Marquee Energy Ltd. Announces Third Quarter 2017 Financial and Operating Results and Provides Operational and Corporate Update

Marquee Energy Ltd. Announces Third Quarter 2017 Financial and Operating Results and Provides Operational and Corporate Update

Canada NewsWire

/NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

CALGARY, Nov. 20, 2017  /CNW/ – Marquee Energy Ltd. (“Marquee” or the “Company”) (TSXV: “MQX”) announces its third quarter operational and financial results for the three and nine months ended September 30, 2017. The Company’s financial statements and Management’s Discussion and Analysis (“MD&A”) for the three and nine months ended September 30, 2017 are available on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com and on Marquee’s website at www.marquee-energy.com.

THIRD QUARTER 2017 HIGHLIGHTS

  • Drilled and completed two horizontal development wells and two horizontal exploration wells at Michichi. Over the last seven days, the two development wells have averaged 248 boe/d per well, approximately 30% above Marquee’s type well forecasts; and
  • Produced an average of 2,791 boe/d (44% oil and liquids), an increase of 19 boe/d (1%) over the third quarter of 2016.

OPERATIONAL UPDATE
Marquee’s field estimated production averaged 3,050 boe/d (50% oil and liquids) during the first 19 days of November. The four horizontal wells drilled in the third quarter of 2017 incorporated a monobore design to control costs, while completing the wells with a 47% increase to fracture density. Marquee was able to reduce the average days from spud to rig release to eight days from 14 days, and fractured each well successfully in late September with approximately 460 tonnes of sand per well, an increase of 40% over the previous design.

Marquee drilled two development wells on the southern portion of the defined Banff development fairway at Michichi. The two wells, brought on production in early October, have averaged 225 boe/d per well (151 barrels per day (“bbl/d”) of oil and liquids, 440 thousand cubic feet per day (“mcf/d”) of gas) over the last 30 days and 248 boe/d per well (165 bbl/d, 500 mcf/d gas) over the last seven days. The recent production is approximately 30% above Marquee’s type well forecasts on a BOE basis. With the increased fracture density and sand volumes, average drilling and completion costs for the two development wells were $1.6 million per well. Marquee is encouraged with these early production results in consideration of its modified drilling and completion design. The wells have recovered approximately 30% of the total load fluid to date and continue to clean up.

Marquee’s two exploratory wells were drilled on a prospective Banff trend west of the current Michichi development fairway to satisfy the Company’s 2017 flow-through share expenditure commitment. These wells continue to produce to test facilities and the Company continues to evaluate their potential.

CORPORATE UPDATE AND OUTLOOK
During the third quarter of 2017, commodity prices faced downward pressure, resulting in the decision to scale back the Company’s second half of 2017 drilling program from six wells to four. With this reduced activity, the Company is projecting to be at the lower end of the previously announced corporate exit rate of 3,000 to 3,300 boe/d. Along with this, the second half 2017 capital spending forecast has been reduced from $15 million to $11 million.

With the commodity price improvement in the latter half of October 2017, the Company has been actively layering in hedges to support its balance sheet and position itself to be active in the first quarter of 2018. The Company’s Board of Directors has approved a five-horizontal well development drilling program at Michichi, with $9.7 million of capital committed for the first half of 2018. Drilling is expected to begin in December 2017 to mitigate potential service equipment shortages.

FINANCIAL AND OPERATIONAL RESULTS

 (thousands of Canadian dollars,


Three months ended
September 30,


Nine months ended
September 30,

except per share and per boe amounts)


2017

2016


2017

2016


Financial

Oil and natural gas sales (1)


$


6,569

$

7,432


$


22,980

$

23,525

Funds flow from operations (2)


$


1,495

$

(532)


$


4,982

$

821

Per share – basic and diluted


$


0.00

$

0.00


$


0.01

$

0.00

Per boe


$


5.58

$

(1.99)


$


6.47

$

1.05

Net income (loss)


$


(2,937)

$

(5,247)


$


(8,555)

$

(12,122)

Per share – basic and diluted


$


(0.01)

$

(0.03)


$


(0.02)

$

(0.06)

Capital expenditures


$


7,529

$

210


$


15,375

$

687

Net debt (2)


$


28,944

$

45,019

Total Assets


$


171,620

$

178,553

Weighted average basic shares outstanding


435,772,196

205,686,639


435,772,196

205,686,639

Weighted average diluted shares outstanding


435,772,196

205,686,639


435,772,196

205,686,639


Operational

Net wells drilled


4


7

Daily sales volumes

Oil (bbl/d)


1,069

1,240


1,082

1,320

Heavy Oil (bbl/d)



10



225

NGL’s (bbl/d)


154

148


149

147

Natural Gas (mcf/d)


9,408

8,241


9,216

11,861

Total (boe/d)


2,791

2,772


2,767

3,669

% Oil and NGL’s


44%

50%


44%

46%

Average realized prices

Light Oil ($/bbl)


$


47.84

$

44.19


$


50.83

$

40.27

Heavy Oil ($/bbl)


$



$

29.35


$



$

24.52

NGL’s ($/bbl)


$


36.37

$

29.33


$


39.32

$

29.64

Natural Gas ($/mcf)


