OneSpaWorld Holdings Limited (OSW) 7 Nov 212021 Q3 Earnings call transcript

Thank you for standing by. This is the conference operator. Welcome to the OneSpaWorld Third Quarter 2021 Earnings Call.

As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. now of turn ICR. would to conference I Malkin Allison Instructions] like the to over [Operator Please ahead. go

Thank you. Good quarter XXXX morning and welcome call webcast. to and earnings OneSpaWorld's third

conditions nature statements to our Before on I'd only may our alter results current on these statements significant today and pandemic be of not forward-looking and factors flow today's remind continues current could and outlook. constitute webcast our information financial of our to statements. operations, materially forward-looking uncertain actual number from The affecting its ongoing should you call we judgment place impact cash business. and made like expectations and position. impact that undue These forward-looking statements. begin, a deemed you based to may and on as available reliance reflect a dynamic certain differ materially analysis The on and of COVID-XX have Accordingly,

otherwise. the quarter For or statements, do will statements and which earnings furnished today a a and result to be as refer more thorough disclaimer with We you our conference that future whether included third to be regarding webcast, in XXXX in to Form or the on call alter information, X-K. not we is to the events obligation release any forward-looking undertake risks SEC this associated update uncertainties statements any made forward-looking discussion new of the forward-looking of

morning. release refer can this found call. explanation metrics An In earlier to be adjusted this on earnings our of addition, certain the company non-GAAP may metrics in these issued

operations call financials to key to our will would Chief Leonard. provide details Stephen will Chief Officer. more liquidity. our our Financial Officer Then provide Chief and today over quarter like review are turn me on Leonard Joining and a with on the the priorities. Stephen and update I and an Executive performance Chairman XXXX Operating begin third of Executive and and now Officer; Lazarus, Fluxman, Leonard

Third Allison. Quarter you, Thank OneSpaWorld's Call. Conference to Results XXXX welcome Good morning and

third highlighted which year profitability was are pleased XXXX significant quarter. compared our in with We and very growth quarter operating second to prior and revenue performance the by

our encouraged so we that with hard to the to prior are model included on to results service. return The of greatly these enhanced implement business We worked significant progress for initiatives quarter service ensure and consistent position our contributed for to growth a efforts to that want future performance. I to improved team return and their OneSpaWorld strong thank our profitability. tireless to entire

guests led cruise combined bring to experience The visited our resumed to our the efforts destination our wellness team allowed as X,XXX ready of centers this staff ship efforts health outstanding increased year. more an that for back, than and spas. and combined resort voyages Your occupancy at and us train more

sailings. ships the positive During a our maintained ensure We to offerings elevated XX additional guest quarter, level continued of resumed and experience.

notably, with accomplishments spas for higher-than-expected million. continued. to Adjusted EBITDA Total operation ships Of Turning resort generated meet loss we our quarter, and destination service were contribution resort that demand. to our And and quarter million. and in was increasing the health $XX return of $X.X from stopping the a most ended had many XX the from reflecting at we spas. note, contributions We flawless million, reopened on positive EBITDA are the quarter to lastly, highlights centers that $XX.X liquidity quarter. wellness resumed XX locations the of total revenues destination most of

XX and resumed on us reembark quarter year-end. wellness saw ships the staff that XXX services and additional an mentioned, train centers had to and by had As resume on quarter ships on expect we end, XX At cruise voyages ready health to ships.

ship guests cruise saw by also record We our demand for services.

