OneSpaWorld Holdings Limited (OSW) 31 Jul 242024 Q2 Earnings call transcript

Good day, and welcome to the OneSpaWorld Second Quarter Fiscal 2024 Earnings Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Ms. Allison Malkin of ICR. Please go ahead.

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

statements. I'd remind and like statements begin, judgment statements. we Before to reflect statements made deemed constitute our you actual on on analysis These be forward-looking a affecting factors and number you available and differ should place from reliance results Accordingly, today's undue not may as call webcast forward-looking only and today to current materially forward-looking these of our may information certain that of expectations on business. based

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

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

priorities. Chief are performance and Operating Financial provide an Executive guidance. today Executive Stephen our year financials XXXX on Lazarus, XXXX provide quarter Then begin key and of will on second Leonard the and Leonard me with Stephen Fluxman, will Officer President; and Joining Officer. more Officer Chief Chairman, fiscal Chief and a details our review update

call to the to begin turn operator call. I Leonard. the of the portion prepared call over our the over to will like Following would turn now the we question-and-answer remarks, to

share quarter conference morning, period pleasure to another OneSpaWorld's It's XXXX to of you to you, Allison. a and all performance. record welcome today Thank earnings Good to speak call. second

partners. operating half business and excellent our platform year. Our once Directors our increasing the annual power quarter, strong off continued quarter's of we our our model an ongoing of an to the beyond program, cruise growth cash of evidences today, of ability and unsurpassed for that line Board operating driven guest first also initiatives free scaling team outstanding experiences second destination flow. by performance an recognizes capping cash of our dividend And drivers, our business our annual again consistent resort generate adopted asset-light our to announced outperformance. With impact provide leverage the integrated delivered our platform, we are guidance The industry-leading and increasing after-tax to growth earnings which momentum

XX% quarter to million wellness XXXX. the of strategic quarter XXX cruise count count towards compared period. cash in an ships EBITDA free count The cash we included of increased for free with to we XX% in million and after-tax million At key $XX.X $XX.X quarter. X,XXX second ship continued unlevered the personnel XXXX. to our of in XXXX. of highlights $XX.X second rate XXX from million compared of to ships of Turning ship XXX on the priorities. ship average $XX.X vessels the to million X,XXX compared vessels $XX.X end, $XX.X At XX% flow of had of million second in was average at unlevered progress XX% XXX our the conversion centers XXXX. The cruise quarter quarter revenues in an of on personnel the compared to ship XX% to second end XXXX. and the quarter quarter million Total health of compared a the during in $XXX.X record compared flow after-tax increased quarter to second ship million quarter Income quarter with quarter the the in with quarter second of continued had XXXX. The XXXX, the increased second increased $XXX.X operations end, ships and ships Adjusted a expansion the on to record

some share you. with highlights me Let

the the we health bringing Icon to X. Silversea highly and year-to-date line new new end, added ship Cruises. with captured builds, quarter, on with the of partners growth new our wellness on we the Sun To current cruise fold. cruise wellness line our builds the ship the one and of in second our in Cunard Seas other opening centers first with visible quarter, First, This and health and new centers this to partnerships follows and opened Princess X

to XXX We operating end expect continue XXXX onboard fiscal to vessels.

value Second, revenue. cryotherapy to new therapy, higher X.X Elemis services and cryotherapy you as recall, services as and products, it our complement new and [ acupuncture relates technology-driven facial and Biotec ] new body our the which introduced LED facial services lightstim augments to we

to We continue few will to entire ramp fleet services next these quarters. the over the new

and total cruise service was per staff treatment of of metrics enhancing and of on simplification We expertise operating growth in from and in the blends. success options our treatments health our per the technology grew utilizing revenue, by This continued which guests growth driven menu focused training, benefits the weekly our in maritime number spa guest, enhancements, and the and key with day, strong passenger per staff per day. revenue center productivity. we wellness revenue Third,

led Additionally, an staff, which attract percentage working to and staff we has continue retain of members to onboard. increasing experienced

