omniture

GreenTree Hospitality Group Ltd. Reports Third Quarter of 2019 Financial Results

Revenue Increased for the Seventh Consecutive Quarter
2019-11-20 22:24 3722
  • A total of 3,102 hotels with 245,705 hotel rooms in operation as of September 30, 2019, compared to 2,955 hotels and 236,557 hotel rooms as of June 30, 2019.
  • Total revenues increased 20.1% to RMB292.1 million (US$40.9 million)[1] for the third quarter of 2019. Total revenues increased 20.6% to RMB802.4 million (US$112.3 million)[1] for the first nine months of 2019.
  • Adjusted EBITDA (non-GAAP) increased 11.6% to RMB177.1 million (US$24.8 million)[1] for the third quarter of 2019. Adjusted EBITDA (non-GAAP) increased 16.5% to RMB484.0 million (US$67.7 million)[1] for the first nine months of 2019.
  • Net income decreased 28.4% to RMB102.2 million (US$14.3 million)[1] for the third quarter of 2019. Net income increased 13.1% to RMB363.2 million (US$50.8 million)[1] for the first nine months of 2019.
  • Core net income (non-GAAP) increased 16.5% to RMB134.8 million (US$18.9 million)[1] for the third quarter of 2019. Core net income (non-GAAP) increased 17.0% to RMB352.9 million (US$49.4 million)[1] for the first nine months of 2019.
  • Net income per ADS (basic and diluted) totaled RMB1.01 (US$0.14)[1] for the third quarter of 2019. Net income per ADS (basic and diluted) totaled RMB3.60 (US$0.50)[1] for the first nine months of 2019.
  • Core net income per ADS (basic and diluted) (non-GAAP) of the Company totaled RMB1.32 (US$0.18)[1] for the third quarter of 2019. Core net income per ADS (basic and diluted) (non-GAAP) totaled RMB3.46 (US$0.48)[1] for the first nine months of 2019.
  • The Company expects total revenue for the full year 2019 to grow 20%-25% from 2018.

SHANGHAI, Nov. 20, 2019 /PRNewswire/ -- GreenTree Hospitality Group Ltd. (NYSE: GHG) ("GreenTree", the "Company", "we", "us" and "our"), a leading hospitality management group in China, today announced its unaudited financial results for the third quarter ended September 30, 2019.

Third Quarter of 2019 Operational Highlights

  • As of September 30, 2019, the Company had 30 leased-and-operated ("L&O") hotels and 3,072 franchised-and-managed ("F&M") hotels in operation in 309 cities across China, compared to 30 L&O hotels and 2,528 F&M hotels in operation in 278 cities as of September 30, 2018. The geographic coverage increased by 11.2% year over year.
  • During the third quarter of 2019, the Company opened 181 hotels, an increase of 35 comparing to 146 newly opened hotels in the third quarter of 2018. Among the hotels opened, 3 were in the luxury hotel segment, 20 in the mid-to-up-scale segment, 92 in the mid-scale segment, and 66 in the economy segment. Geographically speaking, 16 hotels were in Tier 1 cities[2], 38 were in Tier 2 cities[3] and the remaining 127 were in select Tier 3 and other cities in China.
    During this quarter, the Company closed 34 hotels, 15 due to brand upgrade, and 13 due to their non-compliance with the Company's brand and operating standards. The remaining 6 were closed for property related issues. The Company added a net opening of 147 hotels to the portfolio.
  • As of September 30, 2019, the Company had a pipeline with a total of 652 hotels contracted for or under development, among which 47 hotels were in the luxury hotel segment, 128 in the mid-to-up-scale segment, 258 in the mid-scale segment, and 219 in the economy segment.
  • The average daily room rate, or ADR, for all hotels in operation, was RMB174 in the third quarter of 2019, an increase of 4.2% year-over-year.
  • The occupancy rate, or OCC for all hotels in operation was 85.9% in the third quarter of 2019, compared with 87.2% in the third quarter of 2018.
  • The revenue per available room, or RevPAR, which is calculated by multiplying our hotels' ADR by its occupancy rate, was RMB149in the third quarter of 2019, representing a 2.7% year-over-year increase.
  • As of September 30, 2019, the Company's loyalty program had more than 39 million individual loyal members and over 1,450,000 corporate members, compared to approximately 36 million and over 1,380,000 corporate members as of June 30, 2019. The Company had approximately 93.1% of room nights sold directly.

[1] The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB7.1477 on September 30, 2019 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at https://www.federalreserve.gov/releases/H10/hist/dat00_ch.htm.

[2] "Tier 1 cities" refers to the term used by the National Bureau of Statistics of China and refer to Beijing, Shanghai, Shenzhen and Guangzhou.

[3] "Tier 2 cities" refers to the 32 major cities, other than Tier 1 cities, as categorized by the National Bureau of Statistics of China, including provincial capitals, administrative capitals of autonomous regions, direct-controlled municipalities and other major cities designated as "municipalities with independent planning" by the State Council.

"We are pleased with our solid operating and financial performance in the third quarter, especially in the light of the weak service sector numbers observed recently. During the quarter, we further increased market share by exploring new regions and improving the quality of our hotels across all brands. We remain optimistic about the rest of 2019 despite the slowed-down growth momentum of the industry, as we have already shown that GreenTree's business model is able to deliver substantial growth through the variety of options for our franchisees and customers, while generating strong and sustainable cash flow for any future development." said Mr. Alex Xu, Chairman and Chief Executive Officer of GreenTree.

