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Tims China Announces First Quarter 2024 Financial Results

Resilient Total Revenues Increased 3.1% Year over Year for the First Quarter 2024

System Sales Increased 7.1% Year-over-Year for the First Quarter 2024

Continuous Margin Improvement with Seven Consecutive Positive Quarterly Adjusted Store EBITDA

20.3 Million Registered Loyalty Club Members at Quarter-End,
Representing 63.6% Year-over-Year Growth

SHANGHAI and NEW YORK, June 05, 2024 (GLOBE NEWSWIRE) -- TH International Limited (Nasdaq: THCH), the exclusive operator of Tim Hortons coffee shops and Popeyes restaurants in China (“Tims China” or the “Company”) today announced its unaudited financial results for the first quarter 2024.

FIRST QUARTER 2024 HIGHLIGHTS

  • Total revenues reached RMB346.8 million (USD48.0 million), representing a 3.1% increase from the same quarter of 2023.

  • System sales1 reached RMB363.5 million (USD50.3 million), representing a 7.1% increase from the same quarter of 2023.

  • Net new store openings totaled 5 (Net closure of 15 company owned and operated stores for Tims, net opening of 19 franchised stores for Tims, and net opening of one company owned and operated stores for Popeyes)

  • Adjusted store EBITDA2 was RMB6.1 million (USD0.8 million), representing a 2.0% year-over-year growth.

  • Adjusted store EBITDA margin3 was 2.0%, slightly improved from the same quarter in 2023.

  • Registered loyalty club members totaled 20.3 million members as of March 31, 2024, representing a 63.6% year-over-year growth.

_________________________

1 System sales is calculated as the gross merchandise value of sales generated from both company owned and operated stores and franchised stores.
2 Adjusted store EBITDA is calculated as fully burdened gross profit4 of company owned and operated stores excluding depreciation & amortization and store pre-opening expenses.
3 Adjusted store EBITDA margin is calculated as adjusted store EBITDA as a percentage of revenues from company owned and operated stores.
4 Fully burdened gross profit of company owned and operated stores, the most comparable GAAP measure to adjusted store EBITDA, was a loss of RMB33.4 million (USD4.6 million) for the three months ended March 31, 2024, compared to a loss of RMB35.9 million in the same quarter of 2023.

COMPANY MANAGEMENT STATEMENT

Mr. Yongchen Lu, CEO & Director of Tims China, commented, “In Q1 2024, our system sales grew by 7.1%, and we continued to improve our bottom-line performance, marching towards achieving our first quarterly adjusted corporate EBITDA breakeven this year. Our registered loyalty club membership exceeded 20 million as of March 31, 2024, a 63.6% year-over-year growth, serving both as a pivotal catalyst for growth and a testament to our customers’ support and embrace of Tims China’s loyalty program.

Continuous product innovation remains a cornerstone of our strategic vision; we launched 14 new beverages and 18 new food products during the quarter. We just celebrated the meaningful milestones of our 5th anniversary in China as well as the 60th anniversary of the “Tim Hortons” brand in February. To commemorate both remarkable milestones and double celebrations, Tims China launched its Chinese version of "Double Double" latte series. Our collaborations with Tangle Angel and Dove Chocolate have also achieved significant success during the quarter.”

Mr. Lu added, “Our Popeyes brand maintains its robust growth trajectory. So far, we have successfully launched 14 Popeyes restaurants and are actively expanding our product offerings beyond the core fried chicken products. Our restaurants represent a solid base for further growth in Shanghai and beyond.”

Mr. Dong (Albert) Li, CFO of Tims China, commented, “During the first quarter of 2024, and in the face of headwinds, we continued to enhance our operational efficiency. We pared back costs at the headquarter level, and we pruned our underperforming stores. These actions allowed us to deliver year-over-year reductions in food and packaging costs, rental expenses, and labor costs (as a percentage of revenues from company owned and operated stores) by 1.0 percentage points, 0.9 percentage points, and 1.3 percentage points, respectively. Our adjusted general and administrative expenses as a percentage of total revenues decreased by 4.1 percentage points year-over-year.”

Mr. Li continued, “Going forward, and with driving profitable, and capital-efficient growth being front and center of everything we do, we will continue to optimize our store unit economics, roll out our differentiating made-to-order fresh food preparation model to drive traffic, enhance our supply chain capabilities and efficiencies, and facilitate our franchisees to manage the growth and profitability of their stores effectively.”

