XpresSpa Group, Inc.

Greetings and welcome to the ExpressBog Group first quarter 2022 earnings conference call. During the presentation, all participants will be in listen-only mode. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, this conference is being recorded Monday, May 16th, 2022. I would now like to turn the conference over to James Berry, Chief Financial Officer. Please go ahead.

Good afternoon. Thank you for joining us today and for your interest in ExpressBog Group. Before our CEO, Scott Milford, offers his prepared remarks and I review first quarter 2022 financial results, I need to advise you of the following. Comments made on today's call may contain forward-looking statements within the meaning of the private securities litigation reform act of 1995. These forward-looking statements are based on current assumptions and opinions that involve a variety of known and unknown risks and uncertainties. Actual results may differ materially from those contained in or suggested by such forward-looking statements. Important factors that might cause such differences include those set forth from time to time in our SEC filings, including our report on Form 10-K for the year ended December 31, 2021, as well as other current and periodic reports that we file with the SEC. I would now like to turn the call over to Scott.

Thank you, James. And hello, everyone. We appreciate you all joining us this afternoon. Since taking over as CEO in late January, my team and I have been laying the foundation for our future by developing a set of strategic imperatives to accelerate our company's evolution so that we can become a leading health and wellness provider for people on the go. Today, my intention is to walk you through our first quarter performance. and the progress we have made on the four business transformation strategies I laid out on our last earnings call. As we execute these strategies, we're thankful to have available capital to enable us to adjust the pace of our work in light of changing market conditions for our business, even as we continue repurchasing our undervalued stock through our buyback program. Of course, it's important for everyone to be aware that as a public company, we can repurchase our stock during certain limited open window periods. During the first quarter, we repurchased 7.1 million shares during the available open window period. And we'll continue to repurchase shares as the opportunity arises. To help set the stage for our discussion today, I'd like to begin sharing our first quarter's performance. We generated consolidated revenue of $24 million and adjusted EBITDA of $0.4 million. Our quarter end cash balance was $83 million, and we have no long-term debt. I also want to call out that while the quarterly decline in overall airport testing relative to last year was not surprising, as the first quarter is typically the weakest quarter in terms of airport traffic, We did see a decrease that was faster and more significant than we had planned, as countries have moved to significantly relax their testing requirements. We further see this decreasing trend through April and May for the same reasons. Regardless of the fact that we are seeing a relaxation in testing requirements, COVID still posed as a risk, both here and abroad. Our relationship with the CDC remains strong and we continue to support their efforts to build a robust biosafety program through the collection of test samples from international travelers arriving in the U.S. Our intention has been and will continue to be to help keep COVID under control and to help prepare for a potential new threat. In April, as part of the CDC's Traveler-Based Surveillance Program, and together with our partner, Concentric, by Ginkgo, we collected, identified, and sequenced one of the first samples containing the novel BA.4 sublineage of the Omicron variant, and we delivered it to the CDC's lab. This sequence represented one of the first of the new Omicron sublineages that was identified in the United States. We're thrilled that our biosurveillance program continues to play a pivotal role in detecting new variants entering the country, further highlighting the importance of testing. And while testing has been a focus of ours since our business pivot in 2020, our efforts in the past quarter have expanded to include improving the profitability of our legacy spa business and the long-term profitability of the treat brand as COVID moves from pandemic to endemic. All of these changes are made possible by the capital we have available to accelerate our efforts. We continue to reopen our spas, rehire staff, and resume operations while identifying ways in which we can improve unit economics, which I'll update everyone on in a moment. We've opened two treat locations and are preparing for a third later this summer. We are busy putting our attention on long-term growth. We cannot ignore that a primary driver of our forecasted revenue for 2022 has been impacted by the continued, swift relaxation of testing requirements overseas. As a result of this, we anticipate revenues to be lower than we originally forecasted and will not be delivering more specific guidance at this time. I recognize the expected change in revenue is not what any of us desires. However, we had anticipated the eventual leveling off of testing and are already actively engaged in deploying strategies that we believe will help to secure our growth in the future. As I stated in our last earnings call, the work my team and I are doing now will help build a sustainable growth engine for our business in the future.