Third Quarter of 2019 Financial Results


Quarter Ended



 September 30,
2018


 September 30,
2019


 September 30,
2019


RMB


RMB


US$

Revenues






Leased-and-operated hotels

59,029,825


72,530,518


10,147,393

Franchised-and-managed hotels

184,218,350


219,606,332


30,724,055

Total revenues

243,248,175


292,136,850


40,871,448








 Nine Months
Ended



 September 30,
2018


 September 30,
2019


 September 30,
2019


RMB


RMB


US$

Revenues






Leased-and-operated hotels

155,949,957


184,867,320


25,863,889

Franchised-and-managed hotels

509,286,550


617,493,389


86,390,502

Total revenues

665,236,507


802,360,709


112,254,391

Total revenues for the third quarter of 2019 were RMB292.1 million (US$40.9 million)[1], representing a 20.1% year-over-year increase. The increase was primarily attributable to the addition of 181 hotels to our current network, improved RevPAR and contribution from membership growth. Growth was partially offset by the renovation of 6 L&O hotels during this quarter. Total revenues for the first nine months of 2019 were RMB802.4 million (US$112.3 million)[1], representing a 20.6% increase.

  • Total revenues from leased-and-operated hotels for the third quarter of 2019 were RMB72.5 million (US$10.1 million)[1], representing a 22.9% year-over-year increase. The increase was primarily attributable to increasing RevPAR, moderate sublease revenue growth; and was partially offset by the renovation of 6 L&O hotels during the quarter. Total revenues from L&O hotels for the first nine months of 2019 were RMB184.9 million (US$25.9 million)[1], representing a 18.5% increase.
  • Total revenues from franchised-and-managed hotels for the third quarter of 2019 were RMB219.6 million (US$30.7 million)[1], representing a 19.2% year-over-year increase. Initial franchise fees increased by 81.3% year-over-year in the third quarter of 2019, primarily due to more economy hotels opened in the third quarter of 2019. The 16.2% increase from the third quarter of 2018 in recurring franchisee management fees and others was primarily due to the new openings, RevPAR growth of 2.7% as well as growth in central reservation system ("CRS") usage fees, annual IT and hotel manager fees, which in turn resulted from the increased number of hotels and hotel rooms in operation. Total revenues from F&M hotels for the first nine months of 2019 were RMB617.5 million (US$86.4 million)[1], representing a 21.2% increase.

Quarter Ended


 September 30,
2018


 September 30,
2019


 September 30,
2019


RMB


RMB


US$

Initial franchise fee

8,425,643


15,277,606


2,137,416

Recurring franchise management fee
and others

175,792,707


204,328,726


28,586,640

Revenues from franchised-and-
managed hotels

184,218,350


219,606,332


30,724,056








Nine Months Ended


 September 30,
2018


 September 30,
2019


 September 30,
2019


RMB


RMB


US$

Initial franchise fee

29,530,295


41,274,393


5,774,500

Recurring franchise management fee
and others

479,756,255


576,218,996


80,616,002

Revenues from franchised-and-
managed hotels

509,286,550


617,493,389


86,390,502

 

Total operating costs and expenses


Quarter Ended


 September 30,
2018


 September 30,
2019


 September 30,
2019


RMB


RMB


US$

Operating costs and expenses






Hotel operating costs

74,507,927


87,277,200


12,210,529

Selling and marketing expenses

12,136,352


20,785,447


2,907,991

General and administrative expenses

24,229,964


39,891,061


5,580,965

Other operating expenses

99,935


53,736


7,518

Total operating costs and expenses

110,974,178


148,007,444


20,707,003








Nine Months Ended



 September 30,
2018


 September 30,
2019


 September 30,
2019


RMB


RMB


US$

Operating costs and expenses






Hotel operating costs

202,460,194


246,216,861


34,447,005

Selling and marketing expenses

33,524,476


61,815,183


8,648,262

General and administrative expenses

69,781,751


105,391,932


14,744,873

Other operating expenses

278,527


161,710


22,624

Total operating costs and expenses

306,044,948


413,585,686


57,862,765

Hotel operating costs for the third quarter of 2019 were RMB87.3 million (US$12.2 million)[1], representing a 17.1% increase from the third quarter of 2018. The increase was mainly attributable to costs associated with the expansion of our F&M hotels including staff costs; higher consumables, higher depreciation and amortization, higher one-time renovation costs related to the renovation of 6 L&O hotels, as well as the operation costs of Argyle. For the first nine months of 2019, hotel operating costs were RMB246.2 million (US$34.4 million)[1], representing a 21.6% increase.


Quarter Ended


 September 30,


 September 30,


 September 30,

2018


2019


2019


RMB


RMB


US$

Rental

19,958,416


17,679,757


2,473,489

Utilities

5,376,412


4,231,308


591,982

Personnel cost

10,221,598


10,918,296


1,527,526

Depreciation and amortization

5,752,902


5,627,887


787,370

Consumable, food and beverage

5,039,899


7,760,883


1,085,787

Costs of general managers of
franchised-and-operated hotels

19,132,342


27,616,095


3,863,634

Other costs of franchised-and-
operated hotels

6,096,382


8,400,931


1,175,333

Others

2,929,976


5,042,043


705,408

Hotel Operating Costs

74,507,927


87,277,200


12,210,529








Nine Months Ended


 September 30,


 September 30,


 September 30,

2018


2019


2019


RMB


RMB


US$

Rental

55,250,840


57,327,190


8,020,369

Utilities

15,591,749


15,277,291


2,137,372

Personnel cost

25,391,187


28,207,871


3,946,426

Depreciation and amortization

14,287,708


19,326,123


2,703,824

Consumable, food and beverage

14,079,286


21,529,959


3,012,152

Costs of general managers of
franchised-and-operated hotels

50,447,624


73,106,207


10,227,934

Other costs of franchised-and-
operated hotels

17,471,828


21,393,731


2,993,093

Others

9,939,972


10,048,489


1,405,835

Hotel Operating Costs

202,460,194


246,216,861


34,447,005

 