also growth and staff reflecting provide simplification higher-price recommending XX%, partners of revenue are we for at which remains sign in the led a of at in and and we our towards workplace compelling treatment services. Pre-booking We scale. as as options, beginning strong product that to to additional skilled to are menu see our environment company. experienced phase of percentage on just more blend services service service These their pleased affinity our members contracts, products and even members are the more with new combined staff

more within Medi-Spa. expand quarter The those XX% services spa that same up continue saw that year-over-year. double-digit spend do revenue we to finally, pre-book pre-book. And than We our to productivity overall not passengers continue see

this our and increase from offering. Medi-Spa quarter first continue the to ships At service doctors quarter quarter XXXX. were XXX up ships enhanced the further in the up financial and XXX and to have and on Medi-Spa second nurses We number ships, end, We on position XXX available we of from the XXX of add year. Fourth, to services onboard track expand remain this we year, of at end to ships offering our flexibility.

asset-light initial was bolstered per an our and mentioned, annual share model XXXX $X.XX Our of quarter. And dividend the the common of of year payment of and close our of and reinstated record term of first Directors business loan first X, we the to balance program our August dividend quarter consistent on payable remain September the business record as repayments strength summary, business approved growth. In and sheet Board as cash of fifth, this are lien on reflecting second to by excited shareholders outlook. our half of of about our report pleased excellent strength quarterly XXXX, with an XX,

near in results of shareholders. With Our call turn is year robust third will details record guidance. that, to more financial Stephen, who the to quarter and continue represent and to fiscal second ability strong and over another in confident expect I'll growth Stephen? on provide both start, increased for XXXX quarter value we operating performance, and our off we long-term. Overall, and the our to deliver to a remain our

Leonard. you, Thank everyone. morning, Good

We in to all of with are metrics pleased strength report across delivery better-than-expected second key the ongoing results quarter. financial the

fair with million increased And XXXX. Net $X.XX health the cash adjusted confidence record delivered increased dividend the primarily to of second second continue income expense primarily EBITDA. program. Sharing change increase am our income, revenue of of in record Board service the the million strong quarter as positive was million was compared last XXX our generating ship of attributable also in second during to We we attributable $XXX.X net count $XX.X in quarter more compared in compared the million $XXX.X $XX.X annual in cash reported $X.X this quarter increase importantly, attributable our million being with more increase million outlook decline the of ended XXXX, total in diluted in diluted centers across stronger count of value ships year. Cost associated of to and million quarter to share second $XXX.X our operating $XXX.X $XX per from in a to the ability I warrant of and and primarily in wellness $X.X with revenues per flow. generate quarter net of was second the to $XX.X revenue, costs our attributable in wellness income ship compared with revenue the value increase centers ships with our other together quarter with onboard primarily a shareholder improvement million revenues income million million productivity detail demonstrated associated XXXX. or the and on increasing of from XXX quarter to and were quarter net second XXXX. with gains and operating were pleased million the the loss quarter in net to quarter to health with of operations. Cost flow average balance $XXX.X cash compared $XXX.X service costs of compared we were an drive earlier liabilities average to of business operations. or XXXX with $X.XX record to products The a a share morning, quarter revenue $XX.X million the that initiation the the services of the period our loss The quarter ongoing continued million second in the the of sheet compared product prior during the million to onboard $XX.X of product again of

during the value stock the observable liabilities was instruments. the change result exercised the remeasurement of and reflecting value changes fair other As the common these price financial inputs know, to XXXX, you value the quarter of warrants in of in our of of of fair the market second deriving warrant

