Total Revenues of $241.7 Million, Income
from Operations of $25.0 Million and Adjusted EBITDA of $33.0
Million Increases Fiscal 2024 Revenues Guidance to $888 -
$893 Million from $870 - $890 Million Increases Fiscal 2024
Adjusted EBITDA Guidance to $110 - $112 Million from $102 - $108
Million Board Declares Quarterly Dividend of $0.04 Per
Share
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 third quarter and first nine months of fiscal 2024,
ended September 30, 2024.
Leonard Fluxman, Executive Chairman, Chief Executive Officer,
and President of OneSpaWorld, commented: “We delivered exceptional
third quarter results, achieving all-time records for total
revenues, income from operations and adjusted EBITDA that once
again surpassed our expectations. Based on our performance,
continuing momentum and positive outlook across our business, we
are increasing annual guidance for the third time this year. Our
sustained strong performance continues to evidence the talent of
our team to leverage our complex operating model and competitive
strengths to deliver outstanding guest experiences for our cruise
line and destination resort partners, positioning us well to
continue achieving outstanding results for our Company and our
partners.
The third quarter included many noteworthy accomplishments,”
continued Mr. Fluxman. “We grew total revenue by 12%, income from
operations by 48% and adjusted EBITDA by 33%. We generated robust
free cash flow, which we invested to reduce our debt, pay our
quarterly dividend and repurchase shares as we continue to
prioritize bolstering our strong balance sheet, investing in our
growth and enhancing value for our shareholders. And we continue to
invest across our business to enhance our competitive strengths,
innovate our services, products and guest experiences, and leverage
our operating systems and experienced staff, to enhance onboard
productivity, service mix and retail product attachment rate
evidenced by our record maritime operating metrics, including
revenue per passenger per day, revenue per staff day, and weekly
revenue per ship.”
Mr. Fluxman stated further: “Earlier this month, we issued our
inaugural Sustainability and Social Responsibility Report, which
highlights our commitment to exemplary care for our employees,
outstanding service to our partners and their guests, and
responsible stewardship of the environment and communities our
Company impacts across the globe. This commitment and our ongoing
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 positions
us well to deliver continuing strong near-term and long-term
operating and financial performance,” 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 $50.0 million after repaying $24.6 million
of our first lien term loan during the quarter and investing $11.3
million to repurchase our common shares. During the quarter, we
further strengthened our balance sheet, replacing our existing
first lien term loan with a new $100 million facility, thereby
lengthening the debt maturity and lowering our ongoing interest
rate. In addition, we added a $50 million revolving loan facility,
which was undrawn at quarter end, providing us with $100 million of
total liquidity. We move forward with an efficient capital
structure and robust cash flow generation that will enable us to
invest in continuing to drive long-term growth, together with our
dividend and share repurchase programs and debt paydown.”
Mr. Lazarus concluded, “with our strong third quarter
performance and a positive outlook, we have increased our fiscal
year 2024 guidance. We now expect revenues to increase 12% and
adjusted EBITDA to increase 24% at the mid-point of the guidance
ranges from fiscal 2023 actual results.”
Third Quarter 2024 Highlights:
- Total revenues increased 12% to a record $241.7 million
compared to $216.3 million in the third quarter of 2023.
- Income from operations increased 48% to a record $25.0 million
compared to $17.0 million in the third quarter of 2023.
- Adjusted EBITDA increased 33% to a record $33.0 million
compared to $24.9 million in the third quarter of 2023.
- Unlevered after-tax free cash flow increased 28% to a record
$31.0 million compared to $24.2 million in the third quarter of
2023. The Unlevered after-tax free cash flow conversion rate was
94% in the third quarter of 2024.
Operating Network Update:
- Cruise Ship Count: The Company ended the third quarter
with health and wellness centers on 196 ships and an average ship
count of 195 for the quarter, compared with 189 ships and an
average ship count of 185 ships for the third quarter of 2023.
- Destination Resort Count: The Company ended the third
quarter with 52 destination resort health and wellness centers and
an average destination resort count of 52 for the quarter, compared
with 54 destination resort health and wellness centers and an
average destination resort count of 52 for the third quarter of
fiscal 2023.