FIRST QUARTER 2024 FINANCIAL RESULTS

Total revenues reached RMB346.8 million (USD48.0 million) for the three months ended March 31, 2024, representing an increase of 3.1% from RMB336.5 million in the same quarter of 2023. Total revenues comprise:

  • Revenues from Company owned and operated store sales were RMB311.0 million (USD43.1 million) for the three months ended March 31, 2024, representing an increase of 0.2% from RMB310.5 million in the same quarter of 2023. The growth was primarily driven by an increase in the number of company owned and operated stores from 551 as of March 31, 2023 to 615 as of March 31, 2024, offset by same-store sales growth for company owned and operated stores of negative 11.7% in the first quarter of 2024.

  • Other revenues were RMB35.8 million (USD5.0 million) for the three months ended March 31, 2024, representing an increase of 37.5% from RMB26.0 million in the same quarter of 2023. The growth was primarily attributable to revenues from other franchise support activities, which was attributable to an increase in the number of franchised stores from 97 as of March 31, 2023 to 302 as of March 31, 2024.

Company owned and operated store costs and expenses were RMB334.1 million (USD46.3 million) for the three months ended March 31, 2024, representing a decrease of 0.7% from RMB336.5 million in the same quarter of 2023. Company owned and operated store costs and expenses comprise:

  • Food and packaging costs were RMB108.5 million (USD15.0 million), representing a decrease of 2.5% from RMB111.3 million, as we continue to benefit from greater economies of scale and higher efficiencies in supply chains. Accordingly, food and packaging costs as a percentage of revenues from company owned and operated stores decreased by 1.0 percentage points from 35.9% in the first quarter of 2023 to 34.9% in the same quarter of 2024.

  • Rental and property management fee was RMB68.6 million (USD9.5 million), representing a decrease of 4.0% from RMB71.4 million, mainly due to the closure of certain underperforming stores during the first quarter 2024. As a result, rental and property management fee as a percentage of revenues from company owned and operated stores decreased by 0.9 percentage points from 23.0% in the first quarter of 2023 to 22.1% in the same quarter of 2024.

  • Payroll and employee benefits expenses were RMB69.0 million (USD9.6 million), representing a decrease of 5.4% from RMB73.0 million. Payroll and employee benefits as a percentage of revenues from company owned and operated stores decreased by 1.3 percentage points from 23.5% in the first quarter of 2023 to 22.2% in the same quarter of 2024, primarily due to the continuous refinement of staffing arrangement and optimization of store managerial efficiencies.

  • Delivery costs were RMB28.6 million (USD4.0 million), representing an increase of 25.7% from RMB22.8 million, due to an increased proportion of home-delivery orders. Delivery costs as a percentage of revenues from company owned and operated stores increased by 1.9 percentage points to 9.2% in the first quarter of 2024 compared to 7.3% in the same quarter of 2023.

  • Other operating expenses were RMB25.3 million (USD3.5 million), representing an increase of 1.0% from RMB25.1 million, in line with our revenue growth and store network expansion. Other operating expenses as a percentage of revenues from company owned and operated stores remained flat at 8.1% in the first quarter of 2023 and 2024.

  • Store depreciation and amortization expenses were RMB34.0 million (USD4.7 million), representing an increase of 3.2% from RMB33.0 million, driven by an increase in the number of company owned and operated stores from 551 as of March 31, 2023 to 615 as of March 31, 2024. Store depreciation and amortization as a percentage of revenues from company owned and operated stores increased by 0.3 percentage points from 10.6% in the first quarter of 2023 to 10.9% in the same quarter of 2024.

Costs for other revenues were RMB25.0 million (USD3.5 million) for the three months ended March 31, 2024, representing an increase of 32.6% from RMB18.9 million in the same quarter of 2023, which was primarily driven by an increase in the number of franchised stores from 97 as of March 31, 2023 to 302 as of March 31, 2024. Costs for other revenues as a percentage of other revenues decreased by 2.6 percentage points from 72.5% in the first quarter of 2023 to 69.9% in the same quarter of 2024 due to higher margin contribution from our franchised business being realized during the first quarter of 2024.

Marketing expenses were RMB20.7 million (USD2.9 million) for the three months ended March 31, 2024, representing an increase of 13.4% from RMB18.3 million in the same quarter of 2023, which was primarily driven by the increase in the number of our system-wide stores from 648 as of March 31, 2023 to 917 as of March 31, 2024. Marketing expenses as a percentage of total revenues increased by 0.6 percentage points from 5.4% in the first quarter of 2023 to 6.0% in the same quarter of 2024.

