Le Lézard
Classified in: Tourism and vacations, Business
Subjects: ERN, CCA

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


Revenue Increased by 20% for the Sixth Consecutive Quarter

SHANGHAI, Aug. 16, 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 second quarter ended June 30, 2019.

Second Quarter of 2019 Operational Highlights

"We are proud to have delivered  a 6th consecutive quarter of improved operating and financial performance. During the quarter, we further improved the quality of our hotels, our RevPAR and market share. We will continue to focus on enhancing our value proposition to deliver better service and support to our customers and franchisees, and, as a result, deliver solid growth for the long run." said Mr. Alex Xu, Chairman and Chief Executive Officer of GreenTree.

Second Quarter of 2019 Financial Results


Quarter Ended


 June 30, 2018


 June 30, 2019


 June 30, 2019


RMB


RMB


US$

Revenues[3]






Leased-and-operated hotels

51,305,036


60,510,976


8,814,417

Franchised-and-managed hotels

174,724,851


214,419,775


31,233,762

Total revenues

226,029,887


274,930,751


40,048,179

 


Six Months Ended


 June 30, 2018


 June 30, 2019


 June 30, 2019


RMB


RMB


US$

Revenues






Leased-and-operated hotels

96,920,132


112,336,802


16,363,700

Franchised-and-managed hotels

325,068,200


397,887,057


57,958,785

Total revenues

421,988,332


510,223,859


74,322,485


[3] On January 1, 2019, the Company adopted ASC 606  by using the full retrospective method and restate the comparable periods

Total revenues  for the second quarter of 2019 were RMB274.9 million (US$40.0 million)[1], representing a 21.6% year-over-year increase. The increase was primarily attributable to the addition of 134 hotels to our current network, improved RevPAR, contribution from membership growth, and the consolidation of the Argyle's results of operation into our statement. Growth was partially offset by the renovation of 9 L&O hotels during this quarter. Total revenues for the first half of 2019 were RMB510.2 million (US$74.3 million)[1], representing a 20.9% increase.


Quarter Ended


 June 30, 2018


 June 30, 2019


 June 30, 2019


RMB


RMB


US$

Initial franchise fee

12,261,211


13,243,838


1,929,183

Recurring franchise management fee and others

162,463,640


201,175,937


29,304,579

Revenues from franchised-and-managed hotels

174,724,851


214,419,775


31,233,762

 


Six Months Ended


 June 30, 2018


 June 30, 2019


 June 30, 2019


RMB


RMB


US$

Initial franchise fee

21,104,652


25,996,787


3,786,859

Recurring franchise management fee and others

303,963,548


371,890,270


54,171,926

Revenues from franchised-and-managed hotels

325,068,200


397,887,057


57,958,785

Total operating costs and expenses


Quarter Ended


 June 30, 2018


 June 30, 2019


 June 30, 2019


RMB


RMB


US$

Operating costs and expenses






Hotel operating costs

64,206,723


78,939,817


11,498,881

Selling and marketing expenses

10,919,269


16,353,634


2,382,175

General and administrative expenses

25,150,930


39,768,385


5,792,918

Other operating expenses

35,330


65,350


9,520

Total operating costs and expenses

100,312,252


135,127,186


19,683,494

 


Six Months Ended


 June 30, 2018


 June 30, 2019


 June 30, 2019


RMB


RMB


US$

Operating costs and expenses






Hotel operating costs

127,952,267


158,939,661


23,152,172

Selling and marketing expenses

21,388,124


41,029,736


5,976,655

General and administrative expenses

45,551,787


65,500,871


9,541,278

Other operating expenses

178,592


107,974


15,728

Total operating costs and expenses

195,070,770


265,578,242


38,685,833

Hotel operating costs for the second quarter of 2019 were RMB78.9million (US$11.5 million)1, representing a 22.9% increase from the second quarter of 2018. The increase was mainly attributable to costs associated with the expansion of our F&M hotels including staff costs; higher rents, consumables, depreciation and amortization associated with the 4 new L&O hotels added to our portfolio in the third quarter of 2018, 1 new L&O hotel opened in the first quarter of 2019; as well as the operation costs of Argyle. For the first half year of 2019, hotel operating costs were RMB158.9million (US$23.2 million)1, representing a 24.2% increase.