The no compared last as net of primarily $X.XX centers million share as income $XX.X our or from adjusted and are from of year. Adjusted of quarter derived in adjusted in the end. of same there number income income adjusted million the EBITDA period health in second quarter in continued million to EBITDA and vessels gains. Adjusted share XXXX. million wellness million diluted of per per $X.X positive $X.XX $XX.X onboard though, net net compared $XX $XX.X the of to adjusted net operations diluted was income productivity was outstanding Importantly change the or warrants of income of increase

quarter, first our quarter we during to $XX.X of of repaid stronger June over million the have the million $XXX.X of compared now Since of In sheet, we second lien sheet second quarter million free after-tax the million loan balance million our quarter of XX, with second in ended XXXX, term cash $XX XXXX. XXXX. was and balance reduced the after flow $XX.X the to the indebtedness quarter. Moving we repaying unlevered $XX.X $XXX debt cash of total a including to fiscal on million have as

positive expect Moving our guidance, XXXX to second midpoint with revenues quarter to at half. from and strong increase XX% XX% our year, increase first results. the outlook, EBITDA for this the fiscal adjusted on the outperformance of guidance time our We the then in guidance actual ranges now beyond a the have increased fiscal XXXX the second to performance we and

million, expect now our we of range XXXX, million million. previous of $XXX $XXX in our to $XXX range expected million million $XX previous in year guidance and to the million full versus revenue up EBITDA million now to is $XXX $XXX of total million the $XXX from For of guidance to adjusted $XXX

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

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

of quarter guidance quarter third ship assumes summary, we strongly third ending an the and resort XX. In count XXX Our positioned. enter count of

if by growth execute our asset-light our deliver will robust value Thank please and initiatives, our in strategies shareholders up open to ability advantageous could the supported as call? for call and outlook confident Chuck, model. And platform, the open operating our with proven are we for to continue business our that, questions. you you. We we increased

from Securities. with question And the will first Miller come Gregory Instructions] Truist [Operator

curious and Leonard I'm is my spend. post-treatment how product to first trending spend product Stephen, today. relates question

changing Can strong. price revenues trends products types The second quarter resonating quite points any me? more looked seeing of are what you you your with hear Are guests and or today?

momentarily. off just Greg. question. Leonard can, take We thought dropped I the Maybe would he

service out, and benefits continues thanks. demand Sorry, mute. We with be was rolled some Greg. the Product many services strong. we've of the many I see new Yes, on demand simplifications. to very associated

where it. retail being we we just see so attachments And need

there's actually continue think we retail which room good as choices, it I promotes simplify to to improve menu attachments.

we're So retail demand with is attachment. there, the very on and progress happy

terms abroad And potential on to summer, menu you going do of raised more spa pricing, I'm menu stronger is state-size for in a for bit if terms my at of terms this my anyways. little resorts possible, pricing an curious, of alternative? to your U.S. demand many question, follow-up, in position own relates cruises, if look but benchmarking resort of a traveling where of United to menu going resort to and is you're which much try this expect a maybe quite above it's high-end in you spa For how ask understanding, spa a pushback States I'm Americans spa hypothetical much today, is pricing you your pricing. To course, menus? ceiling including, get equivalent example, given the are in affluent than U.S. the you

we land-based single every not so you is that look, I category. mean, banner, always listen, say, look high-end in particular Yes, resorts. would at

remember, mean, and many we I across many, -- demographic different of we go Greg, So categories consumer.

of we you where quite or and determine compare different a certainly our right be should lot if at will, we pricing data for process, pricing. the we still still say, luxury can high-end, we're part budgeting opportunity parcel the an now. We be, So land-based down you where to definitely as look value-oriented. as look may and road, us at there take further we think XXXX, as of opportunity But not

Rakhlenko with The Max next & Cowen question Company. will from come

quarter. strong really a on Congrats

could So can just run and first, the both line, revenue provide margin as it color conservative on you implied top be quarter. seeing, third bottom Seems curious some given like guidance. pretty fourth on additional well implied rates quarter you're and if as the the

and So thinking going just framing fourth you the the how quarter? that's of what's sort are into

is school for we as you has of more quarter seasonally Max, the us, a case, Yes, softer reposition vacation and, productive know, the period shift, been obviously, that come summer much fourth for American the holidays. and out historically, quarter North

