6-K
TH International Ltd (THCH)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of June 2024
Commission file number: 001-41516
TH International Limited
2501 Central Plaza
227 Huangpi North Road
Shanghai, People’s Republic of China,200003
+86-021-6136-6616
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
INDEX TO EXHIBITS
| Exhibit Number | Exhibit Title |
|---|---|
| 99.1 | Earnings Release |
1
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| TH International Limited |
|---|
| /s/ Yongchen Lu |
| Yongchen Lu |
| Chief Executive Officer |
Date: June 10, 2024
2
Exhibit 99.1
TimsChina Announces First Quarter 2024 Financial Results
Jun 05, 2024
ResilientTotal Revenues Increased 3.1% Year over Year for the First Quarter 2024
SystemSales Increased 7.1% Year-over-Year for the First Quarter 2024
ContinuousMargin Improvement with Seven Consecutive Positive Quarterly Adjusted Store EBITDA
20.3Million Registered Loyalty Club Members at Quarter-End,Representing 63.6% Year-over-Year Growth
SHANGHAI and NEW YORK, June 05, 2024 (GLOBE NEWSWIRE) -- TH International Limited (Nasdaq: THCH), the exclusive operator of Tim Hortons coffee shops and Popeyes restaurants in China (“Tims China” or the “Company”) today announced its unaudited financial results for the first quarter 2024.
FIRST QUARTER 2024 HIGHLIGHTS
| ● | Total revenues reached RMB346.8 million (USD48.0 million), representing a 3.1% increase<br> from the same quarter of 2023. |
|---|---|
| ● | System sales^1^ reached RMB363.5 million (USD50.3 million), representing a 7.1%<br> increase from the same quarter of 2023. |
| --- | --- |
| ● | Net new store openingstotaled 5 (Net closure of 15 company owned and operated stores<br> for Tims, net opening of 19 franchised stores for Tims, and net opening of one company owned<br> and operated stores for Popeyes) |
| --- | --- |
| ● | Adjusted store EBITDA^2^ was RMB6.1 million (USD0.8 million), representing a 2.0%<br> year-over-year growth. |
| --- | --- |
| ● | Adjusted store EBITDA margin^3^ was 2.0%, slightly improved from the same quarter<br> in 2023. |
| --- | --- |
| ● | Registered loyalty club members totaled 20.3 million members as of March 31, 2024, representing<br> a 63.6% year-over-year growth. |
| --- | --- |
| ^1^ | System<br>sales is calculated as the gross merchandise value of sales generated from both company owned and operated stores and franchised stores. |
| --- | --- |
| ^2^ | Adjusted<br>store EBITDA is calculated as fully burdened gross profit^4^ of company owned and operated stores excluding depreciation<br>& amortization and store pre-opening expenses. |
| --- | --- |
| ^3^ | Adjusted<br>store EBITDA margin is calculated as adjusted store EBITDA as a percentage of revenues from company owned and operated stores. |
| --- | --- |
| ^4^ | Fully<br>burdened gross profit of company owned and operated stores, the most comparable GAAP measure to adjusted store EBITDA, was a loss of<br>RMB33.4 million (USD4.6 million) for the three months ended March 31, 2024, compared to a loss of RMB35.9 million in the same quarter<br>of 2023. |
| --- | --- |
COMPANYMANAGEMENT STATEMENT
Mr. Yongchen Lu, CEO & Director of Tims China, commented, “In Q1 2024, our system sales grew by 7.1%, and we continued to improve our bottom-line performance, marching towards achieving our first quarterly adjusted corporate EBITDA breakeven this year. Our registered loyalty club membership exceeded 20 million as of March 31, 2024, a 63.6% year-over-year growth, serving both as a pivotal catalyst for growth and a testament to our customers’ support and embrace of Tims China’s loyalty program.
Continuous product innovation remains a cornerstone of our strategic vision; we launched 14 new beverages and 18 new food products during the quarter. We just celebrated the meaningful milestones of our 5^th^ anniversary in China as well as the 60^th^ anniversary of the “Tim Hortons” brand in February. To commemorate both remarkable milestones and double celebrations, Tims China launched its Chinese version of “Double Double” latte series. Our collaborations with Tangle Angel and Dove Chocolate have also achieved significant success during the quarter.”
Mr. Lu added, “Our Popeyes brand maintains its robust growth trajectory. So far, we have successfully launched 14 Popeyes restaurants and are actively expanding our product offerings beyond the core fried chicken products. Our restaurants represent a solid base for further growth in Shanghai and beyond.”
Mr. Dong (Albert) Li, CFO of Tims China, commented, “During the first quarter of 2024, and in the face of headwinds, we continued to enhance our operational efficiency. We pared back costs at the headquarter level, and we pruned our underperforming stores. These actions allowed us to deliver year-over-year reductions in food and packaging costs, rental expenses, and labor costs (as a percentage of revenues from company owned and operated stores) by 1.0 percentage points, 0.9 percentage points, and 1.3 percentage points, respectively. Our adjusted general and administrative expenses as a percentage of total revenues decreased by 4.1 percentage points year-over-year.”