General and administrative expenses were RMB58.7 million (USD8.1 million) for the three months ended March 31, 2024, representing a decrease of 16.9% from RMB70.6 million in the same quarter of 2023, which was primarily due to a reduction of our headquarter headcount. Adjusted general and administrative expenses, which excludes share-based compensation expenses of RMB1.0 million (USD0.1 million), and impairment losses of rental deposits of RMB2.5 million (USD0.3 million), were RMB55.2 million (USD7.6 million), representing a decrease of 18.1% from RMB67.5 million in the same quarter of 2023. Adjusted general and administrative expenses as a percentage of total revenues decreased by 4.1 percentage points from 20.0% in the first quarter of 2023 to 15.9% in the same quarter of 2024. For more information on the Company’s non-GAAP financial measures, please see the section “Use of Non-GAAP Financial Measures” and the table captioned “Reconciliation of Non-GAAP Measures to the Most Directly Comparable GAAP Measures” set forth at the end of this earnings release.

Franchise and royalty expenses were RMB14.1 million (USD2.0 million) for the three months ended March 31, 2024, representing an increase of 18.7% from RMB11.9 million in the same quarter of 2023, which was primarily driven by the increase in the number of our system-wide stores from 648 as of March 31, 2023 to 917 as of March 31, 2024. Franchise and royalty expenses as a percentage of total revenues increased by 0.6 percentage points, from 3.5% in the first quarter of 2023 to 4.1% in the same quarter of 2024.

Impairment losses of long-lived assets were RMB19.0 million (USD2.6 million) for the three months ended March 31, 2024, compared to RMB4.4 million in the same quarter of 2023, which was primarily because of planned closings of underperforming company owned and operated stores.

As a result of the foregoing, operating loss was RMB129.4 million (USD17.9 million) for the three months ended March 31, 2024, compared to RMB130.4 million in the same quarter of 2023.

Adjusted Corporate EBITDA was a loss of RMB53.6 million (USD7.4 million) for the three months ended March 31, 2024, compared to a loss of RMB74.6 million in the same quarter of 2023. Adjusted Corporate EBITDA margin was negative 15.4% in the first quarter of 2024, representing an improvement of 6.8 percentage points from negative 22.2% in the same quarter of 2023.

Net loss was RMB142.8 million (USD19.8 million) for the three months ended March 31, 2024, compared to RMB174.5 million for the same quarter of 2023. Adjusted net loss was RMB97.8 million (USD13.6 million) for the three months ended March 31, 2024, compared to RMB117.1 million for the same quarter of 2023. Adjusted net loss margin was negative 28.2% in the first quarter of 2024, representing an improvement of 6.6 percentage points from negative 34.8% in the same quarter of 2023.

Basic and diluted net loss per ordinary share was RMB0.90 (USD0.12) in the first quarter of 2024, compared to RMB1.25 in the same quarter of 2023. Adjusted basic and diluted net loss per ordinary share was RMB0.62 (USD0.10) in the first quarter of 2024, compared to RMB0.84 in the same quarter of 2023.

Liquidity

As of March 31, 2024, the Company’s total cash and cash equivalents and time deposits were RMB218.2 million (USD30.2 million), compared to RMB220.8 million as of December 31, 2023. The change was primarily attributable to the cash disbursements on the back of the expansion of our business and store network nationwide, repayment of bank borrowings, offset by the US$20.0 million junior promissory notes financing provided by Cartesian Capital Group, our existing shareholder.

KEY OPERATING DATA

 For the three months ended or as of  
  Mar 31, Jun 30, Sep 30, Dec 31, Mar 31,
 2023
 2023
 2023
 2023
 2024
           
Total stores 648  700  763  912  917 
Company owned and operated stores 551  571  589  629  615 
Franchised stores 97  129  174  283  302 
Same-store sales growth for system-wide stores 7.5% 19.9% 0.1% 2.6% -13.6%
Same-store sales growth for company owned and operated stores 8.0% 20.4% -0.4% 2.5% -11.7%
Registered loyalty club members (in thousands) 12,386  14,721  16,898  18,714  20,264 
Adjusted store EBITDA (Renminbi in thousands) 6,002  18,244  29,310  15,859  6,124 
Adjusted store EBITDA margin 1.9% 5.0% 7.5% 4.6% 2.0%
                

KEY DEFINITIONS

  • Same-store sales growth. The percentage change in the sales of stores that have been operating for 12 months or longer during a certain period compared to the same period from the prior year. The same-store sales growth for any period of more than a month equals to the arithmetic average of the same-store sales growth of each month covered in the period. If a store was closed for seven days or more during any given month, its sales during that month and the same month in the comparison period are excluded for purposes of measuring same-store sales growth.

  • Net new store openings. The gross number of new stores opened during the period minus the number of stores permanently closed during the period.