Nine Months Ended


 September 30,


 September 30,


 September 30,

2018


2019


2019


RMB


RMB


US$

Rental

55,250,840


58,891,140


8,239,173

Utilities

15,591,749


14,089,829


1,971,240

Personnel cost

25,391,187


20,926,046


2,927,661

Depreciation and amortization

14,287,708


24,452,033


3,420,965

Consumable, food and beverage

14,079,286


20,383,087


2,851,699

Costs of general managers of
franchised-and operated hotels

50,447,624


63,789,157


8,924,431

Other costs of franchised-and-
operated hotels

17,471,828


27,680,814


3,872,688

Others

9,939,972


16,004,754


2,239,147

Hotel Operating Costs

202,460,194


246,216,860


34,447,004

Selling and marketing expenses for the third quarter of 2019 were RMB20.8 million (US$2.9 million)[1], representing a 71.3% year-over-year increase. The increase was mainly attributable to the operation of the newly-added hotel brands including increased advertising and promotion expenses to improve our brand recognition and increased personnel, compensation and other costs. Selling and marketing expenses for the first nine months of 2019 were RMB61.8 million (US$8.6 million)[1], representing a 84.4% increase.

General and administrative expenses for the third quarter of 2019 were RMB39.9 million (US$5.6 million)[1], representing a 64.6% year-over-year increase. The increase was primarily attributable to increased IT Research and development expense, headquarter staff costs, legal, due diligence, M&A and other consulting fee, increase of share-based payment, as well as the G&A expense of Argyle. General and administrative expenses for the first nine months of 2019 were RMB105.4 million (US$14.7 million)[1], representing a 51.0% year-over-year increase.

Gross profit for the third quarter of 2019 was RMB204.9 million (US$28.7 million)[1], representing an increase of 21.4% from the third quarter of 2018. Gross margin in this quarter was 70.1%, compared to 69.4% a year ago. Gross profit for the first nine months of 2019 was RMB556.1 million (US$77.8 million)[1], representing a 20.2% year-over-year decrease.

Income from operations for the third quarter of 2019 totaled RMB152.6 million (US$21.3 million)[1], representing a year-over-year increase of 13.7%. The operating margin, defined as income from operations as percentage of total revenues, for the third quarter of 2019 was 52.2%, compared to 55.1% a year ago. Income from operations for the first nine months of 2019 totaled RMB405.8 million (US$56.8 million)[1], representing a year-over-year increase of 4.8%.

Adjusted EBITDA (non-GAAP) for the third quarter of 2019 was RMB177.1 million (US$24.8 million)[1], representing a year-over-year increase of 11.6%. The adjusted EBITDA margin, defined as adjusted EBITDA (non-GAAP) as a percentage of total revenues, was 60.6% in the third quarter of 2019, compared to 65.2% in the third quarter of 2018. Adjusted EBITDA (non-GAAP) for the first nine months of 2019 was RMB484.0 million (US$67.7 million)[1], representing a year-over-year increase of 16.5%.

Net income for the third quarter of 2019 was RMB102.2 million (US$14.3 million)[1], representing a year-over-year decrease of 28.4%. Net margin in the third quarter was 35.0%, compared to 58.7% a year ago. The year-over-year decrease was primarily due to losses on investments in equity securities and increase in total operating cost and expenses. Net income for the first nine months of 2019 was RMB363.2 million (US$50.8 million)[1], representing a year-over-year increase of 13.1%.

Core net income (non-GAAP) for the third quarter of 2019 was RMB134.8 million (US$18.9 million)[1], representing a year-over-year increase of 16.5%. The core net margin, defined as core net income (non-GAAP) as a percentage of total revenues, was 46.2% in the third quarter of 2019, compared to 47.6% one year ago. Core net income (non-GAAP) for the first nine months of 2019 was RMB352.9 million (US$49.4 million)[1], representing a year-over-year increase of 17.0%.

Earnings per ADS (basic and diluted) for the third quarter of 2019 was RMB1.01 (US$0.14)[1], representing a year-over-year decrease of 28.4%. Core net income per ADS (basic and diluted) (non-GAAP) was RMB1.32 (US$0.18)[1] for the third quarter of 2019, representing a year-over-year increase of 15.8%. Earnings per ADS (basic and diluted) for the first nine months of 2019 was RMB3.60 (US$0.50)[1], representing a year-over-year increase of 9.9%. Core net income per ADS (basic and diluted) (non-GAAP) was RMB3.46 (US$0.48)[1] for the first nine months of 2019, representing a year-over-year increase of 12.7%.