Mr. Li continued, “Going forward, and with driving profitable, and capital-efficient growth being front and center of everything we do, we will continue to optimize our store unit economics, roll out our differentiating made-to-order fresh food preparation model to drive traffic, enhance our supply chain capabilities and efficiencies, and facilitate our franchisees to manage the growth and profitability of their stores effectively.”
FIRST QUARTER 2024 FINANCIAL RESULTS
Totalrevenues reached RMB346.8 million (USD48.0 million) for the three months ended March 31, 2024, representing an increase of 3.1% from RMB336.5 million in the same quarter of 2023. Total revenues comprise:
| ● | Revenues from Company owned and operated store sales were RMB311.0 million (USD43.1 million)<br> for the three months ended March 31, 2024, representing an increase of 0.2% from RMB310.5<br> million in the same quarter of 2023. The growth was primarily driven by an increase in the<br> number of company owned and operated stores from 551 as of March 31, 2023 to 615 as of March<br> 31, 2024, offset by same-store sales growth for company owned and operated stores of negative<br> 11.7% in the first quarter of 2024. |
|---|---|
| ● | Other revenues were RMB35.8 million (USD5.0 million) for the three months ended March<br> 31, 2024, representing an increase of 37.5% from RMB26.0 million in the same quarter of 2023.<br> The growth was primarily attributable to revenues from other franchise support activities,<br> which was attributable to an increase in the number of franchised stores from 97 as of March<br> 31, 2023 to 302 as of March 31, 2024. |
| --- | --- |
2
Companyowned and operated store costs and expenses were RMB334.1 million (USD46.3 million) for the three months ended March 31, 2024, representing a decrease of 0.7% from RMB336.5 million in the same quarter of 2023. Company owned and operated store costs and expenses comprise:
| ● | Food and packaging costs were RMB108.5 million (USD15.0 million), representing a<br> decrease of 2.5% from RMB111.3 million, as we continue to benefit from greater economies<br> of scale and higher efficiencies in supply chains. Accordingly, food and packaging costs<br> as a percentage of revenues from company owned and operated stores decreased by 1.0 percentage<br> points from 35.9% in the first quarter of 2023 to 34.9% in the same quarter of 2024. |
|---|---|
| ● | Rental and property management fee was RMB68.6 million (USD9.5 million), representing<br> a decrease of 4.0% from RMB71.4 million, mainly due to the closure of certain underperforming<br> stores during the first quarter 2024. As a result, rental and property management fee as<br> a percentage of revenues from company owned and operated stores decreased by 0.9 percentage<br> points from 23.0% in the first quarter of 2023 to 22.1% in the same quarter of 2024. |
| --- | --- |
| ● | Payroll and employee benefits expenses were RMB69.0 million (USD9.6 million), representing<br> a decrease of 5.4% from RMB73.0 million. Payroll and employee benefits as a percentage of<br> revenues from company owned and operated stores decreased by 1.3 percentage points from 23.5%<br> in the first quarter of 2023 to 22.2% in the same quarter of 2024, primarily due to the continuous<br> refinement of staffing arrangement and optimization of store managerial efficiencies. |
| --- | --- |
| ● | Delivery costs were RMB28.6 million (USD4.0 million), representing an increase of 25.7%<br> from RMB22.8 million, due to an increased proportion of home-delivery orders. Delivery costs<br> as a percentage of revenues from company owned and operated stores increased by 1.9 percentage<br> points to 9.2% in the first quarter of 2024 compared to 7.3% in the same quarter of 2023. |
| --- | --- |
| ● | Other operating expenses were RMB25.3 million (USD3.5 million), representing an increase<br> of 1.0% from RMB25.1 million, in line with our revenue growth and store network expansion.<br> Other operating expenses as a percentage of revenues from company owned and operated stores<br> remained flat at 8.1% in the first quarter of 2023 and 2024. |
| --- | --- |
| ● | Store depreciation and amortization expenses were RMB34.0 million (USD4.7 million),<br> representing an increase of 3.2% from RMB33.0 million, driven by an increase in the number<br> of company owned and operated stores from 551 as of March 31, 2023 to 615 as of March 31,<br> 2024. Store depreciation and amortization as a percentage of revenues from company owned<br> and operated stores increased by 0.3 percentage points from 10.6% in the first quarter of<br> 2023 to 10.9% in the same quarter of 2024. |
| --- | --- |
Costsfor other revenues were RMB25.0 million (USD3.5 million) for the three months ended March 31, 2024, representing an increase of 32.6% from RMB18.9 million in the same quarter of 2023, which was primarily driven by an increase in the number of franchised stores from 97 as of March 31, 2023 to 302 as of March 31, 2024. Costs for other revenues as a percentage of other revenues decreased by 2.6 percentage points from 72.5% in the first quarter of 2023 to 69.9% in the same quarter of 2024 due to higher margin contribution from our franchised business being realized during the first quarter of 2024.
Marketingexpenses were RMB20.7 million (USD2.9 million) for the three months ended March 31, 2024, representing an increase of 13.4% from RMB18.3 million in the same quarter of 2023, which was primarily driven by the increase in the number of our system-wide stores from 648 as of March 31, 2023 to 917 as of March 31, 2024. Marketing expenses as a percentage of total revenues increased by 0.6 percentage points from 5.4% in the first quarter of 2023 to 6.0% in the same quarter of 2024.