levels, historical XXXX were our below high cruise we compared quarter during also While quarter for metrics third pleased favorably services. remained to operations. performance, normalized period very the operating demand XXXX for Key continued see most comparable capacity recent of with our on ships the

we cruise For ship of saw rate in our centers. wellness health highest-ever and serviced overall the guests penetration example,

have training flawless and top average board applicants Additionally, staff, with who to X,XXX be Ensuring pre-booking placed COVID corporate third vessels. have spend Through challenges a service response priority tremendous while with overcoming will hurdles, centers. X,XXX on ship and vessels to handily visits vessels, on and team successfully year-end. statistics completing are on return more third the quarter, and our exceeded anticipated health continue we our back to In staff going cruise be we XXX them pandemic, team come voyages, in re-embarked sea. been completed these be sailings these the team visas, We quarter. actual service of and guest many and other prior supporting there will to of eager had forward at and testing performance. a our our members tradition Despite XXXX XXX the OneSpaWorld's travel year-end, personnel By of for securing restrictions. XXX onboard the ship at keeping ecstatic our back to new audits expect from to than personnel numerous wellness

demand new product and Thermage of offering including the three Innovation quarter Keratosis IV The launched also Wellness third very quarter. medi-spa training new to flagships. As Academy product, one were see saw trained service experiencing students applicants The and nearly therapy. pleased continued. London technologies, certification, is we reopen and since Academy in micro-needling introduction strong XXX and from In we during FLX, Institute in reopening. six our with a the our leader new

of we cement our agreement. the cruise has covering demonstrating and term leadership To with and sailing to through execution our early its operators, this XXXX, Azamara with strong health ship all further position centers extended sea. the partnerships are continue OneSpaWorld at that wellness ship We delighted Azamara of contract of during end,

our and our virtually expect exemplary further to operating infrastructure always guest global capitalize significant our expand continue enable will staff our on solution commitment we service, and our service, ahead, look we us to opportunities offerings and irreplicable, As product to believe conditions deliver normalize. as global always value our strategy revenue Clearly, pandemic our OneSpaWorld enhance we this devastating to position us expanse seeking through the to long-term across continue our of for preeminent growth stakeholders. and operations, to earnings positions unwavering innovating

quarter operations position. With spa resort Stephen? destination Stephen, Our drive results that of to and powerfully performance platform during hand call the initial and profitable and the will return will team, on business third growth service we positioned strength ship are operating over who resume. that, to confirms capitalize model to as I our the fully long-term comment XXXX liquidity on to cruise our

Thank gentlemen. us you Leonard. and Good ladies for morning, you, joining Thank today.

As reflecting accelerate few saw sales to the Leonard quarter team's third and second the just return mentioned, now year, quarter of operating the and prepare share performance to ability of will under XXXX a expert our highlights. the extraordinary service I third quarter conditions. from

in of of adjusted the was extended liquidity was a revenues $XX.X operating XXXX. total on loss result quarter ended primarily result the on and net of $XX.X $XX.X burn health increase $X.X ships $X on that Adjusted open the the expire was third centers. our and $X positive and and loss today, centers the operations, and million million. $XX.X compared in in for Cost to land, of And driven change derived $X.X reserve remained warrants XX were to receipts. of credit of $XX.X million by primarily $XX.X the land. expectations, the quarter $XX change sea a XX, wellness quarter from of in compared third sea million EBITDA were of million compared The The XXXX end, million together total costs was million plus EBITDA related in Availability of our our the were million warrants. with resumption end. The in of the $X.X resumed third sea Cost reserve at For $XX million At products million third value with the attributable in costs reflect at improvement from in September our negative three wellness centers caused impact and services inventory available quarter. deriving XXXX, of rate increased and health market with of at current in to million as centers in voyages third a primarily a operating instruments. remains in which at costs board and to The land million million and under compared ended the revenues to quarter. program. having service the operations $XX.X of of of compared $X.X quarter in quarter is increase quarter resort, above the as of that at quarter associated $XX.X destination were million Net reduction includes was XX slightly million $X.X health revenues million third with centers from We and quarter loss line quarter in our months operating increased million attributable by is wellness the write-down value prices fair to the revenue the fair to program. The an expected financial timing changes due to product of XXXX. associated to million $XX.X million to under of our inventory inventory under $X.X cash quarter loss loss on of million the operations from pandemic. recorded wellness million the was the COVID-XX primarily ATM of XXXX. $XX.X increased to and wellness was available million pause the The the the quarter health XXXX health of our value our of $XX.X the $X.X the of a