$


1.56

$

2.59


$


2.53

$

1.92

Netback

Revenue ($/boe)


$


25.58

$

29.14


$


30.42

$

23.40

Royalties ($/boe)


$


(1.25)

$

(1.51)


$


(1.90)

$

(2.05)

Operating and transportation costs ($/boe)


$


(15.78)

$

(16.84)


$


(16.44)

$

(15.77)

Operating netback prior to hedging (2)


$


8.55

$

10.79


$


12.08

$

5.58

Realized hedging gain (loss) ($/boe)


$


3.80

$

(1.17)


$


1.74

$

2.02

Operating netback ($/boe) (2)


$


12.35

$

9.62


$


13.82

$

7.60

(1)

Before royalties

(2)

Non-IFRS Measure.  See Non-IFRS Measures advisory.

 

Changes to Executive Management Team

The Company also wishes to announce the following changes to Marquee’s executive management team, effective today:

  • Dr. William J.F. Roach has been appointed as the Company’s Interim Chief Executive Officer. Dr. Roach will maintain his roles as Interim Executive Chairman of Marquee’s Board of Directors and as a member of the Company’s Reserves Committee;
  • Mr. Howard Bolinger has been promoted to Executive Vice President, Finance and Chief Financial Officer. Mr. Bolinger has also been appointed as the Company’s Corporate Secretary;
  • Mr. Adam Jenkins has been promoted to Vice President, Corporate Development; and
  • Mr. Steve Bradford, Vice President, Land and Corporate Secretary is no longer with Marquee.

Dr. Roach commented, “With the recent changes to Marquee’s executive management team and with its current production portfolio, we are optimistic that we can deliver increased shareholder value over the next several quarters.”

CORPORATE PRESENTATION
Marquee’s updated corporate presentation will be available shortly at www.marquee-energy.com.

ABOUT MARQUEE
Marquee is a Calgary-based, junior energy company focused on light oil development and production in the Michichi area of eastern Alberta. Marquee’s shares are listed for trading on the TSX Venture Exchange under the trading symbol “MQX”.  Additional information about Marquee may be found on its website www.marquee-energy.com and in its continuous disclosure documents filed with Canadian securities regulators on SEDAR at www.sedar.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release
.

FORWARD-LOOKING STATEMENTS OR INFORMATION

Certain statements included or incorporated by reference in this news release may constitute forward-looking statements under applicable securities legislation. Such forward-looking statements or information typically contain statements with words such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “estimate”, “propose”, or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements or information in this news release may include, but are not limited to: reserves estimates and the net present value of the future net reserves related thereto; the number and quality of future potential drilling and development opportunities; anticipated capital budgets and expenditures; average production for 2017 and beyond; 2017 exit production rates; the Company’s development, drilling and completion plan; and well performance.

Such forward-looking statements or information are based on a number of assumptions all or any of which may prove to be incorrect. In addition to any other assumptions identified in this document, assumptions have been made regarding, among other things: the ability of the Company to obtain equipment, services and supplies in a timely manner to carry out its activities; the ability of the Company to market crude oil, natural gas liquids and natural gas successfully to current and new customers; the ability to secure adequate product transportation; the timely receipt of required regulatory approvals; the ability of the Company to obtain financing on acceptable terms; interest rates; regulatory framework regarding taxes, royalties and environmental matters; future crude oil, natural gas liquids and natural gas prices; the ability to successfully integrate acquisitions into Marquee’s business and management’s expectations relating to the timing and results of development, drilling and completions activities.

Forward-looking information is based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Company and described in the forward-looking information. Material risk factors affecting the Company and its business are contained in Marquee’s Annual Information Form for the year ended December 31, 2016, which is available under Marquee’s issuer profile on SEDAR at www.sedar.com.

The forward-looking information contained in this press release is made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward -looking information contained in this press release is expressly qualified by this cautionary statement.

NON-GAAP FINANCIAL MEASURES

This press release contains the term “operating netbacks prior to hedging” and “operating netbacks” which do not have standardized meanings prescribed by IFRS and, therefore, may not be comparable with the calculation of similar measures presented by other companies. Marquee uses operating netbacks to analyze operating performance. Marquee believes this benchmark is a key measure of profitability and overall sustainability for the Company and this term is commonly used in the oil and natural gas industry. Operating netbacks are not intended to represent operating profits, net earnings or other measures of financial performance calculated in accordance with IFRS.

Operating netbacks prior to hedging are calculated by subtracting royalties, production, and operating and transportation expenses from revenues before other income/losses. Operating netbacks include realized hedging gain (loss).

This press release also contains the term “funds flow from operations” which should not be considered an alternative to, or more meaningful than “cash flow from operating activities”, as determined in accordance with IFRS, as an indicator of the Company’s performance. “Funds flow from operations” does not have any standardized meaning prescribed by IFRS and therefore reference to funds flow from operations or funds flow from operations per share may not be comparable with the calculation of similar measures presented by other entities. Management uses funds flow from operations to analyze operating performance and leverage and considers funds flow from operations to be a key measure as it demonstrates the Company’s ability to generate cash necessary to fund future capital investments and to repay debt. Funds flow from operations per share is calculated using the weighted average number of shares for the period.

