QSR Restaurant Brands International Inc

TH International Limited (Nasdaq: THCH), the exclusive operator of Tim Hortons coffee shops in China (“Tims China” or the “Company”) today announced its unaudited financial results for the third quarter 2024.

THIRD QUARTER 2024 HIGHLIGHTS

• Total revenues of RMB359.6 million (USD51.3 million), representing a 17.1% decrease from the same quarter of 2023.
• System sales2 of RMB372.4 million (USD53.1 million), representing a 15.5% decrease from the same quarter of 2023.
• Net new store openings for franchised stores totaled 49 for the quarter (39 systemwide net new store opening, as certain company-owned underperforming stores were closed and we focused on sub-franchise development).
• Company owned and operated store contribution3, previously disclosed as adjusted store EBITDA, was RMB39.9 million (USD5.7 million), representing a 37.6% increase from the same quarter of 2023.
• Company owned and operated store contribution margin4, previously disclosed as adjusted store EBITDA margin, was 13.3%, representing a 5.8 percentage points improvement over the same quarter of 2023.
• Achieved second consecutive positive adjusted corporate EBITDA1 of RMB2.0 million (USD 0.3 million), compared to a loss of RMB63.0 million in the same quarter of 2023.
• Registered loyalty club members totaled 22.8 million members as of September 30, 2024, representing a 35.3% year-over-year growth.

COMPANY MANAGEMENT STATEMENT

Mr. Yongchen Lu, CEO & Director of Tims China, commented, “In the third quarter of 2024, we maintained adjusted corporate EBITDA profitability, despite the ongoing fierce price competition in the Chinese coffee market, after achieving first-ever adjusted corporate EBITDA profitability in the second quarter of 2024. We are committed to focusing on product differentiation and providing great value for our customers. We achieved our highest-ever quarterly company owned and operated store contribution margin of 13.3%, a year-over-year margin expansion of 5.8 percentage points, demonstrating our continuous efforts towards delivering further improvements in operational efficiencies and supply chain capabilities.

Furthering our strategic focus, we prioritize delivering healthy and high-quality products and services to our customers. We have completed the “made-to-order” renovation of 539 new and existing stores by the end of October, adding working stations designed for efficient, fresh and handmade food preparation and “open kitchens.” With this investment, our guests can watch our staff craft fresh meals from start to finish.”

Mr. Dong (Albert) Li, CFO of Tims China, commented, “In the third quarter of 2024, we delivered adjusted corporate EBITDA profitability again. We remain dedicated to enhancing our financial performance by refining our store unit economics and driving efficiencies at the corporate level. Concurrently, our rapidly growing sub-franchise business continues to generate a steady stream of cash flow and profitability, bolstering our margins. We substantially improved our store profitability and delivered year-over-year reductions in food and packaging costs, labor costs, and other store operating expenses (as a percentage of revenues from company owned and operated stores) by 6.1 percentage points, 3.0 percentage points, and 1.1 percentage points, respectively. Our marketing expenses and adjusted general and administrative expenses as a percentage of total revenues decreased by 2.3 percentage points and 2.7 percentage points year-over-year, respectively.”

Mr. Li continued, “Moving forward, our strategic focus remains firmly on delivering profitable, capital-efficient growth. We are committed to bolstering our brand and broadening our appeal by offering great value for money with our fresh and healthy food selections. Additionally, we are collaborating closely with our sub-franchisees to boost customer traffic and optimize our supply chain efficiency, thereby enhancing overall store economics and our bottom-line profitability.”

THIRD QUARTER 2024 FINANCIAL RESULTS

Total revenues reached RMB359.6 million (USD51.3 million) for the three months ended September 30, 2024, representing a decrease of 17.1% from RMB433.9 million in the same quarter of 2023. Total revenues comprise:

• Revenues from Company owned and operated store sales were RMB299.5 million (USD42.7 million) for the three months ended September 30, 2024, representing a decrease of 22.9% from RMB388.3 million in the same quarter of 2023. The decrease was primarily attributable to closures of certain underperforming stores and a 20.7% decrease in same-store sales growth for company owned and operated stores in the third quarter of 2024. The decrease was attributable to a 12.3% decline in the number of orders from 15.4 million in the third quarter of 2023 to 13.5 million in the same quarter of 2024, and a 12.0% year-over-year decrease in average ticket size.
• Other revenues were RMB60.1 million (USD8.6 million) for the three months ended September 30, 2024, representing an increase of 31.8% from RMB45.6 million in the same quarter of 2023. The increase was primarily due to the expansion of our franchise business as the number of our franchised stores increased from 174 as of September 30, 2023 to 382 as of September 30, 2024.

