Tims China Announces Fourth Quarter and Full Year 2022 Financial Results
TH International Limited (Nasdaq: THCH, THCHW) reported its unaudited financial results for Q4 and full year 2022, showcasing a strong performance despite pandemic challenges. Total revenues surged by 34.6% YoY to RMB301.5 million (USD43.7 million) in Q4 and 57.2% YoY to RMB1,011.1 million (USD146.6 million) for the full year. The company opened 131 new stores in Q4, reaching 617 total stores by year-end, and achieved 11.3 million registered loyalty club members, an 88.5% increase YoY. Adjusted store EBITDA improved by 45.7% YoY to RMB12.8 million in Q4. However, the company reported a net loss of RMB222.9 million (USD32.3 million) in Q4, reflecting ongoing operational challenges due to COVID-19.
- Total revenues increased 34.6% YoY in Q4 2022.
- Total revenues for the full year 2022 grew by 57.2% YoY.
- 131 net new store openings in Q4, bringing total stores to 617.
- Registered loyalty club membership reached 11.3 million, up 88.5% YoY.
- Adjusted store EBITDA margin improved to 4.7%, an increase of 0.6 percentage points YoY.
- Net loss of RMB222.9 million (USD32.3 million) in Q4 2022.
- Same-store sales growth decline of 7.1% for company-owned stores in Q4 2022.
- Operating loss of RMB131.4 million (USD19.0 million) in Q4 2022.
Total Revenues Increased
131 Net New Store Openings During the Fourth Quarter,
617 System-Wide Stores at Year-End
11.3 Million Registered Loyalty Club Members at Year-End,
Representing
Adjusted Store EBITDA Margin Increased 0.6 Percentage Points to
Continued Recovery:
SHANGHAI and NEW YORK, April 06, 2023 (GLOBE NEWSWIRE) -- TH International Limited (Nasdaq: THCH), the exclusive operator of Tim Hortons coffee shops in China (“Tims China” or the “Company”) today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2022.
FOURTH QUARTER 2022 HIGHLIGHTS
- Total revenues were RMB301.5 million (USD43.7 million), representing a
34.6% increase from the same quarter of 2021. - Net new store openings totaled 131 (93 company owned and operated stores and 38 franchised stores).
- Adjusted store EBITDA1 was RMB12.8 million (USD1.9 million), representing a
45.7% increase from the same quarter of 2021. - Adjusted store EBITDA margin2 was
4.7% , representing an increase of 0.6 percentage points from the same quarter of 2021.
_________________________
1 Adjusted store EBITDA is calculated as fully-burdened gross profit3 of company owned and operated stores excluding depreciation & amortization and store pre-opening expenses.
2 Adjusted store EBITDA margin is calculated as adjusted store EBITDA as a percentage of revenues from company owned and operated stores.
3 Fully-burdened gross profit of company owned and operated stores, the most comparable GAAP measure to adjusted store EBITDA, was a loss of RMB46.4 million (USD6.7 million) for the three months ended December 31, 2022, compared to a loss of RMB52.7 million in the same quarter of 2021.
FULL YEAR 2022 HIGHLIGHTS
- Total revenues were RMB1,011.1 million (USD146.6 million), representing a
57.2% increase from 2021. - Net new store openings totaled 227 (174 company owned and operated stores and 53 franchised stores) in 2022, reaching 617 total stores at year-end (547 company owned and operated stores and 70 franchised stores).
- Registered loyalty club members totaled 11.3 million as of December 31, 2022, representing an
88.5% increase from 2021.
COMPANY MANAGEMENT STATEMENT
Mr. Yongchen Lu, CEO & Director of Tims China, commented, “We demonstrated resilience and agility during the fourth quarter of 2022 and are pleased with our achievements, especially considering the challenges brought about by the COVID-19 pandemic, which were particularly acute in December given peaks in infection rates across the country. Despite the difficult circumstances, we managed to grow total revenues year-over-year by
Mr. Lu added, “In 2023, we will continue to execute our differentiated ‘Coffee Plus’ growth strategy by offering creative and customized beverage and food combos at compelling values. This initiative has been highly successful: the percentage of orders with food increased from
Mr. Dong (Albert) Li, CFO of Tims China, commented, “In the fourth quarter of 2022, COVID-19 created tremendous pressure on the entire consumer segment in China and our operations were significantly disrupted by widespread infections. However, our team performed well and remained committed to delivering high-quality products and sustained services, while also maintaining the safety and health of our employees and customers in this volatile environment. In the fourth quarter, we expanded both top-line revenues and adjusted store EBITDA margin and also opened a record net new stores of 131, of which 23 utilize our compact Tims Express format in partnership with Sinopec Easy Joy.”
Mr. Li continued, “Looking ahead, our top near-term financial priorities are to continue to deliver robust revenue growth, expand store-level profitability, and improve adjusted corporate EBITDA margins. By leveraging Tims China’s brand influence and positive consumer perception, growing customer recognition and loyalty, continuous innovation, ever-expanding store network, and disciplined execution, we expect to further optimize our cost structure, improve on operational efficiency, and achieve greater economies of scale.”
IMPACT OF COVID-19 AND RELATED EFFORTS
During the fourth quarter of 2022, our business operations were severely affected due to the resurgence of the pandemic and multiple rounds of lockdowns across major cities in the PRC. In December, the PRC government significantly changed its COVID policies, including removal of mass testing and central quarantine requirements, as well as lifting of travel restrictions. A significant wave of infections occurred and many chose to stay at home. As a result, dine-in traffic declined substantially. In the fourth quarter of 2022, we also experienced approximately 48 daily temporary store closures on average, over twice as many compared to approximately 23 daily temporary store closures on average in the third quarter of 2022.