  • System sales. Gross merchandise value of sales generated from both company owned and operated stores and franchised stores.

  • Adjusted store EBITDA. Calculated as fully burdened gross profit of company owned and operated stores excluding depreciation and amortization, and store pre-opening expenses.

  • Adjusted store EBITDA margin. Calculated as adjusted store EBITDA as a percentage of revenues from company owned and operated stores.

  • Adjusted general and administrative expenses. Calculated as general and administrative expenses excluding share-based compensation expenses, expenses related to the issuance of certain ordinary shares to CF Principal Investments LLC in November 2022 (the “Commitment Shares”), offering costs related to the ESA (the “ESA Offering Costs”), expenses related to 200,000 of our ordinary shares that may be purchased from our controlling shareholder by a holder of our convertible notes at its option pursuant to the terms of an Option Agreement dated September 28, 2022 (the “Option Shares”), and professional fees related to warrant exchange and other financing programs.

  • Adjusted corporate EBITDA. Calculated as operating loss excluding store pre-opening expenses, and certain non-cash expenses consisting of depreciation and amortization, share-based compensation expenses, expenses related to the Commitment Shares, the ESA Offering Costs, expenses related to the Option Shares, professional fees related to warrant exchange and other financing programs, impairment losses of long-lived assets and loss on disposal of property and equipment.

  • Adjusted corporate EBITDA margin. Calculated as adjusted corporate EBITDA as a percentage of total revenues.

  • Adjusted net loss. Calculated as net loss excluding store pre-opening expenses, share-based compensation expenses, expenses related to the Commitment Shares, the ESA Offering Costs, expenses related to the Option Shares, professional fees related to warrant exchange and other financing programs, impairment losses of long-lived assets, loss on disposal of property and equipment, changes in fair value of convertible notes, changes in fair value of warrant liabilities; and changes in fair value of ESA derivative liabilities.

  • Adjusted net loss margin. Calculated as adjusted net loss as a percentage of total revenues.

  • Adjusted basic and diluted net loss per ordinary share. Calculated as adjusted net loss attributable to the Company’s ordinary shareholders divided by weighted-average number of basic and diluted ordinary shares.

USE OF NON-GAAP FINANCIAL MEASURES

The Company uses non-GAAP financial measures, namely adjusted store EBITDA, adjusted store EBITDA margin, adjusted general and administrative expenses, adjusted corporate EBITDA, adjusted corporate EBITDA margin, adjusted net loss, adjusted net loss margin, and adjusted basic and diluted net loss per ordinary share in evaluating its operating results and for financial and operational decision-making purposes. The Company defines (i) adjusted store EBITDA as fully burdened gross profit of company owned and operated stores excluding depreciation and amortization, and store pre-opening expenses; (ii) adjusted store EBITDA margin as adjusted store EBITDA as a percentage of revenues from company owned and operated stores; (iii) adjusted general and administrative expenses as general and administrative expenses excluding share-based compensation expenses, expenses related to the Commitment Shares, the ESA Offering Costs, and expenses related to the Option Shares, and professional fees related to warrant exchange and other financing programs; (iv) adjusted corporate EBITDA as operating loss excluding store pre-opening expenses, and certain non-cash expenses consisting of depreciation and amortization, share-based compensation expenses, expenses related to the Commitment Shares, the ESA Offering Costs, expenses related to the Option Shares, professional fees related to warrant exchange and other financing programs, impairment losses of long-lived assets, and loss on disposal of property and equipment; (v) adjusted corporate EBITDA margin as adjusted corporate EBITDA as a percentage of total revenues; (vi) adjusted net loss as net loss excluding store pre-opening expenses, share-based compensation expenses, expenses related to the Commitment Shares, the ESA Offering Costs, expenses related to the Option Shares, professional fees related to warrant exchange and other financing programs, impairment losses of long-lived assets, loss on disposal of property and equipment, changes in fair value of convertible notes, changes in fair value of warrant liabilities; and changes in fair value of ESA derivative liabilities; (vii) adjusted net loss margin as adjusted net loss as a percentage of total revenues; and (viii) adjusted basic and diluted net loss per ordinary share as adjusted net loss attributable to the Company’s ordinary shareholders divided by weighted-average number of basic and diluted ordinary share. The Company believes adjusted store EBITDA, adjusted store EBITDA margin, adjusted general and administrative expenses, adjusted corporate EBITDA, adjusted corporate EBITDA margin, adjusted net loss, adjusted net loss margin, and adjusted basic and diluted net loss per ordinary share enhance investors' overall understanding of its financial performance and allow for greater visibility with respect to key metrics used by its management in its financial and operational decision-making.