Company owned and operated store costs and expenses were RMB279.6 million (USD39.9 million) for the three months ended September 30, 2024, representing a decrease of 29.0% from RMB394.1 million in the same quarter of 2023. Company owned and operated store costs and expenses comprise:

• Food and packaging costs were RMB86.9 million (USD12.4 million), representing a decrease of 36.3% from RMB136.3 million, as we continue to benefit from higher efficiencies in supply chains and cost reduction on raw materials, logistic and warehousing expenses. Accordingly, food and packaging costs as a percentage of revenues from company owned and operated stores decreased by 6.1 percentage points from 35.1% in the third quarter of 2023 to 29.0% in the same quarter of 2024.
• Rental and property management fee was RMB57.8 million (USD8.2 million), representing a decrease of 23.1% from RMB75.1 million, mainly due to the closure of certain underperforming stores and in line with the revenue trend. Rental and property management fee as a percentage of revenues from company owned and operated stores remained flat at 19.3% in both the third quarter of 2023 and 2024.
• Payroll and employee benefits expenses were RMB50.7 million (USD7.2 million), representing a decrease of 34.5% from RMB77.3 million. Payroll and employee benefits as a percentage of revenues from company owned and operated stores decreased by 3.0 percentage points from 19.9% in the third quarter of 2023 to 16.9% in the same quarter of 2024, primarily due to the continuous refinement of staffing arrangements and optimization of store managerial efficiency.
• Delivery costs were RMB30.8 million (USD4.4 million), representing a decrease of 9.8% from RMB34.2 million, which was in line with the trend of delivery orders. Delivery costs as a percentage of revenues from company owned and operated stores increased by 1.5 percentage points to 10.3% in the third quarter of 2024 compared to 8.8% in the same quarter of 2023.
• Other operating expenses were RMB23.7 million (USD3.4 million), representing a decrease of 32.0% from RMB34.8 million, driven by the cost optimization measures and in line with the revenue trend. Other operating expenses as a percentage of revenues from company owned and operated stores decreased by 1.1 percentage points to 7.9% in the third quarter of 2024 compared to 9.0% in the same quarter of 2023.
• Store depreciation and amortization expenses were RMB29.8 million (USD4.2 million), representing a decrease of 18.1% from RMB36.4 million, which was attributable to the closure of certain underperforming stores and in line with the revenue trend. Store depreciation and amortization as a percentage of revenues from company owned and operated stores increased by 0.5 percentage points to 9.9% in the third quarter of 2024 compared to 9.4% in the same quarter of 2023.

Costs for other revenues were RMB45.3 million (USD6.5 million) for the three months ended September 30, 2024, representing an increase of 7.6% from RMB42.1 million in the same quarter of 2023, which was primarily driven by an increase in the revenues generated from franchise business as the number of our franchised stores increased from 174 as of September 30, 2023 to 382 as of September 30, 2024, offset by the streamlined e-commerce business. Costs for other revenues as a percentage of other revenues decreased by 16.9 percentage points from 92.3% in the third quarter of 2023 to 75.4% in the same quarter of 2024 due to higher margins we generated from both franchise business and e-commerce business during the third quarter of 2024.

Marketing expenses were RMB18.5 million (USD2.6 million) for the three months ended September 30, 2024, representing a decrease of 42.1% from RMB32.0 million in the same quarter of 2023, driven by our cost optimization measures and higher brand influence. Marketing expenses as a percentage of total revenues decreased by 2.3 percentage points from 7.4% in the third quarter of 2023 to 5.1% in the same quarter of 2024.

General and administrative expenses were RMB39.8 million (USD5.7 million) for the three months ended September 30, 2024, representing a decrease of 39.6% from RMB65.8 million in the same quarter of 2023, which was primarily due to: (i) a reduction of our headquarter headcount and cost optimization measures; (ii) decrease in share-based compensation expenses; and (iii) decrease in professional fees. Adjusted general and administrative expenses, which excludes share-based compensation expenses of RMB1.4 million (USD0.2 million), were RMB38.4 million (USD5.5 million), representing a decrease of 39.5% from RMB63.4 million in the same quarter of 2023. Adjusted general and administrative expenses as a percentage of total revenues decreased by 2.7 percentage points from 13.4% in the third quarter of 2023 to 10.7% in the same quarter of 2024. For more information on the Company’s non-GAAP financial measures, please see the section “Use of Non-GAAP Financial Measures” and the table captioned “Reconciliation of Non-GAAP Measures to the Most Directly Comparable GAAP Measures” set forth at the end of this earnings release.

Franchise and royalty expenses were RMB15.6 million (USD2.2 million) for the three months ended September 30, 2024, representing an increase of 3.4% from RMB15.1 million in the same quarter of 2023, which was primarily driven by the increase in the number of our system-wide stores from 759 as of September 30, 2023 to 946 as of September 30, 2024, offset by a 15.5% year-over-year decrease in system sales. Franchise and royalty expenses as a percentage of total revenues increased by 0.9 percentage points, from 3.5% in the third quarter of 2023 to 4.4% in the same quarter of 2024 due to the increase of amortized upfront franchise fees.

