GreenTree Hospitality Group Ltd. Reports Second Half and Fiscal Year 2022

Author: GreenTree Hospitality Group Ltd. / 2023-07-24 01:43 / Source: GreenTree Hospitality Group Ltd.

GreenTree Hospitality Group Ltd. Reports Second Half and Fiscal Year 2022

Financial Results

Total revenues decreased by21.1% year over year to RMB487.8million (US$70.7 million) [[1]] for the second half 2022.

Organic revenues,excluding revenues of Argyle and Urban,decreased by 15.8% year over year to RMB466.0 million (US$67.6 million) for the second half 2022.

Income from operations increased by 516.4% year over year to RMB20.0million (US$2.9million)[1] for the second half 2022.

Adjusted EBITDA (non-GAAP)[2]decreased by21.2%year over year to RMB118.3 million (US$17.2 million) for the second half 2022.

SHANGHAI,April 7,2023 -- 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 half and fiscal year of 2022.

Second Half2022 Operational Highlights

As previously disclosed,the Company has been in a dispute with Mr. Kevin Zhang,the founder,and the minority shareholder of Argyle,as to performance of relevant transaction documents and/or compliance with local laws and regulations by Mr. Zhang. As a result,since June 2022,GreenTree has not been able to maintain effective control over Argyle which therefore has been deconsolidated from GreenTree. The total number of hotels as of December 31,2022 and GreenTree's balance sheet donot include Argyle related data. Argyle owned and operated 51 hotels as ofDecember 31,2021and contributed 2.4% of GreenTree's total revenue in 2021.

GreenTree and Urban's minority shareholder entered into definite agreements on November 23,2022 for the minority shareholder and its designated person torepurchase all of the equity interest in Urban held by GreenTreeas of November 25,2022. As a result,the total number of hotels as of December 31,2022 and GreenTree's balance sheet donot include Urban related data. Urban owned and operated 749 hotels as ofDecember 31,2021and contributed 8.8% of GreenTree's total revenue in 2021.

A total of 4,059 hotels with 302,497 hotel rooms were in operation as of December 31,2022,compared to 4,659 hotels and 337,153 hotel rooms as of December 31,2021.

Excluding Argyle and Urban hotels,the total of 4,059 organic hotels increased by 5.2%,compared to 3,859 organic hotels and 292,219 organic hotel rooms as of December 31,2021.

As of December 31,the Company had 61 leased-and-operated ("L&O") hotels and 3,998 franchised-and-managed ("F&M") hotels in operation in355 cities across China,compared to 66 L&O hotels and4,593 F&M hotels in operation in 367 cities as of December 31,2021. Excluding Argyle and Urban hotels,the Company had55 L&O hotels and3,804 F&M hotels in operation as of December 31,2021.

During the second half of 2022,the Company opened 161 hotels,a decrease of 159 compared to 320 hotels opened in the second half of 2021. Of the hotels opened in the second half of 2022,24 were in the mid-to-up-scale segment,93 in the mid-scale segment,and 44 in the economy segment. Geographically,10 hotels were in Tier 1 cities[3],31 in Tier 2 cities and the remaining120 in Tier 3 and lower cities inChina as ofDecember31,2022.

Excluding Argyle and Urban hotels,the Company opened136 organic hotels,compared to 265organic hotels opened in the second half of 2021.

As of December31,the Company had a pipeline of916 hotels contracted for or under development with235 in the mid-to-up-scale segment,486 in the mid-scale segment,and 195 in the economy segment.

The average daily room rate,or ADR,for all hotels in operation was RMB168 in the third quarter of 2022,an increase of3.4% from RMB163 in the thirdquarterof 2021.Such ADR was RMB165 in the fourth quarter of 2022,a 2.9% year-over-year decrease.

The occupancy rate,or OCC,for all hotels in operation was71.1% in the thirdquarterof 2022,down from 72.4% in the thirdquarterof 2021.Such OCC was 63.0% in the fourth quarter of 2022,compared with 69.2% in the fourth quarter of 2021.

The revenue per available room,or RevPAR,which is calculated by multiplying our hotels' ADR by its occupancy rate,was RMB120 in the thirdquarterof 2022,a1.5% year-over-year increase.RevPAR was RMB104 in the fourth quarter of 2022,a 11.6% year-over-year decrease.

As of December31,2022the Company's loyalty program had over78 million individual members and approximately1,935,000 corporate members,compared to over 74 million individual members and approximately1,905,respectively,as of June 30,2022.

Fiscal Year 2022 Operational Highlights

For the full year 2022,the Company opened 362 hotels,a decrease of 49.9% comparing to 722 newly-opened hotels in the full year 2021. Of the hotels opened in 2022,67 were in the mid-to-up-scale segment,201 were in the mid-scale segment,and 94 were in the economy segment. Geographically speaking,23 hotels were in Tier 1 cities,83 were in Tier 2 cities and the remaining 256 were in Tier 3 and other cities in China as of December 31,2022. During 2022,the Company closed 155 hotels,and added a net of 207 hotels to its portfolio.

