Moleculin Biotech, Inc. Reports Financial Results for the Second Quarter Ended June 30, 2019

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Moleculin Biotech, Inc. Reports Financial Results for the Second Quarter Ended June 30, 2019

PR Newswire

HOUSTON, Aug. 16, 2019 /PRNewswire/ – Moleculin Biotech, Inc., (NASDAQ: MBRX) (“Moleculin” or the “Company”), a clinical stage pharmaceutical company with a broad portfolio of drug candidates targeting highly resistant tumors, today announced its financial results for the second quarter ended June 30, 2019. Additionally, the Company announced potential upcoming milestones and recent corporate developments.

Moleculin Biotech, Inc. is a clinical stage pharmaceutical company focused on the development of a broad portfolio of oncology drug candidates for the treatment of highly resistant tumors. (PRNewsfoto/Moleculin Biotech, Inc.)


Management Discussion

Walter Klemp, chairman and chief executive officer of Moleculin, said, “The second quarter of 2019 exhibited significant progress in the various research initiatives and clinical trials that are underway on our drug candidates. During the quarter, we announced three important research developments that we believe can have meaningful impacts in successfully attacking certain rare and difficult cancers.”

“We recently announced an important discovery for the treatment of glioblastoma – one of the most common, and aggressive, types of malignant brain tumor among adults. In animal models, researchers at MD Anderson have combined our lead STAT3 inhibitor – WP1066 – with radiation therapy, the combination of which appears to have developed an immunological memory in immune-competent mice that enabled them to prevent regrowth of the tumor after these tumor cells were reintroduced. The result was the development of long-term survivors, leading to an increase in overall survival in these models. The median survival time with glioblastoma is 15 to 16 months in people who get surgery, chemotherapy, and radiation treatment. This is an important breakthrough that could have a profound impact in extending the lives of people afflicted with glioblastoma in the years to come.”

“The second important research development during the quarter,” Mr. Klemp continued, “was the announcement of additional positive safety and efficacy data from our ongoing Phase 1/2 study – in Poland – of Annamycin for the treatment of acute myeloid leukemia, and consequently the advancement to our third cohort of patients to be treated. This third cohort of patients will be treated at a dose level of 180 mg/m2. The previous two cohorts were treated at lower levels – 120 mg/m2 and 150 mg/m2, respectively. We believe one of the most important unique attributes of Annamycin is its lack of cardiotoxicity, since all currently approved anthracyclines are significantly cardiotoxic (potential to damage the heart).  Importantly, we have seen no cardiotoxicity in any of the patients treated to date both in the US and in Europe. We believe this is an important pathway that may increase the opportunity for leukemia patients to qualify for potentially life-saving bone marrow transplants at a much higher rate than traditionally has been the case.”

“Our third important development during the quarter was the announcement that our ongoing sponsored research at The University of Texas MD Anderson Cancer Center resulted in the discovery that Annamycin, our lead drug candidate for the treatment of acute myeloid leukemia, has demonstrated – in animal models – an ability to significantly improve survival in triple negative breast cancer that has metastasized to the lungs. Annamycin has previously demonstrated a high uptake into the lungs in animal models. Triple-negative breast cancer is considered to be more aggressive and have a poorer prognosis than other types of breast cancer, mainly because there are fewer targeted medicines that treat triple-negative breast cancer. Studies have shown that triple-negative breast cancer is more likely to spread beyond the breast and more likely to recur after treatment. With the demonstrated increased uptake into the lungs in animal models, we are excited about the possibilities for Annamycin in an expanding list of indications.”

Mr. Klemp concluded, “From a strategic standpoint, we are highly focused on developing ‘multiple shots on goal’ for the treatment of rare and difficult cancers. We are pleased with the progress being achieved in our research initiatives and clinical trials. We remain on track to deliver data from our ongoing clinical trials through the balance of the year.”

Jonathan Foster, executive vice president and chief financial officer of Moleculin, stated, “From a financial standpoint we are in a strong position. We finished the second quarter with a solid balance sheet with cash of approximately $18.7 million and no debt. The strength of our balance sheet provides us the ability to fund our ongoing research programs and clinical trials. We believe our existing cash and cash equivalents will be sufficient to fund our planned operations well into 2020 without the issuance of additional equity for cash. We are focused on being capital efficient through our important developmental process.”


Anticipated Milestones


Anticipated Milestones


Potential Time Frame


Next Generation Anthracycline – Annamycin

Clinical Trials – Complete cohort of 150 mg/m2 – prior trial recommended Phase II dose (RP2D)

Accomplished and ongoing
2019

          Announcement of initial clinical data for Annamycin trial

Accomplished and ongoing

2019

          Announcement of RP2D for Poland Trial

2020

          Poland clinical trial (MB-105) begins Phase II

2020

          Approach FDA on U.S. trial (MB-104) on dose expansion using Poland trial data

2020 (Fast Track Approved)

Announce additional clinical research in lung and metastatic lung cancers

2020


Immune/Transcription Modulators – WP1066 Family


Clinical Trials WP 1066 – Announcement of initial clinical data from WP1066 clinician sponsored trial

2019

           Phase 1 surgical cohort begins

2020

           Transfer clinician sponsored trial WP1066 IND to Moleculin

Second Half of 2019

           Emory Physician Led Pediatric Medulloblastoma Trial begins

Second Half of 2019

Announcement of further benefits of our sponsored research agreement with MD Anderson

Accomplished and ongoing
2019

Clinical Trial WP1220 – Announce filing and approval of CTA for WP1220 for the treatment of cutaneous T-cell lymphoma (CTCL)


Accomplished

           Assess WP1220 initial patient data


Q4-2019

IND for WP1732 submitted

2020

Dose first patient in Phase I trial for WP1732

2020

Announce further preclinical research results on WP1066 family

Accomplished and ongoing
2019


Metabolism/Glycosylation Inhibitors


Begin preclinical work on WP1122


Accomplished

Complete formulation and begin manufacture of drug for trial

First Half of 2020

File IND for WP1122

2020


General Clinical

Announce a fourth approved clinical trial


Accomplished

Announce a fifth approved clinical trial

2019


Second Quarter Highlights and Recent Corporate Developments

Moleculin Announces Breakthrough Discovery: WP1066 Potentially Capable of Immune Reprogramming in Glioblastoma Animal Models - Data to be presented at the Inaugural Conference on Brain Metastases, August 16-17, 2019 August 6, 2019, the Company announced that a paper entitled “Immunological Reprogramming in the CNS Tumor Microenvironment and Therapeutic Efficacy of Radiotherapy with STAT3 Blockade” will be presented at the Inaugural Conference on Brain Metastases, in New York City, August 16-17, 2019. Dr. Martina Ott, of MD Anderson Cancer Center, will be presenting the findings of the research she conducted in collaboration with Dr. Amy Heimberger (the Principle Investigator of the current investigator-initiated clinical of WP1066 for brain tumors) in combining WP1066 with radiation therapy in glioblastoma animal models.

One of the findings of her research that is especially encouraging is that immune-competent mice treated with both radiation and WP1066 developed an immunological memory that enabled them to prevent regrowth of the tumor after these tumor cells were reintroduced. The result was the development of long-term survivors, leading to an increase in overall survival in these models.

This study was also particularly interesting because it showed the most robust immunological responses were located in the CNS (Central Nervous System) tumor microenvironment rather than peripheral non-tumor tissue.  Importantly, the study indicated that the combination of STAT3 inhibition with whole brain radiotherapy had the capacity to enhance the therapeutic effect against established tumors based on immunological competence.

Moleculin Announces Annamycin in Acute Myeloid Leukemia in Poland Advances to 3rd Cohort – July 18, 2019, the Company announced additional positive interim safety and efficacy data from its ongoing open label, single arm Phase 1/2 study of Annamycin in Poland. Three patients were treated at a dose level of 150 mg/m2 with no drug-related adverse events, including no signs of cardiotoxicity. The results for all 3 patients were reviewed by the Drug Safety Review Committee, which determined that the trial could progress to the next higher dose level of 180 mg/m2. To date in Poland, one patient experienced grade 2 mucositis (which resolved to grade 1 within 2 days) and no other adverse events related to Annamycin have been reported. One patient has completed treatment in the 120 mg/m2 (second) cohort in the Company’s parallel US clinical trial (the US trial started at a lower initial dose of 100 mg/m2). The Company continues to see no evidence of cardiotoxicity in any of the patients treated thus far in its clinical trials.

Moleculin Files for New Patents for Annamycin After Receiving FDA Approval of Fast Track Designation – July 10, 2019, the Company announced it has filed new patents covering the production and reconstitution of Annamycin, which is currently in two clinical trials for the treatment of relapsed or refractory acute myeloid leukemia (AML). Annamycin has Orphan Drug Designation in the US for the treatment of AML and the Company recently announced promising preclinical data showing the potential for Annamycin to become an important treatment for lung metastases. If these patent applications are approved, this will potentially give the Company 20 years of patent protection for Annamycin.

Moleculin Announces Additional Positive Interim Results in First Cohort of Phase 1/2 Clinical Studies of Annamycin in Acute Myeloid Leukemia in Europe2 of 3 patients qualify to proceed to a potentially curative bone marrow transplant; trial advances to next higher dose level - May 7, 2019, the Company announced additional positive interim safety and efficacy data from its ongoing open label, single arm Phase 1/2 study of Annamycin in Poland. After receiving a single starting dose of 120 mg/m2 in the first cohort of the dose escalation phase of the trial, 2 of 3 patients treated responded sufficiently to qualify for a potentially curative bone marrow transplant. The results for all 3 patients were reviewed by the Safety Review Committee, which determined that no drug-related adverse events were observed that would prevent advancing the trial to the next higher dose level of 150 mg/m2. To date in the European trial, one patient experienced grade 2 mucositis (which resolved to grade 1 within 2 days) and no other adverse events related to Annamycin have been reported. No additional patient data have been developed in the Company’s parallel US clinical trial, which is currently recruiting its second cohort to be given a dose level of 120 mg/m2 (the U.S. trial started at a lower initial dose of 100 mg/m2).

