Earnings call transcript Q3 2022

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Operator

Good day, and welcome to the OneSpaWorld Third Quarter 2022 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Allison Malkin with ICR. Please go ahead.

Allison Malkin

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

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

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

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

to now like Leonard. call to would turn over I the

Leonard Fluxman

the I'm very results. net report Allison. our company's XXXX Third and Conference Thank revenues, highest Call. Quarter history the quarterly Good quarter with to OneSpaWorld's to in third morning, you, which were welcome pleased Results

flow. XXXX highlighted rising by and record-breaking third cash positive net the revenues Our positive net performance income quarter, above XX% was

strength returning despite work to all implementation our ships operating dedication load capabilities. since I'm of product our these levels sales virtually across and and to achieved offerings results impressive return and innovation outstanding our of team's growing enhanced historical and and below continue hard operating key high to of drove from levels This including service, services We remaining service. metrics. passenger as productivity proud

on third of for the at long-term to company's Our for of the centers attest drive preeminent during OneSpaWorld adverse land period pandemic and unique line impact out partners coming health our stakeholders. business sustained and to value positioning an on our resort and increasing unprecedented sea quarter as results extraordinary value our cruise operator and growth wellness

and to profitable As we look model strategy business long-term growth. generate sustained ahead, we our expect

Now of the quarter. turning highlights our to

positive an million including XXXX, we was EBITDA of free cash quarter a loss million, the million $XXX.X health after-tax $XX.X $XX.X ended of million $X.X destination from that resumed million galena Total resort Adjusted revenues the reflects quarter in operation were contribution as $XX.X and contributions growth increase million quarter flow. This from in from with on reopened of XXX and of liquidity $XX.X that spas. compared million, the unlevered of centers to total of $XX XX ships and XXXX. the third third

Our continued the return flawless quarter. to in service

commence Partners. Line service new X quarter service on third us X ships by returned The builds saw to Cruise ship and board

XXXX. of voyages and XXXX compares to which end, at This ships XXX quarter health second of centers of we quarter end. versus voyages quarter resume that ships voyages XX by the board wellness as the of QX had the At on had end and ships, of end XXX XXX resume resumed that

on of operating to the ships year. expect by We the be XXX end

Cruise introduced builds Line service the additional by into that will quarter, centers During we X fourth operating anticipate on Partners. and ship wellness be health new

see our services. for by to We record ship guests continue demand cruise

operations. high continued we for to levels, our period ships on of during QX third spend XXXX recent XXXX. factors Average most per to day cruise services. compared quarter demand operating with for Key remained favorably the comparable performance, were quarter XXXX our compared below historical and guest XXXX load up and digits very While the per see board revenue were metrics pleased normalized double third staff

In we service our and business load short, more normalized innovation from model. to productive the return the favorably pandemic third as factors were and efficient to prebooking to compared are on In organization, we emerged improved offering level of to showcase penetration even for gas addition, more also have more and a the driven of by percentage quarter metrics attractive These training. and a a XXXX. eager our stock focus continued revenue operating in

most the to efforts we demand our yet are are factors, load stopping are accelerating on lines experiencing prepandemic cruise not be board. our robust factors, for at we While of aggregate services and above load

This By to on the XXXX. very vessels other confirmation Our London we by website quarter, and had third we from One Academy end training of applicants, World we The Wellness X,XXX cruise our the since October the and expected the voyages, end to be is Wellness and of record expect vessels XXXX. London X,XXX generated at in a of in Academy Wellness applicants. actual Academy The personnel December X,XXX demand of of up global XXX% training facilities. continues for experience personnel ship leadership further strong employees -- XXXX, have reopened health trained from and London number on wellness QX a certification.

made extraordinary model, all throughout team we value actions advancing operational our positioned and continues strength an and We the quarter model. strong destination and our and line collaborative that even our With to XXXX OneSpaWorld financial resilience business look than demonstrate cruise team, to partnerships, more believe dedicated began beyond stakeholders. the performance to our fourth increase forward better resort OneSpaWorld we quarter with before. of and third performance ever and our a for operating have Overall, confidence

quarter third liquidity and comment Stephen? further will that, turn on our to over who results I position, Stephen, With the call will