To cope with and to adapt to challenges from the pandemic, we continued to focus on our digital capabilities in order to capture the growing demand from delivery and takeaway services. As a result, the number of delivery and takeaway orders increased by
Following the easing of pandemic-related measures, we have gradually resumed normal operations and the overall business environment and consumer sentiment have dramatically improved. This recovery is well demonstrated in our same-store sales performance, which reached
FOURTH QUARTER 2022 FINANCIAL RESULTS
Total revenues reached RMB301.5 million (USD43.7 million) for the three months ended December 31, 2022, representing an increase of
- Revenues from company owned and operated stores were RMB272.5 million (USD39.5 million) for the three months ended December 31, 2022, representing an increase of
27.5% from RMB213.7 million in the same quarter of 2021. The growth was primarily driven by an increase in the number of company owned and operated stores from 373 as of December 31, 2021 to 547 as of December 31, 2022, offset by negative7.1% same-store sales growth of company owned and operated stores for the three months ended December 31, 2022. - Other revenues were RMB29.0 million (USD4.2 million) for the three months ended December 31, 2022, representing an increase of
180.7% from RMB10.3 million in the same quarter of 2021. The growth was primarily attributable to the rapid expansion of our e-commerce business and an increase in franchise fees and revenues from other franchise support activities, which was attributable to an increase in the number of franchised stores from 17 as of December 31, 2021 to 70 as of December 31, 2022.
Company operated store costs and expenses were RMB310.7 million (USD45.0 million) for the three months ended December 31, 2022, representing an increase of
- Food and packaging expenses were RMB89.5 million (USD13.0 million), representing an increase of
25.0% from RMB71.6 million, in line with our revenue growth and store network expansion. Food and packaging costs as a percentage of revenues from company owned and operated stores decreased by 0.7 percentage points from33.5% in the fourth quarter of 2021 to32.8% in the fourth quarter of 2022. - Rental and property management fee were RMB75.9 million (USD11.0 million), representing an increase of
35.2% from RMB56.2 million, mainly due to the increase in the number of company owned and operated stores from 373 as of December 31, 2021 to 547 as of December 31, 2022. Accordingly, rental and property management fee as a percentage of revenues from company owned and operated stores increased by 1.6 percentage points from26.3% in the fourth quarter of 2021 to27.9% in the fourth quarter of 2022. - Payroll and employee benefits expenses were RMB66.7 million (USD9.7 million), representing a decrease of
7.1% from RMB71.8 million, primarily due to refined staffing arrangement of our store operation personnel and optimization of our labor structure, including hiring more part-time employees, during the fourth quarter of 2022. Payroll and employee benefits as a percentage of revenues from company owned and operated stores decreased by 9.1 percentage points from33.6% in the fourth quarter of 2021 to24.5% in the fourth quarter of 2022. - Delivery costs were RMB21.9 million (USD3.2 million), representing an increase of
57.4% from RMB13.9 million, due to increased home-delivery orders. Delivery costs as a percentage of revenues from company owned and operated stores increased by 1.5 percentage points from6.5% in the fourth quarter of 2021 to8.0% in the fourth quarter of 2022. - Other operating expenses were RMB23.1 million (USD3.4 million), representing a decrease of
17.4% from RMB28.0 million, due to our continuous efforts to optimize our cost structure and drive operating leverage through revenue growth and store network expansion. Other operating expenses as a percentage of revenues from company owned and operated stores decreased by 4.6 percentage points from13.1% in the fourth quarter of 2021 to8.5% in the fourth quarter of 2022. - Store depreciation and amortization were RMB33.5 million (USD4.9 million), representing an increase of
59.8% from RMB21.0 million, driven by an increase in the number of company owned and operated stores from 373 as of December 31, 2021 to 547 as of December 31, 2022. Store depreciation and amortization as a percentage of revenues from company owned and operated stores increased by 2.5 percentage points from9.8% in the fourth quarter of 2021 to12.3% in the fourth quarter of 2022.
Cost of other revenues was RMB22.1 million (USD3.2 million) for the three months ended December 31, 2022, representing an increase of
Marketing expenses were RMB24.3 million (USD3.5 million) for the three months ended December 31, 2022, representing an increase of
General and administrative expenses were RMB66.5 million (USD9.6 million) for the three months ended December 31, 2022, representing an increase of
Franchise and royalty expenses were RMB10.3 million (USD1.5 million) for the three months ended December 31, 2022, representing an increase of
As a result of the foregoing, operating loss was RMB131.4 million (USD19.0 million) for the three months ended December 31, 2022, compared to RMB129.3 million in the same quarter of 2021.
Adjusted Corporate EBITDA was a loss of RMB54.7 million (USD7.9 million) for the three months ended December 31, 2022, compared to a loss of RMB59.3 million in the same quarter of 2021. Adjusted Corporate EBITDA margin was negative
Net loss was RMB222.9 million (USD32.3 million) for the three months ended December 31, 2022, compared to RMB137.0 million for the same quarter of 2021. Adjusted net loss was RMB100.8 million (USD14.6 million) for the three months ended December 31, 2022, compared to RMB89.5 million for the same quarter of 2021. Adjusted net loss margin was negative
Basic and diluted net loss per ordinary share was RMB1.61 (USD0.23) in the fourth quarter of 2022, compared to RMB1.11 in the fourth quarter of 2021. Adjusted basic and diluted net loss per ordinary share was RMB0.73 (USD0.11) in the fourth quarter of 2022, compared to RMB0.73 in the fourth quarter of 2021.