- Staff Count: The Company ended the third quarter with
4,204 cruise ship personnel on vessels, compared with 3,927 cruise
ship personnel on vessels at the end of the third quarter of
2023.
Liquidity Update:
- Cash totaled $50.0 million after repaying $24.6 million on our
first lien term loan, repurchasing $11.3 million of shares and
paying a $4.2 million dividend in the third quarter.
- The Company expects to continue to generate positive cash flow
from operations and after-tax free cash flow in the fourth quarter
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.
Third Quarter Ended September 30, 2024 Compared to September
30, 2023
- Total revenues were $241.7 million compared to $216.3 million
in the third quarter of 2023. The increase primarily was
attributable to our average ship count increasing to 195 health and
wellness centers onboard ships operating during the quarter
compared with our average ship count of 185 health and wellness
centers onboard ships operating during the third quarter of 2023,
together with continued productivity gains across our
operations.
- Cost of services were $159.6 million compared to $146.1 million
in the third quarter of 2023. The increase primarily was
attributable to costs associated with increased Service revenues of
$194.4 million in the quarter, compared with Service revenues of
$175.8 million in the third quarter of 2023.
- Cost of products were $40.1 million compared to $34.5 million
in the third quarter of 2023. The increase primarily was
attributable to costs associated with increased Product revenues of
$47.3 million in the quarter, compared to Product revenues of $40.4
million in the third quarter of 2023.
- Net income was $21.6 million, or Net income per diluted share
of $0.20, as compared to Net income of $23.4 million or Net income
per diluted share of $0.16 in the third quarter of 2023. The change
was primarily attributable to a $7.4 million decline in the fair
value of warrant liabilities reflected in Other income (expense)
and an $8.1 million increase in Income from operations. All
warrants were exercised or cancelled prior to the third quarter of
2024 with zero expense incurred during the third quarter of 2024.
The change in fair value of warrant liabilities was the result of
the remeasurement to fair value of the warrants exercised during
the third quarter of 2023 reflecting changes in market prices of
our common stock and other observable inputs deriving the value of
these financial instruments. The $8.1 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 $27.3 million, or Adjusted net income
per diluted share of $0.26, as compared to Adjusted net income of
$22.0 million, or Adjusted net income per diluted share of $0.22,
in the third quarter of 2023.
- Adjusted EBITDA was $33.0 million compared to Adjusted EBITDA
of $24.9 million in the third quarter of 2023.
- Unlevered after-tax free cash flow was $31.0 million compared
to $24.2 million in the third quarter of 2023.
Year-to-date September 30, 2024 Compared to September 30,
2023
- Total revenues were $677.8 million compared to $599.2 million
for the nine months ended September 30, 2023. The increase
primarily was attributable to our average ship count increasing to
190 health and wellness centers onboard ships operating during the
nine months ended September 30, 2024 compared with our average ship
count of 178 health and wellness centers onboard ships operating
during the nine months ended September 30, 2023, together with
continued productivity gains across our operations.
- Cost of services were $454.4 million compared to $409.6 million
in the nine months ended September 30, 2023. The increase primarily
was attributable to costs associated with increased Service
revenues of $547.5 million in the nine months ended September 30,
2024 from our operating health and wellness centers at sea and on
land, compared with Service revenues of $489.2 million in the nine
months ended September 30, 2023.
- Cost of products were $110.8 million compared to $94.9 million
in the nine months ended September 30, 2023. The increase primarily
was attributable to costs associated with increased Product
revenues of $130.4 million in the nine months ended September 30,
2024 from our operating health and wellness centers at sea and on
land, compared to Product revenues of $110.0 million in the nine
months ended September 30, 2023.
- Net income was $58.5 million, or Net income per diluted share
of $0.56, as compared to Net income of $4.3 million or Net income
per diluted share of $0.04 in the nine months ended September 30,
2023. The change was primarily attributable to a $34.4 million
positive change in the fair value of warrant liabilities reflected
in Other income (expense) and a $19.3 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 nine months ended September 30, 2024
reflecting changes in market prices of our common stock and other
observable inputs deriving the value of these financial
instruments. All warrants were exercised or cancelled prior to the
third quarter of 2024. The $19.3 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 nine month period.