Cash flow. Operating cash inflow for the third quarter of 2019 was RMB188.3 million (US$26.3 million)[1], due primarily to improved operating performance across our hotel portfolio. Operating cash inflow for the first nine months of 2019 was RMB395.5 million (US$55.3 million)[1]. Investing cash outflow for the third quarter of 2019 was RMB615.0 million (US$86.0 million)[1], which was primarily attributable to purchases of short-term investments, purchases of property and equipment, loans to third parties and partially offset by proceeds from Proceeds from short-term investments. Investing cash outflow for the first nine months of 2019 was RMB1,016.5 million (US$142.2 million)[1]. Financing cash inflow for the third quarter of 2019 was RMB2.4 million (US$331.6k)[1] , financing cash outflow for the first nine months of 2019 was RMB195.3 million (US$27.3 million)[1].

Cash and cash equivalents, restricted cash, short-term investments, investments in equity securities[4] and time deposit[5]. As of September 30, 2019, the Company had a total balance of cash and cash equivalents, restricted cash, short term investments, investments in equity securities and time deposit of RMB2,060.5 million (US$288.3 million)[1], as compared to RMB2,053.7 million as of June 30, 2019, primarily due to cash outflow due to acquisitions, and loan to third parties and franchisees.

[4] Investments in equity securities include securities and investment in Gingko and New Century which is recorded in Long-term investments account.

[5] Time deposits are the time deposit certificates last over three months.

Guidance

For the full year 2019, the Company expects growth in total revenues of 20%-25% compared to 2018.

The guidance set forth above reflects the Company's current and preliminary view based on our estimates, may not be indicative of our financial results for future interim periods and the full year ended December 31, 2019 and is subject to change.

Conference Call

GreenTree's management will hold an earnings conference call at 8:00 AM U.S. Eastern Time on November 20, 2019 (9:00 PM Beijing/Hong Kong Time on November 20, 2019).

Dial-in numbers for the live conference call are as follows:

International 

1-412-902-4272 

Mainland China

4001-201-203 

US 

1-888-346-8982 

Hong Kong  

800-905-945 or 852-3018-4992 

Singapore

800-120-6157 

Participants should ask to join the GreenTree call, please dial in approximately 10 minutes before the scheduled time of the call.

A telephone replay of the call will be available after the conclusion of the conference call until November 27, 2019.

Dial-in numbers for the replay are as follows:

International Dial-in  

1-412-317-0088

U.S. Toll Free 

1-877-344-7529

Canada Toll Free

855-669-9658

Passcode:

10136236

Additionally, a live and archived webcast of this conference call will be available at http://ir.998.com.

Use of Non-GAAP Financial Measures

We believe that Adjusted EBITDA and core net income, as we present it, is a useful financial metric to assess our operating and financial performance before the impact of investing and financing transactions, income taxes and certain non-core and non-recurring items in our financial statements.

The presentation of Adjusted EBITDA and core net income should not be construed as an indication that our future results will be unaffected by other charges and gains we consider to be outside the ordinary course of our business.

The use of Adjusted EBITDA and core net income has certain limitations because it does not reflect all items of income and expenses that affect our operations. Items excluded from Adjusted EBITDA and core net income are significant components in understanding and assessing our operating and financial performance. Depreciation and amortization expense for various long-term assets, income tax and share-based compensation have been and will be incurred and are not reflected in the presentation of Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, Adjusted EBITDA and core net income does not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation and amortization, interest expense/income, gains/losses from investments in equity securities, income tax expenses, share-based compensation, share of loss in equity investees, government subsidies and other relevant items both in our reconciliations to the corresponding U.S. GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance.

The term Adjusted EBITDA and core net income is not defined under U.S. GAAP, and Adjusted EBITDA and core net income is not a measure of net income, operating income, operating performance or liquidity presented in accordance with U.S. GAAP. When assessing our operating and financial performance, you should not consider this data in isolation or as a substitute for our net income, operating income or any other operating performance measure that is calculated in accordance with U.S. GAAP. In addition, our Adjusted EBITDA and core net income may not be comparable to Adjusted EBITDA and core net income or similarly titled measures utilized by other companies since such other companies may not calculate Adjusted EBITDA and core net income in the same manner as we do.

Reconciliations of the Company's non-GAAP financial measures, including Adjusted EBITDA and core net income, to the consolidated statement of operations information are included at the end of this press release.

About GreenTree Hospitality Group Ltd.

GreenTree Hospitality Group Ltd. ("GreenTree" or the "Company") (NYSE: GHG) is a leading hospitality management group in China. As of September 30, 2019, GreenTree had a total number of 3,102 hotels. In 2018, GreenTree ranked among the Top 12 worldwide in terms of number of hotels in "World's Largest Hotel Companies: HOTELS' 325", published by HOTELS magazine, and was as well the fourth largest hospitality company in China in 2018 based on the statistics issued by the China Hospitality Association.

The Company has built a strong suite of brands including its flagship "GreenTree Inns" brand as a result of its long-standing dedication to the hospitality industry in China and consistent quality of its services, signature hotel designs, broad geographic coverage and convenient locations. The Company has further expanded its brand portfolio into the mid-to-upscale and luxury segments through a series of strategic investments. By offering diverse brands, through its strong membership base, expansive booking network, superior system management with moderate charges, and fully supported by its operating departments including Decoration, Engineering, Purchasing, Operation, IT and Finance, GreenTree aims to keep closer relationships with all our clients and partners by providing a brand portfolio featuring comfort, style and value.

For more information on GreenTree, please visit http://ir.998.com.