Generaland administrative expenseswere RMB58.7 million (USD8.1 million) for the three months ended March 31, 2024, representing a decrease of 16.9% from RMB70.6 million in the same quarter of 2023, which was primarily due to a reduction of our headquarter headcount. Adjustedgeneral and administrative expenses, which excludes share-based compensation expenses of RMB1.0 million (USD0.1 million), and impairment losses of rental deposits of RMB2.5 million (USD0.3 million), were RMB55.2 million (USD7.6 million), representing a decrease of 18.1% from RMB67.5 million in the same quarter of 2023. Adjusted general and administrative expenses as a percentage of total revenues decreased by 4.1 percentage points from 20.0% in the first quarter of 2023 to 15.9% in the same quarter of 2024**.** For more information on the Company’s non-GAAP financial measures, please see the section “Use of Non-GAAP Financial Measures” and the table captioned “Reconciliation of Non-GAAP Measures to the Most Directly Comparable GAAP Measures” set forth at the end of this earnings release.
3
Franchiseand royalty expenseswere RMB14.1 million (USD2.0 million) for the three months ended March 31, 2024, representing an increase of 18.7% from RMB11.9 million in the same quarter of 2023, which was primarily driven by the increase in the number of our system-wide stores from 648 as of March 31, 2023 to 917 as of March 31, 2024. Franchise and royalty expenses as a percentage of total revenues increased by 0.6 percentage points, from 3.5% in the first quarter of 2023 to 4.1% in the same quarter of 2024.
Impairmentlosses of long-lived assets were RMB19.0 million (USD2.6 million) for the three months ended March 31, 2024, compared to RMB4.4 million in the same quarter of 2023, which was primarily because of planned closings of underperforming company owned and operated stores.
As a result of the foregoing, operating loss was RMB129.4 million (USD17.9 million) for the three months ended March 31, 2024, compared to RMB130.4 million in the same quarter of 2023.
AdjustedCorporate EBITDA was a loss of RMB53.6 million (USD7.4 million) for the three months ended March 31, 2024, compared to a loss of RMB74.6 million in the same quarter of 2023. Adjusted Corporate EBITDA margin was negative 15.4% in the first quarter of 2024, representing an improvement of 6.8 percentage points from negative 22.2% in the same quarter of 2023.
Netloss was RMB142.8 million (USD19.8 million) for the three months ended March 31, 2024, compared to RMB174.5 million for the same quarter of 2023. Adjusted net loss was RMB97.8 million (USD13.6 million) for the three months ended March 31, 2024, compared to RMB117.1 million for the same quarter of 2023. Adjusted net loss margin was negative 28.2% in the first quarter of 2024, representing an improvement of 6.6 percentage points from negative 34.8% in the same quarter of 2023.
Basicand diluted net loss per ordinary share was RMB0.90 (USD0.12) in the first quarter of 2024, compared to RMB1.25 in the same quarter of 2023. Adjusted basic and diluted net loss per ordinary share was RMB0.62 (USD0.10) in the first quarter of 2024, compared to RMB0.84 in the same quarter of 2023.
Liquidity
As of March 31, 2024, the Company’s total cash and cash equivalents and time deposits were RMB218.2 million (USD30.2 million), compared to RMB220.8 million as of December 31, 2023. The change was primarily attributable to the cash disbursements on the back of the expansion of our business and store network nationwide, repayment of bank borrowings, offset by the US$20.0 million junior promissory notes financing provided by Cartesian Capital Group, our existing shareholder.
