Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the OneSpaWorld Second Quarter 2023 Earnings Call. [Operator Instructions]. Please note this event is being recorded.

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

Allison Malkin

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

I'd you webcast to and we like Before begin, remind to forward-looking available today's deemed information on that call be and may constitute statements. made statements certain

statements. and of our and may business. not you factors from affecting statements materially as based expectations place results only on should judgment our forward-looking of analysis undue these These on differ current reflect today, actual a forward-looking reliance number Accordingly,

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

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

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

Leonard Fluxman

half an OneSpaWorld's that I'm Conference outstanding to you, second year quarter company. first Allison. our pleased to completed Second XXXX Quarter Results Good of for Call. Thank and morning, share results excellent the welcome

by team by by momentum, of operating in our highly positive talented platform. on relentless operating financial key and better-than-expected acceleration buoyed metrics our saw execution our period The strategy across the performance driven focus with our the extraordinary

a income second our we quarter adjusted and EBITDA. result, achieved revenue, As best-ever from operations

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

recognition Symphony of In any a capabilities, the awarded offerings onboard additional Crystal service Crystal levels, new Cruises medi-spa as were vessels services fitness innovative term refurbished our to salon, agreement as with unique exclusive well the the enduring agreement. and Crystal's our be of newly and introduced Crystal we into spa, and Serenity of provider services during

during These quarter. third will be service reintroduced vessels two the into

We are about more prospects. ever our business excited than

is to Alaska Europe destinations third particular an in Our across quarter strength. off performance and with excellent itineraries in key summer our XXXX start, generating

service the in boat the new Oceana joining thus XX second Lady Virgin total commenced focus that and during forward to our for fiscal the XXXX wellness of adding the Resilient our boat the half services, and be to service second ship Voyages year, and ship that advancement quarter, to centers continue the product look and eight the We new guest offerings our onboard into bringing year. Vista on guest introduced of will experiences health count

fiscal the beyond second have with half our our raised year recognition we increase outlook amount time In we second surpassed expectations. and outlook, year, strong guidance of first this our favorable the annual quarter performance for

and by As first adjusted $XX guidance recall, XXXX by quarter year million increased million revenue May. results may guidance we fiscal $X increased reported you when our EBITDA our we in

versus guidance to accelerated an further, EBITDA our outlook $XX additional by guidance our our we and $XX which has first in XXXX quarter. share million to fiscal pleased by the total million very annual provided are raising has led the an adjusted We additional performance revenue

a adjusted our XX% midpoint to increase and by result, expect XX% XXXX now revenues we at guidance to by ranges. year the fiscal versus increase of XXXX, the EBITDA total for As fiscal year

highlights EBITDA to revenues our grew record a $XXX the Total The reaching of expansion $XX.X doubled second XX%, our than million, while quarter. more by in continued a million. record quarter. Turning count ship to in adjusted the

and we to of we including the XX At service second XXX new quarter, the on have the XXXX. end XXX ships second of ships year-end, compared on the quarter end at now health had expect wellness XXX with of ships, builds. centers At

day second increase per increases saw We spend in last XX% average as staff the strength in and including a per to per day. year guest single-digit metrics, and revenue quarter across ship per compared revenue operating key high

prebookings and continued sales increase. retail of Penetration also to

to are platform excited completed of the prebooking prebooking now And today, implementation full of capabilities. have NCL all ships. as We our have on the XX% ships of

At on vessels had X,XXX vessels, quarter and the end first of quarter XXXX, the we quarter of end, ship X,XXX cruise personnel X,XXX the respectively. at personnel second ship increasing and cruise of on XXXX from

ship evaluating visible focus operators. cruise to with continue growth capture opportunities namely priorities, key We line new on partners current new with as to our highly well as

new success Crystal as and second, spend, We ship guest agreements frequency, utilization builds and have this new advancing evidenced capacity priority by with Cruise revenues. Lines demonstrated addition of increased this retail and into entering spa XX year;

digit in as staff retail per this in to single compared across day per achievements of of XXXX. increase to revenue, regard spend, percentage include a Highlights double revenue as spend a and guest high average service QX our prebooking of

I quarter that, who the on turn With call second Stephen? over Stephen, to will will comment results. our

