Greetings and welcome to XpresSpa Group, Inc.'s second quarter 2019 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. Today's conference call is being hosted by Mr. Doug Satzman, CEO. Before I turn the call over to him, 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 and 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 the company's SEC filings, including the company's report on Form 10-K for the year ended December 31, 2018 and other current and periodic reports the company files with the SEC. During today's call, the company will refer to certain non-GAAP financial measures, which it believes can be useful in evaluating its performance. The presentation of these measures or other information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. For reconciliations of these non-GAAP financial measures to GAAP measures and a discussion of why the company considers these measures useful, please refer to today's earnings release. With that, I would like to turn the call over to Mr. Doug Satzman, CEO.

Thank you operator and thank you all for joining us today. I would like to begin by providing a business update before moving on to a review of our second quarter financial results and recent debt and equity transactions. As you know in the six month since joining the company, I have been working diligently with the team to improve sales while enhancing the guest experience and identifying cost savings measures to improve our financial condition. I am pleased to report that many of the initiatives that I had laid out on prior two conference call are beginning to pay dividends for XpresSpa and we are only just beginning. These green shoots includes the following. Five consecutive months of positive comparable store sales for March through July. Second quarter comparable store sales increased 3.8% and year-to-date, through the first half of the year, we are up 1.4%. There are two factors behind this momentum. First, we are getting better upselling services, including the length of massages through employee incentive. Notably in July we successful cycled over a massage price increase from last year and we were still able to grow our comparable store sales. Second, our average retail ticket increased 8.6% in the second quarter compared to the prior year quarter as improved their supply chain and are now able to carry more relevant items in stock. The retail sales percent of our business continues to be restored although transactions fell 3.4% during the second quarter due to shifting enplanements from terminal to terminal. Next, we experience a 4.5% increase in average sales per store as we closed one underperforming location compared to the prior year period. Subsequent to the quarter end, we closed two additional spas at the end of July and our single non-airport location in the World…

[Operator Instructions]. The first question comes from Ryan Lupin [ph]. Please go ahead.

Hi. How's it going? You mentioned your Series D preferred shareholders are planning to convert to common. Isn't that just shifting one problem to another?

Thanks Ryan. I don't think so. I think anytime you can align shareholder interests with as many parties as possible, it's a good thing for the business. A way of background, the Series D holders represents former shareholders of XpresSpa on the merger of XpresSpa by Form Holdings in 2016. Converting to common simplifies our equity structure by eliminating a class of stock that would have preferred liquidation or that would have preferred liquidation and conversion rights. And once converted, the former Series D holders will now be perfectly aligned with the common shareholders, as I mentioned, allowing the market to clearly assess the proper capitalization of XpresSpa and allowing for what some already believe that the dilution is already priced into our stock price.

Great. Thanks. I will hop back into queue.

The next question comes from Steven Nelson [ph]. Please go ahead.

Hi. Thanks for taking my question. I have several actually. Can you discuss the reason for shelf filing and also do you plan on raising equity in the future? Also, lastly if I may ask one more question related to your extension. Why not limit further expansion until the company has a stronger financial footing from the transaction already completed and improved your operations? Thank you.

Okay. Let me see if I get these. So one, reason for filing the shelf is just good governance. A shelf filing allows the Board to take advantage of opportunities to refinance the debt and working capital of the company. I think your second question was, do we plan on raising equity in the near future. I don't expect to use this device in the near future. But it's an important tool to have, for management to have, should our stock move in a positive direction that rewards everyone. And then why not wait until we are on stronger financial footing? Again, there is no immediate plans to use a shelf. Step one is getting the business self-funding, back on its own two feet and we have made a lot of progress in a very short amount of time. And that will remain the priority. But as the numbers continue to improve, I will be looking for money to grow in investing more spas next year and the following year. So as many tools will only serve the company better. Thank you.

Great. Thanks. I appreciate the color.

The next question comes from Michelle Steele. Please go ahead.

Hi. Two questions from me. Besides Calm, can you give examples of other partnerships that you are seeking?

Hi Michelle. Thank you for asking. I can't really answer that until I have something to announce. I am sure you can appreciate, but what I will say is, we are talking with different groups, some may be services related in health and wellness, some may be products that they what to place. But the consistent theme is there are a number of emerging and big players that see the same value in the real estate that we have within some of the best airports in the world, certainly in the U.S. and the exposure that we have. There is not a lot of health and wellness players in the airport. So we draw a lot of very desirable segment of customers right into our spas. So hopefully, I will have more things to share in the future. But it's very squarely with our strategic partnership platform that I am trying to build.

The next question comes from Marissa [indiscernible]. Please go ahead.

Hi. Good afternoon. Do you have any update on your franchising efforts beyond the Austin store which I understand will be opening in the next month or so? And maybe can you explain why opened a company-operated spa and a franchise spa in the same airport? Wouldn't that seem counterproductive to you? Thanks.

Yes. As you know, I have been asked that question before. It's a nontraditional move we have taken. First, let me get to your first question. We are just starting to entertain other franchisees in our system but nothing in the immediate future. Our focus right now is getting our first franchisee off the ground. So Austin airport, we are opening a company-owned store and a franchise store in the same venue. That is unusual. Our intent though is to ensure that this first franchisee has a really great foundation and hopefully succeeds, we believe he and she will. With that, we are also in the organization in franchising and I have some franchising expense in my background, but most of the company and most of the team members at XpresSpa do not. So we have learning to make sure we start developing best of-class tools that other franchising organizations have built over the years. Fortunately with our first franchisee, he is a really strong experience operator that's teaching us along the way while we are getting he and his partner off the ground. Long term, our goal is not to operate, have two different operators under the same roof. Typically it will be either all company-owned stores if there is more than one or supporting a franchisee to have more than one operation in the airport. But more to come.

Thank you.

The next question comes from Ryan Lupin [ph]. Please go ahead.

Hi. Thanks for letting me ask one more. So what other services are you looking to add here at existing spas? Or what services would you consider eliminating? And are you comfortable now with your current product assortment?

So I think we are trying to do too many things and less is more, in my view. And the spa business is by far the biggest piece of our business, followed by nail service and facial. But we are doing care in a few spas. There is several one-off tests that are very common with a founder-led company for a long time, which XpresSpa was for most of its life as you test things and you get them going and then sometimes somebody never ends the tests. And you just have these legacy one-off things. So part of what I am doing is cleaning up some of these one-off things that aren't scalable, aren't replicable or maybe even successful. At the same time, we are looking at bringing in innovation into the spas. So some of it might be very traditional things. Our facial business is growing. So, are there any up-and-coming cosmetic companies that can bring some new protocols and we can further accelerate my facial business. The nail business is constantly innovating with new products and services. So we capitalized on the gel trend last year. Now a dip trend, which is another application process, is quite popular. So we are going to test our ability to execute that in a timely manner. So we are watching the nail business. But more importantly, I am looking for innovation that will help me better leverage my labor. So I can have one technician supporting two, three desks at a time, that's much better. Right now, I have a very labor-intensive, somebody wants a service, I have somebody there to provide that service one-on-one. But as we find new products having more flexibility, being able to increase our throughput without adding more people every time we add another customer is hopefully something I will give it a test and then go live over time. Thank you for that question.

Great. Thanks so much.

This concludes the question-and-answer session. I would now like to turn the conference back over to Mr. Doug Satzman for any closing remarks.

Okay. Well, I think we are done. Thank you very much for calling in and your interest in XpresSpa. I look forward to presenting again in one quarter from now. Have a great day.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.