GreenTree Hospitality Group Ltd. Reports Second Quarter 2018 Financial Results

PR Newswire - finance.yahoo.com Posted 6 years ago

.8 million and IPO related costs. Financing cash inflow for the first half of 2018 was RMB604.6 million (US$91.4 million)[1],

Cash and cash equivalents, restricted cash, Short term investments and Trading securities. As of June 30, 2018, the Company had a total balance of cash and cash equivalents, restricted cash, short term investments and trading securities of RMB1,898.8 million (US$286.9 million)[1], as compared to RMB1,254.6 million as of December 31, 2017, primarily due to the proceeds of our IPO net of capitalized expenses and net operating cash inflow.

Guidance
For the full year 2018, the Company reaffirms total revenue growth guidance of 20-25% from 2017.

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, 2018 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 August 23, 2018 (8:00 PM Beijing/Hong Kong Time on August 23, 2018).

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

International

1-412-902-4272

China

4001-201203

US

1-888-346-8982

Hong Kong

800-905945 or 852-3018-4992

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 August 30, 2018.

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:

10123082

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 trading 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") (GHG) is a leading franchised hotel operator in China. As of December 31, 2017, GreenTree had the highest proportion of franchised-and-managed hotels among the top four economy to mid-scale hotel networks in China. In 2017, GreenTree was the fourth largest economy to mid-scale hotel group in China in terms of number of hotel rooms according to 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, the consistent quality of its services, signature hotel designs, broad geographic coverage and convenient locations. GreenTree has positioned its brands to appeal to value- and quality-conscious business and leisure travelers.

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.

[1] The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB6.6171 on June 29, 2018 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at https://www.federalreserve.gov/releases/h10/20180702 .

[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.

--Financial Tables and Operational Data Follow--

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Balance Sheets

 
 

December 31,
2017

June 30,

2018

June 30,

2018

 

RMB

RMB

USD

ASSETS

     

Current assets:

     

Cash and cash equivalents

161,963,665

789,355,308

119,290,219

Short-term investment

781,850,000

843,769,909

127,513,550

Trading securities

307,754,960

262,642,263

39,691,445

Accounts receivable, net of allowance for doubtful
accounts

53,882,894

72,652,828

10,979,557

Amounts due from related parties

3,248,692

6,026,569

910,757

Prepaid rent

4,292,472

4,161,168

628,851

Inventories

2,355,154

1,393,732

210,626

Other current assets

127,269,801

143,086,346

21,623,724

Loans receivable, net

6,600,000

20,360,000

3,076,877

Deferred tax assets

36,207,884

37,158,836

5,615,577

Total current assets

1,485,425,522

2,180,606,959

329,541,183

       

Non-current assets:

     

Amounts due from a related party

2,600,000

2,600,000

392,921

Restricted cash

3,000,000

3,000,000

453,371

Loan receivable, net

-

12,900,000

1,949,494

Property and equipment, net

96,669,251

92,693,446

14,008,168

Intangible assets, net

3,727,383

6,649,314

1,004,868

Goodwill

2,959,183

2,959,183

447,202

Long-term investments

122,508,832

121,418,808

18,349,248

Other assets

5,741,301

113,274,089

17,118,389

Deferred tax assets

33,351,457

33,396,565

5,047,009

 TOTAL ASSETS

1,755,982,929

2,569,498,364

388,311,853

       

LIABILITIES AND EQUITY

     

Current liabilities:

     

Accounts payable

7,293,341

10,152,957

1,534,351

Advance from customers

33,662,363

33,191,324

5,015,993

Amounts due to related parties

473,018

953,720

144,130

Salary and welfare payable

44,577,683

42,926,392

6,487,191

Deferred rent

2,916,205

4,146,333

626,609

Deferred revenue

109,101,986

134,668,678

20,351,616

Accrued expenses and other current liabilities

293,741,951

266,921,014

40,338,066

Income tax payable

103,830,578

64,290,664

9,715,837

Dividends payable

39,691,103

-

-

Deferred tax liabilities

27,745,951

18,111,810

2,737,122

Total current liabilities

663,034,179

575,362,892

86,950,915

       

Deferred rent

23,050,635

19,777,360

2,988,826

Deferred revenue

144,258,584

155,257,846

23,463,125

Other long-term liabilities

73,937,277

83,412,257

12,605,561

Deferred tax liabilities

5,797,260

4,806,469

726,371

Unrecognized tax benefits

113,299,633

160,240,788

24,216,165

 Total liabilities

1,023,377,568

998,857,612

150,950,963

       

Shareholders' equity:

     

Class A ordinary shares

160,189,926

217,421,867

32,857,576

Class B ordinary shares

140,696,841

115,534,210

17,459,946

Additional paid-in capital

212,309,734

990,664,622

149,712,808

Retained earnings

223,134,889

249,728,708

37,739,902

Accumulated other comprehensive loss

(4,086,149)

(3,042,408)

(459,780)