Quarter Ended


 June 30,
2018

 June 30,
2019

 June 30,
2019


RMB

RMB

US$

Rental

17,660,357

19,039,168

2,773,368

Utilities

5,104,337

4,891,420

712,516

Personnel cost

7,937,739

8,495,301

1,237,480

Depreciation and amortization

3,714,393

7,174,031

1,045,015

Consumable, food and beverage

4,602,750

6,931,925

1,009,749

Costs of general managers of franchised-and-operated hotels

15,729,674

23,045,469

3,356,951

Other costs of franchised-and-operated hotels

5,990,938

7,306,217

1,064,271

Others

3,466,535

2,056,286

299,531

Hotel Operating Costs

64,206,723

78,939,817

11,498,881

 


Six Months Ended


 June 30,
2018

 June 30,
2019

 June 30,
2019


RMB

RMB

US$

Rental

35,292,424

39,647,433

5,775,300

Utilities

10,215,337

11,045,983

1,609,029

Personnel cost

15,169,589

17,289,575

2,518,511

Depreciation and amortization

8,534,806

13,698,236

1,995,373

Consumable, food and beverage

9,039,387

13,769,076

2,005,692

Costs of general managers of franchised-and-operated hotels

31,315,282

45,490,112

6,626,382

Other costs of franchised-and-operated hotels

11,375,446

12,992,800

1,892,615

Others

7,009,996

5,006,446

729,270

Hotel Operating Costs

127,952,267

158,939,661

23,152,172

Selling and marketing expenses for the second quarter of 2019 were RMB16.4 million (US$2.4 million)[1], representing a 49.8% year-over-year increase. The increase was mainly attributable to the operation of our two newly-added brands, as well as increased advertising and promotion expenses to improve our brands' market recognition, and increased personnel, compensation and other costs. Selling and marketing expenses for the first half of 2019 were RMB41.0 million (US$6.0 million)[1], representing a 91.8% increase.

General and administrative expenses  for the second quarter of 2019 were RMB39.8 million (US$5.8 million)[1], representing a 58.1% year-over-year increase. The increase was primarily attributable to the consolidation of Argyle's G&A expense, as well as increased share-based compensation expenses, consulting fee, and travelling expenses. General and administrative expenses for the first half of 2019 were RMB65.5 million (US$9.5 million)[1], representing a 43.8% year-over-year increase.

Gross profit for the second quarter of 2019 was RMB196.0 million (US$28.5 million)[1], representing an increase of 21.1% from the second quarter of 2018. Gross margin in this quarter was 71.3%, compared to 71.6% a year ago. The decrease of the margin resulted from increased operating costs caused by rising staff numbers and one-time costs related to the renovation of 9 L&O hotels. Gross profit for the first half of 2019 was RMB351.3 million (US$51.2 million)[1], representing a 19.5% year-over-year increase.

Income from operations for the second quarter of 2019 totaled RMB141.4 million (US$20.6 million)[1], representing a year-over-year increase of 2.5%. The operating margin, defined as income from operations as percentage of total revenues, for the second quarter of 2019 was 51.4%, compared to 61.0% a year ago. Income from operations for the first half of 2019 totaled RMB253.2 million (US$36.9 million)[1], representing a year-over-year increase of 0.1%.