These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. As these non-GAAP financial measures have limitations as analytical tools and may not be calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measures, which should be considered when evaluating the Company’s performance. For reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, “Reconciliation of Non-GAAP Measures to the Most Directly Comparable GAAP Measures.” The Company encourages investors and others to review its financial information in its entirety and not rely on any single financial measure.

EXCHANGE RATE INFORMATION

This earnings release contains translations of certain RMB amounts into U.S. dollars (“USD”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB7.2203 to USD1.00, the exchange rate in effect on March 29, 2024 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all.

CONFERENCE CALL

The Company will hold a conference call today, on Wednesday, June 5, 2024, at 8:00 am Eastern Time (on Wednesday, June 5, 2024, at 8:00 pm Beijing Time) to discuss the financial results.

Participants are strongly encouraged to pre-register for the conference call, by using the weblink provided below.

https://register.vevent.com/register/BI94870283e9124554bcb820c11f01f505

Participants may also view the live webcast by registering through below weblink:

https://edge.media-server.com/mmc/p/srctfy6e

The webcast features a 'Submit Your Question' tab at the top, where you will have the opportunity to submit your questions before and during the call.

A live and archived webcast of the conference call will also be available at the Company’s Investor Relations website at https://ir.timschina.com under “Events and Presentations”.

FORWARD-LOOKING STATEMENTS

Certain statements in this earnings release may be considered forward-looking statements within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, such as the Company’s ability to further grow its business and store network, optimize its cost structure, improve its operational efficiency, and achieve profitable growth. Forward-looking statements are statements that are not historical facts and generally relate to future events or the Company’s future financial or other performance metrics. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those expressed or implied by such forward looking statements. New risks and uncertainties may emerge from time to time, and it is not possible to predict all risks and uncertainties. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by the Company and its management, as the case may be, are inherently uncertain and subject to material change. Factors that may cause actual results to differ materially from current expectations include various factors beyond management’s control, including, but not limited to, general economic conditions and other risks, uncertainties and factors set forth in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in the Company’s Annual Report on Form 20-F, and other filings it makes with the Securities and Exchange Commission. Nothing in this communication should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this communication, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein. Except as required by law, the Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions, or circumstances on which any statement is based.

ABOUT TH INTERNATIONAL LIMITED

TH International Limited (Nasdaq: THCH) (“Tims China”) is the parent company of the exclusive master franchisees of Tim Hortons coffee shops in mainland China, Hong Kong and Macau and Popeyes restaurants in mainland China and Macau. Tims China was founded by Cartesian Capital Group and Tim Hortons Restaurants International, a subsidiary of Restaurant Brands International (TSX: QSR) (NYSE: QSR).

The Company’s philosophy is rooted in world-class execution and data-driven decision making and centered around true local relevance, continuous innovation, genuine community, and absolute convenience. For more information, please visit https://www.timschina.com.

INVESTOR AND MEDIA CONTACTS

Investor Relations

Gemma Bakx
IR@timschina.com, or gemma.bakx@cartesiangroup.com

Public and Media Relations

Patty Yu
Patty.Yu@timschina.com


TH INTERNATIONAL LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of RMB and US$, except for number of shares)
       
  As of
  December 31,
2023
 March 31, 2024
(Unaudited)
  RMB RMB US$
       
ASSETS      
Current assets:      
Cash and cash equivalents 203,587  196,890  27,269 
Time deposits 17,165  21,285  2,948 
Accounts receivable, net 27,562  27,703  3,837 
Inventories 50,719  40,252  5,575 
Prepaid expenses and other current assets 159,587  164,645  22,803 
Total current assets 458,620  450,775  62,432 
       
Non-current assets:      
Property and equipment, net 691,876  640,123  88,656 
Intangible assets, net 147,448  145,747  20,186 
Operating lease right-of-use assets 849,079  737,614  102,158 
Other non-current assets 68,416  65,172  9,026 
Total non-current assets 1,756,819  1,588,656  220,026 
Total assets 2,215,439  2,039,431  282,458 
       
LIABILITIES AND SHAREHOLDERS’ EQUITY      
Current liabilities:      
Bank borrowings, current 538,233  422,641  58,535 
Accounts payable 224,849  256,046  35,462 
Contract liabilities 40,715  43,238  5,988 
Amount due to related parties 53,004  208,933  28,937 
Operating lease liabilities 200,878  205,103  28,406 
Other current liabilities 338,154  319,829  44,297 
Total current liabilities 1,395,833  1,455,790  201,625 
       
