Board Authorizes Annual Cash
Dividend
Total Revenues of $224.9 Million, Income
from Operations of $18.8 Million and Adjusted EBITDA of $27.1
Million
Increases Fiscal 2024 Revenues Guidance to
$870 - $890 Million from $860 - $880 Million
Increases Fiscal 2024 Adjusted EBITDA
Guidance to $102 - $108 Million from $95 - $105 Million
OneSpaWorld Holdings Limited (NASDAQ: OSW) (“OneSpaWorld,” or
the “Company”), the pre-eminent global provider of health and
wellness services and products on-board cruise ships and in
destination resorts around the world, today announced its financial
results for its second quarter and first six months of fiscal 2024
ended June 30, 2024.
Leonard Fluxman, Executive Chairman, Chief Executive Officer,
and President of OneSpaWorld, commented: “Our team delivered an
outstanding second quarter capping off an excellent first half of
the year. Our consistently strong performance evidences the power
of our operating platform to deliver unsurpassed guest experiences
for our cruise line and destination resort partners. Driven by our
continuing momentum and scaling impact of our growth drivers, we
are again increasing our annual guidance beyond the quarter’s
outperformance.
The second quarter included many noteworthy accomplishments,”
continued Mr. Fluxman. “We grew total revenue by 12%, income from
operations by 40% and adjusted EBITDA by 25%. We generated robust
free cash flow, further bolstering our strong balance sheet. We
continued to innovate our services, products and guest experiences.
And we further leveraged our management systems and experienced
staff to increase guest services productivity and retail attachment
rates generating record maritime operating metrics, including
revenue per passenger per day, revenue per staff day, and weekly
revenue per ship.”
Mr. Fluxman stated further: “We are pleased to announce that our
Board of Directors adopted an annual cash dividend program, which
recognizes our ability to leverage our industry leading operating
platform, integrated growth initiatives and asset-light business
model to generate consistently increasing after-tax free cash flow.
We remain confident in our ability to deliver strong operating and
financial performance, both near-term and long-term, and increase
value to our shareholders,” concluded Mr. Fluxman.
Stephen Lazarus, Chief Financial Officer and Chief Operating
Officer, added: “We ended the quarter with a strong balance sheet,
including total cash of $63.7 million after repaying $15.0 million
of our first lien term loan during the quarter. Since the second
quarter of fiscal 2022, we have repaid over $109 million of
indebtedness reducing our debt to $123.8 million at June 30,
2024.”
Mr. Lazarus concluded, “with our strong second quarter
performance and a positive outlook, we have increased our fiscal
year 2024 guidance. We now expect revenues to increase 11% and
adjusted EBITDA to increase 18% at the mid-point of the guidance
ranges from fiscal 2023 actual results.”
Second Quarter 2024 Highlights:
- Total revenues increased 12% to a record $224.9 million
compared to $200.5 million in the second quarter of 2023.
- Income from operations increased 40% to a record $18.8 million
compared to $13.4 million in the second quarter of 2023.
- Adjusted EBITDA increased 25% to $27.1 million compared to
$21.6 million in the second quarter of 2023.
- Unlevered after-tax free cash flow increased 18% to $23.8
million compared to $20.1 million in the second quarter of 2023.
The Unlevered after-tax free cash flow conversion rate was 88% in
the second quarter of 2024.
Operating Network Update:
- Cruise Ship Count: The Company ended the second quarter
operating health and wellness centers on 197 ships with an average
ship count of 188 ships for the quarter, compared with 183 ships
and an average ship count of 177 ships for the second quarter of
2023.
- Destination Resort Count: The Company ended the second
quarter operating 52 destination resort health and wellness centers
with an average resort count of 52 for the quarter, compared with
54 destination resort health and wellness centers and an average
resort count of 51 for the second quarter of 2023.
- Staff Count: The Company ended the second quarter with
4,300 cruise ship personnel on vessels, compared with 3,813 cruise
ship personnel on vessels at the end of the second quarter of
2023.
Liquidity Update:
- Cash totaled $63.7 million after repaying $15 million on our
first lien term loan in the second quarter.
- The Company expects to continue to generate positive cash flow
from operations and after-tax free cash flow in the third and
fourth quarters of fiscal 2024 and for the full fiscal year.
The Company’s results are reported in this press release on a
GAAP basis and on an as adjusted non-GAAP basis. A reconciliation
of GAAP to non-GAAP financial information is provided at the end of
this press release. This press release also refers to Unlevered
after-tax free cash flow, Adjusted EBITDA and Adjusted Net Income
(non-GAAP financial measures), the terms for which definition and
reconciliation are presented below.
