Q2 2021 XpresSpa Group Inc Earnings Call
Please note that this event is being recorded.
Like to turn the call over to Mr. Kingsbury CFO. Please go ahead.
Good afternoon. Thank you for joining us today and for your interest in extra expressed by group.
For our CEO, Doug SaaS and provides an update on our business and I briefly review, our second quarter 2021 financial results I first 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 $19.95. 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.
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, 2020, as well as our earnings release and 10-Q issued this afternoon, along with other current and periodic reports that we file with the SEC.
I would now like to turn the call over to Doug.
Thank you James Hello, everyone.
For taking the time to join US. This afternoon before we begin I'd like to express our deep appreciation for all of our shareholders, including both institutional and especially our retail investors.
All of the support that you've given us over the past year.
Our goals are aligned and we look to create significant shareholder value for everyone in the future.
Let me begin by expressing how pleased we are with our financial results. During the second quarter, we generated net revenue of $9.1 million, including $8.7 million from express check and narrowed our adjusted EBITDA loss to $2.3 million down from $3.4 million.
In the prior year second quarter.
The improvement of $1.1 million is indicative of the profitability of express check compared to our legacy Express Spa segment. We also narrowed our net loss to $4.5 million from $58.5 million and retained a strong liquidity position with an unrestricted cash.
Balance of 102.
$5 million.
I want to be clear on a new view that we see.
As we look to the future.
At one point, we believe the future of the airport Spa business was highly uncertain and considering the nature of a high high personal touch business.
We believe that express check would be a short term bridge to the future.
We also believe that tree would be the sole destination as it combines the most relevant parts of express Spa, an express check and expands to health and wellness services for travelers, while adding a significant digital engine.
So revenue is no longer limited to the airports, where we operate units.
Now, we see a much bigger opportunity based on our experience. During this pandemic the data that we've collected and analyzed and customer views.
We now see three sustainable business models for the future we are transitioning.
<unk> from a company operating in a singular concept to our family of relative relevant travel health and wellness brands with a lot of runway ahead of us.
We see multiple brands that we believe have the potential to operate efficiently simultaneously and profitably over the long run.
I would now like to share some thoughts on where we currently stand with respect to our airport based express check in express Spa businesses.
Then I'll take you on our new brand.
Treat and how we intend to capitalize on what we believe is a large opportunity in the travel health and wellness space.
Beginning with the express check brand in April we opened two express check locations. The first in Seattle Tacoma International Airport and the second in San Francisco International Airport. Today, We operate 13 express check wellness centers seven days a week across 11 airports.
In fact agreement extensions have been agreed to at the first two airports that we've opened express check in last years, John F. Kennedy International Airport and Liberty Newark Liberty.
Pretty international Airport.
And as you may recall at the onset of the pandemic in March 2020, we moved extremely quickly on our vision for express check due to the vast opportunity. We saw for COVID-19 testing at major U S airports.
We piloted we learned and we launched.
Since then express check has surpassed all of the expectations. We have for the brand and we're very pleased with the results even as vaccination rates rise.
For example, patient testing was at an all time high during the second quarter, increasing 146% sequentially when compared to the first quarter of this year.
We believe even with an increase in vaccination levels on.
On slide 19, onsite COVID-19 testing will still be an important and necessary service for airline employees and passengers alike for the foreseeable future due to several factors, including COVID-19 variant proliferation.
Ongoing international requirements.
And breakthrough vaccination infection rates.
International travel represents a significant portion of our patient base as many countries outside the U S.
Required continue to require a COVID-19, PCR tests prior to arrival.
We do not see many countries changing this policy anytime in the near future and exposing their citizens to additional risk.
There are simply not enough vaccines to meet the global demand and the wealthy countries or monopolizing most of the supply and further now considering adding booster vaccinations.
According to a Wall Street Journal article this past Friday at the current rate much of the World would remain unvaccinated global stability out of reach until maybe 2023.
Express check also continues to benefit from the range of rapid Covid test and that we are that we offer.
<unk> is substantially higher.
And more expensive in price.
Point with 200 to $250 versus $75 for the standard PCR test.
<unk> antibody tests that we initially launched with <unk>.
