GreenTree Hospitality Group Ltd. Reports Second Quarter 2021 Financial Results

· Total revenues increased 60.7% year-over-year to RMB347.1million (US$53.8 million) [[1]].
· Income from operations increased 42.5% year-over-year to RMB89.3 million (US$13.8 million) [1].
· Adjusted EBITDA (non-GAAP) [2] increased 44.0% year-over-year to RMB111.2 million (US$17.2 million) [1].
· Core net income (non-GAAP) [3] increased 5.7% year-over-year to RMB78.9 million (US$12.2 million) [1].

SHANGHAI, Nov. 15, 2021 /PRNewswire/ -- GreenTree Hospitality Group Ltd. (NYSE: GHG) ("GreenTree", the "Company", "we", "us" and "our"), a leading hospitality management group in China, today announced its unaudited financial results for the second quarter of 2021.

Second Quarter of 2021 Operational Highlights

· A total of 4,542 hotels with 328,773 hotel rooms were in operation as of June 30, 2021, compared to 4,464 hotels and 323,648 hotel rooms as of March 31, 2021.
· As of June 30, 2021, the Company had 63 leased-and-operated ("L&O") hotels and 4,479 franchised-and-managed ("F&M") hotels in operation in 358 cities across China, compared to 35 L&O hotels and 4,029 F&M hotels in operation in 342 cities as of June 30, 2020. The geographic coverage increased by 4.7% year over year.
· During the quarter, the Company opened 201 hotels, an increase of 90 compared to 111 hotels in the second quarter of 2020. Two of those hotels were in the luxury segment, 43 in the mid-to-up-scale segment, 137 in the mid-scale segment, and 19 in the economy segment. Geographically speaking, 10 hotels were in Tier 1 cities [3], 49 in Tier 2 cities and the remaining 142 in Tier 3 and lower cities in China.
· As of June 30, 2021, the Company had a pipeline of 1,271 hotels contracted for or under development, among which 56 hotels were in the luxury hotel segment, 300 in the mid-to-up-scale segment, 506 in the mid-scale segment, and 409 in the economy segment.
· The average daily room rate, or ADR, for all hotels in operation, was RMB 171, an increase of 20.2% from RMB142 in the second quarter of 2020, and a 0.8% decrease compared with RMB172 in the pre-COVID-19 second quarter of 2019.
· The occupancy rate, or OCC for all hotels in operation was 78.6%, an increase of 15.2% compared with 63.4% in the second quarter of 2020, and a 2.5% decrease compared with 81.1% in the pre-COVID-19 second quarter of 2019.
· The revenue per available room, or RevPAR, which is calculated by multiplying our hotels' ADR by its occupancy rate, was RMB 134, a 49.0% year-over-year increase, and a 3.8% decrease compared with RMB139 in the pre-COVID-19 second quarter of 2019.
· As of June 30, 2021, the Company's loyalty program had more than 62 million individual members and more than 1,760,000 corporate members, compared to over 59 million individual members and approximately 1,710,000 corporate members respectively as of March 31, 2021. The Company sold approximately 91.1% of room nights directly during the second quarter 2021.

"With the extensive contributions of every franchisee and members of our staff, our Q2 financials made substantial improvements," said Mr. Alex Xu, Chair and Chief Executive Officer of Greentree. "Although the new waves of COVID-19 outbreaks have somewhat dampened the recovery and had a negative impact in the affected regions, we have seen optimistic signs of recovery in domestic tourism and business travel, especially during the Tomb-Sweeping Day and the Labor Day Festival. During the quarter, we accelerated our expansion into the mid-range and high-end markets in central, southeast and southwest China. We opened 20 L&O hotels and finished the quarter. Unlike previous years, we were able to secure choice locations at economically attractive prices. All these L&O hotels are situated within popular transportation hubs, central business districts, or government centers. We believe that they will act as anchor hotels and will attract new franchisees to our Company. While improving our own services, we have also been developing a cloud-based IT infrastructure that secures internal and personal data in real time. We are the first to have moved all systems to the Cloud, and we are benefiting from higher operating efficiency and stability. Thanks to this new development, I believe that in the near future, our operations and performance will reach new heights. Once again, I would like to thank our dedicated teams, franchisees, and shareholders for their continuous support over the years.

Second Quarter of 2021 Financial Results

Quarter Ended
June 30, 2020 June 30, 2021 June 30, 2021
RMB RMB US$
Revenues
Leased-and-operated hotels 50,337,339 116,882,174 18,102,743
Franchised-and-managed hotels 158,534,095 217,656,936 33,710,767
others 7,118,530 12,517,770 1,938,756
Total revenues 215,989,964 347,056,880 53,752,266
Six Months Ended
June 30, 2020 June 30, 2021 June 30, 2021
RMB RMB US$
Revenues
Leased-and-operated hotels 84,137,483 172,995,482 26,793,588
Franchised-and-managed hotels 276,197,197 395,606,563 61,271,654
others 13,051,275 19,667,293 3,046,076
Total revenues 373,385,955 588,269,338 91,111,318

Total revenues were RMB347.1 million (US$53.8 million) [1], a 60.7% year-over-year increase. The increase was primarily due to the sustained recovery in hotel operations from the impact of COVID-19 and our newly opened L&O hotels. Compared with the pre-COVID-19 second quarter of 2019, total revenues increased by 26.2%. Total revenues for the first half of 2021 were RMB 588.3 million (US$91.1 million) [1], representing a 57.5% year-over-year increase.