XX.X% quarter an atypical a quarter the it's and not implied midpoint at the our than basis. fourth the EBITDA third So to see quarter, softer for is fourth margin on

second to cetera, we've do activity in the So it's delivered not far because short of just would need and do of gives where we et extent repositionings, opportunity us and any the that so. the first quarter, to promotional to type those of

sail the So would and also a the seasonally of that it's begin as I think where reposition. to based expect the of perspective half upon demand from quarter it is during they ships first short what we

Got it.

then congratulations Okay, announcing that's the And dividend. helpful. on

would with thinking around to strategy the the continuing it And of of or carry the versus level growth are be just So about How dividend what's to some curious balance curious, the longer? strategy down even then balancing is debt about debt, over term, okay pay So paydown. the profile you completely dividend? medium pay the that? down you to the debt continuing

most word use Yes, you I the think the appropriate, that balance. is

you everybody As debt. continue do obviously we to knows, know, have

now the of there's comfortable carrying Yes, We have to so between flexibility is repurchase share also dividend. able to we and also allocate the debt program course do like would the a paydown, and repurchases, debt. in that share be the place, we some be

would of mean, a net to be, mentioned turn manageable rather. terms we've so well where think X% -- debt it previously I the level, I X is debt already that below at want we in very

Opportunistically, certainly grow sense, comfortable, just what to I dividend, into will makes rates and come in the may paying depending So, are down most to come down with we time. stock repurchases what opportunity right? aggressive think over drive on happens the play the yes, how absolutely There's the debt. it'll we're interest and the

And just point. it. that Got quick on follow-up a

grow. balance the on continues to sheet cash Your

that some to is stock, what's or the rationale back So for dry to just related having powder that? buy potentially

know, traditionally of of it. line at and expired a as not driver higher that we did our in you is credit than it So is, A has renew point it been. March,

to So be extent it's liquidity repurchase the cash the on have to stock is look, one nice really on side, some yes, able just to that the have to additional to on there's an it and, some always opportunity pull trigger the hand, that.

next The will from with come Sharon question Blair. William Zackfia

that you what where at is good from was I'm kind It way been, about are your that, if some had right which any really I front what enhancements you coming impressive tech manifested already Leonard, going see of what not improving in investments looks in house pike? at talk you treatments accelerate but drive and productivity factors. Can down on now, spot actually back those sure about spas. and like tech really yet the among the of other or per AI And levels. in comments, I some were house have talked know, enhancements of have guest to it you helping think you they've the in

These Yes, questions. good are thanks, Sharon.

So just answer simple first. let me one the

We and of right in the now, going would then in have opportunities, productivity. better onboard, AI to OneSpaWorld. ability office chain nor out and to still will, particularly innings. in there's impact yet. in development certainly not supply But I areas in through They're drive other AI back anything of rolled nothing identification place use the say XXXX, enhancements We're that sort of first any phase.

have enhancing further and happy of operations. excited certainly the we everybody it. start be are respect the very it to productivity certainly tackle shareholders, roll once going we this out, talk So, [ areas to do cetera, that enhancements to It's will some in from will et of we're on have cetera. use ] we very, once to the community, what AI of of we testing, working take it are some the some ready AI it's with in the going stages technology. But fully Obviously, early developed, about for we its with to development, about et to

saw too lot coming of then us about more. gains, up may spas. went So, for out. With to But mean, pickup I but certainly close in of early it ships do it to denominator number respect a to roll guests exciting we our the once a productivity more. we comment, through to see the what was the new it XXX,XXX definitely

The promote more third attachment, quarter. we're demand we which So productivity service menus, all simplification of effectively, start the certainly, at people. during treating our and And the better is continues retail quarter. as that productivity helping led both to

on kind my margin, then of And every beating quarter. product it's model

out figure help Stephen, we're this? well about ultimately can high but trying I are margin I don't anymore, so, go? product seeing to you go? we own sight elevate product -- see what's And line Elemis are drivers the the could of kind Medi-Spa margin the what mean, product in now, can I'm know above of talk of where mid-teens you margin? And how And XXXX, we on

Sure.