Impairment losses of long-lived assets were RMB15.6 million (USD2.2 million) for the three months ended September 30, 2024, compared to RMB13.0 million in the same quarter of 2023, which was primarily due to the planned closing of underperforming company owned and operated stores.

As a result of the foregoing, operating loss was RMB55.9 million (USD8.0 million) for the three months ended September 30, 2024, a significant reduction compared to RMB147.7 million in the same quarter of 2023.

Adjusted Corporate EBITDA was a gain of RMB2.0 million (USD0.3 million) for the three months ended September 30, 2024, compared to a loss of RMB63.0 million in the same quarter of 2023. Adjusted Corporate EBITDA margin was positive 0.6% in the third quarter of 2024, representing an improvement of 15.1 percentage points from negative 14.5% in the same quarter of 2023.

Net loss from continuing operations was RMB87.4 million (USD12.5 million) for the three months ended September 30, 2024, compared to RMB147.6 million for the same quarter of 2023. Adjusted net loss was RMB41.4 million (USD5.9 million) for the three months ended September 30, 2024, compared to RMB100.1 million for the same quarter of 2023. Adjusted net loss margin was negative 11.5% in the third quarter of 2024, representing an improvement of 11.6 percentage points from negative 23.1% in the same quarter of 2023.

Net gain from discontinued operations was zero for the three months ended September 30, 2024, compared to net loss of RMB12.0 million for the same quarter of 2023.

Net loss was RMB87.4 million (USD12.5 million) for the three months ended September 30, 2024, compared to RMB159.7 million for the same quarter of 2023.

Basic and diluted net loss per ordinary share was RMB0.55 (USD0.08) in the third quarter of 2024, compared to RMB1.01 in the same quarter of 2023. Adjusted basic and diluted net loss per ordinary share was RMB0.26 (USD0.04) in the third quarter of 2024, compared to RMB0.64 in the same quarter of 2023.

Liquidity

As of September 30, 2024, the Company’s total cash and cash equivalents, and time deposits were RMB203.7 million (USD29.1 million), compared to RMB219.5 million as of December 31, 2023. The change was primarily attributable to the financing from our founding shareholders, partially offset by cash disbursements on the back of the expansion of our business and store network nationwide and the repayment of certain bank borrowings.

KEY OPERATING DATA

Tims only	For the three months ended or as of
（Exclude the discontinued business)	Sep 30,			Dec 31,			Mar 31,			Jun 30,			Sep 30,
	2023			2023			2024			2024			2024
Total stores	759			902			906			907			946
Company owned and operated stores	585			619			604			574			564
Franchised stores	174			283			302			333			382
Same-store sales growth for system-wide stores	0.1%			2.6%			-13.6%			-14.6	%		-21.7%
Same-store sales growth for company owned and operated stores	-0.4%			2.5%			-11.7%			-13.8	%		-20.7%
Registered loyalty club members (in thousands)	16,867			18,545			20,009			21,403			22,815
Company owned and operated store contribution (Renminbi in thousands)	29,010			15,714			7,241			33,154			39,922
Company owned and operated store contribution margin	7.5%			4.8%			2.4%			10.3%			13.3%

KEY DEFINITIONS

• Same-store sales growth. The percentage change in the sales of stores that have been operating for 12 months or longer during a certain period compared to the same period from the prior year. The same-store sales growth for any period of more than a month equals to the arithmetic average of the same-store sales growth of each month covered in the period. If a store was closed for seven days or more during any given month, its sales during that month and the same month in the comparison period are excluded for purposes of measuring same-store sales growth.
• Net new store openings. The gross number of new stores opened during the period minus the number of stores permanently closed during the period.
• System sales. Gross merchandise value of sales generated from both company owned and operated stores and franchised stores.
• Company owned and operated store contribution (previously disclosed as adjusted store EBITDA). Calculated as fully burdened gross profit of company owned and operated stores excluding depreciation and amortization.
• Company owned and operated store contribution margin (previously disclosed as adjusted store EBITDA margin). Calculated as company owned and operated store contribution as a percentage of revenues from company owned and operated stores.
• Adjusted general and administrative expenses. Calculated as general and administrative expenses excluding share-based compensation expenses, expenses related to the issuance of certain ordinary shares to CF Principal Investments LLC in November 2022 (the “Commitment Shares”), offering costs related to the ESA (the “ESA Offering Costs”), expenses related to 200,000 of our ordinary shares that may be purchased from our controlling shareholder by a holder of our convertible notes at its option pursuant to the terms of an Option Agreement dated September 28, 2022 (the “Option Shares”), and professional fees related to warrant exchange and other financing programs.
• Adjusted corporate EBITDA. Calculated as operating loss for continuing operations excluding certain non-cash expenses consisting of depreciation and amortization, share-based compensation expenses, impairment losses of rental deposits, one-off expense of store closure, professional fees related to Popeyes transaction and other financing programs, impairment losses of long-lived assets and loss on disposal of property and equipment.
• Adjusted corporate EBITDA margin. Calculated as adjusted corporate EBITDA as a percentage of total revenues.
• Adjusted net loss. Calculated as net loss for continuing operations excluding share-based compensation expenses, professional fees related to Popeyes transaction and other financing programs, impairment losses of long-lived assets, impairment losses of rental deposits, one-off expense of store closure, loss on disposal of property and equipment, changes in fair value of Deferred Contingent consideration, changes in fair value of convertible notes, loss of the debt extinguishment and gain on disposal of Popeyes business.
• Adjusted net loss margin. Calculated as adjusted net loss as a percentage of total revenues.
• Adjusted basic and diluted net loss per ordinary share. Calculated as adjusted net loss attributable to the Company’s ordinary shareholders divided by weighted-average number of basic and diluted ordinary shares.