Second Quarter Ended June 30, 2024 Compared to June 30,
2023
- Total revenues were $224.9 million compared to $200.5 million
in the second quarter of 2023. The increase primarily was
attributable to our average ship count increasing to 188 health and
wellness centers onboard ships operating during the quarter
compared with our average ship count of 177 health and wellness
centers onboard ships operating during the second quarter of 2023,
together with continued productivity gains across our
operations.
- Cost of services were $150.8 million compared to $137.2 million
in the second quarter of 2023. The increase primarily was
attributable to costs associated with increased Service revenues of
$180.8 million in the quarter, compared with Service revenues of
$163.2 million in the second quarter of 2023.
- Cost of products were $37.1 million compared to $32.2 million
in the second quarter of 2023. The increase primarily was
attributable to costs associated with increased Product revenues of
$44.0 million in the quarter, compared to Product revenues of $37.3
million in the second quarter of 2023.
- Net income was $15.8 million, or Net income per diluted share
of $0.15, as compared to Net loss of ($3.2) million or Net loss per
diluted share of ($0.03) in the second quarter of 2023. The
increase primarily was attributable to a $12.2 million decline in
Other (expense) from the change in fair value of warrant
liabilities and a $5.4 million increase in Income from operations.
The change in fair value of warrant liabilities was the result of
the remeasurement to fair value of the warrants exercised during
the second quarter of 2024 reflecting changes in market prices of
our common stock and other observable inputs deriving the value of
these financial instruments. The $5.4 million change in Income from
operations primarily derived from the increase in the number of
health and wellness centers onboard ships operating during the
quarter.
- Adjusted net income was $21.7 million, or Adjusted net income
per diluted share of $0.20, as compared to Adjusted net income of
$15.0 million, or Adjusted net income per diluted share of $0.15,
in the second quarter of 2023.
- Adjusted EBITDA was $27.1 million compared to Adjusted EBITDA
of $21.6 million in the second quarter of 2023.
- Unlevered after-tax free cash flow was $23.8 million compared
to $20.1 million in the second quarter of 2023.
Year-to-date June 30, 2024 Compared to June 30, 2023
- Total revenues were $436.1 million compared to $383.0 million
for the six months ended June 30, 2023. The increase primarily was
attributable to our average ship count increasing to 188 health and
wellness centers onboard ships operating during the six months
ended June 30, 2024 compared with our average ship count of 175
health and wellness centers onboard ships operating during the six
months ended June 30, 2023, together with continued productivity
gains across our operations.
- Cost of services were $294.8 million compared to $263.5 million
in the six months ended June 30, 2023. The increase primarily was
attributable to costs associated with increased Service revenues of
$353.1 million in the six months ended June 30, 2024 from our
operating health and wellness centers at sea and on land, compared
with Service revenues of $313.4 million in the six months ended
June 30, 2023.
- Cost of products were $70.7 million compared to $60.5 million
in the six months ended June 30, 2023. The increase primarily was
attributable to costs associated with increased Product revenues of
$83.1 million in the six months ended June 30, 2024 from our
operating health and wellness centers at sea and on land, compared
to Product revenues of $69.6 million in the six months ended June
30, 2023.
- Net income was $36.9 million, or Net income per diluted share
of $0.35, as compared to net loss of ($19.1) million or Net loss
per diluted share of ($0.20) in the six months ended June 30, 2023.
The increase primarily was attributable to a $41.8 million positive
change in the fair value of warrant liabilities reflected in Other
income (expense) and a $11.2 million increase in Income from
operations. The change in fair value of warrant liabilities was the
result of the remeasurement to fair value of the warrants exercised
during the six months ended June 30, 2024 reflecting changes in
market prices of our common stock and other observable inputs
deriving the value of these financial instruments. The $11.2
million increase in Income from operations primarily derived from
the increase in the number of health and wellness centers onboard
ships operating during the comparative six month periods.
- Adjusted net income was income of $41.0 million, or Adjusted
net income per diluted share of $0.39, compared to Adjusted net
income of $27.4 million, or Adjusted net income per diluted share
of $0.28, in the six months ended June 30, 2023.
- Adjusted EBITDA was $52.4 million compared to Adjusted EBITDA
of $40.9 million in the six months ended June 30, 2023.
- Unlevered after-tax free cash flow was $47.8 million compared
to $38.0 million in the six months ended June 30, 2023.
Balance Sheet Highlights
- Cash at June 30, 2024 was $63.7 million, after giving effect to
repayment of $15 million in debt during the second quarter.
- Total debt, net of deferred financing costs, was $123.8 million
at June 30, 2024.