KEYOPERATING DATA
| **** | For the three months ended or as of | **** | **** | **** | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | Mar 31, | **** | Jun 30, | **** | Sep 30, | **** | Dec 31, | **** | Mar 31, | **** | |||||
| **** | 2023 | **** | 2023 | **** | 2023 | **** | 2023 | **** | 2024 | **** | |||||
| Total stores | 648 | 700 | 763 | 912 | 917 | ||||||||||
| Company owned and operated stores | 551 | 571 | 589 | 629 | 615 | ||||||||||
| Franchised stores | 97 | 129 | 174 | 283 | 302 | ||||||||||
| Same-store sales growth for system-wide stores | 7.5 | % | 19.9 | % | 0.1 | % | 2.6 | % | -13.6 | % | |||||
| Same-store sales growth for company owned and operated stores | 8.0 | % | 20.4 | % | -0.4 | % | 2.5 | % | -11.7 | % | |||||
| Registered loyalty club members (in thousands) | 12,386 | 14,721 | 16,898 | 18,714 | 20,264 | ||||||||||
| Adjusted store EBITDA (Renminbi in thousands) | 6,002 | 18,244 | 29,310 | 15,859 | 6,124 | ||||||||||
| Adjusted store EBITDA margin | 1.9 | % | 5.0 | % | 7.5 | % | 4.6 | % | 2.0 | % |
4
KEYDEFINITIONS
| ● | Same-store<br> sales growth. The percentage change in the sales of stores that have been operating for 12<br> months or longer during a certain period compared to the same period from the prior year.<br> The same-store sales growth for any period of more than a month equals to the arithmetic<br> average of the same-store sales growth of each month covered in the period. If a store was<br> closed for seven days or more during any given month, its sales during that month and the<br> same month in the comparison period are excluded for purposes of measuring same-store sales<br> growth. |
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| ● | Net<br> new store openings. The gross number of new stores opened during the period minus the<br> number of stores permanently closed during the period. |
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| ● | System<br> sales. Gross merchandise value of sales generated from both company owned and operated<br> stores and franchised stores. |
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| ● | Adjusted<br> store EBITDA. Calculated as fully burdened gross profit of company owned and operated stores<br> excluding depreciation and amortization, and store pre-opening expenses. |
| --- | --- |
| ● | Adjusted<br> store EBITDA margin. Calculated as adjusted store EBITDA as a percentage of revenues from<br> company owned and operated stores. |
| --- | --- |
| ● | Adjusted<br> general and administrative expenses. Calculated as general and administrative expenses excluding<br> share-based compensation expenses, expenses related to the issuance of certain ordinary shares<br> to CF Principal Investments LLC in November 2022 (the “Commitment Shares”), offering<br> costs related to the ESA (the “ESA Offering Costs”), expenses related to 200,000<br> of our ordinary shares that may be purchased from our controlling shareholder by a holder<br> of our convertible notes at its option pursuant to the terms of an Option Agreement dated<br> September 28, 2022 (the “Option Shares”), and professional fees related to warrant<br> exchange and other financing programs. |
| --- | --- |
| ● | Adjusted<br> corporate EBITDA. Calculated as operating loss excluding store pre-opening expenses, and<br> certain non-cash expenses consisting of depreciation and amortization, share-based compensation<br> expenses, expenses related to the Commitment Shares, the ESA Offering Costs, expenses related<br> to the Option Shares, professional fees related to warrant exchange and other financing programs,<br> impairment losses of long-lived assets and loss on disposal of property and equipment. |
| --- | --- |
| ● | Adjusted<br> corporate EBITDA margin. Calculated as adjusted corporate EBITDA as a percentage of total<br> revenues. |
| --- | --- |
| ● | Adjusted<br> net loss. Calculated as net loss excluding store pre-opening expenses, share-based compensation<br> expenses, expenses related to the Commitment Shares, the ESA Offering Costs, expenses related<br> to the Option Shares, professional fees related to warrant exchange and other financing programs,<br> impairment losses of long-lived assets, loss on disposal of property and equipment, changes<br> in fair value of convertible notes, changes in fair value of warrant liabilities; and changes<br> in fair value of ESA derivative liabilities. |
| --- | --- |
| ● | Adjusted<br> net loss margin. Calculated as adjusted net loss as a percentage of total revenues. |
| --- | --- |
| ● | Adjusted<br> basic and diluted net loss per ordinary share. Calculated as adjusted net loss attributable<br> to the Company’s ordinary shareholders divided by weighted-average number of basic<br> and diluted ordinary shares. |
| --- | --- |
5
USEOF 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, and professional fees related to warrant exchange and other financing programs; (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, professional fees related to warrant exchange and other financing programs, 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, professional fees related to warrant exchange and other financing programs, 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; and (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 Non-GAAP Measures to the Most Directly Comparable GAAP Measures.” The Company encourages investors and others to review its financial information in its entirety and not rely on any single financial measure.
EXCHANGERATE INFORMATION
This earnings 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 RMB7.2203 to USD1.00, the exchange rate in effect on March 29, 2024 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.
6
CONFERENCECALL
The Company will hold a conference call today, on Wednesday, June 5, 2024, at 8:00 am Eastern Time (on Wednesday, June 5, 2024, at 8:00 pm Beijing Time) to discuss the financial results.
Participants are strongly encouraged to pre-register for the conference call, by using the weblink provided below.
https://register.vevent.com/register/BI94870283e9124554bcb820c11f01f505
Participants may also view the live webcast by registering through below weblink:
https://edge.media-server.com/mmc/p/srctfy6e
The webcast features a ’Submit Your Question’ tab at the top, where you will have the opportunity to submit your questions before and during the call.
A live and archived webcast of the conference call will also be available at the Company’s Investor Relations website at https://ir.timschina.com under “Events and Presentations”.
FORWARD-LOOKINGSTATEMENTS
Certain statements in this earnings release may be considered forward-looking statements within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, such as the Company’s ability to further grow its business and store network, optimize its cost structure, improve its operational efficiency, and achieve profitable growth. Forward-looking statements are statements that are not historical facts and generally relate to future events or the Company’s future financial or other performance metrics. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those expressed or implied by such forward looking statements. New risks and uncertainties may emerge from time to time, and it is not possible to predict all risks and uncertainties. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by the Company and its management, as the case may be, are inherently uncertain and subject to material change. Factors that may cause actual results to differ materially from current expectations include various factors beyond management’s control, including, but not limited to, general economic conditions and other risks, uncertainties and factors set forth in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in the Company’s Annual Report on Form 20-F, and other filings it makes with the Securities and Exchange Commission. Nothing in this communication should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this communication, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein. Except as required by law, the Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions, or circumstances on which any statement is based.
