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XpresSpa (XSPA)

Participants
James Berry Chief Financial Officer
Scott Milford Chief Executive Officer
Raphael Gross Investor Relations
Call transcript
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Operator

Greetings, and welcome to XpresSpa Group's First Quarter 2022 Earnings Conference Call.

During the presentation, all participants will be in listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded Monday, May 16, 2022. I would now like to turn this conference over to James Berry, Chief Financial Officer. Please go ahead.

James Berry

afternoon. Good joining for for XpresSpa interest today Group. us you your and in Thank

the report those or results to factors Scott time prepared to offers include differ contained call review our statements on Milford, materially XXXX, Before CEO, other contain may statements. XX, his the for Comments XXXX such to set forward-looking results, XX-K variety Litigation and SEC. forward-looking the as on opinions and that today's filed those December by current time Important Securities the call ended and of first current would in of with of year and financial from might differences on These turn over remarks cause in as I risks Reform may I a unknown known our of suggested Actual you our from meaning Private such need to forward-looking we advise the within XXXX. SEC uncertainties. following. reports periodic assumptions Scott. like made well that now Act quarter forth the statements based that including involve I Form and filings, are

Scott Milford

imperatives this taking business our call. future We progress on quarter strategies and by to everyone. you the Thank and accelerate out laying we for our foundation you team the been company's Today, is to you, go. strategic leading the and our we walk January the made laid last that on I James, hello, on and can first our developing over my a in wellness my earnings set all four afternoon. have provider joining late people health appreciate evolution transformation CEO for us become through Since as I intention performance of so have a

changing to of strategies, our market we're work our in we these to continue as of buyback pace program. we our the thankful through light our us business, repurchasing to even stock have adjust capital As conditions available execute undervalued enable for

to a that window during as Of it's company, certain important can for everyone our course, we be stock limited open periods. repurchase aware public

During the opportunity million. window today, and sharing shares available performance. the To discussion first our help the and begin shares open EBITDA repurchase consolidated period, million $XX to stage repurchased as million for during quarter’s will continue to we of revenue of arises. I'd quarter, X.X the first $X.X We generated set like adjusted our

as as had that long-term decrease requirements, more this and to end a planned Regardless quarter the April see was significant as quarter in and risk, further a we airport faster is their abroad. no call We Our also I was we year and the terms to typically see and moved testing the traffic, decline are quarter quarterly first in have balance to seeing countries posed out want decreasing through cash that reasons. both that did testing for surprising, relaxation is the we a have debt. significantly May requirements. while airport we not overall the COVID fact of still same $XX relax million last of relative weakest than in testing trend here was

arriving of CDC international the biosafety robust with relationship build through travelers we efforts program Our from support in a test remains to U.S. samples the and continue collection to strong their the

We're of sequence sub-lineage concentric April, our new identified by the And containing delivered have and threat. highlighting detecting Treat business importance States. control been keep our the This for efforts In from be our Omicron brand been ours CDC's pandemic will long-term the our the continue in as represented a potential was to variants moves in spa while the to country, variant one the COVID sequenced play our under sub-lineages business to pivotal as it new testing. and the and together a has the of pivot CDC's traveler-based since thrilled intention and profitability of of legacy with of program first first part XXXX, we help Our BA.X we United to to surveillance samples entering testing prepare of to the focus Ginkgo, that help new and that the and biosurveillance further to continues the collected, in endemic. the improving COVID the has the a include role quarter partner of one past expanded of in lab. identified, of program novel profitability Omicron

possible the by our of to made we changes are efforts. have accelerate available capital All these

for reopen continue identifying spas, this everyone and resume later economics, on and We to in improve in staff, we our a operations re-hire summer. a We've which while third preparing which ways unit update I'll two locations opened Treat are can moment.

continued attention on growth. cannot that revenue a our testing driver been the our has putting busy long-term of relaxation impacted overseas. are requirements We We swift XXXX by primary forecasted of ignore for

