XWELL, Inc.

Greetings. Welcome to Exwell Inc's Fiscal Year 2022 Results Conference Call. During today's presentation, all parties will be in a listen-only mode. As a reminder, this conference call is being recorded on April 17, 2023. I would now like to turn the conference over to Omar Haynes, Interim Chief Financial Officer for Exwell. Please go ahead, sir.

Good day, everyone. Welcome to our conference call to review Exwell's fiscal year 2022 operating results. Joining me on today's call is Scott Milford, Exwell's Chief Executive Officer. We have posted our fiscal year earnings release on the investor relations section of our website, located at www.exwell.com. A link to the webcast of today's conference can also be found on our site. Before turning the call over to Scott for his prepared remarks, we 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 filing, including our report on Form 10-K for the year ended December 31, 2022, as well as other current and periodic reports that we file with the SEC. With that said, I'd now like to turn the call over to Scott.

Thank you, Omar, and good day, everyone. We appreciate you joining us today. I'll begin today's call by providing an update on recent business activity and how we're performing. Then, Omar will provide an overview of our fiscal year 2022 results. As outlined in our December shareholder letter, I'm pleased to note that during 2022, Exwell continued to make steady progress executing against the company's operating strategy. and that our focus in 2023 is to further leverage that progress to deliver a leaner, more profitable spa business, expand our biosurveillance business, and grow profit through off-airport acquisition. We're seeing strong operating momentum year over year in our retail operations. Most of our spas are performing better compared to a year ago. And as I'll discuss in a few minutes, we're already seeing signs of strong performance from the use of our new therapeutic chairs, which will replace our existing lounges. Additionally, we're beginning to execute the physical upgrade of our core locations while also advancing the use of autonomous services, all with the goal of improving the overall experience we deliver our guests while also improving unit economics in our airport business. As I referenced in my letter to shareholders in December, we made a number of difficult decisions in 2022, which included closing spas that we had determined would not meet our future growth expectations. And we expect to continue that effort as we continue to look at our existing company-owned portfolio of spas in the U.S. As I stated in our shareholder letter, my goal is to evolve our brand as a leading provider of health and wellness services for people on the go. This effort will require us to continue focusing on growth outside the airport and right-sizing our spa portfolio to a leaner and more profitable division of our overall business. And while that doesn't mean we will abandon growth in the airport altogether, We will rationalize that growth and accelerate it through our out-of-airport acquisition work. To that end, we do expect to add one new spa location in the U.S. in the Philadelphia airport this year. Alternatively, as I noted in our shareholder letter, our international spas have consistently been an area of profitable performance. We now have 10 locations operating outside of the United States, five in Istanbul Airport, three in Amsterdam's Schiphol Airport, and two in Dubai's airport. And despite the devastating effects of the recent earthquake in Turkey, our new spa locations in Istanbul Airport are performing well out of the gate, posting net sales of over $70,000 in January and approximately $80,000 in February. As we move forward, we remain optimistic about the prospects to further leverage our international presence. We're still targeting high single-digit unit growth through 2025 and remain positioned to open our 11th international location at Abu Dhabi Airport during the third quarter of 2023. Now, the December letter to shareholders also highlighted Exwell's enhanced retail strategy, and our commitment to strategically driving retail revenue. Just to quickly recap, during the second half of 2022, we built an entirely new approach to retail in our airport locations and also online. New, higher-value ad products were added to our store mix beginning in August. We're very encouraged by the positive momentum we've achieved to date from these new offerings. and expect to add additional products throughout 2023, including select health-focused grab-and-go food items. From a top-line perspective, during the fourth quarter, retail revenue at our Express Spa business increased 48% versus the same period prior year. Product margin for those sales was 67%, driven by solid growth during the holiday season. Further illustrating the commitments we've made in our shareholder letter, our strategy to drive higher traffic and stronger sales not only included new retail, but also a fresh approach to our service offerings to include therapeutic and tech-forward products to deliver a better consumer experience. For example, This February, we installed Novo XP massage chairs in seven spa locations, including Atlanta, Las Vegas, Miami, Dallas-Fort Worth, and JFK Airport. These therapeutic chairs simulate zero gravity and weightlessness to maximize the results of the fully autonomous massage. From an economic standpoint, these chairs typically pay for themselves within one and a half months. versus the three to four months it took our prior lounge chairs to break even. We currently estimate that revenue from these chairs, once deployed across the entire system, would be more than a million dollars with a service margin of 75%. And we anticipate that 80% of those revenues will be incremental to our existing neck and back massage business. This also doesn't include the additional incremental revenue we expect to add on services to our in-chair experience by way of VR goggle technology, for example. Last month, we also deployed our first hydromassage unit in our JFK location, and we expect to deploy an additional three of these machines this year with the option of additional machines in 2024. Hydromassage technology uses micropulse water bursts to provide an overall massage experience and also specifically targets areas through pulse therapy, all