TH International Limited

Ladies and gentlemen, welcome to Teams China first quarter 2025 earnings conference call. All participants will be in the listen-only mode during management prepared remarks, and there will be a question and answer session to follow. Today's conference is being recorded. At this time, I'd like to turn the call over to Gemma Bucks, who will head Teams China's investor relations efforts for prepared remarks and introduction. Please go ahead, Gemma.

Thank you very much, Desmond. Hello, everyone, and thank you for joining us on today's call. My name is Linda Watts, Head of Investor Relations, and here to say that TimsChina today announced its first quarter 2025 financial results earlier today. A press release as well as an accompanying presentation which contains operational and financial highlights are now available on the company's IR website at ir.timschina.com. Today you will hear from Yongchen Liu, our CEO and Director, and Albert Li, our CFO. After the company's prepared remarks, the management team will conduct a question and answer session. You can find the slide presentation and the webcast of today's earnings call on our Investor Relations website. Before we get started, I'd like to remind you that our earnings presentation and investor materials contain forward-looking statements, which are subject to future events and uncertainties. Statements that are not historical fact, including but not limited to statements about the company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and our actual results may differ materially. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and risk factors included in our filings with the SEC. This presentation also includes certain non-GAAP financial measures which we believe can be helpful in evaluating our performance. However, those measures should not be considered substitutes for the comparable GAAP measures. The accompanying reconciliation information related to those non-GAAP and GAAP measures can be found in our earnings press release issued earlier today. With that said, I would now like to turn it over to Yongchen Liu, our CEO and Director. Please go ahead, Yongchen.

Thank you, Gemma. Good morning and good evening, everyone. In Q1, we solidified our differentiated strategic positioning in coffee plus freshly prepared food by launching light and fit lunch box, Qingti Wuchang He Xide, a series of new platform combo products for the lunch day part to boost lunch sales and offer our guests a healthy and tasty lunch option. The product lineups include hot baked bagel sandwiches, energizing lunch wraps, and loaded power bowls, paired with coffee or other beverages, all at an acceptable price point. With Team China's Sibaba 40% off discount card, the light and fit lunchbox combo products Pricing starts from as low as RMB 24, near about 3.5 US dollars, delivering both great value and great nutrition. Our latest low-power bowls products were launched in middle May. They come in a standard 2 plus 8 plus 8 configuration, featuring 18 carefully selected ingredients The 2 stands for two portions of high-quality protein, while the 2-8 represents eight wholesome grains and eight colorful vegetables, creating a nutrient-rich meal designed to meet the needs of business professionals and fitness enthusiasts alike. has been a key strategic focus for Teams in 2025. It aims to reshape consumer perceptions of Teams as a launch destination beyond our traditional strength in breakfast, as I also mentioned before, thereby creating a second high-demand meal day part and driving sustainable revenue growth. It also introduces a fresh take on Western-style healthy lunches in a cafe setting, offering a complete entree plus snack plus coffee meal solution. This is more than just an extension of our product line. It's re-imaging how busy urban consumers eat and exceeding their expectations. We are moving from singular coffee consumption to all-day healthy dining embedding the cafe experience deeply into a health-focused lifestyle. This initiative has been enthusiastically welcomed by the market since its launch, contributing meaningful incremental daily transactions to the post-Harley rebound in sales and helped teams gain traction in the competitive white-collar launch segment, setting a solid foundation for continued momentum in Q2 and beyond. Amidst macroeconomic volatility and intense market competition, our team has demonstrated great resilience and achieved significant profitability improvements. Thanks to our operational efficiencies, supply chain optimizations, and rigorous cost controls, during the quarter, company owned and operated store contribution margin and adjusted corporate EBITDA margin improved by 5.9 percentage points and 6.1 endpoints year-over-year respectively. We regained top-line growth in the first quarter and achieved 3.5% increase in system sales year-over-year. Our sub-franchise and retail businesses also contribute steady cash flows and profitability. Profits from other revenues increased by 34.5% year-over-year. At the same time, we cut losses and adjust corporate EBITDA by nearly half, 5-0%. These achievements are testament to TeamChina's enduring efforts and our strive for further profitable growth. On store development, leveraging sub-franchisee partnerships, we strategically expanded our store footprint into 84 cities, including the city of Fuyang and Nanchang, that we entered in keyword while maintaining capital efficiency delivering absolute convenience for our guests since we launched our individual franchises program in december 2023 we have received over 7 000 applications and successfully converted nearly 200 stores by the end of march showcasing market confidence in our franchise model we have exception attractive and desirable store unit economics for our sub-franchisees with a reasonable two to three year payback period on average. As of March 31st, our largest loyalty club members reached 25.2 million, reflecting a remarkable 25.7% year-over-year growth. The average number of members per store has now surpassed 24,500. serving as a strong catalyst for our future growth. On marketing, to offset the seasonal slowdown caused by the extended Chinese New Year holiday, Teams China implemented a series of strategic initiatives in Q1, including co-branded collaborations and a brand birthday campaign. These efforts were designed to drive traffic, increase increased average transaction value and established new consumption occasions. Ahead of the Lunar New Year in January, teams partnered with Oatly during the breakfast day part to boost sales. The collaboration featured limited-time menu items paired with branded merchandise, enhancing value and helping lift consumers' average spending. In March, teams launched A co-branded campaign with Eagle Brand America adjoins them to reinforce its health-conscious positioning and expand its presence among urban, white-collar professionals, leveraging Eagle Brand's strong appeal within these key demographics. Aligned with the post-Hard Day period, the 61st Tim Hortons Brand World Birthday Anniversary strategically timed to accelerate recovery from the New Year law. During this period, Tim's low-out Chinese version of Double-Double and seasonal comeback of his signature product, Tim's Donuts, we believe that cultivating a stronger emotional connection around the brand birthday will help deepen consumer recognition and loyalty in the long term. At this time, I would like to turn it over to our CFO, Albert Li, to discuss our first quarter financial performance in more detail.