Adjusted EBITDA (non-GAAP) for the second quarter of 2019 was RMB173.1 million (US$25.2 million)[1], representing a year-over-year increase of 19.1%. The adjusted EBITDA margin, defined as adjusted EBITDA (non-GAAP) as a percentage of total revenues, was 63.0% in the second quarter of 2019, compared to 64.3% in the second quarter of 2018. Adjusted EBITDA (non-GAAP) for the first half of 2019 was RMB307.0 million (US$44.7 million)[1], representing a year-over-year increase of 19.5%.

Net income for the second quarter of 2019 was RMB127.1 million (US$18.5 million)[1], representing a year-over-year increase of 35.2%. Net margin in the second quarter was 46.2%, compared to 41.6% a year ago. The year-over-year increase in net income and net income margin was mainly attributable to the Company's expanded hotel network and the improved RevPAR. Net income for the first half of 2019 was RMB261.1 million (US$38.0 million)1, representing a year-over-year increase of 46.4%.

Core net income (non-GAAP) for the second quarter of 2019 was RMB125.8 million (US$18.3 million)[1], representing a year-over-year increase of 16.9%. The core net margin, defined as core net income (non-GAAP) as a percentage of total revenues, was 45.7% in the second quarter of 2019, compared to 47.6% one year ago. Core net income (non-GAAP) for the first half of 2019 was RMB218.0 million (US$31.8 million)[1], representing a year-over-year increase of 17.4%.

Earnings per ADS (basic and diluted) for the second quarter of 2019 was RMB1.26 (US$0.18)[1], representing a year-over-year increase of 35.5%. Core net income per ADS (basic and diluted) (non-GAAP) was RMB1.23 (US$0.18)[1] for the second quarter of 2019, representing a year-over-year increase of 16.0%. Earnings per ADS (basic and diluted) for the first half of 2019 was RMB2.59 (US$0.38)[1], representing a year-over-year increase of 40.6%. Core net income per ADS (basic and diluted) (non-GAAP) was RMB2.14 (US$0.31)[1] for the first half of 2019, representing a year-over-year increase of 11.5%.

Cash flow. Operating cash inflow for the second quarter of 2019 was RMB85.0 million (US$12.4 million)[1], due primarily to improved operating performance across our hotel portfolio. Operating cash inflow for the first half of 2019 was RMB207.2 million (US$30.2 million)[1]. Investing cash outflow for the second quarter of 2019 was RMB295.0 million (US$43.0 million)[1], which was primarily attributable to acquisitions, increase of long-term time deposits, loans to franchisees and partially offset by proceeds from disposal of investments in equity securities. Investing cash outflow for the first half of 2019 was RMB401.5 million (US$58.5 million)[1]. Financing cash outflow for the second quarter of 2019 was nil while net financing cash outflow for the first half of 2019 was RMB197.6 million (US$28.8 million)[1].

Cash and cash equivalents, restricted cash, short-term investments, investments in equity securities[4] and time deposit[5]. As of June 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 RMB2,053.7 million (US$299.1 million)[1], as compared to RMB2,180.8 million as of March 31, 2019, primarily due to cash outflow due to acquisitions, offset by operating cash inflow and loan to third parties and franchisees.

Recent Developments

During this quarter, the Company continued to develop its mid-scale segment and luxury brands, including GreenTree Eastern, GMe, GYa, VX, Deep Sleep Hotel[6], and two newly-added brands Argyle and Ausotel, to expand the scope of its distribution network and hotel portfolio in order to offer more diversified choices for both franchisees and customers.

The Company also integrated membership programs with its partners including but not limited to Da Niang Dumplings and Yibon Hotel Group. This will enable members to use membership points and benefits interchangeably.

In the meantime, the Company is continuously developing and improving its systems to better serve its clients and franchisees.

Guidance

For the full year 2019, the Company expects organic growth in total revenues of 23-28% 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 August 16, 2019 (8:00 PM Beijing/Hong Kong Time on August 16, 2019).

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

International

1-412-902-4272 

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 August 23, 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:

10133916

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 June 30, 2019, GreenTree had a total number of 2,955 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.

[1]

The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB6.8650 on June 28, 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.



