SUPER HI INTERNATIONAL HOLDING Ltd. American Depositary Shares Q1 FY2026 earnings call

- Store Network Expansion & Operational Quality: As of Q1 end 2026, the company operates 127 Haidilao restaurants in overseas markets, with 1 new store added in Southeast Asia during the quarter and a net increase of 4 stores year-over-year. The company has maintained strict requirements for new store location accuracy, profit expectations, and execution quality, with a current double-digit pipeline of reserved stores, and will continue to prioritize stability and quality in future expansion. New brand incubation under the Red Pomegranate Project now operates 10 multi-format brands across 18 stores, including Canadian Marathon, Indonesian Halal Hot Pot, Japanese Izakawa, and Spark Cora BBQ. - Service Optimization: Management shifted from over-reliance on rigid service standards to flexible operations, granting frontline employees more discretionary authority, and improving service personalization via strengthened post-event reviews and store manager mentoring to boost customer satisfaction. - Product and Menu Innovation: Headquarters supports global regional markets with scenario-based, differentiated localized product development. Key initiatives include scenario-specific offerings (kids' meal sets for families, spicy braised dishes for late-night dining), seasonal collaborative products, and premium upgrades to core beef categories (Australian Wagyu, freshly cut beef). This innovation strategy has effectively driven same-store sales growth and validated the localized product selection framework. - Cost Structure Improvement: Revenue growth and operational refinement drove improved operating leverage. Raw material gross margin hit 66.1% (+0.1 p.p. YoY), employee costs accounted for 34% of revenue (-1.3 p.p. YoY) due to improved personnel efficiency from higher customer traffic, depreciation and amortization accounted for 9.2% of revenue (-0.9 p.p. YoY) from fixed cost dilution and the end of amortization for some stores, and all other major cost categories saw modest year-over-year improvements as a share of revenue.

Total company revenue for Q1 2026 was $226 million, a 14.2% year-over-year increase. 1. Haidilao restaurants: Revenue reached $204 million, an 8.4% year-over-year increase, contributing 90.4% of total revenue. Same-store sales grew 4% year-over-year, total customer traffic hit 8.1 million visits, and table turnover rate increased 0.1 turn to 4 turns per day year-over-year. By region: Southeast Asia (72 stores, 5.2 million customers, 3.8 turns per day, +0.1 turn YoY, 6.3% same-store sales growth); East Asia (21 stores, 1.3 million customers, +18.2% YoY, 5.1 turns per day, +0.1 turn YoY, 10.6% same-store sales growth); North America (22 stores, 1 million customers, flat YoY, 3.6 turns per day, -0.4 turn YoY, -5.1% same-store sales growth due to extreme cold weather and new store ramp-up); Other regions (12 stores, 3.6 turns per day, -0.4 turn YoY, 1.8% same-store sales growth impacted by Middle East geopolitical volatility). 2. Delivery business: Revenue was $7.3 million, an 82.5% year-over-year increase, contributing 3.2% of total revenue. 3. Other businesses (Red Pomegranate Project new brands, central kitchen external sales, branded food/seasoning sales): Revenue reached $14.4 million, a 166.7% year-over-year increase, contributing 6.4% of total revenue. Total operating profit was $13.99 million, a 70.7% year-over-year increase, with an operating margin of 6.2% (+2.6 p.p. YoY). Reported net profit was $4 million, down YoY due to a $4.292 million foreign exchange loss, versus a $7.435 million gain in the prior year period.

- The company will continue to adhere to its long-term strategy of prioritizing quality over short-term growth, with core focus on customer experience, employee benefits, and food quality remaining unchanged after the departure of former executive Mr. Yang. - The company is maintaining its stable, quality-focused store expansion approach, with a double-digit pipeline of committed new stores, but will not set rigid top-down expansion targets, leaving final planning to regional teams based on local market conditions. - Membership management will be strengthened via system digitalization, refined tiered benefits, and improved frontline focus to boost customer loyalty, with 9.05 million total members as of quarter-end and 92% of table turns coming from members. - Off-season operations for hot pot will be supported by summer-specific new products, flexible labor scheduling, scenario-based marketing partnerships, and targeted customer acquisition to maintain healthy turnover and customer experience, with early second quarter performance continuing the stable trend from Q1. - Raw material and oil price impacts on gross margin are expected to remain controllable, buffered by supply chain localization, product mix adjustment, and ongoing efficiency improvements.

- Extreme cold weather in North America in early 2026 depressed customer foot traffic and same-store sales, leading to a 5.1% year-over-year same-store sales decline as newly opened stores are still ramping up. - Geopolitical volatility in the Middle East negatively impacted restaurant operations in other regions, driving a 0.4 turn year-over-year drop in table turnover. - Foreign exchange volatility caused a non-operating net loss of $11.73 million year-over-year, pulling down reported net profit for the quarter despite improving core operating profitability. - B2B central kitchen external sales have lower gross margins and higher volatility than core C-end restaurant operations, though they dilute fixed supply chain costs. - Commodity price volatility (including rising oil prices) creates potential margin pressure, though management expects this to be fully controllable with existing mitigation strategies.

Q: Will Mr. Yang's departure change the company's core strategy of prioritizing customer and employee benefits, and how will the company maintain strategic and team stability? / A: Management confirmed Mr. Yang's departure will not change the core strategy, which prioritizes customer experience, employee engagement, and food quality, and is now deeply embedded in daily store operations. The company will continue to follow the "quality first, growth second" framework for balancing short-term profits and long-term development, with unchanged regional and store-level accountability for operations. It will further deepen employee training, incentives, and mentoring to maintain stable operational quality.

Q: How is decision-making authority structured for the Red Pomegranate new brand project, and is there collaboration with China Haidilao's Red Pomegranate initiative? / A: The framework combines regional decision-making with headquarters resource empowerment: regional managers lead market research, format selection, and day-to-day operations for locally incubated projects, while cross-functional headquarters teams provide centralized support to improve incubation efficiency. Top-down projects in collaboration with China Haidilao also exist, such as Spark Cora BBQ, which draws Chinese product and design guidance with local operations management. Regular informal experience sharing continues with China Haidilao's team after Ms. Yang's return to the Chinese business.

Q: What consumer demand trends have emerged in 2026, and what is the company's medium to long-term growth outlook? / A: Management observed that consumers have shifted to more rational, value-focused spending, where value combines product quality, service, experience, and price, with variations across regions: North America prioritizes cost performance, Southeast Asia prioritizes convenience, and developed East Asian markets prioritize limited-time offerings and social sharing. The company's existing strategy of scenario-based product design and value focus aligns well with this trend. Medium to long-term, management expects industry barriers to rise rather than market size to shrink, and the company's strengthened operations leave it well-positioned to capture growth opportunities.

Q: What is the current status of the company's overseas membership program, and what are future plans? / A: As of Q1 end, total overseas Haidilao membership reached 9.05 million, with 92.5% of table turns from members, 20% of spending from new members, and one-third of spending from repeat customers within three months, for a stable contribution structure. Going forward, the company will invest in membership system digitalization, refine points and benefit design, and encourage frontline staff to prioritize member engagement to increase customer loyalty.