XpresSpa Group Reports Fourth Quarter and 2017 Results
“2017 was a transformative year for
Mr. Perlman continued: “As a pure play in on-the-go wellness, we are entirely focused on the execution of our core strategy. This year, we will work to increase store productivity and contribution margin through labor efficiency, new services and products and traffic analysis initiatives. We will also deepen our collaboration with existing and new partners in the travel vertical, leveraging XpresSpa’s unique position as the leader in the airport spa market, serving harried travelers with idle time in the airport. Key to our growth is the development of our new franchising capability to capture additional demand while we open company-owned
2017 Consolidated Results Highlights
As noted above, consolidated results for full year 2016 include eight days of operations for the Wellness segment following the close of the
- Consolidated revenue from continuing operations was
$48.8 million in 2017 compared to$12.0 million in 2016. - Consolidated net loss from continuing operations was
$16.1 million in 2017 compared to a net loss of$19.3 million in 2016. - Comprehensive loss, after discontinued operations, was
$28.5 million in 2017 compared to$24.0 million in 2016. FLI Charge and Group Mobile are classified as discontinued operations. These businesses were sold inOctober 2017 andMarch 2018 , respectively.
The adjustment to the company’s deferred tax assets and liabilities from the Tax Cuts and Jobs Act of 2017 did not have a material impact to the Company’s financial statements.
2017 Wellness Segment Highlights
Full year 2016 results for
- Revenue of
$48.4 million increased 10.4% from$43.8 million in 2016- 9 store openings and the closure of 5 underperforming stores
- Same store sales growth of 3.0%
- 9 store openings and the closure of 5 underperforming stores
- Gross profit of
$9.4 million , or 19.4% margin, compared to$8.8 million , or 20.0% margin, in 2016; 2017 figure reflects increased labor and set-up costs associated with new store openings - Net operating loss of
$7.3 million decreased from a 2016 loss of$10.7 million - Adjusted EBITDA of
$1.9 million improved$8.8 million from a loss of$6.9 million in 2016, inclusive of$1.3 million of integration and one-time costs, as decreased expenses offset the gross margin comparison.
Fourth Quarter 2017 Wellness Segment Highlights
- Revenue was $11.8 million
- Opened 5 new locations during the quarter, including four domestic and one international
- Introduced XpresCryo facial with partner Nordic Cryotherapy
- Introduced Dermalogica skin care products
- Opened 5 new locations during the quarter, including four domestic and one international
- Gross profit was
$2.4 million , or 20.4% margin - Operating loss was
$1.2 million - Adjusted EBITDA was
$0.4 million - Completed installation of new point-of-sale system in all locations
Adjusted EBITDA is a non-GAAP financial measure; see "Use of Non-GAAP Financial Measures" below. See tables below for abbreviated financial
Balance Sheet & Cash Flows
As of December 31, 2017, the Company had:
- Current assets of $16.1 million
- Cash balance of $6.4 million
- Assets held for disposal of
$6.4 million - Liabilities held for disposal were
$3.8 million - Long-term debt of
$6.5 million with a related party
Conference Call Information
Management will host a conference call today at
Date:
Time:
Join the Conference Call via Webcast
Visit the Investor Relations section of the Company’s website at http://xpresspagroup.com. Visitors to the website should select the “Investors” tab and navigate to the “Events” link to access the webcast.
