PR Newswire | Aug 17, 2020 06:00PM EDT

08/17 17:00 CDT

BEST Inc. Announces Unaudited Second Quarter 2020 Financial Results HANGZHOU, China, Aug. 17, 2020

HANGZHOU, China, Aug. 17, 2020 /PRNewswire/ -- BEST Inc. (NYSE: BEST) ("BEST" or the "Company"), a leading integrated smart supply chain solutions and logistics services provider in China, today announced its unaudited financial results for the quarter ended June 30, 2020.

Johnny Chou, Founder, Chairman and Chief Executive Officer of BEST, commented, "With the height of the COVID-19 pandemic in China behind us, we made a faster-than-expected recovery as we benefited from the deeper and wider trends of digitalization for merchants and online shopping for consumers. In the second quarter of 2020, we strategically targeted both top-line growth and profitability while enhancing efficiency across our businesses. As a result, we continued to gain healthy volume growth while lowering costs in our Express and Freight segments and improved our gross margin by 0.9 percentage point year-over-year, despite challenging market dynamics. We also continued to make strong progress in Store+, which resulted in a significant reduction in losses. We are confident that we have developed the right business model for Store+ that would bring a positive impact to the Company's revenue growth and profitability. Our momentum has also been strong for Global, driven by robust demand in Southeast Asia, and further boosted by our entries into the markets of Malaysia, Singapore and Cambodia during the second quarter."

"We are committed to delivering high-quality growth in a challenging market environment. Going forward, we plan to maintain a balanced growth strategy and strive for profitability by continuing leveraging our technology-enabled integrated supply chain and logistics service model, through emphasizing e-commerce, investing in technology application and automation, capturing revenue and cost synergies across multiple business units, and enhancing service quality." concluded Mr. Chou.

Gloria Fan, BEST's Chief Financial Officer, commented, "In the second quarter, we continued efforts of cost and expense reductions, while reduced risks by emphasizing accounts with higher margins and implementing stringent credit control. Although we recorded a net loss of RMB 30.9 million, we achieved a gross profit of RMB570 million, a year-over-year increase of 9.6%, adjusted EBITDA of RMB158 million, and non-GAAP net income of RMB11 million, amid intensifying competition. In addition, we generated net operating cash flow of RMB723 million during the second quarter, which well covered our planned capital expenditure of RMB424 million, leading to a strong balance of cash and cash equivalents, restricted cash and short-term investments of RMB5.1 billion. These strong results demonstrate that through consistently improving operating efficiencies and expense management, we have achieved our strategy of balancing top-line growth and profitability for the quarter."

FINANCIAL HIGHLIGHTS[1]

For the Quarter Ended June 30, 2020:

* Revenue was RMB8,418.3 million (US$1,191.5 million), a decrease of 4.2% year-over-year ("YoY"). The decrease was primarily due to a decrease in average selling price (ASP) of Express business, partially offset by an increase in Express volume. * Gross Profit was RMB569.7 million (US$80.6 million), an increase of 9.6% YoY compared to gross profit of RMB520.1 million in the same period of 2019. The increase was primarily due to improved operating efficiency resulted from continued cost reduction, partially offset by a decrease in revenue. Gross Margin was 6.8%, an increase of 0.9 percentage point (ppt) YoY. * Net Loss was RMB30.9 million (US$4.4 million), compared to a net loss of RMB22.4 million in the same period of 2019. Non-GAAP Net Income[2][3]was RMB11.2 million (US$1.6 million), compared to non-GAAP Net Income of RMB6.5 million in the same period of 2019. * Diluted EPS[4]was negative RMB0.06 (US$0.01), compared to negative RMB0.05 in the same period of 2019. Non-GAAP diluted EPS[3][5] was RMB0.05 (US$0.01), compared to RMB0.02 in the same period of 2019. * EBITDA[3][6]was RMB117.9 million (US$16.7 million), compared to RMB122.0 million in the same period of 2019. Adjusted EBITDA[3][6] was RMB157.7 million (US$22.3 million), compared to RMB148.2 million in the same period of 2019.

BUSINESS HIGHLIGHTS AND STRATEGIC UPDATES[1]

Core Logistics and Supply Chain

The Company's results rebounded strongly in the quarter ended June 30, 2020 as the impact from COVID-19 pandemic in China subsided. In addition to the company-wide pursuit of balanced top-line growth and profitability, its key strategic focus during the quarter also included:

* Emphasis on business integrations, synergies and efficiencies: the Company continued to emphasize e-commerce related transactions across all business units. This helped the Company achieve strong business-to-consumer (B2C) order growth during the quarter. Furthermore, the Company continued to enhance automation for its hubs and sortation centers, and combine dynamic routing between Express and Freight to drive down unit costs. * Enhancement of service quality: the Company continued to focus on service enhancement, network flexibility, density of last-mile service outlets, and overall customer experience.

BEST Express - Successfully executed its strategy of balanced quality growth and profitability through continued cost reduction and improved quality of service. Parcel volume increased by 19.3% YoY, representing market share of 10.7% during the quarter, improving 0.2 ppt compared with the first quarter while achieving gross margin expansion of 0.9 ppt YoY despite challenging operating conditions. Average cost per parcel decreased by 21.5% YoY.