Excluding Argyle and Urban hotels,the Company opened 295 hotels,a decrease of 52.3% comparing to 618 newly-opened organic hotels in the full year of 2021.

The average daily room rate,for all hotels in operation,was RMB159 in the full year 2022,a 3.1% year-over-year decrease.

The occupancy rate,or OCC for all hotels in operation was 63.7% in the full year 2022,compared with 71.1% in the full year 2021.

The revenue per available room,was RMB101 in the full year 2022,a 13.2% year-over-year decrease.

"2022 was a year full of changes and challenges. During the first half,COVID-19 outbreaks in many parts of the country resulted in lockdowns in many cities,especially in Shanghai.As we entered the third quarter,transportation restrictions were relaxed and Revpar recovered. However,October and November brought a fresh wave of outbreaks,slowing down our recovery once again. Thanks to the introduction of flexible anti-pandemic measures by the government early December,Revpar recovered in the second half of the month to more than 95% of its pre-pandemic levels. Throughout all these challenges,we continued to execute our long-term strategic growth plan that strives to assist franchisees in maintaining quality operations,extend our hotel network,deliver stable operating profitability,and maintain healthy cash flow," said Mr. Alex Xu,Chairman and Chief Executive Officer of GreenTree.

As we entered 2023,recovery was uneven. During the first half of January,recovery slowed again due to the rapid evolvement of pandemic after the pandemic control measures were lifted in China. Outperforming our expectations,Repvar during the Spring Festival recovered to more than 90% of its pre-pandemic levels. Such a recovery accelerated in February,resulting in more than a 5% increase compared to 2019. However,recovery slowed again in March due to outbreaks of influenza A in certain cities.

This March we entered the restaurant business to complement our hotel business and create a new stream of growth as we completed the acquisition of Da Niang Dumplings and Bellagio,two leading restaurant chain businesses in China from our controlling shareholder. We are eager to integrate Da Niang Dumplings and Bellagio into GreenTree,leveraging upon synergies between our respective teams within our Company's unique ecosystem. We are confident in our ability to harness consumer demand for quality food services and build upon the broad appeal of these beloved restaurant brands in China's rapidly-growing food service industry. We are confident that this acquisition will create value and deliver growth for our shareholders.

After another difficult year,life is gradually returning to normal,no matter how many twists and turns we may experience. At the beginning of a new year full of hope,I want to give special thanks to our team,franchisees,and partners for supporting each other through very challenging times and continually contributing to our jointly-developed business.

Second Half2022Financial Results

Six monthsEnded

December31,

2021

December31,

2022

December31,

2022

RMB

US$

Revenues

Leased-and-operated hotels

218,964,549

167,247,701

24,248,637

Franchised-and-managed hotels

378,752,785

315,230,064

45,704,063

others

20,159,286

5,289,198

766,862

Total revenues

617,876,620

487,766,963

70,719,562

Total revenuesfor the second half of 2022were RMB487.8 million (US$70.7 million)[1],a 21.1% year-over-year decrease. The decrease was primarily due tothe deconsolidation of Argyle and the disposal of our interest in Urban,and the impact of COVID-19,which resulted in lower RevPAR at L&O hotels and F&M hotels. Excluding the impact of Argyle and Urban,compared with the second halfof 2021,total revenues for the second half of 2022decreased by 15.8% Total revenues for the full year 2022 were RMB945.1million (US$137.0million),a 21.6% year-over-year decrease.

Total revenues from leased-and-operated hotelsfor the secondhalf of 2022were RMB167.2 million (US$24.2 million)[1],a 23.6% year-over-year decrease. The decrease was primarily due to 3 reasons: first,the deconsolidation of Argyle and the disposal of our interest in Urban;second,the disposal of 6 hotels in operation since the fourth quarter and was partially offset by an increase of 8 newly opened L&O hotels; and third,a 4.6% year-over-yeardecrease in L&O hotels' fourth quarter RevPAR and was partially offset bya 2.7% year-over-yearincrease in L&O hotels' third quarter RevPAR. Excluding the impact of Argyle and Urban,total revenues from L&O hotels for the second half of 2022decreased by 16.3%. Total revenues from L&Ohotels for the full year 2022were RMB338.5million (US$49.1million),a 13.6% year-over-year decrease.