Liquidity
As of December 31, 2022, the Company’s total cash and cash equivalents and short-term investments were RMB611.5 million (USD88.7 million), compared to RMB390.8 million as of December 31, 2021. The change was primarily attributable to proceeds from bank borrowings, proceeds from the closing of our merger with Silver Crest Acquisition Corporation, proceeds from our PIPE investors and proceeds from investors who entered into an Equity Support Agreement dated March 8, 2022, as amended (the “ESA”) with us, offset by the cash disbursements as a result of the rapid expansion of our business and store network nationwide.
KEY OPERATING DATA
| For the three months ended or as of | |||||||||||||||
| Mar 31, | Jun 30, | Sep 30, | Dec 31, | Mar 31, | Jun 30, | Sep 30, | Dec 31, | ||||||||
| 2021 | 2021 | 2021 | 2021 | 2022 | 2022 | 2022 | 2022 | ||||||||
| Total stores | 159 | 217 | 280 | 390 | 424 | 440 | 486 | 617 | |||||||
| Company owned and operated stores | 150 | 206 | 268 | 373 | 403 | 419 | 454 | 547 | |||||||
| Franchised stores | 9 | 11 | 12 | 17 | 21 | 21 | 32 | 70 | |||||||
| Same-store sales growth for system-wide stores | - | - | |||||||||||||
| Same-store sales growth for company owned and operated stores | - | - | |||||||||||||
| Registered loyalty club members (in thousands) | 2,947 | 3,865 | 4,770 | 5,969 | 6,907 | 7,532 | 8,862 | 11,250 | |||||||
| Adjusted store EBITDA (Renminbi in thousands) (Note*) | -1,834 | 7,545 | 5,285 | 8,780 | -25,011 | -43,787 | 15,325 | 12,796 | |||||||
| Adjusted store EBITDA margin (Note*) | - | - | - | ||||||||||||
Note* The Company has revised its previously announced adjusted store EBITDA and adjusted store EBITDA margin to more accurately account for store depreciation and amortization and franchise and royalty expenses for company owned and operated stores. Please refer to “RECONCILIATION OF NON-GAAP MEASURES TO THE MOST DIRECTLY COMPARABLE GAAP MEASURES – A. Adjusted store EBITDA and adjusted store EBITDA margin” for more information.
KEY DEFINITIONS
- Same-store sales growth. The percentage change in the sales of stores that have been operating for 12 months or longer during a certain period compared to the same period from the prior year. The same-store sales growth for any period of more than a month equals to the arithmetic average of the same-store sales growth of each month covered in the period. If a store was closed for seven days or more during any given month, its sales during that month and the same month in the comparison period are excluded for purposes of measuring same-store sales growth.
- Net new store openings. The gross number of new stores opened during the period minus the number of stores permanently closed during the period.
- Adjusted store EBITDA. Calculated as fully-burdened gross profit of company owned and operated stores excluding depreciation and amortization, and store pre-opening expenses.
- Adjusted store EBITDA margin. Calculated as adjusted store EBITDA as a percentage of revenues from company owned and operated stores.
- Adjusted general and administrative expenses. Calculated as general and administrative expenses excluding share-based compensation expenses, expenses related to the issuance of certain ordinary shares to CF Principal Investments LLC in November 2022 (the “Commitment Shares”), offering costs related to the ESA (the “ESA Offering Costs”), and expenses related to 200,000 of our ordinary shares that may be purchased from our controlling shareholder by a holder of our convertible notes at its option pursuant to the terms of an Option Agreement dated September 28, 2022 (the “Option Shares”).
- Adjusted corporate EBITDA. Calculated as operating loss excluding store pre-opening expenses, and certain non-cash expenses consisting of depreciation and amortization, share-based compensation expenses, expenses related to the Commitment Shares, the ESA Offering Costs, expenses related to the Option Shares, impairment losses of long-lived assets and loss on disposal of property and equipment.
- Adjusted corporate EBITDA margin. Calculated as adjusted corporate EBITDA as a percentage of total revenues.
- Adjusted net loss. Calculated as net loss excluding store pre-opening expenses, share-based compensation expenses, expenses related to the Commitment Shares, the ESA Offering Costs, expenses related to the Option Shares, impairment losses of long-lived assets, loss on disposal of property and equipment, changes in fair value of convertible notes, changes in fair value of warrant liabilities; and changes in fair value of ESA derivative liabilities.
- Adjusted net loss margin. Calculated as adjusted net loss as a percentage of total revenues.
- Adjusted basic and diluted net loss per ordinary share. Calculated as adjusted net loss attributable to the Company’s ordinary shareholders divided by weighted-average number of basic and diluted ordinary share.
RECENT BUSINESS DEVELOPMENTS
- On January 17, 2023, Tims China celebrated the opening its 600th coffee shop, a milestone achieved in late 2022. The 600th store is located in Zhongshan in Guangdong province, part of Tims China’s Pearl River Delta cluster, which includes Shenzhen and Guangzhou.
- On February 8, 2023, Tims China announced that its board of directors had approved the entry into a transaction for the exclusive rights to develop and sub-franchise Popeyes, another iconic brand owned by Restaurant Brands International and one of the world’s largest chicken quick-service restaurant groups with over 3,900 locations globally, in mainland China and Macau. The transaction was closed on March 30, 2023 and is expected to bring significant operational and development synergies and further growth potential to Tims China.