BEST Freight -Continued to solidify its leadership position and achieved a growth rate significantly higher than industry-wide average, as well as strong gross margin expansion of 2.5 ppts YoY, driven primarily by the Company's focus on e-commerce products, economies of scale and continuous network optimization. Freight volume increased by 28.9% YoY in the quarter ended June 30, 2020. Average cost per tonne decreased by 21.1% YoY.

BEST Supply Chain Management -Focused on expanding franchised Cloud OFC business, while targeting projects with higher margins and clients with strong credit profile. As a result, gross margin increased by 0.8 ppt YoY to 9.7%. The total number of orders fulfilled by Cloud OFCs increased by 28.5% YoY to 111.3 million in the quarter ended June 30, 2020, of which the total number of orders fulfilled by franchised Cloud OFCs increased by 46.4% YoY to 53.7 million. The number of franchised OFCs increased by 25.9% YoY to 326.

BEST UCargo -The number of registered drivers on the UCargo mobile app increased 141.9% YoY to 244,234. The total number of transactions on the trucking brokerage platform increased by 19.8% YoY to 137,257.

BEST Capital -As of June 30, 2020, BEST Capital had provided financing solutions to 12,373 trucks in total, a quarter-over-quarter ("QoQ") increase of 10.9% compared to March 31, 2020.

