.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, |
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 |
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. |
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 |
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, |
June 30, 2018 |
June 30, |
June 30, |
June 30, |
June 30, |
||
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 |
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 |
7,131 |
(3,152) |
(476) |
35,249 |
26,367 |
3,985 |
|
Net income attributable to ordinary |
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 |
7,131 |
(3,152) |
(476) |
35,249 |
26,367 |
3,985 |
|
Comprehensive income attributable to |
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 |
||||||||||||||||
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 |
(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 |
(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 |
||||||||||||||||
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 |
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 |
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 |
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 |