Stephen Lazarus

execution everybody. led efforts sheet. to service our revenues morning, further to third Good return and a of Leonard. as well record performance positive you, operating Thank strengthened In a focused quarter, the balance as

XX, $XXX.X the quarter million total three include compared million third and ships XXX of wellness of from at centers XXXX, our and revenues $XX.X of the spas. September XXXX. months quarter the to derived resumed health at in third ended health and highlights open generated onboard were in the centers XX Some voyages having destination primarily revenues wellness resort our and operating The as

$XX.X quarter revenues services compared were $XX.X in the the XXXX XXXX million months through primarily ended $XX.X quarter wellness million quarter, associated resort with from million cruise to Cost The centers million XX, and our revenue costs XX that the the attributable centers related during of company's three health e-commerce resumption product $XXX.X third XX sea and quarter. of third on was and service quarter at and spas at The September ships sales costs revenues during operating of increased health the and our the website. the to in and timetospa.com the to with of of land at to opened increase operations related in service were XXXX. wellness destination were increased compared primarily of

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

primarily operations XXXX $X.X to the was improvement The XXX Net third net health was the the onboard million of of voyages. having in in from loss million income derived quarter quarter million from of and change $XX third a centers ships income compared a wellness $XX.X of in resumed XXXX. result

income was income EBITDA Adjusted or $X.X third EBITDA positive of loss was as third This adjusted of that quarterly the adjusted of $X.X million to net loss the loss the adjusted million $XX.X company since diluted last COVID-XX of the fourth in or per represents EBITDA onset recorded year. $X.XX $X.XX to the period of net of adjusted an compared quarter of pandemic. Adjusted the $XX.X XXXX. net per share quarter compared in million share net million

We ended of total quarter $XX.X with the liquidity million.

the full second period which of ending million In under million rate During on that facility. $X this the repaid at credit, drawn under million loan, leaving we loan, the repaid carries lien available the $X term our a on million quarter, remaining we X.X%. had with remaining plus $XX October, interest our LIBOR line $XX of

to continue utilize facility. generated to expect this We extinguish operations to debt cash from

compared contracted as time, it our million of substantially million pandemic In we unlevered to on health relates cruise XXXX. I at after-tax negative establishment $X.X third XXXX, for continue quarter -- adverse of business. the the to in and wellness following all flow our normalized from free of to $XX our cash the third refrain our centers outlook a this board the of was quarter, guidance providing operations ships COVID-XX on of impact the pending

revenue, until debt annual foregoing, model the adjusted fiscal sheet, growth balance operations for a to net highly earnings continued to adjusted business positioned of our generate we us maturities March deliver and XXXX and expect complex positive report of our in and cash material has EBITDA strengthened well XXXX, to and year-over-year income. GAAP net no the income Overall, Notwithstanding innovating positive XXXX ramp and flow. continue

you could call Visa, With up if we open please. will the that, for questions. that do

Operator

today comes with Wieczynski from Our Instructions] [Operator for question Steve Stifel. first

Steven Wieczynski

believe that that and profitable that back to I prepared detailed a guidance point. that this, given so. not $XX the we mean, high-level So there shouldn't mean, But to about as base threshold, let's did, easily exceed think look, understand remain think about any for of start patterns stable if say, EBITDA we XX pretty to not or more give a Is months consumer a business reason capacity I assuming I perspective, larger you're spend next this EBITDA from million at XXXX. in the XXXX,

Leonard Fluxman

questions. a the jump let's for quarter. into quarter. Thanks But congrats your anyhow, on good

would I to we more a see environment. in used our Okay. to we do like much as do I into the And settling are model. predictability and as And we because give guidance hear see more lot Look, we much believe normalized a you. Stephen as

said having manner still positive will let's in once forget many us that that, banners a not they levels. that load back are many, are However, XXX% impact to their type come and legacy factors there or those below

quarter second get Some of the before next of there not may year. them

We the the large banners already into at Caribbean. XXX%. Ships moving are have two now

with thus So quite said look may 'XX, what we've spend, before know I experienced We're of what, very, the we of continue there sure have not we very next if if have to which kind through robustly far, mild-ish. quarter like. But expected demand load third to they in year. and continue be what compression said, the continues or opinion being anything, the those particularly the upwards. that although 'XX, be we we factors quarter, second if in move been see that first expect that's going that strong And still any, just to think to of into to we recessions on and

are not the we looking closer give moving the guidance right look, point. time getting for, is So ready you're this this to but to at