Moleculin Announces $15.0 Million Registered Direct Offering – April 23,2019, the Company announced that it has entered into definitive agreements with institutional investors to purchase an aggregate of 9,375,000 units at a public offering price of $1.60 per unit in a registered direct offering, which offering was closed on April 25, 2019. Each unit is comprised of one share of common stock and 0.5 of a warrant to purchase one share of common stock. Each warrant has an exercise price of $1.75 per share and is exercisable immediately. The warrants will expire five years from the date of issuance. The gross proceeds of the offering were approximately $15.0 million, prior to deducting the placement agent fees and other estimated offering expenses.

Moleculin Receives FDA Approval of Fast Track Designation for Annamycin - April 18, 2019, the Company announced that the FDA has approved its request for Fast Track Designation for its drug, Annamycin, for the treatment of relapsed or refractory AML.

A drug that receives Fast Track designation is eligible for some or all of the following:

  • More frequent meetings with FDA to discuss the drug’s development plan and ensure collection of appropriate data needed to support drug approval;
  • More frequent written communication from FDA about such things as the design of the proposed clinical trials and use of biomarkers;
  • Eligibility for Accelerated Approval and Priority Review, if relevant criteria are met;
  • Rolling Review, which means that a drug company can submit completed sections of its Biologic License Application (BLA) or New Drug Application (NDA) for review by FDA, rather than waiting until every section of the NDA is completed before the entire application can be reviewed. BLA or NDA review usually does not begin until the drug company has submitted the entire application to the FDA.

Moleculin Announces Significant Discovery in Lung Cancer Models  – Annamycin Found to be Active Against Metastases to the Lungs in Pre-Clinical Testing - April 17, 2019, the Company announced that its ongoing sponsored research at The University of Texas MD Anderson Cancer Center has now demonstrated that Annamycin is able to significantly improve survival in an aggressive form of triple negative breast cancer metastasized to the lungs in animal models. The Company believes its success in increasing the survival rate in mice with this tumor model in combination with the previously observed high uptake of Annamycin by the lungs is a promising indication that supports additional clinical research in lung and metastatic lung cancers.

Moleculin Announces Agreement with Emory University to Conduct Pediatric Brain Tumor Trial - April 11, 2019, the Company announced it has entered into an agreement with Emory University to conduct a Phase 1 clinical trial of WP1066 in children with recurrent or refractory malignant brain tumors. The study will be conducted at the Aflac Cancer & Blood Disorders Center at Children’s Healthcare of Atlanta.

Moleculin Announces Preclinical Pancreatic Cancer Data Presented at American Association for Cancer Research Annual Meeting - April 3, 2019, the Company announced that preclinical data supporting activity of its STAT3-inhibiting Immune/Transcription Modulators was presented by Dr. Waldemar Priebe, Founder and Chair of the Scientific Advisory Board of Moleculin, Inc. at the 2019 Annual Meeting of the American Association for Cancer Research in Atlanta, GA.

AACR Abstract:



https://www.moleculin.com/inhibition-of-stat3-in-pancreatic-ductal-adenocarcinoma-and-immunotherapeutic-implications/

The presentation included data resulting from preclinical evaluation in pancreatic cancer models of STAT3 inhibitors WP1066 and WP1732, both discovered at The University of Texas MD Anderson Cancer Center and licensed by Moleculin. WP1066 is an orally bioavailable drug with significant brain uptake that is currently in Phase 1 clinical studies in patients with brain tumors. Complementary to WP1066, we believe STAT3 inhibitor WP1732 may be suitable for IV administration and demonstrates high uptake by the pancreas without uptake to the brain.


Financial Results for the Second Quarter ended June 30, 2019

Research and Development Expense. Research and development (“R&D”) expense was $2.1 million and $4.2 million for the three months ended June 30, 2019 and 2018, respectively. The decrease of $2.1 million is mainly related to costs incurred in 2018 of producing additional drug product for the Company’s Annamycin clinical trials.

General and Administrative Expense. General and administrative expense was $1.5 million and $1.2 million for the three months ended June 30, 2019 and 2018, respectively. The increase of $0.3 million was mainly attributable to an increase in G&A related payroll costs.

Gain from Change in Fair Value of Warrant Liability. We recorded a net gain of $2.4 million in the second quarter of 2019 as compared to a net gain of $0.3 million in the second quarter of 2018, for the change in fair value on revaluation of our warrant liability associated with our warrants issued in conjunction with our stock offerings in April 2019, March 2019, June 2018, February 2018, and February 2017. We are required to revalue certain warrants at the time of each warrant exercise and at the end of each reporting period and reflect in the statement of operations a gain or loss from the change in fair value of the warrant in the period in which the change occurred. We calculated the fair value of the warrants outstanding using the Black-Scholes model. A gain results principally from a decline in our share price during the period and a loss results principally from an increase in our share price.  During the quarter, our stock price fluctuated greatly.


Liquidity and Capital Resources

As of June 30, 2019, the Company had cash and cash equivalents of $18.7 million. In April 2019, the Company received gross proceeds of approximately $16.6 million, as a result of a completed public offering and the exercise of various warrants from past public offerings. This brings the Company’s total net cash raised through its financing efforts year to date to $20.8 million.

Cash used in operations was $9.2 million for the six months ended June 30, 2019. This $2.9 million increase over the prior year of $6.3 million was mainly due to preparing for clinical trials, an increase in R&D payroll costs, an increase in paid sponsored research and related expenses, and an increase in license fees. These are all a reflection of the ongoing clinical and pre-clinical activity and the associated increase in G&A support for our three core drug technologies.

The Company believes that its existing cash and cash equivalents as of June 30, 2019, will be sufficient to fund planned operations into the second quarter of 2020, without the issuance of additional equity for cash. Such issuances should extend the funding of the Company’s planned operations significantly beyond the second quarter of 2020. Such plans are subject to the Company’s stock price, market conditions, changes in planned expenses depending on clinical enrollment progress, the use of drug product or a combination thereof.


About Moleculin Biotech, Inc.

Moleculin Biotech, Inc. is a clinical-stage pharmaceutical company focused on the treatment of highly resistant cancers. Moleculin has three core technologies, all of which are based on discoveries made at M.D. Anderson Cancer Center by Dr. Waldemar Priebe and his team. The Company’s clinical-stage drugs are Annamycin, a Next Generation Anthracycline being studied for the treatment of relapsed or refractory acute myeloid leukemia, or AML, and WP1066, an Immune/Transcription Modulator targeting brain tumors, pancreatic cancer and AML. The Company is also engaged in preclinical development of additional drug candidates, including additional Immune/Transcription Modulators, as well as Metabolism/Glycosylation Inhibitors. Moleculin’s Next Generation Anthracycline, Annamycin, we believe, is unlike any currently approved anthracyclines, as it is designed to avoid multidrug resistance mechanisms with little to no cardiotoxicity. Annamycin has preliminary clinical data suggesting its potential to become the first successful therapy suitable for the majority of relapsed or refractory AML patients and is currently in two Phase I/II clinical trials. WP1066 is one of several Immune/Transcription Modulators capable of stimulating immune response to tumors by inhibiting the errant activity of Regulatory T-Cells (TRegs) while also inhibiting key oncogenic transcription factors, including p-STAT3, c-Myc and HIF-1. These transcription factors are widely sought targets that may also play a role in the inability of immune checkpoint inhibitors to affect more resistant tumors. Moleculin is also developing new prodrugs to exploit the potential uses of inhibitors of glycolysis. The Company’s lead Metabolism/Glycosylation Inhibitor compound, WP1122, provides an opportunity to cut off the fuel supply of tumors by taking advantage of their overdependence on glucose as compared with healthy cells. New research also points to the potential for the glucose decoy (2-DG) within WP1122 to be capable of enhancing the usefulness of checkpoint inhibitors.

For more information about the Company, please visit http://www.moleculin.com.


Forward-Looking Statements

Some of the statements in this release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties. Forward-looking statements in this press release include, without limitation, the ability of Moleculin to successfully recruit sufficient patients to complete its current clinical trials; the ability of Moleculin to file an IND for WP1732; the ability of Moleculin’s drug candidates to show safety and efficacy in patients; and the ability of Moleculin to receive patent protection for Annamycin. Although Moleculin Biotech believes that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements. Moleculin Biotech has attempted to identify forward-looking statements by terminology including ”believes,” ”estimates,” ”anticipates,” ”expects,” ”plans,” ”projects,” ”intends,” ”potential,” ”may,” ”could,” ”might,” ”will,” ”should,” ”approximately” or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors, including those discussed under Item 1A. “Risk Factors” in our most recently filed Form 10-K filed with the Securities and Exchange Commission (“SEC”) and updated from time to time in our Form 10-Q filings and in our other public filings with the SEC.  Any forward-looking statements contained in this release speak only as of its date. We undertake no obligation to update any forward-looking statements contained in this release to reflect events or circumstances occurring after its date or to reflect the occurrence of unanticipated events.

—Financial tables on the following page—


Moleculin Biotech, Inc.


Unaudited Condensed Consolidated Balance Sheets


(in thousands)


June 30, 2019


December 31,
2018

Current Assets:

Cash and cash equivalents

$

18,695

$

7,134

Prepaid expenses and other

1,507

840

     Total current assets

20,202

7,974

Furniture and equipment, net

401

463

Intangible assets

11,148

11,148

Operating lease right-of-use asset

103

     Total Assets

$

31,854

$

19,585

Current Liabilities:

Accounts payable, accrued expenses and other current liabilities

$

2,647

$

3,698

Warrant liability – current

6,944

180

    Total current liabilities

9,591

3,878

Operating lease liability – long-term, net of current portion

171

Deferred rent – long-term

107

Warrant liability – long-term

1,328

     Total Liabilities

9,762

5,313

Total Stockholders’ Equity

22,092

14,272

     Total Liabilities and Stockholders’ Equity

$

31,854

$

19,585


Unaudited Condensed Consolidated Statements of Operations
(in thousands, expect shares and per share amounts)


Three Months Ended June 30,


Six Months Ended June 30,


2019


2018


2019


2018

Revenues

$

$

$

$

Operating Expenses:

Research and development

2,099

4,231

5,031

5,469

General and Administrative and depreciation and amortization

1,533

1,227

3,172

2,626

     Total operating expenses

3,632

5,458

8,203

8,095

     Loss from operations

(3,632)

(5,458)

(8,203)

(8,095)

Other income (expense):

Gain from change in fair value of warrant liability

2,407

331

2,936

1,040

Other expense

(1)

(1)

Interest income, net

4

3

5

4

           Net loss

$

(1,221)

$

(5,125)

$

(5,262)

$

(7,052)

Loss per common share – basic and diluted

$

(0.03)

$

(0.20)

$

(0.15)

$

(0.29)

Weighted average common shares outstanding – basic and diluted

42,393,031

25,888,931

35,765,790

24,617,372

 

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SOURCE Moleculin Biotech, Inc.