Total revenues from leased-and-operated hotels were RMB116.9 million (US$18.1 million) [1], a 132.2% year-over-year increase. The increase was primarily due to the 98.7% year-over-year increase in L&O hotels' RevPAR and revenues from the 30 L&O hotels opened since the third quarter of 2020. The revenue increase was partially offset by the closure of 2 L&O hotels over the same period. Total revenues from L&O hotels for the first half of 2021 were RMB173.0 million (US$26.8 million) [1], representing a 105.6% year-over-year increase.

Total revenues from franchised-and-managed hotels were RMB217.7 million (US$33.7 million) [1], a 37.3% year-over-year increase. Initial franchise fees increased by 47.3% year-over-year, mainly attributable to the gross opening of 181 F&M hotels and the closed F&M hotels. Recurring franchisee management fees and others increased 36.4% year-over-year primarily due to the 47.9% increase in RevPAR and the 11.2% increase in the number of F&M hotels, and was offset by the fee waiver to franchisees related to newly acquired hotels. Total revenues from F&M hotels for the first half of 2021 were RMB395.6 million (US$61.3 million) [1], representing a 43.2% year-over-year increase.

Quarter Ended
June 30, 2020 June 30, 2021 June 30, 2021
RMB RMB US$
Initial franchise fee 13,313,072 19,613,749 3,037,783
Recurring franchise management fee and others 145,221,023 198,043,187 30,672,984
Revenues from franchised-and-managed hotels 158,534,095 217,656,936 33,710,767
Six Months Ended
June 30, 2020 June 30, 2021 June 30, 2021
RMB RMB US$
Initial franchise fee 26,365,904 37,592,607 5,822,353
Recurring franchise management fee and others 249,831,293 358,013,956 55,449,301
Revenues from franchised-and-managed hotels 276,197,197 395,606,563 61,271,654

Total operating costs and expenses

Quarter Ended
June 30, 2020 June 30, 2021 June 30, 2021
RMB RMB US$
Operating costs and expenses
Hotel operating costs 94,916,577 164,437,048 25,468,056
Selling and marketing expenses 11,999,656 21,703,311 3,361,415
General and administrative expenses 48,143,971 71,043,670 11,003,263
Other operating expenses 41,123 2,752,734 426,344
Total operating costs and expenses 155,101,327 259,936,763 40,259,078
Six Months Ended
June 30, 2020 June 30, 2021 June 30, 2021
RMB RMB US$
Operating costs and expenses
Hotel operating costs 184,679,850 286,667,300 44,399,111
Selling and marketing expenses 29,840,978 39,821,421 6,167,553
General and administrative expenses 76,889,542 127,001,827 19,670,078
Other operating expenses 1,198,272 4,146,290 642,178
Total operating costs and expenses 292,608,642 457,636,838 70,878,920

Hotel operating costs were RMB164.4 million (US$25.5 million) [1], a 73.2% increase year-over-year. The increase was mainly attributable to the opening of 23 L&O hotels since the beginning of 2021, which resulted in higher rents, higher staff headcount and compensation, higher depreciation and amortization, and higher utilities and consumables. Excluding the impact from newly opened L&O hotels in 2021, hotel operating costs increased 21.9%. For the first half of 2021, hotel operating costs were RMB286.7 million (US$44.4 million) [1], representing a 55.2% increase.

Quarter Ended
June 30, June 30, June 30,
2020 2021 2021
RMB RMB US$
Rental 35,806,000 64,073,601 9,923,737
Utilities 3,172,300 6,307,116 976,848
Personnel cost 9,332,835 17,417,652 2,697,651
Depreciation and amortization 10,588,191 17,515,961 2,712,877
Consumable, food and beverage 8,440,379 20,386,884 3,157,526
Costs of general managers of franchised-and-managed hotels 20,691,454 28,077,251 4,348,612
Other costs of franchised-and-managed hotels 5,476,527 6,906,955 1,069,751
Others 1,408,891 3,751,628 581,054
Hotel Operating Costs 94,916,577 164,437,048 25,468,056
Six Months Ended
June 30, June 30, June 30,
2020 2021 2021
RMB RMB US$
Rental 62,908,982 103,794,352 16,075,698
Utilities 7,592,490 12,203,535 1,890,087
Personnel cost 19,080,814 31,071,099 4,812,300
Depreciation and amortization 21,927,026 33,683,464 5,216,904
Consumable, food and beverage 19,026,605 31,726,274 4,913,774
Costs of general managers of franchised-and-managed hotels 41,334,102 55,395,961 8,579,742
Other costs of franchised-and-managed hotels 9,979,587 12,448,949 1,928,097
Others 2,830,244 6,343,666 982,509
Hotel Operating Costs 184,679,850 286,667,300 44,399,111

Selling and marketing expenses were RMB21.7 million (US$3.4million) [1], an 80.9% year-over-year increase. The increase was mainly attributable to higher staff headcount and compensation and the opening of 23 L&O hotels since the beginning of 2021. Excluding the impact from newly opened L&O hotels in 2021, selling and marketing expenses increased 41.1%. For the first half of 2021, selling and marketing expenses were RMB39.8 million (US$6.2 million) [1], representing a 33.4% increase.

