OneSpaWorld Holdings Limited (OSW) 3 May 232023 Q1 Earnings call transcript

Good morning, and welcome to the OneSpaWorld First Quarter 2023 Earnings Conference Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Allison Malkin of ICR. Please go ahead.

you. Thank welcome Quarter and and Earnings OneSpaWorld's Webcast. to morning, XXXX First Call Good

business. I factors remind as from and on like statements we judgment differ statements. would Before begin, materially reflect statements to affecting and deemed constitute made number our a actual on These may forward-looking be analysis and available based you today, today's current may call only our expectations webcast and to of forward-looking of information certain that results

you undue statements. Accordingly, place forward-looking not on these should reliance

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

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

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

share reporting and first saw exceeded delivered guidance. made and operating Call. Results OneSpaWorld's to to quarter results quarter and First against across fiscal operations I'm our steady of income revenue, our strategic period XXXX, power talented Allison. XXXX adjusted We from team. record you, EBITDA Thank welcome of also start and by The successful performance the very execution and platform financial to pleased excellent morning, key highest reflecting metrics, Conference ever objectives. that our our strategies better-than-expected our an Good the our operating first Quarter progress

strong providing guest on investing Our by to on experiences cruise relentless and in for exceptional partners ship at our across and continuously our centers destination customer drive and evidenced and innovating resort our sea our every momentum performance and serving gains and productivity health land. operations wellness focus accelerating

ahead, As are more about than business we we excited ever our prospects. look

positive guest continued our experiences, introduced The year. second throughout continue to onboard ship health services, quarter wellness our buoyed centers the to service into momentum year, expect addition XX offerings new advances favorable a in and product by and builds of start, is to we off with guest build and this the together

such, increase EBITDA XX% have increase the XX% we adjusted outlook of at midpoint raised and by to and revenues As by total now our guidance expect annual our to ranges.

introduced revenue expect of we which of to including on And scheduled quarter. X the XXXX. year-end, continue are we average At per Turning wellness and to quarter. growth in more expansion strength quarter. health to revenue rising in XX the adjusted representing ships, the with quarter, builds, at than double-digit XXX on weekly quarter operating metrics day ships our across average the per continued the million, first The be shipboard centers staff and new revenue ships Total At the of the revenues of average have we the weekly first grew count per end XXX by $XX.X ship in first XXX million with highlights in second resort. service of $XX.X key had compared the with ever. our best to quarter EBITDA weekly to saw per the ship XXX% end

per over per ship XX% average QX To revenue day end, XX% of and XXXX. increased ship rose revenue per weekly QX staff XXXX, per this from from of

rose factors QX quarter, at rates In this weekly from of 'XX. per also And reflects ships the personnel anticipated on have fiscal growth at of QX resumed XXXX first ship for expect 'XX. all double-digit we actual resort second normalized having end versus X,XXX and had XX% the levels addition, revenue employees on by vessels to quarter XXXX, load cruise average In with voyages. growth of and cruise

balance capital on also sheet comment to addition quarter structure. began profit a we momentarily and will and in growth, Stephen with the revenue improved our second robust As strengthened

end, ongoing extinguished we thereby expense second our outstanding term fully quarter reducing lien loan, Following lowering debt. interest and

of allows reduced stock us short our of our equity associated and trading warrant The and hedging a simplify to private exchanging XX% warrant We exchange week completed XX% our warrants. last interest in for the warrants increase with warrants also by capital reduce and liquidity. float public exchange that warrant structure,

with another visible a highly capturing priorities confident shareholders. as include like and value our that, As opportunities our in results. fiscal With XXXX for and to significant year current utilization I'd XXXX reminder, first ship our focused new cruise quarter capacity frequency, financial to Stephen? the will turn spend, accomplishments increasing on Stephen, and our are in Overall, well over increasing operators new record on expectation to comment guest represent call evaluating to who OneSpaWorld's for line spot retail and we revenues. with partners as are more growth

Good Leonard. morning, you, Thank everyone.