Stephen Lazarus

Good Leonard. you, morning, Thank everyone.

continued pleased as and our metrics further as very balance sheet. across financial to well and quarter operating improvements results our second key to are momentum report We strong

the XXXX. revenues in will now million quarter second details the quarter morning. million more on we compared reported share I Total second $XXX.X of that to $XXX.X this were

ship centers of operating XXXX with the well of average This ships increase ships XXX average of count occupancy average second primarily of respective in onboard health ships quarter during ship as quarter wellness in service our enrollment to health as attributable the quarters. was during centers count and higher our the the XXX operating compared onboard

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

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

as $X.X of decrease was net primarily compared per net attributable $XX.X second loss XXXX. diluted change warrant million or fair was to of value to $X.XX share in loss net per Net $X.XX income The the the income the diluted negative quarter share of million or liabilities. in of of

fair June during value during months the ended loss in months the was outstanding the three June $XX.X a gain compared XXXX change ended the three warrants XX, of of XXXX. million XX, of to million The a $XX.X

and in of decrease public market the in approximately observable the April was warrant the XXXX. exchange of liabilities value changes we in change that the XX% The for of inputs sponsor other result approximately value instruments XX% common and company's fair of common warrants deriving and warrants of prices the financial of stock the concluded in of our shares the the

the million in $XX.X primarily fair in in during ships improvement the a the operations primarily of the number the wellness change from operating liabilities, of XXXX Excluding and warrant result value from derived centers the of increase quarter. was health of in improvement second the quarter onboard income

Adjusted as adjusted adjusted of income income in $X net was Adjusted diluted the million adjusted to million net income second income EBITDA $XX per $X.X compared diluted compared adjusted to per net the of of second EBITDA was million prior quarter net or million of of or quarter $XX.X in share year. of $X.XX share XXXX. $X.XX

$XX loan at million end at of million repaid million end first last balance debt million million $XX.X the the $X quarter, the the quarter the to compared In to the the we quarter sheet. at end term term $XX on the lien was and Total at financing final first quarter. $XXX.X $XXX.X second quarter end lien year. prepaid to million costs the loan. second on of Turning compared of was net Cash deferred

term reflects the of term paydown repayment second decrease lien the revolving June the year. lien as of since $XX.X This million XX well loans $X $XX the on of first loan the million as million repaid last facility and

and flow was quarter, The the company in from after-tax in to of In generate free quarter million of third throughout second XXXX positive the to continue expects to $XX.X year. unlevered the cash cash XXXX. quarter million fiscal second flow the operations $X.X compared

is the secondary equity As Leisure capital X% completed after an now structure, Rule executing approximate around trade. XXX it with shareholder our relates holder our a shares quarter to eight second block private million Steiner and the subsequently in offering

improving reduced to addition our significantly. of the this In holdings stock, also their liquidity has

guidance. to on Moving

the our to and has year. for on based of led momentum, first increasing year the are our fiscal half favorable guidance better-than-expected We performance our back half us which expectations raising

in to we total in adjusted the and For $XX expect million, of $XXX $XX range to revenue million. XXXX, to EBITDA million the $XXX now range of be fiscal million

and at fiscal expect cruise centers. ships end We and to XXXX health XXX operating XX land-based wellness

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

land-based assumes Our of centers ship of third and quarter health count ending XXX XX. wellness an guidance and

it quarter, average diluted very would year-to-date count, million shares. the as relates $XX share positioning growth be and our addition, the price initiatives. about to feel an we assuming Overall, share XXX.X of approximately confident In in our share count

second the half the continue to expect strong encouraged year. favorable start are to We throughout momentum the our by and

call go will With Kyle, to if that, the ahead, you open we up please. questions. could

Operator

comes Stifel. from Our with Wieczynski Steven go Instructions] question first [Operator ahead. Please

Steven Wieczynski

Yes, Good morning. hey guys.

to guidance. want I start revised with the So

materially about As second straight you've guidance it's this, quarter we the in beat range. which midpoint the of your think

year, half So the customer just give about as the some how -- color how we back base? us wondering in you're of thinking maybe think about your of terms

you before, that, your very think these kind were tough really to of model out around with spending to assuming it's again, of elevated limited I levels. business, visibility kind continue

understand customer back your to through be half might how thinking you about trying just year? base So of the the