RECENT BUSINESS DEVELOPMENTS

On September 5, 2024, Tims China partnered with Meng Lan, the beloved panda superstar, as its “Chief Bagel Recommendation Officer”, to launch Tims China’s second annual Bagel Festival. This collaboration launched with our introduction of four new seasonal products, offering a delicious and, importantly, also health-conscious way to enjoy our popular bagels. To further celebrate the Festival, Tims China offered special promotions designed to increase frequency of guest visits, including the “Multi-Grain Bagel Six-Pass,” “Smile Bagel Three-Pass,” and an exclusive deal for new members to enjoy our well-liked Multi-Grain Bagel for just 8.8 RMB. Limited-edition Meng Lan-themed packaging, including paper bags, bagel boxes, and stickers, were also available on a first come first serve basis, allowing customers to bring home a piece of Meng Lan’s charm. Tims China’s partnership with Meng Lan reflects its aspiration and commitment to being part of everyday life and integrating deeply into Chinese culture. 

On October 17, 2024, Tims China participated in the Fourth ESG Global Leaders Summit in Shanghai as the coffee sponsor of the conference, showcasing its presence in the sustainable consumer sector in China. Mr. Yongchen Lu, CEO & Director of Tims China, took part in a panel discussion titled “Consensus on New Green Consumption Concepts.” Tims China is keenly focused on sustainable development in all aspects of our business, from our coffee cups to our furnishings.

USE OF NON-GAAP FINANCIAL MEASURES

The Company uses non-GAAP financial measures, namely company owned and operated store contribution, company owned and operated store contribution margin, adjusted general and administrative expenses, adjusted corporate EBITDA, adjusted corporate EBITDA margin, adjusted net loss, adjusted net loss margin, and adjusted basic and diluted net loss per ordinary share in evaluating its operating results and for financial and operational decision-making purposes. The Company defines (i) company owned and operated store contribution as fully burdened gross profit of company owned and operated stores excluding depreciation and amortization; (ii) company owned and operated store contribution margin as company owned and operated store contribution as a percentage of revenues from company owned and operated stores; (iii) adjusted general and administrative expenses as general and administrative expenses excluding share-based compensation expenses, expenses related to the Commitment Shares, the ESA Offering Costs, and expenses related to the Option Shares, and professional fees related to warrant exchange and other financing programs; (iv) adjusted corporate EBITDA as operating loss for continuing operations excluding certain non-cash expenses consisting of depreciation and amortization, share-based compensation expenses, expenses related to the Commitment Shares, the ESA Offering Costs, expenses related to the Option Shares, professional fees related to warrant exchange and other financing programs, impairment losses of long-lived assets, and loss on disposal of property and equipment; (v) adjusted corporate EBITDA margin as adjusted corporate EBITDA as a percentage of total revenues; (vi) adjusted net loss as net loss for continuing operations excluding share-based compensation expenses, expenses related to the Commitment Shares, the ESA Offering Costs, expenses related to the Option Shares, professional fees related to warrant exchange and other financing programs, impairment losses of long-lived assets, loss on disposal of property and equipment, changes in fair value of convertible notes, changes in fair value of warrant liabilities, changes in fair value of ESA derivative liabilities, loss of the debt extinguishment and gain on disposal of Popeyes business; (vii) adjusted net loss margin as adjusted net loss as a percentage of total revenues; and (viii) adjusted basic and diluted net loss per ordinary share as adjusted net loss for continuing operations attributable to the Company’s ordinary shareholders divided by weighted-average number of basic and diluted ordinary share. The Company believes company owned and operated store contribution, company owned and operated store contribution margin, adjusted general and administrative expenses, adjusted corporate EBITDA, adjusted corporate EBITDA margin, adjusted net loss, adjusted net loss margin, and adjusted basic and diluted net loss per ordinary share enhance investors' overall understanding of its financial performance and allow for greater visibility with respect to key metrics used by its management in its financial and operational decision-making.

These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. As these non-GAAP financial measures have limitations as analytical tools and may not be calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measures, which should be considered when evaluating the Company’s performance. For reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, “Reconciliation of Non-GAAP Measures to the Most Directly Comparable GAAP Measures.” The Company encourages investors and others to review its financial information in its entirety and not rely on any single financial measure.