USE OF NON-GAAP FINANCIAL MEASURES
The Company uses non-GAAP financial measures, namely adjusted store EBITDA, adjusted store EBITDA margin, adjusted general and administrative expenses, adjusted corporate EBITDA, adjusted corporate EBITDA margin, adjusted net loss, adjusted net loss margin, and adjusted basic and diluted net loss per ordinary share in evaluating its operating results and for financial and operational decision-making purposes. The Company defines (i) adjusted store EBITDA as fully-burdened gross profit of company owned and operated stores excluding depreciation and amortization, and store pre-opening expenses; (ii) adjusted store EBITDA margin as adjusted store EBITDA as a percentage of revenues from company owned and operated stores; (iii) adjusted general and administrative expenses as general and administrative expenses excluding share-based compensation expenses, expenses related to the Commitment Shares, the ESA Offering Costs, and expenses related to the Option Shares; (iv) adjusted corporate EBITDA as operating loss excluding store pre-opening expenses, and certain non-cash expenses consisting of depreciation and amortization, share-based compensation expenses, expenses related to the Commitment Shares, the ESA Offering Costs, expenses related to the Option Shares, impairment losses of long-lived assets and loss on disposal of property and equipment; (v) adjusted corporate EBITDA margin as adjusted corporate EBITDA as a percentage of total revenues; (vi) adjusted net loss as net loss excluding store pre-opening expenses, share-based compensation expenses, expenses related to the Commitment Shares, the ESA Offering Costs, expenses related to the Option Shares, impairment losses of long-lived assets, loss on disposal of property and equipment, changes in fair value of convertible notes, changes in fair value of warrant liabilities; and changes in fair value of ESA derivative liabilities; (vii) adjusted net loss margin as adjusted net loss as a percentage of total revenues; (viii) adjusted basic and diluted net loss per ordinary share as adjusted net loss attributable to the Company’s ordinary shareholders divided by weighted-average number of basic and diluted ordinary share. The Company believes adjusted store EBITDA, adjusted store EBITDA margin, adjusted general and administrative expenses, adjusted corporate EBITDA, adjusted corporate EBITDA margin, adjusted net loss, adjusted net loss margin, and adjusted basic and diluted net loss per ordinary share enhance investors' overall understanding of its financial performance and allow for greater visibility with respect to key metrics used by its management in its financial and operational decision-making.
These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. As these non-GAAP financial measures have limitations as analytical tools and may not be calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measures, which should be considered when evaluating the Company’s performance. For reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, “Reconciliation of GAAP and Non-GAAP Results.” The Company encourages investors and others to review its financial information in its entirety and not rely on any single financial measure.
EXCHANGE RATE INFORMATION
This press release contains translations of certain RMB amounts into U.S. dollars (“USD”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.8972 to USD1.00, the exchange rate in effect on December 30, 2022 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all.
PRE-RECORDED PRESENTATION
The Company will host a pre-recorded presentation that will be available beginning at Thursday, April 6, 2023, at 8:00 am Eastern Time (or Thursday, April 6, 2023, at 8:00 pm Beijing Time) from the Investor Relations website at https://ir.timschina.com under “Events and Presentations”.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Without limiting the generality of the foregoing, the forward-looking statements in this press release include descriptions of the Company’s future commercial operations, such as the continued expansion of its store network and growth of its loyalty club members, and its ability to grow customer recognition, brand awareness and loyalty, the potential benefits of the Popeyes transaction, estimates of the Company’s future market share and financial performance, and the Company’s business plans and financial strategies. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, such as the Company’s inability to implement its business plans, identify and realize additional opportunities, or meet or exceed its financial projections and changes in the regulatory or competitive environment in which the Company operates. You should carefully consider the foregoing factors and the other risks and uncertainties described in the Company’s registration statement on Form F-1, as amended, which was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on December 22, 2022 and other documents filed or to be filed by the Company with the SEC from time to time, which could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements. The Company cannot assure you that these forward-looking statements will prove to be accurate and assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.
STATEMENT REGARDING PRELIMINARY UNAUDITED FINANCIAL INFORMATION
The unaudited financial information set out in this earnings release is preliminary and subject to potential adjustments. Adjustments to the consolidated financial statements may be identified when audit work has been performed for the Company’s year-end audit, which could result in significant differences from this preliminary unaudited financial information. Accordingly, you should not place undue reliance upon these preliminary estimates. The preliminary unaudited financial information included in this press release has been prepared by, and is the responsibility of, the Company’s management. The Company’s auditor has not audited, reviewed, compiled or applied agreed-upon procedures with respect to such preliminary financial data. Accordingly, the Company’s auditor does not express an opinion or any other form of assurance with respect thereto. Upon completion of the year-end audit, the Company’s audited financial results may differ materially from its preliminary estimates.
ABOUT TH INTERNATIONAL LIMITED
TH International Limited (Nasdaq: THCH) (“Tims China”) is the parent company of the exclusive master franchisee of Tim Hortons coffee shops for Restaurant Brands International Inc. (TSX: QSR) (NYSE: QSR) in China, including Hong Kong and Macau. TH International Limited was founded by Cartesian Capital Group and Tim Hortons Restaurants International, a subsidiary of Restaurant Brands International Inc.
Tims China offers freshly brewed coffee, tea and other beverages, bakery & sides, and sandwiches and is an emerging coffee champion in China. The brand's philosophy is rooted in world-class execution and data-driven decision making and centered on true local relevance, continuous innovation, genuine community, and absolute convenience. For more information, please visit www.timhortons.com.cn.