General and administrative expenses were RMB71.0 million (US$11.0 million) [1], a 47.6% year-over-year increase. The increase was mainly attributable to the opening of 23 L&O hotels since the beginning of 2021, the increased one-time consulting fees for exploring financial or investment alternatives as well as for capital market advice. Excluding the impact from newly opened L&O hotels and one-time consulting fees, general and administrative expenses increased 0.5%. General and administrative expenses for the first half of 2021 were RMB127.0 million (US$19.7 million) [1], representing a 65.2% year-over-year increase.

Gross profit was RMB182.6 million (US$28.3 million) [1], a year-over-year increase of 50.8%. Gross margin was 52.6%, compared to 56.1% a year ago. The increase was primarily due to the recovery in our hotel RevPAR from the impact of COVID-19 but was offset by the operating loss of recorded by newly opened L&O hotels during their ramp-up period. Gross profit for the first half of 2021 was RMB301.6 million (US$46.7 million) [1], representing a 59.8% year-over-year increase.

Income from operations were RMB89.3 million (US$13.8 million) [1], a year-over-year increase of 42.5%. The increase was mainly due to the sustained recovery in RevPAR but was offset by the operating loss of recorded by newly opened L&O hotels during their ramp-up period. Operating margin was 25.7%, compared to 29.0% a year ago. Excluding the negative impact of newly opened hotels, income from operations was RMB123.0 million, a year-over-year increase of 96.4%. Income from operations for the first half of 2021 was RMB150.7 million (US$23.3 million) [1], representing a year-over-year increase of 50.9%.

Net income was RMB80.3 million (US$12.4 million) [1], compared to RMB93.7 million in the second quarter of 2020 and net margin was 23.1%.The year-over-year decrease was mainly attributable to the operating loss of recorded by newly opened L&O hotels during their ramp-up period. Excluding the impact of newly opened hotels, net income was RMB114.0 million, a year-over-year increase of 21.6%. Net income for the first half of 2021 was RMB146.3 million (US$22.7 million) [1], representing a year-over-year increase of 83.8%.

Adjusted EBITDA (non-GAAP) [2]was RMB111.2 million (US$17.2 million) [1], a year-over-year increase of 44.0%. Adjusted EBITDA margin, defined as adjusted EBITDA (non-GAAP) as a percentage of total revenues, was 32.1%, compared to 35.8% a year ago. Adjusted EBITDA (non-GAAP) for the first half of 2021 was RMB175.2 million (US$27.1 million) [1], representing a year-over-year increase of 53.4%.

Core net income (non-GAAP) was RMB78.9 million (US$12.2 million) [1], a year-over-year increase of 5.7%. The core net margin, defined as core net income (non-GAAP) as a percentage of total revenues, was 22.7%, compared to 34.6% one year ago. Core net income (non-GAAP) for the first half of 2021 was RMB122.8 million (US$19.0 million) [1], representing a year-over-year increase of 31.1%.

Earnings per ADS (basic and diluted) was RMB0.79 (US$0.12) [1], down from RMB1.01 one year ago. Core net income per ADS (basic and diluted) (non-GAAP) was RMB0.77 (US$0.12) [1], up from RMB0.72 a year ago. Earnings per ADS (basic and diluted) for the first half of 2021 was RMB1.47 (US$0.23) [1] up from RMB0.90 one year ago. Core net income per ADS (basic and diluted) (non-GAAP) was RMB1.19 (US$0.18) [1] for the first half of 2021, an increase from RMB0.91 a year ago.

Cash flow. Operating cash inflow was RMB44.6 million (US$6.9 million) [1] as a result of income from operations. Investing cash outflow was RMB 242.5 million (US$37.6 million) [1], which was primarily attributable to acquisition costs of our L&O hotels, investments and deposits of property and equipment, loans to franchisees, and purchases of short-term investments. The investing cash outflow was partially offset by proceeds from the disposal of equity securities and proceeds from short-term investments. Financing cash inflow was RMB13.7 million (US$2.1 million). Operating cash inflow for the first half of 2021 was RMB42.9 million (US$6.6 million) [1]. Investing cash outflow for the first half of 2021 was RMB500.7 million (US$77.6 million) [1]. Financing cash inflow for the first half of 2021 was RMB149.8 million (US$23.2 million) [1].

Cash and cash equivalents, restricted cash, short-term investments, investments in equity securities and time deposit. As of June 30, 2021, the Company had total cash and cash equivalents, restricted cash, short term investments, investments in equity securities and time deposits of RMB1,291.0 million (US$200.0 million) [1], compared to RMB1,734.0 million as of March 31, 2021. The decrease from the prior quarter was primarily attributable to acquisition costs of our L&O hotels, loans to franchisees, and property investments, offset by drawing down of bank facilities.

COVID-19 Update

During the second quarter, travel demand gradually resumed as the pandemic was well contained and life returned to normalcy, especially for travel during the Tomb-Sweeping day and the Labor Day Festivals. Our RevPAR recovered substantially month-over-month in April, May and June. However, these recovery trends and the momentum in the business were negatively impacted during the third quarter and in October. There were some resurgences of COVID-19 cases in Nanjing city and Jiangsu Province at the end of July, leading to tightened travel restrictions which inevitably imposed a negative impact on the travel industry in the region. Our RevPAR dropped to about 60.7% of the 2019 level during the first week of August from 106.0% of the 2019 level by the end of June. The recent COVID-19 outbreaks in several cities in China have definitely caused some short-term turbulences and created pressure on China's domestic travel market again. This resulted in a drop in our RevPAR to about 81.3% of the 2019 level during the first week of November from 99.9% of the 2019 level by the second week of September after rebounding from the end of July. We are very optimistic about our pipeline plans and expect our recovery to resume shortly after the resurgence of COVID-19 is well under control with effective control measures implemented by the Chinese government, and we expect travel restrictions to gradually ease once again. Moving forward, we are well positioned with our resilient business model to meet the demand when domestic travels increase.