Almost all paths are now rapid which has helped significantly improve gross margins and minimize our cash burn.
As a reminder, it was only March down this year, when we transitioned to a fee for service model for all testing, which has helped us significantly improve our cash flow now.
Now all patients pay upfront at the time of service and then they are able to submit their testing fees for insurance reimbursement on their own.
The testing business has ramped up much faster than we expected our medical practices saw revenues over $17 million in Q2, almost triple what was seen in the first quarter.
We are confident that this will continue over the foreseeable future not.
Not only has testing ramped faster than any other part of our past <unk> business with the four wall Performa margins continue to grow faster than any initiatives that we have implemented in our spas.
And the yield a return on our investment under and under three months.
At the end of 2020, we promoted Scott Milford Chief operating officer.
That has quickly increased labor productivity and work diligently to expand our operational hours to meet those needs of those requiring COVID-19 testing, while still only operating in the terminals are the busiest to ensure profitability.
Scott and our new CFO, James Berry and brought a sharp focus on financial discipline cash generation and the execution of our operational strategies, while still creating an employer of choice people culture.
In late July we announced a partnership with the go give one campaign.
Go get one campaign was created by the World Health Organization Foundation.
And is.
And is dedicated to funding COVID-19 vaccines worldwide and the fight to reduce the growing vaccine equity GAAP.
As a kickoff to the campaign express spa is matching public donations to up to an aggregate of $100000.
We're honored to support this incredible campaign in the fight against COVID-19.
For those.
Okay.
For those in lower income countries lacking access to critical vaccinations.
Our investment in the health and wellness of our customers has opened up the door for this incredible partnership, which we hope to continue to grow in the future.
Additionally, last week, we received approval for a $2 million contract with the centers for disease control and prevention the CDC.
For bio surveillance tracking at three airports JFK International Airport Newark, Liberty International Airport in San Francisco International Airport.
Many of you will remember that I have spoken about our government affairs efforts with the government with the federal government over the past year.
This is one of the outputs from those many conversations this is an eight week program.
With a six month contract with the CDC and is aimed at identifying existing and new COVID-19 variance <unk>.
Including the highly contagious Delta variant and other new variants surfacing that could start surfacing in the U S. Let.
Let me be clear.
This six month contract with a six month extension in place allows the CDC at their discretion to direct express check to set up a national <unk> bio surveillance program with installments of incremental funding in any or all airports.
Regardless of whether there is an express check full fully.
<unk> fully operating in place.
The CDC has the ability to dictate how real estate is used and airports where national safety concerns, whereas the current express check model requires the airport to grant access to the real estate on an airport by airport basis.
Our first $2 million.
<unk> is only for this eight week pilot across three airports targeting seven daily flights.
While we're starting with the incoming flights from India, we are testing.
In developing protocol for future interventions that can be directed to many flights arriving from various cut.
Countries of concern.
The program has been developed.
The program being developed could easily be implemented for any incoming port beyond airports upon the cdc's direction.
And because this aggregate program primarily includes the collection of self administered passenger swaps that express check sends out to select external labs for the testing similar to what is used by children and some elementary school testing programs.
There is not a limited capacity that we might typically have in an express check facility with a specific number of testing rooms.
As this program expands we see this as a potentially significant business line extension for express check.
And with the foundation of the government contract in place.
Again, we will pilot, we will look to learn we plan to launch.
Our collaborations with government agencies as the CDC demonstrates the confidence these agencies have an express check brand.
Stress Tek aims to further our relationship with the CDC and extend the program into all major U S International airports in the near future based on what we have learned and are seeing today COVID-19 testing.
And COVID-19 testing, let alone future infectious disease testing is here to stay for the foreseeable future with people traveling internationally in and out of the U S.
Express check also continues to work with several airlines, providing COVID-19 testing for passengers to select location.
In April we signed an agreement with Delta Airlines to administer the new rapid antigen test to customers traveling from John F. Kennedy International Airport.
Along our Panther and Rome, Fiumicino International airports.
In early August we launched a pilot program with <unk> <unk> Israeli airlines, the national airline of Israel.
The state of Israel requires a negative COVID-19, PCR test within 72 hours of the traveler.