Total revenues from franchised-and-managed hotelsfor the secondhalfof 2022were RMB315.2 million (US$45.7 million)[1],a 16.8% year-over-year decrease. Initial franchise fees for the secondhalfof 2022decreased 54.8 % year-over-year,mainly because of the decrease in the gross opening number and closing number ofF&M hotels. Recurring franchisee management fees and others for the second halfof 2022decreased by 12.4% year-over-year,primarily due to 3 reasons: first,a 12.0% decrease in F&Mhotels' RevPAR for 2022Q4 and offset by a 1.5% increase in F&Mhotels' RevPAR for 2022Q3; second,the fee waivers to franchisees of quarantined hotels; and third,the deconsolidation of Argyle and the disposal of our interest in Urban. Excluding the impact of Argyle and Urban,total revenues from F&M hotels for the second half of 2022decreased by 15.2% year over year.Totalrevenues from F&M hotels for the full year 2022were RMB590.8million (US$85.7million),a 23.7% year-over-year decrease.

Six MonthsEnded

December31,2021

December31,2022

RMB

US$

Initial franchise fee

38,670,967

17,468,243

2,532,657

Recurring franchise management fee and others

340,081,818

297,761,821

43,171,406

Revenues from franchised-and-managed hotels

378,785

315,064

45,063

Total operating costs and expenses

Six MonthsEnded

December31,2022

RMB

US$

Operating costs and expenses

Hotel operating costs

364,709,605

286,269,294

41,505,145

Selling and marketing expenses

27,100,297

19,681,821

2,853,596

General and administrative expenses

129,158,435

111,154,498

16,115,887

Other operating expenses

791,335

1,196,121

173,421

Other general expenses

99,886,003

65,041,046

9,430,066

Total operating costs and expenses

621,645,675

483,342,780

70,078,116

Hotel operating costsfor the secondhalf of 2022were RMB286.3 million (US$41.5million)[1],a21.5% year-over-year decrease. The decrease was mainly due to the deconsolidation of Argyle and the disposal of our interest in Urban,and disposal of L&O hotels. Hotel operating costs for the full year 2022 were RMB594.0 million (US$86.1 million),a 8.8% year-over-year decrease.

Six MonthsEnded

December31,

2021

2022

RMB

US$

Rental

131,774,031

117,457,325

17,029,711

Utilities

13,579,378

14,217,567

2,061,353

Personnel cost

51,043,295

32,577,487

4,723,292

Depreciation and amortization

46,892,180

40,797,121

5,915,027

Consumable,food and beverage

37,769,428

17,015,291

2,466,985

Costs of general managers of franchised-and-managed hotels

59,383,344

51,557,365

7,475,115

Other costs of franchised-and-managed hotels

13,674,629

7,176,865

1,040,548

Others

10,593,320

5,470,273

793,115

Hotel Operating Costs

364,605

286,294

41,145

Selling and marketing expensesfor the second half of 2022were RMB19.7million (US$2.9million)[1],a27.4%year-over-year decrease. The decrease was primarily due to lower staff related expenses and advertising expenses,due to less employee business travels during the pandemic,and the deconsolidation of Argyle and the disposal of our interest in Urban.Selling and marketing expenses for the full year 2022were RMB38.5million (US$5.6million),a 42.4% year-over-year decrease.

General and administrative expensesfor the second halfof 2022were RMB111.2 million (US$16.1million)[1],a13.9 % year-over-year decrease. The decrease was mainly attributable to the reduction in consulting fees,and the deconsolidation of Argyle and the disposal of our interest in Urban. General and administrative expenses for the full year 2022were RMB210.9million (US$30.6million),a17.7% year-over-year decrease.

Other general expenseswere RMB 65.0 million (US$9.4million)[1]in the second half of 2022,which included the provisions for loan receivables related to franchisee loans,and impairments of certain fixed assets.

Gross profitfor the second half of 2022 was RMB201.5million (US$29.2million)[1],a year-over-year decrease of20.4%. Gross margin for the second half of 2022 was 41.3%,compared to41.0% a year ago. Gross profit for the full year 2022 was RMB351.1 million (US$50.9 million),a 36.7% year-over-year decrease.

Income from operationsfor the second half of 2022was RMB20.0 million (US$2.9million)[1],a year-over-year increase of 516.4%,with a margin of4.1%. Excluding other general expenses,income from operation from purely operating activities was RMB 85.0 million,with a margin of 17.4%. Income fromoperations for the full year 2022 was RMB-437.7 million (US$-63.5million),a year-over-year decrease of 384.4%.

Net incomefor the second half of 2022 was RMB-48.3 million (US$-7.0 million)[1],compared to RMB61.5 million in the second half of 2021 and net margin was -9.9 %. The year-over-year decrease was mainly attributable to the losses from investment in equity securities,which included market-to-market value change of stocks the Company and write down of long-term equity investment in Argyle,and other general expenses. Excluding other general expenses,net income was -23.9 million RMB,with a margin of -2.5%.Net income for the full year 2022 was RMB-409.2 million (US$-59.3 million),a year-over-year decrease of 296.9%.