revenues service This average onboard further fiscal morning, to pleased across increase in to our $XX.X ships of health first balance our are wellness the count the ships compared onboard million on with in to health the to including operating was during metrics quarters. during wellness attributable in with the XXXX compared average reported our ship exchange respective warrant XXX and as quarter XXXX. were a and primarily and first completed well quarter quarter sheet, of financial centers million Sharing ship strong that first of XXX key $XXX.X report our of start quarter first the operating improvements count week. XXXX details the ships quarter better-than-expected to of centers as average occupancy as this last our Total performance We we

of an destination first to destination of and average addition, average centers In quarter the compared we XX XX health in fiscal of resorts XXXX. operated on resorts wellness an

product of services to compared primarily and the and Cost million The increase associated of in million in from quarter XXXX. first was million with primarily with to of at health and with first our sea health were the increased products sea and of the land in to costs revenues of from XXXX. compared attributable $XX.X XXXX. quarter of first Cost wellness were revenues in million at $XXX.X of quarter The $XX.X on to $XXX.X the attributable in revenue on our XXXX. service quarter the quarter was operating operating of million million wellness $XX.X million quarter $XX.X product $XX.X centers million $XX.X costs associated first in service increased increase of of compared revenue the compared centers land to

Net of value a negative was The loss our as to $X.X net primarily XXXX. decrease $XX.X of in of in million result the in attributable first a to quarter loss warrant the price. was million the fair the share increase liabilities of change compared negative

of of the first in fair million value quarter is to the gain the of change $XX.X loss a compared the of was quarter XXXX. million function know, in a you share a in liabilities of price and As warrant $X.X

quarter cruise of was onboard million warrant diluted health of income a the net first net of adjusted or derived the wellness quarter in in liabilities, centers $X.XX million compared in ships an in XXXX $XX.X share to improvement from was the quarter. of net fourth loss XXXX. of change $X.X income the adjusted an the and to $XX.X the of million fair primarily EBITDA net Excluding as share operated XXXX. million Adjusted improvement the the result or million $X.X from adjusted compared increase per the of diluted was of increase value in of Adjusted per of or in operations quarter $XX.X number $X.XX loss income during EBITDA adjusted first

$X.X sheet. last quarter to the the the million the million second of year, quarter to Cash the loan. balance at down reflecting quarter to of at debt, of warranty pay $XX $XX compared lien the year. reflected April in second XX. first cash continue exchange loan and end quarter, term end Turning since first the of revolving was year. facility end first million the decrease after-tax This company net fiscal second unlevered quarter was $XXX.X the deferred $XX.X of repayment $XXX.X throughout increased to million XXXX. The of million last Total the to $XX.X flow the at paydown term positive financing and million costs quarter $X at The flow on In of end from first XXXX. $XX.X million of the the compared generate in the compared quarter operations XXXX March completed expects million the cash million to free of was to

we of result XX.X shares the X.X and eliminated warrants. common a million warrants private X and As million public exchange, warrant million issued

pleased and hedges that while to We warrants float interest associated trading increases liquidity short have exchange, which the are capital completed structure, our the simplifies our to were related warrant reducing with exchanged.

on guidance. then to Moving

favorable our We quarter fiscal performance quarter. second guidance introducing better-than-expected expectations based are first outlook on year the and for increasing our while

up of and from For million, the million million the adjusted of $XX to up previously. now previously $XXX revenues in $XXX we $XXX $XX million fiscal to in million to $XX million XXXX, to million from expect range million, total range $XXX $XX EBITDA

expect end cruise We fiscal XX and to resorts. at on XXX XXXX ships operating

the revenue million. quarter, $XXX $XX we EBITDA in million in million the million range and For $XXX of total of $XX adjusted the to to expect second range

an and ship of Our ending second assumes resort count XXX XX. quarter count guidance of ending

count, count as approximately share $XX quarter, be share average shares. in year-to-date our of it the relates million diluted second the addition, share to an In XX.X price would assuming

feel initiatives. Overall, positioning our confident very about and growth we

into favorable are innovation deliver second our our to to expect by call please? strong that, year. open We ongoing to operator, new continue the please services add you new ability service by guest the health experiences, With the for in Operator, compelling driven our questions. the introduce introduced quarter open momentum year, could for encouraged centers you and could unsurpassed start wellness this given and questions, and call and the products shipbuilds up throughout

look you when we Bye results for report Right. us joining speaking today. We with to joining now. for second today. our you, Thanks August. in Thank forward for quarter everybody,

you attending Thank call. conference our for concludes this today's gentlemen, presentation. and Ladies

You may Goodbye. disconnect. now

the time, roster. begin now will this assemble to Question-and-Answer we [Operator Instructions]. momentarily Session will We pause our At

Wieczynski from The first from question ahead. Stifel. go Steve Please comes

Hey Good morning. guys,

if for once industry, color that's we cruise they not SPA Leonard spending So the I isn't if did utilization, come sense. change a to mean but seems you're really across there it customers' in to targets even load patterns your And material going like question, as to would these your terms assuming factors Stephen, continue good a revised that Maybe asking some or this to there of guidance makes us. very But way back your any to still board. I be think assume seem be product or about year, on us the hopefully, would helpful. EBITDA customer ramp pull achievable revised of

