XpresSpa Announces Strategic Partnership and Third Quarter 2018 Financial Results
Store Margins Continue to Improve
Continued
Mr. Jankowski added, “During the third-quarter 2018, we opened in Concourse D at
Mr. Jankowski concluded, “Our intention for the balance of the year and beyond is to build on what we have already accomplished by continuing to streamline costs and position ourselves to achieve positive adjusted EBITDA. Lastly, we are very excited by our new strategic partnership with Calm and welcoming their 35 million users into our spas during the busy holiday travel season. With this investment from Calm, we will be using these funds to raise our brand profile in new and existing markets while enhancing our customers’ experience.”
Third Quarter 2018 Highlights
- Total revenue increased 0.5% to
$12.9 million . Contributions from six additionalXpresSpa locations opened year-over-year were mostly offset by a decrease in comparable store sales.
• Comparable-store sales decreased 3.0% asXpresSpa was impacted by changes in airline assignments within key LaGuardia,John F. Kennedy , andLos Angeles terminals which had a direct impact on traffic and ultimately revenues.
• Retail sales comprised 20% of revenue in third quarter 2018, compared to 17% in second quarter 2018. - Opened a location in Atlanta’s
Hartsfield-Jackson Atlanta International Airport . - Completed renovation in
Washington Reagan National Airport . - Product and service store margin of
$3.0 million , or 22.9% margin, grew 28.5% from third quarter 2017 store margin of$2.3 million , or 18.2% margin, and$2.7 million , or 20.5% margin, in second quarter 2018.
• Labor costs decreased through greater efficiency in staffing and scheduling.
• Product and operating costs decreased as product sourcing fully transitioned to the Company’s strategic partner and careful cost control. - General and administrative expenses decreased 5.7% or
$0.2 million to $3.9 million in third quarter 2018 from$4.2 million in third quarter 2017. Third quarter 2018 general and administrative included one-time professional costs of$0.3 million , and one-time project costs of$0.1 million related to the buildout and implementation of a business analytics tool, as well as a$0.5 million reduction in stock compensation expense to$0.2 million compared to$0.7 million in third quarter 2017. - Operating loss from continuing operations improved to
$2.9 million from$3.5 million in third quarter 2017. - Consolidated net loss attributable to the Company improved to
$3.2 million from$4.7 million in third quarter 2017 primarily due to improvements in store margin and reductions in general and administrative expenses relative to last year. - Adjusted EBITDA* loss of
$0.4 million improved from$0.6 million in third quarter 2017 through improved store margin and reduced general and administrative expenses.
*Adjusted EBITDA is a non-GAAP financial measures; see "Use of Non-GAAP Financial Measures" below. See tables below for abbreviated financial
Balance Sheet & Cash Flows
As of
- Cash and cash equivalents of
$2.5 million - Current assets of
$4.0 million - Total liabilities of
$16.9 million , of which$6.5 million is long-term debt held by a related party.
Management believes that the current cash balance, up to
Conference Call
The conference call can be accessed live over the phone by dialing (631) 891-4304. A replay will be available after the call and can be accessed by dialing (412) 317-6671; the passcode is 10005890. The replay will be available until
The webcast can be accessed from the Investor Relations section of the Company’s website at http://xpresspagroup.com. Visitors to the website should select the “Investors” tab and navigate to the “Events” link to access the webcast.
About
Investor Relations:
ICR
(203) 682-8253 / (646) 277-1263
| XpresSpa Group, Inc. | |||||||
| Condensed Consolidated Balance Sheets | |||||||
| ($ in thousands) | |||||||
| September 30, | December 31, | ||||||
| 2018 | 2017 | ||||||
| (Unaudited) | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 2,525 | $ | 6,368 | |||
| Inventory | 802 | 1,159 | |||||
| Other current assets | 591 | 2,120 | |||||
| Assets held for disposal | 109 | 6,446 | |||||