expenditure $XX the as cash number increasing of million expect the of sailings. quarter these fourth voyages between an anticipation revenue some cash and from of offset $X in higher generated We in million

surrounding from we expect the third quarter relates due to foregoing, pandemic, quarter from to results the generate guidance. flow in and fourth as the positive cash our December. in the for Notwithstanding COVID-XX improvement our outlook and sequential to to business XXXX, in compared a continued the profitability not As revenue and operations impact will business provide to we continue disruption it ongoing XXXX uncertainty to the record

and expect the fourth incur With call year. for loss on for We continue open the up to we'll basis fiscal that, please? and net a a to GAAP Operator, quarter adjusted questions.

Instructions] Sharon Please William Zackfia go Blair. ahead. Our first of comes [Operator question from

on far. board hoping a sailors. that on come of you a bit Hi, you're more. good so like I good know morning. metrics and lot are can seeing really expand passengers at I contextualize sounds originally, seasoned It was more who sea the maybe have

favorability So as kind new I'm penetrate and comes I your wondering guess, And understand, that passenger geographies. dynamic, as to seeing then seeing full kind if of how to to across ability or influenced what of pricing more of selling in can well. base that on the cruise maybe board XXXX? normalization kind on of you versus more terms us today discounting you're discounting XXXX like that price just lastly, relative help Also curious all on if you're penetration looks

in I Sharon. take the -- and you jump financially Sharon, few, Susan right. other I oriented. on maybe Look, you're stuff Thanks, that Steve some can of a think can

occupancies across in seeing Delta impacted were say, subsiding momentum the of sort here I positive really are here would negatively somewhat the brands. with all summer. Clearly, We

Some occupancies brands others. had stronger have than

drive better occupancies some had initiatives have of challenges other but there to have on in been better ones. place Some marketing the

than And less at some banners, been they've XX%. sailing the of

cases, digits. XX% our the the So which have in up sorry, said XXXX one that, control, occupancy is single don't of overall, versus double Having in of quarter. and some though, been XX%. our occupancies third every -- we below metrics up

importantly, by operations we're going now end of start dynamically. seeing utilization every XXXX. to I very those get we're spend metrics I very to not of But And healthy as healthy, one see most spend. until quarter first settle up pre-booking we of into frequency. the into of We're seeing said. I we see sort is right which So the normalized we'll expect mean

exactly who and they to knowing want of some to is do spa. when their ship get they they that's of crews the spend want time And a function want experienced that significantly. huge a in and of XXXX, the when the our XXXX, end did to on towards we has what helped were some up also, the of pre-booking the But also banners beginning with on drive drive not of pre-bookings platform

-- out to well, one scorecard flash our And not is to single continued satisfied, be to very metrics that we would pleased recent every every and say reflecting that on very improve. week. continue we're analyze October do reports, if clicking we're single of So, see set just our I the to even we we very

will got I XX out So roll here and as in quarter think Stephen have out And develop said, fourth of bunch operations the a continue ships. and the We've fourth behind revenue and improve us. ships say, the to in is new to roll quarter. to worst we'll I

uncomfortable lines a the we operate the single I the a experience think them of have that for I as one. and possible. cruise positive in across inserting fact, every very, very comfortable as -- as new job has geography done in remarkable think seamless and protocols, presently been passengers making banners And all

an tracing Their the They doing positioned are contact So from job we of experience. is safety working. that protocols working. all lines are really cruise Their amazing are protecting guest tell, can well.

and to obviously, going allows in which penetrate, spa us XXXX fourth and better obviously revenues. get better we're guests more it first the the because occupancies produce quarter for and into here bodes see the So us more of quarter well, to

Thank you.