In addition, the press release contains the term “net debt”, which does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. Net debt is calculated as net debt, defined as current assets less current liabilities (excluding fair value of commodity contracts and flow-through share premiums).  Management considers net debt as an important additional measure to monitor debt repayment requirements and track the financial viability of the Company.

Please see the Company’s MD&A for the year ended December 31, 2016 and the Company’s MD&A for the three and nine months ended September 30, 2017 for a reconciliation of certain Non-GAAP financial measures used in this press release to their most directly comparable GAAP or IFRS measures.

ADDITIONAL ADVISORIES

References to BOEs

Barrels of oil equivalent (boe) are presented on the basis of one boe for six Mcf of natural gas. Disclosure provided herein in respect of boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

Type Well

This presentation provides indicative information regarding “analogous information” as defined in NI 51-101. This analogous information includes estimates of EUR, as defined in the COGEH, and production type wells. Type well information reflects Marquee Energy’s current operating experience in relation to wells of the indicated types. There is no assurance that actual well results will be in accordance with those suggested by the type well information. Actual results will differ, and the difference may be material. Internally generated type well estimates are generated from internal empirical data sources and publicly available information, and are believed to be independent in nature. Some of this data may not have been prepared by qualified reserves evaluators or auditors, may have been prepared based on internal estimates, and the preparation of any estimates may not be in strict accordance with COGEH. Estimates by engineering and geo-technical practitioners may vary and the differences may be significant. EUR volumes are not reserves. There is no assurance that EUR volumes are recoverable or that it will be commercially viable to produce any portion thereof.

Initial Production Rates

Any references herein to production rates, test rates or initial production rates (including IP 30) are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter. Readers are cautioned not to place reliance on such rates in calculating the aggregate production for Marquee. Initial production or test rates may be estimated based on other third party estimates or limited data available at this time. Well‐flow test result data should be considered to be preliminary until a pressure transient analysis and/or well‐test interpretation has been carried out. In all cases herein, initial production or test results are not necessarily indicative of long‐term performance of the relevant well or fields or of ultimate recovery of hydrocarbons.

SOURCE Marquee Energy Ltd.

View original content: http://www.newswire.ca/en/releases/archive/November2017/20/c8473.html

ADM Tronics Reports Profit for Second Quarter of Fiscal Year 2018

ADM Tronics Reports Profit for Second Quarter of Fiscal Year 2018

PR Newswire

NORTHVALE, N.J., Nov. 20, 2017 /PRNewswire/ — ADM Tronics Unlimited, Inc. (OTCQB: ADMT), a technology-based developer and manufacturer of innovative technologies and products, today announced results for its second fiscal quarter ended September 30, 2017 of Fiscal Year 2018.

Revenues for the six months ended September 30, 2017 were $2,216,061 as compared to $2,757,769 for the six months ended September 30, 2016, a decrease of 20%.  Income from operations for the second quarter was $379,349 as compared to $949,507 for the same period last year, a decrease of 60%.

Revenues for the three months ended September 30, 2017 were $1,069,706 as compared to $1,380,338 for the three months ended September 30, 2016, a decrease of 29%.  Income from operations for the second quarter was $211,358 as compared to $428,463 for the same period last year, a decrease of 51%. 

Complete financial results are available in the Company’s Quarterly Report on Form 10Q available at www.sec.gov.

Andre’ DiMino, President of ADMT remarked, “We are delighted to report another profitable quarter, especially during this transitional period for the Company.  I will elaborate in more depth about the upcoming Company profile planned for next Monday, November 27 in our Investor Update.”

Financial Highlights


Three Months Ended


Six Months Ended


September 30,


September 30,


2017


2016


2017


2016

Net Revenues

$1,069,706

$1,380,338

$2,216,061

$2,757,769

Cost of Sales

$355,938

$636,231

$812,483

$1,096,158

Gross Profit

$713,768

$744,107

$1,403,578

$1,661,611

Operating Expenses

$502,410

$315,644

$1,024,229

$712,104

Income from operations

$211,358

$428,463

$379,349

$949,507

Total other income (expense)

$4,201

$431

$6,548

$617

Income before provision for income taxes

$215,559

$428,894

$384,442

$950,124

Provision for income taxes

$81,000

$158,000

Net income

$134,559

$428,894

$226,442

$950,124

Basic and diluted earnings per common share

$0.00

$0.01

$0.00

$0.01

Weighted average shares of common stock outstanding – diluted

67,588,492

67,008,502

67,588,492

67,008,502


About ADMT

ADMT is a diversified, technology-based developer and manufacturer of innovative technologies and products.  Its core competency is its ability to conceptualize a technology, bring it through development, into manufacturing and commercialization, all in-house.  ADMT has three areas of activity: Proprietary Electronic Medical Devices; Eco-Friendly, Safe, Water-Based Formulations; and, Design, Engineering, Regulatory and Manufacturing Services.  The Company’s headquarters, laboratories, FDA-Registered medical device and manufacturing operations are located in Northvale, NJ.  ADMT’s multi-disciplinary team of engineers, researchers and technologists utilize advanced technology infrastructure, such as 3-D solid prototyping, precision instrumentation and specialized software and peripherals, for the research, development and commercialization of diversified technologies. Additional information is available at the Company’s websites – admtronics.com and concepttoquantity.com.


