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spk00: Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to Best, Inc.' 's first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, there will be a Q&A session. With us today are Johnny Chow, Best, Inc.' 's chairman and CEO, and Gloria Phan, chief financial officer. For today's agenda, Johnny will give a brief overview of business and operational highlights. then Gloria will explain the details of financial results. Following the prepared remarks, you may ask your questions. Please note this call is also being webcasted on Best, Inc.' 's IR website at ir.best-inc.com. A replay of this call will be available after the call. An investor presentation is also available on the IR website. Before it begins, I will read the Safe Harbor Statement on behalf of Best, Inc. Today's discussion will contain forward-looking statements. These forward-looking statements are based on management's current expectations. They involve inherent risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the management's control. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events, or others except as required by law. Please also note that certain financial measures that the company uses on this call are expressed in a non-GAAP basis, such as EBITDA, adjusted EBITDA, non-GAAP net loss. The GAAP results and reconciliation of GAAP to non-GAAP measures can be found in Best, Inc.' 's earnings press release. Finally, please note that unless otherwise stated, all of the figures mentioned during this conference are in RMB. Now I would like to turn the call over to Johnny Chow, Chairman and CEO of Best, Inc. Johnny, please go ahead.
spk01: Thank you, operator. Hello, everyone, and thank you for joining BESS 2022 first quarter earnings call today. In the first quarter, despite the disruption caused by the COVID-19 pandemic, we continued to serve our customers with operational resilience. BESS Global continued its strong growth momentum and finished the quarter with 25% year-over-year volume increases in Southeast Asia. As we continue with our strategic refocusing program, we are winding down best U cargo and the capital business lines to allow us to have a much leaner organization and a lower cost structure. At the end of Q1, we have a net cash position of 1.5 billion RMB that can fuel our future growth. Now let's take a look at each of our business segments. Best Freight maintains its industry-leading position and continues to grow its e-commerce-related transactions, contributing 22.2% of total volume for the quarter, up 5.6 percentage points year-over-year. Freight has also been implementing measures to strengthen its network coverage and service quality. These efforts have delivered immediate results. In the first quarter, Freight's on-time delivery rates improved by 14% year-over-year. In addition, according to a third-party survey, Best Freight continues to rank among top companies for the freight service quality. Best Freight's recovery trend after express handover continued into the first quarter. The freight volume and network stability has been improved. However, resurgence of the pandemic have significantly impacted the logistic industry and our operations. Some of our main sortation centers and a part of our transportation fleet was restricted due to the pandemic. Freight's first quarter volume decreased by 13.5% year over year. Looking ahead, even though there are uncertainties related to the macro environment and the pandemic, we will continue to focus our efforts on improving freight network capabilities and the service quality, as well as on synergizing with supply chain management and global for additional business opportunities. We will also continue to use automation to increase operating efficiency and reduce costs. We are confident thereby optimizing these operational fundamentals. We are prepared for future growth and profitability. Moving on to best supply chain management. Supply chain management remains our key differentiators as it empowers our customers with digitized end-to-end logistics solutions. We continue to leverage our expertise and industry reputation to expand and deepen our presence in apparel, fast-moving consumer goods, auto parts, and pharmaceuticals industries. In Q1, we have signed on 11 new key account customers that will continue to strengthen our industry leadership position and accelerate our growth. During the quarter, we continue to grow our B2B2C fulfillment network and distribution capabilities while reinforcing the service quality and prioritizing higher margin accounts. In the first quarter of 2022, our customer satisfaction rate had reached 99%. As a result of discontinuing certain low margin customers, the total number of orders fulfilled by cloud OFCs decreased 13% to 87 million, of which the total number of orders fulfilled by franchised cloud OFCs increased by 2.4% to 54 million year-over-year. Supply chain management is the heart of our cross-segment synergies, which can significantly benefit Freight and Global's key accounts and cross-border business by supporting its customers' transportation and global logistics needs. Among SDM's top customers, more than 20% use our freight services. Now let's talk about Bass Global. Bass Global has entered into a new stage of growth after successfully completing its initial ramp-up phase. Our two-plus years in Southeast Asia Global has established strong service and network capabilities for future growth. Global continues to gain market shares in Southeast Asia despite the ongoing pandemic and disruption in its supply chains. The parcel volume reached over 38 million in the first quarter, up 25% year over year. Parcel volumes in Vietnam, Malaysia, and Singapore increased by approximately 68% 68% and 72% respectively. In addition to the positive environment in Southeast Asia, our US business reached a break-even last year and continues to be profitable in Q1 2022. Going forward, Global will continue building out its information technology and infrastructure to improve quality and operating efficiency. In Southeast Asia, we will focus on reinforcing network stability and reliability, as well as improving franchisees' operational capabilities. In addition, we will leverage our supply chain management expertise to establish country-to-country smart logistics solutions for local, cross-border, and regional operations. This will allow us to provide better product offerings to our customers and continue our high-growth trajectory. Looking ahead, we believe the activities of the supply chain and logistics business will pick up quickly in China and Southeast Asia as the pandemic eases. Information technology-driven and integrated supply chain and logistics solutions will be in high demand to support such growth. Best strengths in technology, domestic and international end-to-end supply chain and logistics capabilities as well as our broader customer base in China, coupled with strong cash position, will allow us to capture this growth opportunity and on the path to profitability. Now I would like to turn the call over to our CFO, Gloria, for further review of our first quarter financials. Go ahead, Gloria.