Join the Conference Call via Assisted Dial-In
To access the conference call by telephone, interested parties should dial 877-407-0792 (
Replay
An audio webcast of the conference call will be available within the "Presentations" section of the Company’s investor relations website shortly after the end of the conference call. A telephonic playback will be available from
About
Forward-Looking Statements
This press release contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These include statements preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "estimates," "projects," "intends," "should," "seeks," "future," "continue," or the negative of such terms, or other comparable terminology. Forward-looking statements relating to expectations about future results or events are based upon information available to
Investor Contacts
LHA
LHA
212.838.3777
xspa@lhai.com
| XpresSpa Group, Inc. Condensed Consolidated Balance Sheets ($ in thousands) |
||||||||
| December 31, 2017 |
December 31, 2016 |
|||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 6,368 | $ | 17,910 | ||||
| Inventory | 1,159 | 2,506 | ||||||
| Other current assets | 2,120 | 1,637 | ||||||
| Assets held for disposal | 6,446 | 8,446 | ||||||
| Total current assets | 16,093 | 30,499 | ||||||
| Restricted cash | 487 | 638 | ||||||
| Property and equipment, net | 15,797 | 16,266 | ||||||
| Intangible assets, net | 11,547 | 13,719 | ||||||
| Goodwill | 19,630 | 20,303 | ||||||
| Other assets | 1,686 | 1,382 | ||||||
| Total assets | $ | 65,240 | $ | 82,807 | ||||
| Current liabilities | ||||||||
| Accounts payable, accrued expenses and other current liabilities | $ | 8,736 | $ | 10,990 | ||||
| Liabilities held for disposal | 3,761 | 783 | ||||||
| Total current liabilities | 12,497 | 11,773 | ||||||
| Long-term liabilities | ||||||||
| Debt | 6,500 | 6,500 | ||||||
| Other liabilities | 404 | 365 | ||||||
| Total liabilities | 19,401 | 18,638 | ||||||
| Commitments and contingencies (see Note 19) | ||||||||
| Stockholders’ equity | ||||||||
| Series A Convertible Preferred stock, $0.01 par value per share; 500,000 shares authorized; 6,968 issued and none outstanding |
— | — | ||||||
| Series B Convertible Preferred stock, $0.01 par value per share, 5,000,000 shares authorized; 1,666,667 shares issued and none outstanding |
— | — | ||||||
| Series C Junior Preferred stock, $0.01 par value per share; 300,000 shares authorized; none issued and outstanding |
— | — | ||||||
| Series D Convertible Preferred Stock, $0.01 par value per share, 500,000 shares authorized; 475,208 shares issued and 420,541 shares outstanding with a liquidation value of $20,186 as of December 31, 2017; 491,427 shares issued and outstanding with a liquidation value of $23,588 as of December 31, 2016 |
4 | 5 | ||||||
| Common stock, $0.01 par value per share 150,000,000 shares authorized; 26,545,690 and 18,304,881 shares issued and outstanding as of December 31, 2017 and 2016, respectively |
265 | 183 | ||||||
| Additional paid-in capital | 290,396 | 280,221 | ||||||
| Accumulated deficit | (249,708 | ) | (220,868 | ) | ||||
| Accumulated other comprehensive loss | (74 | ) | (13 | ) | ||||
| Total stockholders’ equity attributable to the Company | 40,883 | 59,528 | ||||||
| Noncontrolling interests | 4,956 | 4,641 | ||||||
| Total stockholders’ equity | 45,839 | 64,169 | ||||||
| Total liabilities and stockholders’ equity | $ | 65,240 | $ | 82,807 | ||||
| XpresSpa Group, Inc. Condensed Consolidated Statements of Operations ($ in thousands) |
||||||||
| For the years ended December 31, | ||||||||
| 2017 | 2016 | |||||||
| Revenue | ||||||||
| Wellness | $ | 48,373 | $ | 811 | ||||
| Intellectual property | 450 | 11,175 | ||||||
| Total revenue | 48,823 | 11,986 | ||||||
| Cost of sales | ||||||||
| Wellness | 38,986 | 404 | ||||||
| Intellectual property* | 357 | 6,334 | ||||||
| Total cost of sales | 39,343 | 6,738 | ||||||
| Depreciation, amortization and impairment | 7,976 | 13,254 | ||||||
| General and administrative* | 16,577 | 9,702 | ||||||
| Total operating expenses | 63,896 | 29,694 | ||||||
| Operating loss from continuing operations | (15,073 | ) | (17,708 | ) | ||||