Except for historical information contained herein, the matters set forth in this news release are “forward looking” statements (as defined in the Private Securities Litigation Reform Act of 1995), including statements regarding future revenue growth and performance.  Although ADMT believes the expectations reflected in such forward looking statements are based upon reasonable assumptions, there can be no assurance that its expectations will be realized. Forward looking statements involve risks and uncertainties that could cause actual results to differ materially from expectations.  Factors that could contribute to such differences include those described from time to time in ADMT’s filings with the SEC, news releases and other communications. The Company assumes no obligation to update the information contained in this news release.

 

View original content:http://www.prnewswire.com/news-releases/adm-tronics-reports-profit-for-second-quarter-of-fiscal-year-2018-300559749.html

SOURCE ADM Tronics Unlimited, Inc.

ZTO Reports Third Quarter 2017 Unaudited Financial Results

ZTO Reports Third Quarter 2017 Unaudited Financial Results

PR Newswire

SHANGHAI, Nov. 20, 2017 /PRNewswire/ — ZTO Express (Cayman) Inc. (NYSE: ZTO) (“ZTO” or the “Company”), a leading and fast-growing express delivery company in China, today announced its unaudited financial results for the third quarter ended September 30, 20171.

Third Quarter 2017 Financial Highlights

  • Revenues were RMB3,143.1 million (US$472.4 million), an increase of 33.6% from the same period of 2016, exceeding the higher end of the Company’s guidance of RMB3.0 billion for the third quarter of 2017.
  • Gross profit was RMB1,137.8 million (US$171.0 million), an increase of 33.5% from RMB852.5 million in the same period of 2016.
  • Net income was RMB717.2 million (US$107.8 million), an increase of 31.1% from RMB547.2 million in the same period of 2016.
  • Adjusted EBITDA2 was RMB1,118.1 million (US$168.1 million), an increase of 34.2% from RMB833.1 million in the same period of 2016.
  • Adjusted net income3 was RMB730.7 million (US$109.8million), an increase of 33.5% from RMB547.4 million in the same period of 2016.
  • Basic and diluted earnings per American depositary share (“ADS”4) were RMB1.00(US$0.15), an increase of 28.2% from RMB0.78 in the same period of 2016.
  • Net cash provided by operating activities was RMB1,024.4 million (US$154.0 million), compared with RMB846.9 million in the same period of 2016.

Third Quarter 2017 Operational Highlights

  • Parcel volume in the third quarter of 2017 was 1,535.9 million, an increase of 39.4% from 1,102.0 million in the same period of 2016.
  • Number of pickup/delivery outlets was approximately 28,900 as of September 30, 2017.
  • Number of network partners was over 9,400, which included over 3,800 direct network partners and over 5,600 indirect network partners as of September 30, 2017.
  • Number of line-haul vehicles was over 4,410 as of September 30, 2017, which included around 3,250 self-operated vehicles and around 1,160 vehicles owned and operated by Tonglu Tongze Logistics Ltd., a transportation operator that works exclusively for ZTO.
  • Number of self-operated trucks increased to around 3,250 as of September 30, 2017 from 3,190 as of June 30, 2017. Among the self-operated trucks, over 1,400 were high capacity 15-17-meter-long models as of September 30, 2017, compared to over 1,260 as of June 30, 2017.
  • Number of line-haul routes between sorting hubs was over 1,920 as of September 30, 2017.
  • Number of sorting hubs was 79 as of September 30, 2017, among which 73 are operated by the Company and 6 by the Company’s network partners.

1 An investor relations presentation accompanies this earnings release and can be found at ir.zto.com

2 Adjusted EBITDA is a non-GAAP financial measure, which is defined as net income before depreciation, amortization, interest expenses and income tax expenses, and further adjusted to exclude (i) shared-based compensation expense; and (ii) gain on deemed disposal of equity method investments.

3 Adjusted net income is a non-GAAP financial measure, which is defined as net income before (i) share-based compensation expense and (ii) gain on deemed disposal of equity method investments.

4 One ADS represents one Class A ordinary share.

“I’m pleased to report that our revenues for the third quarter of 2017 came in at RMB3,143.1 million, exceeding the high end of our guidance for the quarter by 4.8% as we continue to gain growth momentum,” commented Mr. Meisong Lai, Founder, Chairman and Chief Executive Officer of ZTO. “Parcel volume growth also accelerated sequentially, increasing 39.4% year-over-year to 1,535.9 million during the quarter. Both our revenues and parcel volume outgrew the industry average as our market share steadily expands when compared to the same period last year. According to data published by the PRC State Post Bureau, ZTO once again received one of the highest scores for customer satisfaction among the major express delivery companies in China during the third quarter. As part of our strategy of aligning the interests of our network partners with ZTO while carefully balancing growth with service quality and profitability, we announced certain increases in the prices of our delivery services last month, which we expect will further enhance service quality, protect the interests of our customers, and offset rising costs for our network partners. I am confident that this increase in price will aid in further improving the stability of our network and enhancing service quality, while helping to create a healthier and more sustainable market environment. We continue to further strengthen our cost leadership position through greater economies of scale and cost cutting initiatives. As part of our efforts to prepare for China’s peak e-commerce season, we have been reinvesting in our infrastructure and capacity by installing more automated sorting equipment, expanding our self-owned fleet of high-capacity trucks and increasing the use of digital waybills. According to data from the State Post Bureau, total parcel volume during China’s Singles’ Day was 331 million, an increase of 31.5% when compared to the same day of last year. Our parcel volume was approximately 65.7 million on the Singles’ Day this year, outgrowing the industry average by over 10 percentage points from the same period last year.”

