OSW - Earnings call transcript Q1 2022 | OneSpaWorld Holdings Limited

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Operator

Good morning, and welcome to the OneSpaWorld First Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Allison Malkin. Please go ahead.

Allison Malkin

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

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

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

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

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

Leonard Fluxman

while occupancy first COVID-XX, despite OneSpaWorld's call. welcome report guest Financially, reported and Good Operationally, impact revenue always quarter positive in our fiscal year negative with a you, to pleased increase net to key compared variance Allison. very and positive quarter quarter a the mitigated growth. I'm XXXX sequential burn conference operating our quarter. Omicron assuring across first to revenue of and XXXX the and operations, EBITDA voyages, on who Thank to rate. metrics, and morning, our resort consecutive on extraordinary growth results leadership to we saw Omicron's the adjusted start while rates scheduled standard staffing -- making experience. equally continued in staff of the quarter, our adjusted service. income our impact We significant I'm better-than-expected onboard fifth corporate spa our our of proud onboard and team maintaining marking cash a the return included floaters

As to to income. positive we revenue generate expected look accelerate to performance positive and expect our performance trends growth adjusted with ahead, we annual continue and EBITDA net deliver our adjusted sequential quarterly

to trained $XX of ready service saw ships additional resumed resort positive quarter quarter in from and many spas. notably, centers the resort from reopened with growth ended on ships. The revenues both highlights we wellness quarter in our on that staff XXXX, accomplishments centers million. ships million, for cruise destination and continued. quarter, from cruise up and sequentially liquidity ships first quarter, re-embark $X.X XX floaters on spas XX improving of were $X.X million wellness XXX Turning to and XXXX. contribution XXX $XX.X contributions of total approximately million contribution the health and was positive total and the fourth us had We health our most on with the Adjusted -- and from reflects the from that quarter The operation destination EBITDA to land, return

five In we builds. new five -- commenced ship bought new ships services and addition,

end, I the ships and the As all services the had and to year. quarter second XXX on ships at have expect of that by end mentioned the health resume quarter end ships on we XXX wellness and of XXX resumed by voyages centers

services. introduced we During demand cruise will new by health the saw record builds partners. for anticipate on remainder ship of our by and ship XXXX, wellness guests that line centers operating seven We additional service our be cruise into

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

the focus points percentage pre-booking driven and per with spend offering staff day With and break menu. and add was facial improvement implemented to were treatment innovation add-on holiday in and the teen where to above XXXX. percentage and we skin of spend initiatives improving increasing menus tracking biotech guests, spend guest X-step by lastly, intensification and with teens during additional XXXX, revenue QX guests metrics over guest that staff introduction saw penetration Service service included, cross-promotion quarter, frequency needed, by through staff and increase mechanisms through our example, in quarter guest with revenue average more conversion on increased to of to experience positive period spring utilization, to key which the additional per X.X continued contributed first audiences families in the this operating lab in the time solution utilization XXXX. was Growing improved to per guest These growth the high compared introducing no reinforced targeting trainings. program, training, the on and For convert the penetration metrics. mind, we These five guest trainings of rebooking and facials and training. by retail sales teen operating our the over also our

return it to service, top flawless will a continue our ensuring be ahead, look we to As priority.

the been on vessels personnel who've back for our prior applicants X,XXX pandemic, securing travel tremendous quarter and come to XXX to actual personnel had ship second the ecstatic these and end, placed of back response the eager we remain centers. successfully restrictions. to have our have vessels. sea. voyages, Despite end and be members We anticipated overcoming health of we expect cruise team challenges wellness staff on quarter, to At By visas, testing at COVID the a re-embarked and new X,XXX from hurdles,

facilities demand and students certification. Our from further the experience Academy in London with Academy nearly at confirmation training X,XXX of very reopening. This continues training and trained London strong is with Wellness communities global leadership applicants, we our relationships the staff since OneSpaWorld's success suppliers other manage and the spas, in operate Wellness how fundamental our to and employees operations. teams that our the resort crews the with of of guests our and is we our believe with of to our We destination

to XX% and to our of we of and our year-end. stock returned service its impact of company's to pre-pandemic evidence the Further our on expect success ships our welfare have operating We to shareholders. delivered over and by value people on well-being XXX our commitment the

members we believe We've returned Overall, contacted have a promptly our we their cost remain service yet teams Stephen? and and impacted mobilized have even our confidence our made performance the corporate global continues have in team, call financial our demonstrate comment begin ever staff staff or OneSpaWorld all enabled dedicated to our to city performance actions look With and Ukraine. of extraordinary Cruise to first to position. through liquidity our operating to of ongoing who support to Line and returned repatriated OneSpaWorld over to we quarter resilience We crisis, Stephen, team unforeseeable forward better our results first safety all and staff staff with have advancing another resort and by and their turn not before, stakeholders. the strong to service value I'll our that, offering throughout quarter XXXX positioned transport and Ukrainian who of choosing, our our at elect the onboard to of shipboard onboard destination hostilities Ukranian the to onset gateway on them to model. increase of an to to have quarter that second the the With of model, strength homes collaborative a business who will yet the we with facilities. more than our partnerships be and operational