Dividend Announcement
Following quarter end, the Board of Directors adopted an annual
cash dividend program with an initial quarterly dividend payment of
$0.04 per common share. The Board’s adoption of the dividend
program follows a comprehensive capital allocation analysis and
reflects the Company’s strong current and expected operating and
financial performance and exceptional after-tax free cash flow
conversion driven by its advantageous asset-light business model.
The first quarterly dividend is payable on September 4, 2024 to
shareholders of record as of the close of business on August 21,
2024.
Q3 2024 and Fiscal Year 2024 Guidance
Three Months Ended September
30, 2024
Year Ended December 31,
2024
Total Revenues
$
235-240 million
$
870-890 million
Adjusted EBITDA
$
27-29 million
$
102-108 million
Conference Call Details
A conference call to discuss the second quarter 2024 financial
results is scheduled for Wednesday, July 31, 2024, at 11:00 a.m.
Eastern Time. Investors and analysts interested in participating in
the call are invited to dial 1-877-283-8977 (international callers
please dial 1-412-542-4171) and provide the passcode 10190591
approximately 10 minutes prior to the start of the call. A live
audio webcast of the conference call will be available online at
https://onespaworld.com/investor-relations. A replay of the call
will be available by dialing 844-512-2921 (international callers
please dial 412-317-6671) and entering the passcode 10190591. The
conference call replay will be available from 3:00 p.m. Eastern
Time on Wednesday, July 31, 2024 until 11:59 p.m. Eastern Time on
Wednesday, August 7, 2024. The Webcast replay will remain available
for 90 days.
About OneSpaWorld
Headquartered in Nassau, Bahamas, OneSpaWorld is one of the
largest health and wellness services companies in the world.
OneSpaWorld’s distinguished health and wellness centers offer
guests a comprehensive suite of premium health, wellness, fitness
and beauty services, treatments, and products, currently onboard
197 cruise ships and at 52 destination resorts around the world.
OneSpaWorld holds the leading market position within the cruise
industry segment of the international leisure market, which it has
earned over six decades upon its exceptional service standards,
expansive global recruitment, training and logistics platforms,
irreplicable operating infrastructure, powerful team, and continual
service and product innovation, delivering tens of millions of
extraordinary guest experiences and outstanding service to its
cruise line and destination resort partners.
On March 19, 2019, OneSpaWorld completed a series of mergers
pursuant to which OSW Predecessor, comprised of direct and indirect
subsidiaries of Steiner Leisure Ltd., and Haymaker Acquisition
Corp. (“Haymaker”), a special purpose acquisition company, each
became indirect wholly owned subsidiaries of OneSpaWorld (the
“Business Combination”). Haymaker is the acquirer and OSW
Predecessor the predecessor, whose historical results have become
the historical results of OneSpaWorld.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995. The expectations,
estimates, and projections of the Company may differ from its
actual results and consequently, you should not rely on these
forward-looking statements as predictions of future events. Words
such as “expect,” “estimate,” “project,” “budget,” “forecast,”
“anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,”
“believes,” “predicts,” “potential,” “continue,” or the negative or
other variations thereof and similar expressions are intended to
identify such forward looking statements. These forward-looking
statements include, without limitation, expectations with respect
to future performance of the Company, including projected financial
information (which is not audited or reviewed by the Company’s
auditors), and the future plans, operations and opportunities for
the Company and other statements that are not historical facts.
These statements are based on the current expectations of the
Company’s management and are not predictions of actual performance.
These forward-looking statements involve significant risks and
uncertainties that could cause the actual results to differ
materially from the expected results. Factors that may cause such
differences include, but are not limited to: the impact of the
COVID-19 pandemic on our business, operations, results of
operations and financial condition, including liquidity for the
foreseeable future; the demand for the Company’s services together
with the possibility that the Company may be adversely affected by
other economic, business, and/or competitive factors or changes in
the business environment in which the Company operates; changes in
consumer preferences or the market for the Company’s services;
changes in applicable laws or regulations; the availability or
competition for opportunities for expansion of the Company’s
business; difficulties of managing growth profitably; the loss of
one or more members of the Company’s management team; loss of a
major customer and other risks and uncertainties included from time
to time in the Company’s reports (including all amendments to those
reports) filed with the SEC. The Company cautions that the
foregoing list of factors is not exclusive. You should not place
undue reliance upon any forward-looking statements, which speak
only as of the date made. The Company does not undertake or accept
any obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements to reflect any change
in its expectations or any change in events, conditions, or
circumstances on which any such statement is based, except as
required by law. These forward-looking statements should not be
relied upon as representing the Company’s assessments as of any
date subsequent to the date of this communication.