Mr. James Guo, Chief Financial Officer of ZTO, added, “Our gross margin during the quarter remained unchanged at 36.2% this quarter compared with the same period last year despite rising labor and fuel costs. Adjusted EBITDA margin also improved to 35.6% from 35.4% in the same period last year as a result of our growing economies of scale and cost cutting initiatives.”          

Third Quarter 2017 Financial Results


Three Months Ended September 30,


Nine Months Ended September 30,


2016


2017


2016


2017


RMB


%


RMB


US$


%


RMB


%


RMB


US$


%


(in thousands, except percentages)

Express delivery services

2,254,803

95.8

2,990,801

449,521

95.2

6,338,210

96.1

8,339,167

1,253,388

95.5

Sale of accessories

98,269

4.2

152,290

22,890

4.8

260,039

3.9

389,952

58,610

4.5


Total revenues

2,353,072

100.0

3,143,091

472,411

100.0

6,598,249

100.0

8,729,119

1,311,998

100.0

Revenues were RMB3,143.1 million (US$472.4 million), an increase of 33.6% from RMB2,353.1 million in the same period of 2016. The increase was mainly driven by an increase in parcel volume as a result of overall market growth and an increase in the Company’s market share in terms of parcel volume. The Company’s parcel volume grew to 1,535.9 million during the third quarter of 2017, an increase of 39.4% from 1,102.0 million in the same period of 2016. Revenue from the sale of accessories were RMB152.3 million, an increase of 55.0% from the same period of 2016, primarily due to increased sales of thermal paper used for digital waybill printing.


Three Months Ended September 30,


Nine Months Ended September 30,


2016


2017


2016


2017


RMB


% of
revenues


RMB


US$


% of
revenues


RMB


% of
revenues


RMB


US$


% of
revenues


(in thousands, except percentages)

Line-haul transportation
     cost

880,186

37.4

1,103,947

165,925

35.1

2,484,403

37.7

3,286,540

493,972

37.7

Sorting hub cost

473,118

20.1

586,060

88,086

18.6

1,358,481

20.6

1,670,114

251,020

19.1

Cost of accessories sold

67,846

2.9

93,008

13,979

3.0

186,385

2.8

239,141

35,943

2.7

Other costs

79,446

3.4

222,308

33,413

7.1

287,237

4.4

540,998

81,313

6.2


Total cost of revenues

1,500,596

63.8

2,005,323

301,403

63.8

4,316,506

65.5

5,736,793

862,248

65.7

Total cost of revenues was RMB2,005.3 million (US$301.4 million), an increase of 33.6% from RMB1,500.6 million in the same period last year. The increase was primarily a result of increases in line-haul transportation costs, sorting hub operating costs, cost of accessories sold, and other costs, which were partially offset by a decrease in waybill material cost due to the increased use of digital waybills by the Company’s end customers which bear lower costs than paper waybills. The percentage of ZTO’s end customers using digital waybills was approximately 88.0% during the third quarter of 2017, an increase from approximately 73.0% during the same period of 2016.

  • Line haul transportation cost was RMB1,103.9 million (US$165.9 million), an increase of 25.4% from RMB880.2 million in the same period last year. The increase was mainly due to an increase of RMB188.1 million (US$28.3 million) in costs associated with the Company’s self-owned fleet which includes fuel, tolls, drivers’ compensation, depreciation and maintenance expenses, and an increase of RMB51.9 million (US$7.8 million) in outsourced transportation costs. As a percentage of revenues, line haul transportation cost accounted for 35.1%, a decrease from 37.4% in the same period last year, mainly due to (i) economies of scale, (ii) increased use of self-owned, more cost-efficient, higher capacity trailer trucks in place of third-party trucks and outsourced transportation, and (iii) increased truck utilization through optimized route planning and back-haul transportation.
  • Sorting hub operating cost was RMB586.1 million (US$88.1 million), an increase of 23.9% from RMB473.1 million in the same period last year. The increase was mainly due to (i) increased labor costs of RMB71.7 million (US$10.8 million) as a result of an increase in wages and headcount; (ii) an RMB22.4 million (US$3.4 million) increase in depreciation and amortization costs, and (iii) an increase of RMB12.3 million (US$1.8 million) in rental and related utilities costs. As a percentage of revenues, sorting hub operating cost accounted for 18.6%, a decrease from 20.1% in the same period last year, mainly due to economies of scale and improved operating efficiency as a result of the increased use of automation in the Company’s sorting facilities.
  • Cost of accessories was RMB93.0 million (US$14.0 million), an increase of 37.2% from RMB67.8 million in the same period last year. The increase was in line with growth in the Company’s revenue from the sale of accessories to its network partners, which includes thermal paper for digital waybill printing, portable bar code readers, and ZTO-branded packaging materials and uniforms. As a percentage of revenues, cost of accessories accounted for 3.0%, an increase from 2.9% in the same period last year.
  • Other costs were RMB222.3 million (US$33.4 million), an increase of 180.0% from RMB79.4 million in the same period last year, primarily due to an increase in dispatching costs associated with serving enterprise customers, which were partially offset by a decrease in costs associated with the increased use of digital waybills.

