Board Authorizes $50 Million Share
Repurchase Program Total Revenues of $211.2 Million, Income
from Operations of $17.0 Million and Adjusted EBITDA of $25.3
Million Increases Fiscal 2024 Revenues Guidance to $860 -
$880 Million from $850 - $870 Million Increases Fiscal 2024
Adjusted EBITDA Guidance to $95 - $105 Million from $90 - $100
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 financial
results for the first quarter ended March 31, 2024.
Leonard Fluxman, Executive Chairman, Chief Executive Officer,
and President of OneSpaWorld, commented: “Our strong momentum from
fiscal 2023 has continued, with first quarter results exceeding our
guidance. We are increasing our annual outlook beyond the
outperformance achieved in the first quarter based on the ongoing
strong execution by our talented team, new partnerships, and new
initiatives which continue to drive organic growth.
The first quarter included several noteworthy accomplishments,”
continued Mr. Fluxman. “Financially, we grew total revenue by 16%,
income from operations by 52% and adjusted EBITDA by 31%. We
generated robust free cash flow, bolstering our strong balance
sheet. We grew key maritime operating metrics at double digit
rates, supported by the sustained pipeline of strategic initiatives
to increase pre-booking, the number of treatments per client, and
the number of passengers utilizing the spa. We entered into a new
exclusive agreement with Royal Caribbean Cruises and Celebrity
Cruises for their existing 40 ships in service and all future ships
which enter service during the agreement term. We also added Aroya
Cruises to our list of partners, where we will operate all health
and wellness facilities beginning in late 2024. We anticipate
ending fiscal 2024 operating aboard 198 vessels.”
Mr. Fluxman stated further: “The quarter marked a key milestone
for OneSpaWorld: the fifth anniversary of our de-SPAC public
listing. Notably, OneSpaWorld public warrant holders expressed
their support for the company, with 98% of all outstanding warrants
converted and exercised. The remaining warrants were canceled.
Importantly, we also eliminated the overhang of our private equity
investor which sold its final tranche of our shares, simplifying
our capital structure, while increasing trading liquidity and the
public float.
Based on sustained robust consumer demand for cruising and
execution of our proven operating strategies and growth
initiatives, we expect that fiscal 2024 will be another year of
significant accomplishments and increasing value for OneSpaWorld
shareholders. In recognition of this strength and our favorable
long-term growth prospects, as well as the strength of our balance
sheet, our Board of Directors approved a $50 million share
repurchase program,” concluded Mr. Fluxman.
Stephen Lazarus, Chief Financial Officer, and Chief Operating
Officer, added, “We ended the quarter with total cash of $66.6
million. We received $51.7 million net from the completion of the
warrant conversion, repaid $20.0 million of our first lien term
loan, and utilized $7.7 million to repurchase common shares during
the quarter. Since the second quarter of 2022, we have repaid a
total of $94.1 million in debt, reducing interest expense.”
Mr. Lazarus concluded, “with our strong first quarter
performance and a positive outlook, we have increased our fiscal
year 2024 guidance. We now expect revenues to increase 10% and
adjusted EBITDA to increase 12% at the mid-point of the guidance
range from fiscal 2023 actual results.”
First Quarter 2024 Highlights:
- Total revenues increased 16% to $211.2 million compared to
$182.5 million in the first quarter of 2023.
- Income from operations increased 52% to $17.0 million compared
to $11.2 million in the first quarter of 2023.
- Adjusted EBITDA increased 31% to $25.3 million compared to
$19.3 million in the first quarter of 2023.
- Unlevered after-tax free cash flow increased $6.2 million to
$24.1 million compared to $17.9 million in the first quarter of
2023. The unlevered after-tax free cash flow conversion rate was
95% in the first quarter of 2024.
Operating Network Update:
- Cruise Ship Count: The Company ended the first quarter
with health and wellness centers on 193 ships and an average ship
count of 188 for the quarter, compared with 179 ships and an
average ship count of 173 ships at the first quarter of 2023.
- Destination Resort Count: The Company ended the first
quarter with 51 destination resort health and wellness centers and
an average resort count of 51 for the quarter, compared with 51
destination resort health and wellness centers and an average
resort count of 48 from the first quarter of fiscal 2023.
- Staff Count: The Company ended the first quarter with
4,082 cruise ship personnel on vessels, compared with 3,665 cruise
ship personnel on vessels at the end of the first quarter of 2023.*
* First quarter of fiscal 2023 cruise ship personnel were
below full count levels as passenger load factors were returning to
normalization post COVID-19.
Liquidity Update:
- Cash at March 31, 2024 totaled $66.6 million.
- In the first quarter, the Company:
- Received $51.7 million net from the completion of the warrant
conversion.
- Repaid $20.0 million on its First Lien Term Loan.
- Utilized $7.7 million in cash to repurchase 606,386 shares of
its common stock.
- As previously announced, the Company’s $20 million credit
facility expired on March 19, 2024. The Company noted that
given its strong liquidity profile, it does not currently plan to
renew this facility and will continue to evaluate entering a line
of credit in the future.
