OSW - Earnings call 3 2023 | OneSpaWorld Holdings Limited

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Operator

Good day, and welcome to the OneSpaWorld Third Quarter 2023 Earnings Conference Call.

[Operator Instructions]

Please note, this event is being recorded. I would now like to turn the conference over to Allison Malkin of ICR. Please go ahead.

Allison Malkin

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

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

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

For made release, a is furnished to of that today disclaimer discussion which was we the risks on the forward-looking the and with earnings statements more thorough conference included webcast, uncertainties in statements in and to SEC forward-looking associated to the X-K. call our you be third refer regarding Form XXXX this quarter

We any undertake new alter to forward-looking result update future statements events do or of any a otherwise. or information, as not obligation whether

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

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

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

Leonard Fluxman

today once our another of you, Quarter to I'm OneSpaWorld's to XXXX share Third Good Results quarter welcome you Call. and which delighted expectations. again to results, Thank Conference speak strong exceeded Allison. morning, and

financial priorities. on maintain metrics, performance staff across drive introduce new this quarter and key end, by the efficiencies continue our health unwavering execution and our cruise unsurpassed through offerings, centers introduce to stellar our our wellness To with our win contracts. and positive momentum ship sales on products new focus operational innovative we enhancements, to technology third and provide ship of driven The empower builds service key levels,

best-ever the from EBITDA As our than adjusted year by achieved this guidance quarter. we more full in and a EBITDA delivered revenue result, quarter and we outperformance operations and revenue raised adjusted third our income

As we demand we the very by our the encouraged the we continue look unparalleled are strong driving environment value strategies offers ahead, cruising to Customers are healthy proposition, world appreciate around are seeing. and demand.

million. of count XX%, to highlights performance continued with on and the XX% record in revenues quarter of and the a $XXX.X ships a Touching quarter. At we record Total XXX The health quarter, XXXX. the reaching $XX.X third XXX ships on centers million compared of end the end the increased in quarter. expansion our of at grew adjusted the EBITDA ship third wellness third had

now shipboard guest in have last staff revenue to XXXX. saw including also low in and expect including pre-bookings At per and across key a week ships, ship strength increase builds average to a quarter in-service XXX the to per We metrics, increase High year-end, in XX Penetration new XX% compared third single-digit sales we introduced increases revenue as per average year. retail throughout operating day. of single-digit improve. spend continued

supporting remain sea. our continue highly We on to focused operations at

the to XXXX proportion exhibiting members staff success in greater first Our is of quarter surpass of ongoing the of level staff members for contracts staff experienced we initiatives to experienced have subsequent in our and experienced return XXXX. expect

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

enhance of sailing onboard traveling have productivity. XXX to focus to made year-to-date revenue ship X,XXX who their sales visits, We equating and also members days have primary XX staff with

partners. and Now highly with I'll visible shared cruise key update ship new first, line year: earlier growth that current capture priorities our you review with this we

introduce Serenity of new and Our vessels, ships, health X cruise on agreement with this Crystal part Chinese-American as to line which cruise X wellness Cruises, part line. continue Crystal growth. new X In Adora which the quarter, Symphony and Cruise a the and new including of as new announced partners earlier centers vessel a year agreement Crystal is ships, adds new our we introduced to

ship We health launching builds expect products. centers value higher services continue to this continue second, introduce wellness and year; XX to on and

protocols exciting immunity We implementation, wellness toning including enhancing devices; on introducing productivity. of services, center third, and focus stages various in focusing and continue and facial to IV on products are therapy, which health

partners. Highlights in guest retail to And spend achievements of pre-booking per revenue, across double-digit spend regard compared day of in average high fourth, revenue expanding percent a single- per increases cruise this to and potential as line stock our QX adding share service XXXX. new include by of as market

maritime to market most Voyages, X and and cruises, cruises. wellness as outsourced in new Adora Virgin Region XX-plus-percent share recent celebrity to health by recently, wins room grow have Cruises, cruises contract our the We sea evidenced Oceania market

prospects and in We and are the very fourth excited XXXX beyond. quarter about into our business

for operators fourth XXXX is fleets for our business of our cruising we amount seasonally current expectations. have as so our winter surpassed season. third third trends, they period outlook a strong the beyond Our raised start light year, year softer quarter it and fiscal annual for guidance the year performance despite a the reposition this to off quarter far being the outperformance time increased In in with we cruise their

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

canceled to or all certain altered Ukraine in In response, impacted the lines innocent that I Finally, ongoing to I war the hearts out convey war over East, itineraries. been the call turn in the Stephen, want cruise Middle before have to lives by the and our go the that have lost.

a However, on results. expect we do to Stephen? this have not our material impact