EXCHANGE RATE INFORMATION

This earnings release contains translations of certain RMB amounts into U.S. dollars (“USD”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB7.0111 to USD1.00, the exchange rate in effect on September 27, 2024 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any rate or at all.

CONFERENCE CALL

The Company will hold a conference call today, on Tuesday, November 12, 2024, at 8:00 am Eastern Time (on Tuesday, November 12, 2024, at 9:00 pm Beijing Time) to discuss the financial results.

Participants are strongly encouraged to pre-register for the conference call, by using the weblink provided below.

https://register.vevent.com/register/BI0020d540f6a64a69806219ade06628f5

Participants may also view the live webcast by registering through below weblink:

https://edge.media-server.com/mmc/p/9sbntepg

The webcast features a 'Submit Your Question' tab at the top, where you will have the opportunity to submit your questions before and during the call.

A live and archived webcast of the conference call will also be available at the Company’s Investor Relations website at https://ir.timschina.com under “Events and Presentations”.

FORWARD-LOOKING STATEMENTS

Certain statements in this earnings release may be considered forward-looking statements within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, such as the Company’s ability to further grow its business and store network, optimize its cost structure, improve its operational efficiency, and achieve profitable growth. Forward-looking statements are statements that are not historical facts and generally relate to future events or the Company’s future financial or other performance metrics. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those expressed or implied by such forward looking statements. New risks and uncertainties may emerge from time to time, and it is not possible to predict all risks and uncertainties. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by the Company and its management, as the case may be, are inherently uncertain and subject to material change. Factors that may cause actual results to differ materially from current expectations include various factors beyond management’s control, including, but not limited to, general economic conditions and other risks, uncertainties and factors set forth in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in the Company’s Annual Report on Form 20-F, and other filings it makes with the Securities and Exchange Commission. Nothing in this communication should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this communication, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein. Except as required by law, the Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions, or circumstances on which any statement is based.

ABOUT TH INTERNATIONAL LIMITED

TH International Limited (Nasdaq: THCH) (“Tims China”) is the parent company of the exclusive master franchisees of Tim Hortons coffee shops in mainland China, Hong Kong and Macau. Tims China was founded by Cartesian Capital Group and Tim Hortons Restaurants International, a subsidiary of Restaurant Brands International (TSX: QSR) (NYSE: QSR).

The Company’s philosophy is rooted in world-class execution and data-driven decision making and centered around true local relevance, continuous innovation, genuine community, and absolute convenience. For more information, please visit https://www.timschina.com.

INVESTOR AND MEDIA CONTACTS

Investor Relations

Gemma BakxIR@timschina.com, or gemma.bakx@cartesiangroup.com

Public and Media Relations

Patty YuPatty.Yu@timschina.com

TH INTERNATIONAL LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of RMB and US$, except for number of shares)
		As of
		December 31,2023			September 30,  2024(Unaudited）
		RMB			RMB			US$
ASSETS
Current assets:
Cash and cash equivalents		202,315			196,734			28,060
Time deposits		17,165			7,007			1,000
Accounts receivable, net		27,562			41,315			5,893
Inventories		49,866			35,004			4,993
Prepaid expenses and other current assets		156,855			161,830			23,081
Current assets of discontinued operations		4,857			-			-
Total current assets		458,620			441,890			63,027
Non-current assets:
Property and equipment, net		669,641			536,088			76,463
Intangible assets, net		107,317			101,787			14,518
Operating lease right-of-use assets		785,437			536,350			76,500
Other non-current assets		63,855			60,069			8,568
Noncurrent assets of discontinued operations		130,569			-			-
Total non-current assets		1,756,819			1,234,294			176,049
Total assets		2,215,439			1,676,184			239,076
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Bank borrowings, current		538,233			383,452			54,692
Accounts payable		219,775			203,587			29,038
Contract liabilities		40,715			43,348			6,183
Amount due to related parties		53,004			29,860			4,259
Convertible notes, at fair value		-			451,277			64,366
Operating lease liabilities		189,835			179,352			25,581
Other current liabilities		290,713			187,241			26,706
Current liabilities of discontinued operations		63,558			-			-
Total current liabilities		1,395,833			1,478,117			210,825
Non-current liabilities:
Bank borrowings, non-current		5,266			283			40
Convertible notes, at fair value		420,712			445,360			63,522
Contract liabilities		5,272			6,290			897
Amount due to related parties		94,200			-			-
Operating lease liabilities		653,659			421,150			60,069
Other non-current liabilities		8,637			7,634			1,090
Noncurrent liabilities of discontinued operations		54,289			-			-
Total non-current liabilities		1,242,035			880,717			125,618
Total liabilities		2,637,868			2,358,834			336,443
Shareholders’ equity:
Ordinary shares		10			10			1
Additional paid-in capital		1,807,715			1,818,539			259,380
Accumulated losses		(2,256,424	)		(2,536,947	)		(361,847	)
Accumulated other comprehensive income		21,492			27,044			3,858
Treasury shares		-			-			-
Total (deficit) equity attributable to shareholders of the Company		(427,207	)		(691,354	)		(98,608	)
Non-controlling interests		4,778			8,704			1,241
Total shareholders’ (deficit) equity		(422,429	)		(682,650	)		(97,367	)
Commitments and Contingencies		-			-			-
Total liabilities and shareholders’ equity (deficit)		2,215,439			1,676,184			239,076