As in to a this what be any not I expected the guidance forecasted result is will specific of recognize us delivering be this, we revenue time. originally and at of change desires. lower we than more anticipate revenues not

help the in leveling actively deploying engaged we are believe that off our had secure the future. of will eventual we testing growth already to However, anticipated strategies and in

shift growth what now my I to in As help the putting talk this achieve I work now, a place in business goal. doing And and are call, sustainable and our in us will build help like long-term the are future. for we stated our team about earnings engine last to gears I'd

business organizing growth. our Our imperative first for strategic is

identifying areas savings management we the of ensure are current our effectively a landscape. aggressively team, to operating As changing we business within meet can

or Instead we of brands, of out XpresSpa. revenue business? looking are airport with alignment in the XpresSpa businesses acquire distinct our drive across and will for this our Will any three questions. expressed grow these ourselves work Does with? check supporting it will support Group business partner our it We help or vision, Treat or existing asking of in-airport us grow in it integration

more investments ineffective. collectively. who in with is our and Officer, making brand as them holistically making [Pablo us integrating a experience includes build of Chief can shortly, This for way. Hiring we example, that our like will leverage things cost manual that technology investments efficient in patient scheduler brands Henderson] sales currently key are leaders to Marketing building, such streamline we much the further and efficient supply are infrastructure that process more in and an [ph] new in to our we're We making so serves join chain largely

offering. imperative across airport on currently focused aggressively These by revenue our our growing our increasing improving is retail efforts second by and business our Our rebuilding are capability on to our offer brands. retail wellness business. services focused consumers more to products on We're expanding relevant building

in last touchless testing XpresSpas additional services and mentioned we're drive we As sales labor quarter, on our save to costs.

wellness but services, Facials. We at are also to looking brand, may to This our add select we revenue. lucrative services like and adding and Treat from include to looking are like Botox aesthetic health products more drive and vitamin shops, also other therapies XpresSpas hydration

close and are U.S. We this developing expansion airport our not our may of airport other strategy, existing permanently serve as existing as while airport identifying acquisitions also locations, effort the to making stores required review to continue long-term to of the we Notably, portfolio our focusing that international locations, new portfolio partners. grow footprint. decisions well difficult market beyond with spas our extends as are on existing

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a strategic Our third increasing our and help presence. seasoned rebuild is retail We stronger with retail business, expert us a retail online revenue to in-store. hired growth comparative both recently

and sales basket opportunity Our for in-store services offering grow retail the relevant to more be offer provide we add-on average value. will to

lower airport, a new cost we our and cost and like of been health strength developing services products are model. driving business our having adding our in than buyers services more summer on planning we retail rather access to begin potential creative strategy consumers serve and without higher of labor pushing busy kit and millions the core We our and margin tailored to labor focus more during are add deployment our needs, not of Historically, with in cost, on revenue. products believe selling retail variety that can efforts wellness hopes a offering to despite the to travel a format and higher are of significantly reinvent a travelers that our has attract bundled We relied season. in

year. our expanding XXXX we acquisition. is airport a be believe to put balance through energy imperative to of for through we must the strategic deal good fourth Our of order into put capital will in We This work of our revenue. next grow, where out us and

outside while our may believe desire an faster to within airport. us So, growth expand allows the consider the strategy we constraints. to of airport, with opportunistic is We our out acquisitions airport fewer scale

partner and potential already identifying begun business. now to accretive companies are in have with discussions process may we a our be We the of that banking believe

to we set offset brand Our services our airport. effort of will labor. can the helped attractive care, them of that integrated We help also while Treat now an to the rising to outside and cost the businesses healthcare offering companies business sell to BXB benefit has that looking an fuel grow have retain of products

now, with committed dedicated imperatives. dedication who every to field to to vision to will on on and work the share business relationships and growth. a will I each fortunate care of our key pursuit update me day focus People And with and on transform to for we our and effort We teams evolution. Go. I XX deliver the very our potential. support let review continue the that this to in order report airports, want these group CDC. And market in milestones adjust portfolio continue operations. and our team delivering and My according government to with of are Beginning current XpresCheck, we'll And the of work on needs across also the XX have and the locations to locations requirements I and am on hard progress of achieve existing maximize of strategic thank I leaders such we our a as in

numbers identifying testing to cost continue declined, This manner. to testing business. necessary more our will closing may in at some locations. XpresCheck creative ways As include costs associated with to optimize deliver more look operating a we ways We're effective

