omniture

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

2.7% RevPAR growth
2019-11-22 00:28 4451
  • 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. 22, 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

 

57,862,764

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

 

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

 

30,724,055

 

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

 

457,754

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)

 

(142,210,806)

                       

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

 

2,377,783

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

 

1,003,497

 

17,405,012

 

22,993,514

 

3,216,911

Losses on investments in equity securities

-

 

21,796,444

 

3,049,434

 

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-300963162.html

Source: GreenTree Hospitality Group Ltd.
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