TH International (THCH) - 2024 Q3 - Quarterly Report

Financial Performance - Total revenues for Q3 2024 were RMB359.6 million (USD51.3 million), a 17.1% decrease from RMB433.9 million in Q3 2023[4] - System sales decreased by 15.5% year-over-year to RMB372.4 million (USD53.1 million) in Q3 2024[5] - Adjusted corporate EBITDA was RMB2.0 million (USD0.3 million), compared to a loss of RMB63.0 million in Q3 2023, marking a 15.1 percentage points improvement in margin[27] - Company-owned and operated store revenues for 2024 were RMB 299,455, down 22.9% from RMB 388,321 in 2023[62] - The net loss from continuing operations for the three months ended September 30, 2024, was RMB 148,562 thousand, compared to RMB 88,851 thousand for the same period in 2023, representing a significant increase in losses[63] - The company reported a comprehensive loss attributable to shareholders of RMB 167,511 thousand for the three months ended September 30, 2024, compared to RMB 76,705 thousand in 2023, indicating a worsening financial position[63] - Operating loss for 2024 was RMB (55,919), improving from RMB (147,650) in 2023, indicating a reduction in losses by 62.1%[62] - Adjusted net loss for 2023 was RMB (100,111) million, decreasing to RMB (41,406) million by September 30, 2024, indicating a 59% improvement[70] - Adjusted net loss margin improved from -23.1% in 2023 to -11.5% by September 30, 2024, reflecting a significant reduction in losses[70] Store Operations - Company owned and operated store sales decreased by 22.9% to RMB299.5 million (USD42.7 million), driven by a 20.7% decline in same-store sales[11] - Same-store sales growth for company-owned and operated stores is projected to decline to -20.7% by September 30, 2024, down from -0.4% on September 30, 2023[32] - The number of franchised stores increased from 174 to 382 year-over-year, contributing to a 31.8% increase in other revenues to RMB60.1 million (USD8.6 million)[12] - Total stores increased from 759 on September 30, 2023, to a projected 946 by September 30, 2024[32] Cost Management - Food and packaging costs decreased by 36.3% to RMB86.9 million (USD12.4 million), with costs as a percentage of revenues dropping by 6.1 percentage points to 29.0%[13] - Marketing expenses decreased by 42.1% to RMB18.5 million (USD2.6 million), reducing the percentage of total revenues by 2.3 percentage points to 5.1%[21] - General and administrative expenses from continuing operations decreased to RMB 39,752 thousand for the three months ended September 30, 2024, down from RMB 65,829 thousand in 2023, reflecting cost-cutting measures[68] - Total costs and expenses for 2024 were RMB 415,473, a decrease of 28.5% from RMB 581,571 in 2023[62] Cash Flow and Assets - As of September 30, 2024, total cash and cash equivalents were RMB203.7 million (USD29.1 million), down from RMB219.5 million at the end of 2023[31] - Cash and cash equivalents as of September 2024 were RMB 196,734, a slight decrease of 2.9% from RMB 202,315 in December 2023[59] - The cash at the end of the period for September 30, 2024, was RMB 196,734 thousand, a decrease from RMB 461,755 thousand at the beginning of the period, highlighting cash flow challenges[64] - Total current assets increased to RMB 441,890 in September 2024, up from RMB 458,620 in December 2023[59] - Non-current assets increased to RMB 1,234,294 in September 2024, up from RMB 1,756,819 in December 2023[59] Shareholder Equity and Liabilities - Total liabilities rose to RMB 2,358,834 in September 2024, compared to RMB 2,637,868 in December 2023, reflecting a decrease of 10.6%[60] - Total shareholders' equity showed a deficit of RMB (682,650) in September 2024, improving from RMB (422,429) in December 2023[60] - Accumulated losses decreased to RMB (2,536,947) in September 2024 from RMB (2,256,424) in December 2023, showing an improvement of 10.5%[60] Strategic Initiatives - The introduction of four new seasonal products during the Bagel Festival aims to enhance customer engagement and drive sales[43] - Tims China participated in the Fourth ESG Global Leaders Summit, emphasizing its commitment to sustainable development[44] - The company plans to optimize its cost structure and improve operational efficiency as part of its growth strategy[54] - The company aims to increase the frequency of guest visits through special promotions during events like the Bagel Festival[43] - Future store openings are anticipated to contribute positively to overall system sales growth despite current challenges[32] Losses and Impairments - The company experienced a net cash used in operating activities of RMB 12,999 thousand for the three months ended September 30, 2024, compared to RMB 30,446 thousand in 2023, showing an improvement in cash flow management[64] - Share-based compensation expenses decreased from RMB 61,727 million in 2023 to RMB 1,260 million by September 30, 2024, a reduction of over 98%[70] - Impairment losses of long-lived assets increased from RMB 21,792 million in 2023 to RMB 40,386 million by September 30, 2024, indicating a rise of approximately 85%[70] - Loss on disposal of property and equipment decreased from RMB 13,780 million in 2023 to RMB 3,716 million by September 30, 2024, a reduction of about 73%[70] - Changes in fair value of convertible notes increased from RMB 31,372 million in 2023 to RMB 48,461 million by September 30, 2024, an increase of approximately 55%[71] - The company reported a one-off expense of store closure amounting to RMB 3,181 million in 2024[70]