INVESTOR AND MEDIA CONTACTS
Investor Relations
Tims China Investor Relations:
IR@timschina.com
ICR, LLC
TimsChinaIR@icrinc.com
Public Relations
ICR, LLC
TimsChinaPR@icrinc.com
| TH INTERNATIONAL LIMITED AND SUBSIDIARIES | ||||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (Amounts in thousands of RMB and US$, except for number of shares) | ||||||||
| As of | ||||||||
| December 31, 2021 | December 31，2022 | |||||||
| RMB | RMB | US$ | ||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | 390,837 | 239,077 | 34,663 | |||||
| Short term investment | - | 372,376 | 53,989 | |||||
| Accounts receivable, net | 9,817 | 5,617 | 814 | |||||
| Inventories | 42,479 | 71,468 | 10,362 | |||||
| Prepaid expenses and other current assets | 142,839 | 108,275 | 15,699 | |||||
| Total current assets | 585,972 | 796,813 | 115,527 | |||||
| Non-current assets | ||||||||
| Property and equipment, net | 554,015 | 720,036 | 104,395 | |||||
| Intangible assets, net | 77,594 | 96,018 | 13,921 | |||||
| Operating lease right-of-use assets | - | 946,873 | 137,284 | |||||
| Other non-current assets | 67,312 | 82,270 | 11,928 | |||||
| Total non-current assets | 698,921 | 1,845,197 | 267,528 | |||||
| Total assets | 1,284,893 | 2,642,010 | 383,055 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Short-term bank borrowings | 192,055 | 407,807 | 59,127 | |||||
| Accounts payable | 60,952 | 105,673 | 15,321 | |||||
| Contract liabilities | 14,129 | 22,122 | 3,207 | |||||
| Amount due to related parties | 14,074 | 22,485 | 3,260 | |||||
| Derivative financial liabilities | - | 269,251 | 39,038 | |||||
| Lease liability-current | - | 180,468 | 26,165 | |||||
| Other current liabilities | 286,080 | 310,456 | 45,012 | |||||
| Total current liabilities | 567,290 | 1,318,262 | 191,130 | |||||
| Non-current liabilities | ||||||||
| Long-term bank borrowings | 11,903 | 8,800 | 1,276 | |||||
| Convertible notes, at fair value | 318,466 | 354,080 | 51,337 | |||||
| Contract liabilities - non-current | 970 | 3,311 | 480 | |||||
| Derivative financial liabilities - non-current | - | 19,083 | 2,767 | |||||
| Lease liability-non-current | - | 820,249 | 118,925 | |||||
| Other non-current liabilities | 47,169 | 7,921 | 1,147 | |||||
| Total non-current liabilities | 378,508 | 1,213,444 | 175,932 | |||||
| Total liabilities | 945,798 | 2,531,706 | 367,062 | |||||
| Shareholders’ equity | ||||||||
| Ordinary Shares (US | 7 | 9 | 1 | |||||
| Additional paid-in capital | 937,315 | 1,472,015 | 213,422 | |||||
| Accumulated losses | (637,528 | ) | (1,380,173 | ) | (200,106 | ) | ||
| Accumulated other comprehensive income | 35,744 | 16,999 | 2,465 | |||||
| Treasury shares (8,242,983 and nil ordinary Shares as of December 31, 2022 and 2021, respectively) | - | - | - | |||||
| Total equity attributable to shareholders of the Company | 335,538 | 108,850 | 15,782 | |||||
| Non-controlling interests | 3,557 | 1,454 | 211 | |||||
| Total shareholders’ equity | 339,095 | 110,304 | 15,993 | |||||
| Commitments and Contingencies | - | - | - | |||||
| Total liabilities and shareholders’ equity | 1,284,893 | 2,642,010 | 383,055 | |||||
| TH INTERNATIONAL LIMITED AND SUBSIDIARIES | ||||||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS) | ||||||||||||||||||
| (Amounts in thousands of RMB and US$, except for per share data) | ||||||||||||||||||
| For the three months ended December 31, | For the year ended December 31, | |||||||||||||||||
| 2021 | 2022 | 2021 | 2022 | |||||||||||||||
| RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||
| Revenues | ||||||||||||||||||
| Company owned and operated stores | 213,653 | 272,509 | 39,510 | 617,226 | 938,097 | 136,011 | ||||||||||||
| Other revenues | 10,322 | 28,972 | 4,201 | 26,146 | 72,967 | 10,579 | ||||||||||||
| Total revenues | 223,975 | 301,481 | 43,711 | 643,372 | 1,011,064 | 146,590 | ||||||||||||
| Costs and expenses, net | ||||||||||||||||||
| Company owned and operated stores | ||||||||||||||||||
| Food and packaging (including cost of Company owned and operated stores from transactions with a related party of RMB36,862,860 and RMB19,521,561 for the years ended December 31, 2022 and 2021, respectively) | 71,596 | 89,480 | 12,973 | 207,948 | 314,550 | 45,606 | ||||||||||||
| Rental and property management fee | 56,160 | 75,939 | 11,010 | 148,152 | 236,838 | 34,338 | ||||||||||||
| Payroll and employee benefits | 71,828 | 66,699 | 9,670 | 199,330 | 268,857 | 38,981 | ||||||||||||
| Delivery costs | 13,926 | 21,917 | 3,178 | 38,604 | 73,616 | 10,673 | ||||||||||||
