TH International (US:THCH)2025-12-09 14:02Financial Data and Key Metrics Changes - In Q3 2025, the company achieved a 12.8% year-over-year growth in system sales, with food revenues increasing by 24.2% year-over-year [4][5] - The adjusted corporate EBITDA improved by 10.4% and adjusted net loss improved by 11.5% year-over-year [5] - The average monthly transacting customers reached 3.85 million, a 16.7% increase from the same quarter in 2024 [12] - Digital orders as a percentage of total orders rose to an all-time high of 91.0% [12] Business Line Data and Key Metrics Changes - Company-owned and operated store revenues dropped by 5.5% year-over-year, primarily due to planned closures of underperforming stores [12] - Same-store sales growth for company-owned and operated stores was positive at 3.3% [12] - Revenues from the franchise and retail business increased by 25.0% year-over-year, with the number of franchise stores growing from 382 to 479 [14] Market Data and Key Metrics Changes - The company expanded its store footprint into 91 cities, with significant growth in loyalty club members reaching 27.9 million, a 22.3% year-over-year increase [6][7] - The coffee sector faced intensified competition from rapidly expanding tea beverage categories, impacting market dynamics [8] Company Strategy and Development Direction - The company is focused on enhancing operational efficiencies, supply chain capabilities, and rigorous cost controls to support sustainable profit growth [17] - Strategic initiatives include expanding into special channel stores, such as high-speed train stations and airports, which have shown strong performance [31] - The company aims to improve gross margins through supply chain optimizations and new product launches [28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from competitive pressures but expressed confidence in the company's resilience and ability to adapt [18] - The company anticipates achieving double-digit store level margins next year through various strategic initiatives [28] - Management highlighted the importance of maintaining a strong brand presence and customer engagement through targeted marketing efforts [8] Other Important Information - The company successfully issued approximately $89.9 million in senior secured convertible notes, restructuring its financing to focus on operational growth [19] - The company reported a negative adjusted corporate EBITDA margin of 4.2% in Q3 2025, compared to a positive margin in the same quarter of 2024 [16] Q&A Session Summary Question: Company's liquidity status and long-term financing plan - The company raised $89.9 million through convertible notes and repurchased previous convertible notes, eliminating near-term offshore liabilities and allowing focus on daily operations [24] Question: Pressure on store contribution margins and future margin profile - The lower store contribution margin was attributed to a higher delivery revenue mix due to competitive pricing strategies, which is expected to be temporary [27] - The company aims to enhance gross margins and achieve mid- to high-teens contribution margins through various strategies [28] Question: Performance of strategic special channel stores - Special channel stores have performed well, generating mid- to high-teens EBITDA margins with a payback period of around two years [31]