Evel when passengers and flight crew depart in the U S. And then another COVID-19, PCR tests once arriving and then Gary and International Airport in Tel Aviv.
If this pilot is successful and express check may provide III travel COVID-19.
Rapid COVID-19, PCR testing onsite at JFK and other U S airports for all our passengers and crew on multiple daily flights in place of the second PCR administered.
In Israel.
The protocol, we will get U S originating LLC passengers out of the airport significantly faster after a 10 plus hour flight and sitting in line with all the other arriving passengers from other from every country.
And other airlines in Q4 and on site COVID-19 tests before being released from the airport.
Again, we piloted we learned and we're looking to launch.
Now turning to the airport business.
On July one we reopened for historically top performing express <unk> locations.
These locations include Hartsfield, Jackson, Atlanta International and concourse, a Dallas Fort Worth International Airport and concourse.
Charlotte Douglas International Airport concourse tea.
In Las Vegas, Mccarran International Airport Concourse D.
In order to maximize profitability across these spas, we negotiated the right to operate these for spas during the busiest hours and only start with our highest performing services, which are massages manicures pedicures.
As a reminder, we had already opened or to express <unk> locations in Dubai International Airport and the UAE.
And a single franchise express one location in Austin Bergstrom International Airport.
We also opened a new express Spa expanded concept on July on June 17th in Dubai International Airport.
This is an international wellness prototype focused on testing, new wellness treatments and technology, expanding our core express <unk> offerings, the hopefully exports the.
The winners into existing domestic and international U S and International Express par businesses.
To date this brings us up to eight express spa locations currently reopened.
And operating.
As we analyze the first 30 days of performance of the four high volume U S locations that we opened on July one.
Their sales are lower than previous 2019 run rates. Despite the increase in airport traffic and rising vaccination levels.
The good news is that even with the lower revenue baseline. We believe we can generate the same or better gross profit margins.
While the legacy express while the legacy <unk> business on its own may not have been highly profitable in the past.
Today. It has the benefit of cost cutting measures, we implemented in 2019 as well as sharing the corporate overhead across to other operating brands leveraging the same corporate support structure.
Our operations team is currently reviewing our pricing service model and labor model to find further upside beyond the efficiencies of operating.
Reduced hours during the airports busiest times.
As vaccination rates increase in airport traffic continues to return, especially with anxious fliers.
And business travelers, who had been a significant.
Service segment in the past.
We see enthusiasm for travel Spa services and at airports returning.
We now have plans to open the next wave of eight to 10 high performing express spas by early fall to continue the profitable restoration of the pre Covid business.
The pre Covid business model, a 40% to $50 million in annual revenue as the economy reopens.
We piloted.
Earnings were learning.
<unk> launching.
We will continue to reevaluate each airport on a month by month basis.
As well as review continued learnings as our portfolio continues to be reactivated.
Now, let's discuss our new brand treat.
A comprehensive travel health and wellness concept that is positioned for the post pandemic world.
While this multichannel business is coming to market in record time, and 2021 take advantage of the singular moment in history, the return to travel it.
As a runway to be a larger business and express fall or express check with better revenue and gross margins over time.
Train started.
And the vision of our collective new executive team. After many planning sessions in late 2019 and early 2020.
The brand and concept has been refined by one of our new executives Kelsey Hansen.
<unk> of marketing and communications, who has wrap these services with the beautiful lifestyle brand with timely digital content in a modern retail store design that connects with today's re emerging traveler.
Through this leadership through this leadership team strategic thinking we found a way to leverage expressed bonds historic travel wellness experience.
<unk> Express check healthcare expertise to provide travelers access to integrated healthcare through technology and on site personalized services.
We have a classic need and want to converging.
Wanted to get back to traveling that need to do it safely and responsibly.
We are not building, an average brand where average people and above average prices.
We are passionately working towards creating a concept worth creating with the story worth telling.
And the contribution worth talking about.
Treatise positioned to be a leader in what we view as an emerging new category of how focused travel and personal wellness services.
Treat will act as a wellness <unk>, providing original content to help you plan to travel as well as medical care and wellness services to consumers as they return to travel.
True treats mobile app travelers will be able to access 24, seven on demand virtual health care.