Guidance

Considering the impact of COVID-19 clusters in Nanjing city and other places in China recently, and assuming the resurgence of these outbreaks remains under control in China in the coming quarters, the Company expects an increase in total revenues of 25%-30% for the full year 2021, compared to 2020 and an increase in total revenues of 7%-12% for the full year 2021, compared to 2019.

The guidance set forth above reflects the Company's current and preliminary views based on our recovery speed and may not be indicative of the final financial results for future interim periods and the full year.

Conference Call

GreenTree's management will hold an earnings conference call at 8:00 PM U.S. Eastern Time on November 15, 2021 (9:00 AM Beijing/Hong Kong Time on November 16, 2021).

Dial-in numbers for the live conference call are as follows:

International 1-412-902-4272
Mainland China 4001-201-203
US 1-888-346-8982
Hong Kong 800-905-945 or 852-3018-4992
Singapore 800-120-6157

Participants should ask to join the GreenTree call, please dial in approximately 10 minutes before the scheduled time of the call.

A telephone replay of the conference call will be available after the conclusion of the live conference call until November 22, 2021.

Dial-in numbers for the replay are as follows:

International Dial-in 1-412-317-0088
U.S. Toll Free 1-877-344-7529
Canada Toll Free 855-669-9658
Passcode: 10161822

Additionally, a live and archived webcast of this conference call will be available at http://ir.998.com.

Use of Non-GAAP Financial Measures

We believe that Adjusted EBITDA and core net income, as we present it, is a useful financial metric to assess our operating and financial performance before the impact of investing and financing transactions, income taxes and certain non-core and non-recurring items in our financial statements.

The presentation of Adjusted EBITDA and core net income should not be construed as an indication that our future results will be unaffected by other charges and gains we consider to be outside the ordinary course of our business.

The use of Adjusted EBITDA and core net income has certain limitations because it does not reflect all items of income and expenses that affect our operations. Items excluded from Adjusted EBITDA and core net income are significant components in understanding and assessing our operating and financial performance. Depreciation and amortization expense for various long-term assets, income tax and share-based compensation have been and will be incurred and are not reflected in the presentation of Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, Adjusted EBITDA and core net income does not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation and amortization, interest expense/income, gains/losses from investments in equity securities, income tax expenses, share-based compensation, share of loss in equity investees, government subsidies and other relevant items both in our reconciliations to the corresponding U.S. GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance.

The term Adjusted EBITDA and core net income is not defined under U.S. GAAP, and Adjusted EBITDA and core net income is not a measure of net income, operating income, operating performance or liquidity presented in accordance with U.S. GAAP. When assessing our operating and financial performance, you should not consider this data in isolation or as a substitute for our net income, operating income or any other operating performance measure that is calculated in accordance with U.S. GAAP. In addition, our Adjusted EBITDA and core net income may not be comparable to Adjusted EBITDA and core net income or similarly titled measures utilized by other companies since such other companies may not calculate Adjusted EBITDA and core net income in the same manner as we do.

Reconciliations of the Company's non-GAAP financial measures, including Adjusted EBITDA and core net income, to the consolidated statement of operations information are included at the end of this press release.

About GreenTree Hospitality Group Ltd.

GreenTree Hospitality Group Ltd. ("GreenTree" or the "Company") (NYSE: GHG) is a leading hospitality management group in China. As of June 30, 2021, GreenTree had a total number of 4,542 hotels. In 2020, HOTELS magazine ranked GreenTree Top 12 Ranking among 225 largest global hotel groups in terms of number of hotels in its annual HOTELS' 225. GreenTree was also the fourth largest hospitality company in China in 2020 based on the statistics issued by the China Hospitality Association.

GreenTree has built a strong suite of brands including its flagship "GreenTree Inns" brand as a result of its long-standing dedication to the hospitality industry in China and consistent quality of its services, signature hotel designs, broad geographic coverage and convenient locations. GreenTree has further expanded its brand portfolio into mid-to-up-scale and luxury segments through a series of strategic investments. By offering diverse brands, through its strong membership base, expansive booking network, superior system management with moderate charges, and fully supported by its operating departments including Decoration, Engineering, Purchasing, Operation, IT and Finance, GreenTree aims to keep closer relationships with all of its clients and partners by providing a brand portfolio that features comfort, style and value.

For more information on GreenTree, please visit http://ir.998.com

Safe Harbor Statements

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995. In some cases, these forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to," "confident," "future," or other similar expressions. GreenTree may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including statements about or based on GreenTree's current beliefs, expectations, assumptions, estimates and projections about us and our industry, are forward-looking statements that involve known and unknown factors, risks and uncertainties that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Such factors and risks include, but not limited to the following: GreenTree's goals and growth strategies; its future business development, financial condition and results of operations; trends in the hospitality industry in China and globally; competition in our industry; fluctuations in general economic and business conditions in China and other regions where we operate; the regulatory environment in which we and our franchisees operate; and assumptions underlying or related to any of the foregoing. You should not place undue reliance on these forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided, including the forward-looking statements made, in this press release are current as of the date of the press release. Except as required by law, GreenTree undertakes no obligation to update any such information or forward-looking statements to reflect events or circumstances after the date on which the information is provided or statements are made, or to reflect the occurrence of unanticipated events.