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 Adjusted
EBITDA and Adjusted Net Income (non-GAAP financial measures), the
definitions and reconciliations to their nearest GAAP equivalents
for which are presented below.
First Quarter Ended March 31, 2024 Compared to March 31,
2023
- Total revenues increased 16% to $211.2 million compared to
$182.5 million in the first quarter of 2023. The increase was
principally attributable to our average ship count increasing 9% to
188 health and wellness centers onboard ships operating during the
quarter, compared with our average ship count of 173 health and
wellness centers onboard ships operating during the first quarter
of 2023. In addition, we benefited from our initiatives to drive
revenue growth and profitability in each of our onboard health and
wellness centers through enhanced pre-booking of guest services,
onboard guest engagement and experiences, our guest service and
product offering innovations, and the disciplined execution of our
complex operating protocols by our onboard and corporate
teams.
- Cost of services were $144.0 million compared to $126.3 million
in the first quarter of 2023. The increase was primarily
attributable to costs associated with increased service revenues of
$172.2 million in the quarter from our operating health and
wellness centers at sea and on land, compared with service revenues
of $150.1 million in the first quarter of 2023.
- Cost of products were $33.5 million compared to $28.3 million
in the first quarter of 2023. The increase was primarily
attributable to costs associated with increased product revenues of
$39.0 million in the quarter from our operating health and wellness
centers at sea and on land, compared to product revenues of $32.3
million in the first quarter of 2023.
- Net income was $21.2 million, or net income per diluted share
of $0.21, as compared to net loss of ($15.9) million or net loss
per diluted share of ($0.17) in the first quarter of 2023. The
$37.1 million increase in net income was attributable to: (i) a
$29.6 million positive change in fair value of warrant liabilities;
(ii) a $1.7 million decrease in interest expense; and (iii) a $5.8
million positive change in income from operations. The change in
fair value of warrant liabilities during the quarter ended March
31, 2024 was a gain of $7.7 million compared to a loss of ($21.9)
million during the quarter ended March 31, 2023. Net gain in the
change in fair value of warrant liabilities was the result of the
remeasurement to fair value of the warrants exercised during the
first quarter of 2024 and changes in market prices of our common
stock and other observable inputs deriving the value of these
financial instruments.
- Adjusted net income was $19.3 million, or adjusted net income
per diluted share of $0.19, as compared to adjusted net income of
$12.3 million, or adjusted net income per diluted share of $0.13,
in the first quarter of 2023.
- Adjusted EBITDA was $25.3 million compared to Adjusted EBITDA
of $19.3 million in the first quarter of 2023.
- Unlevered after-tax free cash flow was $24.1 million compared
to $17.9 million in the first quarter of 2023.
Balance Sheet and Cash Flow Highlights
- Cash at quarter-end March 31, 2024 was $66.6 million.
- Total debt, net of deferred financing costs, at March 31, 2024,
was $138.6 million.
Warrant Exchange
On March 26, 2024, the Company announced that all remaining
public warrants had been converted into common shares and exercised
or canceled, generating $51.7 million in net cash proceeds during
the quarter ended March 31, 2024. Over the five-year exercise
period that expired on March 19, 2024, a total of 24,034,310
warrants were exercised, generating net proceeds to the Company
(after deducting applicable fees) of approximately $54.1 million.
As previously announced, a total of 19,270,733 warrants were
exchanged for the Company’s common shares pursuant to privately
negotiated warrant exchange agreements with certain holders of the
warrants. The Company’s fully diluted share count is expected to
approximate 105 million as of June 30, 2024, as most of the
warrants were converted for cash.
Share Repurchase Program
Subsequent to quarter end, the Board of Directors approved a new
share repurchase program authorizing the Company to repurchase up
to $50 million of its common shares. The share repurchases will be
funded through the Company’s available cash.
The Company may repurchase shares of its outstanding common
stock from time to time on the open market, including through Rule
10b5-1 plans, in privately negotiated transactions, through block
purchases, or otherwise in compliance with applicable laws,
including Rule 10b-18 of the Securities Exchange Act of 1934, as
amended. The timing and amount of stock repurchases will depend on
a variety of factors, including business and market conditions. The
share repurchase program may be suspended, modified, or
discontinued at any time and the Company has no obligation to
repurchase any specific value or number of its common shares under
the program.
Second Quarter 2024 and Fiscal Year 2024 Guidance
Three Months Ended June 30,
2024
Year Ended December 31,
2024
Total Revenues
$
216-221 million
$
860-880 million
Adjusted EBITDA
$
24-26 million
$
95-105 million
Conference Call Details
A conference call to discuss the first quarter 2024 financial
results is scheduled for Wednesday, May 1, 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 10188231
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 10188231. The
conference call replay will be available from 3:00 p.m. Eastern
Time on Wednesday, May 1, 2024 until 11:59 p.m. Eastern Time on
Wednesday, May 8, 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
195 cruise ships and at 50 destination resorts around the world.