A travel health wallet with your medical records and real time Global COVID-19 travel requirements all in one place.
As well as book appointments in our onsite wellness centers as they open.
Our goal is to be your travel champion, making it easier for you to be well as he returned to traveling the world.
To ensure a seamless launch of this new brand we are rolling treat out in three distinct phases.
If you recall on our Q1 earnings call in May we announced phase one of the new brand our website www dot treat care dot com.
And brand campaign with launch in June.
To the hard work of our new Chief Technology Officer, David Cole, we met this target and officially launched our website on June one.
Treat website features original content access to resources about COVID-19 requirements for travelers and curated e-commerce with emerging products targeting the trap the savvy traveler living the wellness lifestyle.
The initial website launch is gaining traction daily we have over 1000.100000 unique visitors.
The website also allows consumers to opt in.
Two biweekly newsletter.
Treatment, which has started with over 1000 readers and an average 30% to 35% Saturday morning open rate.
If you have not signed up for the treatment on <unk> Dot com.
Thank you will enjoy it.
As seen in the press release issued this morning phase III of <unk> mobile App launched today.
Our internal goal was to have this mobile app up and running by the end of summer as communicated on our last earnings call I'm happy to report that through the team's smart work led by David We stayed on track and launched ahead of schedule.
Mobile App is available today at no charge for Apple and Android devices and provides access to on demand virtual care, including check here video care and a travel wallet with access to a person's medical records and test results.
<unk> are available which include a mobile app subscription with access to a limited $24 seven on demand medical care virtually.
Also included in the membership is one free PCR COVID-19 test.
One free flu vaccine shop per year, and discounts on prescriptions, which will be added in a few weeks.
Over time, there will be additional capabilities added to the app such as in person scheduling once our airport wellness centers.
Locations begin to open.
Plus other exclusive offers and discounts.
Memberships started $200 for three months.
It can be $720 from 12 months.
Now moving on to Phase III, which includes the launch of treat in airport wellness centers, which will both leverage.
Some of our existing and airport real estate as well as take shape a new spaces.
We're starting construction this week and plan to open the first pilot location JFK at JFK terminal four in mid Q4.
And a converted express spot location and a second pilot treat location in Phoenix Sky Harbor International Airport before the holidays and a converted express check location.
Again, we pilot we learn we launch.
Trade and airport wellness centers will offer services, such as COVID-19 testing travel vaccines anxiety care emergency prescriptions, vitamin IV therapies as well as private technology led wellness sessions, including fitness yoga meditation and mindfulness session.
<unk> and our premium hospitality environment.
Upon entering customers will see a beautifully curated retail and checking area and will be greeted by treat wellness coffee areas.
Well appointed treatment rooms will allow a break from the hectic airport environment and offer a list of health and wellness services designed specifically for travelers.
We intend to rollout treat wellness centers across many additional airports in 2022 and 2023, leveraging our existing express spa real estate.
Most importantly, we are building the one travel brand that provides access to integrated holistic care and can seamlessly fit into a health and wellness lifestyle.
Over the long term, we envision that trades digital channels will provide more significant growth opportunities for revenue and profit.
Then our airport real estate.
This is because we believe this customer is everywhere and not just captive in the airports.
The success of this revenue stream will be achieved through both subscription based services that provide care and digital tools supporting travel health and wellness.
Furthermore, we anticipate offering upstream content that can be monetized for affiliate revenue as well as curated retail through e-commerce channels.
In 2021, we are building the long term infrastructure and habits. The transition from an airport wellness operator to a technology led company with unparalleled customer data coming in through multiple channels.
And that also operates a profitable and convenient health and wellness operations for travelers in airports.
While we are excited about this new brand and C treat as the central pillar to the future of Express Spark group. We also now believe that there is significant opportunity for three sustainable growth brands, while healthy unit level economics can run adjacent to each other and leverage the.
<unk> corporate structure as well as our relationships and experience operating in global airports.
We have we have an extremely clear vision for the company with a focus on elevating our brands.
Being nimble.
Further expanding our services and products inside and outside the airports to increase value for all expressed by shareholders.
As I have expressed here today, we have also assembled an extremely strong management team over the last six to nine months.