1 The conversion of Renminbi ("RMB")into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB6.4566 on June 30, 2021 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at https://www.federalreserve.gov/releases/h10/20210706/
2 Adjusted EBITDA (non-GAAP) is calculated as net income plus other operating expenses, income tax expense, interest expense, depreciation and amortization, losses from investment in equity securities, but excludes other operating income, interest income and other, net, gains from investment in equity securities, share of gains in equity investees (net of tax). The calculation of Adjusted EBITDA (non-GAAP) included in this report has been aligned according to the abovementioned definition.

3 Core net income is calculated as net income plus share-based compensation, losses from investments in equity securities (net of 25% tax), one-time fees and expense, asset impairment/accrued bad debt and income tax expenses related to dividend distribution but excludes government subsidies (net of 25% tax) and gains from investment in equity securities (net of 25% tax).

4 Tier 1 Cities refers to Beijing, Shanghai, Shenzhen and Guangzhou; Tier 2 Cities refers to the 32 major cities, other than Tier 1 Cities, including provincial capitals, administrative capitals of autonomous regions, direct-controlled municipalities and other major cities designated as municipalities with independent planning by the State Council.

Financial Tables and Operational Data Follow

GreenTree Hospitality Group Ltd.
Unaudited Condensed Consolidated Balance Sheets
December 31, June 30, June 30,
2020 2021 2021
RMB RMB US$
ASSETS
Current assets:
Cash and cash equivalents 611,358,209 301,977,626 46,770,379
Short-term investment 301,983,182 457,389,492 70,840,611
Investments in equity securities 242,378,696 258,063,433 39,968,936
Accounts receivable, net of allowance 101,511,057 118,420,083 18,340,935
Amounts due from related parties 9,770,871 96,724,469 14,980,713
Prepaid rent 13,597,867 27,794,835 4,304,872
Inventories 3,804,680 2,124,236 329,002
Other current assets 77,649,794 207,630,731 32,157,906
Loans receivable, net 222,244,629 229,822,383 35,594,954
Total current assets 1,584,298,985 1,699,947,288 263,288,308
Non-current assets:
Restricted cash 22,369,900 22,369,900 3,464,656
Long-term time deposits 490,000,000 200,000,000 30,976,056
Loan receivable, net 145,703,988 374,363,755 57,981,562
Property and equipment, net 668,605,661 932,584,414 144,438,933
Intangible assets, net 491,513,073 528,910,391 81,917,788
Goodwill 100,231,487 104,582,687 16,197,796
Long-term investments 369,525,917 184,385,036 28,557,606
Other assets 66,635,394 304,334,781 47,135,455
Deferred tax assets 156,070,112 134,764,674 20,872,390
TOTAL ASSETS 4,094,954,517 4,486,242,926 694,830,550
LIABILITIES AND EQUITY
Current liabilities:
Short-term bank loans 150,000,000 290,000,000 44,915,280
Accounts payable 19,606,344 18,092,131 2,802,114
Advance from customers 34,305,508 27,860,877 4,315,100
Amounts due to related parties 3,198,253 5,355,911 829,525
Salary and welfare payable 51,567,587 56,836,957 8,802,924
Deferred rent 1,356,132 2,568,897 397,871
Deferred revenue 221,314,997 222,434,022 34,450,643
Accrued expenses and other current liabilities 300,696,673 384,637,018 59,572,690
Income tax payable 87,483,970 51,441,614 7,967,291
Total current liabilities 869,529,464 1,059,227,427 164,053,438
Deferred rent 28,642,973 42,833,226 6,634,022
Deferred revenue 361,901,369 336,579,118 52,129,467
Other long-term liabilities 115,862,713 130,626,161 20,231,416
Deferred tax liabilities 178,413,413 175,797,535 27,227,571
Unrecognized tax benefits 290,679,902 312,079,760 48,335,000
TOTAL LIABILITIES 1,845,029,834 2,057,143,227 318,610,914
Shareholders' equity:
Class A ordinary shares 222,587,070 222,587,070 34,474,347
Class B ordinary shares 115,534,210 115,534,210 17,893,971
Additional paid-in capital 1,149,280,404 1,150,227,409 178,147,540