Stephen Lazarus

you, Thank everyone. morning, Leonard. Good

Omicron Leonard revenue. saw and variance to the As in the quarter return impact negative the operating million approximately team the mentioned, first focused of $XX and in growth of execution to quarter service despite a performance positive significant our sales drives

were staff $XX.X European and $X.X open first to revenues will Cost in centers. million to million in pandemic were with Russia's land $XX.X our first the in at who centers, the $XX.X $XX.X circumstances the of at health XX, resumed million the especially the resort service operating quarter. primarily centers some and from related health to XXXX their XXXX $X.X of proud and centers variant. XXXX, first very were war and The destination commitment with and was three now increase of first compared land. given revenues and compared and the health and quarter operations from service months and million ended to are OneSpaWorld centers and operating million of share wellness the our revenues and sea We up the onboard wellness and of ships health of $XX.X $XX.X Ukraine. extraordinary increased our increase in to operating in providing compared staff the I impact quarter fourth was wellness at of to and quarter primarily even on from the The increased our compared $X.X attributable million for were March and XXX sea XX land. to having wellness Omicron impacted to costs on are associated of of to dedication highlights our resumption of in excellence costs Total health for is sea the million products wellness Eastern exemplary, their increased the revenues by team our of members quarter. Cost product services the quarter quarter. from on of costs with associated the at attributable and million XXXX, million our The derived XXXX, voyages primarily

utilize under to to of first current fair a since recorded our was program $X intend at quarter The and million the than loss $X.X $XX.X credit line to projected in the our result ATM compared value $XX.X of million million of million of second company rate $X.X first was remainder At in quarter available the EBITDA EBITDA loss improvement of burn March EBITDA ended availability a that ATM The We continuing was period million prices the million of under of of total of warrants improve, plus with million result not better the XXXX. of value loss The pandemic. million. expectation change positive adjusted warrants. quarterly $X.X the the loss net our represents million. liquidity the $X.X compared the The positive million $XX changes COVID-XX million instruments. million of This fair cash $X as the we do change the reduction the in $XX.X net quarter program. onset deriving in of was XX, $XX operations, the $XX.X of an the to end, Adjusted Our XXXX. financial the from for market million remained XXXX. a quarter quarter with of our liquidity $XX.X adjusted is primarily in value of the in to was

second year. as flow the positive in generate as full thereafter well cash to continuing the expect quarter fiscal We beginning quarterly and for

continued our business business on our it the XXXX GAAP Notwithstanding continue foregoing, fiscal disruption to we not from the incur in due basis. the a uncertainties we will net impact As COVID-XX surrounding relates loss for the to guidance. pandemic, to to XXXX, continue to provide outlook a and to ongoing expect

the for Chad, to if expect and take EBITDA will for income questions. the adjusted we you positive we However, With call positive open that, year. could up line, the please. adjusted achieve net

Operator

you. Thank Certainly.

from We [Operator begin Stifel. will the Wieczynski go Please the ahead. question-and-answer Steve Instructions] come with now session. question will And first

Steven Wieczynski

morning. Good guys. Hey,

you Omicron of quarter, I that cadence would So, the little I a in think in to out could about that guess posted into help want revenue, know And I the million more. in -- the Stephen bit first called EBITDA $X but the dig us question be, quarter. you million $XX the in impact the

And would from fourth impact understand the EBITDA line Just growth actual have seen the what the guys EBITDA you think trying over Omicron to you was. on quarter? sequential

Leonard Fluxman

all EBITDA. number in line that EBITDA reported to ships we almost profile, substantially have factors out headwinds headwind. close going out staff falls when to on top taken you industry Omicron cruise almost down Omicron we ICR, when is Steve, it cancellations, margin spoke low as EBITDA, actually, big service, mean on service line. somewhere as -- services well into related know, at region positive of typically probably top anticipated impact, cruise from high The back it June, So, the our The and of at what of And XX%. impacted load based we in last canceled, about the impact when year, July down as million a EBITDA our yes, adjusted million it got $XX you XX%, you about figure to of the can a $XX as to so close as I the quarantines was as

So, headwind a I $X EBITDA there. say on about would million

Steven Wieczynski

Okay, don't March to if say? through I into great. you're And or going sequentially should April, this accelerate have then, seen question, answer from EBITDA know you I but