Total GreenTree Hospitality Group Ltd.
shareholders' equity

732,245,241

1,570,306,999

237,310,452

       

Noncontrolling interests

360,120

333,753

50,438

Total shareholders' equity

732,605,361

1,570,640,752

237,360,890

       

TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY

1,755,982,929

2,569,498,364

388,311,853

 

 

 

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income

 
 

Quarter Ended

 

Six Months Ended

 

June 30,
2017

June 30,

2018

June 30,
2018

 

June 30,  
2017

June 30,
2018

June 30,
2018

 

RMB

RMB

USD

 

RMB

RMB

USD

Revenues

             

Leased-and-operated hotels

47,063,998

49,740,478

7,516,960

 

88,826,814

93,915,936

14,192,915

Franchised-and-managed hotels

134,262,270

165,509,815

25,012,440

 

246,498,634

309,378,578

46,754,406

Membership fees

12,619,532

18,103,997

2,735,941

 

24,887,139

35,003,197

5,289,809

Total revenues

193,945,800

233,354,290

35,265,341

 

360,212,587

438,297,711

66,237,130

               

Operating costs and expenses

             

Hotel operating costs

(57,725,535)

(65,633,713)

(9,918,803)

 

(114,760,347)

(130,744,785)

(19,758,623)

Selling and marketing expenses

(9,401,701)

(11,555,287)

(1,746,277)

 

(19,055,646)

(22,904,354)

(3,461,389)

General and administrative expenses

(18,146,306)

(25,150,930)

(3,800,899)

 

(36,581,236)

(45,551,787)

(6,883,950)

Other operating expenses

(295,431)

(35,330)

(5,339)

 

(1,148,166)

(178,592)

(26,989)

Total operating costs and expenses

(85,568,973)

(102,375,260)

(15,471,318)

 

(171,545,395)

(199,379,518)

(30,130,951)

               

Other operating income

4,722,477

12,242,088

1,850,069

 

5,066,976

26,067,489

3,939,413

Income from operations

113,099,304

143,221,118

21,644,092

 

193,734,168

264,985,682

40,045,592

               

Interest income and other, net 

5,674,569

11,420,031

1,725,836

 

12,409,580

16,123,893

2,436,701

Gains (losses) from trading securities

24,385,333

(25,862,935)

(3,908,500)

 

35,967,385

(31,036,562)

(4,690,357)

Other expense, net

(28,852)

-

-

 

(69,818)

-

-

Income before income taxes

143,130,354

128,778,214

19,461,428

 

242,041,315

250,073,013

37,791,936

               

Income tax expense

(34,494,218)

(31,356,198)

(4,738,662)

 

(58,331,623)

(61,574,619)

(9,305,378)

Income before share of loss in equity investees

108,636,136

97,422,016

14,722,766

 

 

183,709,692

 

188,498,394

 

28,486,558

               

Share of (gain ) loss in equity investees, net
of tax

52,078

(182,988)

(27,654)

 

(513,447)

(1,090,024)

(164,728)

Net income

108,688,214

97,239,028

14,695,112

 

183,196,245

187,408,370

28,321,830

Net loss (gain) attributable to noncontrolling
interests

7,131

(3,152)

(476)

 

35,249

26,367

3,985

Net income attributable to ordinary
shareholders

108,695,345

97,235,876

14,694,636

 

183,231,494

187,434,737

28,325,815

               

Net earnings per share

             

Class A ordinary share-basic and diluted

1.19

0.96

0.14

 

2.01

1.94

0.29

Class B ordinary share-basic and diluted

1.19

0.96

0.14

 

2.01

1.94

0.29

               

Net earnings per ADS

             

Class A ordinary share-basic and diluted

1.19

0.96

0.14

 

2.01

1.94

0.29

Class B ordinary share-basic and diluted

1.19

0.96

0.14

 

2.01

1.94

0.29

               

Weighted average shares outstanding

             

Class A ordinary share-basic and diluted

48,635,252

66,789,299

66,789,299

 

48,635,252

58,866,740

58,866,740

Class B ordinary share-basic and diluted

42,716,957

34,762,909

34,762,909

 

42,716,957

37,839,060

37,839,060

               

Other comprehensive income, net of tax

             

-Foreign currency translation adjustments

(827,530)

1,213,623

183,407

 

(1,979,774)

1,043,741

157,734

Comprehensive income, net of tax

107,860,684

98,452,651

14,878,519

 

181,216,471

188,452,111

28,479,564

               

Comprehensive loss (gain) attributable to
noncontrolling interests

7,131

(3,152)

(476)

 

35,249

26,367

3,985

Comprehensive income attributable to
ordinary shareholders

107,867,815

98,449,499

14,878,043

 

181,251,720

188,478,478

28,483,549

 

 

 

 

GreenTree Hospitality Group Ltd.