Retained earnings 570,042,924 721,270,906 111,710,638
Accumulated other comprehensive income 45,586,647 44,212,936 6,847,712
Total GreenTree Hospitality Group Ltd. shareholders' equity 2,103,031,255 2,253,832,531 349,074,208
Non-controlling interests 146,893,428 175,267,168 27,145,428
Total shareholders' equity 2,249,924,683 2,429,099,699 376,219,636
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 4,094,954,517 4,486,242,926 694,830,550
GreenTree Hospitality Group Ltd.
Unaudited Condensed Consolidated Statements of Comprehensive Income
Quarter Ended Six Months Ended
June 30,
2020 		June 30,
2021 		June 30,
2021 		June 30,
2020 		June 30,
2021 		June 30,
2021
RMB RMB US$ RMB RMB US$
Revenues
Leased-and-operated hotels 50,337,339 116,882,174 18,102,743 84,137,483 172,995,482 26,793,588
Franchised-and-managed hotels 158,534,095 217,656,936 33,710,767 276,197,197 395,606,563 61,271,654
Others 7,118,530 12,517,770 1,938,756 13,051,275 19,667,293 3,046,076
Total revenues 215,989,964 347,056,880 53,752,266 373,385,955 588,269,338 91,111,318
Operating costs and expenses
Hotel operating costs (94,916,577 ) (164,437,048 ) (25,468,056 ) (184,679,850 ) (286,667,300 ) (44,399,111 )
Selling and marketing expenses (11,999,656 ) (21,703,311 ) (3,361,415 ) (29,840,978 ) (39,821,421 ) (6,167,553 )
General and administrative expenses (48,143,971 ) (71,043,670 ) (11,003,263 ) (76,889,542 ) (127,001,827 ) (19,670,078 )
Other operating expenses (41,123 ) (2,752,734 ) (426,344 ) (1,198,272 ) (4,146,290 ) (642,178 )
Total operating costs and expenses (155,101,327 ) (259,936,763 ) (40,259,078 ) (292,608,642 ) (457,636,838 ) (70,878,920 )
Other operating income 1,762,982 2,181,186 337,823 19,093,913 20,053,589 3,105,905
Income from operations 62,651,619 89,301,303 13,831,011 99,871,226 150,686,089 23,338,303
Interest income and other, net 14,107,924 14,151,551 2,191,796 24,721,184 29,282,647 4,535,304
Interest expense (1,727,991 ) (4,089,714 ) (633,417 ) (2,738,246 ) (7,477,925 ) (1,158,183 )
Gains (losses) from investment in equity
securities 		42,534,583 16,149,045 2,501,169 (12,640,335 ) 43,873,336 6,795,115
Income before income taxes 117,566,135 115,512,185 17,890,559 109,213,829 216,364,147 33,510,539
Income tax expense (24,399,003 ) (35,332,983 ) (5,472,382 ) (30,576,563 ) (70,539,794 ) (10,925,223 )
Income before share of loss in equity investees 93,167,132 80,179,202 12,418,177 78,637,266 145,824,353 22,585,316
Share of gains in equity investees, net of tax 553,487 84,331 13,061 948,331 463,897 71,849
Net income 93,720,619 80,263,533 12,431,238 79,585,597 146,288,250 22,657,165
Net loss attributable to non-controlling interests 10,621,047 1,053,211 163,122 12,910,415 4,939,732 765,067
Net income attributable to ordinary shareholders 104,341,666 81,316,744 12,594,360 92,496,012 151,227,982 23,422,232
Net earnings per share
Class A ordinary share-basic and diluted 1.01 0.79 0.12 0.90 1.47 0.23
Class B ordinary share-basic and diluted 1.01 0.79 0.12 0.90 1.47 0.23
Net earnings per ADS
Class A ordinary share-basic and diluted 1.01 0.79 0.12 0.90 1.47 0.23
Class B ordinary share-basic and diluted 1.01 0.79 0.12 0.90 1.47 0.23
Weighted average shares outstanding
Class A ordinary share-basic and diluted 68,286,954 68,286,954 68,286,954 68,286,954 68,286,954 68,286,954
Class B ordinary share-basic and diluted 34,762,909 34,762,909 34,762,909 34,762,909 34,762,909 34,762,909
Other comprehensive income, net of tax
Foreign currency translation adjustments (1,181,225 ) (3,804,473 ) (589,238 ) 3,816,008 (1,373,712 ) (212,761 )
Comprehensive income, net of tax 92,539,394 76,459,060 11,842,000 83,401,605 144,914,538 22,444,404
Comprehensive loss attributable to non-controlling interests 10,621,047 1,053,211 163,122 12,910,415 4,939,732 765,067
Comprehensive income attributable to ordinary shareholders 103,160,441 77,512,271 12,005,122 96,312,020 149,854,270 23,209,471

