Recently Acquired
XpresSpa Expected to Add Over $50 Million to 2017 Annual
Consolidated Revenue
Conference Call
Today at 4:30 p.m.
NEW YORK - March 30, 2017 - FORM
Holdings Corp. (Nasdaq: FH), a diversified holding company
("FORM"), today announced financial results for the year ended
December 31, 2016, in its Annual Report on Form 10-K filed with the
Securities and Exchange Commission, as well as an update on the
operating results of XpresSpa Holdings LLC ("XpresSpa") and its
business segments in the first quarter of 2017.
2016 and
Year-to-Date 2017 Operational Highlights
-
XpresSpa
-
Closed XpresSpa acquisition on December 23,
2016
-
XpresSpa generated $43.8 million of revenue in
2016, an increase of 13% from 2015
-
Experienced same-store comparable sales* growth
of 12% in the second half of 2016
-
FORM recognized one week of XpresSpa operations
for the period following the acquisition beginning on December 23,
2016; revenue of $0.8 million for this period is reflected in
FORM's consolidated financial statements
-
XpresSpa is anticipated to generate 10%
same-store comparable sales* growth in 2017 and contribute more
than $50 million of annual revenue to FORM's consolidated
operations
-
Management expects store-level contribution
margins* to be at 20%
-
Preliminary first quarter revenues are
approximately $10.6 - 10.9 million
-
Group Mobile
-
Group Mobile generated $6.7 million in revenue
in 2016, an increase of 26% from 2015
-
Transitioned from reseller to full-service
solutions provider with a new leadership team
-
Group Mobile generated $12.1 million in bookings
and committed orders* in 2016, an increase of 128% from 2015
-
Group Mobile expects to generate in excess of
$20 million of revenues in 2017
-
Management expects Group Mobile to be profitable
for 2017
-
Preliminary first quarter revenues are
approximately $3.4 - 3.7 million
-
Intellectual Property
-
Recognized $11.2 million of licensing revenue in
2016
-
Completed assignment of majority of FORM's
telecom patent portfolio to Nokia Corporation
-
Continue to pursue licensing efforts with
remaining intellectual property assets in order to maximize return
on investment
*Same-store comparable sales, store-level
contribution margin and bookings and customer commitments are
Non-GAAP financial measures; see "Use of Non-GAAP Financial
Measures" below.
"2016 was a transformative year
for FORM as we repositioned the company and established a
growth-oriented platform that we expect will drive shareholder
value into the future," said Andrew D. Perlman, FORM's Chief
Executive Officer. "The year concluded with our acquisition of
XpresSpa, providing entry into the growing travel, health, and
wellness markets. Our efforts with XpresSpa are focused on
improving recruiting and retention of talented technichians and
therapists to keep up with consumer demand, increasing operational
efficiencies and accelerating the growth of the XpresSpa brand and
store footprint."
"We have also taken strategic
actions to position our Group Mobile business for continued growth
in 2017. Our February 2017 acquisition of Excalibur
Integrated Systems creates a national footprint, and brings
additional customers and a higher-margin services component to the
business. These enhancements to Group Mobile's offerings
position the company as a more important and valuable partner to
its customers."
"Moving forward we intend to focus
on our core assets in XpresSpa and Group Mobile as we look to
monetize or create strategic alternatives for all non-core assets,"
Mr. Perlman continued.
2017
Outlook
"Based on our strategic actions,
operational results and capital structure, we believe that we have
a solid foundation and momentum to achieve growth in 2017," Mr.
Perlman continued. "We intend to grow XpresSpa's revenue to
over $50 million through a combination of same-store comparable
sales increases and the addition of locations in 2017. We remain
comfortable with our previously issued guidance of approximately
10% same-store comparable sales growth in 2017."
Mr. Perlman concluded, "Regarding
our other segments, we are giving Group Mobile a revenue target in
excess of $20 million in 2017. This will be achieved by adding new
products, exploring new distribution verticals, such as military
and government, and increasing the sales team's geographic
coverage."
"Our intellectual property
strategy will continue to progress with the intent of monetizing
our existing portfolio of intellectual property using strategies
that eliminate risk and maximize return."
Segment Operating
Results
XpresSpa
XpresSpa, the Company's largest operating segment, provides air
travelers with premium health and wellness services, as well as a
branded line of exclusive luxury travel products and accessories at
its 53 locations across 22 major airports in the United States,
Amsterdam and Dubai.
Following the closing of the
acquisition on December 23, 2016, in fiscal year 2016, FORM
recognized $0.8 million of XpresSpa revenue for the seven-day
period prior to year-end. For the full year 2016, XpresSpa
generated $43.8 million of revenue, representing a 13% increase as
compared to 2015, and largely driven by an increase in same-store
comparable sales in the second half of 2016.
Management estimates segment-level
preliminary first quarter revenues of $10.6 - 10.9 million.