ABOUTTH INTERNATIONAL LIMITED
TH International Limited (Nasdaq: THCH) (“Tims China”) is the parent company of the exclusive master franchisees of Tim Hortons coffee shops in mainland China, Hong Kong and Macau and Popeyes restaurants in mainland China and Macau. Tims China was founded by Cartesian Capital Group and Tim Hortons Restaurants International, a subsidiary of Restaurant Brands International (TSX: QSR) (NYSE: QSR).
The Company’s philosophy is rooted in world-class execution and data-driven decision making and centered around true local relevance, continuous innovation, genuine community, and absolute convenience. For more information, please visit https://www.timschina.com.
INVESTORAND MEDIA CONTACTS
InvestorRelations
Gemma Bakx
IR@timschina.com, or gemma.bakx@cartesiangroup.com
Publicand Media Relations
Patty Yu
Patty.Yu@timschina.com
7
| TH INTERNATIONAL LIMITED AND SUBSIDIARIES | |||||||
|---|---|---|---|---|---|---|---|
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (Amounts in thousands of RMB and US, except for number of shares) | |||||||
| March 31,<br><br> 2024<br> (Unaudited) | |||||||
| RMB | US | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | 203,587 | 196,890 | |||||
| Time deposits | 17,165 | 21,285 | |||||
| Accounts receivable, net | 27,562 | 27,703 | |||||
| Inventories | 50,719 | 40,252 | |||||
| Prepaid expenses and other current assets | 159,587 | 164,645 | |||||
| Total current assets | 458,620 | 450,775 | |||||
| Non-current assets: | |||||||
| Property and equipment, net | 691,876 | 640,123 | |||||
| Intangible assets, net | 147,448 | 145,747 | |||||
| Operating lease right-of-use assets | 849,079 | 737,614 | |||||
| Other non-current assets | 68,416 | 65,172 | |||||
| Total non-current assets | 1,756,819 | 1,588,656 | |||||
| Total assets | 2,215,439 | 2,039,431 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Bank borrowings, current | 538,233 | 422,641 | |||||
| Accounts payable | 224,849 | 256,046 | |||||
| Contract liabilities | 40,715 | 43,238 | |||||
| Amount due to related parties | 53,004 | 208,933 | |||||
| Operating lease liabilities | 200,878 | 205,103 | |||||
| Other current liabilities | 338,154 | 319,829 | |||||
| Total current liabilities | 1,395,833 | 1,455,790 | |||||
| Non-current liabilities: | |||||||
| Bank borrowings, non-current | 5,266 | 2,890 | |||||
| Convertible notes, at fair value | 420,712 | 435,633 | |||||
| Contract liabilities | 5,272 | 5,051 | |||||
| Amount due to related parties | 94,200 | 96,492 | |||||
| Operating lease liabilities | 707,689 | 602,500 | |||||
| Other non-current liabilities | 8,896 | 8,447 | |||||
| Total non-current liabilities | 1,242,035 | 1,151,013 | |||||
| Total liabilities | 2,637,868 | 2,606,803 | |||||
| Shareholders’ equity: | |||||||
| Ordinary shares | 10 | 10 | |||||
| Additional paid-in capital | 1,807,715 | 1,812,164 | |||||
| Accumulated losses | (2,256,424 | ) | (2,400,468 | ) | ) | ||
| Accumulated other comprehensive income | 21,492 | 14,928 | |||||
| Treasury shares | - | - | |||||
| Total (deficit) equity attributable to shareholders of the Company | (427,207 | ) | (573,366 | ) | ) | ||
| Non-controlling interests | 4,778 | 5,994 | |||||
| Total shareholders’ (deficit) equity | (422,429 | ) | (567,372 | ) | ) | ||
| Commitments and Contingencies | - | - | |||||
| Total liabilities and shareholders’ equity (deficit) | 2,215,439 | 2,039,431 |
All values are in US Dollars.