There's no it product in real to time. no. attachment point at Medi-Spa, So, Medi-Spa of this services note as relates

not is helping. that So

did relates cost the as the agreement. Elemis. own it we and longer But, a know, companies As yes, long-term supply disaggregating, we of product, no to the into, pre enter you

So go-forward. side the in that of fixed terms cost of is

productivity there, driver onboard. those the in now, biggest see And we're discounting lack promote the just around doing required things improvements you to improvements is the that sales. right order and continued of And being where so, it's frankly,

next Champine Capital. with will Laura Loop from come The question

is about ship. you M&A have thoughts if to your our do Is done at the that of product an there. have your that add business there I My products? so after could product also to sort paying left ways even you of they've we just on or we've there of growth could question beating that e-commerce know be which build talked estimates. that you share customers side additional the need side, wondering business kind e-commerce to looked would an keep I'm lines on is

-- really give sit them Yes. R&D land-based on have outlets. particular I Thanks, the involved ideas mean, Elemis We their in working We certainly our about need. of Laura. in and No, calls. a retail we we're the world a what's don't side. versus lot

and think some more the and we to do we continue you, necessary we lineup is bar don't face enough area, be back body customer mean, even whatever I of in a product listen side offer range. are Elemis certainly when us cases, those [ grow. have own they development I mean, we the -- on use, that needed, We've of So protocols the for the across pretty the retail development to may on large the I complementary we around services than of they some luxury Elemis' provide theirs, product In with are those a the added still to product lineups of needed. range. into have us And we're smaller there. that all But all ] tell and our and by services supported architecture products.

things we coming about new excited And are so from next year. Elemis very

on deal, time, So really have we at own approached look respect to on dominant test the products the because such we a e-commerce, our to to Elemis time and get we'll keep its there long-term and then sells of all showroom put But and no that e-commerce need lot website. do range. With same sell consumer. with showcase have -- we for mentioned, and Stephen as board incredible a on at an as And continue but trial we guests the good side, this. very deal e-commerce Elemis, to our and Elemis is

brought they've we compete in but against don't same not mostly onboard. our we the because buying way products them, that So it's guests are -- that

we and do to something but look sale, the adding in right that e-commerce like we'll be expand it nothing that, e-commerce side. and better to now. doing did worth it to extent do And It's at the than continue certainly might to there's can post-guest We what the looks XXXX. experience

Research. Georgieva question Infinity with next from will The come Assia

start the increase the I that [Technical I congratulatory fact And with have go quite is clearly. dividend Difficulty] both my is occupancy to outlook. don't it's an you to fantastic. think then, the the great the you And reinstated Can QX, that on remember Great deal warrants to and Stephen, a it said ask question Difficulties] ways. we because I with opportunity remarks. date that can [Technical

the has One you levels major the that gotten serve on much of pretty brands of to historical occupancy.

Another lagging today one who is historical have reported still levels. may behind the earlier

So the grow it seems that continue you ship able what that opportunity, with occupancy be beyond might is. greater Is count to to a fair assessment?

So, know, point have much as proportion out Assia, service anyway, a onboard would speaking, I generally that, guests levels. you of gone we historical small pretty to only and occupancies back

they're Some with above even happens, kids. of But that. it's are they're typically them those when you when may cabins that because XXX%, surpassing know, as filling the be getting

our audience really that's not so se. target per And

are their now think not start ships have to still don't and always increment done historically from Obviously, us the plus, that But the not and fill perspective, we for XXX-plus-percent to you fact do significant. marginal XXX cruise they a I'm that So that again. -- continuing opportunity love getting line really when they for I there's that is occupancy, occupancy lots of us.

