Tims China Announces Third Quarter 2024 Financial Results
Achieved Consecutive Adjusted Corporate EBITDA(1) Profitability
Generated Highest-ever Company Owned and Operated Store Contribution Margin(4) of 13.3%
SHANGHAI and NEW YORK, Nov. 12, 2024 (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 third quarter 2024.
THIRD QUARTER 2024 HIGHLIGHTS
-- Total revenues of RMB359.6 million (USD51.3 million), representing a
17.1% decrease from the same quarter of 2023.
-- System sales2 of RMB372.4 million (USD53.1 million), representing a 15.5%
decrease from the same quarter of 2023.
-- Net new store openings for franchised stores totaled 49 for the quarter
(39 systemwide net new store opening, as certain company-owned
underperforming stores were closed and we focused on sub-franchise
development).
-- Company owned and operated store contribution3, previously disclosed as
adjusted store EBITDA, was RMB39.9 million (USD5.7 million), representing
a 37.6% increase from the same quarter of 2023.
-- Company owned and operated store contribution margin4, previously
disclosed as adjusted store EBITDA margin, was 13.3%, representing a 5.8
percentage points improvement over the same quarter of 2023.
-- Achieved second consecutive positive adjusted corporate EBITDA1 of RMB2.0
million (USD 0.3 million), compared to a loss of RMB63.0 million in the
same quarter of 2023.
-- Registered loyalty club members totaled 22.8 million members as of
September 30, 2024, representing a 35.3% year-over-year growth.
COMPANY MANAGEMENT STATEMENT
Mr. Yongchen Lu, CEO & Director of Tims China, commented, "In the third quarter of 2024, we maintained adjusted corporate EBITDA profitability, despite the ongoing fierce price competition in the Chinese coffee market, after achieving first-ever adjusted corporate EBITDA profitability in the second quarter of 2024. We are committed to focusing on product differentiation and providing great value for our customers. We achieved our highest-ever quarterly company owned and operated store contribution margin of 13.3%, a year-over-year margin expansion of 5.8 percentage points, demonstrating our continuous efforts towards delivering further improvements in operational efficiencies and supply chain capabilities.
Furthering our strategic focus, we prioritize delivering healthy and high-quality products and services to our customers. We have completed the "made-to-order" renovation of 539 new and existing stores by the end of October, adding working stations designed for efficient, fresh and handmade food preparation and "open kitchens." With this investment, our guests can watch our staff craft fresh meals from start to finish."
Mr. Dong (Albert) Li, CFO of Tims China, commented, "In the third quarter of 2024, we delivered adjusted corporate EBITDA profitability again. We remain dedicated to enhancing our financial performance by refining our store unit economics and driving efficiencies at the corporate level. Concurrently, our rapidly growing sub-franchise business continues to generate a steady stream of cash flow and profitability, bolstering our margins. We substantially improved our store profitability and delivered year-over-year reductions in food and packaging costs, labor costs, and other store operating expenses (as a percentage of revenues from company owned and operated stores) by 6.1 percentage points, 3.0 percentage points, and 1.1 percentage points, respectively. Our marketing expenses and adjusted general and administrative expenses as a percentage of total revenues decreased by 2.3 percentage points and 2.7 percentage points year-over-year, respectively."
Mr. Li continued, "Moving forward, our strategic focus remains firmly on delivering profitable, capital-efficient growth. We are committed to bolstering our brand and broadening our appeal by offering great value for money with our fresh and healthy food selections. Additionally, we are collaborating closely with our sub-franchisees to boost customer traffic and optimize our supply chain efficiency, thereby enhancing overall store economics and our bottom-line profitability."
THIRD QUARTER 2024 FINANCIAL RESULTS
Total revenues reached RMB359.6 million (USD51.3 million) for the three months ended September 30, 2024, representing a decrease of 17.1% from RMB433.9 million in the same quarter of 2023. Total revenues comprise:
-- Revenues from Company owned and operated store sales were RMB299.5
million (USD42.7 million) for the three months ended September 30, 2024,
representing a decrease of 22.9% from RMB388.3 million in the same
quarter of 2023. The decrease was primarily attributable to closures of
certain underperforming stores and a 20.7% decrease in same-store sales
growth for company owned and operated stores in the third quarter of
2024. The decrease was attributable to a 12.3% decline in the number of
orders from 15.4 million in the third quarter of 2023 to 13.5 million in
the same quarter of 2024, and a 12.0% year-over-year decrease in average
ticket size.
