TH International Ltd (THCH) Q3 2024 Earnings Call Highlights: Record Store Margins and ...

In This Article:

  • Adjusted Corporate EBITDA Profitability: Achieved for the second consecutive quarter.

  • Store Contribution Margin: Highest ever at 13.3%, with a year-over-year margin expansion of 5.8 percentage points.

  • Revenue: Total revenue of RMB 7.6 million in Q3 2024.

  • Cash and Cash Equivalents: RMB 203.7 million (USD 29.1 million) as of September 30, 2024.

  • Monthly Average Transacting Customers: 3.3 million in Q3 2024, a 2.4% increase from Q3 2023.

  • Digital Orders: Increased to 86.6% of total orders in Q3 2024, up from 82.6% in Q3 2023.

  • Food and Packaging Costs: Reduced by 6.1 percentage points as a percentage of revenues from company-owned and operated stores year-over-year.

  • Labor Costs: Reduced by 3.0 percentage points as a percentage of revenues from company-owned and operated stores year-over-year.

  • Marketing Expenses: Decreased by 2.3 percentage points as a percentage of total revenues year-over-year.

  • General and Administrative Expenses: Reduced by 2.7 percentage points as a percentage of total revenues year-over-year.

  • Store Network Expansion: 539 stores renovated for made-to-order food preparation by the end of October 2024.

  • Franchising Growth: 43 new stores opened and 94 additional signed since the program launch.

  • Registered Members: 22.8 million globally, reflecting a 35.3% year-over-year growth.

Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • TH International Ltd (NASDAQ:THCH) achieved its highest ever quarterly company-owned and operated store contribution margin of 13.3%, indicating improved operational efficiencies.

  • The company maintained Adjusted corporate EBITDA profitability for the second consecutive quarter, showcasing financial stability.

  • TH International Ltd (NASDAQ:THCH) has successfully launched a sub-franchising program, receiving over 5,000 applications and opening 43 new stores, which supports its expansion strategy.

  • The loyalty program has grown significantly, with 22.8 million registered members, reflecting a 35.3% year-over-year increase, enhancing customer retention.

  • The introduction of innovative products, such as low-calorie bagels and plant-based options, aligns with consumer health trends and has been well-received, boosting brand visibility.

Negative Points

  • The ongoing price competition in the Chinese coffee market poses a challenge, potentially impacting profit margins.

  • Despite the growth in digital orders, the company faces pressure to continually enhance its digital capabilities to meet rising consumer expectations.

  • The capital required for company-owned stores remains significant, with a payback period of 2 to 3 years, which could strain financial resources.

  • The expansion into new cities requires careful selection of partners and locations, which may slow down the pace of growth.

  • Marketing expenses, although reduced, still represent a considerable portion of total revenues, necessitating efficient allocation to maintain profitability.