Yes.

on into, as it's say difficult for fourth I mean, would COVID I the presence Steve, more better on which well more Alaska more there's So up. very to QX Americans in We're quarter. call, are here less now. all started other very business, hard the a with quite fourth consumer very us It's DK much we quarter is off to our right the upset Europe have with year, mentioned, or QX, and any that less that with European to ships, for similarly even that has the season in said season. in around where continues flying I anything to consensus with really the moving If good spend of think no be demand have guide way robust. a conservative believe, are in you got Americans, airlines this bookings us

load Clearly, we build lines see factors. cruise the continue and to the

our to to is of And have for see partners, Norwegian's the come to we to up with call to trends build continue us. revenue. Some which a onboard forecasted, all originally we continue going little listening momentum had than faster similar listening

good. is demand So

level I think staff. staff. We're all that we with in out all fact, the of longer highly abundance did training no have pandemic during hard selective a person, to great the in be virtual. an now We, starting coming with of the work pandemic, at

can the make to can selective best amount revenue. be that for on so board we staff the with staff and put and most drive And being person where extent we the each

circles You confident I we about know, year. of that think the why feel rest the

I -- your wrong. a I just maybe of maybe have bit with little operators prepared then, cruise comment that you. Good that think you I in or that Leonard, what about around there. more possibly remarks, new lines Okay. Got a along go and you the color it made something misunderstood can But And exploring mean? into might partnerships was phrasing detail

You Steve, were coming market. got the a yet know in of players there's mean I or operators we year. trade this Lanka, we ships and to sold sea sold either some don't new certainly operators participate in at lot of them play. Sri to more I to off India, some see mean, new

So there I really seems yacht it think can to that are Not will whether it's attracting type the be but of that players, players. drive market the offering. ships in albeit but revenue, new inevitable luxury, those that newer be there be the small, small are

what look for makes will us do. to we selectively, so And sense at

the for color. thanks guys, Thanks gotcha. Okay,

Please, from The comes ahead. next go Blair. question William from Zackfia Sharon

I outlook. and to a Hi, Good the on the morning. date question guess trends

know about to of the fourth the does quarter, ramp do kind for rest along you the concerned utilize see assume might Did increased you more lines of the outlook historical discounting? sort discounting maybe And some have of further up line coming need anything I with patterns. year? to of out discounting to spa were of the So in the

Sharon, points. we, the prebook upon window, based or call know, of with perhaps you given have autonomy it. wherever want managers discounting to historically during discounting price higher to our as activity the cruise the we're play always obviously Clearly, to yield spa you

in the and of levels all of classical doing what accretive still down price we're So to are are which to XXXX. some we getting

hold we're being classic. see than need see some pricing, where we hallmark is So and which of better we our with opportunistic And still we we discount highest a still level. of where the holding, it's hallmark

managers we and discounting, there's very to our our going So we as what's trend leaders, a trained gauging banner staff that consumer figure haven't and on. excessive to all carefully right seen fast very, as triage we've and need of if I really our monitor that out spend this demand we see dig And now. we're think we and appetite, anything necessary and very in

to quarter? And higher the you realizing services? something call you stickiness Is some prices going price through there Thanks that you've I been for it, then And thought over think and I about be that. in some would maybe guess, would on did that points talked the higher, you pricing. holidays you able keep I initial that first are the

where are not me rolled We And gives certainly seeing some stickiness but on as have services. banners for we confidence in spend appetite to on just demand much certain that services, the high that the out. our

some as period rolled we that call out we'll of where historical our as staying classical it. December discount it pricing. we to what we working, a being material So of the the sort we're sticky, of little it's But not that peak where we we see it with we've still initiated we need And will. pricing change it, of some just we mentioned where where with seen nothing replace during hallmark

then Okay. last me. And question for

were out a prebooking platform planning work the you Did in complete quarter. how the that? company cruise think are trends of And on first brands? I kind large rolling ramping for of that you on

you lost you the that? Can just I repeat Sorry, there. at end

Sorry.

the cruise just how in first and if you ramping. think banner completed are I wondered that you rollout out quarter. were in a another large pre-booking company So rolling I trends

Yes.

we We a slower its little have with commenced NCL than anticipated.

time. getting t's resources, from partners right at our know, right obviously, the You the

customer, of can customer and but frequency times terms guest We be with not push yield opportunity, as the at know the certainly, know a with we real manage, spends are had. you overall as or better think that to favorable us money a in we we real services and only because hard I prebook cruise to spend to there's booking prebook is to trying lines.