GreenTree Hospitality Group Ltd. Reports Second Quarter of 2019 Financial Results

GreenTree Hospitality Group Ltd. Reports Second Quarter of 2019 Financial Results

PR Newswire

Revenue Increased by 20% for the Sixth Consecutive Quarter

  • A
    total of
    2,955
     hotels with 236,557 hotel rooms in operation as of June 30, 2019, compared to 2,829 hotels and 225,757 hotel rooms as of March 31, 2019.
  • Total revenues increased 21.6% to RMB274.9 million (US$40.0 million)



    [1]



     for the second quarter of 2019. Total revenues increased 20.9% to RMB510.2 million (US$74.3 million)[1]
     for the first half of 2019.
  • Adjusted EBITDA (non-GAAP) increased 19.1% to RMB173.1 million (US$25.2 million)[1]
     for the second quarter of 2019. Adjusted EBITDA (non-GAAP) increased 19.5% to RMB307.0 million (US$44.7 million)[1]
     for the first half of 2019.
  • Net income increased 35.2% to RMB127.1 million (US$18.5 million)[1]
     for the second quarter of 2019. Net income increased 46.4% to RMB261.1 million (US$38.0 million)[1]
     for the first half of 2019.
  • Core net income (non-GAAP) increased 16.9% to RMB125.8 million (US$18.3 million)[1]
     for the second quarter of 2019. Core net income (non-GAAP) increased 17.4% to RMB218.0 million (US$31.8 million)[1]
     for the first half of 2019.
  • Net income per ADS (basic and diluted) totaled RMB1.26 (US$0.18)[1] for the second quarter of 2019. Net income per ADS (basic and diluted) totaled RMB2.59 (US$0.38)[1] for the first half of 2019.
  • Core net income per ADS (basic and diluted) (non-GAAP) of the Company totaled RMB1.23 (US$0.18)[1] for the second quarter of 2019. Core net income per ADS (basic and diluted) (non-GAAP) totaled RMB2.14 (US$0.31)[1] for the first half of 2019.
  • The Company expects total revenue for the full year 2019 total to grow 23-28% from 2018.

SHANGHAI, Aug. 16, 2019 /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 ended June 30, 2019.

Second
Quarter of 2019 Operational Highlights

  • As of June 30, 2019, the Company had 30 leased-and-operated (“L&O”) hotels and 2,925 franchised-and-managed (“F&M”) hotels in operation in 300 cities across China, compared to 26 L&O hotels and 2,408 F&M hotels in operation in 267 cities as of June 30, 2018. The geographic coverage increased by 12.4% year over year. 
  • During the second quarter of 2019, the Company opened 134 hotels, increased by 30 comparing to 104 newly opened hotels in the second quarter of 2018. Among the hotels opened, one was in the luxury hotel segment, 21 were in the mid-to-up-scale segment, 60 were in the mid-scale segment, and 52 were in the economy segment. Geographically speaking, 7 hotels were in Tier 1 cities[2] 34 were in Tier 2 cities[3] and the remaining 93 were in select Tier 3 and other cities in China.
    During this quarter, the Company closed 35 hotels, 26 due to their non-compliance with the Company’s brand and operating standards, and 8 due to property related issues. The remaining one that was closed for brand upgrade. The Company added a net opening of 99 hotels to the portfolio.
  • As of June 30, 2019, the Company had a pipeline with a total of 596 hotels contracted for or under development, among which 47 hotels were in the luxury hotel segment, 117 in the mid-to-up-scale segment, 239 in the mid-scale segment, and 193 in the economy segment.
  • The average daily room rate, or ADR, for all hotels in operation, was RMB172 in the second quarter of 2019, an increase of 4.8% year-over-year. 
  • The occupancy rate, or OCC for all hotels in operation was 81.1% in the second quarter of 2019, compared with 82.6% in the second quarter of 2018.
  • The revenue per available room, or RevPAR, which is calculated by multiplying our hotels’ ADR by its occupancy rate, was RMB139 in the second quarter of 2019, representing a 2.9% year-over-year increase.
  • As of June 30, 2019, the Company’s loyalty program had more than 36 million individual loyal members and over 1,380,000 corporate members, compared to approximately 33 million and over 1,320,000 corporate members as of March 31, 2019. The Company had approximately 93.8% of room nights sold directly.

“We are proud to have delivered  a 6th consecutive quarter of improved operating and financial performance. During the quarter, we further improved the quality of our hotels, our RevPAR and market share. We will continue to focus on enhancing our value proposition to deliver better service and support to our customers and franchisees, and, as a result, deliver solid growth for the long run.” said Mr. Alex Xu, Chairman and Chief Executive Officer of GreenTree.

Second Quarter of 2019 Financial Results


Quarter Ended


 June 30, 2018


 June 30, 2019


 June 30, 2019


RMB

RMB


US$


Revenues[3]

Leased-and-operated hotels

51,305,036

60,510,976

8,814,417

Franchised-and-managed hotels

174,724,851

214,419,775

31,233,762


Total revenues


226,029,887


274,930,751


40,048,179

 


Six Months Ended


 June 30, 2018


 June 30, 2019


 June 30, 2019


RMB

RMB


US$


Revenues

Leased-and-operated hotels

96,920,132

112,336,802

16,363,700

Franchised-and-managed hotels

325,068,200

397,887,057

57,958,785


Total revenues


421,988,332


510,223,859


74,322,485


[3] On January 1, 2019, the Company adopted ASC 606  by using the full retrospective method and restate the comparable periods

Total revenues  for the second quarter of 2019 were RMB274.9 million (US$40.0 million)[1], representing a 21.6% year-over-year increase. The increase was primarily attributable to the addition of 134 hotels to our current network, improved RevPAR, contribution from membership growth, and the consolidation of the Argyle’s results of operation into our statement. Growth was partially offset by the renovation of 9 L&O hotels during this quarter. Total revenues for the first half of 2019 were RMB510.2 million (US$74.3 million)[1], representing a 20.9% increase.

  • Total revenues from leased-and-operated hotels  for the second quarter of 2019 were RMB60.5 million (US$8.8 million)[1], representing a 17.9% year-over-year increase. The increase was primarily attributable to increasing RevPAR, moderate sublease revenue growth; and was partially offset by the renovation of 9 L&O hotels during the quarter. Total revenues from leased-and-operated hotels for the first half of 2019 were RMB112.3 million (US$16.4 million)1, representing a 15.9% increase.
  • Total revenues from franchised-and-managed hotels  for the second quarter of 2019 were RMB214.4 million (US$31.2 million)[1], representing a 22.7% year-over-year increase. Initial franchise fees increased by 8.0% year-over-year in the second quarter of 2019, primarily due to the gross opening of 134 hotels in the second quarter of 2019 as compared to 104 hotels opened in the second quarter of 2018. The 23.8% increase from the second quarter of 2018 in recurring franchisee management fees and others was primarily due to the new openings, RevPAR growth of 2.8% as well as growth in central reservation system (“CRS”) usage fees, annual IT and marketing fees and hotel manager fees, which in turn resulted from the increased number of hotels and hotel rooms in operation. Total revenues from franchised-and-managed hotels for the first half of 2019 were RMB397.9 million (US$58.0 million)[1], representing a 22.4% increase.


Quarter Ended


 June 30, 2018


 June 30, 2019


 June 30, 2019


RMB

RMB


US$

Initial franchise fee

12,261,211

13,243,838

1,929,183

Recurring franchise management fee and others

162,463,640

201,175,937

29,304,579


Revenues from franchised-and-managed hotels


174,724,851


214,419,775


31,233,762

 


Six Months Ended


 June 30, 2018


 June 30, 2019


 June 30, 2019


RMB

RMB


US$

Initial franchise fee

21,104,652

25,996,787

3,786,859

Recurring franchise management fee and others

303,963,548

371,890,270

54,171,926


Revenues from franchised-and-managed hotels


325,068,200


397,887,057


57,958,785

Total operating costs and expenses


Quarter Ended


 June 30, 2018


 June 30, 2019


 June 30, 2019


RMB


RMB


US$


Operating costs and expenses

Hotel operating costs

64,206,723

78,939,817

11,498,881

Selling and marketing expenses

10,919,269

16,353,634

2,382,175

General and administrative expenses


25,150,930

39,768,385

5,792,918

Other operating expenses

35,330

65,350


9,520


Total operating costs and expenses



100,312,252


135,127,186


19,683,494

 


Six Months Ended


 June 30, 2018


 June 30, 2019


 June 30, 2019


RMB


RMB


US$


Operating costs and expenses

Hotel operating costs

127,952,267

158,939,661

23,152,172

Selling and marketing expenses

21,388,124

41,029,736

5,976,655

General and administrative expenses


45,551,787

65,500,871

9,541,278

Other operating expenses

178,592

107,974

15,728


Total operating costs and expenses



195,070,770


265,578,242


38,685,833

Hotel operating costs for the second quarter of 2019 were RMB78.9million (US$11.5 million)1, representing a 22.9% increase from the second quarter of 2018. The increase was mainly attributable to costs associated with the expansion of our F&M hotels including staff costs; higher rents, consumables, depreciation and amortization associated with the 4 new L&O hotels added to our portfolio in the third quarter of 2018, 1 new L&O hotel opened in the first quarter of 2019; as well as the operation costs of Argyle. For the first half year of 2019, hotel operating costs were RMB158.9million (US$23.2 million)1, representing a 24.2% increase.