[4]

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



[5]

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



[6]

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

[7]

Wumian Hotel changed its brand name to Deep Sleep Hotel in the second quarter of 2019, while its English trademark is currently being registered.

---Financial Tables and Operational Data Follow?

 

GreenTree Hospitality Group Ltd.
Unaudited Condensed Consolidated Balance Sheets


 December 31, 2018


 June 30,
2019


 June 30,
2019


RMB


RMB


US$

ASSETS






Current assets:






Cash and cash equivalents

1,264,025,785


850,661,068


123,912,756

Short-term investment

685,512,063


151,615,477


22,085,284

Investments in equity securities

307,693,782


248,171,341


36,150,232

Accounts receivable, net of allowance for doubtful accounts

64,864,184


 

94,605,153


13,780,794

Amounts due from related parties

228,600


250,151


36,438

Prepaid rent

4,478,413


3,766,832


548,701

Inventories

2,547,729


1,432,429


208,657

Other current assets

53,969,039


54,477,884


7,935,599

Loans receivable, net

67,196,568


91,672,017


13,353,535

Total current assets

2,450,516,163


1,496,652,352


218,011,996













Non-current assets:






Restricted cash

3,300,000


16,285,620


2,372,268

Long-term time deposits

60,000,000


520,000,000


75,746,540

Loan receivable, net

39,352,863


69,695,061


10,152,230

Property and equipment, net

222,389,573


426,585,281


62,139,152

Intangible assets, net

27,213,391


256,942,055


37,427,830

Goodwill

5,787,068


45,485,971


6,625,779

Long-term investments

112,219,460


378,850,506


55,185,798

Other assets

25,701,523


81,078,922


11,810,479

Deferred tax assets

133,300,966


134,070,982


19,529,640

 TOTAL ASSETS

3,079,781,007


3,425,646,750


499,001,712













LIABILITIES AND EQUITY






Current liabilities:






Short-term bank loans

60,000,000


60,000,000


8,739,985

Accounts payable

9,182,058


11,708,087


1,705,475

Advance from customers

36,370,325


34,092,101


4,966,074

Amounts due to related parties

285,578


1,117,926


162,844

Salary and welfare payable

42,767,219


39,241,585


5,716,181

Deferred rent

4,421,427


3,208,628


467,389

Deferred revenue

210,585,604


215,123,608


31,336,287

Accrued expenses and other current
liabilities

241,407,979


271,306,037


39,520,182

Income tax payable

104,988,638


77,823,166


11,336,222

Total current liabilities

710,008,828


713,621,138


103,950,639







Deferred rent

20,519,682


19,881,213


2,896,025

Deferred revenue

380,173,585


397,461,282


57,896,764

Other long-term liabilities

96,573,810


100,167,279


14,591,009

Deferred tax liabilities

43,538,624


134,389,663


19,576,062

Unrecognized tax benefits

169,619,409


198,533,742


28,919,700

 TOTAL LIABILITIES

1,420,433,938


1,564,054,317


227,830,199







Shareholders' equity:






Class A ordinary shares

217,421,867


219,526,699


31,977,669

Class B ordinary shares

115,534,210


115,534,210


16,829,455

Additional paid-in capital

1,003,026,803


1,073,071,903


156,310,547

Retained earnings

252,617,450


307,982,604


44,862,725

Accumulated other comprehensive (loss) income

62,367,692


58,585,189


8,533,895

Total GreenTree Hospitality Group Ltd. shareholders' equity

1,650,968,022


1,774,700,605


258,514,291







Non-controlling interests

8,379,047


86,891,828


12,657,222

Total shareholders' equity

1,659,347,069


1,861,592,433


271,171,513







TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

3,079,781,007


3,425,646,750


499,001,712

 

 

GreenTree Hospitality Group Ltd.
Unaudited Condensed Consolidated Statements of Comprehensive Income