Adjusted EBITDA (non-GAAP)[2]for the second half of 2022 was RMB 118.3 million (US$ 17.2 million)[1],a year-over-year decrease of 21.2 %. Adjusted EBITDA margin,defined as adjusted EBITDA (non-GAAP) as a percentage of total revenues,for the second half of 2022 was 24.3 %,compared to 24.3 % a year ago.The decrease was mainly attributable to the increased number of LO hotels—both newly opened and in the pipeline. Excluding the impact of newly-opened and pipeline hotels,adjusted EBITDA (non-GAAP) for the second half of 2022 was RMB 146.0 million,with a margin of 34.6%. Adjusted EBITDA (non-GAAP) for the full year 2022 was RMB211.6 million(US$30.7 million),a year-over-year decrease of 35.0%.

Core net income (non-GAAP)for the secondhalf of 2022 was RMB67.7million (US$9.8 million)[1]. The core net margin,defined as core net income (non-GAAP) as a percentage of total revenues,for the secondhalf of 2022 was 13.9%,compared to -1.7 % one year ago. Excluding the impact of newly opened hotels,corenetincome (Non-GAAP) was RMB422.0million,with a margin of30.0%. Core net income (non-GAAP) for the full year 2022 was RMB173.6 million (US$25.2 million),a year-over-year increase of 54.7%.

Earnings per ADS (basic and diluted)for the secondhalfof 2022 were RMB-0.48(US$-0.07)[1],downfrom RMB0.59 one year ago.Core net income per ADS (basic and diluted) (non-GAAP) for the secondhalfof 2022 was RMB0.66(US$0.10)[1] Earnings per ADS (basic and diluted) for the full year 2022 was RMB-3.68 (US$-0.53) down from RMB2.05 one year ago. Core net income per ADS (basic and diluted) (non-GAAP) was RMB1.70 (US$0.25) for the full year 2022,a increase from RMB1.09 a year ago.

Cash flowOperating cash inflow for the secondhalfof 2022was RMB151.0 million (US$21.9 million)[1]as a result of income from operations. Investing cash inflow for the secondhalf of 2022was RMB116.4 million (US$16.9million)[1],which was primarily attributable to proceeds from short-term investments,and proceeds from the disposal of our interest in Urban. Financing cash outflow for the secondhalfof 2022was RMB160.3million (US$23.2million),mainly attributable to the repayment of bank loans by the end of December 31,2022. Operating cash inflow for the full year 2022 was RMB281.7 million (US$40.8 million). Investing cash outflow for the full year 2022 was RMB439.0 million (US$63.6 million). Financing cash inflow for the full year 2022 was RMB341.9 million (US$49.6 million).

Cash and cash equivalents,restricted cash,short-term investments,investments in equity securities and time deposit.As of December 31,the Company had total cash and cash equivalents,short term investments,investments in equity securities and time deposits of RMB1,055.5 million (US$153.0million)[1],compared to RMB1,079.5million(US$156.5 million) as of June30,2022. The decrease from the second half 2022 was primarily attributable to the repayment of bank loans,offset by cash from operating activities,

Guidance

Taking into account the recovery in long-term trends and short-term industry fluctuations,we expect total revenues of the hotel business for the full year of 2023 to grow 30%~35% over the 2022 levels. Furthermore,considering the merger of the restaurant business into the group and the revenue contribution from restaurant business,we expect total revenues of the whole company for the full year of 2023 to grow 90%~95% over the company's 2022 levels.

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

Conference Call

GreenTree's management will hold an earnings conference call at 9:00 PM U.S. Eastern Time on April 6,2023 (9:00 AM Beijing/Hong Kong Time on April 7,2023).

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 April 13,2023.

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:

8283615

Additionally,a live and archived webcast of this conference call will be available athttp://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 ofDecember 31,GreenTree had a total number of 4,059 hotels. In 2021,HOTELS magazine ranked GreenTree Top 11Ranking 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 2021based on the statistics issued by the China Hospitality Association.

GreenTree has a broad portfolio of diverse brands spanning from the economy to mid-scale,and up-scale segments of the hospitality industry mainly in China. 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 diverse brand portfolio that features comfort,style and value.

For more information on GreenTree,please visithttp://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.

Financial Tables and Operational Data Follow

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Balance Sheets

December31,

December 31,

December 31,

2021

2022

RMB

US$

ASSETS

Current assets:

Cash and cash equivalents

298,428,709

676,435

98,025,349

Restricted cash

3,300,000

Short-term investments

557,458,675

156,031,572

22,622,451

Investments in equity securities

157,988,851

41,361,346

5,996,831

Accounts receivable,net of allowance

95,589,936

118,186,912

17,135,492

Amounts due from related parties

310,419,860

437,165,271

63,006

Prepaid rent

15,454,967

Inventories

2,297,584

2,236,082

324,201

Other current assets

142,737,163

107,213,779

15,544,537

Loans receivable,net

247,530,580

170,019,414

24,650,498

Total current assets

1,831,206,325

1,708,314,811

247,682,365

Non-current assets:

Amounts due from a related party

112,360,000

16,290,669

Restricted cash

18,869,900

24,346,773

3,529,950

Long-term time deposits

160,000,000

130,000

18,848,228

Loans receivable,net

290,967,680

177,172,509

25,687,599

Property and equipment,net

1,045,356,265

834,771,681

121,030,517

Intangible assets,net

520,117,479

38,111,936

5,525,711

Goodwill

120,819,948

29,583,468

4,200

Long-term investments

188,790,785

175,554,460

25,453,004

Operating lease right-of-use assets

1,739,494

223,966,174

Other assets

329,366,340

94,606,582

13,716,666

Deferred tax assets

161,565,839

232,861,870

33,798

TOTAL ASSETS

4,667,060,561

5,102,423,584

739,781,880

LIABILITIES AND EQUITY

Current liabilities:

Short-term bank loans

356,000

99,800,000

14,469,640

Long-term bank loans,current portion

50,200,000

141,000

20,559,067

Accounts payable

24,036,544

20,745,204

3,007,772

Advance from customers

39,773,738

18,010

2,492

Amounts due to related parties

9,627

13,812,954

2,002,690

Salary and welfare payable

60,565

68,684,825

9,958,364

Deferred rent

1,926,957

Deferred revenue

215,147,975

189,105,747

27,417,756

Accrued expenses and other current liabilities

381,282,062

400,054,308

58,422

Income tax payable

70,897,366

75,199,441

10,902,894

Dividends payable

40,999,458

Operating lease liabilities,current

210,388,801

30,503,509

Total current liabilities

1,249,949,292

1,238,272,290

179,606

Long-term bank loans

301,000

160,000

23,197,819

Deferred rent

68,842,692

Deferred revenue

314,472,488

232,695,351

33,655

Other long-term liabilities

132,046,925

120,036

17,426,787

Operating lease liabilities,non-current

1,449,422,906

210,146,568

Deferred tax liabilities

228,201,745

60,456,710

8,765,399

Unrecognized tax benefits

328,820,281

346,662,050

50,261,273

TOTAL LIABILITIES

2,624,133,423

3,607,705,343

523,068,106

Shareholders' equity:

Class A ordinary shares

222,587,070

222,070

32,092

Class B ordinary shares

115,534,210

115,210

16,750,886

Treasury Stock

(16,971,057)

(2,460,572)

Additional paid-in capital

1,151,384,306

1,321,950

166,925,992

Retained earnings (Accumulated losses)

326,298,618

(50,088,070)

(7,262,088)

Accumulated other comprehensive income

41,880,907

27,732,104

4,020,777

Total GreenTree Hospitality Group Ltd. shareholders' equity

1,857,685,111

1,450,116,207

210,087

Non-controlling interests

185,242,027

44,602,033

6,687

Total shareholders' equity

2,042,927,138

1,494,718,240

216,713,774

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

4,583

739,880

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income

Six MonthsEnded

Year Ended

December31,2022

RMB

US$

RMB

US$

Revenues

Leased-and-operated hotels

218,637

391,960,031

338,520,066

49,080,796

Franchised-and-managed hotels

378,063

774,359,348

590,611

85,653,542

Others

20,862

39,826,579

15,984

2,612

Total revenues

617,562

1,145,958

945,143,662

137,032,950

Operating costs and expenses

Hotel operating costs

(364,605)

(286,294)

(41,146)

(651,376,905)

(594,322)

(86,124,706)

Selling and marketing expenses

(27,297)

(19,821)

(2,596)

(66,921,718)

(38,427)

(5,586,967)

General and administrative expenses

(129,435)

(111,498)

(16,887)

(256,160,262)

(210,878,900)

(30,574,566)

Other operating expenses

(791,335)

(1,121)

(173,421)

(4,937,625)

(3,244,855)

(470,460)

Other general expenses

(99,003)

(65,046)

(9,066)

(99,003)

(555,660,756)

(80,563,237)

Total operating costs and expenses

(621,675)

(483,780)

(70,116)

(1,079,513)

(1,402,338,260)

(203,319,936)

Other operating income

7,006,346

15,531,491

2,251,855

27,059,935

19,448,889

2,824

Income from operations

3,237,291

19,955,674

2,893,301

153,923,380

(437,709)

(63,467,162)

Interest income and other,net

30,691,771

23,803

3,429,479

59,974,418

47,941

6,870,026

Interest expense

(5,193,460)

(10,236)

(1,478,460)

(12,671,385)

(25,375,848)

(3,679,152)

Gains (loss) from investment in equity securities

(34,735,461)

(83,843,819)

(12,156,211)

9,137,875

(62,235)

(9,011,807)