the will with that $X.X of that the four at more a quarter this us our us, in report million To first are program the to COVID-XX deployed and which in with future. the efforts will they biosurveillance being $X.X and over contract will major recorded near-term. last help the in in hopeful the goal believe to at-risk why the U.S. XX to in in remainder And quarter. reiterate, we with is placed it specific year CDC program expansion fourth a this about pool We and We develop the a that continue with renewal in the that quarter these of an million in million in biosurveillance demonstrative second lead continue is of is identify with details lead still to work having of other testing CDC $X.X have involves to the year recognized continuous confidence airports revenue a contract to We countries, we countries. the effort that

XX spa airport travel season. we'll the spas locations, locations of that existing important business. least We our advantage our take to operating Performance XX spa have of domestically, at franchise continues and summer including currently over reopened to now have improve. two to Turning

returning to slowly pre-pandemic of volumes sales while and are to are see levels we a result, a XX% pre-pandemic starting were rebound. scheduling we about As earlier,

revenue continue ensure sales We are and monitor we hour to and optimize are maximized. able will where to by productivity

they We renewed a wellness products overall services in services that along interest well-being on among additional with willingness are travel. will travelers, while and spend dollars their to seeing improve

last late light to [indiscernible], which therapy, as reality evaluate services continue virtual adding goggles, to began our touchless we year. and spas such We

of new Amsterdam types services consists Airport retail, sales are will which these also expect Dubai drive Schiphol operating. stores. in XpresSpa our These add to of three six three there of We in International to locations in and airport. Internationally, in more addition more currently on-trend

wellness improve XpresSpa locations also be to with XpresSpas at summer. with of peace this cost have efforts of growth to on in newest as Airport at expansion all more and be spend factors higher, important more major believe a serve the first part a well-being and lower. we our the will are later five this margins These coupled of to These new willing our open tend designed continued and who traveler's that is is However, airport operations sophisticated We to generally an will traveler, growth technologies hub. experience international Istanbul opening future. international mind

Treat, As of received a Airport business one third our on integrated People through in location wellness has for health JFK Go, opened you know, its unit customers. services, Designed the brand, in looking suite travel XXXX. positive stop first JFK a and for feedback from the December solution

continued seeing IVs, We’re and and in in injections interest retail offerings. our C our our vitamin BXX,

This a we services the As in we services aesthetic to location. business, brick as our further of a to we of with with continue into leveraging Sky our this adjustments mortar menu, Phoenix well successful spa goal Airport. Harbor opened discussions April, some to are margin in making that time evaluate offerings and space more are higher adding In already and Treat products. second add

introduce Tree We the further that location learnings have to expect the into we business. improve to of JFK some from Treat Phoenix

likely see Treat as meet it greater Salt the third location more plan, greater from design Our half JFK. wellness well our forward. security] inviting also health and to Since our about more This to will our it [ph] activity of to the able and is will is they services floor more going retail value be room offer more provide cost [host former in will Because demand. opportunity XpresSpa and spa services as It location has a original design of location. default more open first some a providing It as engineered Lake retail somebody's same our products. City, a popular a will to assortment at offer of can we open passersby, catch travel be eye. in

our model Treat locations. and in to the evolve continue the evaluate will we service product current We as offerings

popular to our use We align offerings menu. legacy Treat will further a also under the more services to some with integrate spa and unified opportunity businesses of the new

as multiple Treat offering As long-term Treat health a from and in the we of said a an strategy extends This view strategy wellness we is for to locations will outside leadership channels this offering position see offering as expect in and outside play mid-term integrated basis year, contribution inside just a product product our with that integrated travel, but value wellness because before, revenue creation. This our airports. service modest our revenue integrated operating offer airport. we serve BXB the an

leading that biosafety and servicing and Finally, relationship agency recall in January, we Ezra acquired to healthcare important a the digital global healthcare role continue our HyperPointe will strategy. an pharmaceutical Under play HyperPointe, data of in ongoing Ernst, the marketing industry. analytics leadership

for further Additionally, to optimize we are beginning organizations to integrate our ways business our look two to growth. for