Safe Harbor Statements

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995.  In some cases, these forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to," "confident," "future," or other similar expressions. GreenTree may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including statements about or based on GreenTree's current beliefs, expectations, assumptions, estimates and projections about us and our industry, are forward-looking statements that involve known and unknown factors, risks and uncertainties that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Such factors and risks include, but not limited to the following: GreenTree's goals and growth strategies; its future business development, financial condition and results of operations; trends in the hospitality industry in China and globally; competition in our industry; fluctuations in general economic and business conditions in China and other regions where we operate; the regulatory environment in which we and our franchisees operate; and assumptions underlying or related to any of the foregoing. You should not place undue reliance on these forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided, including the forward-looking statements made, in this press release are current as of the date of the press release. Except as required by law, GreenTree undertakes no obligation to update any such information or forward-looking statements to reflect events or circumstances after the date on which the information is provided or statements are made, or to reflect the occurrence of unanticipated events.

---Financial Tables and Operational Data Follow---

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Balance Sheets



 December 31,


 September 30,


 September 30,

2018

2019

2019


RMB


RMB


US$

ASSETS






Current assets:






Cash and cash equivalents

1,264,025,785


428,700,947


59,977,468

Short-term investment

685,512,063


556,921,410


77,916,170

Investments in equity securities

307,693,782


219,089,283


30,651,718

Accounts receivable, net of allowance
for doubtful accounts

64,864,184


90,541,096


12,667,165

Amounts due from related parties

228,600


2,461,505


344,378

Prepaid rent

4,478,413


5,837,170


816,650

Inventories

2,547,729


1,501,785


210,107

Other current assets

53,969,039


61,394,719


8,589,437

Loans receivable, net

67,196,568


60,955,706


8,528,017

Total current assets

2,450,516,163


1,427,403,621


199,701,110







Non-current assets:






Restricted cash

3,300,000


22,285,620


3,117,873

Long-term time deposits

-


560,000,000


78,346,881

Loan receivable, net

39,352,863


89,090,553


12,464,227

Property and equipment, net

222,389,573


565,715,389


79,146,493

Intangible assets, net

27,213,391


261,856,305


36,635,044

Goodwill

5,787,068


48,540,659


6,791,088

Long-term investments

112,219,460


407,024,641


56,944,841

Other assets

85,701,523


88,055,910


12,319,474

Deferred tax assets

133,300,966


124,879,426


17,471,274

 TOTAL ASSETS

3,079,781,007


3,594,852,124


502,938,305













LIABILITIES AND EQUITY






Current liabilities:






Short-term bank loans

60,000,000


60,000,000


8,394,309

Accounts payable

9,182,058


13,347,487


1,867,382

Advance from customers

36,370,325


37,219,547


5,207,206

Amounts due to related parties

285,578


1,041,109


145,657

Salary and welfare payable

42,767,219


38,770,181


5,424,148

Deferred rent

4,421,427


3,204,304


448,299

Deferred revenue

210,585,604


225,121,443


31,495,648

Accrued expenses and other current
liabilities

241,407,979


278,469,913


38,959,372

Income tax payable

104,988,638


89,275,446


12,490,094

Total current liabilities

710,008,828


746,449,430


104,432,115







Deferred rent

20,519,682


19,204,066


2,686,748

Deferred revenue

380,173,585


393,140,375


55,002,361

Other long-term liabilities

96,573,810


108,623,349


15,196,965

Deferred tax liabilities

43,538,624


127,972,289


17,903,982

Unrecognized tax benefits

169,619,409


206,196,531


28,847,955

 TOTAL LIABILITIES

1,420,433,938


1,601,586,040


224,070,126







Shareholders' equity:






Class A ordinary shares

217,421,867


219,526,699


30,712,915

Class B ordinary shares

115,534,210


115,534,210


16,163,830

Additional paid-in capital

1,003,026,803


1,080,594,887


151,180,784

Retained earnings

252,617,450


411,095,935


57,514,436

Accumulated other comprehensive
(loss) income

62,367,692


78,192,101


10,939,477

Total GreenTree Hospitality Group
Ltd. shareholders' equity

1,650,968,022


1,904,943,832


266,511,442







Non-controlling interests

8,379,047


88,322,252


12,356,737

Total shareholders' equity

1,659,347,069


1,993,266,084


278,868,179







TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY

3,079,781,007


3,594,852,124


502,938,305

 

 

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income



Quarter Ended


Nine Months Ended


 September
30, 2018


 September
30, 2019


 September
30, 2019


 September
30, 2018


 September
30, 2019


 September
30, 2019


RMB


RMB


US$


RMB


RMB


US$

Revenues












Leased-and-operated hotels

59,029,825


72,530,518


10,147,393


155,949,957


184,867,320


25,863,889

Franchised-and-managed hotels

184,218,350


219,606,332


30,724,505


509,286,550


617,493,389


86,390,502

Total revenues

243,248,175


292,136,850


40,871,448


665,236,507


802,360,709


112,254,391













Operating costs and expenses












Hotel operating costs

(74,507,927)


(87,277,200)


(12,210,529)


(202,460,194)


(246,216,861)


(34,447,005)

Selling and marketing expenses

(12,136,352)


(20,785,447)


(2,907,991)


(33,524,476)


(61,815,183)


(8,648,262)

General and administrative
expenses

(24,229,964)


(39,891,061)


(5,580,965)


(69,781,751)


(105,391,932)


(14,744,873)

Other operating expenses

(99,935)


(53,736)


(7,518)


(278,527)


(161,710)


(22,625)

Total operating costs and
expenses

(110,974,178)


(148,007,444)


(20,707,003)


(306,044,948)


(413,585,686)


(57,862,765)