| Interest expense | (731 | ) | (1,698 | ) | ||||
| Extinguishment of debt | — | (472 | ) | |||||
| Other non-operating income (expense), net | (197 | ) | 599 | |||||
| Loss from continuing operations before income taxes | (16,001 | ) | (19,279 | ) | ||||
| Income tax expense | 111 | — | ||||||
| Consolidated net loss from continuing operations | (16,112 | ) | (19,279 | ) | ||||
| Loss from discontinued operations before income taxes* | (12,265 | ) | (4,724 | ) | ||||
| Income tax expense | (12 | ) | — | |||||
| Consolidated net loss from discontinued operations | (12,277 | ) | (4,724 | ) | ||||
| Consolidated net loss | (28,389 | ) | (24,003 | ) | ||||
| Net income attributable to noncontrolling interests | (451 | ) | (3 | ) | ||||
| Net loss attributable to the Company | $ | (28,840 | ) | $ | (24,006 | ) | ||
| Consolidated net loss from continuing operations | $ | (16,112 | ) | $ | (19,279 | ) | ||
| Other comprehensive income (loss) from continuing operations: foreign currency translation |
(61 | ) | (13 | ) | ||||
| Comprehensive loss from continuing operations | (16,173 | ) | (19,292 | ) | ||||
| Consolidated net loss from discontinued operations | (12,277 | ) | (4,724 | ) | ||||
| Other comprehensive income (loss) from discontinued operations: foreign currency translation |
— | — | ||||||
| Comprehensive loss from discontinued operations | (12,277 | ) | (4,724 | ) | ||||
| Comprehensive loss | $ | (28,450 | ) | $ | (24,016 | ) | ||
| Loss per share | ||||||||
| Loss per share from continuing operations | $ | (0.74 | ) | $ | (1.27 | ) | ||
| Loss per share from discontinued operations | (0.55 | ) | (0.31 | ) | ||||
| Total basic and diluted net loss per share | $ | (1.29 | ) | $ | (1.58 | ) | ||
| Weighted-average number of shares outstanding during the year | ||||||||
| Basic | 22,286,983 | 15,167,292 | ||||||
| Diluted | 22,286,983 | 15,167,292 | ||||||
| * Includes stock-based compensation expense, as follows: | ||||||||
| Intellectual property costs | $ | — | $ | 223 | ||||
| General and administrative | 2,177 | 2,225 | ||||||
| Discontinued operations | 568 | 122 | ||||||
| Total stock-based compensation expense | $ | 2,745 | $ | 2,570 | ||||
Use of Non-GAAP Financial Measures
Adjusted EBITDA is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. A reconciliation of operating loss for the wellness segment for the year ended
We consider Adjusted EBITDA to be an important indicator for the performance of our business, but not a measure of performance or liquidity calculated in accordance with U.S. GAAP. We have included this non-GAAP financial measure because management utilizes this information for assessing our performance and liquidity, and as an indicator of our ability to make capital expenditures and finance working capital requirements. We believe that Adjusted EBITDA is a measurement that is commonly used by analysts and some investors in evaluating the performance and liquidity of companies such as us. In particular, we believe that it is useful for analysts and investors to understand this indicator because it excludes transactions not related to our core cash operating activities. We believe that excluding these transactions allows investors to meaningfully analyze the performance of our core operations. Adjusted EBITDA should not be considered in isolation or as an alternative to cash flow from operating activities or as an alternative to operating income or as an indicator of operating performance or any other measure of performance derived in accordance with GAAP. In evaluating our performance as measured by Adjusted EBITDA, we recognize and consider the limitations of this measurement. Adjusted EBITDA does not reflect our obligations for the payment of income taxes, interest expense, or other obligations such as capital expenditures. Accordingly, Adjusted EBITDA is only one of the measurements that management utilizes. The following table provides a reconciliation of operating loss for the wellness operating segment and corporate to Adjusted EBITDA income (loss) for each of the four quarters of 2017 and the full years ended December 31, 2017 and 2016.