Quarter Ended


 June 30,
2018


 June 30,
2019


 June 30,
2019


RMB


RMB


US$

Rental

17,660,357

19,039,168

2,773,368

Utilities

5,104,337

4,891,420

712,516

Personnel cost

7,937,739

8,495,301

1,237,480

Depreciation and amortization

3,714,393

7,174,031

1,045,015

Consumable, food and beverage

4,602,750

6,931,925

1,009,749

Costs of general managers of franchised-and-operated hotels

15,729,674

23,045,469

3,356,951

Other costs of franchised-and-operated hotels

5,990,938

7,306,217

1,064,271

Others

3,466,535

2,056,286


299,531


Hotel Operating Costs


64,206,723


78,939,817


11,498,881

 


Six Months Ended


 June 30,
2018


 June 30,
2019


 June 30,
2019


RMB


RMB


US$

Rental

35,292,424

39,647,433

5,775,300

Utilities

10,215,337

11,045,983

1,609,029

Personnel cost

15,169,589

17,289,575

2,518,511

Depreciation and amortization

8,534,806

13,698,236

1,995,373

Consumable, food and beverage

9,039,387

13,769,076

2,005,692

Costs of general managers of franchised-and-operated hotels

31,315,282

45,490,112

6,626,382

Other costs of franchised-and-operated hotels

11,375,446

12,992,800

1,892,615

Others

7,009,996

5,006,446


729,270


Hotel Operating Costs


127,952,267


158,939,661


23,152,172

Selling and marketing expenses for the second quarter of 2019 were RMB16.4 million (US$2.4 million)[1], representing a 49.8% year-over-year increase. The increase was mainly attributable to the operation of our two newly-added brands, as well as increased advertising and promotion expenses to improve our brands’ market recognition, and increased personnel, compensation and other costs. Selling and marketing expenses for the first half of 2019 were RMB41.0 million (US$6.0 million)[1], representing a 91.8% increase.

General and administrative expenses  for the second quarter of 2019 were RMB39.8 million (US$5.8 million)[1], representing a 58.1% year-over-year increase. The increase was primarily attributable to the consolidation of Argyle’s G&A expense, as well as increased share-based compensation expenses, consulting fee, and travelling expenses. General and administrative expenses for the first half of 2019 were RMB65.5 million (US$9.5 million)[1], representing a 43.8% year-over-year increase.

Gross profit for the second quarter of 2019 was RMB196.0 million (US$28.5 million)[1], representing an increase of 21.1% from the second quarter of 2018. Gross margin in this quarter was 71.3%, compared to 71.6% a year ago. The decrease of the margin resulted from increased operating costs caused by rising staff numbers and one-time costs related to the renovation of 9 L&O hotels. Gross profit for the first half of 2019 was RMB351.3 million (US$51.2 million)[1], representing a 19.5% year-over-year increase.

Income from operations for the second quarter of 2019 totaled RMB141.4 million (US$20.6 million)[1], representing a year-over-year increase of 2.5%. The operating margin, defined as income from operations as percentage of total revenues, for the second quarter of 2019 was 51.4%, compared to 61.0% a year ago. Income from operations for the first half of 2019 totaled RMB253.2 million (US$36.9 million)[1], representing a year-over-year increase of 0.1%.

Adjusted EBITDA (non-GAAP)
for the second quarter of 2019 was RMB173.1 million (US$25.2 million)[1], representing a year-over-year increase of 19.1%. The adjusted EBITDA margin, defined as adjusted EBITDA (non-GAAP) as a percentage of total revenues, was 63.0% in the second quarter of 2019, compared to 64.3% in the second quarter of 2018. Adjusted EBITDA (non-GAAP) for the first half of 2019 was RMB307.0 million (US$44.7 million)[1], representing a year-over-year increase of 19.5%.

Net income
for the second quarter of 2019 was RMB127.1 million (US$18.5 million)[1], representing a year-over-year increase of 35.2%. Net margin in the second quarter was 46.2%, compared to 41.6% a year ago. The year-over-year increase in net income and net income margin was mainly attributable to the Company’s expanded hotel network and the improved RevPAR. Net income for the first half of 2019 was RMB261.1 million (US$38.0 million)1, representing a year-over-year increase of 46.4%.

Core net income (non-GAAP) for the second quarter of 2019 was RMB125.8 million (US$18.3 million)[1], representing a year-over-year increase of 16.9%. The core net margin, defined as core net income (non-GAAP) as a percentage of total revenues, was 45.7% in the second quarter of 2019, compared to 47.6% one year ago. Core net income (non-GAAP) for the first half of 2019 was RMB218.0 million (US$31.8 million)[1], representing a year-over-year increase of 17.4%.

Earnings per ADS (basic and diluted)
for the second quarter of 2019 was RMB1.26 (US$0.18)[1], representing a year-over-year increase of 35.5%. Core net income per ADS (basic and diluted) (non-GAAP) was RMB1.23 (US$0.18)[1] for the second quarter of 2019, representing a year-over-year increase of 16.0%. Earnings per ADS (basic and diluted) for the first half of 2019 was RMB2.59 (US$0.38)[1], representing a year-over-year increase of 40.6%. Core net income per ADS (basic and diluted) (non-GAAP) was RMB2.14 (US$0.31)[1] for the first half of 2019, representing a year-over-year increase of 11.5%.

Cash flow.
O
perating cash inflow for the second quarter of 2019 was RMB85.0 million (US$12.4 million)[1], due primarily to improved operating performance across our hotel portfolio. Operating cash inflow for the first half of 2019 was RMB207.2 million (US$30.2 million)[1]. Investing cash outflow for the second quarter of 2019 was RMB295.0 million (US$43.0 million)[1], which was primarily attributable to acquisitions, increase of long-term time deposits, loans to franchisees and partially offset by proceeds from disposal of investments in equity securities. Investing cash outflow for the first half of 2019 was RMB401.5 million (US$58.5 million)[1]. Financing cash outflow for the second quarter of 2019 was nil while net financing cash outflow for the first half of 2019 was RMB197.6 million (US$28.8 million)[1].

Cash and cash equivalents, restricted cash, short-term investments, investments in equity securities[4] and time deposit[5]. As of June 30, 2019, the Company had a total balance of cash and cash equivalents, restricted cash, short term investments, investments in equity securities and time deposit of RMB2,053.7 million (US$299.1 million)[1], as compared to RMB2,180.8 million as of March 31, 2019, primarily due to cash outflow due to acquisitions, offset by operating cash inflow and loan to third parties and franchisees.

Recent Developments

During this quarter, the Company continued to develop its mid-scale segment and luxury brands, including GreenTree Eastern, GMe, GYa, VX, Deep Sleep Hotel[6], and two newly-added brands Argyle and Ausotel, to expand the scope of its distribution network and hotel portfolio in order to offer more diversified choices for both franchisees and customers.

The Company also integrated membership programs with its partners including but not limited to Da Niang Dumplings and Yibon Hotel Group. This will enable members to use membership points and benefits interchangeably.

In the meantime, the Company is continuously developing and improving its systems to better serve its clients and franchisees.

Guidance

For the full year 2019, the Company expects organic growth in total revenues of 23-28% compared to 2018.

The guidance set forth above reflects the Company’s current and preliminary view based on our estimates, may not be indicative of our financial results for future interim periods and the full year ended December 31, 2019 and is subject to change.

Conference Call

GreenTree’s management will hold an earnings conference call at 8:00 AM U.S. Eastern Time on August 16, 2019 (8:00 PM Beijing/Hong Kong Time on August 16, 2019).

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

International

1-412-902-4272 

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 call will be available after the conclusion of the conference call until August 23, 2019.

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:

10133916

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, 2019, GreenTree had a total number of 2,955 hotels. In 2018, GreenTree ranked among the Top 12 worldwide in terms of number of hotels in “World’s Largest Hotel Companies: HOTELS’ 325”, published by HOTELS magazine, and was as well the fourth largest hospitality company in China in 2018 based on the statistics issued by the China Hospitality Association.

The Company 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. The Company has further expanded its brand portfolio into the mid-to-upscale 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 our clients and partners by providing a brand portfolio featuring 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=RMB6.8650 on June 28, 2019 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at https://www.federalreserve.gov/releases/H10/hist/dat00_ch.htm.

[2]

“Tier 1 cities” refers to the term used by the National Bureau of Statistics of China and refer to Beijing, Shanghai, Shenzhen and Guangzhou.

[3]

“Tier 2 cities” refers to the 32 major cities, other than Tier 1 cities, as categorized by the National Bureau of Statistics of China, 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.

[4]

Investments in equity securities include securities and investment in Gingko and New Century which is recorded in Long-term investments account.

[5]


Investments in equity securities include securities and investment in Gingko and New Century which is recorded in Long-term investments account.  

[6]


Time deposits are the time deposit certificates last over three months.

[7]


Wumian Hotel changed its brand name to Deep Sleep Hotel in the second quarter of 2019, while its English trademark is currently being registered.

—Financial Tables and Operational Data Follow—

 


GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Balance Sheets


 December 31, 2018


 June 30,
2019


 June 30,
2019


RMB


RMB


US$


ASSETS


Current assets:

Cash and cash equivalents

1,264,025,785

850,661,068

123,912,756

Short-term investment

685,512,063

151,615,477

22,085,284

Investments in equity securities

307,693,782

248,171,341

36,150,232

Accounts receivable, net of allowance for doubtful accounts

64,864,184

 

94,605,153

13,780,794

Amounts due from related parties

228,600

250,151


36,438

Prepaid rent

4,478,413

3,766,832

548,701

Inventories

2,547,729

1,432,429

208,657

Other current assets

53,969,039

54,477,884

7,935,599

Loans receivable, net

67,196,568

91,672,017

13,353,535


Total current assets


2,450,516,163


1,496,652,352


218,011,996


Non-current assets:

Restricted cash

3,300,000

16,285,620


2,372,268

Long-term time deposits

60,000,000

520,000,000

75,746,540

Loan receivable, net

39,352,863

69,695,061

10,152,230

Property and equipment, net

222,389,573

426,585,281

62,139,152

Intangible assets, net

27,213,391

256,942,055


37,427,830

Goodwill

5,787,068

45,485,971


6,625,779

Long-term investments

112,219,460

378,850,506

55,185,798

Other assets

25,701,523

81,078,922


11,810,479

Deferred tax assets

133,300,966

134,070,982

19,529,640


 TOTAL ASSETS


3,079,781,007



3,425,646,750


499,001,712


LIABILITIES AND EQUITY


Current liabilities:

Short-term bank loans

60,000,000

60,000,000

8,739,985

Accounts payable

9,182,058

11,708,087

1,705,475

Advance from customers

36,370,325

34,092,101

4,966,074

Amounts due to related parties

285,578

1,117,926

162,844

Salary and welfare payable

42,767,219

39,241,585

5,716,181

Deferred rent

4,421,427

3,208,628

467,389

Deferred revenue

210,585,604

215,123,608

31,336,287

Accrued expenses and other current
liabilities

241,407,979

271,306,037


39,520,182

Income tax payable

104,988,638

77,823,166

11,336,222


Total current liabilities


710,008,828


713,621,138


103,950,639

Deferred rent

20,519,682

19,881,213

2,896,025

Deferred revenue

380,173,585

397,461,282

57,896,764

Other long-term liabilities

96,573,810

100,167,279

14,591,009

Deferred tax liabilities

43,538,624

134,389,663

19,576,062

Unrecognized tax benefits

169,619,409

198,533,742

28,919,700


 TOTAL LIABILITIES


1,420,433,938


1,564,054,317


227,830,199


Shareholders’ equity:

Class A ordinary shares

217,421,867

219,526,699

31,977,669

Class B ordinary shares

115,534,210

115,534,210

16,829,455

Additional paid-in capital

1,003,026,803

1,073,071,903

156,310,547

Retained earnings

252,617,450

307,982,604

44,862,725

Accumulated other comprehensive (loss) income

62,367,692

58,585,189

8,533,895


Total GreenTree Hospitality Group Ltd. shareholders’ equity


1,650,968,022


1,774,700,605


258,514,291

Non-controlling interests

8,379,047

86,891,828

12,657,222


Total shareholders’ equity


1,659,347,069


1,861,592,433


271,171,513


TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY


3,079,781,007


3,425,646,750


499,001,712

 

 


GreenTree Hospitality Group Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income


Quarter Ended


Six Months Ended


 June 30,
2018


 June 30, 2019


 June 30, 2019


 June 30, 2018


 June 30, 2019


 June 30, 2019


RMB


RMB


US$


RMB


RMB


US$


Revenues

Leased-and-operated hotels

51,305,036

60,510,976

8,814,417

96,920,132

112,336,802

16,363,700

Franchised-and-managed hotels

174,724,851

214,419,775

31,233,762

325,068,200

397,887,057

57,958,785


Total revenues


226,029,887


274,930,751


40,048,179


421,988,332


510,223,859


74,322,485


Operating costs and expenses

Hotel operating costs

(64,206,723)

(78,939,817)

(11,498,881)

(127,952,267)

(158,939,661)

(23,152,172)

Selling and marketing expenses

(10,919,269)

(16,353,634)

(2,382,175)

(21,388,124)

(41,029,736)

(5,976,655)

General and administrative
expenses


(25,150,930)

(39,768,385)

(5,792,918)


(45,551,787)

(65,500,871)

(9,541,278)

Other operating expenses

(35,330)

(65,350)

(9,520)

(178,592)

(107,974)

(15,728)


Total operating costs and
expenses



(100,312,252)


(135,127,186)


(19,683,494)



(195,070,770)


(265,578,242)


(38,685,833)

Other operating income


12,242,088

1,639,842

238,870


26,067,489

8,546,295

1,244,908


Income from operations


137,959,723


141,443,407


20,603,555


252,985,051


253,191,912


36,881,560

Interest income and other, net

11,420,031

17,759,532

2,586,968

16,123,893

34,228,543

4,985,949

Interest expense

(700,350)

(102,017)

(1,385,475)

(201,817)

Gains (losses) from investment
in equity securities

(25,862,935)

15,902,581

2,316,472

(31,036,562)

75,837,051

11,046,912

Other income, net

1,860,961


271,079

2,690,742

391,951


Income before income taxes


123,516,819


176,266,131


25,676,057


238,072,382


364,562,773


53,104,555

Income tax expense

(29,339,034)

(49,050,930)

(7,145,074)

(58,625,445)

(103,216,322)

(15,035,152)


Income before share of loss in equity method investments


94,177,785


127,215,201


18,530,983


179,446,937


261,346,451


38,069,403

Share of losses in equity investees, net of tax

(182,988)

(114,566)

(16,688)

(1,090,024)

(287,797)

(41,922)


Net income


93,994,797


127,100,635


18,514,295


178,356,913


261,058,654


38,027,481

Net loss attributable to non-controlling interests

(3,152)

1,376,781

200,551

26,367

2,332,314

339,739


Net income attributable to ordinary shareholders


93,991,645


128,477,416


18,714,846


178,383,280


263,390,968


38,367,220


Net earnings per share

Class A ordinary share-basic and diluted

0.93

1.26

0.18

1.84

2.59

0.38

Class B ordinary share-basic and diluted

0.93

1.26

0.18

1.84

2.59

0.38


Net earnings per ADS

Class A ordinary share-basic and diluted

0.93

1.26

0.18

1.84

2.59

0.38

Class B ordinary share-basic and diluted

0.93

1.26

0.18

1.84

2.59

0.38


Weighted average shares outstanding

Class A ordinary share-basic and diluted

66,789,300

67,113,004

67,113,004

58,866,739

67,064,583

67,064,583

Class B ordinary share-basic and diluted

34,762,909

34,762,909

34,762,909

37,839,060

34,762,909

34,762,909


Other comprehensive income, net of tax

Foreign currency translation adjustments

1,213,623

11,020,015

1,605,246

1,043,741

(3,782,503)

(550,984)


Comprehensive income, net of tax


95,208,420


138,120,650


20,119,541


179,400,654


257,276,151


37,476,497

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

(3,152)

1,376,781

200,551

26,367

2,332,314

339,740


Comprehensive income attributable to ordinary shareholders


95,205,268


139,497,431


20,320,092


179,427,021


259,608,465


37,816,237


 


GreenTree Hospitality Group Ltd.


Unaudited Condensed Consolidated Statements of Cash Flows


 Quarter Ended


Six Months Ended


 June30, 2018


 June 30, 2019


 June 30, 2019


 June 30, 2018


 June 30, 2019


 June 30, 2019


RMB


RMB


US$


RMB


RMB


US$


Operating activities:

Net income

93,994,797

127,100,635

18,514,295

178,356,913

261,058,654

38,027,481


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

Depreciation and amortization

4,557,247

8,150,042

1,187,187

9,951,749

15,820,814

2,304,561

Share of loss in equity method investments

182,988

114,566

16,688

1,090,024

287,797

41,922

Interest income

(234,004)


(2,452,171)


(357,199)

(4,937,866)


(10,413,809)


(1,516,942)

Bad debt expense

379,445

(5,890,482)

(858,045)

698,703

(4,999,113)

(728,203)

(Gains) loss from investments in equity securities

25,862,935

(15,902,581)

(2,316,472)

31,036,562

(75,837,051)

(11,046,912)

Foreign exchange losses (gains)

(1,340,059)

(324,322)

(47,243)

(614,853)

(528,439)

(76,976)

Share-based compensation

3,586,930

6,260,341

911,921

3,746,769

11,109,792

1,618,324

Income tax expenses related to dividend distribution or retained profits

3,955,452

576,177

7,799,944

1,136,190


Changes in operating assets and liabilities:

Accounts receivable

(8,246,047)

(5,850,767)

(852,260)

(19,468,637)

(23,868,928)

(3,476,901)

Prepaid rent

(1,455,073)

131,304

711,581

103,653

Inventories

186,242

(280,089)

(40,800)

961,422

1,168,794

170,254

Amounts due from related parties

1,938,481

(25,151)

(3,664)

1,522,123

(21,551)

(3,139)

Other current assets

(19,562,202)

(7,010,607)

(1,021,210)

(26,365,951)

186,182

27,120

Other assets

(7,453,225)

(1,085,685)



(12,142,854)

(1,768,806)

Accounts payable

(4,359,732)

(2,228,556)

(324,626)

337,208

1,970,109

286,979

Amounts due to related parties

154,006

899,112

130,970

480,702

832,348

121,245

Salary and welfare payable

27,794

2,313,943

337,064

(1,651,291)

(5,049,650)

(735,564)

Deferred revenue

27,635,223

9,218,777

1,342,866

49,878,884

4,825,701

702,943

Advance from customers

8,017,444

(607,442)


(88,483)

(471,039)

(2,278,224)


(331,863)

Accrued expenses and other current liabilities

(29,094,444)


2,668,564


388,720

(25,606,665)


28,261,232


4,116,713

Income tax payable

(56,273,754)

(51,216,175)

(7,460,477)

(36,539,914)

(27,333,112)

(3,981,517)

Unrecognized tax benefits

43,190,003

22,867,582

3,331,039

46,941,155

28,914,333

4,211,847

Deferred rent

(1,028,699)

(1,558,697)

(227,050)

(2,043,147)

(1,851,268)

(269,668)

Other long-term liabilities

7,701,591

2,545,743

370,831

9,474,980

3,593,469

523,450

Deferred taxes

(9,523,172)

(272,719)

(39,726)

(14,570,166)

4,997,435

727,958


Net cash provided by operating activities


86,297,940



85,021,773



12,384,818


202,338,969



207,214,186



30,184,149


Investing activities:

Purchases of property and equipment

(54,676,146)


(4,451,361)


(648,414)

(113,008,255)


(3,511,310)


(1,968,144)

Purchases of intangible assets

(900,000)

(900,000)

Advances for acquisitions

(47,866,700)

(6,972,571)

(47,866,700)

(6,972,571)

Purchases of short-term investments

(275,105,052)

(28,283,130)

(4,119,902)

(791,666,641)

(212,519,973)

(30,957,024)

Proceeds from short-term investments

234,004


40,774,393


5,939,460

745,234,004


756,830,368


110,244,773

Proceeds from disposal of property and equipment

1,000,000

145,666

1,300,000

189,366

Acquisitions, net of cash received

(234,660,607)

(34,182,171)

(244,660,607)

(35,638,836)

Increase of long-term time deposits

(20,000,000)

(2,913,328)

(460,000,000)

(67,006,555)

Purchases of investments in equity securities

(22,060,000)

(3,213,401)

(4,795,838)

(24,036,351)

(3,501,289)

Purchases of long term investments

(247,456,740)

(36,046,138)

Proceeds from disposal of investments in equity securities

7,604,063

36,617,830

5,333,988

18,871,973

145,221,744

21,153,932

Loan to third parties

(5,000,000)

(135,835,219)

(19,786,631)

(10,000,000)

(151,775,219)

(22,108,553)

Loan to a related party

(4,300,000)

(106,979,750)

(15,583,358)

(4,300,000)

(116,979,750)

(17,040,022)