BEST Store+ Store+ business continued to execute its strategy of enhancing order quality to improve gross margin, while developing its asset-light partnership model which enables accelerated acquisition of both membership stores and franchised BEST-Neighbor stores, and contributes to lower selling and fulfilling expenses to achieve profitability. As a result, gross margin increased by 2.5ppts YoY to 13.0%, while adjusted EBITDA margin improved by 2.6 ppts YoY to negative 10.2%. BEST Global Global continued with strong momentum in Southeast Asia. In the quarter ended June 30, 2020, parcel volume in Thailand increased by 95.3% QoQ to approximately 10 million, while parcel volume in Vietnam increased by 54.3% QoQ to 5.75 million. The Company also launched express delivery services in Malaysia, Cambodia and Singapore, marking another significant step towards building an efficient logistics network with an extensive coverage in Southeast Asia. Key Operational Metrics Three Months Ended % Change YoY June 30, June 30, June 30, 2019 VS 2020 VS Express Parcel Volume (in '000) 2018 2019 2020 2018 2019 1,280,050 1,906,863 2,274,585 49.0% 19.3% Freight Volume (Tonne in '000) 1,366 1,730 2,230 26.6% 28.9% Supply Chain Management 61,178 86,663 111,332 41.7% 28.5% Orders Fulfilled (in '000) UCargo Number of 96 115 137 19.4% 19.8% Transactions (in '000) Store^+ Total Number of 871 780 768 (10.4%) (1.6%) Orders Fulfilled (in '000) Global Parcel Volume in - 783 16,100 - 1,955.2% Southeast Asia (in '000) FINANCIAL RESULTS For the Quarter Ended June 30, 2020: Revenue: The following table sets forth a breakdown of revenue by business segment for the periods indicated. Table 1 - Breakdown of Revenue by Business Segment Three Months Ended June 30, 2019 June 30, 2020 (In '000, except for %) RMB % of RMB US$ % of % Change Revenue Revenue YoY Core logistics and supply chain Express 5,448,476 62.1% 5,151,845 729,196 61.1% (5.4%) Freight 1,305,785 14.9% 1,364,989 193,202 16.2% 4.5% Supply Chain Management 600,211 6.8% 509,708 72,144 6.1% (15.1%) UCargo 521,830 5.9% 492,554 69,716 5.9% (5.6%) Capital 56,398 0.6% 49,314 6,980 0.6% (12.6%) Total core logistics and supply chain 7,932,700 90.3% 7,568,410 1,071,238 89.9% (4.6%) Store^+ 790,558 9.0% 657,364 93,044 7.8% (16.8%) Global 64,872 0.7% 192,500 27,247 2.3% 196.7% Total Revenue 8,788,130 100% 8,418,274 1,191,529 100% (4.2%) Core Logistics and Supply Chain * Express Service Revenue decreased by 5.4% YoY to RMB5,151.8 million (US$729.2 million) from RMB5,448.5 million, primarily due to a 20.7% YoY decrease in ASP per parcel, offset by a 19.3% YoY increase in parcel volume. The decrease in ASP is primarily attributable to competitive market dynamics. * Freight Service Revenue increased by 4.5% YoY to RMB1,365.0 million (US$193.2 million) from RMB1,305.8 million, primarily due to a 28.9% YoY increase in freight volume, offset by a 18.9% YoY decrease in ASP per tonne. * Supply Chain Management Service Revenue decreased by 15.1% YoY to RMB509.7 million (US$72.1 million) from RMB600.2 million, primarily due to a decrease in transportation service revenue, partially offset by a 28.5% increase in number of B2C orders fulfilled. * BEST UCargo Revenue decreased by 5.6% YoY to RMB492.6 million (US$69.7 million) from RMB521.8 million, primarily due to discontinuation of several key account customers to minimize credit exposure. * BEST Capital Revenue decreased by 12.6% YoY to RMB49.3 million (US$7.0 million) from RMB56.4 million, primarily due to implementation of more stringent credit control policies. BEST Store+- Revenue decreased by 16.8% YoY to RMB657.4 million (US$93.0 million) from RMB790.6 million, primarily due to ongoing efforts to enhance order quality to improve margins. BEST Global -Revenue increased by 196.7% YoY to RMB192.5 million (US$27.2 million) from RMB64.9 million, primarily due to strong growth in parcel volumes in Thailand and Vietnam. Cost of Revenue: The following table sets forth a breakdown of cost of revenue by business segment for the periods indicated. Table 2 - Breakdown of Cost of Revenue by Business Segment Three Months Ended % of Revenue June 30, 2019 June 30, 2020 Change (In '000, except for %) RMB % of RMB US$ % of YoY Revenue Revenue Core logistics and supply chain Express (5,203,842) 95.5% (4,874,191) (689,897) 94.6% (0.9ppt) Freight (1,222,296) 93.6% (1,242,847) (175,914) 91.1% (2.5ppts) Supply Chain Management (546,778) 91.1% (460,298) (65,151) 90.3% (0.8ppt) UCargo (499,994) 95.8% (479,946) (67,932) 97.4% 1.6ppts Capital (16,794) 29.8% (4,545) (643) 9.2% (20.6ppts) Total for core logistics and supply chain (7,489,704) 94.4% (7,061,827) (999,537) 93.3% (1.1ppts) Store^+ (707,497) 89.5% (572,162) (80,984) 87.0% (2.5ppts) Global (70,862) 109.2% (214,540) (30,366) 111.4% 2.2ppts Total Cost of Revenue (8,268,063) 94.1% (7,848,529) (1,110,887) 93.2% (0.9ppt) Cost of Revenue was RMB7,848.5 million (US$1,110.9 million) or 93.2% of revenue in the quarter ended June 30, 2020, compared to RMB8,268.1 million or 94.1% of revenue in the same quarter of 2019. The decrease of 0.9 ppt in cost of revenue as a percentage of revenue was primarily attributable to economies of scale and improved operating efficiency. Table 3 - Breakdown of Average Cost Per Parcel and Average