Gross Profit was RMB1,137.8 million (US$171.0 million), an increase of 33.5% from RMB852.5 million in the same period last year. Gross margin remained unchanged at 36.2% compared with the same period last year.

Total Operating Expenses were RMB193.0 million (US$29.0 million), an increase of 66.3% from RMB116.0 million in the same period last year.

  • Selling, general and administrative expenses were RMB193.4 million (US$29.1 million), an increase of 50.6% from RMB128.4 million in the same period last year. The increase was mainly due to increases in (i) share-based compensation expenses from RMB0.3 million in the third quarter of 2016 to RMB13.5 million (US$2.0 million) in the third quarter of 2017; (ii) payroll and social welfare costs of RMB26.6 million (US$4.0 million) due to an increase in headcount and wages; and (iii) accrual for annual performance bonuses and incentives associated with cost-cutting initiatives of RMB16.5 million (US$2.5 million) in the third quarter of 2017.
  • Other operating income, net was RMB0.4 million (US$0.1 million), compared with RMB12.4 million in the same period last year. The decrease was mainly due to a decrease in government subsidies.

Income from operations was RMB944.7 million (US$142.0 million), an increase of 28.3% from RMB736.4 million in the same period last year. Operating margin decreased to 30.1% from 31.3% in the same period last year, primarily due to an increase in employee compensation expenses.

Interest income was RMB45.2 million (US$6.8 million), compared with RMB9.7 million in the same period in 2016, primarily due to the increased amount of cash and bank deposits available for investment since the Company’s initial public offering in October 2016.

Interest expense was RMB2.5 million (US$0.4 million), compared with RMB3.8 million in the same period in 2016. The decrease was mainly due to the repayment of bank loans during the previous quarters.

Foreign currency exchange loss, before tax was RMB27.5 million (US$4.1 million), primarily arising from the remeasurement of U.S. dollar denominated bank deposits at the Company’s balance sheet date due to the depreciation of the U.S. dollar against the Chinese Renminbi.

Net income was RMB717.2 million (US$107.8 million), compared with RMB547.2 million in the same period last year. Net margin decreased slightly to 22.8% from 23.3% in the same period last year.

Basic and diluted earnings per ADS were RMB1.00 (US$0.15), compared with basic and diluted earnings per ADS of RMB0.78 in the same period last year.

Adjusted net income was RMB730.7 million (US$109.8 million), compared with adjusted net income of RMB547.4 million during the same quarter last year. Adjusted net margin decreased slightly to 23.2% from 23.3% in the same period last year.

EBITDA5 was RMB1,104.6 million (US$166.0 million), compared with RMB832.9 million in the same period last year. EBITDA margin decreased slightly to 35.1% from 35.4% in the same period last year.

Adjusted EBITDA was RMB1,118.1 million (US$168.1 million), compared to RMB833.1 million in the same period last year. Adjusted EBITDA margin increased to 35.6% from 35.4% in the same period last year.

Net cash provided by operating activities was RMB1,024.4 million (US$154.0 million), compared with 846.9 million in the same period last year, mainly attributable to growth in net income and increased deposits for last-mile delivery fees.

5 EBITDA is a non-GAAP financial measure, which is defined as net income before depreciation, amortization, interest expenses and income tax expenses.

Business Outlook

Based on current market conditions and current operations, revenues for the fourth quarter of 2017 is expected to be in the range of RMB3.9 billion (US$586.2 million) to RMB4.1 billion (US$616.2 million), representing a 22.2% to 28.5% increase from the same period of 2016. This represents management’s current and preliminary view, which is subject to change.

Company Share Purchase

On May 21, 2017, the Company announced a new share repurchase program whereby ZTO is authorized to repurchase its own Class A ordinary shares in the form of ADSs with an aggregate value of up to US$300 million during the 12-month period thereafter. As of September 30, 2017, the Company has purchased an aggregate of 7,240,865 ADSs at an average purchase price of US$13.89, net of repurchase commissions.

The Company believes that the share repurchase program represents ZTO’s confidence in its cash flow and the long-term outlook for the express delivery industry in China. ZTO’s fast-growing strategy, asset-light business model and solid operation sallow the Company to generate strong cash flow. The Company believes that the share repurchase program is consistent with the goal of increasing shareholders’ value.

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 RMB6.6533 to US$1.00, the noon buying rate on September 30, 2017 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 EBITDA, adjusted EBITDA, adjusted net income, adjusted EBITDA margin and adjusted net margin, 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 EBITDA, adjusted EBITDA, adjusted net income, adjusted EBITDA margin and net margin 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 EBITDA, adjusted EBITDA, adjusted net income, adjusted EBITDA margin and adjusted net margin 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.