Loan to franchisees

(13,000,000)

(13,460,000)

(1,960,670)

(28,000,000)

(31,590,000)


(4,601,603)

Repayment of loan from third parties

121,280,219

17,666,456

121,280,219

17,666,456

Repayment from a related party



116,979,750

17,040,022



116,979,750

17,040,022

Repayment from a franchisee

4,920,000

1,973,956

287,539

8,420,000

7,267,353

1,058,609


Net cash used in investing activities


(340,223,131)



(294,970,619)



(42,967,315)


(180,144,757)



(401,517,216)



(58,487,577)


Financing activities:

Distribution to the shareholders

(160,840,918)

(200,532,021)

(208,025,814)

(30,302,376)

Income tax paid related to the above distribution

(3,000,000)

Proceeds from NCI

10,390,000

1,513,474

Proceeds from IPO, net of capitalized expenses

837,505,007

Payment for initial public offering costs

(25,087,646)

(29,390,408)


Net cash provided by (used in) financing activities


(185,928,564)


604,582,578


(197,635,814)


(28,788,902)

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

1,509,941

3,249,707

473,373

614,853

(8,440,253)

(1,229,461)


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


(438,343,814)


(206,699,139)


(30,109,124)


627,391,643


(400,379,097)



(58,321,791)

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

1,230,699,122

1,073,645,827

156,394,148

164,963,665

1,267,325,785

184,606,815


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


792,355,308

866,946,688

126,285,024


792,355,308


866,946,688



126,285,024

 

* Upon the adoption of ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, restricted cash was included within cash and cash equivalents in the consolidated statement of cash flows for the three months and six months period ended June 30, 2019 and the comparative disclosure had been restated to conform to the current period presentation.

 


GreenTree Hospitality Group Ltd.


Unaudited Reconciliation of GAAP and Non-GAAP Results


Quarter Ended


Six Months Ended


June 30, 2018


 June 30, 2019


 June 30, 2019


June 30, 2018


 June 30, 2019


 June 30, 2019


RMB


RMB


US$


RMB


RMB


US$


Net income


93,994,797


127,100,635


18,514,295


178,356,913


261,058,654


38,027,481


Deduct:

Other operating income


12,242,088

1,639,842

238,870


26,067,489

8,546,295

1,244,908

Reimbursement related to the ADS program

 



 



Gains on investments in equity securities

15,902,581

2,316,472

75,837,051

11,046,912

Other income, net

1,860,961

271,079

2,690,742

391,951


Add:

Other operating expenses

35,330

65,350

9,520

178,592

107,974

15,728

Income tax expense

29,339,034

49,050,930

7,145,074

58,625,445

103,216,322

15,035,152

Share of loss in equity investees, net of tax

182,988

114,566

16,688

1,090,024

287,797

41,922

Interest expense

700,350

102,017

1,385,475

201,817

Share-based compensation

3,586,930

7,326,131

1,067,171

3,746,769

12,175,582

1,773,573

Depreciation and amortization

4,557,247

8,150,042

1,187,187

9,951,749

15,820,814

2,304,561

Losses on investments in equity securities

25,862,935

31,036,562


Adjusted EBITDA (Non-GAAP)


145,317,173


173,104,620


25,215,531


256,918,565


306,978,530


44,716,463

 

 


Quarter Ended


Six Months Ended


 June 30, 2018


 June 30, 2019


 June 30, 2019


June 30, 2018


 June 30, 2019


 June 30, 2019


RMB


RMB


US$


RMB


RMB


US$


Net income


93,994,797


127,100,635


18,514,295


178,356,913


261,058,654



38,027,481


Deduct:

Government subsidies (net of 25% tax)

76,774

233,981

34,083

10,312,776

5,048,981

735,467

Gains on investments in equity securities (net of 25% tax)

11,926,936

1,737,354

56,877,788

8,285,184

Reimbursement related to the ADS program

9,271,648

9,271,648

Other income (net of 25% tax)

1,395,721

203,309

2,018,057

293,963


Add:

Share-based compensation

3,586,930

7,326,131

1,067,171

3,746,769

12,175,582

1,773,573

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

19,397,201

23,277,422

one-time consulting fees for M&A

943,650

137,457

943,650

137,458

Income tax expenses related to dividend distribution

3,955,452

576,177

7,799,944

1,136,190


Core net income (Non-GAAP)


107,630,506


125,769,230


18,320,354


185,796,680


218,033,004


31,760,088


Core net income per ADS (Non-GAAP)

Class A ordinary share-basic and diluted

1.06

1.23

0.18

1.92

2.14

0.31

Class B ordinary share-basic and diluted

1.06

1.23

0.18

1.92

2.14

0.31

Operational Data


As of June 30, 2018


As of June 30, 2019


 Total hotels in operation:


2,434


2,955

 Leased-and-owned hotels

26

30

 Franchised hotels

2,408

2,925


 Total hotel rooms in operation


201,275


236,557

 Leased-and-owned hotels

3,358

3,803

 Franchised hotels

197,917

232,754


 Number of cities


267


300

 


Quarter Ended


As of June 30, 2018


As of June 30, 2019


 Occupancy rate (as a percentage)

 Leased-and-owned hotels

70.7%

70.5%

 Franchised hotels

82.9%

81.3%

 Blended

82.6%

81.1%


 Average daily rate (in RMB)

 Leased-and-owned hotels

201

216

 Franchised hotels

163

171

 Blended

164

172


RevPAR (in RMB)

 Leased-and-owned hotels

142

152

 Franchised hotels

135

139

 Blended

136

139

 


Number of Hotels in Operation


Number of Hotel Rooms in Operation


As of June


As of June


As of June


As of June


30, 2018


30, 2019


30, 2018


30, 2019


Luxury


/


19


/


4,017

Argyle

/

19

/


4,017


 Mid-to-up-scale


60


152


6,760


15,357

 GreenTree Eastern

59

96

6,650

10,200

 Deepsleep Hotel

1

62

 GMe

18

1,669

 Geya

11

918

 VX

1

17

110

1,397

Ausotel

/

9

/

1,111


 Mid-scale


2,062


2,229


177,665


189,357

 GreenTree Inn

1,785

1,931

155,470

166,183

 GT Alliance

277

295

22,195

22,994

 GreenTree Apartment

3

180


 Economy hotels


312


555


16,850


27,826

 Vatica

111

119

8,295

8,819

 Shell

201

436

8,555

19,007


Total


2,434


2,955


201,275


236,557

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

Cision View original content:http://www.prnewswire.com/news-releases/greentree-hospitality-group-ltd-reports-second-quarter-of-2019-financial-results-300902944.html

SOURCE GreenTree Hospitality Group Ltd.

Qudian Inc. Reports Second Quarter 2019 Unaudited Financial Results

Logo

Qudian Inc. Reports Second Quarter 2019 Unaudited Financial Results

PR Newswire

XIAMEN, China, Aug. 16, 2019 /PRNewswire/ — Qudian Inc. (“Qudian” or the “Company”) (NYSE: QD), a leading provider of online small consumer credit products in China, today announced its unaudited financial results for the quarter ended June 30, 2019.

Second Quarter 2019 Operational Highlights:

  • Total number of registered users as of June 30, 2019 reached 76.0 million, representing an increase of 11.9% from June 30, 2018
  • Number of outstanding borrowers[1] from loan book business and transaction referral business as of June 30, 2019 increased by 11.9%  to 6.1 million from 5.4 million as of March 31, 2019
  • Cumulative number of borrowers[2] from loan book business and transaction referral business as of June 30, 2019 increased by 16.9% to 18.3 million from June 30, 2018
  • New active borrowers[3] from loan book business and transaction referral business for this quarter increased by 108.2% to 1,092,849 from 524,795 for the first quarter of 2019 as a result of successful activation of Qudian’s user base through credit trial programs and incremental user growth driven by transaction referral business
  • Total outstanding loan balance[4] as of June 30, 2019 increased by 91.8% to RMB28.7 billion from June 30, 2018
  • Weighted average loan tenure for our loan book business was 8.4 months for this quarter, compared with 9.9 months for the first quarter of 2019; Weighted average loan tenure for our transaction referral business was 14.1 months for this quarter, compared with 11.8 months for the first quarter of 2019
  • Cumulative number of users for traffic referral service as of June 30, 2019 increased by 34.1% to 3.4 million from March 31, 2019; Cumulative number of users for transaction referral service as of June 30, 2019 increased by 205.6% to 417,478 from March 31, 2019
  • Cumulative amount of transactions referred for transaction referral business was RMB5.9 billion as of June 30, 2019


[1] Outstanding borrowers are borrowers who have outstanding loans as of a particular date, including outstanding borrowers from both loan book business and transaction referral business. Transaction referral business, as part of our open-platform, was launched in the second half of 2018.

[2] Cumulative number of borrowers are borrowers who have drawn down credit on or prior to a particular date, on a cumulative basis, including outstanding borrowers from both loan book business and transaction referral business.

[3] Active borrowers are borrowers who have drawn down credit in the specified period from both loan book business and transaction referral business. New active borrowers are active borrowers who had never drawn down credit on our platform prior to the specified period.

[4] Includes off and on balance sheet loans directly or indirectly funded by our institutional funding partners or our own capital, net of cumulative write-offs and it does not include auto loans from Dabai Auto business and loans from transaction referral business.

Second Quarter 2019 Financial Highlights:

  • Total revenues were RMB2,220.7 million (US$323.5 million), flat from the same period last year, primarily due to discontinuation of Dabai Auto
    • Loan facilitation income and other related income increased by 34.8% year-on-year to RMB609.7 million (US$88.8 million) from RMB452.1 million for the same period last year
    • Referral service fee and other related income which relate to transaction referral services and traffic referral services provided by our open-platform, substantially increased to RMB398.1 million (US$58.0 million) from nil for the same period last year
    • Financing income increased by 10.0% to RMB984.4 million (US$143.4 million) from RMB895.1 million for the same period last year as a result of an increase in average on-balance sheet loan balance
  • Net income increased by 57.9% year-on-year to RMB1,143.4 million (US$166.6 million), or RMB4.00 (US$0.58) per diluted ADS
  • Non-GAAP net income[5] increased by 57.1% year-on-year to RMB1,158.6 million (US$168.8 million), or RMB4.05 (US$0.59) per diluted ADS

 [5] For more information on this Non-GAAP financial measure, please see the table captioned “Unaudited Reconciliation of GAAP and Non-GAAP Results” set forth at the end of this press release.