- Adjusted net income was income of $68.2 million, or Adjusted
net income per diluted share of $0.65, compared to Adjusted net
income of $49.4 million, or Adjusted net income per diluted share
of $0.50, in the nine months ended September 30, 2023.
- Adjusted EBITDA was $85.4 million compared to Adjusted EBITDA
of $65.8 million in the nine months ended September 30, 2023.
- Unlevered after-tax free cash flow was $78.8 million compared
to $62.2 million in the nine months ended September 30, 2023.
Balance Sheet and Cash Flow Highlights
- Cash at September 30, 2024 was $50.0 million, after giving
effect to repayment of $24.6 million in debt, repurchasing $11.3
million of shares and paying a $4.2 million dividend in the third
quarter.
- A new credit agreement including a term loan facility of $100
million and a revolving loan facility of up to $50 million was
entered into during the third quarter. The revolving facility
remained undrawn at September 30, 2024. Total debt, net of deferred
financing costs, was $98.7 million at September 30, 2024, compared
with $158.2 million at December 31, 2023.
Q4 2024 and Fiscal Year 2024 Guidance
Three Months Ended December
31, 2024
Year Ended December 31,
2024
Total Revenues
$
210-215 million
$
888-893 million
Adjusted EBITDA
$
25-27 million
$
110-112 million
Quarterly Dividend and Share Repurchase Program
The Company also announced today that the Board of Directors
approved a quarterly dividend payment of $0.04 per common share
payable on December 4, 2024 to shareholders of record as of the
close of business on November 20, 2024.
During the third quarter of fiscal 2024, the Company repurchased
$11.3 million under its $50 million share repurchase program. As of
September 30, 2024, the Company had $38.7 million remaining
available under the share repurchase program.
Conference Call Details
A conference call to discuss the third quarter 2024 financial
results is scheduled for Wednesday, October 30, 2024, at 10:00 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 10193562
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 10193562. The
conference call replay will be available from 2:00 p.m. Eastern
Time on Wednesday, October 30, 2024 until 11:59 p.m. Eastern Time
on Wednesday, November 6, 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; expansive
global recruitment, training and logistics platforms; irreplicable
operating infrastructure; powerful team; 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 September
30,
Nine Months Ended September
30,
$
%
$
%
2024
2023 (1)
Inc/(Dec)
Inc/(Dec)
2024
2023 (2)
Inc/(Dec)
Inc/(Dec)
REVENUES:
Service revenues
$
194,407
$
175,849
$
18,558
11
%
$
547,462
$
489,204
$
58,258
12
%
Product revenues
47,289
40,422
6,867
17
%
130,351
110,035
20,316
18
%
Total revenues
241,696
216,271
25,425
12
%
677,813
599,239
78,574
13
%
COST OF REVENUES AND OPERATING
EXPENSES:
Cost of services
159,598
146,128
13,470
9
%
454,424
409,648
44,776
11
%
Cost of products
40,147
34,477
5,670
16
%
110,815
94,949
15,866
17
%
Administrative
4,238
4,673
(435
)
(9
)%
13,035
12,762
273
2
%
Salary, benefits and payroll taxes
8,556
9,833
(1,277
)
(13
)%
26,279
27,708
(1,429
)
(5
)%
Amortization of intangible assets
4,144
4,206
(62
)
(1
)%
12,431
12,618
(187
)
(1
)%
Total cost of revenues and operating
expenses
216,683
199,317
17,366
9
%
616,984
557,685
59,299
11
%
Income from operations
25,013
16,954
8,059
48
%
60,829
41,554
19,275
46
%
OTHER (EXPENSE) INCOME:
Interest expense, net
(2,496
)
(3,726
)
1,230
33
%
(7,672
)
(12,688
)
5,016
40
%
Change in fair value of warrant
liabilities
—
7,365
(7,365
)
(100
)%
7,677
(26,736
)
34,413
129
%
Total other (expense) income
(2,496
)
3,639
(6,135
)
(169
)%
5
(39,424
)
39,429
100
%
Income before income tax expense
(benefit)
22,517
20,593
1,924
9
%
60,834
2,130
58,704
2756
%
INCOME TAX EXPENSE (BENEFIT)
966
(2,818
)
3,784
134
%
2,358
(2,200
)
4,558
207
%
Net income
$
21,551
$
23,411
$
(1,860
)
(8
)%
$
58,476
$
4,330
$
54,146
1250
%
Net income per voting and non-voting
share:
Basic
$
0.21
$
0.23
$
0.56
$
0.04
Diluted
$
0.20
$
0.16
$
0.56
$
0.04
Weighted average shares outstanding:
Basic
104,884
99,963
103,824
96,975
Diluted
105,587
101,369
104,762
96,975
(1) Diluted EPS includes an adjustment to exclude $7.4 million
from net income for the three months ended September 30, 2023,
which is attributable to the gain in fair value of the in-the-money
warrant liabilities as they were dilutive for this period.