Leonard Fluxman

of load substantially of of we and climbing. been sort trough the post climb kind out better Omicron towards of they've to factors, end now started So, seeing the are and February growing

have even well are still above some XX% well and close are banners getting Others there. factors job exceptional Some load of -- of are some getting them are but above them an to XX%. done

continue continues are improve And we've from alongside to load So, improving to what seen. those performance the load our will similarly, factors. factors and improve

So, see strong than demand the improve, to more as which into is ships factors the going the we've move well. to a season Alaska, for as load we seen before, outlook other have also as Mediterranean any pretty going we're

have entered of about next started. to already of second lot Even early So, the quarter already And and a we've of some just very quarter started [Ph] promising. the the reports look Alaska we're I think that or encouraged have some the into. [repositionings] cruises

Steven Wieczynski

obviously, you question second out at guys land-based my just of make is have there's ships or on a And or things? sure would make potentially you be, to even on slow. side to -- April, want that through of that going not sure all want your I I to just fear the consumer board that any slowing there, the seen

Leonard Fluxman

we No, have not.

Steven Wieczynski

Perfect.

it. appreciate guys, you, thank Okay,

Leonard Fluxman

Okay.

Operator

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

Sharon Zackfia

hard the sea. guess as the kind staffed. excess I year, morning. half good fully Hi, in pretty the ships you have back of outside that guess the mind, to the that of to returned you'll or understand question, less associated this all costs it's with that on are of with in I staffing [indiscernible] more be have the backend

the are gross been, to So, how the levels? XXXX. weigh service year, XXXX that relates or there product quarter do half with it you back margins about continue get this for think about both on of to either of Do we remainder I for this those XXXX to the things of kind below might have we are guess, in mean basis need or year? other and think to roughly parity think points of you that closer as XXX this I

Stephen Lazarus

Once we start back quarter the parity. final Sharon, think move the year, I into of to we do getting

few The third back quarter, still in. ships a coming there's

complements the occupancies do could back, improved, We board have approach then end it have margins as on significantly to improved. we too. we the full But be of So, to year close. certainly, expect expect

Sharon Zackfia

for and looks update segment your Maritime 'XX? us as look XXXX, kind in an like of then, for you on what past Great. that. 'XX capacity Thank you we growth can And give the

Leonard Fluxman

Yes.

you XXXX, newbuilds OSW outside ships. then, We're there should And looking taken, remainder six I seven or year. some on be through XXXX, ships, by still coming we're which which as XX expecting total of OSW newbuilds. the we there of out total are XX up Sharon, year-end. this the ships the us number, These XXXX, OSW XXX to a we've of five during about as are introduced. another five newbuild year, In approximately the This newbuilds be through getting So, be to at mentioned, right. mentioned, already a so, should was look

Sharon Zackfia

Great, thank you.

Operator

Steph Please the Jefferies. Thank question next from from go And Wissink ahead. you. will come

Steph Wissink

Hi, good morning everyone.

a there that should the have sea, with We questions, waiting Is thinking versus start about when returned are wanted portfolio we proportionately revenue anything that be those we're to of within are ships ships we conscious that of to to ship? so few larger? per have return those in the water the on still

Leonard Fluxman

know, All ships. than revenues the generally, larger are newbuilds smaller substantially and those large the you as ships generate

in effect period a of do to we this couple So, on you are that through was ships during introducing introduced retired those as less than years. move obviously recall, positive revenues And ones later and the that the as older the significantly smaller, we were as have generated being year. will them COVID go next

Steph Wissink

Okay. That's helpful.

versus think as per the I correctly in of of the XX discounted So, maybe we at in portfolio pre-pandemic revenue somewhat more looking months, be possibility to if be ship average the we average? should is. you being next what versus ship post-pandemic favorable terms about ships hearing revenue Am XX per will pre-pandemic

Leonard Fluxman

big the service. like get in smaller for to important cruising, size typically geographies cruise and ships Australia and mean as just service are we is be could I into I soon like factors passenger largest introduced, we've and say or coming And as the which are certainly, to wouldn't now best Encore. put The heard going have Seas, going. into These that service, Asia reopened good. introduced are Yes. load is Wonder ships larger starts typically with ships Australia lower first the to revenues ships the into been of and lesser Bilss that where they that Mardi you Gras, the but are geographies, ships general, say coming

are cruise So, those smaller lines. typically the

Steph Wissink

right, give a chance to of being the to mid-single little your talk very then, All a bit you revenue digits higher wanted KPIs, helpful. I And about low the pre-book some visit. to just per more level

the said mid- in been I up to think might you teens, high have teens. high

And per little of more and give some been a as you've might be through about what that and Just talk there the those productivity? training post-pandemic of of productivity you revenue design implementing? us opportunity sense enhancements maybe bit kind menu ship a about thinking you're can

Leonard Fluxman

Yes.