Quarter Ended


Six Months Ended


 June 30,
2018


 June 30, 2019


 June 30, 2019


 June 30, 2018


 June 30, 2019


 June 30, 2019


RMB


RMB


US$


RMB


RMB


US$

Revenues












Leased-and-operated hotels

51,305,036


60,510,976


8,814,417


96,920,132


112,336,802


16,363,700

Franchised-and-managed hotels

174,724,851


214,419,775


31,233,762


325,068,200


397,887,057


57,958,785

Total revenues

226,029,887


274,930,751


40,048,179


421,988,332


510,223,859


74,322,485













Operating costs and expenses












Hotel operating costs

(64,206,723)


(78,939,817)


(11,498,881)


(127,952,267)


(158,939,661)


(23,152,172)

Selling and marketing expenses

(10,919,269)


(16,353,634)


(2,382,175)


(21,388,124)


(41,029,736)


(5,976,655)

General and administrative
expenses

(25,150,930)


(39,768,385)


(5,792,918)


(45,551,787)


(65,500,871)


(9,541,278)

Other operating expenses

(35,330)


(65,350)


(9,520)


(178,592)


(107,974)


(15,728)

Total operating costs and
expenses

(100,312,252)


(135,127,186)


(19,683,494)


(195,070,770)


(265,578,242)


(38,685,833)













Other operating income

12,242,088


1,639,842


238,870


26,067,489


8,546,295


1,244,908

Income from operations

137,959,723


141,443,407


20,603,555


252,985,051


253,191,912


36,881,560













Interest income and other, net

11,420,031


17,759,532


2,586,968


16,123,893


34,228,543


4,985,949

Interest expense

-


(700,350)


(102,017)


-


(1,385,475)


(201,817)

Gains (losses) from investment
in equity securities

(25,862,935)


15,902,581


2,316,472


(31,036,562)


75,837,051


11,046,912

Other income, net

-


1,860,961


271,079


-


2,690,742


391,951

Income before income taxes

123,516,819


176,266,131


25,676,057


238,072,382


364,562,773


53,104,555













Income tax expense

(29,339,034)


(49,050,930)


(7,145,074)


(58,625,445)


(103,216,322)


(15,035,152)

Income before share of loss in equity method investments

94,177,785


127,215,201


18,530,983


179,446,937


261,346,451


38,069,403













Share of losses in equity investees, net of tax

(182,988)


(114,566)


(16,688)


(1,090,024)


(287,797)


(41,922)

Net income

93,994,797


127,100,635


18,514,295


178,356,913


261,058,654


38,027,481













Net loss attributable to non-controlling interests

(3,152)


1,376,781


200,551


26,367


2,332,314


339,739

Net income attributable to ordinary shareholders

93,991,645


128,477,416


18,714,846


178,383,280


263,390,968


38,367,220













Net earnings per share












Class A ordinary share-basic and diluted

0.93


1.26


0.18


1.84


2.59


0.38

Class B ordinary share-basic and diluted

0.93


1.26


0.18


1.84


2.59


0.38













Net earnings per ADS












Class A ordinary share-basic and diluted

0.93


1.26


0.18


1.84


2.59


0.38

Class B ordinary share-basic and diluted

0.93


1.26


0.18


1.84


2.59


0.38













Weighted average shares outstanding












Class A ordinary share-basic and diluted

66,789,300


67,113,004


67,113,004


58,866,739


67,064,583


67,064,583

Class B ordinary share-basic and diluted

34,762,909


34,762,909


34,762,909


37,839,060


34,762,909


34,762,909













Other comprehensive income, net of tax












Foreign currency translation adjustments

1,213,623


11,020,015


1,605,246


1,043,741


(3,782,503)


(550,984)

Comprehensive income, net of tax

95,208,420


138,120,650


20,119,541


179,400,654


257,276,151


37,476,497













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

(3,152)