Non-GAAP Financial Measures
We refer to certain financial measures that are not recognized
under U.S. generally accepted accounting principles (“GAAP”).
Please see “Note Regarding Non-GAAP Financial Information” and
“Reconciliation of GAAP to Non-GAAP Financial Information” below
for additional information and a reconciliation of the non-GAAP
financial measures to the most comparable GAAP financial
measures.
ONESPAWORLD HOLDINGS LIMITED
AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per
share data)
Three Months Ended June
30,
Six Months Ended June
30,
$
%
$
%
2024
2023 (1)
Inc/(Dec)
Inc/(Dec)
2024
2023 (1)
Inc/(Dec)
Inc/(Dec)
REVENUES:
Service revenues
$
180,846
$
163,234
$
17,612
11
%
$
353,055
$
313,355
$
39,700
13
%
Product revenues
44,045
37,279
6,766
18
%
83,062
69,613
13,449
19
%
Total revenues
224,891
200,513
24,378
12
%
436,117
382,968
53,149
14
%
COST OF REVENUES AND OPERATING
EXPENSES:
Cost of services
150,801
137,192
13,609
10
%
294,826
263,520
31,306
12
%
Cost of products
37,138
32,207
4,931
15
%
70,668
60,472
10,196
17
%
Administrative
4,740
4,519
221
5
%
8,797
8,089
708
9
%
Salary, benefits and payroll taxes
9,230
8,954
276
3
%
17,723
17,875
(152
)
(1
)%
Amortization of intangible assets
4,143
4,206
(63
)
(1
)%
8,287
8,412
(125
)
(1
)%
Total cost of revenues and operating
expenses
206,052
187,078
18,974
10
%
400,301
358,368
41,933
12
%
Income from operations
18,839
13,435
5,404
40
%
35,816
24,600
11,216
46
%
OTHER (EXPENSE), INCOME, NET:
Interest expense
(2,221
)
(4,352
)
2,131
49
%
(5,176
)
(8,962
)
3,786
42
%
Change in fair value of warrant
liabilities
(46
)
(12,201
)
12,155
100
%
7,677
(34,101
)
41,778
123
%
Total other (expense) income, net
(2,267
)
(16,553
)
14,286
86
%
2,501
(43,063
)
45,564
106
%
Income (loss) before income tax
expense
16,572
(3,118
)
19,690
631
%
38,317
(18,463
)
56,780
308
%
INCOME TAX EXPENSE
813
59
754
1278
%
1,392
618
774
125
%
Net income (loss)
$
15,759
$
(3,177
)
$
18,936
596
%
$
36,925
$
(19,081
)
$
56,006
294
%
Net income (loss) per share:
Basic
$
0.15
$
(0.03
)
$
0.36
$
(0.20
)
Diluted
$
0.15
$
(0.03
)
$
0.35
$
(0.20
)
Weighted average shares outstanding:
Basic
105,123
97,471
103,292
95,546
Diluted
105,767
97,471
104,346
95,546
(1) Potential common shares under the treasury stock method and
the if-converted method were antidilutive because the Company
reported a net loss in the three and six months ended June 30, 2023
and the effect of the change in the fair value of warrants was
antidilutive. Consequently, the Company did not have any
adjustments in those periods between basic and diluted loss per
share related to stock options, restricted share units and
warrants.
Forecasted
Q3 2024
FY 2024
Period End Ship Count
197
198
Average Ship Count (1)
195
189
Period End Resort Count
52
52
Average Resort Count (2)
52
52
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Selected Statistics
Period End Ship Count
197
183
197
183
Average Ship Count (1)
188
177
188
175
Average Weekly Revenue Per
Ship
$
88,034
$
82,149
$
84,859
$
79,662
Average Revenue Per Shipboard
Staff Per Day
$
586
$
572
$
567
$
557
Period End Resort Count
52
54
52
54
Average Resort Count (2)
52
51
52
50
Average Weekly Revenue Per
Resort
$
14,028
$
15,447
$
15,405
$
16,182
Capital Expenditures (in
thousands)
$
1,116
$
882
$
2,322
$
2,201
(1) Average Ship Count reflects the fact that during the period
ships were in and out of service and is calculated by adding the
total number of days that each of the ships generated revenue
during the period, divided by the number of calendar days during
the period.
(2) Average Resort Count reflects the fact that during the
period destination resort health and wellness centers were in and
out of service and is calculated by adding the total number of days
that each destination resort health and wellness center generated
revenue during the period, divided by the number of calendar days
during the period.