Which is already contributing today and as seen by our Q1 and Q2 results and recent announcements while laying the foundation for long term success of this developing global multichannel company.
We believe that our portfolio of health and wellness brands will enable us to build and enhance shareholder value for years to come.
The best days are ahead of us.
With that I'll turn it to you James.
Thank you Doug.
I mentioned last quarter, we were very pleased to have been able to recognize revenue for express project. During the first quarter based on a reassessment of the management agreement management service agreement relative to ASC pick the SEC.
For the second quarter, we were able to recognize a total of $9.1 million compared to $143000 in the second quarter last year only one that did not meet the.
Requirement for revenue recognition in Q2.
The increase in revenue was primarily due to the recognition of the revenue from the 12 to 13 express check wellness centers that were wholly or partially opened during the quarter.
Please note during the quarter a majority of the expressed by locations remaining to close in the third quarter, we will be able to recognize the revenue associated with the four express.
Opening opened on July one.
Managed service fees totaled $8.7 million compared to zero in the second quarter of the prior year. We also generated revenue from services and product with $338000.79000, respectively from sales and marketing agreements with strategics.
Bob partners related to our two locations in Dubai.
Cost of sales increased to $7.7 million from $978000 in the prior year second quarter. The increase in cost of sales was primarily due to the cost of sales incurred an express check most notably for the rapid test kit.
That by the decrease in the variable costs associated with the decline in express Barbara.
And decrease in occupancy cost as a result of rent concessions received from airport.
Gross profit was $111.4 million compared to a negative gross profit of $835000 in the prior year second quarter, primarily due to the higher revenue.
General and admin expense.
Expenses were $4.6 million compared to approximately $3.4 million for the year ago comparable period the.
The increase was related primarily due to startup costs associated with express check development with treat and additional legal fees related to the resolution of certain expressed by our litigation matters.
That by reduced variable costs related to the closed expressed by location and the realized benefits of cross cutting banking pro initiatives instituted throughout 2019, primarily in salaries occupancy and professional fee.
Operating losses from operations decreased to $4.7 million compared to $58.5 million.
Second quarter due to higher revenue and recognized loss on revaluation of warrants and conversion options in 2020.
Net loss attributable to common shareholders was $4.5 million compared to net loss attributable to common shareholders of $58.1 million in the prior year second quarter.
Finally, with respect to GAAP financials, our liquidity remains strong with cash and cash equivalents totaling $102.5 million.
June 32021.
On a non-GAAP basis, adjusted EBITDA loss of $2.3 million compared to adjusted EBIT loss of $3.4 million in the prior year second quarter.
This represents an improvement of $1.1 million.
It is indicative of the profitability of express check Wellness Center.
We define adjusted EBITDA as earnings before interest taxes, depreciation and amortization expense on an adjusted for stock based compensation and impairment disposal.
We consider adjusted EBITDA to be an important indicator for the performance of our operating business Express check in particular, we believe that it is useful for analysts and investors to understand that adjusted EBITDA excludes certain transactions not related to our core cash operating activity, which are primarily primarily relate.
Did you or express check wellness centers.
We believe that excluding these transactions allows investors to meaningfully analyze the performance of our core cash operation.
For further details please refer to our annual report on Form 10-Q filed today.
Let me now conclude with the non-GAAP financial metrics.
<unk> to express check that we believe will be helpful in providing greater transparency in terms of performance.
Although we do not generate revenue directly from patient testing volumes as detailed above in the interest of providing investors with greater transparency regarding express checks performance, we've opted to disclose recent and current the average daily patient testing volumes, along with other relevant non-GAAP financial metrics during.
Second quarter 2021 average daily patient testing volumes were all express check wellness tankers was more than 1000.
With the additional centers opened total patient volumes grew nearly 146% in the second quarter of 2021 versus the first quarter, notably the number of higher revenue higher margin COVID-19 rapid test increased from just over 300 per day in Q1 with more than 800 per day in <unk>.
Q2 of 176% increase.
During July higher revenue higher margin Covid rapid test molecular and PCR as a percentage of total cost averaged 97%.
Patient volume with over 33700, including those rapid test.
