GreenTree Hospitality Group Ltd. Reports Second Quarter 2021 Financial Results

Author: GreenTree Hospitality Group Ltd. / 2023-07-23 23:42 / Source: GreenTree Hospitality Group Ltd.

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. 16,2021 -- GreenTree Hospitality Group Ltd. (NYSE: GHG) ("GreenTree",the "Company","we","us" and "our"),a leading hospitality management groupin 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,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 inChina.

As of June 30,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 secondquarter 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,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

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

33,767

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 30,2021

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 30,2021

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

158,095

217,936

33,767

Six Months Ended

June 30,2021

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

395,563

61,654

Total operating costs and expenses

Quarter Ended

June 30,2021

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

71,670

11,003,263

Other operating expenses

41,123

2,734

426,344

Total operating costs and expenses

155,101,327

259,936,763

40,259,078

Six Months Ended

June 30,2021

RMB

US$

Operating costs and expenses

Hotel operating costs

184,679,850

286,300

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,

2020

2021

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

94,577

164,048

25,056

Six Months Ended

June 30,

2020

2021

RMB

US$

Rental

62,908,982

103,794,352

16,075,698

Utilities

7,490

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

184,850

286,300

44,111

Selling and marketing expenseswere 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 expenseswere RMB71.0 million (US$11.0 million) [1],a 47.6% year-over-year increase. The increase was mainly attributable to theopening of 23 L&O hotelssince 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 expensesincreased 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 profitwas 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 operationswere 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],downfrom RMB1.01one year ago.Core net income per ADS (basic and diluted) (non-GAAP) was RMB0.77(US$0.12) [1],up from RMB0.72a 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 RMB44.6million (US$6.9million) [1] as a result of income from operations. Investing cash outflow was RMB242.5million (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 RMB13.7million (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,the Company had total cash and cash equivalents,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,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 cityand 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 of7%-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

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,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.

3Core 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,

2020

2021

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

70,611

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

9,871

96,724,469

14,980,713

Prepaid rent

13,597,867

27,835

4,304,872

Inventories

3,804,680

2,124,236

329,002

Other current assets

77,649,794

207,630,731

32,906

Loans receivable,net

222,244,629

229,383

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

22,900

3,464,656

Long-term time deposits

490,000,000

200,000

30,976,056

Loan receivable,net

145,988

374,363,755

57,981,562

Property and equipment,net

668,605,661

932,414

144,438,933

Intangible assets,net

491,513,073

528,910,391

81,917,788

Goodwill

100,231,487

104,582,687

16,796

Long-term investments

369,525,917

184,036

28,557,606

Other assets

66,635,394

304,781

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

694,550

LIABILITIES AND EQUITY

Current liabilities:

Short-term bank loans

150,000

290,000

44,915,280

Accounts payable

19,344

18,092,131

2,802,114

Advance from customers

34,305,508

27,860,877

4,315,100

Amounts due to related parties

3,253

5,355,911

829,525

Salary and welfare payable

51,567,587

56,836,957

8,924

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

336,118

52,129,467

Other long-term liabilities

115,862,713

130,626,161

20,416

Deferred tax liabilities

178,413,413

175,797,535

27,571

Unrecognized tax benefits

290,902

312,079,760

48,335,000

TOTAL LIABILITIES

1,845,029,834

2,057,227

318,610,914

Shareholders' equity:

Class A ordinary shares

222,587,070

222,070

34,474,347

Class B ordinary shares

115,210

17,893,971

Additional paid-in capital

1,149,280,404

1,150,409

178,147,540

Retained earnings

570,042,924

721,270,906

111,638

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

146,428

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

4,550

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income

Quarter Ended

Six Months Ended

June 30,2021

RMB

US$

RMB

US$

Revenues

Leased-and-operated hotels

50,743

84,588

Franchised-and-managed hotels

158,767

276,654

Others

7,756

13,076

Total revenues

215,266

373,318

Operating costs and expenses

Hotel operating costs

(94,577)

(164,048)

(25,056)

(184,850)

(286,300)

(44,111)

Selling and marketing expenses

(11,656)

(21,311)

(3,415)

(29,978)

(39,421)

