TH International (US:THCH)2024-08-29 22:07Financial Data and Key Metrics Changes - The company achieved adjusted corporate EBITDA profitability for the first time, with an adjusted EBITDA margin of 10.3% [6][13] - Monthly average transacting customers increased by 12.1% year-over-year, reaching 3.1 million [14] - Digital orders as a percentage of total orders rose from 80.6% in Q2 2023 to 86.5% in Q2 2024 [14] - Cash and cash equivalents increased to RMB253.2 million as of June 30, 2024, compared to RMB219.5 million at the end of 2023 [16] Business Line Data and Key Metrics Changes - Revenue from company-owned stores decreased by 6.6% due to the strategic pruning of underperforming stores [7] - System sales grew by 1.6%, indicating overall business resilience despite challenges [7] - The number of bagels sold increased from 4.8 million in Q2 2023 to 6 million in Q2 2024, with food orders rising to 51.9% [10] Market Data and Key Metrics Changes - The loyalty club membership reached 21.4 million, reflecting a 45.4% year-over-year growth [8] - The competitive landscape shows notable players like Luckin and Starbucks experiencing declines in same-store sales by 20% and 14%, respectively [26] Company Strategy and Development Direction - The company is focusing on sustainable profitable growth by enhancing its franchise network and improving operational efficiency [6][7] - A strategic decision was made to transfer the Popeyes China business back to RBI to streamline operations and focus on the core Tim Hortons brand [11] - The company plans to continue its Coffee Plus strategy, emphasizing freshly prepared food offerings [10][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic challenges and intense competition but expressed confidence in their value-for-money strategy [19] - The company expects to open more stores in Q3 and Q4, building on the momentum from individual franchisees [22][38] - Management remains optimistic about further improvements in adjusted store EBITDA margins [23][24] Other Important Information - The company secured up to $50 million in financing from founding shareholders, reinforcing its balance sheet [11] - Significant marketing campaigns were launched, generating over $45 million in exposure [9] Q&A Session Summary Question: How can the company maintain continuous profitability? - Management emphasized prioritizing profitable growth through operational efficiency and enhancing customer value [18][19] Question: What is the growth outlook for Q4? - Management expects more store openings in Q3 and Q4, with 20 stores already opened and 52 signed by the end of June [21][22] Question: Is there room for growth in the adjusted store EBITDA margin? - Management is satisfied with the current margin and will seek further improvements [23][24] Question: How does Tims analyze the competitive landscape? - Management noted challenges in the coffee market but believes their strategy positions them well against competitors [25][26] Question: What is the company's position in the ongoing price war? - Management does not actively participate in the price war but focuses on value-for-money offerings [28][31] Question: What are the primary needs for capital moving forward? - Future capital will be used for store renovations, marketing initiatives, and R&D for new products [33][34] Question: Will the store count increase this year? - Management expects an increase in store count in the second half of the year, particularly in Q4 [37][38]