EBITDA, adjusted EBITDA, adjusted net income, adjusted EBITDA margin and adjusted net margin 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. EBITDA, adjusted EBITDA, adjusted net income, adjusted EBITDA margin and adjusted net margin 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 Monday, November 20 (9:00 AM Beijing Time on November 21, 2017).

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

United States:

1-888-317-6003

Hong Kong:

852-5808-1995

China:

4001-206115

International:

1-412-317-6061

Passcode:

4787417

Please dial in ten 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 27, 2017:

United States:

1-877-344-7529

International:

1-412-317-0088

Passcode:

10114011

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 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 2017 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 September 30,


Nine Months Ended September 30,


2016


2017


2016


2017


RMB


RMB


US$


RMB


RMB


US$


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

Revenues

2,353,072

3,143,091

472,411

6,598,249

8,729,119

1,311,998

Cost of revenues

(1,500,596)

(2,005,323)

(301,403)

(4,316,506)

(5,736,793)

(862,248)

Gross profit

852,476

1,137,768

171,008

2,281,743

2,992,326

449,750

Operating income (expenses):

Selling, general and administrative

(128,396)

(193,422)

(29,072)

(509,124)

(558,060)

(83,877)

Other operating income, net

12,354

398

60

20,377

88,455

13,295

Total operating expenses

(116,042)

(193,024)

(29,012)

(488,747)

(469,605)

(70,582)

Income from operations

736,434

944,744

141,996

1,792,996

2,522,721

379,168

Other income (expenses):

Interest income

9,717

45,177

6,790

30,528

113,374

17,040

Interest expense

(3,766)

(2,479)

(373)

(12,152)

(13,216)

(1,986)

Gain on deemed disposal of equity method
     investments

9,551

Foreign currency exchange loss, before tax

5,021

(27,542)

(4,139)

5,021

(33,386)

(5,018)

Income before income tax, and share of loss in
     equity method investments

747,406

959,900

144,274

1,825,944

2,589,493

389,204

Income tax expense

(186,468)

(237,670)

(35,722)

(480,440)

(637,602)

(95,832)

Share of loss in equity method investments

(13,761)

(5,000)

(751)

(33,711)

(14,868)

(2,235)

Net income

547,177

717,230

107,801

1,311,793

1,937,023

291,137

Net loss (income) attributable to
     noncontrolling interests

(115)

(260)

(39)

1,863

333

50

Net income attributable to ZTO Express
     (Cayman) Inc.

547,062

716,970

107,762

1,313,656

1,937,356

291,187

Change in redemption value of convertible
     redeemable preferred shares

(40,269)

(119,992)

Net income attributable to ordinary
     shareholders

506,793

716,970

107,762

1,193,664

1,937,356

291,187

Net earnings per share/ADS attributable to
     ordinary shareholders

Basic

0.78

1.00

0.15

1.85

2.70

0.40

Diluted

0.78

1.00

0.15

1.85

2.69

0.40

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

Basic

618,384,686

716,138,386

716,138,386

615,406,907

718,790,306

718,790,306

Diluted

618,384,686

716,478,593

716,478,593

615,406,907

719,221,212

719,221,212

Other comprehensive income, net of tax of nil:

Foreign currency translation adjustment

3,701

(179,986)

(27,052)

29,530

(413,408)

(62,136)

Comprehensive income

550,878

537,244

80,749

1,341,323

1,523,615

229,001

Comprehensive loss (income) attributable to
     noncontrolling interests

(115)

(260)

(39)

1,863

333

50

Comprehensive income attributable to ZTO
     Express (Cayman) Inc.

550,763

536,984

80,710

1,343,186

1,523,948

229,051

 

 



Unaudited Consolidated Balance Sheets Data:


As of


December 31,
2016


September 30, 2017


RMB


RMB


US$


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


ASSETS


Current assets:

Cash and cash equivalents

11,287,789

5,180,344

778,613

Restricted cash

635,366

257,945

38,769

Accounts receivable, net of allowance for doubtful accounts of
     RMB5,124and RMB13,867 at December 31, 2016 and September 30,
     2017, respectively

197,803

198,908

29,896

Short-term investment

5,522,239

830,000

Inventories

33,959

28,549

4,291

Advances to suppliers

646,666

245,556

36,907

Prepayments and other current assets

379,055

655,658

98,547

Amounts due from related parties

5,400

9,900

1,488


Total current assets


13,186,038


12,099,099


1,818,511

Investments in equity investees

537,175

556,556

83,651

Property and equipment, net

4,065,562

5,839,191

877,638

Land use rights, net

1,302,869

1,512,024

227,259

Goodwill

4,157,111

4,157,111

624,819

Deferred tax assets

109,030

185,197

27,835

Other non-current assets

45,953

123,550

18,571


TOTAL ASSETS


23,403,738


24,472,728


3,678,284


LIABILITIES AND EQUITY


Current liabilities

Short-term bank borrowing

450,000

250,000

37,575

Accounts payable

636,422

572,145

85,994

Advances from customers

229,724

247,824

37,248

Income tax payable

418,310

290,269

43,628

Amounts due to related parties

131,425

94,219

14,161

Other current liabilities

1,656,590

2,191,011

329,313


Total current liabilities


3,522,471


3,645,468


547,919

Deferred tax liabilities

130,520

128,315

19,286

Other non-current liabilities

73,980

11,119


TOTAL LIABILITIES


3,652,991


3,847,763


578,324


As of


December 31,
2016


September 30, 2017


RMB


RMB


US$


Shareholders’ equity

Ordinary shares (US$0.0001 par value; 10,000,000,000 shares authorized,
     731,406,440 shares issued and 720,564,604 shares outstanding as of
     December 31, 2016, and 713,323,739 shares outstanding as of September
     30, 2017)