Stephen Lazarus

morning, Good Leonard. you, everyone. Thank

wellness strong sheet. share that now quarter momentum pleased financial to increase of more and as average to increasing revenues the guest each third our an third drive we wellness key centers growth XXX details health average results reported XXXX. well on quarter and onboard count and across will report million, our improvements in engagement health operating revenue morning. ships centers million of count third and this XXXX. XXX XX% metrics board to XX% operating and health experiences. compared of I quarter of our ship during continued as during enhanced third $XXX.X operational through The of from was Total with ship initiatives quarter the onboard and on were ships We to to $XXX.X the in quarter are our centers wellness balance attributable our And an our increase

service in of with to quarter revenues were and teams. service XXXX. sea onboard offering services Cost with $XXX.X our of of XXXX. and to and in and increase by increased million attributable guest Our of compared from at the $XXX.X on the the costs our innovations service primarily in million disciplined and third The $XXX.X product protocols quarter million the corporate of compared of land operating associated execution complex health $XXX.X quarter was million wellness revenue operating our third centers

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

of increase in costs implemented basis point third of share those $X.XX of million an the as $X.X Product income income XXXX products. compared per increases income of quarter or XXXX. $X.XX from diluted benefited of per in Net retail diluted or of of the margin million in income in This approximately to resulted the net third in price cost vessels improvement quarter. the an share ahead net was onboard $XX.X net XX quarter

fair $XX.X attributable million positive uncertain $X.X decrease related warrant change from primarily the of tax the liabilities, foreign company's XXXX. X of XX, benefits months value in in was warrants result income in $X.X months operations positive The and September 'XX million a tax in $X.X as during XX, increase X participation million in outstanding ended change during the million compared tax ended fair of to a in $X.X the a a exposure settled gain August the 'XX. in $XXX,XXX Italy amnesty change a program of value of to The September million to gain a was

in liabilities the instruments. deriving was of in of stock changes prices common of result observable inputs The and of fair the financial other value the our market fair warrant change value

or $X.XX million adjusted of XXXX. the adjusted $XX.X adjusted XX% compared increased $XX.X per in as Adjusted diluted income quarter of the net per Adjusted of to $XX.X income income increased quarter million EBITDA million of compared of $X.XX to last net to diluted million EBITDA XX% or $XX third adjusted income year. of net in third to share net share

balance loan at repayment 'XX million since loan our to of Turning financing on primarily debt September first on decrease million XX and June giving term of on repayment XX September the of at to XX, the sheet. after during $XX from [ compared XX, term repayment fees Total the 'XX the of was net million quarter. loan million million at Total at compared $XX $XX.X $XXX million deferred was the $XXX year. cash $XX September to term full first lien to million The lien effect resulted XXXX. September the last ], $XX lien second

ended our repaid in million XXXX, result, the a free the instruments. second million as of In flow and we cash on we third fourth a XXXX. in lien loan. quarter, total $XX X to Unlevered positive quarter after-tax The term of repaid have operations first $XX.X continue quarter flow since debt to throughout $XX.X And of XXXX. from September the million XXXX to XX, generate million cash compared months expects company in $XX.X was the

our on to guidance. Moving

for quarter. expectations We the our increasing guidance better-than-expected fiscal to for our fourth third and the performance are reflect quarter year time this third our year

total in At the XX% $XXX million. of increase midpoint, $XXX 'XX, $XXX.X an of now this we fiscal expect to XXXX For the range revenues of revenues actual from the million. represents fiscal million

midpoint, of XXXX million. of At Adjusted XX% EBITDA this represents is million expected million. increase $XX.X an actual in to the of range $XX the adjusted EBITDA from $XX fiscal

ships cruise 'XX We and XXX on at expect operating fiscal resource. end land-based XX to

we quarter, of the EBITDA our we fourth $XX million. range Overall, the million initiatives. range and million positioning expect $XX $XXX to revenue about of in growth $XXX total million For to confident adjusted and feel in the

business are operator. We expect open the continue near momentum successful growth our that, in and questions. With in medium to by Please, the we'll and term. the for encouraged our call

Operator

Instructions] [Operator

Gregory comes with from Truist. question first The Miller

Gregory Miller

XQ the over to And share your seen holidays? next into start have I'd views like pricing. if points raise year, spend off into pricing you Could pressure on you the you may impact year? how service any in with or if possible, pricing consumer current the heading much next

Leonard Fluxman

very little pricing Yes, but necessary, we've on we pressure level. on certainly shoulder actually where discounting below increased all. pricing hold where seen it we've had not to our We're at days only continue --

So Year banners. period across on Hallmark will on of couple reintroduce there's and the a hallmark pricing most services banners of we New obviously still through pricing some Christmas

So our cetera. cruise cruises, right are now, the should we repositioning as -- their are ships, lines say ships longer I said, et

not pressure seen thus on So have we far. pricing still

good in shape. we're So

Gregory Miller

levels Could then thought driving higher past. providing than about staff, your better to ask you And for year. Excellent commentary you're after about trend? what I in is that return the see discuss experience the you your I'd follow-up. at the

Leonard Fluxman

up Definitely, if perhaps produce So X to tend as X.X, attachment contracts, something and calls, improve, and the we just after at the this a call wanted and on we management experienced call, then move such we've try productivity they're move. of them and much mentioned out experience level. capable a level it's higher staff ultimately retail improve prior see to into

continue to We training. reinforce

do They're money for that of care We given earn on and the expenses is taken environment are on money that well wish They're them they the most continue an busy. to extent board of save take that care doing being definitely incredible the to to of. to This board. well.

starting and with we're see number greater So that experience that and comes to greater retention improve productivity.