Steven Wieczynski

think answer Okay. a but you thought I take me really shot a at would there, detailed give I it. didn't I

has cash second inflected. here So flow question free is, obviously, the clearly

left your You've excess stock of timing more stock. and if million million, of own exhaust got gone, about single-digit cash $XX wondering that point, then been potentially And your And of makes just wondering where do term to buying you I when could on your loan. think range. of maybe flow? is some go $XX terms once that start sense guys at you in second the about I obviously, upper stuck rest lien from it mean, and you go in it's million $XX out you back this thinking some there kind for guess

Leonard Fluxman

most and Even stock given to probably the very itself, liquidity which sense an stock, accretive reduction in above probably in rate make is accretive, interest doesn't around going of buying well immediately the two, mentioned XX%. be And right is than back and at more rid stock, our the getting just now. focus that's the back of buying

increase want that's we digits. as from extinguish to at the two do what fast possible. time, market same thing in as continue look back at then stock So what the do single the because double things the biggest simultaneously other that's to holding moving into we is to the liquidity And can

Operator

from comes William Blair. Zackfia question Next Sharon with

Sharon Zackfia

questions. see nice business. momentum to Really of guess the in I the couple a

choosing so that and happening you're my gross your more for the apologize something margin better we of dynamics the that prepandemic a here. I Just margin, services services out services, Is battling But the of that's of that might consumer 'XX margins function nicely and into the value-added couple of if mean, First, getting voice the I been it's something in 'XX. last flow-through ahead to quarters. on trying change kind gross levels for of figure of there's as that? on go business structural for

Leonard Fluxman

certainly did has we remember, with moved want demand well. as Sharon prices towards and there's percentage first a expensive -- a longer structural the more last services. quarters on frequency pricing, lean we not as doing yes, more Look, lot demand sorry to I the pushing of more our both revenue. percentage But services. of think We're retail so of into And services year. operating pace hear total to you up total X moving into lot land keep changes, a during take possible longer, sea the

our on really, changed to structurally see. I as think you really as have lean business can it's that positive such run having tried possible the wherever a possible. we've influence menu But as We

I of as P&L So through well. as in demonstrated all has has think flowed quarter that second the quarter started the in and this

Sharon Zackfia

the think on optimize and lot. seems have and XXXX like to crisis, had and there's seen I to used a you think you've like staff prebooking towards you've day. of has SPAs? to occupancy that you utilization where following some just you metrics, been give to that which moved more think shift as something as Do per that you've that, well back the per be It -- something learned I this into revenue change better just above able perhaps was. is Do you've consumers if

Leonard Fluxman

Yes.

it's mean that I look, you everything So a of combination mentioned.

store all -- least day strong function of per a XXXX. and revenue them. on starting higher still at that's XXX%, not now is both And at per not Our is substantially ships of than demand

be materially higher, when to should per still penetration off legacy at your I digits. It's towards the last higher double double started we in back obviously, starting slightly compared digits is higher. so a revenue to staff say, that. And going I above or 'XX, the it's to was year XX%, guess high move

that continues be to positive. So very

prebooking banner, fourth the which of us the not large our hit again despite grown quarter, fantastic adding beginning third will the has that's quarter, a banner. and And first in

the the because of their So that too will facilities spas the have types the what of producing a of positive and impact on spot. newness and and incredible we're ships

banner So think be impact late the on because positive board, fourth for once will I will just first too which quarter be quarter, that get next a we quarter impacting will have the year. that bookings first

Sharon Zackfia

then And last me. question for

seasonality of given would You beat I more the internal you normal because if beat wondering don't half if third I the by that through to XX% a this fourth you year. are or as I But at expected the quarter, call, last guess, in the if improving relative much. line still quarterly by know consensus And quarter. quarter? we your top had much I'm the consensus you acceleration projections you kind sequential still like load so the see of recall in expect factors overachieved, second