Okay, thank you.

ahead. The from Maksim Please, go comes next from TD Cohen. question Rakhlenko

nice quarter. on Congrats guys. thanks really Great, a

the you're as to about know, potentially you lead if divergence So first, starting any health can looking think and speak see at, your we're as any across you're year you ahead? that or the indicators banners just to of consumers other

transition And No, in haven't that we now. as right period Yes. yet. we're

season over in will moving process So we're the commence of and end to at just in the that starting the May. of ships season are Med, Alaska

obviously, we've Alaska the off So have incorporates on right nicely. longer Clearly, guidance which cruises, be some in process ships got very now. season to tends lower already those little that our cruises are in then, the longer started a but

good -- was positive my year. year more But Med had I I there. us feel as Alaska more I said So will last last again. remarks Steve, a question ships the be Alaska equally because for earlier than we season lot in or should good be think that a to

it. Got

year, And Okay. sequencing If you provide trying few you top correctly, then and your and then to up bit, other you're for I recall speak the which lift. frequency working a things. will do a to growth initiatives can little get ones the you're on biggest think the

So just any updates there?

Yes.

early around is that real all of capture. our the every retail. process and we are So launching new really of tell team focus tracking to Those is some the -- utilization well the we're as as the how focus the but right single doing are are really is and around which the utilization initiatives week strategies and now, where in spend retail they're initiatives, too that spend

direction, we get for pointed of if bodes all can metrics it those the right So in success.

it. Got

last for quick one me. Okay. then just And

a which services softer trending than the product roughly X% revenues are on Your levels, XXXX side. bit above is

we new training, of products, So normalized specifically, remind are as a level far AURs it's what the and on top just about think us initiatives the can that growth? anything staff should as whether you side, product

Yes.

and on moved faster compare up right, go XXXX, pricing and moved So just has service, products. back though, remember, up on to when you it's

an in effect attachment. So to going that's percentage your impact

slumped which to So But don't. attach much, attachment train when selling it it initiatives the really product. on how slump, solution them teach if training are call I hasn't people want to clearly and us, a around we them, retail join as you focused retail

And but opportunity. many when are all doing there's see in-person there the we're not more on were banners focusing successful, doing The ships. we was we're training, it out virtual now we teams visiting that where as training,

improve. we think to areas And so focus to them on we will visits help do opportunity ships, there's where the

clearly, So going we're Hallmark move much happy at pace moved with with where upwards. But where to move catch a we've to higher retail think it's opportunity We there's is. to pricing up to.

it. helpful. very and Thanks Got alot regards. best That's

welcome. You're

The comes ahead. next question Truist from Miller go Securities. Gregory from Please,

upside a offerings Good morning. With for of what exist in the case -- what I'd more couple off may OSW be there what like the to the regards you islands of might could from and material share long-term to revenues? to the opportunity of start question. cruisers, be private kind years, next today

partners been islands. guests. on we I islands some think In elevated think or available of of some for substantially spa private at the have the I island our the experience experiences the cases, services each have, has cruise line

But own their think sort go experience participate that off islands after the do to something and visiting think improve it guests. the developing the extent will to sort to island. to spa islands, us. people private well we in for to of to services clearly, the the well I should overall improve that still we because continue on islands continues and why board are opportunity we services can cruise those I still when continue stay in lines But the find they're support on by the facilities is those bode can and

get resorts some implementing attention of I'm My ships. manicures. the Okay, receptivity operational on there's curious that thanks. media to to or the your or cruise robot in second the feasibility been question,

just could manager? that, robot you repeat you say If did

a The robot by that are ones manicures, human. the handled not

question. All of handled I'm humans. I'm by are our products understanding your not sure

If If to? this is in implementing is as something receptive something you'd be this interested you're well.

critical can was guess, I I et see trained same got easy, able a that care esthetician, it, something in do it knowledge I actually the it have to do do to mean manicure cutical care, look to various mean to a but with of about robot types with cetera. I've as fashion same you and the that you've at as if have Look, well manicures. but we'd looks great yet Yes. our

So I'm certain of I'm that parts could this sure fact juncture. manicures, our dispute or not that's massages, business, into possible the going AI to but not robots at play

leave I'll there. Okay, it Thank you.