Note Regarding Non-GAAP Financial Information
This press release includes financial measures that are not
calculated in accordance with GAAP, including Adjusted net income
(loss), Adjusted net income (loss) per diluted share, Adjusted
EBITDA and Unlevered after-tax free cash flow.
We define Adjusted net income as net income (loss), adjusted for
items, including increase in depreciation and amortization expense
resulting from the Business Combination, non-cash stock-based
compensation and change in fair value of warrant liabilities.
Adjusted net income per diluted share is defined as Adjusted net
income divided by the weighted average diluted shares outstanding
during the period, as if such shares had been outstanding during
the entire three and six month periods ended 2024 and 2023.
We define Adjusted EBITDA as income from continuing operations
before interest expense, income tax expense, depreciation and
amortization, adjusted for the impact of certain other items,
including non-cash stock-based compensation expense and change in
fair value of warrant liabilities.
We define Unlevered after-tax free cash flow as Adjusted EBITDA
minus capital expenditures and cash taxes paid.
We believe that these non-GAAP measures, when reviewed in
conjunction with GAAP financial measures, and not in isolation or
as substitutes for analysis of our results of operations under
GAAP, are useful to investors as they are widely used measures of
performance and the adjustments we make to these non-GAAP measures
provide investors further insight into our profitability and
additional perspectives in comparing our performance to other
companies and in comparing our performance over time on a
consistent basis. Adjusted net income, Adjusted net income per
diluted share, Adjusted EBITDA and Unlevered after-tax free cash
flow have limitations as profitability or liquidity measures in
that they do not include total amounts for interest expense on our
debt and provision for income taxes, and the effect of our
expenditures for capital assets and certain intangible assets. In
addition, all of these non-GAAP measures have limitations as
profitability or liquidity measures in that they do not include the
effect of non-cash stock-based compensation expense and the impact
of certain expenses related to items that are settled in cash.
Because of these limitations, the Company relies primarily on its
GAAP results.
In the future, we may incur expenses similar to those for which
adjustments are made in calculating Adjusted EBITDA. Our
presentation of Adjusted EBITDA should not be construed as a basis
to infer that our future results will be unaffected by
extraordinary, unusual, or nonrecurring items.
Reconciliation of GAAP to Non-GAAP Financial
Information
The following table reconciles Net income (loss) to Adjusted net
income for the second quarters and year-to-date periods ended June
30, 2024 and 2023 and Adjusted net income per diluted share for the
second quarters and year-to-date periods ended June 30, 2024 and
2023 (amounts in thousands, except per share amounts):
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Net income (loss)
$
15,759
$
(3,177
)
$
36,925
$
(19,081
)
Change in fair value of warrant
liabilities
46
12,201
(7,677
)
34,101
Depreciation and amortization
(a)
3,761
3,761
7,522
7,522
Stock-based compensation
2,094
2,257
4,188
4,848
Adjusted net income
$
21,660
$
15,042
$
40,958
$
27,390
Adjusted net income per diluted
share
$
0.20
$
0.15
$
0.39
$
0.28
Diluted weighted average shares
outstanding
105,767
99,508
104,346
98,011
(a) Depreciation and amortization refers to addback of purchase
price adjustments to tangible and intangible assets resulting from
the Business Combination.
The following table reconciles Net income (loss) to Adjusted
EBITDA and Unlevered after-tax free cash flow for the second
quarters and year-to-date periods ended June 30, 2024 and 2023
(amounts in thousands):
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Net income (loss)
$
15,759
$
(3,177
)
$
36,925
$
(19,081
)
Income tax expense
813
59
1,392
618
Interest expense
2,221
4,352
5,176
8,962
Change in fair value of warrant
liabilities
46
12,201
(7,677
)
34,101
Depreciation and amortization
5,870
5,477
12,079
10,986
Stock-based compensation
2,094
2,257
4,188
4,848
Business combination costs
(b)
293
476
293
476
Adjusted EBITDA
$
27,096
$
21,645
$
52,376
$
40,910
Capital expenditures
(1,116
)
(882
)
(2,322
)
(2,201
)
Cash taxes
(2,223
)
(637
)
(2,244
)
(678
)
Unlevered after-tax free cash
flow
$
23,757
$
20,126
$
47,810
$
38,031
(b) Business combination costs refers to legal and advisory fees
incurred by OneSpaWorld in connection with the Business
Combination, including costs associated with the secondary offering
and warrant conversion.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240731039493/en/
ICR: Investors: Allison Malkin, 203-682-8225
allison.malkin@icrinc.com
Follow OneSpaWorld: Instagram: @onespaworld LinkedIn:
OneSpaWorld Facebook: @onespaworld
OneSpaWorld (NASDAQ:OSW)
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