“In the second quarter we achieved new records in net income and borrower numbers and made great progress on our open-platform initiative,” said Mr. Min Luo, Founder, Chairman and Chief Executive Officer of Qudian. “Leveraging our self-developed credit big-data and transaction clearing technologies, we are able to provide large scale credit assessment and high-speed precision processing via an efficient and reliable to-consumer interface for more than 100 licensed financial service providers to serve the underpenetrated consumption credit market in China. These underserved mass-market Chinese consumers are attracted to the affordable and seamless loans offered through our platform, creating overwhelming demand that drives natural traffic with minimal acquisition costs for us. As the end of the second quarter 2019, our registered user base grew to 76.0 million and total outstanding borrowers reached 6.1 million, both the highest in our Company’s history.

“Strategically, via our open-platform initiative we are further opening up our dormant registered user base  beyond our loan book to financial institution partners who wish to grow their own loan book. During the second quarter, over 415,000 open-platform outstanding borrowers were served on our interface, with a 70%[6] repeat ratio, demonstrating strong sustainability and user stickiness trends.”


[6] Repeat user ratio refers to the ratio of (i) users who have made at least one drawdown on the open-platform prior to the second quarter of 2019 and made at least one drawdown in the second quarter of 2019, and have at least RMB1,000 of remaining credit line after the most recent drawdown as of June 30, 2019, divided by (ii) users who have made at least one drawdown on the open-platform and have at least RMB1,000 of remaining credit line after the most recent drawdown as of June 30, 2019.

“Since we have an overwhelming demand situation, instead of increasing marketing spend we have stepped up efforts to activate more new users in our loan book business. Through our increased efforts in credit trials and our evolving credit assessment system, new active borrowers increased by 107.9% from last quarter.”

“While we continue to enjoy a massive proprietary app based user base, we are opening our interface to third-party app partners. Instead of routing high cost traffic to our app, we will continue our approach of implementing a distributed traffic eco-system. Leveraging the latest in HTML5 technology, we can operate the full credit assessment and disbursement experience through third-party apps. This brings seamless user experience to the mass market by integrating our user interfaces within such leading third-party apps where their users wish to stay.”

“We delivered another record Non-GAAP net income of RMB1,158.6 million, a 57.1% year-over-year increase as a result of our fast-growing user base, risk-free incremental profits from our open-platform initiative, low operating costs, regulatory compliant operating structure and solid asset quality,” said Mr. Carl Yeung, Chief Financial Officer of Qudian. “Owning to our massive under-tapped user base our open-platform initiative continued to prove its strong potential to become a major growth driver, generating RMB398.1 million in revenue for the second quarter with little marginal operational cost and zero credit risk, and driving over RMB4.8 billion in loan balance for our licensed financial institution partners as of the end of second quarter. This grew substantially from RMB158.7 million of referral revenues in the first quarter of 2019. Our established full-suite consumer finance solution offered to our app partners contains credit assessment models and transaction infrastructure that can process over 37,000 transactions per hour, solidifying our leadership position in big data analytics and transaction clearing, delivering significant value to all participants in the online consumer finance value chain.”

“Qudian has a long-standing commitment to deliver value to our shareholders. We seized the market window to raise a US$345 million convertible bond, including a fully exercised green shoe, at 1% coupon for 7 years, and further entered a capped call transaction to increase the effective conversion premium by 75%. More importantly, given the ongoing visible disconnect between the Company’s value and fundamentals, the majority of the proceeds are earmarked for potential share buybacks over the next one to two years. We will continue to assess latest capital market trends and may undertake new capital market transactions that enhance shareholder value. With solid second quarter results driven by strong momentum in our open-platform initiative and better-than-expected loan book growth, we are reaffirming our previously announced Non-GAAP net income guidance of RMB4.5 billion.

Second Quarter Financial Results

Total revenues were RMB2,220.7 million (US$323.5 million), flat from RMB2,243.7 million for the second quarter of 2018.

Financing income totaled RMB984.4 million (US$143.4 million), an increase of 10.0% from RMB895.1 million for the second quarter of 2018, as a result of an increase in average on-balance sheet loan balance.

Loan facilitation income and otherrelated income increased by 34.8% to RMB609.7 million (US$88.8 million) from RMB452.1 million for the second quarter of 2018, as a result of an increase in the amount of off-balance sheet transactions. 

Referral service fee and other related income substantially increased to RMB398.1 million (US$58.0 million) from nil in the second quarter of 2018, as a result of the ramp-up of the open-platform initiative.

Sales income substantially decreased to RMB123.5 million (US$18.0 million) from RMB784.8 million for the second quarter of 2018, due to the scaling down of the Dabai Auto business.

Sales commission fee decreased by 9.7% to RMB95.6 million (US$13.9 million) from RMB105.9 million for the second quarter of 2018, due to a decrease in the gross merchandise value for merchandise credit products.

Total operating costs and expenses decreased by 34.9% to RMB959.1 million (US$139.7 million) from RMB1,473.1 million for the second quarter of 2018.

Cost of revenues decreased by 69.8% to RMB286.1 million (US$41.7 million) from RMB947.8 million for the second quarter of 2018, primarily due to a decrease in costs incurred by the Dabai Auto business and a decrease in funding costs associated with the on-balance sheet portion of our loan book business.

Sales and marketing expenses decreased by 51.6% to RMB77.7 million (US$11.3 million) from RMB160.6 million for the second quarter of 2018. The decrease was primarily due to a decrease in staff salary and marketing expenses associated with the scaling down of the Dabai Auto business.

General and administrative expenses decreased by 2.6% to RMB67.3 million (US$9.8 million) from RMB69.1 million for the second quarter of 2018.

Research and development expenses increased by 70.6% to RMB62.9 million (US$9.2 million) from RMB36.9 million for the second quarter of 2018 as a result of an increase in staff salary.

Provision for receivables increased by 122.8% to RMB494.5 million (US$72.0 million) from RMB222.0 million for the second quarter of 2018. The increase was primarily due to an increase in past-due on-balance sheet outstanding principal receivables compared to the second quarter of 2018 and a write-down relating to the Dabai Auto business of RMB38.4 million (US$5.6 million).

As of June 30, 2019, the total balance of outstanding principal and financing service fee receivables for on-balance sheet transactions for which any installment payment was more than 30 calendar days past due was RMB668.1 million (US$97.3 million), and the balance of allowance for principal and financing service fee receivables at the end of the period was RMB888.3 million (US$129.4 million), indicating M1+ Delinquency Coverage Ratio of 1.3x.

The following chart displays “vintage charge-off rate.” Vintage charge-off rate refers to, with respect to on- and off-balance sheet transactions facilitated during a specified time period, the total outstanding principal balance of the transactions that are delinquent for more than 180 days during such period, divided by the total initial principal of the transactions facilitated in such vintage.

Vintage Charge-off Rate by Vintage for the Whole Loan Book

The following chart displays the historical lifetime cumulative M1+ delinquency rate by vintage, from the second month after credit drawdowns up to the twelfth month after such transactions for all on- and off-balance transactions for each of the quarters indicated, before charge-offs.

M1+ Delinquency Rate by Vintage for the Whole Loan Book

Income from operations increased by 63.4% to RMB1,264.2 million (US$184.2 million) from RMB773.8 million for the second quarter of 2018.

Net income attributable to Qudian’s shareholders increased by 57.9% to RMB1,143.4 million (US$166.6 million), or RMB4.00 (US$0.58) per diluted ADS.

Non-GAAP Net income attributable to Qudian shareholders increased by 57.1% to RMB1,158.6 million (US$168.8 million), or RMB4.05 (US$0.59) per diluted ADS.

Cash Flow

As of June 30, 2019, the Company had cash and cash equivalents of RMB2,586.9 million (US$376.8 million) and restricted cash of RMB858.6 million (US$125.1 million). Restricted cash mainly represents (i) cash held by the consolidated trusts through segregated bank accounts; (ii) time deposits that are pledged for short-term bank loans; and (iii) security deposits held in designated bank accounts for guarantee of off-balance sheet transactions. Such restricted cash is not available to fund the general liquidity needs of the Company.

For the quarter ended June 30, 2019, net cash provided by operating activities was RMB1,413.6 million (US$205.9 million), mainly attributable to net income of RMB1,143.4 million (US$166.6 million), adjustment of provision for receivables of RMB494.5 million (US$72.0 million). Net cash provided by investing activities was RMB881.3 million (US$128.4 million), mainly due to proceeds from collection of loan principal of RMB6,935.1 million (US$1,010.2 million), partially offset by payments to originate loan principal of RMB5,833.9 million (US$849.8 million). Net cash used in financing activities was RMB1,927.8 million (US$280.8 million), mainly due to repayments of borrowings of RMB1,374.5 million (US$200.2 million) and repurchase of ordinary shares of RMB693.5 million (US$101.0 million).

Convertible bond issuance and update on share repurchase

On July 1, 2019, the Company closed the offering of US$300 million in aggregate principal amount of convertible senior notes due 2026 and the sale of an additional US$45 million aggregate principal amount of such notes pursuant to the exercise in full by the initial purchasers of their option to purchase additional notes. In light of continued disconnection between strong fundamentals and low stock price, the Company plans to use the majority of the proceeds to further fuel its share repurchase efforts. As of the date of this release, the Company has completed total share repurchases of approximately US$377 million. As of June 30, 2019, the total number of ordinary shares outstanding was 279,260,717.

Outlook

The Company reaffirms its total Non-GAAP net income for the full year of 2019 to exceed RMB4.5 billion, which will represent a 76.5% increase from approximately RMB2.5 billion for 2018.

The above outlook is based on current market conditions and reflects the Company’s preliminary expectations as to market conditions, its regulatory and operating environment, as well as customer demand, all of which are subject to change.

Conference Call

The Company’s management will host an earnings conference call on August 16, 2019 at 8:00 AM U.S. Eastern Time, (8:00 PM Beijing/Hong Kong Time).

Dial-in details for the earnings conference call are as follows:

U.S.:

+1-866-519-4004 (toll-free) / +1-845-675-0437

International:

+65-6713-5090

Hong Kong: 

800-906-601 (toll-free) / +852-3018-6771

Mainland China:  

400-620-8038 / 800-819-0121

Please dial in 15 minutes before the call is scheduled to begin and provide the passcode to join the call. The passcode is “Qudian Conference Call”. Additionally, a live and archived webcast of the conference call will be available on the Company’s investor relations website at http://ir.qudian.com.