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Cash Flows

Quarter Ended Six Months Ended
June 30,
2020 		June 30,
2021 		June 30,
2021 		June 30,
2020 		June 30,
2021 		June 30,
2021
RMB RMB US$ RMB RMB US$
Operating activities:
Net income 93,720,619 80,263,533 12,431,238 79,585,597 146,288,250 22,657,165
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 16,339,200 21,363,445 3,308,776 32,005,845 40,437,845 6,263,025
Share of gains in equity method investments (553,487 ) (84,331 ) (13,061 ) (948,331 ) (463,897 ) (71,848 )
Fair value change in returnable consideration and contingent consideration, net - - - - (502,712 ) (77,860 )
Interest income (2,097,419 ) (1,765,790 ) (273,486 ) (4,841,860 ) (3,855,030 ) (597,068 )
Bad debt expense 12,009,289 8,703,709 1,348,033 17,928,925 20,461,144 3,169,028
(Gains)losses from investments in equity securities (42,534,582 ) (16,149,045 ) (2,501,169 ) 12,640,335 (43,873,336 ) (6,795,115 )
Foreign exchange (gains) losses (1,367,301 ) 1,775,361 274,968 (209,869 ) 2,507,642 388,384
Share-based compensation - 529,166 81,957 232,558 1,307,865 202,562
Income tax expenses related to dividend distribution or retained profits 4,089,529 - - 8,089,529 - -
Changes in operating assets and liabilities:
Accounts receivable (44,819,542 ) (20,719,952 ) (3,209,112 ) (38,698,091 ) (32,846,596 ) (5,087,290 )
Prepaid rent 5,586,585 (6,091,256 ) (943,415 ) 9,922,250 (14,196,968 ) (2,198,830 )
Inventories 156,836 507,466 78,596 (237,377 ) 1,680,444 260,268
Amounts due from related parties 715,354 (488,496 ) (75,658 ) 1,510,197 (3,873,538 ) (599,935 )
Other current assets (5,488,452 ) (42,766,291 ) (6,623,655 ) 14,827,078 (123,719,995 ) (19,161,787 )
Other assets (3,332,215 ) (9,573,784 ) (1,482,790 ) (9,014,522 ) (7,784,920 ) (1,205,731 )
Accounts payable 1,602,850 (3,319,895 ) (514,186 ) 2,888,996 (1,514,213 ) (234,522 )
Amounts due to related parties (30,278 ) 2,056,471 318,507 (2,048,301 ) 2,157,658 334,179
Salary and welfare payable 3,390,002 4,595,233 711,711 1,372,751 5,269,370 816,121
Deferred revenue (8,125,238 ) (9,538,448 ) (1,477,317 ) (39,043,755 ) (24,203,226 ) (3,748,602 )
Advance from customers (5,183,719 ) (2,191,085 ) (339,356 ) (7,757,920 ) (6,444,631 ) (998,146 )
Accrued expenses and other current liabilities 76,631,257 36,992,871 5,729,466 (28,104,147 ) 52,388,512 8,113,947
Income tax payable (30,267,700 ) (41,031,173 ) (6,354,919 ) (46,418,967 ) (36,042,356 ) (5,582,250 )
Unrecognized tax benefits (17,495,140 ) 15,757,387 2,440,508 (3,209,911 ) 21,399,858 3,314,416
Deferred rent (910,363 ) 11,168,115 1,729,721 4,151,399 15,403,018 2,385,624
Other long-term liabilities 4,624,768 3,352,037 519,164 17,619,297 14,233,448 2,204,480
Deferred taxes 1,599,014 11,269,091 1,745,360 (12,368,615 ) 18,689,560 2,894,644
Net cash provided by operating activities 58,259,867 44,614,339 6,909,881 9,873,091 42,903,196 6,644,859
Investing activities:
Purchases of property and equipment (18,550,705 ) (89,389,814 ) (13,844,719 ) (41,628,937 ) (157,888,825 ) (24,453,865 )
Purchases of intangible assets (9,075 ) - - (9,075 ) - -
Proceeds from disposal of property and equipment 11,125 - - 11,125 - -
Payment for acquisition of minority equity - - - - (868,388 ) (134,496 )
Acquisitions, net of cash received (1,255,807 ) (119,469,020 ) (18,503,395 ) (1,255,807 ) (173,128,625 ) (26,814,209 )
Collection of acquisition advances 35,440,000 9,148,000 1,416,845 35,440,000 10,148,000 1,571,725
Advances for purchases of property and equipment (170,426,363 ) (26,395,682 ) (204,889,383 ) (31,733,325 )
Purchases of short-term investments (46,420,027 ) (73,361,955 ) (11,362,320 ) (147,690,027 ) (138,286,310 ) (21,417,822 )
Proceeds from short-term investments 3,567,419 133,185,790 20,627,852 398,634,105 356,735,030 55,251,220
Proceeds from sales of long-term time deposits - - - - 50,000,000 7,744,015
Increase of long-term time deposits - - - (30,000,000 ) (130,000,000 ) (20,134,436 )
Proceeds from disposal of equity securities and
dividends received from equity securities 		2,540,418 211,307,112 32,727,304 2,540,418 211,307,112 32,727,304
Proceeds from disposal of euqity method investments 6,380,000 - - 6,380,000 - -
Loan to related parties (19,850,000 ) (53,467,680 ) (8,281,090 ) (185,366,500 ) (231,745,560 ) (35,892,818 )
Repayment from related parties 20,639,679 1,250,000 193,600 186,156,179 148,665,500 23,025,354
Loan to third parties (1,200,000 ) (9,000,000 ) (1,393,922 ) (3,200,000 ) (10,500,000 ) (1,626,243 )
Repayment of loan from third parties - 46,500,000 7,201,933 - 46,500,000 7,201,933
Loan to franchisees (47,721,778 ) (269,415,292 ) (41,727,115 ) (146,451,778 ) (460,435,294 ) (71,312,346 )
Repayment from franchisees 20,199,572 140,599,873 21,776,147 35,215,035 183,674,199 28,447,511
Net cash (used in) provided by investing activities (46,229,179 ) (242,539,349 ) (37,564,562 ) 108,774,738 (500,712,544 ) (77,550,498 )
Financing activities:
Loan from non-controlling interest - - - - 2,792,853 432,558
Proceeds from short-term borrowings - 10,000,000 1,548,803 10,000,000 140,000,000 21,683,239
Capital contribution from noncontrolling interest holders 2,978,387 3,740,000 579,252 3,378,387 7,031,000 1,088,963
Net cash provided by financing activities 2,978,387 13,740,000 2,128,055 13,378,387 149,823,853 23,204,760
Effect of exchange rate changes on cash and cash equivalents 1,167,214 (1,804,220 ) (279,437 ) 592,196 (1,395,088 ) (216,071 )
Net increase(decrease) in cash and cash equivalents 16,176,289 (185,989,230 ) (28,806,063 ) 132,618,412 (309,380,583 ) (47,916,950 )
Cash and cash equivalents at the beginning of the period 458,602,346 510,336,756 79,041,098 342,160,223 633,728,109 98,151,985
Cash and cash equivalents at the end of the period 474,778,635 324,347,526 50,235,035 474,778,635 324,347,526 50,235,035

GreenTree Hospitality Group Ltd.