Stifel. Wieczynski comes Steve ahead. question Our of Please from next go

good guys, Hey Yes. morning.

handily of are treatment? for us Leonard. look like some just comments, I'm some Just -- Could what get comment lot or a really a you add-on a know for -- I post sense look just But us to around or to in and you metrics little you sales increase of -- give trying just add-on your mentioned adding XXXX. those bit of to a well? feel on maybe to how and as don't a that's sales then give that's get into through some So the made better of of up things means maybe a -- lot kind relative to quarter -- October different folks. of into different double-digit the a those trying handily through better progressed if cases. a

to is I up don't any me know pointing bookings me particularly because up by cases, metric But up can digits. trip I across it. metrics out I spend of versus they're to want here up you some In XXXX. more which up as areas to than you guest Fee double different hold single were tell such outside in occupancy, you'd double are virtually nicely, digits.

for well penetration with All lower count. guest of that bodes and utilization

publish bode banners of on improve to better they're think us of we're We've that So of revenues. and I don't doing discuss it's that I from now metrics we're monitor, occupancies for really what data And we such are these And it. Steve, with metrics, the I They as now, during helped we're you, an don't of positive that board, continuing each to see our directors, because well incredible have every these how metrics. some have and can developed And better channel I hyperfocused are performance one metrics. thus those one banner know. higher that you we generating any from that's see get directors struggled of on I watching will measure we too pandemic you spa of so that improvements those we metrics the team. far, across got tell seeing want working. that our week-to-week, the into we tell them, can specifics performance But the doing, team. single incredible the to period every

them the all year. back at partners about having second you. service three sometime point, got of their quarter next I three Okay, at entire and talking I fleet mean, major obviously, in in you when then And think look are of this your

would cash think how I generate starting of going be do guess that -- dividend be always So kind free based supposed -- that to are here, distribution to was decent you flow. at assume guys priority now is to flow paying you point, some very or is your free that, historically cash from question I versus this the of a the a that debt? down this And story. about amount And of guess of on I strong

that the don't the And changed, quarter, of our And consider. rid Stephen And XXXX. position we right. the we'll to -- all second that, to love you're nice So, that's That's cash generate to we're cash get as rate. second at flow. think to that. extent firstly the I obviously, going particularly and can. of about free to able going us as debt, I end following start for has lien, second a And soon going higher we're because the talk of our to the what are something To I us By certainly flow that sort down single we do to interest pay been meeting. focus unfavorable forward think quarter its positive right. Board other we're We'd it the post with options consider then options, do every open of of of

you. Thanks, it. Appreciate got guys. Okay,

question ahead. of comes go Wissink Please next from Our Jefferies. Steph

you. comment want on Good I cost the morning, follow-up operation. Thank everyone. to a of increased

could labor you help a thinking you're with should we taking respect advancement what you And bit menu seeing you're inflation? Anything a there then costing little us price that perspective from cover about? any same to bring pricing, just if to If question with labor be back. share about any is as

to sea in costs. So some as infrastructure Steph, models two On on and differ seeing know, enormously land, the you creep land respect are with cost and we wages.

ground. will the less price say we manning to has manning will We're out the performance this that being staff. not restaurants, not later of labor very starting hours full. and others That actually kind platform. helped EBITDA on and you're opening competition or insulated that that be more economy. protected there's And to we're that are going that hitting remains hyper then model pressure increases sea, will the But some At providers leisure the of there said, Clearly, get I improve or less inflationary other implement. across seeing staffing etcetera, on We us are for up we're that year with seeing very, we're and perhaps on take seeing seeing offsetting etcetera, that pressures some land-based any land. across from we're

pricing we in can put have banners review increases We across certain up. and roll some out take where to place and price we continue

And we've the as that fluid. demand's that have frequency's spend's far. the to in So be us based increases can manner. that None we up, fact successful up, continues negative tell on been you And a impacted thus taken up. have of