Other income (expense),net

11,818,559

9,564,918

1,386,782

11,559

24,229,535

3,512,952

Income before income taxes

5,700

(40,866,660)

(5,109)

222,182,847

(453,664,316)

(65,775,143)

Income tax expense

(38,349,089)

(5,279)

(837,191)

(108,888,883)

46,026,416

6,673,203

Income (loss) before share of gains in equity investees

(32,389)

(46,640,939)

(6,762,300)

113,293,964

(407,637,900)

(59,101,940)

Share of losses (gains) in equity investees,net of tax

(81,023)

(1,426)

(242,624)

382,874

(1,598,301)

(231,732)

Net income(loss)

(32,611,412)

(48,365)

(7,004,924)

113,676,838

(409,201)

(59,333,672)

Net loss attributable to non-controlling interests

(1,178,321)

(440,831)

(63,915)

3,411

32,849,513

4,732

Net income(loss)attributable to ordinary shareholders

(33,789,733)

(48,755,196)

(7,839)

117,438,249

(376,688)

(54,570,940)

Net earnings (losses) per share

Class A ordinary share-basic and diluted

(0.33)

(0.48)

(0.07)

1.14

(4.00)

(1.00)

Class B ordinary share-basic and diluted

(0.33)

(0.48)

(0.07)

1.14

(4.00)

(1.00)

Net earnings(losses)per ADS

Class A ordinary share-basic and diluted

(0.33)

(0.48)

(0.07)

1.14

(4.00)

(1.00)

Class B ordinary share-basic and diluted

(0.33)

(0.48)

(0.07)

1.14

(4.00)

(1.00)

Weighted average shares outstanding

Class A ordinary share-basic and diluted

68,286,954

67,416,046

67,046

68,046

Class B ordinary share-basic and diluted

34,909

Other comprehensive income,net of tax

Foreign currency translation adjustments

(5,123,691)

(4,418,802)

(640,666)

(6,497,403)

(14,148,803)

(2,051,384)

Unrecognized gain on an available-for-sale

2,791,663

2,663

Comprehensive income,net of tax

(34,943,440)

(52,733,167)

(7,590)

109,098

(423,385,004)

(61,056)

Comprehensive loss/(income) attributable to non-controlling interests

(1,732

Comprehensive income(loss)attributable to ordinary shareholders

(36,121,761)

(53,173,998)

(7,505)

113,509

(390,535,491)

(56,324)

GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Cash Flows

Six MonthsEnded

Year Ended

December31,2021

December 31,2022

RMB

US$

RMB

US$

Operating activities:

Net (loss) income

(32,412)

(48,364)

(7,924)

113,838

(409,200)

(59,672)

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

Depreciation and amortization

57,672,812

47,626,699

6,222

98,110,657

109,873,526

15,930,164

Share of losses (gains) in equity method investments

81,023

1,426

242,624

(382,874)

1,301

231,732

Fair value change in returnable consideration and contingent consideration,net

502,712

Impairment of long lived assets

4,093,856

593,553

60,306,705

8,743,650

Impairment of goodwill

91,480

13,228,046

Lease expense to reduce operating lease right-of-use assets

117,324

17,711

224,536,299

32,703

Losses from disposal of a subsidiary

118,443

2,131

314,929

118,443

16,056

2,336,753

Interest expense (income)

185,387

(581,841)

(84,359)

(3,669,643)

(844,175)

(122,394)

Bad debt expense

112,130,582

90,221

13,140

132,591,726

431,102

62,532

Losses (gains) on equity securities held

34,461

83,819

12,211

(9,875)

62,235

9,807

Losses (gains) on disposal of property and equipment

604,017

(1,840)

(183,095)

604,017

1,303,452

188,983

Foreign exchange (gains) losses

(3,817,988)

(8,738,690)

(1,266,991)

(1,310,346)

(20,675,691)

(2,997,693)

Share-based compensation

1,897

(333,495)

(48,352)

2,464,763

(62,356)

(9,041)

Changes in operating assets and liabilities:

Accounts receivable

10,517,268

(30,311)

(4,355,436)

(22,329,328)

(59,471,493)

(8,556)

Prepaid rent

12,339,868

(1,100)

Inventories

(184,470)

(717,583)

(104,040)

1,495,974

(793,081)

(114,986)

Amounts due from related parties

(90,009)

(288,549)

(41,836)

(3,963,547)

(3,141,469)

(455,470)

Other current assets

63,374,516

21,522

3,254

(60,345,480)

31,867,577

4,620,364

Other assets

(41,370)

(9,218,002)

(1,485)

(49,214,290)

(2,148)

(340,594)

Accounts payable

6,034,473

119,116

17,270

4,260

574,260

83,260

Amounts due to related parties

4,174,716

3,357,608

486,807

6,332,374

4,327

620,879

Salary and welfare payable

3,317,608

5,596

799,251

8,978

10,358

1,414

Deferred revenue

(29,392,677)