-- Other revenues were RMB60.1 million (USD8.6 million) for the three months
ended September 30, 2024, representing an increase of 31.8% from RMB45.6
million in the same quarter of 2023. The increase was primarily due to
the expansion of our franchise business as the number of our franchised
stores increased from 174 as of September 30, 2023 to 382 as of September
30, 2024.
Company owned and operated store costs and expenses were RMB279.6 million (USD39.9 million) for the three months ended September 30, 2024, representing a decrease of 29.0% from RMB394.1 million in the same quarter of 2023. Company owned and operated store costs and expenses comprise:
-- Food and packaging costs were RMB86.9 million (USD12.4 million),
representing a decrease of 36.3% from RMB136.3 million, as we continue to
benefit from higher efficiencies in supply chains and cost reduction on
raw materials, logistic and warehousing expenses. Accordingly, food and
packaging costs as a percentage of revenues from company owned and
operated stores decreased by 6.1 percentage points from 35.1% in the
third quarter of 2023 to 29.0% in the same quarter of 2024.
-- Rental and property management fee was RMB57.8 million (USD8.2 million),
representing a decrease of 23.1% from RMB75.1 million, mainly due to the
closure of certain underperforming stores and in line with the revenue
trend. Rental and property management fee as a percentage of revenues
from company owned and operated stores remained flat at 19.3% in both the
third quarter of 2023 and 2024.
-- Payroll and employee benefits expenses were RMB50.7 million (USD7.2
million), representing a decrease of 34.5% from RMB77.3 million. Payroll
and employee benefits as a percentage of revenues from company owned and
operated stores decreased by 3.0 percentage points from 19.9% in the
third quarter of 2023 to 16.9% in the same quarter of 2024, primarily due
to the continuous refinement of staffing arrangements and optimization of
store managerial efficiency.
-- Delivery costs were RMB30.8 million (USD4.4 million), representing a
decrease of 9.8% from RMB34.2 million, which was in line with the trend
of delivery orders. Delivery costs as a percentage of revenues from
company owned and operated stores increased by 1.5 percentage points to
10.3% in the third quarter of 2024 compared to 8.8% in the same quarter
of 2023.
-- Other operating expenses were RMB23.7 million (USD3.4 million),
representing a decrease of 32.0% from RMB34.8 million, driven by the cost
optimization measures and in line with the revenue trend. Other operating
expenses as a percentage of revenues from company owned and operated
stores decreased by 1.1 percentage points to 7.9% in the third quarter of
2024 compared to 9.0% in the same quarter of 2023.
-- Store depreciation and amortization expenses were RMB29.8 million (USD4.2
million), representing a decrease of 18.1% from RMB36.4 million, which
was attributable to the closure of certain underperforming stores and in
line with the revenue trend. Store depreciation and amortization as a
percentage of revenues from company owned and operated stores increased
by 0.5 percentage points to 9.9% in the third quarter of 2024 compared to
9.4% in the same quarter of 2023.
Costs for other revenues were RMB45.3 million (USD6.5 million) for the three months ended September 30, 2024, representing an increase of 7.6% from RMB42.1 million in the same quarter of 2023, which was primarily driven by an increase in the revenues generated from franchise business as the number of our franchised stores increased from 174 as of September 30, 2023 to 382 as of September 30, 2024, offset by the streamlined e-commerce business. Costs for other revenues as a percentage of other revenues decreased by 16.9 percentage points from 92.3% in the third quarter of 2023 to 75.4% in the same quarter of 2024 due to higher margins we generated from both franchise business and e-commerce business during the third quarter of 2024.
Marketing expenses were RMB18.5 million (USD2.6 million) for the three months ended September 30, 2024, representing a decrease of 42.1% from RMB32.0 million in the same quarter of 2023, driven by our cost optimization measures and higher brand influence. Marketing expenses as a percentage of total revenues decreased by 2.3 percentage points from 7.4% in the third quarter of 2023 to 5.1% in the same quarter of 2024.
(MORE TO FOLLOW) Dow Jones Newswires
November 12, 2024 05:45 ET (10:45 GMT)
Comments