Unaudited Reconciliation of GAAP and Non-GAAP Results

Quarter Ended Six Months Ended
June 30, 2020 June 30, 2021 June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2021
RMB RMB US$ RMB RMB US$
Net income 93,720,619 80,263,533 12,431,238 79,585,597 146,288,250 22,657,165
Deduct:
Other operating income 1,762,982 2,181,186 337,823 19,093,913 20,053,589 3,105,905
Interest income and other, net 14,107,924 14,151,551 2,191,796 24,721,184 29,282,647 4,535,304
Gains from investment in equity securities 42,534,583 16,149,045 2,501,169 42,534,583 43,873,336 6,795,114
Share of gains in equity investees, net of tax 553,487 84,331 13,061 948,331 463,897 71,848
Add:
Other operating expenses 41,123 2,752,734 426,344 1,198,272 4,146,290 642,179
Income tax expense 24,399,003 35,332,983 5,472,382 30,576,563 70,539,794 10,925,223
Interest expense 1,727,991 4,089,714 633,416 2,738,246 7,477,925 1,158,183
Depreciation and amortization 16,339,200 21,363,445 3,308,776 32,005,845 40,437,845 6,263,025
Losses from investment in equity securities - - - 55,174,918 - -
Adjusted EBITDA(Non-GAAP) 77,268,960 111,236,296 17,228,308 114,213,988 175,216,635 27,137,601
Quarter Ended Six Months Ended
June 30,
2020		 June 30,
2021		 June 30,
2021		 June 30,
2020		 June 30,
2021		 June 30,
2021
RMB RMB US$ RMB RMB US$
Net income 93,720,619 80,263,533 12,431,238 79,585,597 146,288,250 22,657,165
Deduct:
Government subsidies (net of 25% tax) 779,513 843,954 130,712 13,212,085 11,134,872 1,724,572
Gains from investment in equity securities (net of 25% tax) 31,900,937 12,111,784 1,875,876 31,900,937 32,905,002 5,096,336
Add:
Share-based compensation - 529,166 81,957 232,558 1,307,865 202,562
Losses from investments in equity securities (net of 25% tax) - - - 41,381,189 - -
One-time fees and expense 11,033,914 1,708,936 - 14,707,304 2,277,871
Asset impairment/Accrued bad debt 9,501,082 - 9,501,082 4,523,574 700,612
Income tax expenses related to dividend distribution 4,089,529 - - 8,089,529 - -
Core net income(Non-GAAP) 74,630,780 78,870,874 12,215,543 93,676,933 122,787,119 19,017,303
Core net income per ADS (Non-GAAP)
Class A ordinary share-basic and diluted 0.72 0.77 0.12 0.91 1.19 0.18
Class B ordinary share-basic and diluted 0.72 0.77 0.12 0.91 1.19 0.18

Operational Data

2020 Q2 2021 Q2
Total hotels in operation: 4,064 4,542
Leased-and-owned hotels 35 63
Franchised hotels 4,029 4,479
Total hotel rooms in operation 296,307 328,773
Leased-and-owned hotels 4,359 7,229
Franchised hotels 291,948 321,544
Number of cities 342 358
Quarter Ended
2020 Q2 2021 Q2
Occupancy rate (as a percentage)
Leased-and-owned hotels 46.5 % 72.9 %
Franchised hotels 63.7 % 78.8 %
Blended 63.4 % 78.6 %
Average daily rate (in RMB)
Leased-and-owned hotels 173 219
Franchised hotels 142 169
Blended 142 171
RevPAR (in RMB)
Leased-and-owned hotels 80 160
Franchised hotels 90 133
Blended 90 134
Number of Hotels in Operation Number of Hotel Rooms in Operation
2020 Q2 2021 Q2 2020 Q2 2021 Q2
Luxury 21 28 4,388 5,821
Argyle 21 28 4,388 5,821
Mid-to-up-scale 296 423 26,682 38,704
GreenTree Eastern 118 170 12,509 18,155
Deepsleep Hotel 2 5 161 356
Gem 32 39 2,896 3,605
Gya 28 50 2,348 4,212
Vx 28 52 2,260 4,520
Ausotel 11 14 1,521 1,877
Urban Garden and others[1] 77 93 4,987 5,979
Mid-scale 2,610 2,917 212,674 231,105
GreenTree Inn 2,047 2,158 173,519 179,790
GT Alliance 316 508 24,176 35,937
GreenTree Apartment 10 15 488 1,058
Vatica 124 115 9,026 8,386
City 118 Selected and others[1] 113 121 5,465 5,934
Economy hotels 1,139 1,174 52,563 53,143
Shell 574 617 25,017 26,714
City 118 and others[1] 565 557 27,546 26,429
Total 4,066 4,542 296,307 328,773

For more information, please contact:

GreenTree

Ms. Selina Yang
Phone: +86-21-3617-4886 ext. 7999
E-mail: ir@998.com

Mr. Nicky Zheng
Phone: +86-21-3617-4886 ext. 6708
E-mail: ir@998.com

Christensen

In Shanghai
Ms. Constance Zhang
Phone: +86-138-1645-1798
E-mail: czhang@christensenIR.com

In Hong Kong
Ms. Karen Hui
Phone: +852-9266-4140
E-mail: khui@christensenIR.com

In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@ChristensenIR.com

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GreenTree Hospitality Group Ltd. published this content on 17 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 November 2021 17:59:35 UTC.