| Total current assets | 4,027 | 16,093 | |||||
| Restricted cash | 487 | 487 | |||||
| Property and equipment, net | 15,005 | 15,797 | |||||
| Intangible assets, net | 9,789 | 11,547 | |||||
| Goodwill | - | 19,630 | |||||
| Other assets | 3,356 | 1,686 | |||||
| Total assets | $ | 32,664 | $ | 65,240 | |||
| Current liabilities | |||||||
| Accounts payable, accrued expenses and other current liabilities | $ | 7,641 | $ | 8,736 | |||
| Convertible notes, net | 1,610 | - | |||||
| Liabilities held for disposal | 40 | 3,761 | |||||
| Total current liabilities | 9,291 | 12,497 | |||||
| Debt | 6,500 | 6,500 | |||||
| Convertible notes, net | 398 | - | |||||
| Derivative warrant liabilities | 455 | 34 | |||||
| Other liabilities | 265 | 370 | |||||
| Total liabilities | 16,909 | 19,401 | |||||
| Commitments and contingencies (see Note 13) | |||||||
| Stockholders’ equity | |||||||
| Series A Convertible Preferred stock, $0.01 par value per share; 6,968 shares authorized; 6,968 issued and none outstanding | - | - | |||||
| Series B Convertible Preferred stock, $0.01 par value per share; 1,609,167 shares authorized; 1,609,167 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 | 4 | 4 | |||||
| Common stock, $0.01 par value per share; 150,000,000 shares authorized; 31,919,511 and 26,545,690 issued and outstanding as of September 30, 2018 and December 31, 2017, respectively | 319 | 265 | |||||
| Additional paid-in capital | 291,989 | 290,396 | |||||
| Accumulated deficit | (280,351 | ) | (249,708 | ) | |||
| Accumulated other comprehensive loss | (279 | ) | (74 | ) | |||
| Total stockholders’ equity attributable to the Company | 11,682 | 40,883 | |||||
| Noncontrolling interests | 4,073 | 4,956 | |||||
| Total stockholders’ equity | 15,755 | 45,839 | |||||
| Total liabilities and stockholders’ equity | $ | 32,664 | $ | 65,240 | |||
| XpresSpa Group, Inc. | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (In thousands, except share and per share data) | ||||||||||||||||
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Revenue | ||||||||||||||||
| Products and services | $ | 12,922 | $ | 12,652 | $ | 37,760 | $ | 36,563 | ||||||||
| Other | - | 200 | 800.00 | 300 | ||||||||||||
| Total revenue | 12,922 | 12,852 | 38,560 | 36,863 | ||||||||||||
| Cost of sales | ||||||||||||||||
| Labor | 5,997 | 7,086 | 18,697 | 18,178 | ||||||||||||
| Occupancy | 1,996 | 1,950 | 6,216 | 5,704 | ||||||||||||
| Products and other operating costs | 1,992 | 1,437 | 5,208 | 6,044 | ||||||||||||
| Total cost of sales | 9,985 | 10,473 | 30,121 | 29,926 | ||||||||||||
| Depreciation and amortization | 1,879 | 1,722 | 5,375 | 6,379 | ||||||||||||
| Goodwill impairment | - | - | 19,630.00 | - | ||||||||||||
| General and administrative* | 3,943 | 4,180 | 12,443 | 13,037 | ||||||||||||
| Total operating expenses | 15,807 | 16,375 | 67,569 | 49,342 | ||||||||||||
| Operating loss from continuing operations | (2,885 | ) | (3,523 | ) | (29,009 | ) | (12,479 | ) | ||||||||
| Interest expense | (624 | ) | (183 | ) | (1,212 | ) | (549 | ) | ||||||||
| Other non-operating income -expense), net | 378 | (82 | ) | 877 | (17 | ) | ||||||||||
| Loss from continuing operations before income taxes | (3,131 | ) | (3,788 | ) | (29,344 | ) | (13,045 | ) | ||||||||
| Income tax benefit -expense) | 66 | (57 | ) | 198 | (284 | ) | ||||||||||
| Consolidated net loss from continuing operations | (3,065 | ) | (3,845 | ) | (29,146 | ) | (13,329 | ) | ||||||||
| Loss from discontinued operations before income taxes* | - | (699 | ) | (1,115 | ) | (4,474 | ) | |||||||||
| Income tax benefit -expense) | - | - | - | - | ||||||||||||
| Consolidated net loss from discontinued operations | - | (699 | ) | (1,115 | ) | (4,474 | ) | |||||||||
| Consolidated net loss | (3,065 | ) | (4,544 | ) | (30,261 | ) | (17,803 | ) | ||||||||
| Net income attributable to noncontrolling interests | (122 | ) | (153 | ) | (382 | ) | (329 | ) | ||||||||
| Net loss attributable to the Company | $ | (3,187 | ) | $ | (4,697 | ) | $ | $ | (30,643 | ) | $ | (18,132 | ) | |||
| Consolidated net loss from continuing operations | (3,065 | ) | (3,845 | ) | $ | (29,146 | ) | (13,329 | ) | |||||||
| Other comprehensive income -loss) from continuing operations | (3 | ) | 31 | (205 | ) | (120 | ) | |||||||||