Leonard Fluxman

Yes.

to quarter, recall, Alaska European, sure summer first yet after would your may we of guidance strong point, you as Steve, the the be. how quite So seasons weren't we gave when

were well, have start as which lines forward the from summer, it just to heard summer cruise how upon booked were the we based bookings, the heavily mentioning confident they the expected visibility Although strength upon off we airlines with to as respect we based did. for the well

to what with in there conservatism guidance approved. really still that, And around kind we if little we the know there extent, a don't that was I -- recessionary think fact together of any, don't know some is the

I a think quarter executed an off to got far. very But good we've so second incredible and we've July

is summer the performance in out we it's resilient. perhaps the we working expected, where incredibly remains and and been has expected, stronger So its and some than way cases, consumer

Stephen wraps that So up I the mentioned think into guidance previously. positive that all

Steven Wieczynski

And Okay. or Are seeing they maybe same clip? then rates pretty spending still Got they the and after good customers what your this the from as wondering is you. at treatments, around pretty pace amount facilities. second come at you're a in point the good question attachment user

after still one And coming they watch of to sure might in closely to folks essentially kind yes, your of the be of want to that pretty it's I we use make sense? makes guess but spending finished? us, Hopefully, to kind that's are they're facilities, things

Leonard Fluxman

trading same fact, they're And X% and we've up of quarter. spend at cost in the up spend look, the the function -- on XXXX things. it's that seen selection up against service spend service, or of in against two is they're XXXX the down. trading up X% of second It's and a -- X% the Yes. whether guest service, No, move It's and time. the

attachment continues spend guest The to positively. move was up retail rate So again.

now sign be with is And to as attachment. a XX%. well strong up so a retail a that percentage consumer Prebooking to service continues strong, of OSA of and is as

is but ties very, of that at which factors, slightly levels are now normally load XX%, back very factors So just load now over XXX%. I normal to guess penetration of historical with in historical the

Steven Wieczynski

That's Okay. hear. to on a you. solid quarter. Congrats Got good very

Leonard Fluxman

Thank you.

Operator

ahead. with Please Our next Blair. go Zackfia Sharon from comes question William

Sharon Zackfia

bogey, business, as morning. kind always your and in second Good back guess Hi. XXXX that the we've here talking mistaken, been thought the margins of half in quarter I'm XXXX. recovery not of the the and you've margins met above about as I imputed we've kind think are of if I

have a positive on less the for pandemic, of coming margin about the out discounting of kind just thoughts what been as shift. changed company? I'm you've of kind seen kind mix wondering the and know you've potential I talked And your is you consumer the of opportunity just

Leonard Fluxman

ahead, Go Stephen.

Stephen Lazarus

as great because therefore, just a and that as our question, as long and discount, is something margin we're onboard is It's of had, revenue contribution, right, you growing and focus Okay. absolute et we'll there's having always marginal be staff in on -- know, sense. primary aren't dollars because while, working ahead to EBITDA cetera, make go favor doesn't incremental

Your valid seen It since waned point in pandemic onboard. that we've is strong ended. demand continued hasn't the

-- big improved reflected is that a EBITDA that of of part in part so the And margins.

around we cetera. lot work initiatives, way improving the onboard We've et a also done marketing of our operate with

is to the could than we're XXXX. end prepared I wouldn't continue starting to this around comfortable at feel deliver probably we to were be think in a I we high point while QX where get better point So say the that fact we being can to levels, necessarily where or what

do cash if lot demand, But again, depend we're to activities probably, basis, marketing terms a absolute for. in a the it right things we'll to flow, start for to dollars, would is can again, to drive go-forward better. what on And on revert fall of ultimately off absolute yes, consumer. we looking which going say, now, we of is the to drive But

Sharon Zackfia

does this being prebooking to I to that banner? lot that more in you about And guess a -- when have kind hear itself it results other you've mean, I start rolled the of was out. of more brands, given I meaningful just good on in mean of manifest terms Norwegian fully the done on Norwegian brand being