$XXX,XXX to During the the contributed HyperPointe first total quarter, Group. of revenue XpresSpa

accretive is out to and while this transactions whenever to to and are pursuing value acquisitions we over to to broaden in offering. we stakeholders. me airports, I day our plan both services so, strategic we vision, and authorization. products our Before and able under further our call turn will And increase the every to that expand able James, of reiterate let working our shares are will realize hard repurchase possible, do be all for we If XpresSpa other

it act Again, value. is turn subject in doing its periods. James. when price believe declines, there With the even position we current this blackout I'll to because stock’s a value stock to we are intrinsic and We over always not a because disconnect that, we between the are are to

James Berry

level. of kits newly loss The increase the the $X.X due Revenue first The to million to rose to refer $X.X to that acquired million acquired were you, million, of first HyperPointe to with the also locations the $X.X locations the sales for compared The $X.X the XXXX but prior centers, associated due in reported during Note costs XpresSpa location our provide Treat the of results, in closed quarter. year recognition million $XX primarily operating million compared million and in prior revenue at related an in $X.X increase of operate of and the operating in locations the of the common increase largest to quarter. and administrative reopening increased to this General temporarily quarter $X.X the million, of of that due XXXX. in segment. $X.X to year brief and in compared to cost net quarter we to of and of locations, was first from early we quarter first revenue from to cost quarter. to $X.X the loss quarter attributable ago in related million, to details. testing XpresCheck afternoon Cost component wellness for XpresCheck synopsis primarily comparable expenses first in that million cost XX-Q the $XX loss shareholders Thank period. greater XpresSpa quarter first the filed year we quarter. million cost please was functional although operations generated from of higher going a primarily prior were for XpresSpa our the $XX.X I'm year Scott. We generated quarter. re-opened million XpresCheck or sales the to We the and the the HyperPointe compared an year on the locations, business was the million first $X.X prior certain labor

million from cash solid million cash Operating our we equivalents minus million $XX minus improved flow Finally, and long-term $X.X debt. $X.X GAAP repurchase. financials, million with to for deployed totaling no have share respect cash we $XX.X remains liquidity and and our to with also

repurchased first shares periods. During outside of we million quarter, blackout X.X the

million announced XXXX. shares program repurchase under a million August X.X available XX XXXX, XX, on May remain share of As XX,

Given during which indicator, EBITDA interest transactions and quarter. an share first adjusted was We as the to consider the define for in and core to understand our impairment earnings activities. substantially as we that EBITDA active taxes X.X we exclude depreciation before adjusted of adjusted EBITDA does please current $X.X On period. non-GAAP We a to the be disposal year amortization next undervalued, of certain prior expense important adjusted related view basis, and EBITDA the be assets. price, to not window open compared adjusted compensation it stock-based intend operating million, cash but million

release, with and to along respect the testing, furnished the for We also metrics rapid are that in PCR patient earnings with opting percentages tests. rapid

referenced, anticipate revenues your from lower Finally, Relations now we time to this are today's turn our as Scott submit be than forecasted. we to will ahead shareholders questions to afternoon. to you Thank retail over I questions call. the of invited call originally for ask who Investor

Raphael Gross

Thank you, James.

to The you something first question and name changing relevant you are follows, is the more when ticker headed? as to will be company where

Scott Milford

kicked rebranding Thank to I'm already you to exercise. excited be to work question. share really start for that able off a that we've

are one Pablo, be for so XX, identified an Once on his us of finalize he and this and will well-underway. already hire to conclude May that agency it. us have and lead joins have can him We exercise we it we first this priorities

Raphael Gross

Great.

cash. is question Next about

fourth in compared time? and this point core a lot earned business of You've the be last deteriorating, you looking of to acquisitions really at your at year should is cash, quarter

Scott Milford

growth we profitability. and for absolutely place. that believe to in continue right making the ensure that for the resources do to generation we throughout opportunity that path firmly Let To sure cash need that revenue revenue we're we drive is believe most to organization through optimizing our on that going the accretive costs have we're the and hand, cutting achieve are longer-term we say acquisition me us

Raphael Gross

Okay.