Non-current liabilities:      
Bank borrowings, non-current 5,266  2,890  400 
Convertible notes, at fair value 420,712  435,633  60,334 
Contract liabilities 5,272  5,051  700 
Amount due to related parties 94,200  96,492  13,364 
Operating lease liabilities 707,689  602,500  83,445 
Other non-current liabilities 8,896  8,447  1,170 
Total non-current liabilities 1,242,035  1,151,013  159,413 
Total liabilities 2,637,868  2,606,803  361,038 
       
Shareholders’ equity:      
Ordinary shares 10  10  1 
Additional paid-in capital 1,807,715  1,812,164  250,982 
Accumulated losses (2,256,424) (2,400,468) (332,461)
Accumulated other comprehensive income 21,492  14,928  2,068 
Treasury shares -  -  - 
Total (deficit) equity attributable to shareholders of the Company (427,207) (573,366) (79,410)
Non-controlling interests 4,778  5,994  830 
Total shareholders’ (deficit) equity (422,429) (567,372) (78,580)
       
Commitments and Contingencies -  -  - 
       
Total liabilities and shareholders’ equity (deficit) 2,215,439  2,039,431  282,458 
       



       
TH INTERNATIONAL LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)
(Amounts in thousands of RMB and US$, except for per share data)
       
  For the three months ended March 31,
  2023 2024
  RMB RMB US$
Revenues:      
Company owned and operated stores 310,451  311,037  43,078 
Other revenues 26,028  35,778  4,955 
Total revenues 336,479  346,815  48,033 
       
Costs and expenses, net:      
Company owned and operated stores      
Food and packaging 111,326  108,523  15,030 
Rental and property management fee 71,410  68,586  9,499 
Payroll and employee benefits 72,960  69,038  9,562 
Delivery costs 22,782  28,637  3,966 
Other operating expenses 25,088  25,329  3,508 
Store depreciation and amortization 32,974  34,021  4,712 
Company owned and operated store costs and expenses 336,540  334,134  46,277 
       
Costs of other revenues 18,868  25,024  3,466 
Marketing expenses 18,303  20,748  2,874 
General and administrative expenses 70,620  58,698  8,128 
Franchise and royalty expenses 11,905  14,132  1,957 
Other operating costs and expenses 5,572  4,183  579 
Loss on disposal of property and equipment 896  2,004  278 
Impairment losses of long-lived assets 4,418  18,965  2,627 
Other income 226  1,675  232 
Total costs and expenses, net 466,896  476,213  65,954 
       
Operating loss (130,417) (129,398) (17,921)
       
Interest income 2,023  992  137 
Interest expenses (4,336) (5,591) (774)
Foreign currency transaction loss (1,788) 3,950  547 
Changes in fair value of Deferred Contingent consideration -  (2,130) (295)
Changes in fair value of convertible notes (14,272) (10,651) (1,475)
Changes in fair value of warrant liabilities (58,184) -  - 
Changes in fair value of ESA derivative liabilities 32,523  -  - 
       
Loss before income taxes (174,451) (142,828) (19,781)
Income tax expenses -  -  - 
Net loss (174,451) (142,828) (19,781)
       
Less: Net (income) loss attributable to non-controlling interests 433  1,217  169 
Net Loss attributable to shareholders of the Company (174,884) (144,045) (19,950)
Basic and diluted loss per Ordinary Share (1.25) (0.90) (0.12)
       
Net loss (174,451) (142,828) (19,781)
       
Other comprehensive income (loss)      
Unrealized gain on short-term investment, net of nil income taxes 700  -  - 
Fair value changes of convertible notes due to instrument-specific credit risk, net of nil income taxes (2,607) (3,550) (492)
Foreign currency translation adjustment, net of nil income taxes 1,029  (3,033) (420)
       
Total comprehensive loss (175,329) (149,411) (20,693)
       
Less: Comprehensive loss attributable to non- controlling interests 433  1,217  169 
Comprehensive loss attributable to shareholders of the Company (175,762) (150,628) (20,862)
       



TH INTERNATIONAL LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of RMB and US$)
       
  For the three months ended March 31,
  2023
 2024
  RMB RMB US$
Net cash used in operating activities (85,360) (26,746) (3,704)
Net cash provided by/(used in) investing activities 50,238  (7,264) (1,006)
Net cash provided by financing activities 163,983  25,975  3,597 
Effect of foreign currency exchange rate changes on cash (3,368) 1,338  185 
Net increase/(decrease) in cash 125,493  (6,697) (928)
Cash at beginning of the period 239,077  203,587  28,196 
Cash at end of the period 364,570  196,890  27,268 
       