Leonard Fluxman

question, good a Sharon. That's

it we finally rollout thrilled it and fact, ships. out got than off I'm accelerated, then the we expected little the we later a started recently. but firstly, very on completed And So rolled that all in

at between start us more, where at do and passenger we treatments into tends impact will for take higher, will to So to of XX% really they're anywhere least for is another to start believe to system a us the looking loaded impact, prebooked what -- because we better spend be. frequency the seeing it that all know that to the XX% fully quarter their

us. going But I ships the is and how accretive be given the they on perform, component to spas typically only think to the prebooking

Operator

Our ahead. Laura Capital. Champine with next Loop question comes go from Please

Laura Champine

with up operate, questions. passengers in to XX%. our cruising taking coming for Thanks just impressed at the how that people your in wondering how acceleration is weekly We compares ship you where as efforts? revenue were the to per I'm particularly much of the to back growth that meaning of the own opposed ships more number

Leonard Fluxman

factors to That load back our penetration Well, rates. our revenues. clearly, factors generate weekly average historical improves higher historical back higher moving rate load said, to being to is ability the

is though passengers penetration factor even exactly the So where there are board, be. expect on we it to more

higher prices advantage productivity us higher generate in the average of to and weekly and has Taking certainly allowed has discounting revenues. itself, improved. of So less

that now cycle into are more to onboard through we experience. since have There's contracts second the the staff pandemic. starting And

certainly much staff and a of have the board, the highest I'd staff all of complemental We fitness one full modalities say, fitness on on the board. most, revenues generates

to So weekly generate and I improving ability have staff, our of mix the trained higher with experienced together of added the to our ship. staff, revenues mix think load per factors passengers, better average

Laura Champine

Thank Understood. you.

Operator

Rakhlenko Please go from comes Our Cowen. next Max question with ahead. TD

Bradley Jamison

on Stephen Max. is Leonard. morning, This Good Hi. and Bradley for

that for looking more you're about now? any talk seeing onboard customers of you what services for can in broadly, types services? right have are medi-spa demand the First, increases with continued Then utilization seen overall you

Leonard Fluxman

double seen be with with less we Obviously, in we're ships that service than to of onboard. digits uptick immunity medi-spa still have services, in So some offering. and the the stuff more services the medi-spa, infusion shops continues IV

So board I increase services the we've the seen across of we're offering, think take that an rate. in medi-spa

spa some to per So is ship. services, average your revenue those of prices are than weekly higher average of which at all the generally accretive

Bradley Jamison

any Are us seeing then the your at strategies you service can that? update on through all And how play to Great. pricing summer? out pushback you consumers continued your on have from

any you pricing with there then European is feel seasons? and to the And opportunity Alaska more do that for play ahead

Leonard Fluxman

Yes.

we where where at, for So seasons. at of adjusting the hallmark We're to we're which be won't prices possible, needed, expected. going these hold each means discounting as than holding, we're less pricing, but

or lookouts seen And every we against check-in And one thus of whether per far, single my points week, cruise there's as not we pricing pressure on do we anything. have a that that's the because the discounting anything to have.

So adjusting we are not prices.

we reevaluate XXXX, at everything obviously, forward year-end. into Going

the at But be we prices with to extent at need we'll end, to consider that the lower up, the determination. continues haven't that To higher we this point, pricing Our made discounting. and take it.

Operator

next Truist. comes with Miller ahead. go Our Gregory from Please question

Gregory Miller

My Thanks. provide the staffing environment on labor question you perhaps the ago? a is today first on detail Good expectations and quarter relative morning. and environment. Could to count staff recruitment some additional

Leonard Fluxman

Right.

us one certainly, the in close XX% achievements. for staffed of modalities of So to to be our about stellar staffing need one actually the we every continues across banners. We're to all be. staff We're

back. We've bringing no restocking on There's or no or pressure. pressure experienced seen staff rehiring

than it so of In point it's that fact, the really we've and execution our before. is strength a ever considerably And strong was far. bench stronger seen

it The quarter that X,XXX X,XXX today, we're so we we're staff today. from dashboard, to X,XXX if at the you ended look at at up the --

the services our numbers, demand. just positions are strengthen our we all in So continues on that staff of those banners and are moving up to in where