OneSpaWorld holds the leading market position within the cruise
line industry of the historically fast-growing international
leisure market and has been built upon its exceptional service
standards, expansive global recruitment, training and logistics
platforms, irreplicable operating infrastructure, extraordinary
team, and a history of service and product innovation that has
enhanced its guests’ personal care experiences while vacationing
for over 65 years.
On March 19, 2019, OneSpaWorld completed a series of mergers
pursuant to which OSW Predecessor, comprised of direct and indirect
subsidiaries of Steiner Leisure Limited, 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 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.
We are not providing a quantitative reconciliation of
forward-looking non-GAAP financial measures to the most directly
comparable GAAP measure because we are unable to predict with
reasonable certainty the ultimate outcome of certain significant
items without unreasonable effort. These items are uncertain,
depend on various factors, and could have a material impact on GAAP
reported results for the relevant period.
ONESPAWORLD HOLDINGS LIMITED
AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED) (in thousands, except per
share data)
Three Months Ended March
31,
$
%
2024
2023
Inc/(Dec)
Inc/(Dec)
REVENUES:
Service revenues
$
172,209
$
150,121
$
22,088
15
%
Product revenues
39,017
32,334
6,683
21
%
Total revenues
211,226
182,455
28,771
16
%
COST OF REVENUES AND OPERATING
EXPENSES:
Cost of services
144,025
126,328
17,697
14
%
Cost of products
33,530
28,265
5,265
19
%
Administrative
4,057
3,570
487
14
%
Salaries, benefits and payroll taxes
8,493
8,921
(428
)
(5
)%
Amortization of intangible assets
4,144
4,206
(62
)
(1
)%
Total cost of revenues and operating
expenses
194,249
171,290
22,959
13
%
Income from operations
16,977
11,165
5,812
52
%
OTHER INCOME (EXPENSE)
Interest expense, net
(2,955
)
(4,610
)
1,655
36
%
Change in fair value of warrant
liabilities
7,723
(21,900
)
29,623
135
%
Total other income (expense)
4,768
(26,510
)
31,278
118
%
Income (loss) before income tax
expense
21,745
(15,345
)
37,090
242
%
INCOME TAX EXPENSE
579
559
20
4
%
Net income (loss)
$
21,166
$
(15,904
)
$
37,070
233
%
Net income (loss) per voting and
non-voting share:
Basic
$
0.21
$
(0.17
)
Diluted (1)
$
0.21
$
(0.17
)
Weighted average shares outstanding:
Basic
101,467
93,418
Diluted (1)
102,933
93,418
(1) Potential common shares under the treasury stock method and
the if-converted method were antidilutive for the three months
ended March 31, 2023, because the Company reported a net loss in
this period and 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 loss per
share related to stock options, restricted share units and
warrants.
Forecasted
Q2 2024
FY 2024
Period End Ship Count
195
198
Average Ship Count (1)
186
189
Period End Resort Count
51
51
Average Resort Count (2)
51
51
Three Months Ended
March 31,
2024
2023
Selected Statistics
Period End Ship Count
193
179
Average Ship Count (1)
188
173
Average Weekly Revenue Per Ship
$
81,708
$
77,076
Average Revenue Per Shipboard Staff Per
Day
$
549
$
542
Period End Resort Count
51
51
Average Resort Count (2)
51
48
Average Weekly Revenue Per Resort
$
16,791
$
16,973
Capital Expenditures (in thousands)
$
1,206
$
1,319
(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 (loss), adjusted for
items, including increase in depreciation and amortization expense
resulting from the Business Combination, non-cash stock-based
compensation, impairment charges of long-lived assets 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-month periods
ended March 31, 2024 and 2023.
We define Adjusted EBITDA as loss from continuing operations
before interest expense, income taxes expense, depreciation and
amortization, adjusted for the impact of certain other items,
including non-cash stock-based compensation expense, impairment
charges of long-lived assets 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 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 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 first quarters ended March 31, 2024 and 2023 and
Adjusted net income per diluted share for the first quarters ended
March 31, 2024 and 2023 (amounts in thousands, except per share
amounts):
Three Months Ended
March 31,
2024
2023
Net income (loss)
$
21,166
$
(15,904
)
Change in fair value of warrant
liabilities
(7,723
)
21,900
Depreciation and amortization (a)
3,761
3,761
Stock-based compensation
2,094
2,591
Adjusted net income
$
19,298
$
12,348
Adjusted net income per diluted share
$
0.19
$
0.13
Diluted weighted average shares
outstanding
102,933
96,589
(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 first
quarters ended March 31, 2024 and 2023 (amounts in thousands):
Three Months Ended
March 31,
2024
2023
Net income (loss)
$
21,166
$
(15,904
)
Income tax expense
579
559
Interest expense, net
2,955
4,610
Change in fair value of warrant
liabilities
(7,723
)
21,900
Depreciation and amortization
6,209
5,509
Stock-based compensation
2,094
2,591
Adjusted EBITDA
$
25,280
$
19,265
Capital expenditures
(1,206
)
(1,319
)
Cash taxes
(21
)
(41
)
Unlevered after-tax free cash flow
$
24,053
$
17,905
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version on businesswire.com: https://www.businesswire.com/news/home/20240501235211/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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