1,376,781


200,551


26,367


2,332,314


339,740

Comprehensive income attributable to ordinary shareholders

95,205,268


139,497,431


20,320,092


179,427,021


259,608,465


37,816,237


 

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Cash Flows


 Quarter Ended


Six Months Ended


 June30, 2018


 June 30, 2019


 June 30, 2019


 June 30, 2018


 June 30, 2019


 June 30, 2019


RMB


RMB


US$


RMB


RMB


US$

Operating activities:












Net income

93,994,797


127,100,635


18,514,295


178,356,913


261,058,654


38,027,481













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












Depreciation and amortization

4,557,247


8,150,042


1,187,187


9,951,749


15,820,814


2,304,561

Share of loss in equity method investments

182,988


114,566


16,688


1,090,024


287,797


41,922

Interest income

(234,004)


(2,452,171)


(357,199)


(4,937,866)


(10,413,809)


(1,516,942)

Bad debt expense

379,445


(5,890,482)


(858,045)


698,703


(4,999,113)


(728,203)

(Gains) loss from investments in equity securities

25,862,935


(15,902,581)


(2,316,472)


31,036,562


(75,837,051)


(11,046,912)

Foreign exchange losses (gains)

(1,340,059)


(324,322)


(47,243)


(614,853)


(528,439)


(76,976)

Share-based compensation

3,586,930


6,260,341


911,921


3,746,769


11,109,792


1,618,324

Income tax expenses related to dividend distribution or retained profits

-


3,955,452


576,177


-


7,799,944


1,136,190













Changes in operating assets and liabilities:












Accounts receivable

(8,246,047)


(5,850,767)


(852,260)


(19,468,637)


(23,868,928)


(3,476,901)

Prepaid rent

(1,455,073)


-


-


131,304


711,581


103,653

Inventories

186,242


(280,089)


(40,800)


961,422


1,168,794


170,254

Amounts due from related parties

1,938,481


(25,151)


(3,664)


1,522,123


(21,551)


(3,139)

Other current assets

(19,562,202)


(7,010,607)


(1,021,210)


(26,365,951)


186,182


27,120

Other assets

-


(7,453,225)


(1,085,685)


-


(12,142,854)


(1,768,806)

Accounts payable

(4,359,732)


(2,228,556)


(324,626)


337,208


1,970,109


286,979

Amounts due to related parties

154,006


899,112


130,970


480,702


832,348


121,245

Salary and welfare payable

27,794


2,313,943


337,064


(1,651,291)


(5,049,650)


(735,564)

Deferred revenue

27,635,223


9,218,777


1,342,866


49,878,884


4,825,701


702,943

Advance from customers

8,017,444


(607,442)


(88,483)


(471,039)


(2,278,224)


(331,863)

Accrued expenses and other current liabilities

(29,094,444)


2,668,564


388,720


(25,606,665)


28,261,232


4,116,713

Income tax payable

(56,273,754)


(51,216,175)


(7,460,477)


(36,539,914)


(27,333,112)


(3,981,517)

Unrecognized tax benefits

43,190,003


22,867,582


3,331,039


46,941,155


28,914,333


4,211,847

Deferred rent

(1,028,699)


(1,558,697)


(227,050)


(2,043,147)


(1,851,268)


(269,668)

Other long-term liabilities

7,701,591


2,545,743


370,831


9,474,980


3,593,469


523,450

Deferred taxes

(9,523,172)


(272,719)


(39,726)


(14,570,166)


4,997,435


727,958

Net cash provided by operating activities

86,297,940


85,021,773


12,384,818


202,338,969


207,214,186


30,184,149













Investing activities:












Purchases of property and equipment

(54,676,146)


(4,451,361)


(648,414)


(113,008,255)


(3,511,310)


(1,968,144)

Purchases of intangible assets

(900,000)


-


-


(900,000)


-


-

Advances for acquisitions

-


(47,866,700)


(6,972,571)


-


(47,866,700)


(6,972,571)