Cost Per Tonne Three Months Ended % Change (in RMB) June 30, 2019 June 30, 2020 YoY Express: Average Cost Per Parcel 2.73 2.14 (21.5%) Average Transportation Cost Per Parcel 0.71 0.57 (19.6%) Average Labor Cost Per Parcel 0.23 0.21 (8.3%) Average Lease Cost Per Parcel 0.09 0.08 (11.7%) Average Other Cost Per Parcel 0.14 0.08 (44.2%) Average Last-mile Cost Per Parcel 1.56 1.20 (22.8%) Freight: Average Cost Per Tonne 706.5 557.4 (21.1%) Average Transportation Cost Per Tonne 351.5 250.2 (28.8%) Average Labor Cost Per Tonne 93.7 76.0 (18.8%) Average Lease Cost Per Tonne 55.4 51.5 (7.0%) Average Other Cost Per Tonne 44.5 40.8 (8.3%) Average Last-mile Cost Per Tonne 161.4 138.9 (13.9%) * Express Service Average Cost per Parcel decreased by 21.5%, primarily attributable to improved operating efficiency and economies of scale. * Freight Service Average Cost per Tonne decreased by 21.1% YoY, primarily due to improved operating efficiency, network optimization and economies of scale. Gross Profitwas RMB569.7 million (US$80.6 million), compared to gross profit of RMB520.1 million in the same quarter of 2019; Gross Margin was 6.8%, compared to 5.9% in the same quarter of 2019. Operating Expenses The following table sets forth a breakdown of operating expenses and adjusted operating expenses by category for the periods indicated. Table 4 - Breakdown of Operating Expenses and Adjusted Operating Expenses by Category Three Months Ended June 30, 2019 June 30, 2020 % of % of % of Revenue (In '000, except for %) RMB Revenue RMB US$ Revenue Change YoY Selling, General and (514,391) 5.9% (555,417) (78,614) 6.6% 0.7ppt Administrative Expenses Adjusted for SBC Expenses (23,569) 0.3% (36,541) (5,172) 0.5% 0.2ppt Adjusted Selling, General (490,822) 5.6% (518,876) (73,442) 6.1% 0.5ppt and Administrative Expenses Research and (62,517) 0.7% (50,499) (7,148) 0.6% (0.1ppt) Development Expenses Adjusted for SBC Expenses (2,388) 0.0% (2,489) (352) 0.0% 0.0ppt Adjusted Research and (60,129) 0.7% (48,010) (6,796) 0.6% (0.1ppt) Development Expenses Total Operating Expenses (576,908) 6.6% (605,916) (85,762) 7.2% 0.6ppt Adjusted for SBC Expenses (25,957) 0.3% (39,030) (5,524) 0.5% 0.2ppt Adjusted Total (550,951) 6.3% (566,886) (80,238) 6.7% 0.4ppt Operating Expenses Selling, General and Administrative Expenses were RMB555.4 million (US$78.6 million) or 6.6% of revenue in the quarter ended June 30, 2020, compared to RMB514.4 million or 5.9% of revenue in the same quarter of 2019. The increase in selling, general and administrative expenses was primarily attributable to losses on disposal of fixed assets due to upgrade of Express's equipment. Research and Development Expenses were RMB50.5 million (US$7.1 million) or 0.6% of revenue in the quarter ended June 30, 2020, compared to RMB62.5 million, or 0.7% of revenue in the same quarter of 2019. The decrease in research and development expenses was primarily attributable to capitalization of certain R&D expenditure to intangible assets, as well as reduction in travel expenses. Share-based Compensation ("SBC") Expenses included in the cost and expense items above in the quarter ended June 30, 2020 were RMB39.7 million (US$5.6 million), compared to RMB26.2 million in the same quarter of 2019. In the second quarter of 2020, RMB0.7 million (US$0.1 million) was allocated to cost of revenue, RMB2.9 million (US$0.4 million) was allocated to selling expenses, RMB33.6 million (US$4.8 million) was allocated to general and administrative expenses, and RMB2.5 million (US$0.3 million) was allocated to research and development expenses. Net Loss and Non-GAAP Net Income Net Lossin the quarter ended June 30, 2020 was RMB30.9 million (US$4.4 million), compared to Net Loss of RMB22.4 million in the same period of 2019. Excluding the impact of SBC expenses and amortization of intangible assets resulting from business acquisitions, non-GAAP Net Income in the quarter ended June 30, 2020 was RMB11.2 million (US$1.6 million), compared to non-GAAP Net Income of RMB6.5 million in the same quarter of 2019. The following table sets forth a breakdown of non-GAAP net income for the three months ended June 30, 2020 by segment. Table 5-Breakdown of non-GAAP Net Income by Segment Three Months Ended June 30, 2020 Core logistics and supply chain (In RMB'000) Express Freight Supply Chain UCargo Capital Store^+ Global Unallocated^^[7] Total Non-GAAP Net 108,337 57,940 (5,131) (17,626) 36,849 (69,405) (50,735) (48,991) 11,238 Income/(Loss) Diluted EPS and non-GAAP diluted EPS Diluted EPS in the quarter ended June 30, 2020 was negative RMB0.06(US$0.01), based on a weighted average of 389.3 million diluted shares outstanding during the quarter. This is compared to negative RMB0.05 on a weighted average of 388.2 million diluted shares outstanding in the same period of 2019. Excluding SBC expenses and amortization of intangible assets resulting from business acquisitions, non-GAAP diluted EPS in the quarter ended June 30, 2020 was RMB0.05(US$0.01), compared to RMB0.02 in the same period of 2019. A reconciliation of non-GAAP diluted EPS to diluted EPS is included at the end of this results announcement. Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDAwas RMB157.7 million (US$22.3 million), compared to RMB148.2 million in the quarter ended June 30, 2019. Adjusted EBITDA Margin was 1.9%, compared to 1.7% in the quarter ended June 30, 2019. Adjusted EBITDA and Adjusted EBITDA Margin by Segment The following table sets forth a breakdown of adjusted EBITDA and adjusted EBITDA margin for the three months ended June 30, 2020 by segment. Table 6-Breakdown of Adjusted EBITDA and Adjusted EBITDA Margin by Segment Three Months Ended June 30, 2020 Core logistics and supply chain (In RMB'000) Express Freight Supply Chain UCargo Capital Store^+ Global Unallocated^^[8] Total Adjusted EBITDA 188,881 73,075 5,709 (17,507) 40,708 (67,336) (47,805) (18,064) 157,661 Adjusted EBITDA 3.7% 5.4% 1.1% (3.6%) 82.5% (10.2%) (24.8%) - 1.9% Margin Core Logistics and Supply Chain - Adjusted EBITDAwas RMB290.9 million (US$41.2 million), compared to RMB298.5 million in the quarter ended June 30, 2019. Adjusted EBITDA Margin was 3.8%, remain flat compared to the quarter ended June 30, 2019. Store+ - Adjusted EBITDAwas negative RMB67.3 million (US$9.5 million), compared to negative RMB101.6 million in the quarter ended June 30, 2019. Adjusted EBITDA Marginwas negative 10.2% compared to negative 12.8% in the quarter ended June 30, 2019. Global - Adjusted EBITDAwas negative RMB47.8 million (US$6.8 million), compared to negative RMB32.3 million in the quarter ended June 30, 2019. Adjusted EBITDA Marginwas negative 24.8% compared to negative 49.8% in the quarter ended June 30, 2019. Cash and Cash Equivalents, Restricted Cash and Short-term Investments As of June 30, 2020, cash and cash equivalents, restricted cash and short-term investments were RMB5,141.9 million (US$727.8 million), compared to RMB4,236.1 million as of March 31, 2020. Net Cash Generated from Operating Activities Net cash generated from operating activities was RMB722.6 million (US$102.3 million), compared to RMB334.2 million in the same period of 2019. The increase in net cash generated from operating activities was mainly due to recovery from COVID-19 and significant growth of our Express and Freight volumes from the first quarter of 2020. Capital Expenditures ("CAPEX") CAPEX was RMB424.1 million (US$60.0 million), or 5.0% of total revenue in the quarter ended June 30, 2020, compared to CAPEX of RMB380.9 million, or 4.3% of total revenue, in the same period of 2019. The increase in CAPEX was primarily due to planned upgrades of automation systems in major hubs, sortation centers, and Cloud OFCs, which included investments in high-speed automated sorting lines, dimension and weight scanning systems. SHARES OUTSTANDING As of the date of this press release, the Company had approximately 385.1 million ordinary shares outstanding[9]. Each American Depositary Share represents one Class A ordinary share. FINANCIAL GUIDANCE Due to the rapidly evolving market dynamics, the negative impact from the COVID-19 pandemic, BEST is unable to provide financial guidance at this time. The Company is closely monitoring the situation and will provide more information as it becomes available. WEBCAST AND CONFERENCE CALL INFORMATION The Company will hold a conference call at 9:00 pm U.S. Eastern Time on August 17, 2020 (9:00 am Beijing Time on August 18), to discuss its financial results and operating performance for the second quarter of 2020. Participants may access the call by dialing the following numbers: United States : +1-888-317-6003 Hong Kong : 800-963976 or +852-5808-1995 Mainland China : 4001-206115 International : +1-412-317-6061 Participant Elite Entry Number : 7770489 A replay of the conference call will be accessible through August 24, 2020 by dialing the following numbers: United States : +1-877-344-7529 International : +1-412-317-0088 Replay Access Code : 10146908 Please visit the Company's investor relations website http://ir.best-inc.com/ on August 17, 2020 to view the earnings release prior to the conference call. A live and archived webcast of the conference call and a corporate presentation will be available at the same site. ABOUT BEST INC. BEST Inc. (NYSE: BEST) is a leading integrated smart supply chain solutions and logistics services provider in China. Through its proprietary technology platform and extensive networks, BEST offers a comprehensive set of logistics and value-add services, including express and freight delivery, supply chain management and last-mile services, truckload service brokerage, international logistics and financial services. BEST's mission is to empower business and enrich life by leveraging technology and business model innovation to create a smarter, more efficient supply chain. For more information, please visit: http://www.best-inc.com/en/. For investor and media inquiries, please contact: BEST Inc. Investor relations team ir@best-inc.com The Piacente Group, Inc.Yang SongTel: +86-10-6508-0677E-mail: best@tpg-ir.com The Piacente Group, Inc. Brandi PiacenteTel: +1-212-481-2050 E-mail:??best@tpg-ir.com 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" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as BEST's strategic and operational plans, contain forward-looking statements. BEST may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in its annual report 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 BEST'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, including