Other operating income

1,865,788


8,449,390


1,182,113


27,933,277


16,995,685


2,377,783

Income from operations

134,139,785


152,578,796


21,346,558


387,124,836


405,770,708


56,769,409













Interest income and other, net

14,991,069


18,055,095


2,526,001


31,114,962


52,283,638


7,314,750

Interest expense

-


(735,927)


(102,960)


-


(2,121,402)


(296,795)

Gains (losses) from investment
in equity securities

3,091,278


(21,796,444)


(3,049,434)


(27,945,284)


54,040,607


7,560,559

Other income, net

36,723,048


-


-


36,723,048


2,690,742


376,449

Income before income taxes

188,945,180


148,101,520


20,720,165


427,017,562


512,664,293


71,724,372













Income tax expense

(46,288,024)


(46,994,932)


(6,574,833)


(104,913,469)


(150,211,254)


(21,015,327)

Income before share of loss in
equity method investments

142,657,156


101,106,588


14,145,332


322,104,093


362,453,039


50,709,045













Share of losses in equity
investees, net of tax

141,666


1,067,166


149,302


(948,358)


779,369


109,037

Net income

142,798,822


102,173,754


14,294,634


321,155,735


363,232,408


50,818,082













Net loss attributable to non-
controlling interests

358,464


939,576


131,451


384,831


3,271,890


457,755

Net income attributable to
ordinary shareholders

143,157,286


103,113,330


14,426,085


321,540,566


366,504,298


51,275,837













Net earnings per share












Class A ordinary share-basic
and diluted

1.41


1.01


0.14


3.27


3.60


0.50

Class B ordinary share-basic
and diluted

1.41


1.01


0.14


3.27


3.60


0.50













Net earnings per ADS












Class A ordinary share-basic
and diluted

1.41


1.01


0.14


3.27


3.60


0.50

Class B ordinary share-basic
and diluted

1.41


1.01


0.14


3.27


3.60


0.50













Weighted average shares
outstanding












Class A ordinary share-basic
and diluted

66,789,300


67,416,046


67,416,046


61,536,613


67,183,025


67,183,025

Class B ordinary share-basic
and diluted

34,762,909


34,762,909


34,762,909


36,802,409


34,762,909


34,762,909













Other comprehensive income,
net of tax












Foreign currency translation
adjustments

(2,685,649)


19,606,912


2,743,108


(1,641,908)


15,824,409


2,213,916

Comprehensive income, net of
tax

140,113,173


121,780,666


17,037,742


319,513,827


379,056,817


53,031,999













Comprehensive (gain)/loss
attributable to non-controlling
interests

358,464


939,576


131,452


384,831


3,271,890


487,754

Comprehensive income
attributable to ordinary
shareholders

140,471,637


122,720,242


17,169,193


319,898,658


382,328,707


53,489,753

 

 

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Cash Flows



 Quarter Ended


Nine Months Ended


 September
30, 2018


 September
30, 2019


 September
30, 2019


 September
30, 2018


 September
30, 2019


 September
30, 2019


RMB


RMB


US$


RMB


RMB


US$

Operating activities:












Net income

142,798,822


102,173,754


14,294,634


321,155,735


363,232,408


50,818,082













Adjustments to
reconcile net income to
net cash provided by
operating activities:












Depreciation and amortization

7,453,263


11,069,474


1,548,676


17,405,012


26,890,288


3,762,090

Share of loss in equity
method investments

(141,666)


(757,717)


(106,009)


948,358


(469,920)


(65,744)

Gains from disposal of a
long-term investment

(36,723,048)


(309,449)


(43,294)


(36,723,048)


(309,449)


(43,294)

Interest income

(14,991,069)


4,248,415


(594,375)


(19,928,935)


(14,662,224)


(2,051,321)

Bad debt expense

623,470


10,663,023


1,491,812


1,322,173


5,663,910


792,410

(Gains) loss from
investments in equity
securities

(3,091,278)


21,796,444


3,049,435


27,945,284


(54,040,607)


(7,560,559)

Foreign exchange losses
(gains)

(3,559,864)


614,390


85,956


(4,174,717)


85,951


12,025

Share-based compensation

3,821,789


7,522,984


1,052,504


7,568,558


18,632,776


2,606,821

Income tax expenses related
to dividend distribution or
retained profits

-


4,140,689


579,304


-


11,940,633


1,670,556

(Gains) from the acquisition
of long-term investment

(1,344,212)


-


-


(1,344,212)


-


-













Changes in operating
assets and liabilities:












Accounts receivable

7,038,795


(6,591,451)


(922,178)


(12,429,842)


(30,460,379)


(4,261,564)

Prepaid rent

19,552


(2,070,338)


(289,651)


150,856


(1,358,757)


(190,097)

Inventories

265,681


(55,490)


(7,763)


1,227,103


1,113,304


155,757

Amounts due from related
parties

148,694


(1,974,899)


(276,299)


1,670,817


(1,996,450)


(279,314)

Other current assets

(693,699)


4,784,543


669,382


(27,059,650)


4,970,725


695,430

Other assets

-


4,267,763


597,082


-


(7,875,091)


(1,101,766)

Accounts payable

(68,022)


1,332,798


186,465


269,186


3,302,907


462,094

Amounts due to related
parties

148,655


(76,817)


(10,747)


629,357


755,531


105,703

Salary and welfare payable

(3,379,410)


(471,404)


(65,952)


(5,030,701)


(5,521,054)


(772,424)