| Other operating expenses (including service fee from transactions with a related party of RMB550,000 and nil for the years ended December 31, 2022 and 2021, respectively) | 27,962 | 23,106 | 3,350 | 99,105 | 107,770 | 15,625 | ||||||||||||
| Store depreciation and amortization | 20,986 | 33,544 | 4,863 | 62,679 | 118,659 | 17,204 | ||||||||||||
| Company owned and operated store costs and expenses | 262,458 | 310,685 | 45,044 | 755,818 | 1,120,290 | 162,427 | ||||||||||||
| Costs of other revenues | 6,529 | 22,109 | 3,206 | 16,731 | 48,555 | 7,040 | ||||||||||||
| Marketing expenses | 20,527 | 24,302 | 3,523 | 50,317 | 81,017 | 11,746 | ||||||||||||
| General and administrative expenses | 58,558 | 66,460 | 9,636 | 174,963 | 289,544 | 41,979 | ||||||||||||
| Franchise and royalty expenses (including franchise and royalty expenses from transactions with a related party of RMB31,882,569 and RMB15,576,324 for the years ended December 31, 2022 and 2021, respectively) | 5,345 | 10,294 | 1,492 | 18,800 | 35,595 | 5,161 | ||||||||||||
| Other operating costs and expenses | 1,645 | 2,395 | 347 | 2,135 | 8,340 | 1,209 | ||||||||||||
| Loss on disposal of property and equipment | 414 | - | - | 1,546 | 8,835 | 1,281 | ||||||||||||
| Impairment losses of long-lived assets | 1,002 | 1,750 | 254 | 1,002 | 7,223 | 1,047 | ||||||||||||
| Other income | 3,157 | 5,153 | 747 | 3,476 | 7,152 | 1,037 | ||||||||||||
| Total costs and expenses, net | 353,321 | 432,842 | 62,755 | 1,017,836 | 1,592,247 | 230,853 | ||||||||||||
| Operating loss | (129,346 | ) | (131,361 | ) | (19,044 | ) | (374,464 | ) | (581,183 | ) | (84,263 | ) | ||||||
| Interest income | 30 | 1,727 | 250 | 316 | 2,703 | 392 | ||||||||||||
| Interest expenses | (1,719 | ) | (4,524 | ) | (656 | ) | (1,902 | ) | (14,804 | ) | (2,146 | ) | ||||||
| Foreign currency transaction (loss)/gain | (395 | ) | (5,142 | ) | (746 | ) | (1,302 | ) | (6,275 | ) | (910 | ) | ||||||
| Changes in fair value of convertible notes | (5,577 | ) | (2,867 | ) | (416 | ) | (5,577 | ) | (4,494 | ) | (652 | ) | ||||||
| Changes in fair value of warrant liabilities | - | 35,954 | 5,213 | - | 45,903 | 6,655 | ||||||||||||
| Changes in fair value of ESA derivative liabilities | - | (116,666 | ) | (16,915 | ) | - | (186,598 | ) | (27,054 | ) | ||||||||
| Loss before income taxes | (137,007 | ) | (222,879 | ) | (32,314 | ) | (382,929 | ) | (744,748 | ) | (107,978 | ) | ||||||
| Income tax expenses | - | - | - | - | - | - | ||||||||||||
| Net loss | (137,007 | ) | (222,879 | ) | (32,314 | ) | (382,929 | ) | (744,748 | ) | (107,978 | ) | ||||||
| Less: Net Loss attributable to non-controlling interests | 1,324 | 988 | 143 | (1,208 | ) | (2,103 | ) | (305 | ) | |||||||||
| Net Loss attributable to shareholders of the Company | (138,331 | ) | (223,867 | ) | (32,457 | ) | (381,721 | ) | (742,645 | ) | (107,673 | ) | ||||||
| Basic and diluted loss per Ordinary Share | (1.11 | ) | (1.61 | ) | (0.23 | ) | (3.14 | ) | (5.80 | ) | (0.84 | ) | ||||||
| Net loss | (137,007 | ) | (222,879 | ) | (32,314 | ) | (382,929 | ) | (744,748 | ) | (107,978 | ) | ||||||
| Other comprehensive income | ||||||||||||||||||
| Fair value changes of short-term investment | - | 2,134 | 309 | - | 2,134 | 309 | ||||||||||||
| Fair value changes of convertible notes due to instrument-specific credit risk, net of nil income taxes | (548 | ) | 505 | 73 | (548 | ) | (1,520 | ) | (220 | ) | ||||||||
| Foreign currency translation adjustment, net of nil income taxes | (2,114 | ) | 5,272 | 764 | (2,890 | ) | (19,357 | ) | (2,807 | ) | ||||||||
| Total comprehensive loss | (139,669 | ) | (214,968 | ) | (31,477 | ) | (386,367 | ) | (763,491 | ) | (110,696 | ) | ||||||
| Less: Comprehensive loss attributable to non- controlling interests | 1,324 | 988 | 143 | (1,208 | ) | (2,103 | ) | (305 | ) | |||||||||
| Comprehensive loss attributable to shareholders of the Company | (140,993 | ) | (215,956 | ) | (31,620 | ) | (385,159 | ) | (761,388 | ) | (110,391 | ) | ||||||
| TH INTERNATIONAL LIMITED AND SUBSIDIARIES | |||||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||
| (Amounts in thousands of RMB and US$) | |||||||||||||||||
| For the three months ended December 31, | For the year ended December 31, | ||||||||||||||||
| 2021 | 2022 | 2021 | 2022 | ||||||||||||||
| RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||||
| Net cash used in operating activities | (56,722 | ) | (96,102 | ) | (13,933 | ) | (244,966 | ) | (286,928 | ) | (41,601 | ) | |||||
| Net cash used in investing activities | (114,274 | ) | (93,737 | ) | (13,591 | ) | (335,277 | ) | (705,172 | ) | (102,240 | ) | |||||