but not limited to the following: BEST's goals and strategies; BEST's future business development, results of operations and financial condition; BEST 's ability to maintain and enhance its ecosystem; BEST 's ability to continue to innovate, meet evolving market trends, adapt to changing customer demands and maintain its culture of innovation; fluctuations in general economic and business conditions in China and other countries in which BEST operates, and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in BEST's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and BEST does not undertake any obligation to update any forward-looking statement, except as required under applicable law. USE OF NON-GAAP FINANCIAL MEASURES In evaluating its business, BEST considers and uses non-GAAP measures, such as non-GAAP net loss/income, non-GAAP net loss/profit margin, adjusted EBITDA, adjusted EBITDA margin, EBITDA, adjusted selling expenses, adjusted general and administrative expenses, adjusted research and development expenses, and non-GAAP diluted EPS, as supplemental measures in the evaluation of the Company's operating results and in the Company's financial and operational decision-making. The Company believes these non-GAAP financial measures that help identify underlying trends in the Company's business that could otherwise be distorted by the effect of the expenses and gains that the Company includes in loss from operations and net loss. The Company believes that these non-GAAP financial measures 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 the Company's management in its financial and operational decision-making. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of Non-GAAP Measures to the Nearest Comparable GAAP Measures" in the results announcement. The non-GAAP financial measures are provided as additional information to help investors compare business trends among different reporting periods on a consistent basis and to enhance investors' overall understanding of the Company's current financial performance and prospects for the future. These non-GAAP financial measures should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for, or superior to, U.S. GAAP results. In addition, the Company's calculation of the non-GAAP financial measures may be different from the calculation used by other companies, and therefore comparability may be limited. Summary of Unaudited Condensed Consolidated Income Statements (In Thousands) Three Months Ended June 30, Six Months Ended June 30, 2019 2020 2019 2020 RMB RMB US$ RMB RMB US$ Revenue Express 5,448,476 5,151,845 729,196 9,716,435 8,518,532 1,205,720 Freight 1,305,785 1,364,989 193,202 2,293,715 2,048,509 289,948 Supply Chain Management 600,211 509,708 72,144 1,134,848 917,300 129,835 Store^+ 790,558 657,364 93,044 1,344,080 1,120,199 158,554 Global 64,872 192,500 27,247 105,819 308,288 43,635 Ucargo 521,830 492,554 69,716 963,017 873,103 123,580 Capital 56,398 49,314 6,980 104,790 97,799 13,843 Total Revenue 8,788,130 8,418,274 1,191,529 15,662,704 13,883,730 1,965,115 Cost of Revenue Express (5,203,842) (4,874,191) (689,897) (9,341,550) (8,365,512) (1,184,061) Freight (1,222,296) (1,242,847) (175,914) (2,177,011) (2,059,282) (291,472) Supply Chain Management (546,778) (460,298) (65,151) (1,059,832) (864,744) (122,397) Store^+ (707,497) (572,162) (80,984) (1,190,942) (973,637) (137,809) Global (70,862) (214,540) (30,366) (118,487) (362,858) (51,359) Ucargo (499,994) (479,946) (67,932) (932,675) (852,985) (120,732) Capital (16,794) (4,545) (643) (29,434) (11,602) (1,642) Total Cost of Revenue (8,268,063) (7,848,529) (1,110,887) (14,849,931) (13,490,620) (1,909,472) Gross Profit 520,067 569,745 80,642 812,773 393,110 55,643 Selling Expenses (213,222) (230,433) (32,616) (406,489) (449,210) (63,582) General and Administrative (301,169) (324,984) (45,998) (588,246) (625,703) (88,563) Expenses Research and (62,517) (50,499) (7,148) (116,536) (110,814) (15,685) Development Expenses Total Operating Expenses (576,908) (605,916) (85,762) (1,111,271) (1,185,727) (167,830) Loss from Operations (56,841) (36,171) (5,120) (298,498) (792,617) (112,187) Interest Income 26,024 18,415 2,606 50,049 40,000 5,662 Interest Expense (14,696) (41,379) (5,857) (40,744) (74,551) (10,552) Foreign Exchange (Loss)/ Gain (2,198) 334 47 (4,066) 185 26 Other Income 33,076 37,935 5,369 53,635 71,869 10,172 Other Expense (3,225) (6,037) (854) (7,920) (18,361) (2,599) Loss before Income Tax and Share of Net Loss of (17,860) (26,903) (3,809) (247,544) (773,475) (109,478) Equity Investees Income Tax Expense (4,410) (3,952) (559) (8,102) (8,102) (1,147) Loss before Share of Net (22,270) (30,855) (4,368) (255,646) (781,577) (110,625) Loss of Equity Investees Share of Net Loss of Equity (101) (44) (6) (136) (74) (10) Investees Net Loss (22,371) (30,899) (4,374) (255,782) (781,651) (110,635) Net Loss attributable to non- (3,077) (6,571) (930) (5,430) (14,431) (2,043) controlling interests Net loss attributable to (19,294) (24,328) (3,444) (250,352) (767,220) (108,592) BEST Inc. Net loss attributable to (19,294) (24,328) (3,444) (250,352) (767,220) (108,592) ordinary shareholders Summary of Unaudited Condensed Consolidated Balance Sheets (in thousands) As of December 31, 2019 As of June 