471

471

71

Additional paid-in capital

15,940,206

15,963,031

2,399,265

Treasury shares, at cost

(671,733)

(100,962)

Retained earnings

3,509,707

5,447,063

818,701

Accumulated other comprehensive (loss) income

294,649

(118,759)

(17,850)


ZTO Express (Cayman) Inc. shareholders’ equity


19,745,033


20,620,073


3,099,225

Noncontrolling interests

5,714

4,892

735


Total Equity


19,750,747


20,624,965


3,099,960


TOTAL LIABILITIES AND EQUITY


23,403,738


24,472,728


3,678,284

 

 



Summary of Unaudited Consolidated Cash Flow Data:


Three Months Ended September 30,


Nine Months Ended September 30,


2016


2017


2016


2017


RMB


RMB


US$


RMB


RMB


US$


(in thousands)

Net cash provided by operating
     activities

846,932

1,024,381

153,966

1,388,992

2,259,137

339,551


Net cash used in investing
     activities6

(888,202)

(1,128,970)

(169,686)

(1,996,929)

(7,572,212)

(1,138,114)

Net cash provided by financing
     activities

(26,754)

(403,295)

(60,616)

71,246

(859,685)

(129,211)

Effect of exchange rate changes
     on cash and cash equivalents

2,732

(117,917)

(17,723)

22,417

(312,106)

(46,910)

Net decrease in cash and cash
     equivalents

(65,292)

(625,801)

(94,059)

(514,274)

(6,484,866)

(974,684)


Cash and cash equivalents at
     beginning of period7

2,269,780

6,064,090

911,441

2,718,762

11,923,155

1,792,066


Cash and cash equivalents at end
     of period7

2,204,488

5,438,289

817,382

2,204,488

5,438,289

817,382

 

6 The amount of cash used in investing activities mainly includes purchases of the fixed term bank deposits with an original maturity of six to nine months. For the third quarter of 2017, the Company purchased approximately RMB2.4 billion (US$365.0 million) of such deposits.

7 In November 2016, the FASB issued ASU No. 2016-18 (“ASU 2016-18”), Statement of Cash Flows (Topic 230) – Restricted Cash. This ASU requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The provisions of ASU 2016-18 are effective for reporting periods beginning after December 15, 2017 and are to be applied retrospectively; early adoption is permitted. We elected, as permitted by the standards, to early adopt ASU 2016-18 in the first quarter of 2017.In connection with the adoption of this update, we have reclassified RMB15.2 million and RMB39.6 million of restricted cash from operating activities to the cash, cash equivalents, and restricted cash balance in the three-month and nine-month periods ended September 30, 2016, respectively, to be consistent with the 2017 presentation.

 


Reconciliations of GAAP and Non-GAAP Results


Three Months Ended September 30,


Nine Months Ended September 30,


2016


2017


2016


2017


RMB


RMB


US$


RMB


RMB


US$


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

Net income

547,177

717,230

107,801

1,311,793

1,937,023

291,137

Add:

Share-based compensation expense

251

13,492

2,028

122,251

27,235

4,093

Less:

Gain on deemed disposal of equity
     method investment

(9,551)

Adjusted net income

547,428

730,722

109,829

1,424,493

1,964,258

295,230

Net income

547,177

717,230

107,801

1,311,793

1,937,023

291,137

Add:

Depreciation

89,174

138,757

20,855

202,635

387,851

58,295

Amortization

6,310

8,455

1,271

16,347

24,752

3,720

Interest expenses

3,766

2,479

373

12,152

13,216

1,986

Income tax expenses

186,468

237,670

35,722

480,440

637,602

95,832

EBITDA

832,895

1,104,591

166,022

2,023,367

3,000,444

450,970

Add:

Share-based compensation expense

251

13,492

2,028

122,251

27,235

4,093

Less:

Gain on deemed disposal of equity
     method investments

(9,551)

Adjusted EBITDA

833,146

1,118,083

168,050

2,136,067

3,027,679

455,063

 

 

For investor and media inquiries, please contact:

ZTO

Ms. Sophie Li
Investor Relations Director
E-mail: ir@zto.com

Christensen

In China
Mr. Christian Arnell
Phone: +86-10-5900-1548
E-mail: carnell@christensenir.com

In US
Mr. Tip Fleming
Phone: +1-917-412-3333
Email: tfleming@Christensenir.com

View original content:http://www.prnewswire.com/news-releases/zto-reports-third-quarter-2017-unaudited-financial-results-300559288.html

SOURCE ZTO Express (Cayman) Inc.