| Comprehensive loss from continuing operations | (3,068 | ) | (3,814 | ) | (29,351 | ) | (13,449 | ) | ||||||||
| Consolidated net loss from discontinued operations | - | (699 | ) | (1,115 | ) | (4,474 | ) | |||||||||
| Other comprehensive loss from discontinued operations | - | - | - | - | ||||||||||||
| Comprehensive loss from discontinued operations | - | (699 | ) | (1,115 | ) | (4,474 | ) | |||||||||
| Comprehensive loss | (3,068 | ) | (4,513 | ) | $ | (30,466 | ) | (17,923 | ) | |||||||
| Loss per share | ||||||||||||||||
| Loss per share from continuing operations | $ | (0.11 | ) | $ | (0.16 | ) | $ | (1.08 | ) | $ | (0.65 | ) | ||||
| Loss per share from discontinued operations | - | $ | (0.04 | ) | $ | (0.04 | ) | $ | (0.22 | ) | ||||||
| Total basic and diluted net loss per share | $ | (0.11 | ) | $ | (0.20 | ) | $ | $ | (1.12 | ) | $ | (0.87 | ) | |||
| Weighted-average number of shares outstanding during the period: | ||||||||||||||||
| Basic | 28,352,284 | 24,144,002 | 27,268,792 | 20,852,034 | ||||||||||||
| Diluted | 28,352,284 | 24,144,002 | 27,268,792 | 20,852,034 | ||||||||||||
| *Includes stock-based compensation expense, as follows: | ||||||||||||||||
| General and administrative | $ | 194 | $ | 662 | $ | 765 | $ | 1,752 | ||||||||
| Discontinued operations | - | 44 | - | 427 | ||||||||||||
| Total stock-based compensation expense | $ | 194 | $ | 706 | $ | 765 | $ | 2,179 | ||||||||
| XpresSpa Group, Inc. | ||||||||||||||||
| Use of Non-GAAP Financial Measures | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Products and services revenue | $ | 12,922,000 | $ | 12,652,000 | $ | 37,760,000 | $ | 36,563,000 | ||||||||
| Cost of sales | ||||||||||||||||
| Labor | (5,997,000 | ) | (7,086,000 | ) | (18,697,000 | ) | (18,178,000 | ) | ||||||||
| Occupancy | (1,996,000 | ) | (1,950,000 | ) | (6,216,000 | ) | (5,704,000 | ) | ||||||||
| Products and other operating costs | (1,966,000 | ) | (1,311,000 | ) | (5,092,000 | ) | (5,701,000 | ) | ||||||||
| Total cost of sales | (9,959,000 | ) | (10,347,000 | ) | (30,005,000 | ) | (29,583,000 | ) | ||||||||
| Gross profit | 2,963,000 | 2,305,000 | 7,755,000 | 6,980,000 | ||||||||||||
| Gross profit as a % of total revenue | 22.9 | % | 18.2 | % | 20.5 | % | 19.1 | % | ||||||||
| Depreciation, amortization and impairment | ||||||||||||||||
| Depreciation | (1,195,000 | ) | (1,117,000 | ) | (3,474,000 | ) | (4,604,000 | ) | ||||||||
| Amortization | (684,000 | ) | (605,000 | ) | (1,901,000 | ) | (1,775,000 | ) | ||||||||
| Goodwill impairment | - | - | (19,630,000 | ) | - | |||||||||||
| Total depreciation, amortization and impairment | (1,879,000 | ) | (1,722,000 | ) | (25,005,000 | ) | (6,379,000 | ) | ||||||||
| Total general and administrative expense | (3,943,000 | ) | (4,180,000 | ) | (12,443,000 | ) | (13,037,000 | ) | ||||||||
| Other operating revenue and expense | ||||||||||||||||
| Other operating revenue | - | 200,000 | 800,000 | 300,000 | ||||||||||||
| Other operating expense | (26,000 | ) | (126,000 | ) | (116,000 | ) | (343,000 | ) | ||||||||
| Total other operating revenue, net | (26,000 | ) | 74,000 | 684,000 | (43,000 | ) | ||||||||||
| Operating loss from continuing operations | (2,885,000 | ) | (3,523,000 | ) | (29,009,000 | ) | (12,479,000 | ) | ||||||||
| Add: | ||||||||||||||||
| Depreciation and amortization | 1,879,000 | 1,722,000 | 5,375,000 | 6,379,000 | ||||||||||||
| Goodwill impairment | - | - | 19,630,000 | - | ||||||||||||
| Merger and acquisition, integration, and one-time costs | 452,000 | 529,000 | 1,057,000 | 1,365,000 | ||||||||||||
| Stock-based compensation expense | 194,000 | 662,000 | 765,000 | 1,752,000 | ||||||||||||
| Adjusted EBITDA loss | (360,000 | ) | (610,000 | ) | (2,182,000 | ) | (2,983,000 | ) | ||||||||
| XpresSpa Group Inc. | ||||||||||||||||
| Same Store Sales Growth for Third Quarter 2018 | ||||||||||||||||
| ($ in thousands) | ||||||||||||||||
| September 30, 2018 | September 30, 2017 | % | ||||||||||||||
| Non-Comp | Non-Comp | |||||||||||||||
| Comp Store | Store | Total | Comp Store | Store | Total | |||||||||||
| Revenue | $ | 11,375 | $ | 1,547 | $ | 12,922 | $ | 11,732 | $ | 920 | $ | 12,652 | (3.0 | %) | ||