Deferred revenue

28,271,497


5,676,928


794,231


78,150,381


10,502,629


1,469,372

Advance from customers

3,111,537


3,127,446


437,546


2,640,498


849,222


118,811

Accrued expenses and other
current liabilities

22,265,074


3,050,771


426,819


(3,341,591)


31,312,003


4,380,710

Income tax payable

31,644,131


11,452,280


1,602,233


(4,895,783)


(15,880,832)


(2,221,810)

Unrecognized tax benefits

(2,526,933)


7,662,789


1,072,064


44,414,222


36,577,122


5,117,328

Deferred rent

6,878,075


(681,471)


(95,341)


4,834,928


(2,532,739)


(354,343)

Other long-term liabilities

8,384,000


8,456,070


1,183,048


17,858,980


12,049,539


1,685,793

Deferred taxes

3,613,270


(2,297,390)


(321,417)


(10,956,896)


2,700,045


377,750

Net cash provided by
operating activities

199,967,104


188,257,305


26,338,165


402,306,073


395,471,491


55,328,496













Investing activities:












Purchases of property and
equipment

(1,547,609)


(33,707,518)


(4,715,855)


(114,555,864)


(47,218,828)


(6,606,157)

Purchases of intangible assets

(2,345,490)


-


-


(3,245,490)


-


-

Proceeds from disposal of
property and equipment

-


-


-


-


1,300,000


181,877

Acquisitions, net of cash received

(13,302,894)


(4,318,317)


(604,155)


(13,302,894)


(248,978,924)


(34,833,432)

Proceeds from disposal of a
long-term investment

89,182,803


-


-


89,182,803


-


-

Advances for acquisitions of
equity investees

(6,000,000)


(11,244,749)


(1,573,198)


(6,000,000)


(59,111,449)


(8,269,996)

Purchases of short-term
investments

(92,693,808)


(405,305,933)


(56,704,385)


(884,360,449)


(617,825,906)


(86,437,023)

Proceeds from short-term
investments

39,741,997


4,248,415


594,375


784,976,001


761,078,783


106,478,837

Increase in long-term
investments

-


(40,000,000)


(5,596,206)


-


(40,000,000)


(5,596,206)

Purchases of equity securities

(40,879)


(65,086,928)


(9,105,996)


(4,836,717)


(89,123,279)


(12,468,805)

Purchases of long term
investments

-


-


-


-


(247,456,740)


(34,620,471)

Proceeds from disposal of
equity securities

6,015,829


76,361,856


10,683,416


24,887,802


221,583,600


31,000,686

Increase of long-term time
deposits

-


-


-


-


(460,000,000)


(64,356,366)

Repayment from a related
party

-


220,300,000


30,821,103


-


337,279,750


47,187,172

Loan to related parties

-


(220,536,455)


(30,854,185)


(4,300,000)


(337,516,205)


(47,220,253)

Loan to third parties

(156,819,164)


(104,000,000)


(14,550,133)


(166,819,164)


(255,775,219)


(35,784,269)

Repayment of loan from third
parties

-


-


-


-


121,280,219


16,967,727

Loan to franchisees

(17,960,267)


(34,861,152)


(4,877,255)


(45,960,267)


(66,451,152)


(9,296,858)

Repayment from a franchisee

700,000


3,187,806


445,990


9,120,000


10,455,159


1,462,731

Net cash (used in) provided
by investing activities

(155,069,482)


(614,962,975)


(86,036,484)


(335,214,239)


(1,016,480,191)


(142,210,808)













Financing activities:












Distribution to the
shareholders

-


-


-


(200,532,021)


(208,025,814)


(29,103,882)

Income tax paid related to the
above distribution

-


-


-


(3,000,000)


-


-

Proceeds from NCI

-


2,370,000


331,575


-


12,760,000


1,785,190

Proceeds from IPO, net of
capitalized expenses

-


-


-


837,505,007


-


-

Payment for initial public
offering costs

-


-


-


(29,390,408)


-


-

Net cash provided by (used
in) financing activities

-


2,370,000


331,575


604,582,578


(195,265,814)


(27,318,692)













Effect of exchange rate
changes on cash and cash
equivalents and restricted
cash*

4,904,076


8,375,549


1,171,782


5,518,929


(64,704)


(9,052)

Net increase (decrease) in
cash and cash equivalents
and restricted cash*

49,801,698


(415,960,121)


(58,194,960)


677,193,341


(816,339,218)


(114,210,056)

Cash and cash equivalents
and restricted cash* at the
beginning of the period

792,355,308


866,946,688


121,290,301


164,963,665


1,267,325,785


177,305,397

Cash and cash equivalents
and restricted cash* at the
end of the period

842,157,006


450,986,567


63,095,341


842,157,006


450,986,567


63,095,341


* Upon the adoption of ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash,
restricted cash was included within cash and cash equivalents in the consolidated statement of cash flows
for the three months and nine months period ended September 30, 2019 and the comparative disclosure
had been restated to conform to the current period presentation.

 

 

GreenTree Hospitality Group Ltd.