(2) For the nine months ended September 30, 2023, potential
common shares under the treasury stock method and the if-converted
method were antidilutive because the effect of the change in the
fair value of warrants was antidilutive. Consequently, the Company
did not have any adjustments in this period between basic and
diluted income per share related to stock-based awards and
warrants.
Forecasted
Q4 2024
FY 2024
Period End Ship Count
198
198
Average Ship Count (1)
186
189
Period End Resort Count
51
51
Average Resort Count (2)
52
52
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Selected Statistics
Period End Ship Count
196
189
196
189
Average Ship Count (1)
195
185
190
178
Average Weekly Revenue Per Ship
$
91,019
$
84,749
$
86,978
$
81,444
Average Revenue Per Shipboard Staff Per
Day
$
602
$
587
$
579
$
568
Period End Resort Count
52
54
52
54
Average Resort Count (2)
52
52
52
50
Average Weekly Revenue Per Resort
$
11,860
$
13,550
$
14,210
$
15,269
Capital Expenditures (in thousands)
$
1,111
$
670
$
3,433
$
2,871
(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,
Adjusted net income per diluted share, Adjusted EBITDA and
Unlevered after-tax free cash flow.
We define Adjusted net income as net income, 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 nine 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 to Adjusted net income
for the third quarters and year-to-date periods ended September 30,
2024 and 2023 and Adjusted net income per diluted share for the
third quarters and year-to-date periods ended September 30, 2024
and 2023 (amounts in thousands, except per share amounts):
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Net income
$
21,551
$
23,411
$
58,476
$
4,330
Change in fair value of warrant
liabilities
—
(7,365
)
(7,677
)
26,736
Depreciation and amortization (a)
3,761
3,761
11,283
11,283
Stock-based compensation
1,974
2,197
6,163
7,045
Adjusted net income
$
27,286
$
22,004
$
68,245
$
49,394
Adjusted net income per diluted share
$
0.26
$
0.22
$
0.65
$
0.50
Diluted weighted average shares
outstanding
105,587
101,369
104,762
99,180
(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 to Adjusted EBITDA and
Unlevered after-tax free cash flow for the third quarters and
year-to-date periods ended September 30, 2024 and 2023 (amounts in
thousands):
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Net income
$
21,551
$
23,411
$
58,476
$
4,330
Income tax (benefit) expense
966
(2,818
)
2,358
(2,200
)
Interest expense
2,496
3,726
7,672
12,688
Change in fair value of warrant
liabilities
—
(7,365
)
(7,677
)
26,736
Depreciation and amortization
6,011
5,512
18,090
16,498
Stock-based compensation
1,974
2,197
6,163
7,045
Business combination costs (b)
—
237
293
713
Adjusted EBITDA
$
32,998
$
24,900
$
85,375
$
65,810
Capital expenditures
(1,111
)
(670
)
(3,433
)
(2,871
)
Cash taxes
(866
)
(68
)
(3,110
)
(746
)
Unlevered after-tax free cash flow
$
31,021
$
24,162
$
78,832
$
62,193
(b) Business combination costs refers to legal and advisory fees
incurred by OneSpaWorld in connection with the secondary offering
and warrant conversion.
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version on businesswire.com: https://www.businesswire.com/news/home/20241030125278/en/
ICR: Investors: Allison Malkin, 203-682-8225
allison.malkin@icrinc.com
OneSpaWorld (NASDAQ:OSW)
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From Oct 2024 to Nov 2024
OneSpaWorld (NASDAQ:OSW)
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From Nov 2023 to Nov 2024