 

Unaudited Condensed Consolidated Statements of Cash Flows

   
     

Quarter Ended

 

Six Months Ended

     

June 30,

June 30,

June 30,

 

June 30,

June 30,

June 30,

     

2017

2018

2018

 

2017

2018

2018

     

RMB

RMB

USD

 

RMB

RMB

USD

                   

Operation activities:

               
 

Net income

 

108,688,214

97,239,028

14,695,112

 

183,196,245

187,408,370

28,321,830

                   
 

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

           
 

Depreciation and amortization

 

6,115,165

4,557,247

688,708

 

12,674,080

9,951,749

1,503,944

 

Share of loss (gain) in equity method
investments

 

(52,078)

182,988

27,654

 

513,447

1,090,024

164,728

 

Interest income

 

(2,788,706)

(234,004)

(35,364)

 

(5,838,706)

(4,937,866)

(746,228)

 

Bad debt expense

 

581,251

379,445

57,343

 

1,154,523

698,703

105,591

 

(Gains) losses from trading securities

 

(24,385,333)

25,862,935

3,908,500

 

(35,967,385)

31,036,562

4,690,357

 

Loss on disposal of property and
equipment

 

(695,230)

-

-

 

157,506

-

-

 

Foreign exchange (gain) loss

 

(374,755)

(1,340,059)

(202,515)

 

(1,298,256)

(614,853)

(92,919)

 

Share-based compensation

 

-

3,586,930

542,070

 

-

3,746,769

566,225

                   
 

Changes in operating assets and
liabilities:

               
 

Restricted cash

 

-

-

-

 

7,200,000

-

-

 

Accounts receivable

 

(15,539,614)

(8,246,047)

(1,246,172)

 

(26,245,214)

(19,468,637)

(2,942,171)

 

Prepaid rent

 

2,630,635

(1,455,073)

(219,896)

 

6,598,997

131,304

19,843

 

Inventories

 

(206,252)

186,242

28,146

 

11,224

961,422

145,294

 

Amounts due from related parties

 

1,181,694

1,938,481

292,950

 

3,435,718

1,522,123

230,029

 

Other current assets

 

970,740

(19,562,202)

(2,956,310)

 

(1,819,059)

(26,365,951)

(3,984,518)

 

Other assets

 

-

-

-

 

1,728,263

-

-

 

Accounts payable

 

800,856

(4,359,732)

(658,858)

 

2,115,442

337,208

50,960

 

Amounts due to related parties

 

(157,557)

154,006

23,274

 

2,538,414

480,702

72,645

 

Salary and welfare payable

 

2,140,122

27,794

4,200

 

(678,679)

(1,651,291)

(249,549)

 

Deferred revenue

 

(2,225,451)

21,657,037

3,272,889

 

14,667,526

36,565,954

5,525,979

 

Advance from customers

 

8,312,326

8,017,444

1,211,625

 

11,776,047

(471,039)

(71,185)

 

Accrued expenses and other current
liabilities

 

3,252,222

(31,297,653)

(4,729,814)

 

15,533,168

(27,214,366)

(4,112,733)

 

Income tax payable

 

(42,196,868)

(56,273,754)

(8,504,293)

 

(27,193,374)

(36,539,914)

(5,522,043)

 

Unrecognized tax benefits

 

15,194,271

43,190,003

6,527,029

 

14,744,258

46,941,155

7,093,917

 

Deferred rent

 

(5,683,343)

(1,028,699)

(155,461)

 

(10,891,391)

(2,043,147)

(308,768)

 

Other long-term liabilities

 

8,865,201

7,701,591

1,163,892

 

(172,893)

9,474,980

1,431,893

 

Deferred taxes

 

5,754,724

(7,506,008)

(1,134,335)

 

5,790,416

(11,620,992)

(1,756,206)

 

Net cash provided by operating
activities

 

70,182,234

83,377,940

12,600,374

 

173,730,317

 

199,418,969

 

30,136,915

                   

Investing activities:

               
 

Purchases of property and equipment

 

(2,350,676)

(54,676,146)

(8,262,856)

 

(7,110,402)

(113,008,255)

(17,078,215)

 

Purchases of intangible assets

 

-

(900,000)

(136,011)

 

-

(900,000)

(136,011)

 

Purchases of short-term investments

 

-

(275,105,052)

(41,574,867)

 

-

(791,666,641)

(119,639,516)

 

Proceeds from short-term investments

 

-

234,004

35,364

 

-

745,234,004

112,622,449

 

Proceeds from disposal of property and equipment

 

-

-

-

 

1,600,000

-

-

 

Purchases of trading securities

 

(5,886,700)

-

-

 

(37,029,398)

(4,795,838)

(724,764)

 

Proceeds from disposal of trading
securities

 

10,667,510

7,604,063

1,149,153

 

31,396,866

18,871,973

2,852,001

 

Loan to a related party

 

(3,100,000)

-

-

 

(4,100,000)

-

-

 

Loan to franchisees

 

-

(17,800,000)

(2,690,000)

 

(3,500,000)

(37,800,000)

(5,712,472)

 

Repayment from a franchisee

 

-

3,340,000

504,753

 

-

6,840,000

1