TH INTERNATIONAL LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)
(Amounts in thousands of RMB and US$, except for per share data)
		For the three months ended September 30,									For the nine months ended September 30,
		2023			2024						2023			2024
		RMB			RMB			US$			RMB			RMB			US$
Revenues:
Company owned and operated stores		388,321			299,455			42,712			1,061,399			918,141			130,956
Other revenues		45,600			60,099			8,572			120,708			140,392			20,024
Total revenues		433,921			359,554			51,284			1,182,107			1,058,533			150,980
Costs and expenses, net:
Company owned and operated stores
Food and packaging		136,299			86,855			12,388			371,019			289,289			41,261
Rental and property management fee		75,126			57,799			8,244			221,844			184,571			26,326
Payroll and employee benefits		77,346			50,683			7,229			229,677			176,662			25,197
Delivery costs		34,161			30,805			4,394			86,159			90,587			12,920
Other operating expenses		34,805			23,678			3,377			92,234			72,291			10,311
Store depreciation and amortization		36,354			29,792			4,249			103,782			93,540			13,342
Company owned and operated store costs and expenses		394,091			279,612			39,881			1,104,715			906,940			129,357
Costs of other revenues		42,112			45,330			6,465			98,806			105,080			14,988
Marketing expenses		31,953			18,496			2,638			75,510			51,085			7,286
General and administrative expenses		65,829			39,752			5,670			263,597			134,002			19,113
Franchise and royalty expenses		15,126			15,632			2,230			41,960			43,809			6,249
Other operating costs and expenses		9,971			783			112			19,904			10,479			1,495
Loss on disposal of property and equipment		11,923			1,098			157			13,780			3,716			530
Impairment losses of long-lived assets		13,014			15,585			2,223			21,792			40,386			5,760
Other income		2,448			815			116			8,432			5,070			723
Total costs and expenses, net		581,571			415,473			59,260			1,631,632			1,290,427			184,055
Operating loss		(147,650	)		(55,919	)		(7,976	)		(449,525	)		(231,894	)		(33,075	)
Interest income		7,474			980			140			10,984			2,221			317
Interest expenses		(4,572	)		(4,078	)		(583	)		(13,761	)		(18,742	)		(2,673	)
Foreign currency transaction loss		1,159			(37	)		(5	)		(614	)		4,417			629
Loss of the debt extinguishment		-			-			-			-			(10,657	)		(1,520	)
Changes in fair value of Deferred Contingent consideration		6,331			-			-			6,331			(16,941	)		(2,416	)
Changes in fair value of convertible notes		(10,046	)		(27,921	)		(3,982	)		(31,372	)		(48,461	)		(6,912	)
Changes in fair value of warrant liabilities		-			-			-			(83,966	)		-			-
Changes in fair value of ESA derivative liabilities		(315	)		-			-			19,594			-			-
Loss from continuing operations before income taxes		(147,619	)		(86,975	)		(12,406	)		(542,329	)		(320,057	)		(45,650	)
Income tax expenses		-			(410	)		(58	)		-			(1,499	)		(214	)
Net loss from continuing operations		(147,619	)		(87,385	)		(12,464	)		(542,329	)		(321,556	)		(45,864	)
Discontinued operations：
Loss from discontinued operations（including gain on disposal of Popeyes business RMB66,203 thousand in 2024) before income taxes		(12,041	)		-			-			(19,439	)		44,959			6,413
Income tax expenses		-			-			-			-			-			-
Net loss from discontinued operations		(12,041	)		-			-			(19,439	)		44,959			6,413
Net loss		(159,660	)		(87,385	)		(12,464	)		(561,768	)		(276,597	)		(39,451	)
Less: Net (income) loss attributable to non-controlling interests		943			1,466			209			2,399			3,926			560
Net Loss attributable to shareholders of the Company
-from continuing operations		(148,562	)		(88,851	)		(12,673	)		(544,728	)		(325,482	)		(46,424	)
-from discontinued operations		(12,041	)		-			-			(19,439	)		44,959			6,413
Basic and diluted loss per Ordinary Share		(1.01	)		(0.55	)		(0.08	)		(3.75	)		(1.73	)		(0.25	)
Net loss		(159,660	)		(87,385	)		(12,464	)		(561,768	)		(276,597	)		(39,451	)
Other comprehensive income (loss)
Unrealized gain on short-term investment, net of nil income taxes		(4,965	)		-			-			(2,134	)		-			-
Fair value changes of convertible notes due to instrument-specific credit risk, net of nil income taxes		(2,182	)		1,280			183			(9,848	)		(213	)		(30	)
Foreign currency translation adjustment, net of nil income taxes		239			10,866			1,549			(6,490	)		5,765			822
Total comprehensive loss		(166,568	)		(75,239	)		(10,732	)		(580,240	)		(271,045	)		(38,659	)
Less: Comprehensive loss attributable to non- controlling interests		943			1,466			209			2,399			3,926			560
Comprehensive loss attributable to shareholders of the Company		(167,511	)		(76,705	)		(10,941	)		(582,639	)		(274,971	)		(39,219	)