Importantly, XpresSpa's business experiences seasonality that is
tied to variations in enplanements. This year the seasonality
is exaggerated by the later Easter holiday this year versus last,
which the company estimates will shift approximately $0.5 million
of revenues from the first quarter to the second quarter. On
an average basis over the past two years, the first quarter
typically represents approximately 21% of annual revenues, the
second quarter 26%, the third quarter 27%, and the fourth quarter
26%.
XpresSpa recently opened its fifth
location at New York's JFK International Airport, and anticipates
opening two locations this spring at Phoenix's Sky Harbor
International Airport and one this fall at Charlotte's Douglas
Airport.
Group
Mobile
For the full year 2016, Group Mobile generated $6.7 million of
revenue. Bookings and customer commitments in the fourth
quarter were $6.4 million (and $12.1 million for full 2016), an
increase of more than 450% compared to the fourth quarter of 2015,
which is expected to be recognized as revenue during
2017.
Similar to other technology
solutions providers, Group Mobile's business is impacted by
seasonality. The historical seasonal cadence of Group
Mobile's sales progression throughout the year is typically as
follows: the first quarter typically represents approximately 19%
of annual revenue, the second quarter 37%, the third quarter 26%,
and the fourth quarter 18%.
FORM anticipates Group Mobile to
be profitable for 2017, supported by management's full year 2017
segment forecast calling for revenues to exceed $20 million and a
gross margin of at least 15%. These estimates suggest an
increase in annual revenues of approximately 200% and an expansion
of gross margins by approximately 300 basis points, to 15%.
FLI
Charge
In 2016, FLI Charge launched its consumer product line and
generated approximately $0.3 million of revenue. In addition, FLI
Charge has expanded its e-commerce presence through online
partnerships. FLI Charge continues to expand the availability of
its consumer products through online and direct-to-consumer
channels. FORM is currently exploring strategic alternatives for
FLI Charge to maximize shareholders value, including alternative
financing sources.
Intellectual
Property
FORM's Intellectual Property segment generated $11.2 million from
licensing during 2016. On December 5, 2016, FORM assigned the
majority of its telecom patent portfolio back to Nokia.
Balance Sheet
& Cash Flows
FORM's capital structure remains
sound, with current assets of $23.5 million, a cash balance of
$17.9 million as of December 31, 2016, and $6.5 million of
long-term debt assumed as part of the XpresSpa acquisition. In
2017, FORM plans to reduce its general and administrative expenses
and improve its cash flow through extracting synergies from its
acquisitions, mainly in corporate functions. FORM also expects to
realize improved cash flow due to expected revenue growth and the
resultant leverage of its fixed cost base as it incurs capital
expenditures in 2017 related to planned store openings, the
remodeling of certain existing stores, and strategic technology
enhancements. These investments will provide the foundation for an
expansion of operating margins as FORM realizes scale.
Full Year
Results
For fiscal 2016, FORM reported
consolidated revenue of $19.0 million, a decrease of 16% versus the
prior year. The decrease was primarily the result of a $10.6
million year-over-year decrease in revenue from FORM's intellectual
property segment due to a one-time payment associated with a
license and settlement agreement in December 2015, partially offset
by the positive impact of the acquisitions of Group Mobile and FLI
Charge in October 2015 and XpresSpa in December 2016.
Total operating expenses for
fiscal 2016 were $41.4 million compared to $33.0 million last year
due to $11.9 million of impairment charges recorded in the second
quarter of 2016, a $5.7 million increase in cost of goods sold as a
result of the acquisitions and higher merger integration and
acquisition costs, which were $1.4 million in 2016 and $0.2 million
in 2015. This was partially offset by a $12.3 million
decrease in legal and patent litigation expenses as part of the
intellectual property costs, to $6.3 million from $18.6 million in
2015, and a $2.5 million decrease in stock-based compensation
expenses resulting from equity awards becoming fully vested in
2015, as well as lower insurance, accounting and audit fees.
Conference
Call Information
FORM will host a conference call and audio webcast today, March 30,
2017, at 4:30 p.m. EST, to discuss financial results for the fourth
quarter and full year of fiscal 2016.
Join the Conference Call via
Webcast
-
Visit http://bit.ly/2mXirrW before the start
time to join the web portion of this event.
-
Enter your First Name, Last Name, Company, and
Email Address and select "Submit".
-
Select the "Launch Webcast" icon to view the
event.
Join the Conference Call via
Assisted Dial-In
To access the conference call by
telephone, interested parties should dial (888) 428-7458 (U.S and
Canada dial-in) or (862) 255-5400 (Toll) (For international
dial-in) and reference FORM Holdings.
About FORM
Holdings Corp.
FORM Holdings Corp.