(6,553)

General and administrative expenses

(48,971)

(71,670)

(11,263)

(76,542)

(127,827)

(19,078)

Other operating expenses

(41,123)

(2,734)

(426,344)

(1,272)

(4,290)

(642,178)

Total operating costs and expenses

(155,327)

(259,763)

(40,078)

(292,642)

(457,838)

(70,920)

Other operating income

1,762,982

2,181,186

337,823

19,093,913

20,589

3,105,905

Income from operations

62,651,619

89,301,303

13,011

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

42,583

16,045

2,501,169

(12,640,335)

43,873,336

6,795,115

Income before income taxes

117,566,135

115,512,185

17,559

109,213,829

216,364,147

33,510,539

Income tax expense

(24,003)

(35,983)

(5,472,382)

(30,576,563)

(70,539,794)

(10,925,223)

Income before share of loss in equity investees

93,132

80,179,202

12,418,177

78,266

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

79,597

146,250

22,657,165

Net loss attributable to non-controlling interests

10,621,047

1,211

163,122

12,415

4,939,732

765,067

Net income attributable to ordinary shareholders

104,341,666

81,316,744

12,360

92,496,012

151,982

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

68,954

Class B ordinary share-basic and diluted

34,909

Other comprehensive income,net of tax

Foreign currency translation adjustments

(1,225)

(3,473)

(589,238)

3,816,008

(1,373,712)

(212,761)

Comprehensive income,net of tax

92,394

76,459,060

11,842,000

83,401,605

144,914,538

22,444,404

Comprehensive loss attributable to non-controlling interests

10,067

Comprehensive income attributable to ordinary shareholders

103,160,441

77,271

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 30,2021

RMB

US$

RMB

US$

Operating activities:

Net income

93,619

80,533

12,238

79,597

146,250

22,165

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

16,339,200

21,445

3,308,776

32,845

40,845

6,025

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

8,709

1,033

17,925

20,461,144

3,169,028

(Gains)losses from investments in equity securities

(42,582)

(16,045)

(2,169)

12,335

(43,336)

(6,115)

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

1,865

202,562

Income tax expenses related to dividend distribution or retained profits

4,529

8,529

Changes in operating assets and liabilities:

Accounts receivable

(44,819,542)

(20,719,952)

(3,112)

(38,698,091)

(32,846,596)

(5,087,290)

Prepaid rent

5,585

(6,091,256)

(943,415)

9,922,250

(14,196,968)

(2,830)

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)

1,197

(3,538)

(599,935)

Other current assets

(5,488,452)

(42,766,291)

(6,623,655)

14,827,078

(123,995)

(19,161,787)

Other assets

(3,215)

(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)

2,471

318,507

(2,048,301)

2,658

334,179

Salary and welfare payable

3,390,002

4,595,233

711,711

1,372,751

5,370

816,121

Deferred revenue

(8,125,238)

(9,538,448)

(1,317)

(39,755)

(24,226)

(3,748,602)

Advance from customers

(5,183,719)

(2,085)

(339,356)

(7,757,920)

(6,631)

(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

(30,700)

(41,173)

(6,354,919)

(46,967)

(36,356)

(5,250)

Unrecognized tax benefits

(17,495,140)

15,387

2,508

(3,911)

21,858

3,416

Deferred rent

(910,363)

11,168,115

1,721

4,399

15,403,018

2,624

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

11,091

1,745,360

(12,368,615)

18,689,560

2,894,644

Net cash provided by operating activities

58,867

44,614,339

6,909,881

9,091

42,903,196

6,644,859

Investing activities:

Purchases of property and equipment

(18,550,705)

(89,814)

(13,844,719)

(41,628,937)

(157,825)

(24,453,865)

Purchases of intangible assets

(9,075)

Proceeds from disposal of property and equipment

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)

(1,807)

(173,128,625)

(26,814,209)

Collection of acquisition advances

35,000

9,148,000

1,416,845

35,000

10,571,725

Advances for purchases of property and equipment

(170,426,363)

(26,682)

(204,383)

(31,733,325)

Purchases of short-term investments

(46,027)

(73,955)

(11,362,320)

(147,690,027)

(138,310)