TH INTERNATIONAL LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of RMB and US$)
		For the three months ended September 30,									For the nine months ended September 30,
		2023			2024						2023			2024
		RMB			RMB			US$			RMB			RMB			US$
Net cash provided by/(used in) operating activities		(30,446	)		(12,999	)		(1,854	)		(115,565	)		(8,038	)		(1,146	)
Net cash provided by/(used in) investing activities		63,781			7,426			1,059			127,938			(21,259	)		(3,032	)
Net cash provided by/(used in) financing activities		171,822			27,980			3,991			200,435			16,204			2,311
Effect of foreign currency exchange rate changes on cash		1,006			5,460			778			9,870			6,240			889
Net increase/(decrease) in cash		206,163			27,867			3,974			222,678			(6,853	)		(978	)
Cash at beginning of the period		255,592			168,867			24,086			239,077			203,587			29,038
Cash at end of the period		461,755			196,734			28,060			461,755			196,734			28,060

TH INTERNATIONAL LIMITED AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES TO THE MOST DIRECTLY COMPARABLE GAAP MEASURES
(Unaudited, amounts in thousands of RMB and US$, except for number of shares and per share data)
A. Company owned and operated store contribution
		For the three months ended September 30,									For the nine months ended September 30,
		2023			2024						2023			2024
		RMB			RMB			US$			RMB			RMB			US$
Revenues - company owned and operated stores		388,321			299,455			42,712			1,061,399			918,141			130,956
Food and packaging costs - company owned and operated stores		(136,299	)		(86,855	)		(12,388	)		(371,019	)		(289,289	)		(41,261	)
Rental expenses - company owned and operated stores		(75,126	)		(57,799	)		(8,244	)		(221,844	)		(184,571	)		(26,326	)
Payroll and employee benefits - company owned and operated stores		(77,346	)		(50,683	)		(7,229	)		(229,677	)		(176,662	)		(25,197	)
Delivery costs - company owned and operated stores		(34,161	)		(30,805	)		(4,394	)		(86,159	)		(90,587	)		(12,920	)
Other operating expenses - company owned and operated stores		(34,805	)		(23,678	)		(3,377	)		(92,234	)		(72,291	)		(10,311	)
Store depreciation and amortization		(36,354	)		(29,792	)		(4,249	)		(103,782	)		(93,540	)		(13,342	)
Franchise and royalty expenses - company owned and operated stores		(12,485	)		(9,713	)		(1,385	)		(33,962	)		(30,101	)		(4,293	)
Fully-burdened gross (loss) profit - company owned and operated stores		(18,255	)		10,130			1,446			(77,278	)		(18,900	)		(2,694	)
Store depreciation and amortization		36,354			29,792			4,249			103,782			93,540			13,342
Store pre-opening expenses		10,910			-			-			26,751			5,677			810
Company owned and operated store contribution		29,009			39,922			5,695			53,255			80,317			11,458
Company owned and operated store contribution margin		7.5%			13.3%			13.3%			5.0%			8.7%			8.7%
B. Adjusted general and administrative expenses
		For the three months ended September 30,									For the nine months ended September 30,
		2023			2024						2023			2024
		RMB			RMB			US$			RMB			RMB			US$
General and administrative expenses from continuing operations		(65,829	)		(39,752	)		(5,670	)		(263,597	)		(134,002	)		(19,113	)
Adjusted for:
Share-based compensation expenses		3,009			1,375			196			61,727			1,260			180
Professional fees related to financing programs		4,622			-			-			27,841			10,464			1,492
Impairment losses of rental deposits		-			-			-			-			2,457			350
Adjusted General and administrative expenses		(58,198	)		(38,377	)		(5,474	)		(174,029	)		(119,821	)		(17,091	)
Adjusted General and administrative expenses as a % of total revenue		13.4%			10.7%			10.7%			14.7%			11.3%			11.3%
C. Adjusted corporate EBITDA and adjusted corporate EBITDA margin
		For the three months ended September 30,									For the nine months ended September 30,
		2023			2024						2023			2024
		RMB			RMB			US$			RMB			RMB			US$
Operating loss from continuing operations		(147,650	)		(55,919	)		(7,976	)		(449,525	)		(231,894	)		(33,075	)
Adjusted for:
Store pre-opening expenses		10,910			-			-			26,751			5,677			810
Depreciation and amortization		41,162			39,896			5,690			119,196			123,478			17,612
Share-based compensation expenses		3,009			1,375			196			61,727			1,260			180
Impairment losses of rental deposits		-			-			-			-			2,457			350
One-off expense of store closure		-			-			-			-			3,181			454
Professional fees related to financing programs		4,622			-			-			27,841			10,464			1,492