(28,933,976)

(4,195,032)

(53,595,903)

(75,948,621)

(11,515)

Advance from customers

11,912,861

(5,188,318)

(752,235)

5,230

(16,334,755)

(2,368,317)

Accrued expenses and other current liabilities

19,157,025

32,022

4,651,023

71,545,537

88,799,911

12,874,777

Income tax payable

19,455,752

54,801,507

7,945,472

(16,604)

3,241,384

469,957

Unrecognized tax benefits

16,740,521

(19,550,080)

(2,834,495)

38,140,379

17,841,769

2,813

Operating lease liabilities-current

(94,414,058)

(13,688,752)

(155,217)

(22,484,373)

Deferred rent

25,367,526

-(2,175)

40,770,544

Other long-term liabilities

415,356

30,462

4,417

14,648,804

(6,594,188)

(956,067)

Deferred taxes

25,603,045

(66,805)

(9,868)

44,292,605

(122,777)

(17,811,398)

Net cash provided by operating activities

318,071,943

150,993,397

21,891,984

360,975,140

281,707,571

40,758

Investing activities:

Purchases of property and equipment

(183,691)

(40,177,940)

(5,825,254)

(341,715,516)

(69,012,279)

(10,005,840)

Purchases of intangible assets

(201,746)

(47,813)

(6,932)

(201,746)

(108,028)

(15,663)

Proceeds from disposal of property and equipment

2,399

346,285

2,285

Payment for acquisition of minority equity

(149,999)

(1,018,387)

Acquisitions,net of cash received

25,300

(147,608,325)

Advances for acquisitions

(39,483,494)

(39,494)

Collection of acquisition advances

2,500

12,500

Advances for purchases of property and equipment

(14,878)

(219,261)

Repayment from advances for purchases of property and equipment

22,400,000

3,390

470,827

22,827

Purchases of short-term investments

(239,771)

(82,900,000)

(12,370)

(378,189,081)

(131,760,000)

(19,103,404)

Proceeds from short-term investments

179,202

127,788,611

18,527,607

536,232

517,528,048

75,514

Proceeds from sales of long-term time deposits

50,000

Increase of long-term time deposits

(130,000)

Purchases of investments in equity securities

(8,940,000)

(8,000)

Proceeds from disposal of subsidiaries

1,693,391

79,666,587

11,569

1,569

Proceeds from disposal of equity securities

72,697,479

284,591

116,555,911

16,899,019

Proceeds from disposal of euqity method investments

1,391-

Loan to related parties

(372,382)

(5,802)

(831,613)

(604,618,942)

(171,055,802)

(24,760)

Repayment from related parties

159,268,000

1,991,517

288,743

307,500

47,599,184

6,901,233

Loan to third parties

(26,444,271)

(36,944,271)

(266,200)

(38,595)

Repayment from third parties

8,627,367

55,127,367

1,638,833

237,608

Loan to franchisees

37,266

(12,780)

(1,809,253)

(423,399,028)

(47,740)

(6,924,656)

Repayment from franchisees

(50,914)

42,068

6,179,619

133,380,285

90,302,936

13,092,695

Net cash (used in) provided by investing activities

(427,642)

116,364,237

16,871,228

(928,186)

438,239

63,643,832

Financing activities:

Distribution to the shareholders

(320,253,160)

(320,160)

(40,458)

(5,363)

Loan from non-controlling interest

6,050

4,803,299

696,413

9,689,903

5,299

739,909

Repayment of bank loans

(250,000)

(36,091)

(250,000)

(406,000)

(58,464)

Proceeds from bank loans

668,000

85,000

12,323,842

808,640

Capital contribution from non-controlling interest holders

1,000

8,191,000

400,000

57,995

Net cash generated from (used in) financing activities

105,890

(160,296,701)

(23,240,836)

255,743

(341,896,159)

(49,283)

Effect of exchange rate changes on cash and cash equivalents and restricted cash

50,892

510,712

74,046

(1,344,197)

1,072,948

155,563

Net increase(decrease) increase in cash and cash equivalents and restricted cash

(3,748,917)

107,571,645

15,596,422

(313,129,500)

379,599

55,870

Cash and cash equivalents and restricted cash at the beginning of the period

324,347,526

592,875,563

85,876

633,728,109

320,609

46,482,429

Cash and cash equivalents and restricted cash at the end of the period

320,609

700,447,208

101,298

320,299

GreenTree Hospitality Group Ltd.

