GreenTree Hospitality Group Ltd. American depositary shares, each representing one Class A ordinary share

Good day and welcome to the Green Tree Hospitality Group Limited fourth quarter and fiscal year 2024 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. And to withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Rene Wagenstein with Christensen. Please go ahead.

Thank you, Rocco. Hello, everyone, and thank you for joining us. GreenTree's earnings release was distributed earlier today and is available on our IR website at ir.998.com, as well as on PR Newswire services. We also posted a PowerPoint presentation that accompanies our comments to the same IR website. On the call from Green Tree are Mr. Alex Hsu, Chairman and Chief Executive Officer, and Ms. Celina Yang, Chief Financial Officer. Mr. Hsu will present the company's performance overview of the fourth quarter and fiscal year of 2024, and Ms. Yang will then discuss financials and guidance. They will both be available to answer your questions during the Q&A sessions which follows. Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as may, will, expects, anticipates, aims, future, intends, plans, believes, estimates, continue, target, is or are likely to, going forward, confident, outlook, and similar statements. Any statements that are not historical facts, including statements about the company and its industry, are forward-looking statements. Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known and unknown risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the company's control. which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. 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 during this conference call, are current as of today's date. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events, or otherwise, except as required under applicable law. It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Alex Xu. Mr. Xu, please go ahead.

Thanks, Renee. And hello, everyone, and thank you for joining us today. Our performance in the fourth quarter was negatively impacted by the closure of 12 leased and managed hotels during the year and lower raw power compared to a higher base last year and the continued optimization of our restaurant business. In our hotel business, we are simultaneously accelerating the opening of new hotels with a planned 480 in 2025. That's an increase from 405 in 2024. And upgrading our existing portfolio with an absolute focus on quality to ensure higher standards of products and services. We believe that rejuvenation of our portfolio that was slowed down by the pandemic will be completed by the summer of 2026. While mid-scale remains our core segment, hotel openings in 2024 and our pipeline highlights our strategic commitment to expanding our mid to upscale segment, where we expect the growth over the next two years to deliver a significant economy of scale. Finally, we'll continue the phased closure of leased and managed hotels, especially in the lower tier cities. retaining only select flagship properties in key cities to serve as showcase of our capabilities for the prospective franchisees. The strategic transformation of our restaurant business made further progress on our two priorities. At the end of the quarter, franchised and managed stores accounted for almost 90% of all stores That's up from 78% a year ago. And the street stores that benefited from more stable consumer traffic accounted for 50% of all stores, up from 40% a year ago. Additionally, we have been wide-sizing many of our stores, reflecting the new economic reality to improve overall profitability. We believe we now have a strong foundation to build on and will grow the overall numbers of restaurants in 2025 with a particular focus on franchised and managed as well as street stores. Please turn to slide five. Compared with the fourth quarter of 2023, Hotel Valpar was 116 RMB, a decrease of 9.6%, and the restaurant ADS was a decrease of 16.8%. Total revenue was 304.1 RMB, a decrease of 18.2%. Hotel revenues were 240.2 million RMB and a decrease of 17.1% mainly due to the closure of 12 LO hotels in 2024 and a year-over-year decrease in world power of 9%. Net income was negative 72.8 million RMB mainly as a result of impairments of goodwill and trademarks of our restaurant businesses impairment of assets, and provisions for loan receivables related to franchise loans. Adjusted net income defined as excluding these impacts was 77.3 million RMB, an increase of 26.8% with a margin of 25.4%. Core net income was 57.8 million RMB, a decrease of 22.3% with a margin of 19%. An adjusted EBITDA was 71.5 million RMB, a decrease of 38.3% with a margin of 23.5%. Catch from operation was 74.2 million RMB. It's up from a negative 13.5 million RMB a year ago. Slide six shows detailed numbers for total revenues, net income, adjusted EBITDA, and the core net income. Slide seven shows the trend in our quarterly operating performance. In the first quarter, compared to a year ago, raw power for our LO hotels decreased by 2.1% to 158 RMB. Raw power for FM hotels decreased by 9.8% to 115 RMB. ADR for our LO hotels was largely in line with that of last year, and ADR for our FM hotels decreased by 4.6% to 167 RMB. Occupancy at our LO hotels decreased to 65.5% from 66.9%, and occupancy at our FM hotels decreased to 68.6% from 72.5%. Slide eight highlights the growth in our membership programs, which accounted for most of our direct sales. Individual memberships grow to 102 million, up from 91 million a year ago, and the corporate memberships grow to 2.17 million, up from 2.05 million a year ago. Slide nine shows the operating performance of restaurants with the ADS decreasing year-over-year to 4,234 RMB. Starting with slide 11, I'll review our strategy, strategic execution across our businesses. In our hotel business, we further expanded in the mid to upscale segment and in tier two, tier three, and lower cities. As you can see on slide 12, we continued to grow our mid to upscale segment with 553 hotels. That's 12.5% of our total portfolio at the end of the quarter. While the mid-scale segment remains the core of our hotel business at 67.3%, we continue our expansion into the higher-end markets. We also continue to grow our economy segment, ending the quarter at 20.2%. Please turn to slide 13. Our current pipeline is growing in tier two cities, and we also opened more hotels in such cities. On slide 14, we continue to turn around our restaurant business to ensure that it is sustainably profitable going forward by focusing on areas with greater food traffic. We have closed all stores and opened new FM stores, completing the strategic transformation to our new business model. As a result, FM restaurants accounted for 89.6% at the end of the quarter compared to 78.4% a year ago. And the street stores accounted for 50.5% compared to 39.7% a year ago. Next, Selena will review operating and financial highlights.