you is confident and Next Are that enough to from your assuming not that question means business for evolving to existing XpresCheck in revenue? Treat elsewhere I'm acquisitions. you through need about Treat. look

Scott Milford

Yeah.

think same actually we So, both at we the time. can do

XpresCheck to services that with and a leases, they of offer. think created were I the at types time with we important that our specific it's on limits could note

not integrated we at every XpresCheck So, location. able be may to services include

and that, work airports and services the reinvented with we of retail outside be result where we we're think can look the can also offering our if a I while going time, we to airport business. as additional those to same see of expand to So, expand services at

Raphael Gross

expect current to work, stop the as Question hear CDC, do are the them June going to on you And of the expires biosurveillance renewing contract, now, contract ends? from the of end on you when when which the shortly?

Scott Milford

is the going We available that even this number as of expect we're at flights to intention. screening. well stretch to labor reducing continue That we’re to the about dollars, hear any And as schedules, refine time.

may So, secure we test, and contract. that we India, coming in the down allowing but still renewal enough we may from the to past, labor out us that long that have screened of flights can two, where to or five six stretching hopefully reduce in enough the available so pool

Raphael Gross

question, [ph]? And you Next are concerned [D-listing] a considering are so, split? you getting do if about notice How for a you approval? stock reverse need shareholder

Scott Milford

focused trend but that We reverse and team value developing will earlier current I that little year, on outlined we've that strategies and the help our that in value deploying the we're on credit are now. We are that last price. long-term got our over very strategies drive for And drive we're long-term. believe confident and we will we've the delivered comments right the shareholder sensitive now very now results delivering to price stock my stock

Raphael Gross

acquiring currently Why dormant? airport just non-XpresSpa them? How it you because estate? be better And do take the other can't not would you Is when many do are XpresSpas having are have real real Why acquire to what that airport over estate your with locations you sitting to open? anything? spas own without of you plan

Scott Milford

question. big a That's

answer I if see me can it let altogether. So,

that currently spas stages around various making closure. in of have possible XX we decision are So,

or we to very site poor of operate. may either those are require cost Some locations reopen, high others

reduce opportunity using our And decisions make tough so, this to we're to later. exposure now

to means We're looking to of now who You airport we'll going of increase a going advantage closed. us instances. allows our the these and of know, to we're to be If they ways the some in it paths take or to financial new might for keep pandemic airport cost And including not entry multiple be exit. affected improve businesses, competitors, opportunistic footprint have stayed locations, to explore enter of our our a that. have may down. number And

Raphael Gross

versus this revenue is services also the point? a are the much really of at How in from actually terms play And Treat is you any going treatment? COVID-testing versus retail Treat digital be this a of other making component money play of or to digital

Scott Milford

down is testing, customers and when of wellness exploring under the with So, belt I'm question, a evolution going in and align the to better XX% we other answer hydration from themselves as the latter Treat boosts. therapy In and opened, has even purchased. those product It revenue couple digital and part it, percentages We're a part of more retail brand. treat related. significant as and Treat being the now about XX% that both see revenue are units begun Right we to vitamin the are re-tooling Treat’s from first services question in reference the the first. to slowed shifting We to now more shift assets digital process open. fully of other testing of our expect of of to are retail services have portion but of has leverage testing as Treat the services services now, like retail, our was our in is

Raphael Gross

business? does is your acquisition COVID-testing HyperPointe even recent If waning, help how the Okay. overall

Scott Milford

need it programs help our may in it to while strategy. to HyperPointe the That relax, that overall support made of important when out business. and So, our testing reduce part an designed was building to the requirements done our and part remain of we doesn't continues And development protect travelers. was biosecurity strategy for acquisition,

think ensure structure, we we resources G&A way with as between XpresSpa keep they that more costs drive. our holistic HyperPointe within own can in-line in that a I to revenue the costs optimize to and continue we'll leverage

Raphael Gross

Thanks, any at this Scott. questions I'm seeing not time. more

Scott Milford

Thank you very much.

James Berry

evening. concludes everyone's for Believe call participation. that our Appreciate this

you. your disconnect now I Thank can think you lines.

Scott Milford

very much. you Thank

Operator

our conclude indeed does everyone. call that And today

disconnect. may You now