directed by the consumer without the use of a technician. As we continue to measure improved revenue from autonomous massage, coupled with add-on services such as VR goggles and light therapy, we plan to make additional technology investments to further improve the experience and revenue growth. This does include the use of fully autonomous massage. Separately, as some of you may have read in our recent press release, we're now offering consumers autonomous manicures. Through our partnership with Clockwork, a pioneer in robotics for the beauty industry, We've launched a pilot program starting with our JFK Terminal 4 location. During an initial three-month period, we plan to launch at least five of Clockwork's AI-powered robots across various spa locations. And ultimately, we expect to potentially deploy as many as 25 units across our portfolio of spots. We're excited to launch this program. which we believe represents revenue potential upon full rollout of approximately $2.5 million on an annualized basis at a service margin of 50%. Regarding our continued plans to upgrade the physical aesthetic of our spas, we're actively engaged with respective airport leadership to approve new design layouts, color palettes, equipment, retail, and even a refreshed Express Spa logo. As plans are approved by the airports, we'll begin the process of upgrading. But the takeaway here is that our spas will look different and even more importantly, feel different as these changes are deployed. We've taken measured steps to ensure the upgrades we make are both aesthetically and economically driven. Travelers will be able to see the results of our new design efforts at our new Philadelphia airport location, which will open this summer. In summary, we continue our strategy of optimizing our spa portfolio with a goal of a leaner and more profitable business that is able to deliver a reinvented product and service mix to drive more traffic and a higher ticket while improving the experience for our guests. In addition to the work underway to reinventing our wellness business in our airports, we've also made investments to facilitate a longer-term and more expansive relationship with the CDC and Ginkgo Bioworks to build out a more permanent biosurveillance platform that extends well beyond the current two-year contract term. To that end, Expo now operates seven biosurveillance testing centers in seven of the nation's busiest airports, JFK, Newark Liberty, San Francisco, Atlanta International, Washington Dulles, Seattle, and LAX. Along with our partners, we continue to grow the program's capabilities. For example, earlier this year we expanded our support for the Traveler-Based Genomic Surveillance Program to include a pilot study monitoring influenza virus in addition to the work we were doing with SARS-CoV-2. Looking ahead, we remain confident about the future opportunity of this partnership. We enjoy a solid working relationship with our partner and with the CDC, and we regularly meet with administration officials to explore the growth of this, the world's first true biosurveillance program. In fact, We've gotten several investor questions during the last two quarters focused on pieces of news they read about the expansion of this program, especially outside the US. To be clear, where it makes sense for us to grow this program, both domestically and internationally, we will. And we have the strength of a good working relationship with our partner, and more importantly, with the CDC, to bring that growth to reality. In addition to our commitment to driving top line growth, we remain very disciplined in managing our business and cost structure and have executed on numerous initiatives to drive down our expenses. I've been clear that performance of TREAT has not met our expectations. As a result, we closed the TREAT location in Phoenix Sky Harbor earlier this year. and are in the process of removing unprofitable medical services from the treat menu of offerings in both our JFK and Salt Lake Airport locations, focusing more of our effort on retail sales and higher margin wellness service offerings where we're currently seeing the growth. To further strengthen our core spa brand, we're combining the Express Spa and treat offerings into a single operating model and brand, Express Spa. This single approach will drive a better consumer experience and allow us to optimize costs through a unified operational process. We're currently developing a more modern and refined Express Spa logo that we will install in our airport locations as we refresh them. What we learned from opening treats. is that consumers yearn for something new and innovative in the airport. They want a premium environment to shop in, and they want the ability to unplug from the hectic pace of the airport environment. And through our upgrading and upskilling efforts, we believe we have the right balance of experience, escape, and expedience in our Express Spa brand without having to rebuild all our locations to look like treats. We've also been successful rationalizing our cost structure elsewhere. During the latter half of 2022, we carefully reviewed our portfolio with a focus on closing locations that no longer fit our profile for a successful business. Since then, we've closed 12 underperforming SPAs and shuttered 15 of our express check locations. We've also implemented meaningful spending cuts through headcount and G&A expense reductions, coupled with labor optimization in our stores. In the second half of 2022, we reduced G&A by approximately 11% compared to the same period in the prior year, and by 25% compared to the first half of 2022. Further, as we continue to right-size our SPA portfolio, we expect to reduce costs further. This will occur both at the unit level and also on the spa support side as well, as we'll need less infrastructure to support fewer, more profitable units. That said, we still have work to do, but clearly our cost-cutting initiatives are taking shape. We're encouraged by our momentum, and we enter 2023 as a leaner business, with a path to return to profitability. In summary, I'd like to underscore our continued momentum in our business. We remain encouraged by our evolving long-term strategy, and we remain optimistic about our positioning as we begin 2023. I'll now turn the call over to Omar for an update on our financial results. Omar?