between any those guys and if -- view Fair basically And product is Royal Icon enough, go the add and mentioned on Utopia. even you of a ships Utopia, of longer I How view of without a versus different do X presenting, without types Silversea much and can these do that demographics because you voyage can would Stephen. I customer you that whether family, Nova, Icon demographic X types versus How voyages. any the a target or kids Utopia Ray on higher-end family-type voyage I it's markets? different Seas, mean, party-type shorter Silversea,

thanks. Assia,

the been and issue way look, a quite And different I I the more going and families different kind training and maybe on, layout I itineraries, partying smart younger demographic, of of market. a is also Royal And across never introducing Icon shorter go bit it's work a it's think as family I caters of choice offering way types for has kids. banners an cruises, on approached incredible that seen little very smart this. And length the think think for by an to demographics, well. Utopia, think us. They're we that to demographic is different Caribbean and more those of types our we've then

as I think are demographics. offering ships, the equally they'll well. Silversea you beautiful kids, identical longer different ships X exciting So as it's very luxury I catering they that itineraries, markets, And X in think do say. no to

continue to our We on been have on there excel recent and as outstanding. well, there results

Utopia, greater penetration Icon, do And Utopia? a younger so that you the may think between family-oriented, you the demographic, have party at more and the market, rate

to It's tell. too early

the extra outstanding. think I think a to period But X, X or makes with they X-day some ship days, amenities quicker listen, for day days time I the shorter mix spa. they've got of is deciding people the of when a including make choices got X because X they're going participate in

I will X I think, itinerary X, think vessels. complement for it's other the chosen competitiveness the days, their that against

decades. first done cruises. this X to. don't time party no, can't and we And see Certainly So any for that X-day this is adapt the I nothing challenges. We've we're not handling

actually was challenge. I of a than more way. thinking was opportunity this an the going I was other

Younger couples as sorry, not. Utopia-type opposed I And I'm is don't spa to you. actually have their I'm at the playing spend kids, I'm kids. time sound better for The ant-kid can product with like and

enjoying you're whether in on kids the with or the way at the ability Icon, remember, family that different ship family But Icon if participating types itinerary put to the ages kids from on couple onboard. things adults programs many different of like doesn't in out laid to the different married ship be. well the or is ship, with and kids, the impede which could do no party It you're the on the

behave. opportunity they Possibly. So see, to better But do younger with no, how as consumer we'll a an group, then the again, look, have to is there crowd?

the could So think certainly an it. be I Icon is don't disadvantaged by yes, it but opportunity,

with right. you And in onboard. actually if of into multiplier onboarding Fair engine enough. gets they to ask one quite spa. are as All prepared brands I terms have may that pre-bookings We in pre-booking what that the your not be mentioned that would may know remarks you, tend to pre-booked attuned or feed that not last spent a And be question. having

opportunity So in this penetration XXXX, we do you the think, what of had versus is in what have terms pre-booking year?

line onboarding we to pre-booking to I We are get as to pre-booking to onboard them done be still of good get at and to scale. mentioned, scale. look, with onto There journey. experience We lot continue a will there still cruise banners move banners is partners So platform think pre-booking continue some different the enhancing our think the and to with to work upwards. respect were

to content. provide continue We

of We views different they to provide onboard, it the pre-booking that and continue to available continue will continue so augment that types journey. what to we is and to improve of adapt

think everything will I move see giving start them, northwards. certainly we they that to pre-booking we're if utilize

XX% at about And we're currently, a correct? rate,

Sorry, you broke question? up there. What was the

XX% at are terms currently we Pre-booking, in penetration pre-bookings? of about

It's XX%.

Pre-booking is now as about we reported. XX% right

sorry. Okay. I'm

you pre-book. is, spend than slightly not a pre-booked a XX% mentioned that that average, The guest, than more on guest XX% or do

ahead, like conference our Fluxman, I session. question-and-answer Please would to back any Leonard remarks. over turn for Chairman, Executive sir. the concludes Mr. go This to closing

half the results you very investor all first you of look you and All meetings. with excited very quarter many speaking report Thank again, our Thanks, much. forward results us we joining Once of the thank we you during about XXXX, today. right. We're to for seeing Chuck. upcoming third when and for

today's presentation. Thank concluded. for now has you conference attending The

disconnect. now may You