         
TH INTERNATIONAL LIMITED AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES TO THE MOST DIRECTLY COMPARABLE GAAP MEASURES
(Unaudited, amounts in thousands of RMB and US$, except for number of shares and per share data)
         
A. Adjusted store EBITDA and adjusted store EBITDA margin      
         
  For the three months ended March 31, 2024
  Tims Popeyes Total
  RMB RMB RMB US$
Revenues - company owned and operated stores 296,375  14,662  311,037  43,078 
Food and packaging costs - company owned and operated stores (102,709) (5,814) (108,523) (15,030)
Rental expenses - company owned and operated stores (64,608) (3,978) (68,586) (9,499)
Payroll and employee benefits - company owned and operated stores (65,179) (3,859) (69,038) (9,562)
Delivery costs - company owned and operated stores (27,534) (1,103) (28,637) (3,966)
Other operating expenses - company owned and operated stores (24,217) (1,112) (25,329) (3,508)
Store depreciation and amortization (33,227) (794) (34,021) (4,712)
Franchise and royalty expenses - company owned and operated stores (9,839) (455) (10,294) (1,426)
Fully-burdened gross loss - company owned and operated stores (30,938) (2,453) (33,391) (4,625)
Store depreciation and amortization 33,227  794  34,021  4,712 
Store pre-opening expenses 4,952  542  5,494  761 
Adjusted Store EBITDA 7,241  (1,117) 6,124  848 
Adjusted Store EBITDA Margin 2.4% -7.6% 2.0% 2.0%
         
  For the three months ended March 31, 2023
  Tims Popeyes Total
  RMB RMB RMB US$
Revenues - company owned and operated stores 310,451  -  310,451  45,205 
Food and packaging costs - company owned and operated stores (111,326) -  (111,326) (16,210)
Rental expenses - company owned and operated stores (71,410) -  (71,410) (10,398)
Payroll and employee benefits - company owned and operated stores (72,960) -  (72,960) (10,624)
Delivery costs - company owned and operated stores (22,782) -  (22,782) (3,318)
Other operating expenses - company owned and operated stores (25,088) -  (25,088) (3,653)
Store depreciation and amortization (32,974) -  (32,974) (4,801)
Franchise and royalty expenses - company owned and operated stores (9,823) -  (9,823) (1,430)
Fully-burdened gross loss - company owned and operated stores (35,912) -  (35,912) (5,229)
Store depreciation and amortization 32,974  -  32,974  4,801 
Store pre-opening expenses 8,940  -  8,940  1,302 
Adjusted Store EBITDA 6,002  -  6,002  874 
Adjusted Store EBITDA Margin 1.9%   1.9% 1.9%
         
B. Adjusted general and administrative expenses      
  For the three months ended March 31, 2024
  Tims Popeyes Total
  RMB RMB RMB US$
General and administrative expenses (54,467) (4,231) (58,698) (8,128)
Adjusted for:        
Share-based compensation expenses 1,014  -  1,014  140 
Impairment losses of rental deposits 2,457  -  2,457  340 
Adjusted General and administrative expenses (50,996) (4,231) (55,227) (7,648)
Adjusted General and administrative expenses as a % of total revenue 15.4% 28.8% 15.9% 15.9%
         
  For the three months ended March 31, 2023
  Tims Popeyes Total
  RMB RMB RMB US$
General and administrative expenses (70,620) -  (70,620) (10,286)
Adjusted for:        
Share-based compensation expenses 3,161  -  3,161  460 
Adjusted General and administrative expenses (67,459) -  (67,459) (9,826)
Adjusted General and administrative expenses as a % of total revenue 20.0%   20.0% 20.0%
         
C. Adjusted corporate EBITDA and adjusted corporate EBITDA margin      
         
  For the three months ended March 31, 2024
  Tims Popeyes Total
  RMB RMB RMB US$
Operating loss (121,262) (8,136) (129,398) (17,921)
Adjusted for:        
Store pre-opening expenses 4,952  542  5,494  761 
Depreciation and amortization 42,225  1,415  43,640  6,044 
Share-based compensation expenses 1,014  -  1,014  140 
Impairment losses of rental deposits 2,457  -  2,457  340 
One-off expense of store closure 2,265  -  2,265  314 
Impairment losses of long-lived assets 18,965  -  18,965  2,627 
Loss on disposal of property and equipment 2,004  -  2,004  278 
Adjusted Corporate EBITDA (47,380) (6,179) (53,559) (7,417)
Adjusted Corporate EBITDA Margin -14.3% -42.1% -15.4% -15.4%
         