Leonard Fluxman

weeks part. question. being to Year. of Definitely, good And return to for Thanksgiving the off of normalized everybody decent week get But excellent up then shoulder did Christmas front going the you more most you a of starts New seasonality. Yes, X October before obviously sort November, get go start. to the very through for loading a period we're then December

it for has going demand pretty still far this sort traditional, just us will be stellar. I is but decent remained thus more be So believe to of because

Operator

from Cowen Rakhlenko comes Company. and question with Next Max

Bradley Jamison

on Stephen Jamison Congrats first. for quarter. great a Bradley Leonard Matt. and on is This

I average into we today is? and you the as dig And could increasing how pricing guest per taking what wonder if First, you spend about go current are thinking forward? metric that

Leonard Fluxman

Yes.

I for guest services. very, remarks, really do digits, haven't continue start my see up average and that certainly so double But We spend will next very to we our probably accretive in versus out. 'XX spend, we demand So average spend given guest as guest we that year. as guidance was mentioned

to year. peak and hallmark pricing or Valentine's continue will call seasons, holidays, certainly going the at summer We Day as to it around next pricing we're look during opportunity

So at setting more for is obviously, in pricing. think stone right we're to opposed opportunistically I there opportunity it going But look further as to it now.

Bradley Jamison

you is Great. And little gears we bit as there to P&L come then versus just kind switching are that best at way think rate move the a the XXXX? payroll what's the costs? as a EBITDA more more And down Or of to staff? of run to of level we you stellar add a normalized in What's about forward XXXX had way to best obviously quarter. margin pretty still

Stephen Lazarus

that into are year, then been we really trying some There certainly not really, as reality And some appropriately play will demand running as additional and here make hire service. just payroll is to next But of forward. have costs move into back mentioned, sure of ahead Leonard positions we've bringing come supported. as lean, is going the are the start return to to to we ships the to business

would expect payroll forward the we and there some in costs. So salary going increase for be to

obviously quarter, The EBITDA the adjusted good. XX% just really margin margin over in really, was really, EBITDA the

play, and to delivery. little to with perhaps expectations into As a focus probably staffing the demand But bit slightly back on overall company. the trade what these is flow business, we've but the in of right? it's should absolute up that economy. obviously, our come 'XX to some improves, dollars our terms board, regards margin for So again, to deliver factors said, deliver as good better and of goes cash always total demand overall moderate happens as depending And levels, remain percentage, our into with as on

Operator

Securities. Miller question next to on Truist move the with Gregory from We'll

Gregory Miller

love partnership more and hear ramp with I that immaterial of if the this appreciate background the start on your engagement? should of higher terribly company, may I'd any not to we the it off material about with like exponential announcement new anticipate just Princess to the be OpEx fitness but Cruises. and partnership to

Leonard Fluxman

Yes.

names to together familiar is We they're some with got offering sense and the that Leonard. a guests penetration of is is space. different into you're Princess of this to something for probably So database elevate makes certainly the out exponential reached trying fantastic of this their and that a modalities, us, terms in feel the fitness they of with of lot certainly

just sort the cetera, a of last meeting spacing, et terms week it most ships have kickoff in studio et cetera. able of space, some onto of of not be commenced We the because rolling will of to accommodate or out all ships,

we're be think -- But do cross-promotional there'll exponential OpEx Princess penetration yet from certainly and this will So opportunity early stages. the expect clauses. of able we've that We see to any the traction we to in not from increase be the sort in that for to make a is highly do the we a terms to database. us. And of that's marketing a in database, attractive they think tend as lot to location female females database of decisions all of participants which lot obviously, know, them,

later think and of look us, fourth terms early quarter. to forward I for that off So program on that's in kicking quarter, we opportunistic, importance demographic. the And how penetrating it's nuanced that's in first the the of clearly,

Gregory Miller

spend perhaps And curious particular I'm share relates But XQ my XQ if your you some alluded morning. X-step a then could it of this call looking this related results. I just guest any follow-up, to initiative remarks impact you about increasing as decrease to the and at was of on X-step particular within you and And program utilization. spoke these back your to elements

Leonard Fluxman

Yes.