Unaudited Reconciliation of GAAP and Non-GAAP Results



Quarter Ended


Nine Months Ended


 September
30, 2018


 September
30, 2019


 September
30, 2019


 September
30, 2018


 September
30, 2019


 September
30, 2019


RMB


RMB


US$


RMB


RMB


US$

Net income

142,798,822


102,173,754


14,294,634


321,155,735


363,232,408


50,818,082













Deduct:












Other operating income

1,865,788


8,449,390


1,182,113


27,933,277


16,995,685


2,377,784

Gains on investments in equity securities

3,091,278


-


-


-


54,040,607


7,560,559

Share of gain in equity investees, net of tax

141,666


1,067,166


149,302


-


779,369


109,037

Other income, net

36,723,048


-


-


36,723,048


2,690,742


376,449













Add:












Other operating expenses

99,935


53,736


7,518


278,527


161,710


22,625

Income tax expense

46,288,024


46,994,932


6,574,833


104,913,469


150,211,254


21,015,327

Share of loss in equity investees, net of tax

-


-


-


948,358


-


-

Interest expense

-


735,927


102,960


-


2,121,402


296,795

Share-based compensation

3,821,789


7,643,465


1,069,360


7,568,558


19,819,047


2,772,787

Depreciation and amortization

7,453,263


7,172,700


1,003,498


17,405,012


22,993,514


3,216,911

Losses on investments in equity securities

-


21,796,444


3,049,435


27,945,284


-


-

Adjusted EBITDA (Non-GAAP)

158,640,053


177,054,402


24,770,821


415,558,618


484,032,932


67,718,699














Quarter Ended


Nine Months Ended


 September
30, 2018


 September
30, 2019


 September
30, 2019


 September
30, 2018


 September
30, 2019


 September
30, 2019


RMB


RMB


US$


RMB


RMB


US$

Net income

142,798,822


102,173,754


14,294,634


321,155,735


363,232,408


50,818,082













Deduct:












Government subsidies (net of 25% tax)

1,049,804


-


-


11,362,580


5,048,981


706,379

Gains on investments in equity securities
(net of 25% tax)

2,318,459


-


-


-


40,530,455


5,670,419

Reimbursement related to the ADS program

-


-


-


9,271,648


-


-

Other income (net of 25% tax)

27,542,286


-


-


27,542,286


2,018,057


282,337













Add:












Share-based compensation

3,821,789


7,643,465


1,069,360


7,568,558


19,819,047


2,772,787

Losses on investments in equity securities 
(net of  25% tax)

-


16,347,333


2,287,076


20,958,963


-


-

one-off selling expense

-


4,306,969


602,567


-


4,306,969


602,567

one-time consulting fees for M&A (net of
25% tax)

-


210,000


29,380


-


1,153,650


161,402

Income tax expenses related to dividend
distribution

-


4,140,689


579,304


-


11,940,633


1,670,556

Core net income (Non-GAAP)

115,710,062


134,822,210


18,862,321


301,506,742


352,855,214


49,366,259

























Core net income per ADS (Non-GAAP)












Class A ordinary share-basic and diluted

1.14


1.32


0.18


3.07


3.46


0.48

Class B ordinary share-basic and diluted

1.14


1.32


0.18


3.07


3.46


0.48

               

 

Operational Data



As of September
30, 2018

As of September
30, 2019

 Total hotels in operation:

2,558

3,102

      Leased-and-owned hotels

30

30

      Franchised hotels

2,528

3,072

 Total hotel rooms in
operation

209,463

245,705

      Leased-and-owned hotels

3,857

3,724

      Franchised hotels

205,606

241,981

 Number of cities

278

309





Quarter Ended


As of September
30, 2018

As of September
30, 2019

 Occupancy rate (as a
percentage)



      Leased-and-owned hotels

72.60%

73.10%

      Franchised hotels

87.50%

86.10%

      Blended

87.20%

85.90%

 Average daily rate (in
RMB)



      Leased-and-owned hotels

210

224

      Franchised hotels

166

173

      Blended

167

174

RevPAR (in RMB)



      Leased-and-owned hotels

152

164

      Franchised hotels

145

149

      Blended

146

149

 

 


Number of Hotels in Operation

Number of Hotel Rooms in
Operation


As of September
30, 2018

As of September
30, 2019

As of September
30, 2018

As of September
30, 2019

Luxury

/

21

/

4,739

Argyle

/

21

/

4,739

 Mid-to-up-scale

82

171

8,930

17,147

 GreenTree Eastern

74

100

8,270

10,691

 Deepsleep Hotel

1

2

61

161

 Gem

2

22

170

2,002

 Gya

1

18

70

1,566

 Vx

4

19

359

1,544

Ausotel

/

10

/

1,183

 Mid-scale

2,118

2,290

181,373

193,213

 GreenTree Inn

1,824

1,986

158,174

169,889

 GT Alliance

294

297

23,199

22,951

 GreenTree Apartment

/

7

/

373

 Economy hotels

358

620

19,160

30,606

 Vatica

117

122

8,698

9,022

 Shell

241

498

10,462

21,584

Total

2,558

3,102

209,463

245,705

 

For more information, please contact:

GreenTree

Ms. Selina Yang
Phone: +86-21-3617-4886 ext. 7999
E-mail: ir@998.com

Mr. Nicky Zheng
Phone: +86-21-3617-4886 ext. 6708
E-mail: ir@998.com

Christensen

In Shanghai
Ms. Constance Zhang
Phone: +86-138-1645-1798
E-mail: czhang@christensenIR.com

In Hong Kong 
Ms. Karen Hui 
Phone: +852-9266-4140 
E-mail: khui@christensenIR.com

In US 
Ms. Linda Bergkamp 
Phone: +1-480-614-3004
Email: lbergkamp@ChristensenIR.com

Cision View original content:http://www.prnewswire.com/news-releases/greentree-hospitality-group-ltd-reports-third-quarter-of-2019-financial-results-300962066.html

Source: GreenTree Hospitality Group Ltd.
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