And with that I would be happy to take your questions.
Thank you at this time, we'll be conducting a question and answer session. Michelle you May now proceed with the questions.
Good afternoon, Doug and thank you.
The first question. We have you mentioned that the medical practices did $14 million in revenues in the second quarter, how does that reconcile with express check $99.1 million revenue is recorded.
Okay.
I'm going to turn this question over to James.
Well the patient service be collected by the practices. In addition to paying for the medical providers.
Services, there are used to pay past current and future MSA charges. The information that we provide about those practices.
To give a better understanding to the current levels of activities at that very top level.
I'm going to jump into on the end of it and the <unk>.
The number was 17.
Million not 14.
And.
This is unbelievable guys.
You look at the traffic thats coming through vaccination rates.
Our piling up infection rates are lower than the height of the pandemic yet testing is still more relevant not still is more relevant today than it ever has been.
And we don't see it changing anywhere in the near future as travel picks up.
More countries are going to continue requiring these tests. So it's important to understand the revenues and the fees that come through these practices because thats the indicator of the demand that's coming through and the runway that we have.
It blew us away when we saw what Q2 looks like compared to Q1.
<unk>.
We're very excited for the rest of the year from a business perspective.
Great. Thanks Congrats.
The next question the company has over $100 million of cash on the balance sheet, great position to be in however, how are you going to make efficient use of this cash.
James.
I I would report that our stewardship of cash is always top of mind.
In addition to funding new segments such as Street.
So exciting and dynamic.
Stated that we would continue to evaluate opportunities, including acquisitions strategic business transactions and potentially stock repurchases.
So youre right. It is great to have that on that amount of money the flexibility that it gives us, but we take it very seriously and making sure that there is an efficient return on that capital.
I'm going to tag onto so we're getting visibility to a lot of emerging concepts as.
As the world's changed in this post Covid world as other.
Company's other good ideas.
That that.
Are well suited to these strategic partners with us to amplify what we're doing with treat and accelerate some of the other services that we're offering.
And so like James said and a good steward of cash and making sure. It is invested wisely.
Where there is a much bigger of a benefit for us than just a return on the investment, but but a strategic value to further accelerate our.
Our offerings in some of our new contracts and purchases.
Great. Thank you Doug.
There is a lot of talk from employers, especially municipal employers, saying that any employee who has not been vaccinated or meet a weekly COVID-19 test in order for them to be able to go to work is this an opportunity you see for express check.
Absolutely. So now as we've settled into this new norm of testing.
We've been talking a lot about for travelers to go somewhere but we're seeing.
More municipalities just just like the Investor asked that's going to require regular testing. So there is a clear opportunity for the express check business line to grow outside of airports to provide testing services. We've already built the protocol and can handle large peaks.
<unk>.
And we continue to evaluate a broad number of opportunities that.
Don't just have to limit us to being in an airport.
Great. Thanks, Scott.
Will you do with the rest.
Let's see how many leases expire in the near term.
That you will have to decide shortly on the go forward path for those locations.
So the real estate, we have continues to be a very valuable asset literally it took US 15.16 years to get the 15 locations that we had pre pandemic.
A lot of Rfps and but once you're in the airport and you've demonstrated that you are a good operator.
It's much easier to stay in an airport and get extensions on one of the things we're seeing quite often now and you may be reading about is.
Rent concessions are being offered by by airports because of the lack of business often the rent concessions are funded by PPP funds or other.
Government Covid dollars that come federally down to the state that work their way to the airports, but one of the things. They can offer it doesn't cost them anything is extending near term and we're getting more term and other airport operators are as well. So it gives us more runway to make an evaluation.
<unk> weather piece of expressed by our real estate is best suited for a treat which we think is the highest sales and profit opportunity.
Or an express check or reopen it as an express spa with some of the features that I spoke before but there could be a couple that we cut these were maybe a small kiosk at the end of a terminal.
No it wasn't very busy before its not magically going to be very busy now, but the real estate that we have under contract and frankly express check.
What's even more real estate under contract and at least three more airports, we'd never operated in.
It's become a very important part of our strategy.
Great. Thank you Doug.
Next question, what made you choose John F. Kennedy Airport and Sky Harbor as the first two locate street location.