| Net cash provided by financing activities | 427,941 | 44,180 | 6,405 | 797,998 | 834,259 | 120,956 | |||||||||||
| Effect of foreign currency exchange rate changes on cash | (507 | ) | 2,288 | 332 | (1,791 | ) | 6,081 | 882 | |||||||||
| Net decrease in cash | 256,438 | (143,371 | ) | (20,787 | ) | 215,964 | (151,760 | ) | (22,003 | ) | |||||||
| Cash at beginning of the period | 134,400 | 382,448 | 55,450 | 174,874 | 390,837 | 56,666 | |||||||||||
| Cash at end of the period | 390,838 | 239,077 | 34,663 | 390,838 | 239,077 | 34,663 | |||||||||||
| TH INTERNATIONAL LIMITED AND SUBSIDIARIES | ||||||||||||||||||
| RECONCILIATION OF NON-GAAP MEASURES TO THE MOST DIRECTLY COMPARABLE GAAP MEASURES | ||||||||||||||||||
| (Unaudited, amounts in thousands of RMB and US$, except for number of shares and per share data) | ||||||||||||||||||
| A. Adjusted store EBITDA and adjusted store EBITDA margin | ||||||||||||||||||
| For the three months ended December 31, | For the year ended December 31, | |||||||||||||||||
| 2021 | 2022 | 2021 | 2022 | |||||||||||||||
| RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||
| Revenues - company owned and operated stores | 213,653 | 272,509 | 39,510 | 617,226 | 938,097 | 136,011 | ||||||||||||
| Food and packaging costs - company owned and operated stores | (71,596 | ) | (89,480 | ) | (12,973 | ) | (207,948 | ) | (314,550 | ) | (45,606 | ) | ||||||
| Rental expenses - company owned and operated stores | (56,160 | ) | (75,939 | ) | (11,010 | ) | (148,152 | ) | (236,838 | ) | (34,338 | ) | ||||||
| Payroll and employee benefits - company owned and operated stores | (71,828 | ) | (66,699 | ) | (9,670 | ) | (199,330 | ) | (268,857 | ) | (38,981 | ) | ||||||
| Delivery costs - company owned and operated stores | (13,926 | ) | (21,917 | ) | (3,178 | ) | (38,604 | ) | (73,616 | ) | (10,673 | ) | ||||||
| Other operating expenses - company owned and operated stores | (27,962 | ) | (23,106 | ) | (3,350 | ) | (99,105 | ) | (107,770 | ) | (15,625 | ) | ||||||
| Store depreciation and amortization | (20,986 | ) | (33,544 | ) | (4,863 | ) | (62,679 | ) | (118,659 | ) | (17,204 | ) | ||||||
| Franchise and royalty expenses - company owned and operated stores | (3,866 | ) | (8,174 | ) | (1,185 | ) | (14,894 | ) | (29,404 | ) | (4,263 | ) | ||||||
| Fully-burdened gross loss - company owned and operated stores | (52,671 | ) | (46,350 | ) | (6,719 | ) | (153,486 | ) | (211,597 | ) | (30,679 | ) | ||||||
| Store depreciation and amortization | 20,986 | 33,544 | 4,863 | 62,679 | 118,659 | 17,204 | ||||||||||||
| Store pre-opening expenses | 40,465 | 25,602 | 3,712 | 110,583 | 52,262 | 7,577 | ||||||||||||
| Adjusted Store EBITDA | 8,780 | 12,796 | 1,856 | 19,776 | (40,676 | ) | (5,898 | ) | ||||||||||
| Adjusted Store EBITDA Margin | 4.1 | % | 4.7 | % | 4.7 | % | 3.2 | % | -4.3 | % | -4.3 | % | ||||||
| B. Adjusted general and administrative expenses | ||||||||||||||||||
| For the three months ended December 31, | For the year ended December 31, | |||||||||||||||||
| 2021 | 2022 | 2021 | 2022 | |||||||||||||||
| RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||
| General and administrative expenses | (58,558 | ) | (66,460 | ) | (9,636 | ) | (174,963 | ) | (289,544 | ) | (41,979 | ) | ||||||
| Adjusted for: | ||||||||||||||||||
| Share-based compensation expenses | - | 11,145 | 1,616 | - | 44,421 | 6,440 | ||||||||||||
| Commission fee for Cantor shares | - | - | - | - | 21,521 | 3,120 | ||||||||||||
| Option granted by controlling shareholder to CB holder | - | - | - | - | 1,778 | 258 | ||||||||||||
| Offering costs for ESA transactions | - | - | - | - | 4,622 | 670 | ||||||||||||
| Adjusted General and administrative expenses | (58,558 | ) | (55,315 | ) | (8,020 | ) | (174,963 | ) | (217,202 | ) | (31,491 | ) | ||||||
| C. Adjusted corporate EBITDA and adjusted corporate EBITDA margin | ||||||||||||||||||
| For the three months ended December 31, | For the year ended December 31, | |||||||||||||||||
| 2021 | 2022 | 2021 | 2022 | |||||||||||||||
| RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||
| Operating loss | (129,346 | ) | (131,361 | ) | (19,044 | ) | (374,464 | ) | (581,183 | ) | (84,263 | ) | ||||||
| Adjusted for: | ||||||||||||||||||
| Store pre-opening expenses | 40,465 | 25,602 | 3,712 | 110,583 | 52,262 | 7,577 | ||||||||||||
| Depreciation and amortization | 28,152 | 38,170 | 5,534 | 74,276 | 133,403 | 19,342 | ||||||||||||
| Share-based compensation expenses | - | 11,145 | 1,616 | - | 44,421 | 6,440 | ||||||||||||
| Commission fee for Cantor shares | - | - | - | - | 21,521 | 3,120 | ||||||||||||