training virtual the everybody a of to our that not were return from who had So been them I flawless have our remarks staffers. tremendous But that focus means to hands-on I service, in training, the and adequately was in if, my front board put with amount first can't number making look, and of -- on sure me. to of return lot is new don't we And do we get-go remember remember of a trained. one, service has exactly beginning, what

experienced, So as performance and timers became new improve. see to more we're first starting more our delivery and

And we're of starting frequency. intensification take our managers platform, on curved a more the so And certainly product we drove lot that actually can guest restrictions that lot us and and place on to We're out training, we're new innovation focusing field revenue the improving now at a purse, focus, to this we're as the spend, of it last year. really participation, beyond outside in areas we us putting into obviously, on service IT that performance. were call enables help look sales things drive of the of a

So growing retail conversion increasing egress I guest utilization thing that through and cross-promotion, mentioned the improving spend. was

the And above. we've all of done I think

first see will we a improve of training right ship on in So where focus we and highlighted do these the can any additional remain to or and metrics, we our those our performing key board certain focus one a not the that important think go start lot where for areas certain either the staff board of you against and deploy now. I about port I in perhaps team spoke on we elements for some people quarter, shift of to

Operator

Assia The Georgieva next from comes with Infinity Research. question

Assia Georgieva

could of question in I a results. Fantastic as to maybe you some the a increase the basis, I of revenue sort ask the have we million key in very sequential quarter. revenue. Great XX%. the of happy almost to but terms closer was that drivers If identify drivers… XX% be ships on increase job. see service, I more able about key $XX is in Would a understand to

Leonard Fluxman

Of Yes. ships. the

thanks. So

A There business are is in think has which do more move with And very revenue typically ships do the quarter, in this can to we did spend that things being factors to lot lot sequentially. load guest around more the certainly There it quarter, improve our up strongest I started a our positively. of are certainly right, days. intensifications of service. impact summer. to

ships the many I Alaska to the softer, got slightly we so And XXXX. expected Alaska this helped. on quarter that all certainly And and mentioned for the in being second operating tell Alaska more performed versus know, well offset Great. better. to despite in see you, we I much us was very I area that Europe think And as

Assia Georgieva

And versus it ago. look weaker my seasonally significant the durable up, glassing going on at the to I trajectory If that QX. QX part, of X quarters, that hadn't reasonable? DLX thought been QX, seems it might the which the and we be about years end the by has remainder into quite estimation of Is repay

Stephen Lazarus

as talked a goal So summer, of and we've a about about having we've before, talked repaying previously. the TL you're of by where ahead the quarter

I say continuing think the will. this do at most sooner If we summer. stage, certainly that, comfortable we're to can by than it we

Assia Georgieva

a are and sailings? sounded And affect question, slight the of years, Steven. of XXXX coming X that yes, the That Okay. out last of received people the prebookings one the would that over wallets incentives all last would have possibly basically cycling some into be that of like we some in the

Stephen Lazarus

referring it's I she's onboard the credits think Yes, to.

Leonard Fluxman

To the I free perhaps credits to there's credits are material having usage. the dwindled I Look, I XXXX extent of out imagine being full down anybody Yes. mean have had look, a XX still free that onboard hasn't onboard -- taken a can't -- going the crews? impact. mean, substantially

Obviously, introduce of all positively seen we cruise modifications in is, yield the nears any you us. that as credits form lines know, if perhaps Now recession, onboard have continued to in demand. addition there in towards of order to free drive Assia,

a at obviously need much ago than use extent something that lower us. amenities help were level people say to to probably they assist certain motivating year spend a then but would to will terms least an they as that and that's is So more of in I they're at the try

Assia Georgieva

whatever hoping of you ahead it. Okay. is great as put guys, a us is Fair I'm recession And enough. mild that congratulations, Again, job.

Stephen Lazarus

you, Thank Assia. right. All

Operator

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

Leonard Fluxman

speaking you us ICR All healthy a I want forward for you at We Thank with in results much. right. quarter wish all you to and and Thanks look very holiday when season. opportunity joining we today. to report January happy again, in to XXXX. the this take you February everybody, seeing all conference fourth

Operator

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

disconnect. now may You

OneSpaWorld Holdings Limited (OSW) 2 Nov 222022 Q3 Earnings call transcript