8
| TH INTERNATIONAL LIMITED AND SUBSIDIARIES | |||||||
|---|---|---|---|---|---|---|---|
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS<br> OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS) | |||||||
| (Amounts in thousands of RMB and US,<br> except for per share data) | |||||||
| 2024 | |||||||
| RMB | US | ||||||
| Revenues: | |||||||
| Company owned<br> and operated stores | 310,451 | 311,037 | |||||
| Other<br> revenues | 26,028 | 35,778 | |||||
| Total<br> revenues | 336,479 | 346,815 | |||||
| Costs<br> and expenses, net: | |||||||
| Company owned and operated<br> stores | |||||||
| Food and packaging | 111,326 | 108,523 | |||||
| Rental and property management<br> fee | 71,410 | 68,586 | |||||
| Payroll and employee benefits | 72,960 | 69,038 | |||||
| Delivery costs | 22,782 | 28,637 | |||||
| Other operating expenses | 25,088 | 25,329 | |||||
| Store<br> depreciation and amortization | 32,974 | 34,021 | |||||
| Company<br> owned and operated store costs and expenses | 336,540 | 334,134 | |||||
| Costs of other revenues | 18,868 | 25,024 | |||||
| Marketing expenses | 18,303 | 20,748 | |||||
| General and administrative<br> expenses | 70,620 | 58,698 | |||||
| Franchise and royalty expenses | 11,905 | 14,132 | |||||
| Other operating costs and<br> expenses | 5,572 | 4,183 | |||||
| Loss on disposal of property<br> and equipment | 896 | 2,004 | |||||
| Impairment losses of long-lived<br> assets | 4,418 | 18,965 | |||||
| Other<br> income | 226 | 1,675 | |||||
| Total<br> costs and expenses, net | 466,896 | 476,213 | |||||
| Operating<br> loss | (130,417 | ) | (129,398 | ) | ) | ||
| Interest income | 2,023 | 992 | |||||
| Interest expenses | (4,336 | ) | (5,591 | ) | ) | ||
| Foreign currency transaction<br> loss | (1,788 | ) | 3,950 | ||||
| Changes in fair value of<br> Deferred Contingent consideration | - | (2,130 | ) | ) | |||
| Changes in fair value of<br> convertible notes | (14,272 | ) | (10,651 | ) | ) | ||
| Changes in fair value of<br> warrant liabilities | (58,184 | ) | - | ||||
| Changes<br> in fair value of ESA derivative liabilities | 32,523 | - | |||||
| Loss before<br> income taxes | (174,451 | ) | (142,828 | ) | ) | ||
| Income<br> tax expenses | - | - | |||||
| Net<br> loss | (174,451 | ) | (142,828 | ) | ) | ||
| Less:<br> Net (income) loss attributable to non-controlling interests | 433 | 1,217 | |||||
| Net<br> Loss attributable to shareholders of the Company | (174,884 | ) | (144,045 | ) | ) | ||
| Basic<br> and diluted loss per Ordinary Share | (1.25 | ) | (0.90 | ) | ) | ||
| Net loss | (174,451 | ) | (142,828 | ) | ) | ||
| Other<br> comprehensive income (loss) | |||||||
| Unrealized gain on short-term<br> investment, net of nil income taxes | 700 | - | |||||
| Fair value changes of convertible<br> notes due to instrument-specific credit risk, net of nil income taxes | (2,607 | ) | (3,550 | ) | ) | ||
| Foreign<br> currency translation adjustment, net of nil income taxes | 1,029 | (3,033 | ) | ) | |||
| Total comprehensive loss | (175,329 | ) | (149,411 | ) | ) | ||
| Less:<br> Comprehensive loss attributable to non- controlling interests | 433 | 1,217 | |||||
| Comprehensive<br> loss attributable to shareholders of the Company | (175,762 | ) | (150,628 | ) | ) |
All values are in US Dollars.
9
| TH INTERNATIONAL LIMITED AND SUBSIDIARIES | |||||||
|---|---|---|---|---|---|---|---|
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (Amounts in thousands of RMB and US) | |||||||
| 2024 | |||||||
| RMB | US | ||||||
| Net cash used in operating activities | (85,360 | ) | (26,746 | ) | ) | ||
| Net cash provided by/(used in) investing activities | 50,238 | (7,264 | ) | ) | |||
| Net cash provided by financing activities | 163,983 | 25,975 | |||||
| Effect of foreign currency exchange rate changes on cash | (3,368 | ) | 1,338 | ||||
| Net increase/(decrease) in cash | 125,493 | (6,697 | ) | ) | |||
| Cash at beginning of the period | 239,077 | 203,587 | |||||
| Cash at end of the period | 364,570 | 196,890 |
All values are in US Dollars.
10
| 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 | ||||||||||
| Popeyes | Total | |||||||||
| RMB | RMB | US | ||||||||
| Revenues - company owned and operated stores | 296,375 | 14,662 | 311,037 | |||||||
| Food and packaging costs - company owned and operated stores | (102,709 | ) | (5,814 | ) | (108,523 | ) | ) | |||
| Rental expenses - company owned and operated stores | (64,608 | ) | (3,978 | ) | (68,586 | ) | ) | |||
| Payroll and employee benefits - company owned and operated stores | (65,179 | ) | (3,859 | ) | (69,038 | ) | ) | |||
| Delivery costs - company owned and operated stores | (27,534 | ) | (1,103 | ) | (28,637 | ) | ) | |||
| Other operating expenses - company owned and operated stores | (24,217 | ) | (1,112 | ) | (25,329 | ) | ) | |||
| Store depreciation and amortization | (33,227 | ) | (794 | ) | (34,021 | ) | ) | |||
| Franchise and royalty expenses - company owned and operated stores | (9,839 | ) | (455 | ) | (10,294 | ) | ) | |||
| Fully-burdened gross loss - company owned and operated stores | (30,938 | ) | (2,453 | ) | (33,391 | ) | ) | |||
| Store depreciation and amortization | 33,227 | 794 | 34,021 | |||||||
| Store pre-opening expenses | 4,952 | 542 | 5,494 | |||||||
| Adjusted Store EBITDA | 7,241 | (1,117 | ) | 6,124 | ||||||
| Adjusted Store EBITDA Margin | 2.4 | % | -7.6 | % | 2.0 | % | % |
All values are in US Dollars.