Purchases of short-term investments

(275,105,052)


(28,283,130)


(4,119,902)


(791,666,641)


(212,519,973)


(30,957,024)

Proceeds from short-term investments

234,004


40,774,393


5,939,460


745,234,004


756,830,368


110,244,773

Proceeds from disposal of property and equipment

-


1,000,000


145,666


-


1,300,000


189,366

Acquisitions, net of cash received

-


(234,660,607)


(34,182,171)


-


(244,660,607)


(35,638,836)

Increase of long-term time deposits

-


(20,000,000)


(2,913,328)


-


(460,000,000)


(67,006,555)

Purchases of investments in equity securities

-


(22,060,000)


(3,213,401)


(4,795,838)


(24,036,351)


(3,501,289)

Purchases of long term investments

-


-


-


-


(247,456,740)


(36,046,138)

Proceeds from disposal of investments in equity securities

7,604,063


36,617,830


5,333,988


18,871,973


145,221,744


21,153,932

Loan to third parties

(5,000,000)


(135,835,219)


(19,786,631)


(10,000,000)


(151,775,219)


(22,108,553)

Loan to a related party

(4,300,000)


(106,979,750)


(15,583,358)


(4,300,000)


(116,979,750)


(17,040,022)

Loan to franchisees

(13,000,000)


(13,460,000)


(1,960,670)


(28,000,000)


(31,590,000)


(4,601,603)

Repayment of loan from third parties

-


121,280,219


17,666,456


-


121,280,219


17,666,456

Repayment from a related party

-


116,979,750


17,040,022


-


116,979,750


17,040,022

Repayment from a franchisee

4,920,000


1,973,956


287,539


8,420,000


7,267,353


1,058,609

Net cash used in investing activities

(340,223,131)


(294,970,619)


(42,967,315)


(180,144,757)


(401,517,216)


(58,487,577)













Financing activities:












Distribution to the shareholders

(160,840,918)


-


-


(200,532,021)


(208,025,814)


(30,302,376)

Income tax paid related to the above distribution

-


-


-


(3,000,000)


-


-

Proceeds from NCI

-


-


-


-


10,390,000


1,513,474

Proceeds from IPO, net of capitalized expenses

-


-


-


837,505,007


-


-

Payment for initial public offering costs

(25,087,646)


-


-


(29,390,408)


-


-

Net cash provided by (used in) financing activities

(185,928,564)


-


-


604,582,578


(197,635,814)


(28,788,902)













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

1,509,941


3,249,707


473,373


614,853


(8,440,253)


(1,229,461)

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

(438,343,814)


(206,699,139)


(30,109,124)


627,391,643


(400,379,097)


(58,321,791)

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

1,230,699,122


1,073,645,827


156,394,148


164,963,665


1,267,325,785


184,606,815

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

792,355,308


866,946,688


126,285,024


792,355,308


866,946,688


126,285,024

 

* 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 six months period ended June 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


Six Months Ended


June 30, 2018


 June 30, 2019


 June 30, 2019


June 30, 2018


 June 30, 2019


 June 30, 2019


RMB


RMB


US$


RMB


RMB


US$

Net income

93,994,797


127,100,635


18,514,295


178,356,913


261,058,654


38,027,481













Deduct:












Other operating income

12,242,088


1,639,842


238,870


26,067,489


8,546,295


1,244,908

Reimbursement related to the ADS program

 

-






 

-





Gains on investments in equity securities

-


15,902,581


2,316,472


-


75,837,051


11,046,912

Other income, net

-


1,860,961


271,079


-


2,690,742


391,951













Add:












Other operating expenses

35,330


65,350


9,520


178,592


107,974


15,728

Income tax expense

29,339,034


49,050,930


7,145,074


58,625,445


103,216,322


15,035,152

Share of loss in equity investees, net of tax

182,988


114,566


16,688


1,090,024


287,797


41,922

Interest expense

-


700,350


102,017


-


1,385,475


201,817

Share-based compensation

3,586,930


7,326,131


1,067,171


3,746,769


12,175,582


1,773,573

Depreciation and amortization

4,557,247


8,150,042


1,187,187


9,951,749


15,820,814


2,304,561

Losses on investments in equity securities

25,862,935


-


-


31,036,562


-


-

Adjusted EBITDA (Non-GAAP)

145,317,173


173,104,620


25,215,531


256,918,565


306,978,530


44,716,463

 

 


Quarter Ended


Six Months Ended


 June 30, 2018


 June 30, 2019


 June 30, 2019


June 30, 2018


 June 30, 2019


 June 30, 2019


RMB


RMB


US$


RMB


RMB


US$

Net income

93,994,797


127,100,635


18,514,295


178,356,913


261,058,654


38,027,481













Deduct:












Government subsidies (net of 25% tax)

76,774


233,981


34,083


10,312,776


5,048,981


735,467

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

-


11,926,936


1,737,354


-


56,877,788


8,285,184

Reimbursement related to the ADS program

9,271,648


-


-


9,271,648


-


-

Other income (net of 25% tax)

-


1,395,721


203,309


-


2,018,057


293,963













Add:












Share-based compensation

3,586,930


7,326,131


1,067,171


3,746,769


12,175,582


1,773,573

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

19,397,201


-


-


23,277,422


-


-

one-time consulting fees for M&A

-


943,650


137,457


-


943,650


137,458

Income tax expenses related to dividend distribution

-


3,955,452


576,177


-


7,799,944


1,136,190

Core net income (Non-GAAP)

107,630,506


125,769,230


18,320,354


185,796,680


218,033,004


31,760,088

























Core net income per ADS (Non-GAAP)












Class A ordinary share-basic and diluted

1.06


1.23


0.18


1.92


2.14


0.31

Class B ordinary share-basic and diluted

1.06


1.23


0.18


1.92


2.14


0.31

Operational Data


As of June 30, 2018

As of June 30, 2019

 Total hotels in operation:

2,434

2,955

 Leased-and-owned hotels

26

30

 Franchised hotels

2,408

2,925

 Total hotel rooms in operation

201,275

236,557

 Leased-and-owned hotels

3,358

3,803

 Franchised hotels

197,917

232,754

 Number of cities

267

300

 


Quarter Ended

As of June 30, 2018

As of June 30, 2019

 Occupancy rate (as a percentage)



 Leased-and-owned hotels

70.7%

70.5%

 Franchised hotels

82.9%

81.3%

 Blended

82.6%

81.1%

 Average daily rate (in RMB)



 Leased-and-owned hotels

201

216

 Franchised hotels

163

171

 Blended

164

172

RevPAR (in RMB)



 Leased-and-owned hotels

142

152

 Franchised hotels

135

139

 Blended

136

139

 


Number of Hotels in Operation



Number of Hotel Rooms in Operation


As of June



As of June



As of June


As of June

30, 2018

30, 2019

30, 2018

30, 2019

Luxury


/




19




/



4,017

Argyle


/




19




/



4,017

 Mid-to-up-scale


60




152




6,760



15,357

 GreenTree Eastern


59




96




6,650



10,200

 Deepsleep Hotel


-




1




-



62

 GMe


-




18




-



1,669

 Geya


-




11




-



918

 VX


1




17




110



1,397

Ausotel


/




9




/



1,111

 Mid-scale


2,062




2,229




177,665



189,357

 GreenTree Inn


1,785




1,931




155,470



166,183

 GT Alliance


277




295




22,195



22,994

 GreenTree Apartment


-




3




-



180

 Economy hotels


312




555




16,850



27,826

 Vatica


111




119




8,295



8,819

 Shell


201




436




8,555



19,007

Total


2,434




2,955




201,275



236,557

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

SOURCE GreenTree Hospitality Group Ltd.


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