Yes.

next comes question Capital. from Champine Loop from The Laura Please, ahead. go

is key. also more about a question Hi, little but my technology, low

cruise of are that lines weekly out this own So pre- at driver significant very a how rollout And we revenue strong ship growth apps to in prebooking to that your bookings, what spike that of as and their helps in is roll drive phase per better trends? quarter? technology

like into I integrate to study give AI that better promote, can something we think at and something to saying looking But time. but this that something just feel will on done automate It's either decision-making right looking we consider, we be AI for is what initiatives the or that or or that is very, I'm we're that marketing to now, other processes that we of will in the extent a clearly information and have in that's at CEO that And great there's look we an looking currently And business that more anything revenue part that extent would data something anything from to utilize board. sent to we're question, and capture, think have into. what's only can those that can at the looking and not we I rev it's right being office. what it's very managers future and produced going I data-enabled into our opportunity, any now the cetera, as place it's we that efficiencies, we can in anything on, over carefully. tech not automate the et say, as being how decisions, then that's

Got it. you. Thank

course. Of

Please, Assia go next The from from question Georgieva ahead. Infinity Research. comes

great and a question. basically congratulations about I'm Hello? up we're fact-checking more kind I circumstances. of have such to Stephen, QX you a on under me XXXX back is normal Good member. It quarter. to of per working productivity staff selling had versus I that numbers? Am off? seems those morning guys probably onboard and glad XX%

going versus you on it to have Yes, that. I'll pull I yes. I'm to versus back it XXXX, 'XX. come

Okay.

XXXX, increase versus from a even at that's XXX? significant point still XXX this to So relative

Yes. Assia, along, QX really of But probably impacted month remember, one of activity good in then that came had we staffing. and Omnicon and XXXX, certainly

little I bit. think spend it impacted a

there it's So to an to very, compare it decent year-over-year. a is QX, Omnicon factor in very there, still, but improvement

I to well. that why very is XXXX doing went whole because industry the where back was a Which year was

Okay.

year be So as air I'll positive do last the of mentioned wondered you was more demand, catch year. this to lot little lift has just have year getting had later European I it a up expensive Do terms with -- terms we'll And year, the should a that And of that bit versus it Or year. people last last expect you more we this Europe? seems you in flying gotten North Stephen logistical that Americans Med Europe. demand? then. expect difficulties in as into more of source

mentioned You and seeing, airfare sort of month the people we I into seeing I And only a out about at talking know, a a look take we demand had that they're are that international think what know, pricing think prebooking ago. that I of transatlantic, of lot you about know, you are bigger can Europe.

that out pricing, some other demand say continues think to let's there's despite be airlines lower offs, come I that strong. have

to from that more get a it think the booking I European a and Europe, reiteration the American seems with mix year. window we without good maybe and by COVID in both will based the North customer the of that line, to this cruise similar -- me impacts upon

we you lifted did, as even started into since see vaccinated. we've coming know, which U.S. more than you restrictions the Europeans to will the And into, as coming they see out we long

more that do think tends frequented into I works but look ways, and feel upon the year and in both confidence based certainly be Americans, So Europeans by taken going and I to positive at. Med, Alaska momentum Europe a data it both this we've Alaska

makes sense. That Okay.

that into to Alaska, in I a wouldn't start, It's Alaska imagine I cold early the early season of you're be had good terms In Florida, being there. it's in seeing you really mentioned want still but May. in pretty

So think And and last a liquidity you've to I how what done season such terms great was see airlift of most of pretty is I point, play my priorities, guess the in much at there question develops. necessary. we'll imminent have job might terms this And a again, extinguishing role. in the

So at one-, X-year forward, the a sheet of sort going on look how should we balance basis?

basis, this think us going for On perhaps a I interest are one-year to here, continue rates we up evaluate later uses they where given cash, again afternoon.

want I to likely to XXXX. continue your of up regarding as relates that's I paying don't is question But imminent. best be to realistically, we'll priority it a down just to debt. Our follow although evaluate uses cash, including potential think payment, dividend

-- to has So productivity that -- a improved XX% it increase. increase approximately it's

I what is had, That plus. XX%

So, okay. Good. you. Thank

you can't end balance too fiscal sheet, much on of we the know, a year if us do towards look think your might give range be obviously, debt you do think the So, -- what have how you you specific. XXXX,

now. Well, just $XXX over it's million

cash we depends has really as how it translates which on you I free much pay we So flow. much after-tax unlevered through we've can off. you know, pretty mean EBITDA to -- given guidance,

number want the So honest. some yet, may don't specific I it a to give that to we be cash all want other or of somewhere range will be in address. things depending what on just to using of

you, Understand, thank Thank you, Stephen. Leonard.

Thanks.

you. Thank

Instructions] [Operator are from questions more no There the phone.