783,224,329 783,224,329

Net earnings per share/ADS attributable to

ordinary shareholders

Basic 1.73 1.85 0.26 2.60 2.33 0.33

Diluted 1.73 1.85 0.26 2.59 2.33 0.33

Adjusted net earnings per share/ADS

attributable to ordinary shareholders

Basic 1.74 1.85 0.26 2.97 2.67 0.38

Diluted 1.74 1.85 0.26 2.97 2.66 0.38

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SOURCE ZTO Express (Cayman) Inc.