A replay of the conference call will be accessible approximately one hour after the conclusion of the live call until August 24, 2019, by dialing the following telephone numbers:

U.S.:

+1-855-452-5696 (toll-free) / +1-646-254-3697

International: 

+61-28199-0299

Hong Kong: 

800-963-117 (toll-free) / +852-3051-2780

Mainland China:

400-632-2162 (toll-free) / 800-870-0205 (toll-free)

Passcode: 

7744949

About Qudian Inc.

Qudian Inc. (“Qudian”) is a leading provider of online small consumer credit in China. The Company uses big data-enabled technologies, such as artificial intelligence and machine learning, to transform the consumer finance experience in China. With the mission to use technology to make personalized credit accessible, Qudian targets hundreds of millions of young, mobile-active consumers in China who need access to small credit for their discretionary spending but are underserved by traditional financial institutions due to lack of traditional credit data. Qudian’s data technology capabilities combined with its operating efficiencies allow Qudian to understand prospective borrowers from different behavioral and transactional perspectives, assess their credit profiles with regard to both their willingness and ability to repay and offer them instantaneous and affordable credit products with customized terms, and distinguish Qudian’s business and offerings.

For more information, please visit http://ir.qudian.com.

Use of Non-GAAP Financial Measures

We use adjusted net income, a Non-GAAP financial measure, in evaluating our operating results and for financial and operational decision-making purposes. We believe that adjusted net income helps identify underlying trends in our business by excluding the impact of share-based compensation expenses, which are non-cash charges. We believe that adjusted net income provides useful information about our operating results, enhances the overall understanding of our past performance and future prospects and allows for greater visibility with respect to key metrics used by our management in its financial and operational decision-making.

Adjusted net income is not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. This Non-GAAP financial measure has limitations as analytical tools, and when assessing our operating performance, cash flows or our liquidity, investors should not consider them in isolation, or as a substitute for net loss / income, cash flows provided by operating activities or other consolidated statements of operation and cash flow data prepared in accordance with U.S. GAAP.

We mitigate these limitations by reconciling the Non-GAAP financial measure to the most comparable U.S. GAAP performance measure, all of which should be considered when evaluating our performance.

For more information on this Non-GAAP financial measure, please see the table captioned “Unaudited Reconciliation of GAAP and Non-GAAP Results” set forth at the end of this press release.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB6.8650 to US$1.00, the noon buying rate in effect on June 28, 2019 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Statement Regarding Preliminary Unaudited Financial Information

The unaudited financial information set out in this earnings release is preliminary and subject to potential adjustments. Adjustments to the consolidated financial statements may be identified when audit work has been performed for the Company’s year-end audit, which could result in significant differences from this preliminary unaudited financial information.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the expectation of its collection efficiency and delinquency, contain forward-looking statements. Qudian may also make written or oral forward-looking statements in its periodic reports to the SEC, 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. Statements that are not historical facts, including statements about Qudian’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Qudian’s goal and strategies; Qudian’s expansion plans; Qudian’s future business development, financial condition and results of operations; Qudian’s expectations regarding demand for, and market acceptance of, its credit products; Qudian’s expectations regarding keeping and strengthening its relationships with borrowers, institutional funding partners, merchandise suppliers and other parties it collaborate with; general economic and business conditions; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Qudian’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Qudian does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

Qudian Inc.
Annie Huang
Tel: +86-592-591-1580
E-mail: ir@qudian.com

The Foote Group
Philip Lisio
Tel: +86-135-0116-6560
E-mail: qudian@thefootegroup.com

 

                                               


QUDIAN INC.


Unaudited Condensed Consolidated Statements of Operations

Three months ended June 30,  

(In thousands except for number

2018

2019

of shares and per share data) 

(Unaudited)  

(Unaudited)

(Unaudited)

RMB

RMB 

US$ 


Revenues:

     Financing income

895,131

984,446

143,401

     Sales commission fee

105,898

95,602

13,926

     Sales income

784,753

123,536

17,995

     Penalty fee

5,766

9,394

1,368

     Loan facilitation income and other related income

452,103

609,651

88,806

Referral service fee and other related income

398,068

57,985


Total revenues


2,243,651


2,220,697


323,481


Operating cost and expenses:

    Cost of revenues

(947,817)

(286,135)

(41,680)

    Sales and marketing

(160,586)

(77,732)

(11,323)

    General and administrative

(69,110)

(67,326)

(9,807)

    Research and development

(36,863)

(62,882)

(9,160)

    Changes in guarantee liabilities

(36,747)

(2,139)

(312)

    Changes in risk assurance liabilities

31,611

4,605

    Provision for receivables

(221,951)

(494,453)

(72,025)


Total operating cost and expenses


(1,473,074)


(959,056)


(139,702)

Other operating income

3,203

2,570

374


Income from operations


773,780


1,264,211


184,153

Interest and investment income, net

4,584

11,348

1,653

Foreign exchange gain/(loss), net

18,420

(1,074)

(156)

Other income

7,828

21,915

3,192

Other expenses

(372)

(54)


Net income before income taxes


804,612


1,296,028


188,788

Income tax expenses

(80,420)

(152,622)

(22,232)


Net income


724,192


1,143,406


166,556


Net income attributable to Qudian Inc.’s


  shareholders


724,192


1,143,406


166,556

Earnings per share for Class A

and Class B ordinary shares:

        Basic

2.21

4.03

0.59

        Diluted

2.19

4.00

0.58

Earnings per ADS (1 Class A ordinary

share equals 1 ADS):

        Basic

2.21

4.03

0.59

        Diluted

2.19

4.00

0.58

Weighted average number of Class A

and Class B ordinary shares outstanding:

        Basic

327,811,355

284,022,960

284,022,960

        Diluted

330,060,963

285,735,609

285,735,609


Other comprehensive income

Foreign currency translation adjustment

113,240

9,755

1,421


Total comprehensive income


837,432


1,153,161


167,977


Total comprehensive income attributable to


Qudian Inc.’s shareholders


837,432


1,153,161


167,977

 

 


QUDIAN INC.


Unaudited Condensed Consolidated Balance Sheets

As of March 31,

As of June 30,

(In thousands except for number

2019

2019

of shares and per-share data)

(Unaudited)

(Unaudited)

(Unaudited)

RMB

RMB

US$


ASSETS:


 Current assets:

 Cash and cash equivalents

1,931,430

2,586,949

376,832

 Restricted cash

1,138,364

858,648

125,076

 Short-term investments

30,000

30,000

4,370

 Short-term loan principal and financing service fee receivables

10,010,611

8,743,378

1,273,616

 Short-term finance lease receivables

492,132

448,494

65,331

 Short-term contract assets

1,338,853

1,809,313

263,556

 Amounts due from related parties

44

45

7

 Other current assets

1,760,531

1,967,223

286,558



 Total current assets


16,701,965


16,444,050


2,395,346



 Non-current assets:

 Long-term loan principal and financing service fee receivables

388,200

251,921

36,696

 Long-term finance lease receivables

569,629

484,989

70,647

 Operating lease right-of-use assets

149,673

137,668

20,054


 Investments in equity method investees

30,635

49,651

7,232

 Long-term investments

180,000

26,220

 Property and equipment, net

40,843

63,920

9,311

 Intangible assets

7,056

6,111

890

 Long-term contract assets

22,848

575,066

83,768

 Deferred tax assets

312,911

450,116

65,567

 Other non-current assets

23,200

20,266

2,952


 Total non-current assets



1,544,995


2,219,708


323,337


TOTAL ASSETS


18,246,960


18,663,758


2,718,683

 

 


QUDIAN INC.


Unaudited Condensed Consolidated Balance Sheets

As of March 31,

As of June 30,

(In thousands except for number

2019

2019

of shares and per-share data)

(Unaudited)

(Unaudited)

(Unaudited)

RMB

RMB

US$


LIABILITIES AND SHAREHOLDERS’ EQUITY 


 Current liabilities: 

 Short-term borrowings and interest payables 

4,201,713

3,241,491

472,177

 Short-term lease liabilities

18,202

11,957

1,742

 Accrued expenses and other current liabilities 

515,414

657,416

95,763

 Guarantee liabilities 

566,630

409,160

59,601

 Risk assurance liabilities

760,313

110,752

 Income tax payable 

445,261

339,715

49,485


 Total current liabilities 


5,747,220


5,420,052


789,520


 Non-current liabilities: 


 Deferred tax liabilities

102,969

376,321

54,817

 Long-term lease liabilities

23,188

18,996

2,767

 Long-term borrowings and interest payables  

597,500

597,500

87,036


 Total non-current liabilities 


723,657


992,817


144,620


 Total liabilities


6,470,877


6,412,869


934,140


 Shareholders’ equity: 

 Class A Ordinary shares 

162

150

22

 Class B Ordinary shares 

44

44

6

 Treasury shares 

(362,130)

(362,130)

(52,750)

 Additional paid-in capital 

6,185,101

5,506,759

802,150

 Accumulated other comprehensive loss 

(63,667)

(53,912)

(7,853)

 Retained earnings 

6,016,573

7,159,978

1,042,968


 Total shareholders’ equity 


11,776,083


12,250,889


1,784,543


TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 


18,246,960


18,663,758


2,718,683

 

 


QUDIAN INC.


Unaudited Reconciliation of GAAP And Non-GAAP Results

Three months ended June 30,

2018

2019

(In thousands except for number

(Unaudited)

(Unaudited)

(Unaudited)

of shares and per-share data)

RMB

RMB

US$


Total net income attributable to Qudian Inc.’s shareholders


724,192


1,143,406


166,556

Add: Share-based compensation expenses 

13,449

15,162

2,209


Non-GAAP net income attributable to Qudian Inc.’s shareholders


737,640


1,158,568


168,765

Non-GAAP net income per share-basic


2.25


4.08


0.59

Non-GAAP net income per share-diluted


2.23


4.05


0.59

Weighted average shares outstanding-basic

327,811,355

284,022,960

284,022,960

Weighted average shares outstanding-diluted

330,060,963

285,735,609

285,735,609

 

 

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SOURCE Qudian Inc.