ZTO Reports Fourth Quarter 2022 and Full Year 2022 Unaudited Financial Results.

SHANGHAI: ZTO Express (Cayman) Inc. (NYSE: ZTO and SEHK: 2057), a leading and fast-growing express delivery company in China ("ZTO" or the "Company"), today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2022[1]. For 2022, despite COVID-19 disruptions and softening economy, the Company grew parcel volume by 2.1 billion, or 9.4% year over year and expanded market share by 1.5 percentage points to 22.1% while maintaining high quality of service and customer satisfaction. Adjusted net income [2] increased 37.6% to reach RMB6,806.0 million. Cash generated from operating activities was RMB11,479.3 million.

Fourth Quarter 2022 Financial Highlights

Revenues were RMB9,871.3 million (US$1,431.2 million), an increase of 7.1% from RMB9,217.5 million in the same period of 2021.

Gross profit was RMB2,772.6 million (US$402.0 million), an increase of 23.2% from RMB2,250.9 million in the same period of 2021.

Net income was RMB2,129.3 million (US$308.7 million), an increase of 21.8% from RMB1,747.7 million in the same period of 2021.

Adjusted EBITDA[3] was RMB3,397.5 million (US$492.6 million), an increase of 24.0% from RMB2,739.2 million in the same period of 2021.

Adjusted net income[2] was RMB2,120.2 million (US$307.4 million), an increase of 21.5% from RMB1,745.3 million in the same period of 2021.

Basic and diluted net earnings per American depositary share ("ADS" [4]) were RMB2.67 (US$0.39) and RMB2.61 (US$0.38), an increase of 22.5% and 19.7% from RMB2.18 and RMB2.18 in the same period of 2021, respectively.

Adjusted basic and diluted earnings per American depositary share attributable to ordinary shareholders[5] were RMB2.66 (US$0.39) and RMB2.60 (US$0.37), an increase of 22.0% and 19.3% from RMB2.18 and RMB2.18 in the same period of 2021, respectively.

Net cash provided by operating activities was RMB3,769.8 million (US$546.6 million), compared with RMB3,023.8 million in the same period of 2021.

Fiscal Year 2022 Financial Highlights

Revenues were RMB35,377.0 million (US$5,129.2 million), an increase of 16.3% from RMB30,405.8 million in the same period of 2021.

Gross profit was RMB9,039.3 million (US$1,310.6 million), an increase of 37.2% from RMB6,589.4 million in the same period of 2021.

Net income was RMB6,659.0 million (US$965.5 million), an increase of 41.6% from RMB4,701.3 million in the same period of 2021.

Adjusted EBITDA[3] was RMB11,289.1 million (US$1,636.8 million), an increase of 36.0% from RMB8,300.7 million in the same period of 2021.

Adjusted net income[2] was RMB6,806.0 million (US$986.8 million), an increase of 37.6% from RMB4,947.0 million in the same period of 2021.

Basic and diluted net earnings per American depositary share ("ADS"[4]) were RMB8.41 (US$1.22) and RMB8.36 (US$1.21), an increase of 45.0% and 44.1% from RMB5.80 and RMB5.80 in the same period of 2021.

Adjusted basic and diluted net earnings per American depositary share[5] attributable to ordinary shareholders were RMB8.59 (US$1.25) and RMB8.54 (US$1.23), an increase of 40.8% and 40.0% from RMB6.10 and RMB6.10 in the same period of 2021.

Net cash provided by operating activities was RMB11,479.3 million (US$1,664.3 million), compared with RMB7,220.2 million in the same period of 2021.

Operational Highlights for Fourth Quarter 2022

Parcel volume was 6,593 million, an increase of 3.9% from 6,343 million in the same period of 2021.

Number of pickup/delivery outlets was over 31,000 as of December 31, 2022.

Number of direct network partners was approximately 5,900 as of December 31, 2022.

Number of self-owned line-haul vehicles was over11,000 as of December 31, 2022.

Out of the over 11,000 self-owned trucks, approximately 9,700 were high capacity 15 to 17-meter-long models as of December 31, 2022, compared to over 9,300 as of September 30, 2022.

Number of line-haul routes between sorting hubs was over 3,750 as of December 31, 2022, compared to approximately 3,750 as of September 30, 2022.

Number of sorting hubs was 98 as of December 31, 2022, among which 87 are operated by the Company and 11 by the Company's network partners.

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

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

(3) 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 the shared-based compensation expense and non-recurring items such as the gain on disposal of equity investment and subsidiary which management aims to better represent the underlying business operations.

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

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

Mr. Meisong Lai, Founder, Chairman and Chief Executive Officer of ZTO, commented, "For 2022, facing external challenges such as slowing industry growth and COVID-related ups and downs, ZTO focused on keeping our network stable and improving our operational capabilities and efficiency. We achieved our targets for volume growth, market share gain and profit increases while staying on top of quality of services and customer satisfaction. Our market share increased 1.5 percentage points to 22.1% for the year, and our adjusted net income was 6.8 billion which grew 37.6% over last year. There are lesser uncertainties about how the industry landscape will continue to evolve. Competitive focus has been gradually shifted towards sensible pricing practice and bottom-line earnings. The healthier and more capable leaders will advance further in quality of service, volume, and profitability expansion. By our track record, ZTO's strategy and execution have been consistently sound and effective, and we are well positioned to embark on our next 20 years of growth and...