(Nasdaq: FH) is a publicly held diversified holding company
that specializes in identifying,
investing in and developing companies with superior
growth potential. FORM's current holdings include
XpresSpa, Group Mobile, FLI Charge, Infomedia and intellectual
property assets. XpresSpa is the world's largest airport spa
company with 53 locations across 22 major airports. Group Mobile is
a provider of rugged, mobile and field-use computing products,
serving customers worldwide. FLI Charge designs, develops,
licenses, manufactures and markets wireless conductive power and
charging solutions. Infomedia is a leading provider of customer
relationship management and monetization technologies to mobile
carriers and device manufacturers. FORM Holdings' intellectual
property division is engaged in the development and monetization of
intellectual property. To learn more about FORM Holdings Corp.,
visit: www.FORMHoldings.com.
Use of Non-GAAP
Financial Measures
XpresSpa uses GAAP and non-GAAP
measurements to assess the trends in its business. Items XpresSpa
reviews on an ongoing basis are revenues, Comp Store Sales (which
it defines as sales from stores opened longer than a year compared
to the same period sales of those stores a year ago), store
contribution margins, and number of transactions (which is a way to
measure traffic in spas). In addition, XpresSpa monitors stores'
performance compared to its model store metrics to ensure that it
is consistently opening spas that have the same or similar return
dynamics as historical stores. XpresSpa believes the trends
exhibited by its business are strong and substantiate its continued
investment in additional locations and infrastructure.
The measurement of Comp Store
Sales on a daily, weekly, monthly and year-to-date basis provides
an additional perspective on XpresSpa's total sales growth when
considering the influence of new unit contribution. A
reconciliation between Comp Store Sales, which is a non-GAAP
measure commonly used in the retail industry, and total revenue,
based on XpresSpa's full year 2015 and 2016 results (FORM's
financial statements reflect only XpresSpa's total revenue for the
final seven days of 2016, the period from when the merger between
FORM and XpresSpa closed and the end of 2016) is presented
below:
(In Thousands) |
2015 |
2016 |
Comp Store Sales |
$34,060 |
$38,943 |
Non-Comp Store Sales |
$4,783 |
$4,877 |
Total Revenue |
$38,843 |
$43,820 |
Group Mobile uses bookings and
customer commitments as a non-GAAP measure to assess the health of
the business. They represent orders placed and orders committed
from the customers, which will be fulfilled in the future. Group
Mobile expects to recognize bookings and commitments from customers
as revenues throughout 2017.
Forward-Looking
Statements
This press release includes
forward-looking statements, which may be identified by words such
as "believes," "expects," "anticipates," "estimates," "projects,"
"intends," "should," "seeks," "future," "continue," or the negative
of such terms, or other comparable terminology. Forward-looking
statements are statements that are not historical facts. Such
forward-looking statements are subject to risks and uncertainties,
which could cause actual results to differ materially from the
forward-looking statements contained herein. Statements in this
press release regarding the merger between FORM and XpresSpa;
XpresSpa's projected revenue, the ability to raise capital to fund
operations and business plan; the continued listing of FORM's
securities on the Nasdaq Capital Market; market acceptance of FORM
products; the collective ability to protect intellectual property
rights; competition from other providers and products; FORM's
management and board of directors after the merger; and any other
statements about FORM's management team's future expectations,
beliefs, goals, plans or prospects constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. There are a number of important factors
that could cause actual results or events to differ materially from
those indicated by such forward-looking statements, including, but
not limited to: FORM's inability to maintain the listing of its
securities on the Nasdaq Capital Market; the potential lack of
market acceptance of FORM's products; FORM's inability to monetize
and recoup FORM's investment with respect to assets and other
businesses that that were acquired or will be acquired in the
future; general economic conditions and level of information
technology and consumer electronics spending; unexpected trends in
the mobile phone and telecom computing industries; the potential
loss of one or more of FORM's significant Original Equipment
Manufacturer ("OEM") suppliers, the potential lack of market
acceptance of FORM's products; market acceptance, quality, pricing,
availability and useful life of FORM's products and services, as
well as the mix of FORM's products and services sold; potential
competition from other providers and products; FORM's inability to
license and monetize FORM's patents, including the outcome of
litigation; FORM's inability to develop and introduce new products
and/or develop new intellectual property; FORM's inability to
protect FORM's intellectual property rights; new legislation,
regulations or court rulings related to enforcing patents, that
could harm FORM's business and operating results; FORM's inability
to retain key members of its management team; and other risks and
uncertainties and other factors discussed from time to time in our
filings with the Securities and Exchange Commission ("SEC"),
including FORM's Annual Report on Form 10-K for the year ended
December 31, 2016 filed with the SEC on March 30, 2017. FORM
expressly disclaims any obligation to publicly update any
forward-looking statements contained herein, whether as a result of
new information, future events or otherwise, except as required by
law.
Contacts
FORM Holdings
212-309-7549
info@FORMHoldings.com
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: FORM Holdings Corp. via Globenewswire
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