So we're far. what done very pleased with we've so

Are basis. capacity something what just of is a conscious that of because great. little sooner little bit XX% that One you follow-up I a part that in in you XXXX bit you've you I to framework back Or a referenced? you that's that's to there around And of benchmarks break finding the you're threshold some cash cash think cash historic happening neutrality. helping just for else flow of was that QX the on to a kind mentioned understand have flow for the be were looking you we P&L even structural given the there XX% get on positive. the that would sooner Okay, you should able turn that want than capacity assumed? of body bit cash us maybe how to that's KPIs of the

playing occupancy that of is, performance couple lower is things I'll even There at yes, of better into at are that, most take important that. levels. the are -- a overall which

enterprise point generating you about expectation get we're excited into we move on cash to is cash move not And neutrality anymore. all into then so back and as that cash the next would which to basis burning to the of positive flow want obviously, an and quickly very year,

operating So improved the piece of biggest it performance. comes from

our We are moment, from benefit in some the seeing at some of costs. continued reduction corporate

support increasing we will more will However, some step of of on as and to to need time, this sailings away. those service to so some return in go start over that a benefit corporate basis, order overhead increased vessels

positive and be year, next it flow the we'll positive as our neutral that we that, cash despite and into very year. we'll is December, expectation flow move in be However, then quickly EBITDA cash in

you. helpful. Thank Very

question Research. Georgieva ahead. comes Assia Instructions] Please [Operator next Infinity of from Our go

glad to Good that morning, of to guys. a closer normal. are starting get I couple things Very questions. had

XXXX, you go penetration first terms the that in think The significant those SEC half rate? through been more we we'll driver spent. will those in offset the those have a one to been the environment have then a But higher of of relates next And helpful. [ph]. spend lot of have I a normal Do the year. in that fair imagine if have, that is probably Is second hopefully, been a assessment?

credits the very posted happens I'd hard say it. that mean credit don't portfolio used on or credit where just It's track that is board. being used is their have to a but spa spend see or against get just much guest their has. We against credits. how helping any it's they spend. they onboard the We ability it's to those what their of that's where a onboard a as So, total no utilize for spend one I board. to It's us see or on credits because don't with onboard helping we'd track much statement we idea. how Clearly, us, spend to the but have target how towards their spend credits credit love in to

Okay.

how had difficult very that that understand try I it's to through I go would to each think but that mentioned into dig barrier track can deeper customer. you Stephen to and able be

can't the utilization we by of us. lines cruise their not and are onboard get the credits give going to spend that and department to tried We've

$XX soon the use we was EBITDA positive program, to the continuing use and close you're further so anticipate question neutral? Yes, on ATM, that anticipate you tend remaining be that. cash given Should My that to like I they do know of second to million? being

to enable $XX remaining it at No certainly the utilizing and which use those would off shareholders and definitive pay prices, decision [indiscernible] to has Obviously, these to just be been do, us million, accretive to regards the would the would extent be. it stock proceeds Assia. we reached with

be opportunistic. we'll and that it's really that is debt. earlier we So translate though, on what the into, will appropriate, paydown feel we'll just the cash an If take in

by opposed whether I to we'll going and to play there not it So time. we'll it it ear point of see out or committing and think kind how to we're as leave at goes this in it use

this Okay, enough. at it program. if to be accretive use you fair that's an would But point, that transaction continue

Yes, correct.

good. Okay,

a Thank all. great much. you Okay, so day. Have

Thank you.

You too.

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

All look the us all call. Thank in healthy holiday you take for right. next want few opportunity report joining all our today And our you to on to very next third wish conferences and quarter fourth and all. season. quarter results we this at upcoming with We Thank we a weeks to speaking you forward when investor safe our happy, year. you,

This today's call. conference concludes

day. pleasant you disconnect a have may and participating for your lines. Thank You