ZTO Express (NYSE: ZTO) reported Q3 EPS of $0.24, $0.02 better than the analyst estimate of $0.22. Revenue for the quarter came in at $736.7 million versus the consensus estimate of $756.63 million.

Third Quarter 2019 Financial Highlights

• Revenues were RMB5,265.8 million (US$736.7 million), an increase of 24.4% from RMB4,234.6 million in the same period of 2018
• Gross profit was RMB1,596.9 million (US$223.4 million), an increase of 20.5% from RMB1,325.3 million in the same period of 2018
• Net income was RMB 1,307.7 million (US$183.0 million), an increase of 23.4% from RMB 1,059.4 million in the same period of 2018
• Adjusted EBITDA[2] was RMB1,887.5 million (US$264.1 million), an increase of 28.1% from RMB1,473.1 million in the same period of 2018
• Adjusted net income[3] was RMB 1,318.5 million (US$184.5 million), an increase of 24.6% from RMB1,058.5 million in the same period of 2018
• Basic and diluted earnings per American depositary share ("ADS"[4]) attributable to ordinary shareholders were RMB1.67 (US$0.23), an increase of 23.7% and 24.6% from RMB1.35 and RMB1.34 in the same period of 2018, respectively
• Adjusted basic and diluted earnings per American depositary share[5] attributable to ordinary shareholders were RMB1.69 (US$0.24), an increase of 25.2% and 26.1% from RMB1.35 and RMB1.34 in the same period of 2018, respectively
• Net cash provided by operating activities was RMB1,417.7 million (US$198.3 million), compared with RMB911.7 million in the same period of 2018

Operational Highlights for Third quarter 2019

• Parcel volume was 3,057.9 million, an increase of 45.9% from 2,095.9 million in the same period of 2018
• Number of pickup/delivery outlets was approximately 30,000 as of September 30, 2019, while the number of direct network partners was approximately 4,750 as of September 30, 2019
• Number of line-haul vehicles was over 6,600 as of September 30, 2019, which included over 5,700 self-owned vehicles and over 900 vehicles owned and operated by Tonglu Tongze Logistics Ltd., a transportation operator that works exclusively for ZTO. Among the 6,600 vehicles, over 3,950 were high capacity 15-to-17-meter-long trailer trucks compared to over 3,150 as of June 30, 2019
• Number of line-haul routes between sorting hubs was over 2,400 as of September 30, 2019
• Number of sorting hubs was 89 as of September 30, 2019, among which 80 are operated by the Company and the other nine by the Company's network partners

Mr. Meisong Lai, Founder, Chairman and Chief Executive Officer of ZTO, commented, "ZTO's market share by parcel volume expanded 2.3 percentage points to 18.9% during the third quarter of 2019. With the strong partnership with thousands of our network partners, ZTO delivered sound execution on our corporate strategy by maintaining high quality of services and achieving targeted net earnings growth as we continue to strengthen our industry leadership."

Mr. Lai added, "Since the founding of our business 17 years ago, we have followed the philosophy of taking control of our own destiny and invest wisely in the future. Throughout the years, we have consistently built infrastructure that are suitable to the stage of market development and operational needs, and we have not only cumulated valuable resources but also developed ability to leverage and maximize value creation and recreation by consolidating resources and expand on our product and service capabilities. We believe that the Chinese express delivery industry and the Chinese logistic industry have great potential for further steady growth as Chinese economy continue to expand. ZTO is on one hand focusing on execution of our near-term strategies surrounding last mile effectiveness including courier advantages, we are also working towards our longer-term goal of becoming a world-leading comprehensive logistics service provider."

Ms. Huiping Yan, Chief Financial Officer of ZTO, added, "ZTO is increasingly benefiting from its brand recognition for wide service coverage and deep penetration into the Chinese express delivery industry. We are on track to deliver another year of strong volume and solid profit growth based on the first three quarters performances and the most recent assessment of the market and operational conditions for the rest of 2019. Supported by the increase in economies of scale, consistent cost productivity gain and corporate structure efficiency, we are able to dampen the impact of price pressure and achieve healthy net income growth. Combined sorting hub and line-haul transportation costs per parcel declined 10.7% year over year, and corporate SG&A, excluding share-based compensation, was 5.3% of total revenues down from 5.6% last year. Adjusted net income rose 24.6% to RMB1.32 billion, and cash from operating activities rose 55.5% to RMB1.42 billion."

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