FORM HOLDINGS REPORTS FULL YEAR 2016 RESULTS AND UPDATE ON FIRST QUARTER 2017
(Thomson Reuters ONE) -
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
1. Visit http://bit.ly/2mXirrW before the start time to join the web portion of
this event.
2. Enter your First Name, Last Name, Company, and Email Address and select
"Submit".
3. 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(at)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
Unternehmensinformation / Kurzprofil:
Datum: 30.03.2017 - 22:01 Uhr
Sprache: Deutsch
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