Unaudited Reconciliation of GAAP and Non-GAAP Results

Six Months Ended

Year Ended

Dec 31,2021

Dec 31,2022

RMB

US$

RMB

US$

Net income

(32,672)

Deduct:

Other operating income

7,824

Interest income and other,026

Gains from investment in equity securities

(34,461)

9,875

Share of gain in equity investees,023)

382,874

Other income,783

11,952

Add:

Other operating expenses

791,421

4,625

3,855

470,460

Other general expenses

95,362,000

65,065

95,000

555,756

80,237

Income tax expense

38,089

5,279

837,192

108,883

(46,416)

(6,203)

Interest expense

5,460

10,236

1,460

12,385

25,848

3,152

Depreciation and amortization

57,811

47,656

109,164

Losses from investment in equity securities

83,211

62,807

Share of loss in equity investees,net of tax

1,624

1,732

Adjusted EBITDA(Non-GAAP)

150,057,091

118,288,048

17,150,155

325,273,726

211,584,538

30,874

Six Months Ended

Year Ended

Dec 31,672)

Deduct:

Government subsidies (net of 25% tax)

1,610,283

7,348,561

1,065,441

12,155

8,626

1,246,829

Gains from investment in equity securities (net of 25% tax)

6,406

Other income (net of 25% tax)

8,863,919

7,688

1,087

8,919

18,151

2,634,714

Add:

Share-based compensation

1,762

(62,041)

Losses from investments in equity securities (net of 25% tax)

26,596

62,882,864

9,158

46,617,176

6,758,855

One-time fees and expense

9,631

2,919,456

423,281

24,568,935

7,387,383

1,070

Asset impairment/Accrued bad debts

(4,523,574)

65,065

555,237

Core net income(Non-GAAP)

(10,539,064)

67,256

9,700

112,055

173,980

25,168,906

Core net income per ADS (Non-GAAP)

Class A ordinary share-basic and diluted

(0.10)

0.66

0.10

1.09

1.70

0.25

Class B ordinary share-basic and diluted

(0.10)

0.66

0.10

1.09

1.70

0.25

Operational Data

Decemebr 31,2021

December 31,2022

Total hotels in operation:

4,659

4,059

Leased and owned hotels

Franchised hotels

4,593

3,998

Total hotel rooms in operation

337,153

302,497

Leased and owned hotels

7,064

6,565

Franchised hotels

330,089

295,932

Number of cities

367

355

Quarter Ended

2021Q3

2022Q3

Occupancy rate (as a percentage)

Leased-and-owned hotels

65.2%

63.0%

Franchised hotels

72.6%

71.3%

Blended

72.4%

71.1%

Average daily rate (in RMB)

Leased-and-owned hotels

223

237

Franchised hotels

161

167

Blended

163

168

RevPAR (in RMB)

Leased-and-owned hotels

146

149

Franchised hotels

117

119

Blended

118

120

Quarter Ended

2021Q4

2022Q4

Occupancy rate (as a percentage)

Leased-and-owned hotels

60.9%

62.4%

Franchised hotels

69.5%

63.0%

Blended

69.2%

63.0%

Average daily rate (in RMB)

Leased-and-owned hotels

224

208

Franchised hotels

168

163

Blended

170

165

RevPAR (in RMB)

Leased-and-owned hotels

136

130

Franchised hotels

117

103

Blended

117

104

Number of Hotels in Operation

Number of Hotel Rooms in Operation

December 31,2021

December 31,2022

December 31,2022

Luxury

6,265

Argyle

6,265

Mid-to-up-scale

519

426

47,666

41,255

GreenTree Eastern

204

205

22,246

22,492

Deepsleep Hotel

417

534

Gem

4,173

4,753

Gya

5,302

5,811

7,021

7,403

Ausotel

2,237

Urban Garden and others

104

6,270

262

Mid-scale

2,932

2,953

230,750

231,835

GreenTree Inn

2,169

2,226

178,849

183,116

GT Alliance

515

538

36,802

38,031

GreenTree Apartment

1,098

1,262

Vatica

112

111

8,115

8,009

City 118 Selected and others

120

5,886

1,417

Economy hotels

1,175

680

52,472

29,407

Shell

650

680

28,196

29,407

City 118 and others

525

24,276

Total

4,059

337,497

For more information,please contact:

GreenTree

Ms. Selina Yang

Phone: +86-158-2166-6251

E-mail:ir@998.com

Mr. Allen Wang

Phone: +86-181-0184-0639

E-mail:ir@998.com

Christensen

In Shanghai

Mr. Jerry Xu

Phone: +86-138-1680-0706

E-mail: jxu@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

1 The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB6.8972 on December31,2022as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at https://www.federalreserve.gov/releases/h10/20220103/

2 Adjusted EBITDA (non-GAAP) is calculated as net income plus other operating expenses,income tax expense,net of tax,interest expense,depreciation and amortization,losses from investment in equity securitiesand the provision for bad debts,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),and other income,net. 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 and asset impairment/accrued bad debts,and income tax expenses related to withholding tax,but excludes government subsidies (net of 25% tax),gains from investment in equity securities (net of 25% tax),and other income (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.

Tags: Banking/Financial Service Hotels and Resorts Travel

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