  For the three months ended March 31, 2023
  Tims Popeyes Total
  RMB RMB RMB US$
Operating loss (130,417) -  (130,417) (18,992)
Adjusted for:        
Store pre-opening expenses 8,940  -  8,940  1,302 
Depreciation and amortization 38,357  -  38,357  5,585 
Share-based compensation expenses 3,161  -  3,161  460 
Impairment losses of long-lived assets 4,418  -  4,418  643 
Loss on disposal of property and equipment 896  -  896  130 
Adjusted Corporate EBITDA (74,645) -  (74,645) (10,872)
Adjusted Corporate EBITDA Margin -22.2%   -22.2% -22.2%
         
D. Adjusted net loss and adjusted net loss margin      
         
  For the three months ended March 31, 2024
  Tims Popeyes Total
  RMB RMB RMB US$
Net loss (134,689) (8,139) (142,828) (19,781)
Adjusted for:        
Store pre-opening expenses 4,952  542  5,494  761 
Share-based compensation expenses 1,014  -  1,014  140 
Impairment losses of long-lived assets 18,965  -  18,965  2,627 
Impairment losses of rental deposits 2,457  -  2,457  340 
One-off expense of store closure 2,265  -  2,265  314 
Loss on disposal of property and equipment 2,004  -  2,004  278 
Changes in fair value of Deferred Contingent consideration 2,130  -  2,130  295 
Changes in fair value of convertible notes 10,651  -  10,651  1,475 
Adjusted Net loss (90,251) (7,597) (97,848) (13,551)
Adjusted Net loss Margin -27.2% -51.8% -28.2% -28.2%
         
  For the three months ended March 31, 2023
  Tims Popeyes Total
  RMB RMB RMB US$
Net loss (174,451) -  (174,451) (25,402)
Adjusted for:        
Store pre-opening expenses 8,940  -  8,940  1,302 
Share-based compensation expenses 3,161  -  3,161  460 
Impairment losses of long-lived assets 4,418  -  4,418  643 
Loss on disposal of property and equipment 896  -  896  130 
Changes in fair value of convertible notes 14,272  -  14,272  2,078 
Changes in fair value of warrant liabilities 58,184  -  58,184  8,472 
Changes in fair value of ESA derivative liabilities (32,523) -  (32,523) (4,736)
Adjusted Net loss (117,103) -  (117,103) (17,053)
Adjusted Net loss Margin -34.8%   -34.8% -34.8%
         
E. Adjusted basic and diluted net loss per Ordinary Share      
         
  For the three months ended March 31, 2024
  Tims Popeyes Total
  RMB RMB RMB US$
Net Loss attributable to shareholders of the Company (135,906) (8,139) (144,045) (19,950)
Adjusted for:        
Store pre-opening expenses 4,952  542  5,494  761 
Share-based compensation expenses 1,014  -  1,014  140 
Impairment losses of long-lived assets 18,965  -  18,965  2,627 
Impairment losses of rental deposits 2,457  -  2,457  340 
One-off expense of store closure 2,265  -  2,265  314 
Loss on disposal of property and equipment 2,004  -  2,004  278 
Changes in fair value of Deferred Contingent consideration 2,130  -  2,130  295 
Changes in fair value of convertible notes 10,651  -  10,651  1,475 
Adjusted Net loss attributable to shareholders of the Company (91,468) (7,597) (99,065) (13,720)
Weighted average shares outstanding used in calculating basic and diluted loss per share 160,633,868  160,633,868  160,633,868160,633,868 
Adjusted basic and diluted net loss per Ordinary Share (0.57) (0.05) (0.62) (0.09)
         
  For the three months ended March 31, 2023
  Tims Popeyes Total
  RMB RMB RMB US$
Net Loss attributable to shareholders of the Company (174,884) -  (174,884) (25,465)
Adjusted for:        
Store pre-opening expenses 8,940  -  8,940  1,302 
Share-based compensation expenses 3,161  -  3,161  460 
Impairment losses of long-lived assets 4,418  -  4,418  643 
Loss on disposal of property and equipment 896  -  896  130 
Changes in fair value of convertible notes 14,272  -  14,272  2,078 
Changes in fair value of warrant liabilities 58,184  -  58,184  8,472 
Changes in fair value of ESA derivative liabilities (32,523) -  (32,523) (4,736)
Adjusted Net loss attributable to shareholders of the Company (117,536) -  (117,536) (17,116)
Weighted average shares outstanding used in calculating basic and diluted loss per share 139,612,628  -  139,612,628139,612,628 
Adjusted basic and diluted net loss per Ordinary Share (0.84) -  (0.84) (0.12)
         

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