30, 2020 RMB RMB US$ Assets Current Assets Cash and Cash Equivalents 1,994,683 2,384,686 337,530 Restricted Cash 1,786,832 1,625,088 230,016 Accounts and Notes Receivables 1,229,083 997,130 141,136 Inventories 140,006 158,718 22,465 Prepayments and Other Current Assets 2,750,126 2,921,347 413,490 Short-term Investments 1,057,598 532,500 75,370 Lease Rental Receivables 483,363 488,841 69,191 Amounts Due from Related Parties 246,758 187,871 26,591 Total Current Assets 9,688,449 9,296,181 1,315,789 Non-current Assets Property and Equipment, Net 2,939,379 3,548,293 502,228 Intangible Assets, Net 121,587 112,288 15,893 Goodwill 490,986 499,433 70,690 Long-term Investments 230,855 230,781 32,665 Non-current Deposits 127,191 145,892 20,650 Other Non-current Assets 346,645 471,378 66,719 Operating Lease Right-of-use Assets 4,378,804 4,277,966 605,507 Lease Rental Receivables 993,260 892,626 126,343 Restricted Cash 175,700 599,622 84,871 Total non-current Assets 9,804,407 10,778,279 1,525,566 Total Assets 19,492,856 20,074,460 2,841,355 Liabilities and Shareholders' Equity Current Liabilities Short-term Bank Loans 2,510,500 2,650,059 375,092 Securitization Debt 104,899 67,947 9,617 Accounts and Notes Payable 3,391,383 3,232,139 457,480 Accrued Expenses and Other Liabilities 2,019,634 2,165,136 306,455 Customer Advances and Deposits and 1,489,510 1,528,563 216,354 Deferred Revenue Operating Lease Liabilities 1,035,252 1,114,936 157,809 Financing Lease Liabilities 1,363 1,003 142 Amounts Due to Related Parties 9,769 8,316 1,177 Income Tax Payable 7,358 8,944 1,266 Total Current Liabilities 10,569,668 10,777,043 1,525,392 Non-current Liabilities Convertible senior notes held by 680,104 1,749,900 247,682 related parties Convertible Senior Notes held by third 680,104 693,456 98,152 parties Operating Lease Liabilities 3,482,634 3,323,387 470,395 Financing Lease Liabilities 2,072 4,539 642 Deferred Tax Liabilities 25,806 24,502 3,468 Other Non-current Liabilities 137,184 159,826 22,622 Long-term Bank Loans - 276,955 39,200 Total Non-current Liabilities 5,007,904 6,232,565 882,161 Total Liabilities 15,577,572 17,009,608 2,407,553 Shareholders' Equity Ordinary Shares 25,988 25,988 3,678 Treasury Shares - (111,164) (15,734) Additional Paid-In Capital 19,353,400 19,431,389 2,750,335 Statutory reserves 7,865 9,154 1,296 Accumulated Deficit (15,629,537) (16,453,792) (2,328,883) Accumulated Other Comprehensive Income 163,196 183,078 25,913 BEST Inc. Shareholders' Equity 3,920,912 3,084,653 436,605 Non-controlling Interests (5,628) (19,801) (2,803) Total Shareholders' Equity 3,915,284 3,064,852 433,802 Total Liability and Shareholders' Equity 19,492,856 20,074,460 2,841,355 Summary of Unaudited Condensed Consolidated Statements of Cash Flows (In Thousands) Six Months Ended June 30, Three Months Ended June 30, 2019 2020 2019 2020 RMB RMB US$ RMB RMB US$ Net Cash Generated from/ 334,242 722,606 102,277 128,692 (570,907) (80,807) (Used in) Operating Activities Net Cash Used in (638,496) (283,084) (40,068) (827,251) (169,167) (23,944) Investing Activities Net Cash Generated from 304,705 762,081 107,866 661,497 1,367,066 193,496 Financing Activities Exchange Rate Effect on Cash, Cash Equivalents, and 27,331 1,023 145 (70) 25,189 3,565 Restricted Cash Net Increase/(Decrease) in Cash and Cash Equivalents, 27,782 1,202,626 170,220 (37,132) 652,181 92,310 and Restricted Cash Cash and Cash Equivalents, and Restricted Cash at 2,934,494 3,406,770 482,197 2,999,408 3,957,215 560,107 Beginning of Period Cash and Cash Equivalents, and Restricted Cash at End 2,962,276 4,609,396 652,417 2,962,276 4,609,396 652,417 of Period RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES The table below sets forth a reconciliation of the Company's net loss to EBITDA, adjusted EBITDA and adjusted EBITDA margin for the periods indicated: Table 7 -Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin Three Months Ended June 30, 2020 Core logistics and supply chain (In RMB'000) Express Freight Supply Chain UCargo Capital Store^+ Global Unallocated^(^[10]) Total Net Income/(Loss) 103,938 55,219 (7,966) (18,336) 36,524 (73,566) (53,899) (72,813) (30,899) Add Depreciation & 79,308 15,135 10,936 119 394 3,926 4,151 7,963 121,932 Amortization Interest Expense - - - - - - - 41,379 41,379 Income Tax 1,236 - (96) - 3,465 (372) (281) - 3,952 Expense Subtract Interest Income - - - - - - - (18,415) (18,415) EBITDA 184,482 70,354 2,874 (18,217) 40,383 (70,012) (50,029) (41,886) 117,949 Add Share-based Compensation 4,399 2,721 2,835 710 325 2,676 2,224 23,822 39,712 Expenses Adjusted EBITDA 188,881 73,075 5,709 (17,507) 40,708 (67,336) (47,805) (18,064) 157,661 Adjusted EBITDA 3.7% 5.4% 1.1% (3.6%) 82.5% (10.2%) (24.8%) - 1.9% Margin Three Months Ended June 30, 2019 Core logistics and supply chain (In RMB'000) Express Freight Supply Chain UCargo Capital Store^+ Global Unallocated^^[11] Total Net Income/(Loss) 104,531 15,552 (2,524) 4,477 26,916 (106,720) (35,871) (28,732) (22,371) Add Depreciation & 108,057 13,449 14,251 59 412 3,666 2,313 9,043 151,250 Amortization Interest Expense - - - - - - - 14,696 14,696 Income Tax - - 133 - 4,981 (434) (270) - 4,410 Expense Subtract Interest Income - - - - - - - (26,024) (26,024) EBITDA 212,588 29,001 11,860 4,536 32,309 (103,488) (33,828) (31,017) 121,961 Add Share-based Compensation 3,023 1,918 2,583 592 65 1,922 1,495 14,614 26,212 Expenses Adjusted EBITDA 215,611 30,919 14,443 5,128 32,374 (101,566) (32,333) (16,403) 148,173 Adjusted EBITDA 4.0% 2.4% 2.4% 1.0% 57.4% (12.8%) (49.8%) - 1.7% Margin The table below sets forth a reconciliation of the Company's net loss to non-GAAP net income, non-GAAP net income margin for the periods indicated: Table 8 -Reconciliation of Non-GAAP Net Income and Non-GAAP Net Income Margin Three Months Ended June 30, 2020 Core logistics and supply chain (In RMB'000) Express Freight Supply Chain UCargo Capital Store^+ Global Unallocated^(^[12]) Total Net Income/(Loss) 103,938 55,219 (7,966) (18,336) 36,524 (73,566) (53,899) (72,813) (30,899) Add Share-based Compensation 4,399 2,721 2,835 710 325 2,676 2,224 23,822 39,712 Expenses Amortization of Intangible Assets Resulting from - - - - - 1,485 940 - 2,425 Business Acquisition Non-GAAP Net 108,337 57,940 (5,131) (17,626) 36,849 (69,405) (50,735) (48,991) 11,238 Income/(Loss) Non-GAAP Net Income/(Loss) 2.1% 4.2% (1.0%) (3.6%) 74.7% (10.6%) (26.4%) - 0.1% Margin Three Months Ended June 30, 2019 Core logistics and supply chain (In RMB'000) Express Freight Supply Chain UCargo Capital Store^+ Global Unallocated^(^[13]) Total Net Income/(Loss) 104,531 15,552 (2,524) 4,477 26,916 (106,720) (35,871) (28,732) (22,371) Add Share-based Compensation 3,023 1,918 2,583 592 65 1,922 1,495 14,614 26,212 Expenses Amortization of Intangible Assets Resulting from - - - - - 1,737 907 - 2,644 Business Acquisition Non-GAAP Net 107,554 17,470 59 5,069 26,981 (103,061) (33,469) (14,118) 6,485 Income/(Loss) Non-GAAP Net Income/(Loss) 2.0% 1.3% 0.0% 1.0% 47.8% (13.0%) (51.6%) - 0.1% Margin The table below sets forth a reconciliation of the Company's diluted EPS to non-GAAP diluted EPS for the periods indicated: Table 9 - Reconciliation of Diluted EPS and Non-GAAP Diluted EPS Three Months Ended June 30, Six Months Ended June 30, 2020 2020 (In '000) RMB US$ RMB US$ Net Loss Attributable to Ordinary (24,328) (3,444) (767,220) (108,592) Shareholders Add Share-based Compensation Expenses 39,712 5,621 75,934 10,748 Amortization of Intangible Assets Resulting 2,425 343 4,892 692 from Business Acquisitions Non-GAAP Net Profit/(Loss) Attributable to Ordinary Shareholders for Computing 17,809 2,520 (686,394) (97,152) Non-GAAP Diluted EPS Weighted Average Diluted Shares Outstanding During the Quarter Diluted 389,265,285 389,265,285 389,510,030 389,510,030 Diluted (Non-GAAP) 391,930,771 391,930,771 389,510,030 389,510,030 Diluted EPS (0.06) (0.01) (1.97) (0.28) Add Non-GAAP adjustment to net loss per 0.11 0.02 0.21 0.03 share Non-GAAP Diluted EPS 0.05 0.01 (1.76) (0.25) ^[1] All numbers presented have been rounded to the nearest integer, tenth, or hundredth, and year-over-year comparisons are based on figures before rounding. ^[2] Non-GAAP net income/loss represents net income/loss excluding share-based compensation expenses, amortization o f intangible assets resulting from business acquisitions, and fair value change of equity investments (if any). ^[3] See the sections entitled "Use of Non-GAAP Financial Measures" and "Reconciliations of Non-GAAP Measures to the Nearest Comparable GAAP Measures" for more information about the non-GAAP measures referred to within this results announcement. ^[4] Diluted earnings per share, or Diluted EPS, is calculated by dividing net profit attributable to ordinary shareholders as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. ^[5] Non-GAAP diluted earnings per share, or non-GAAP diluted EPS, represents diluted earnings per share excluding share-based compensation expenses, amortization of intangible assets resulting from business acquisitions, and fair value change of equity i nvestments (if any). ^[6] EBITDA represents net loss excluding depreciation, amortization, interest expense and income tax expense and minus interest income. Adjusted EBITDA represents EBITDA excluding share-based compensation expenses and fair value change of equity i nvestments (if any). ^[7] Unallocated expenses are primarily related to corporate administrative expenses and other miscellaneous items that are not allocated to individual segments. ^[8] Unallocated expenses are primarily related to corporate administrative expenses and other miscellaneous items that are not allocated to individual segments. ^[9] The total number of shares outstanding excludes shares reserved for future issuances upon exercise or vesting of awards granted under the Company's share incentive plans. ^[10] Unallocated expenses are primarily related to corporate administrative expenses and other miscellaneous items that are not allocated to individual segments. ^[11] Unallocated expenses are primarily related to corporate administrative expenses and other miscellaneous items that are not allocated to individual segments. ^[12] Unallocated expenses are primarily related to corporate administrative expenses and other miscellaneous items that are not allocated to individual segments. ^[13] Unallocated expenses are primarily related to corporate administrative expenses and other miscellaneous items that are not allocated to individual segments.

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