XpresSpa Group(US:XWEL)2022-08-15 23:00Financial Data and Key Metrics Changes - Revenue increased to $13.6 million in Q2 2022 from $9.1 million in Q2 2021, primarily driven by $7.4 million from Express Check locations and $3.7 million from reopened spas and Treat locations [47] - Operating loss was $7.8 million compared to a loss of $4.2 million in the prior year [50] - Net loss attributable to common shareholders was $7.9 million, up from $4.5 million in the previous year [50] - Cash and cash equivalents totaled $71.1 million, with working capital of $61.8 million and no long-term debt [52] Business Line Data and Key Metrics Changes - The company currently operates 26 spas globally, with plans to open five more in Q3, including the first location in Istanbul Airport [11][21] - Two Treat locations are currently open, with a third expected to open in Salt Lake City in late Q3 [26] - Revenue from Express Check locations was $7.4 million, while reopened spas and Treat locations generated $3.7 million [47] Market Data and Key Metrics Changes - The company is expanding its international presence, with plans to open a new spa location at Abu Dhabi Airport in Q1 2023 and five new locations at Istanbul Airport by the end of 2022 [24][22] - Istanbul Airport serves approximately 250 international destinations and over 20 million passengers annually, making it a strategic location for expansion [22] Company Strategy and Development Direction - The company aims to transform into a leading health and wellness provider for travelers, focusing on four core transformational imperatives: refreshing airport business, creating a new retail strategy, adding customers through acquisitions, and reducing infrastructure costs [7][8] - A strategic rebranding campaign is set to launch in Q4 2022, including a new name and visual identity [7][74] - The company is pursuing a B2B wellness product strategy and exploring partnerships for promotional packages and pop-up locations [73] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by the decline in testing demand but remains optimistic about the long-term growth potential through strategic initiatives [36][38] - The company is committed to optimizing capital and managing sustainable growth while focusing on shareholder value [33][70] - Management believes the underlying fundamentals are solid and that the company is well-positioned to achieve long-term objectives [45][58] Other Important Information - The company has successfully eliminated approximately $1 million a month in costs, which is expected to yield benefits starting in Q3 [51][33] - A new two-year contract with the CDC for biosurveillance efforts is valued at approximately $16 million, with a potential total value of $61 million [42][60] Q&A Session Summary Question: Can you provide guidance on the CDC contract? - The contract is worth up to $61 million over two years, with operations expanding to four major international airports and new locations for wastewater surveillance [60][62] Question: What is the expected number of locations by the end of Q3? - By the end of Q3, the company expects to have three Treat locations and 31 XpresSpa locations open globally [64] Question: What is the status of airport acquisition plans? - The company is actively pursuing acquisitions outside the airport to accelerate growth but has paused specific discussions due to valuation disagreements [68] Question: What is the company's capital allocation strategy? - The company aims to balance organic growth and external opportunities while returning excess capital to shareholders through share repurchases [69] Question: Can you elaborate on the B2B strategy? - The company has hired a leader to build a targeted B2B strategy, focusing on promotional packages and airport lounge services [73] Question: What is the timeline for the new brand launch? - The new brand is expected to launch in Q4 2022, pending the resolution of trademark and registration hurdles [74] Question: Is there potential for Monkeypox testing in the future? - The company is working with Ginkgo and the CDC to explore incorporating Monkeypox testing into their protocols [76] Question: How does the CEO view the company's direction? - The CEO believes the company is headed in the right direction, emphasizing the importance of agility and the integration of services to meet traveler needs [79]