I'm glad you asked.
I don't think Ive talked about this much.
We are really ideal for what we want to pilot with our treat wellness centers. So JFK terminal four is one of the preeminent terminals I think in the world.
The ownership JFK.
<unk> have been outstanding partners with US the Port Authority of New York and New Jersey has also been.
Very supportive of what we've done with express check and now treat and what is great about JFK well, let me tell you touch about Phoenix.
Compare and contrast, Phoenix also great management in place that's been a very important airport for us with our express swap portfolio.
But it is.
Another one where we have access to a really good piece of real estate just like in JFK terminal four so New York.
One is east coast, one is west coast. One location is pre security. The other is post security. One is maybe 200 square feet. The other is close to 2000 square feet. So were really get good data.
To see.
And informed and to learn from to inform the next <unk>.
$130.40 that we build.
That's where again, we take a very disciplined approach to piloting learning and then launching and we find we have a much higher success rate as well.
We use this methodology again and again.
Since I've been here at the company.
That's why we've chosen and we also had just two very good pieces of real estate that we could easily convert and get them open.
This fall.
Okay.
Great. Thanks, Doug.
Are you finding it hard to staff your express check on express, but is there a labor shortage youre seeing.
Well is it absolutely is a labor shortage.
We are starting to see relief as federal and state.
<unk>.
Expires four four for the unemployed and whether you're a foodservice worker or your delivery driver.
Or you work in an airport.
It's a challenge to find people but.
Our our people team our HR team has done an excellent job.
Milford, who was promoted to COO.
As most of his career background as the HR. So it is a very strong team with.
Recruiters that have kept us generally staffed.
The medical side, the medical tax that we get.
Those can be competitive too.
But it's loosened up during the height of the pandemic.
Lots of urgent cares in hospitals and.
And testing centers were all vying for.
Fixed population.
But that's eased up and labor.
It has not been a big challenge for us so far.
But I really attribute it to having good benefits could pay.
Good Middle management that takes care of our people.
And that's part of what I brought Scott into to do and it's working.
Great. Thank you Doug and my final question should.
Should we expect to see an increase in personnel related to treat.
<unk> G&A and be able to support this new business.
Yes, it's a good question. So we are being very careful as we add new talent first we look at.
Some of the talent, we have internally we have some very.
Strong folks who have been promoted and then we go to the outside to bring in talent that we we may not have.
As we balance the cost of it.
With this new business, we have the good fortune of.
Express check.
Which has dramatically changed our cash burn situation and with the reemergence of express Spa, we're going to have more register's ringing more.
Income sources to distribute and really leverage this corporate team that we have our senior leadership team supports all of the companies.
Most of the people as you go through the organization support all three brands, if youre recruiter or you're an accountant.
Youre able to two.
Support them and frankly, that's a benefit express spa never had all of the corporate overhead was purely paid for by these spas, but now it is being redistributed with.
With these difference.
Growing businesses.
The.
Im also being careful not to starve the growth. So one of the mistakes. One can make is you use staff. So slowly that you never know.
<unk> the potential.
These three businesses and this company is picking up speed. So we are bringing on talent as we as we need to while keeping an eye on the overall expense rate, while we have more centers of revenue contributing and distributing these costs. So I feel good.
Good.
With the practices that we have in place.
And I got to tell you the leadership team, bringing the first people in when the Sky was falling in the pandemic. It really took some true believers.
Now it's much easier to hire we have a lot of people, who would love to get working at express spar group.
Under these these men and women that were bringing in.
We're we're very pleased to be in this position.
So it's been an awesome Q2, and where we are we're deep into Q3 doing what we do and I look forward to sharing more news at our next quarterly earnings call.
Is there are there any more questions I think you said last question.
That would be it for me.
Today, Doug Thank you.
Okay, well I just wanted to reiterate our big.
Thank you to all of our investors.
In our retail investors or institutional investors or any of the men and women in between.
Very hard.
To produce and create mid and long term value.
The day traders that are in and out that's not necessarily our customer we are building.
A company that is growing outside of airports into multiple revenue streams with multiple brands and we're just getting started so thank you for calling in and your continued support.
Okay.
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