spk02: Thank you, Johnny, and hello to everyone. Our first quarter revenue, excluding new cargo and capital, declined by 4.6% year over year. The pandemic has created various bottlenecks that significantly challenge the logistics industry. Our Q1 performance is a testament to our strong business resilience. Our balance of cash and cash equivalents, restricted cash, and short-term investments were approximately 5.3 billion RMB at the end of the first quarter of 2022. Supported by our robust balance sheet, Our emphasis on service quality and operational efficiency will strengthen our core competencies in freight, integrated supply chain management, global logistics solutions, positioning ourselves for future recovery, and building a solid foundation for sustainable growth and profitability. Now, let me walk you through our financial results for the first quarter of 2022. Our revenue for the first quarter was 1.8 billion RMB, compared with 2.8 billion last year. The decrease is primarily due to the winding down of our Ucargo business units. Ucargo's Q1 2022 revenue were approximately 19 million compared with 869 million RMB in the same quarter of 2021. Due to the rising oil price and additional costs resulted from the pandemic, our growth loss for Q1 was 76.8 million RMB, compared to a gross profit of 51.7 million for the same quarter of 2021. Gross margin was negative 4.3 percent compared to positive 1.9 percent last year. Net loss from continuing operations for the first quarter was 379.9 million RMB compared to 191.2 million RMB last year. Adjusted EBITDA for continuing operations was negative 294.6 million RMB compared to negative 98.5 million for the same quarter of 2021. Next, moving on to key financial highlights for our business units. For Best Freight, we remain focused on expanding its e-commerce related business and improving our service quality. As we are winding down your cargo business, its financial results are now consolidated into freight business segments. In the first quarter, freight service revenue was approximately 1.1 billion RMB, compared to 2 billion for the same period of last year, primarily driven by the decreased Yukago revenue of approximately 849 million RMB. Excluding Yukago, freight revenue decreased by 8.6% year-over-year, primarily due to a 13.5% decrease in freight volume. partially offset by a 4.5% of AASP increase. Its gross margin was negative 7.1%, 7.7 percentage points lower year over year, due to higher oil prices and additional costs resulted from the pandemic. Adjusted EBITDA for best freight was negative 149.9 million RMB, compared to negative 32.9 million RMB last year. Q1 revenue for best supply chain management decreased by 8.6% year-over-year to 409 million RMB, primarily due to discontinuation of certain low-margin legacy accounts. Gross margin was 4.3%, 1.1 percentage point lower year-over-year, primarily due to lockdowns of certain warehouses resulted from the pandemic. Adjusted EBITDA for supply chain management was negative for 8.5 million RMB, compared to 167,000 RMB in the same period of 2021. For BEX Global, Q1 revenue increased by 7.3% year-over-year to 269.7 million RMB, driven by solid parcel volume growth in Southeast Asia. Its growth margin was negative 6.3%, decreased by 0.4%, primarily due to higher fuel price and additional costs associated with the pandemic. partially mitigated by its increased volume. Q1 adjusted EBITDA for BEX Global was negative 63.4 million RMB compared to negative 51.9 million RMB last year. Our operating expenses, including share-based compensation, totaled 267.5 million RMB, or 14.8% of revenue, compared with 262.9 million RMB or 9.4 percent of revenue in the same period of last year. Selling general and administrative expenses for continued operations were 235.7 million RMB, or 13 percent of the revenue in the first quarter, compared to 224.7 million RMB, or 8.1 percent of the revenue in the same quarter of 2021, mainly due to additional expenses associated with winding down the capital business line. R&D expenses for continual operations were 31.9 million RMB or 1.8% of the revenue, compared to 38.1 million RMB or 1.3% of revenue in the same quarter of last year. Now, turning to our outlook, due to the uncertainties relating to the COVID-19 pandemic and its recovery, The company's previous guidance will no longer be in effect. However, we see a high demand in technology-driven integrated supply chain and logistic solutions in China and globally. We are excited about our business prospects and have full confidence in our ability to emerge stronger from the market challenges and deliver long-term benefits to our stakeholders. With that, we will now open the call to questions. Thank you. Operator?
spk00: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Again, if you have a question, please press star then one. As there are no questions, this concludes our question and answer session. I would like to turn the conference back to Gloria Phan for any closing remarks.
spk02: Okay, thank you, operator. Thank you, everybody, for participating in today's earnings call. If you have any additional questions, please contact our investor relations team. Okay, thank you, everybody. Thank you very much.
spk00: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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