different we So, with of it's really business them we the every one the and the line the and what's others month, can the better take platform across others spa through to who working their and targeting, to the are showing where and call way dedicated job. so, right? we're of through and focus of views And the pre-booking cruise a opportunities huge competitor some in engine versus to And percentage monthly don't well some their that are as our action reviews with the the early the doing from without doing have, being analyzed We'll utilization, on results of and that help at, they on. of what now. from practice performance there's our lines frequency, name cruise can is the we them partners that And our goes single companies, where through the that pre-booking top we'll important e-mails, buy-in flash them, take we do where take are. of improve guest them starting we'll onset of they through with other invest it, most focus and not factors And guest geographies. we which or that's focusing opportunities banners penetration, compare them do how looked as this how how what's doing sales then lines to perhaps better show some all each back capabilities we're the with utilize that the working, them, obviously, revenue, we've you go worse, and pre-booking particularly see we exist, been bookings, segmentation calendar cruise to it, service spend but all

some So, dissect we've the happening to been data the on we're for and time are the be able now where more. do that now see talking to utilizing to pre-booking about what's opportunities

Steph Wissink

always. as you. right, very All helpful, Thank

Leonard Fluxman

Yes.

Operator

from The come Please next [Operator go question Assia from Instructions] will Research. ahead. Infinity Georgieva

Assia Georgieva

another it we if of yet morning, Good be next could to of quarters, possibly I wondered $XX Congratulations in sort improving assume is to guys. that the million were quarter the through on three results. range? fair EBITDA going look

Stephen Lazarus

is So, each it's three in it Stephen, it for be the of million the I saying guess $XX that quarters, next range? could you are possible

Assia Georgieva

easily the remainder get we million cumulative year No, Steve. -- I'm above of quite sorry, $XX for could the

Stephen Lazarus

Cumulatively, is answer yes, cumulatively, absolutely; yes. the cumulatively,

Assia Georgieva

think, for and And I you. Leonard, more just maybe separately,

of passengers touched we doing and You geographies, some of of European similar on do are Alaska including reliant past? think in hurdles? rates Or travel passenger have expect because well. in the more standard the on we the the you base, we U.S. Med Should a source number vaccination

Leonard Fluxman

of shifts demand I but for think far itineraries they're in on and itinerary Obviously, some shift lot thus none Med. because those impacted been there Alaska has both has of going able fast. Ukraine, bookings which more maybe pretty what's there's to pent-up given a so even

been or or going confident the the pent-up overseas, than fact pre-pandemic. demand ship two a years very safely, see Mediterranean five I for U.S. to that for locked different I ports feel X.X having content to you see up travelers about in six to on saw get the go think more you're years, maybe

Assia Georgieva

discuss every much pretty to Great. tend last And this question. one We call. on

to us thinking? In made flow new you terms you your the remind your would the positive fact is and you have be of thinking cash, cash in decisions or quarter. future what current uses of given any changes that whether turning Could

Stephen Lazarus

have any yet. thinking our to changes of We made not

the which first stock you revolver, same, of the rate, combination with exclusive, drawn of the million the of LIBOR lien the mutually of that's as $X near lien, know, pay the back has none introducing interest term down thereafter, you in the and on to with million plus company's this look And prioritization perhaps down cash and/or some the or the remains pay second doing dividend use buying a Our has at specifically program. $XX only a be something a X.X%. high

Assia Georgieva

And to chance expensive more start account. able refinance it so be Stephen, paying be to to net-net do Or the would any to debt? than

Stephen Lazarus

In that's carried the organization overall debt by there's being so may reduce the to may terms burden of the that the future would prefer second on occur, we disruptions for of that not less a company. lien, or

we this that in are at So, not We its time on in refinancing million. it want actually point $XX entirety. planning to get of rid

Assia Georgieva

Sure. so That Thank makes a lot of sense. both. much. you, Thank you

Stephen Lazarus

Yes.

are You welcome.

Operator

Ladies like I and turn this to gentlemen, question-and-answer Fluxman conference closing the concludes remarks. any session. our would over to for Leonard back

Leonard Fluxman

you. Thank

serve the just reiterate about I a We like to believe of of outlook from product preeminent effective offering the year, joining business close delivery you. and ships you during excited leader to the the our I'd training rates resiliency the percentage as look of and destination sea land for in book tools. remaining and to advantages wellness the the we'll health tough from new times shipbuild operation Thank business utilization our at operating Health our through on report of resilient centers potential added the all results. contracted speaking as of for service business times, our the achieve the Before well. We order XXXX. to take a we And Beauty of results we're our asset-light competitive you second proven our of innovation category recession shipboard rest our today, and quarter that call, operating increasing targets. an our of when and in to we that in part on with model quarter combined require percentage second only us economic us of increasing small has even look benefits passengers the with services increasing our Thank and forward the and to we in again forward in

Operator

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

now You may disconnect.

OneSpaWorld Holdings Limited (OSW) 7 May 222022 Q1 Earnings call transcript