| For the three months ended March 31, 2023 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Tims | Popeyes | Total | ||||||||
| RMB | RMB | RMB | US | |||||||
| Revenues - company owned and operated stores | 310,451 | - | 310,451 | |||||||
| Food and packaging costs - company owned and operated stores | (111,326 | ) | - | (111,326 | ) | ) | ||||
| Rental expenses - company owned and operated stores | (71,410 | ) | - | (71,410 | ) | ) | ||||
| Payroll and employee benefits - company owned and operated stores | (72,960 | ) | - | (72,960 | ) | ) | ||||
| Delivery costs - company owned and operated stores | (22,782 | ) | - | (22,782 | ) | ) | ||||
| Other operating expenses - company owned and operated stores | (25,088 | ) | - | (25,088 | ) | ) | ||||
| Store depreciation and amortization | (32,974 | ) | - | (32,974 | ) | ) | ||||
| Franchise and royalty expenses - company owned and operated stores | (9,823 | ) | - | (9,823 | ) | ) | ||||
| Fully-burdened gross loss - company owned and operated stores | (35,912 | ) | - | (35,912 | ) | ) | ||||
| Store depreciation and amortization | 32,974 | - | 32,974 | |||||||
| Store pre-opening expenses | 8,940 | - | 8,940 | |||||||
| Adjusted Store EBITDA | 6,002 | - | 6,002 | |||||||
| Adjusted Store EBITDA Margin | 1.9 | % | 1.9 | % | % |
All values are in US Dollars.
11
| B. Adjusted general and administrative expenses | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| For the three months ended March 31, 2024 | |||||||||||
| Tims | Popeyes | Total | |||||||||
| RMB | RMB | RMB | US | ||||||||
| General and administrative expenses | (54,467 | ) | (4,231 | ) | (58,698 | ) | ) | ||||
| Adjusted for: | |||||||||||
| Share-based compensation expenses | 1,014 | - | 1,014 | ||||||||
| Impairment losses of rental deposits | 2,457 | - | 2,457 | ||||||||
| Adjusted General and administrative expenses | (50,996 | ) | (4,231 | ) | (55,227 | ) | ) | ||||
| Adjusted General and administrative expenses as a % of total revenue | 15.4 | % | 28.8 | % | 15.9 | % | % |
All values are in US Dollars.
| For the three months ended March 31, 2023 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Tims | Popeyes | Total | ||||||||
| RMB | RMB | RMB | US | |||||||
| General and administrative expenses | (70,620 | ) | - | (70,620 | ) | ) | ||||
| Adjusted for: | ||||||||||
| Share-based compensation expenses | 3,161 | - | 3,161 | |||||||
| Adjusted General and administrative expenses | (67,459 | ) | - | (67,459 | ) | ) | ||||
| Adjusted General and administrative expenses as a % of total revenue | 20.0 | % | 20.0 | % | % |
All values are in US Dollars.
12
| C. Adjusted corporate EBITDA and adjusted corporate EBITDA margin | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| For the three months ended March 31, 2024 | |||||||||||
| Tims | Popeyes | Total | |||||||||
| RMB | RMB | RMB | US | ||||||||
| Operating loss | (121,262 | ) | (8,136 | ) | (129,398 | ) | ) | ||||
| Adjusted for: | |||||||||||
| Store pre-opening expenses | 4,952 | 542 | 5,494 | ||||||||
| Depreciation and amortization | 42,225 | 1,415 | 43,640 | ||||||||
| Share-based compensation expenses | 1,014 | - | 1,014 | ||||||||
| Impairment losses of rental deposits | 2,457 | - | 2,457 | ||||||||
| One-off expense of store closure | 2,265 | - | 2,265 | ||||||||
| Impairment losses of long-lived assets | 18,965 | - | 18,965 | ||||||||
| Loss on disposal of property and equipment | 2,004 | - | 2,004 | ||||||||
| Adjusted Corporate EBITDA | (47,380 | ) | (6,179 | ) | (53,559 | ) | ) | ||||
| Adjusted Corporate EBITDA Margin | -14.3 | % | -42.1 | % | -15.4 | % | % |
All values are in US Dollars.
| For the three months ended March 31, 2023 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Tims | Popeyes | Total | ||||||||
| RMB | RMB | RMB | US | |||||||
| Operating loss | (130,417 | ) | - | (130,417 | ) | ) | ||||
| Adjusted for: | ||||||||||
| Store pre-opening expenses | 8,940 | - | 8,940 | |||||||
| Depreciation and amortization | 38,357 | - | 38,357 | |||||||
| Share-based compensation expenses | 3,161 | - | 3,161 | |||||||
| Impairment losses of long-lived assets | 4,418 | - | 4,418 | |||||||
| Loss on disposal of property and equipment | 896 | - | 896 | |||||||
| Adjusted Corporate EBITDA | (74,645 | ) | - | (74,645 | ) | ) | ||||
| Adjusted Corporate EBITDA Margin | -22.2 | % | -22.2 | % | % |
All values are in US Dollars.