| XpresSpa Group, Inc. Reconciliation of Operating Loss From Continuing Operations to Adjusted EBITDA Income (Loss) for Wellness Operating Segment ($ in thousands) |
||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| Quarter Ended | 2017 | 2016 | ||||||||||||||||||||||
| 3/31/2017 | 6/30/2017 | 9/30/2017 | 12/31/2017 | Wellness | XpresSpa | |||||||||||||||||||
| Total revenue | $ | 10,984 | $ | 12,927 | $ | 12,652 | $ | 11,810 | $ | 48,373 | $ | 43,820 | ||||||||||||
| Cost of sales | ||||||||||||||||||||||||
| Labor | 5,309 | 5,783 | 6,458 | 6,777 | 24,327 | 19,784 | ||||||||||||||||||
| Occupancy | 1,771 | 1,983 | 1,950 | 1,917 | 7,621 | 6,399 | ||||||||||||||||||
| Product, supplies, and other operating costs | 1,755 | 2,635 | 1,939 | 709 | 7,038 | 8,887 | ||||||||||||||||||
| Total cost of sales | 8,835 | 10,401 | 10,347 | 9,403 | 38,986 | 35,070 | ||||||||||||||||||
| Gross Profit | 2,149 | 2,526 | 2,305 | 2,407 | 9,387 | 8,750 | ||||||||||||||||||
| Gross profit as a % of total revenue | 19.6 | % | 19.6 | % | 18.2 | % | 20.4 | % | 19.4 | % | 20.0 | % | ||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||
| Depreciation | 1,129 | 2,327 | 1,110 | 984 | 5,550 | 3,309 | ||||||||||||||||||
| Amortization | 586 | 592 | 597 | 600 | 2,375 | 433 | ||||||||||||||||||
| Total depreciation and amortization | 1,715 | 2,919 | 1,707 | 1,584 | 7,925 | 3,742 | ||||||||||||||||||
| Total general and administrative | 2,805 | 1,599 | 2,237 | 2,071 | 8,712 | 15,673 | ||||||||||||||||||
| Operating loss from continuing operations | (2,371 | ) | (1,992 | ) | (1,639 | ) | (1,248 | ) | (7,250 | ) | (10,665 | ) | ||||||||||||
| Plus: | ||||||||||||||||||||||||
| Depreciation and amortization | 1,715 | 2,919 | 1,707 | 1,584 | 7,925 | 3,742 | ||||||||||||||||||
| Merger and acquisition, integration and one-time costs | 484 | 200 | 529 | 50 | 1,263 | — | ||||||||||||||||||
| Adjusted EBITDA income (loss) | $ | (172 | ) | $ | 1,127 | $ | 597 | $ | 386 | $ | 1,938 | $ | (6,923 | ) | ||||||||||
| XpresSpa Group, Inc. Reconciliation of Operating Loss From Continuing Operations to Adjusted EBITDA Income (Loss) Company-Wide ($ in thousands) |
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| Wellness | Intellectual Property |
Corporate | Total 2017 |
|||||||||||||
| Operating loss from continuing operations | $ | (7,250 | ) | $ | 9 | $ | (7,832 | ) | $ | (15,073 | ) | |||||
| Plus: | ||||||||||||||||
| Depreciation and amortization | 7,925 | 23 | 28 | 7,976 | ||||||||||||
| Merger and acquisition, integration and one-time costs | 1,263 | — | 152 | 1,415 | ||||||||||||
| Stock-based compensation expense | — | — | 2,177 | 2,177 | ||||||||||||
| Adjusted EBITDA income (loss) | $ | 1,938 | $ | 32 | $ | (5,475 | ) | $ | (3,505 | ) | ||||||
Wellness Segment Same Store Sales Growth for 2017
($ in thousands)
| 2017 | 2016 (unaudited) | % | |||||||||||||||||||||||||||
| Comp Store | Non-Comp Store |
Total | Comp Store | Non-Comp Store |
Total | ||||||||||||||||||||||||
| Revenue | $ | 42,502 | $ | 5,871 | $ | 48,373 | $ | 41,277 | $ | 2,543 | $ | 43,820 | 3 | % | |||||||||||||||