(21,822)

Proceeds from short-term investments

3,419

133,185,790

20,627,852

398,105

356,735,030

55,251,220

Proceeds from sales of long-term time deposits

50,000

7,744,015

Increase of long-term time deposits

(30,000)

(130,000)

(20,134,436)

Proceeds from disposal of equity securities and

dividends received from equity securities

2,540,418

211,112

32,304

2,304

Proceeds from disposal of euqity method investments

6,380,000

6,000

Loan to related parties

(19,850,000)

(53,467,680)

(8,281,090)

(185,366,500)

(231,560)

(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)

(1,393,922)

(3,000)

(10,500,243)

Repayment of loan from third parties

46,201,933

46,933

Loan to franchisees

(47,778)

(269,415,292)

(41,115)

(146,451,778)

(460,435,294)

(71,346)

Repayment from franchisees

20,199,572

140,873

21,776,147

35,215,035

183,674,199

28,447,511

Net cash (used in) provided by investing activities

(46,229,179)

(242,349)

(37,564,562)

108,774,738

(500,544)

(77,498)

Financing activities:

Loan from non-controlling interest

2,792,853

432,558

Proceeds from short-term borrowings

10,548,803

10,000

140,000

21,239

Capital contribution from noncontrolling interest holders

2,978,387

3,740,000

579,252

3,387

7,088,963

Net cash provided by financing activities

2,387

13,000

2,055

13,387

149,823,853

23,760

Effect of exchange rate changes on cash and cash equivalents

1,214

(1,220)

(279,437)

592,196

(1,088)

(216,071)

Net increase(decrease) in cash and cash equivalents

16,176,289

(185,230)

(28,063)

132,618,412

(309,583)

(47,950)

Cash and cash equivalents at the beginning of the period

458,346

510,336,756

79,041,098

342,223

633,728,109

98,985

Cash and cash equivalents at the end of the period

474,778,635

324,347,526

50,235,035

474,035

GreenTree Hospitality Group Ltd.

Unaudited Reconciliation of GAAP and Non-GAAP Results

Quarter Ended

Six Months Ended

June 30,2021

RMB

US$

RMB

US$

Net income

93,165

Deduct:

Other operating income

1,905

Interest income and other,304

Gains from investment in equity securities

42,169

42,583

43,114

Share of gains in equity investees,848

Add:

Other operating expenses

41,344

1,179

Income tax expense

24,003

35,983

5,382

30,563

70,794

10,223

Interest expense

1,991

4,714

633,416

2,246

7,925

1,183

Depreciation and amortization

16,025

Losses from investment in equity securities

55,174,918

Adjusted EBITDA(Non-GAAP)

77,268,960

111,236,296

17,228,308

114,988

175,635

27,601

Quarter Ended

Six Months Ended

June 30,165

Deduct:

Government subsidies (net of 25% tax)

779,513

843,954

130,712

13,085

11,872

1,572

Gains from investment in equity securities (net

of 25% tax)

31,900,937

12,784

1,875,876

31,937

32,905,002

5,096,336

Add:

Share-based compensation

529,562

Losses from investments in equity securities (net

of25% tax)

41,381,189

One-time fees and expense

11,033,914

1,708,936

14,707,277,871

Asset impairment/Accrued bad debt

9,082

4,523,574

700,612

Income tax expenses related to dividend distribution

4,529

Core net income(Non-GAAP)

74,780

78,870,874

12,543

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

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

160

Franchised hotels

133

Blended

134

Number of Hotels in Operation

Number of Hotel Rooms in Operation

2020 Q2

2021 Q2

2020 Q2

2021 Q2

Luxury

4,388

5,821

Argyle

4,388

5,821

Mid-to-up-scale

296

423

26,682

38,704

GreenTree Eastern

118

170

12,509

18,155

Deepsleep Hotel

161

356

Gem

2,896

3,605

Gya

2,348

4,212

2,260

4,520

Ausotel

1,521

1,877

Urban Garden and others[1]

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

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

296,773

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

InHong 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

View original content:https://www.prnewswire.com/news-releases/greentree-hospitality-group-ltd-reports-second-quarter-2021-financial-results-301424732.html

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