| Option granted by controlling shareholder to CB holder | - | - | - | - | 1,778 | 258 | ||||||||||||
| Offering costs for ESA transactions | - | - | - | - | 4,622 | 670 | ||||||||||||
| Impairment losses of long-lived assets | 1,002 | 1,750 | 254 | 1,002 | 7,223 | 1,047 | ||||||||||||
| Loss on disposal of property and equipment | 414 | - | - | 1,546 | 8,835 | 1,281 | ||||||||||||
| Adjusted Corporate EBITDA | (59,313 | ) | (54,694 | ) | (7,928 | ) | (187,057 | ) | (307,118 | ) | (44,528 | ) | ||||||
| Adjusted Corporate EBITDA Margin | -26.5 | % | -18.1 | % | -18.1 | % | -29.1 | % | -30.4 | % | -30.4 | % | ||||||
| D. Adjusted net loss and adjusted net loss margin | ||||||||||||||||||
| For the three months ended December 31, | For the year ended December 31, | |||||||||||||||||
| 2021 | 2022 | 2021 | 2022 | |||||||||||||||
| RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||
| Net loss | (137,007 | ) | (222,879 | ) | (32,314 | ) | (382,929 | ) | (744,748 | ) | (107,978 | ) | ||||||
| Adjusted for: | ||||||||||||||||||
| Store pre-opening expenses | 40,465 | 25,602 | 3,712 | 110,583 | 52,262 | 7,577 | ||||||||||||
| Share-based compensation expenses | - | 11,145 | 1,616 | - | 44,421 | 6,440 | ||||||||||||
| Commission fee for Cantor shares | - | - | - | - | 21,521 | 3,120 | ||||||||||||
| Option granted by controlling shareholder to CB holder | - | - | - | - | 1,778 | 258 | ||||||||||||
| Offering costs for ESA transactions | - | - | - | - | 4,622 | 670 | ||||||||||||
| Impairment losses of long-lived assets | 1,002 | 1,750 | 254 | 1,002 | 7,223 | 1,047 | ||||||||||||
| Loss on disposal of property and equipment | 414 | - | - | 1,546 | 8,835 | 1,281 | ||||||||||||
| Changes in fair value of convertible notes | 5,577 | 2,867 | 416 | 5,577 | 4,494 | 652 | ||||||||||||
| Changes in fair value of warrant liabilities | - | (35,954 | ) | (5,213 | ) | - | (45,903 | ) | (6,655 | ) | ||||||||
| Changes in fair value of ESA derivative liabilities | - | 116,666 | 16,915 | - | 186,598 | 27,054 | ||||||||||||
| Adjusted Net loss | (89,549 | ) | (100,803 | ) | (14,614 | ) | (264,221 | ) | (458,897 | ) | (66,534 | ) | ||||||
| Adjusted Net loss Margin | -40.0 | % | -33.4 | % | -33.4 | % | -41.1 | % | -45.4 | % | -45.4 | % | ||||||
| E. Adjusted basic and diluted net loss per Ordinary Share | ||||||||||||||||||
| For the three months ended December 31, | For the year ended December 31, | |||||||||||||||||
| 2021 | 2022 | 2021 | 2022 | |||||||||||||||
| RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||
| Net Loss attributable to shareholders of the Company | (138,331 | ) | (223,867 | ) | (32,457 | ) | (381,721 | ) | (742,645 | ) | (107,673 | ) | ||||||
| Adjusted for: | ||||||||||||||||||
| Store pre-opening expenses | 40,465 | 25,602 | 3,712 | 110,583 | 52,262 | 7,577 | ||||||||||||
| Share-based compensation expenses | - | 11,145 | 1,616 | - | 44,421 | 6,440 | ||||||||||||
| Commission fee for Cantor shares | - | - | - | - | 21,521 | 3,120 | ||||||||||||
| Option granted by controlling shareholder to CB holder | - | - | - | - | 1,778 | 258 | ||||||||||||
| Offering costs for ESA transactions | - | - | - | - | 4,622 | 670 | ||||||||||||
| Impairment losses of long-lived assets | 1,002 | 1,750 | 254 | 1,002 | 7,223 | 1,047 | ||||||||||||
| Loss on disposal of property and equipment | 414 | - | - | 1,546 | 8,835 | 1,281 | ||||||||||||
| Changes in fair value of convertible notes | 5,577 | 2,867 | 416 | 5,577 | 4,494 | 652 | ||||||||||||
| Changes in fair value of warrant liabilities | - | (35,954 | ) | (5,213 | ) | - | (45,903 | ) | (6,655 | ) | ||||||||
| Changes in fair value of ESA derivative liabilities | - | 116,666 | 16,915 | - | 186,598 | 27,054 | ||||||||||||
| Adjusted Net loss attributable to shareholders of the Company | (90,873 | ) | (101,791 | ) | (14,757 | ) | (263,013 | ) | (456,794 | ) | (66,229 | ) | ||||||
| Weighted average shares outstanding used in calculating basic and diluted loss per share | 124,193,929 | 139,179,231 | 139,179,231 | 121,582,945 | 128,096,505 | 128,096,505 | ||||||||||||
| Adjusted basic and diluted net loss per Ordinary Share | (0.73 | ) | (0.73 | ) | (0.11 | ) | (2.16 | ) | (3.57 | ) | (0.52 | ) | ||||||
FAQ
What were the Q4 2022 financial results for TH International Limited (THCH)?
How did THCH perform in terms of store openings in 2022?
What was the net loss reported by THCH in Q4 2022?
What is the registered loyalty club membership for TH International as of year-end 2022?
What was the adjusted store EBITDA margin for THCH in Q4 2022?