Impairment losses of long-lived assets		13,014			15,585			2,223			21,792			40,386			5,760
Loss on disposal of property and equipment		11,923			1,098			157			13,780			3,716			530
Adjusted Corporate EBITDA		(63,010	)		2,035			290			(178,438	)		(41,275	)		(5,887	)
Adjusted Corporate EBITDA Margin		-14.5%			0.6%			0.6%			-15.1%			-3.9%			-3.9%
D. Adjusted net loss and adjusted net loss margin
		For the three months ended September 30,									For the nine months ended September 30,
		2023			2024						2023			2024
		RMB			RMB			US$			RMB			RMB			US$
Net loss from continuing operations		(147,619	)		(87,385	)		(12,464	)		(542,329	)		(321,556	)		(45,864	)
Adjusted for:
Store pre-opening expenses		10,910			-			-			26,751			5,677			810
Share-based compensation expenses		3,009			1,375			196			61,727			1,260			180
Professional fees related to financing programs		4,622			-			-			27,841			10,464			1,492
Impairment losses of long-lived assets		13,014			15,585			2,223			21,792			40,386			5,760
Impairment losses of rental deposits		-			-			-			-			2,457			350
One-off expense of store closure		-			-			-			-			3,181			454
Loss on disposal of property and equipment		11,923			1,098			157			13,780			3,716			530
Loss of the debt extinguishment		-			-			-			-			10,657			1,520
Changes in fair value of Deferred Contingent consideration		(6,331	)		-			-			(6,331	)		16,941			2,416
Changes in fair value of convertible notes		10,046			27,921			3,982			31,372			48,461			6,912
Changes in fair value of warrant liabilities		-			-			-			83,966			-			-
Changes in fair value of ESA derivative liabilities		315			-			-			(19,594	)		-			-
Adjusted Net loss		(100,111	)		(41,406	)		(5,906	)		(301,025	)		(178,356	)		(25,440	)
Adjusted Net loss Margin		-23.1%			-11.5%			-11.5%			-25.4%			-16.8%			-16.8%
E. Adjusted basic and diluted net loss per Ordinary Share
		For the three months ended September 30,									For the nine months ended September 30,
		2023			2024						2023			2024
		RMB			RMB			US$			RMB			RMB			US$
Net loss from continuing operations to shareholders of the Company		(148,562	)		(88,851	)		(12,673	)		(544,728	)		(325,482	)		(46,424	)
Adjusted for:
Store pre-opening expenses		10,910			-			-			26,751			5,677			810
Share-based compensation expenses		3,009			1,375			196			61,727			1,260			180
Professional fees related to financing programs		4,622			-			-			27,841			10,464			1,492
Impairment losses of long-lived assets		13,014			15,585			2,223			21,792			40,386			5,760
Impairment losses of rental deposits		-			-			-			-			2,457			350
One-off expense of store closure		-			-			-			-			3,181			454
Loss on disposal of property and equipment		11,923			1,098			157			13,780			3,716			530
Loss of the debt extinguishment		-			-			-			-			10,657			1,520
Changes in fair value of Deferred Contingent consideration		(6,331	)		-			-			(6,331	)		16,941			2,416
Changes in fair value of convertible notes		10,046			27,921			3,982			31,372			48,461			6,912
Changes in fair value of warrant liabilities		-			-			-			83,966			-			-
Changes in fair value of ESA derivative liabilities		315			-			-			(19,594	)		-			-
Adjusted Net loss attributable to shareholders of the Company		(101,054	)		(42,872	)		(6,115	)		(303,424	)		(182,282	)		(26,000	)
Weighted average shares outstanding used in calculating basic and diluted loss per share		158,746,919			162,396,330			162,396,330			150,283,284			162,053,937			162,053,937
Adjusted basic and diluted net loss per Ordinary Share		(0.64	)		(0.26	)		(0.04	)		(2.02	)		(1.12	)		(0.16	)

___________________________

1 Excluding the transferred Popeyes business.2 System sales is calculated as the gross merchandise value of sales generated from both company owned and operated stores and franchised stores.3 Company owned and operated store contribution, is calculated as fully burdened gross profit5 of company owned and operated stores excluding depreciation & amortization.4 Company owned and operated store contribution margin, is calculated as company owned and operated store contribution as a percentage of revenues from company owned and operated stores.5 Fully burdened gross profit of company owned and operated stores, the most directly comparable GAAP measure to company owned and operated store contribution, was a gain of RMB10.1 million (USD1.4 million) for the three months ended September 30, 2024, compared to a loss of RMB18.3 million in the same quarter of 2023.