13
| D. Adjusted net loss and adjusted net loss margin | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| For the three months ended March 31, 2024 | |||||||||||
| Tims | Popeyes | Total | |||||||||
| RMB | RMB | RMB | US | ||||||||
| Net loss | (134,689 | ) | (8,139 | ) | (142,828 | ) | ) | ||||
| Adjusted for: | |||||||||||
| Store pre-opening expenses | 4,952 | 542 | 5,494 | ||||||||
| Share-based compensation expenses | 1,014 | - | 1,014 | ||||||||
| Impairment losses of long-lived assets | 18,965 | - | 18,965 | ||||||||
| Impairment losses of rental deposits | 2,457 | - | 2,457 | ||||||||
| One-off expense of store closure | 2,265 | - | 2,265 | ||||||||
| Loss on disposal of property and equipment | 2,004 | - | 2,004 | ||||||||
| Changes in fair value of Deferred Contingent consideration | 2,130 | - | 2,130 | ||||||||
| Changes in fair value of convertible notes | 10,651 | - | 10,651 | ||||||||
| Adjusted Net loss | (90,251 | ) | (7,597 | ) | (97,848 | ) | ) | ||||
| Adjusted Net loss Margin | -27.2 | % | -51.8 | % | -28.2 | % | % |
All values are in US Dollars.
| For the three months ended March 31, 2023 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Tims | Popeyes | Total | ||||||||
| RMB | RMB | RMB | US | |||||||
| Net loss | (174,451 | ) | - | (174,451 | ) | ) | ||||
| Adjusted for: | ||||||||||
| Store pre-opening expenses | 8,940 | - | 8,940 | |||||||
| Share-based compensation expenses | 3,161 | - | 3,161 | |||||||
| Impairment losses of long-lived assets | 4,418 | - | 4,418 | |||||||
| Loss on disposal of property and equipment | 896 | - | 896 | |||||||
| Changes in fair value of convertible notes | 14,272 | - | 14,272 | |||||||
| Changes in fair value of warrant liabilities | 58,184 | - | 58,184 | |||||||
| Changes in fair value of ESA derivative liabilities | (32,523 | ) | - | (32,523 | ) | ) | ||||
| Adjusted Net loss | (117,103 | ) | - | (117,103 | ) | ) | ||||
| Adjusted Net loss Margin | -34.8 | % | -34.8 | % | % |
All values are in US Dollars.
14
| E. Adjusted basic and diluted net loss per Ordinary Share | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| For the three months ended March 31, 2024 | |||||||||||
| Tims | Popeyes | Total | |||||||||
| RMB | RMB | RMB | US | ||||||||
| Net Loss attributable to shareholders of the Company | (135,906 | ) | (8,139 | ) | (144,045 | ) | ) | ||||
| Adjusted for: | |||||||||||
| Store pre-opening expenses | 4,952 | 542 | 5,494 | ||||||||
| Share-based compensation expenses | 1,014 | - | 1,014 | ||||||||
| Impairment losses of long-lived assets | 18,965 | - | 18,965 | ||||||||
| Impairment losses of rental deposits | 2,457 | - | 2,457 | ||||||||
| One-off expense of store closure | 2,265 | - | 2,265 | ||||||||
| Loss on disposal of property and equipment | 2,004 | - | 2,004 | ||||||||
| Changes in fair value of Deferred Contingent consideration | 2,130 | - | 2,130 | ||||||||
| Changes in fair value of convertible notes | 10,651 | - | 10,651 | ||||||||
| Adjusted Net loss attributable to shareholders of the Company | (91,468 | ) | (7,597 | ) | (99,065 | ) | ) | ||||
| Weighted average shares outstanding used in calculating basic and diluted loss per share | 160,633,868 | 160,633,868 | 160,633,868 | ||||||||
| Adjusted basic and diluted net loss per Ordinary Share | (0.57 | ) | (0.05 | ) | (0.62 | ) | ) |
All values are in US Dollars.
| For the three months ended March 31, 2023 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Tims | Popeyes | Total | ||||||||
| RMB | RMB | RMB | US | |||||||
| Net Loss attributable to shareholders of the Company | (174,884 | ) | - | (174,884 | ) | ) | ||||
| Adjusted for: | ||||||||||
| Store pre-opening expenses | 8,940 | - | 8,940 | |||||||
| Share-based compensation expenses | 3,161 | - | 3,161 | |||||||
| Impairment losses of long-lived assets | 4,418 | - | 4,418 | |||||||
| Loss on disposal of property and equipment | 896 | - | 896 | |||||||
| Changes in fair value of convertible notes | 14,272 | - | 14,272 | |||||||
| Changes in fair value of warrant liabilities | 58,184 | - | 58,184 | |||||||
| Changes in fair value of ESA derivative liabilities | (32,523 | ) | - | (32,523 | ) | ) | ||||
| Adjusted Net loss attributable to shareholders of the Company | (117,536 | ) | - | (117,536 | ) | ) | ||||
| Weighted average shares outstanding used in calculating basic and diluted loss per share | 139,612,628 | - | 139,612,628 | |||||||
| Adjusted basic and diluted net loss per Ordinary Share | (0.84 | ) | - | (0.84 | ) | ) |
All values are in US Dollars.
15