Gregory Miller

changes any you my an on of days? facilities And wellness utilization capacity Are for the could port or follow-up, improvement update seeing the then provide there? you for

Leonard Fluxman

XXXX. continue number at move We're of day we're where that up. much utilization working flattish. it to seeing It's this kind port in was pretty time No, to

what be achieving, of slightly than we're we sea at move opportunity see to is there higher which all accretive. target Our also staff And for will up. utilization

metrics brings cruises, The there certainly down one those the the of quarter. longer which in that some area is any were

so what of we've novel, seen. the less period cruises to is And time, across longer which utilization longer that's tend a and historically, have

Operator

next ahead. Our Assia Georgieva question go Infinity comes with from Research. Please

Assia Georgieva

Fantastic mentioned Job, had bookings couple That morning. at on the Good questions. XX%. Crystal think was to and I Great of hear. currently stands I you guys. about hear great that preclose I congratulations correctly? quarter, that contract. Leonard, Did a

Leonard Fluxman

Yes.

Assia Georgieva

to add just would the referring that translate entire of they that banner? about across actual XX% in Or the mentioned you to fleet spend, when to increase -- was is onboard they would And XX% NCL ships? the that

Leonard Fluxman

So we're in terms out the to start of quarter. they at Clearly, quarter banners into came at even XX% prebook. across third rolled all obviously, extent NCL of that ships, the we've the on through the the and now

for So to see start lines be directionally have had in to numbers longer, same it the to seen we start we've guests better are the other then NCL the prebook extent that way cruise the spenders. move that accretive because will that

Assia Georgieva

spend Could on the you services? you that quantify extent the of additional see prebooked

Leonard Fluxman

to spend see people to in tend to passengers more -- Well, XX% prebook XX% we than don't. who tend

Assia Georgieva

NCL. wins, just all Across not Okay.

Leonard Fluxman

Across our banners. all of Yes.

Assia Georgieva

think playing the see up. I of the you've for in a of Caribbean all closer the -- had less that passenger And the In catch How us more do booking in Europe Great. develop Okay. given of trends you European is concern mentioned a strong, the desirable somewhat Europe? quality lines, exceptionally legitimate that possibly cruise being trends. about

Leonard Fluxman

spend. itineraries going much across you the predictable. not there as European Mediterranean. highly The you're well know. Alaska some so are as as west Caribbean, port very and And has very, ports, as are days, to extent, Assia, is Europe, the more a east know, strong ports, you some The even always

rate surprisingly but we there, so year the Caribbean, number we spend, Europe and at and strength that Europe, this traveling seeing North in but Alaska season of of level Europe, the been strong, Americans in the has would beginning the given in saw So I of expected which July. we're far, over

execution the far. so with pleased very we're So

Assia Georgieva

Great.

next question, great. longer-term months XX let's you over a sort if or of capital the Could bit one in little of I say, your may. And terms last talk so? Sounds roadmap about a structure,

Leonard Fluxman

to the is rates, us in million now Look, it's lien, mentioned, Yes. from down respect free to paying of which these on flow cash as all high generation, to helping green which deleverage interest good focus. with be be our back will $XX continue our Stephen #X over even first

the right? at at and extent and keep look our will we obviously extent structure look reviewing means that deleveraging some the to alternatives. exclusive, into to reinstatement can point It the as potentially internally dividend But further considering in we we that the as moving Board well capital they're And and start at both a with we future again. XXXX, can mutually

Assia Georgieva

I that for was looking dividend comment.

I so appreciate thank much. So it. you

Leonard Fluxman

You're welcome.

Operator

CEO, any session This for call like Executive turn I for to today. remarks. the concludes would President to Leonard over question-and-answer our closing Fluxman, back Chairman, and

Leonard Fluxman

right. All Thank Kyle. you,

to want We the today quarter joining where incredible this our continue November. I all seen. call. And Thank we'll quarter speak the thank to excited third execution second us call you to We're in of hope all. on with at. early everybody our First, we've part business and on for that is resilience incredible you

Operator

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

now disconnect. may You

OneSpaWorld Holdings Limited (OSW) 2 Aug 232023 Q2 Earnings call transcript