Operator

with Wieczynski Stifel. Our comes Steve next from question

Steven Wieczynski

already start. So strong to quarter the -- heard think Leonard, pretty heard a how is you like think that you about I I I talked fourth you up seems correctly

and were real then essentially been So sequential if to maybe any has witnessed that from quarter. levels similar spend that's levels witnessed is just during played what it fair understand think you out trends I the quarter change in standpoint. October at the third guess what there you trying case, through how a the to running I'm here, to the

Leonard Fluxman

up but quarter, know, second quarter other bunch and I third third the spend. quarter and as spend utilization tend Staff actually starts you the way, -- third the to starts of saw Steve, mean, were we've beginning metrics Caribbean we go very, down quarter a guest Mediterranean the quarter seen of strong. average in as be how we depending are, Look, extremely new with Yes. the that out longer the those into improvements third as and repositioned back the what but and can ships cruises softer cruises what to areas. on we're these by of as very Alaska termed encouraged at troubled long the even the just back from itineraries

to date, very encouraged what I've so by October. far seen what I'm so in And seen from we've

demand. pattern strong a hold to continues continues it yes, of So

Steven Wieczynski

or of could factors that's just from yet. of our know performance you're there other whether think anything XXXX prepared thinking as about that's or seasonality look we more be we -- in terms to a big potentially as guidance kind into should Got look, perspective? next that I XXXX I picture not you. And whether give year. early. it's Is hurt about operating But help know we then

Leonard Fluxman

somewhat see. cruise hear 'XX. XX% I value environment we I from the is heard But mean to demand value cruising guests be can continues through I provides we'll at an it inflationary and certainly, strong. look, more look demand, XX% And cruise seems report. guess in close-in the from today a Royal and pricing, Not incredible the as still I vacation I that lines to today, that mean the they as NCL bookings booked lines, vacation. from that

We services. continue to see demand our for

lines benefits cruise prebooking. too we cruise are more prebooking is the our see they at we I that where the partners, they're guests think level And spend and more from in, focus which the with that to line the continue pre-book. on experiencing We a banners collaboration if know seeing

So I focus that. think on more we'll see them

Outside can't of we Steve, control, things, just events. geopolitical

they've on As there, cancel which which move and change the could vacation have outside you sort experience know, started lines of cruise don't that's to date. macro my doing trouble, anything I any cruising, to demand out seems already. or other things view of will from that see be outperforming away done for

Operator

William The Blair. next question Zackfia Sharon comes with from

Sharon Zackfia

that you in holding levels, staff this doing high I'm I there's guess were staff increase mean, to of is kind curious basis? if revenue to know I'm per trying day per look out think forward, figure Or day? realistically what the about kind how on per kind at the I pre-pandemic. adding And we you day. extremely the point, is look going revenue high per wondering main annual on it by of I I'm it's at continuing particularly when per opportunity of revenue an seasonality at staff could as there. staff. per more you

Leonard Fluxman

good a Sharon. but question, Tough one,

and the sales mentioned, we is out performing, who's the time. need are coming down metrics stuff Today, shore which data, there really all modality we we with with to to that, continue drill focus see can not the and our where the underperformance So revenue from, I up. have, we as

the the level higher the team quarters an on of has in job this last think the performance. focusing excellent them is of year I raising year to the and X last underperformance throughout done and

So get everybody to B-pluses. As we up and want to

that pandemic is in excellent before, that, the preparation period. have was pre-pandemic period and doing an that done earlier can data now we I we've where did think ever the the our and we than all it team see focusing on we job and

acting execution needed. data training on reinforcing So that a earlier retrieval is of vigilance of it's and where I data function think

will So that needed. don't they not that balance will to balance want We different we continue make that we but across as so need. to staff there itineraries we sure requisite [indiscernible] And staff want the busy. be them busy, to the is also have them be

massage a in At we same it's yes, outperforming. at time, somebody is is focus So of acupuncture, is the XXXX to the and one best be Do what looking less going medi-spa which use or therapist in add balancing have our our stock? continued act.

right we're right want itinerary right the the to staff for make sure for ship So we demographic. the the that putting right on

will to per that staff think per into revenue support continue XXXX. I day

Sharon Zackfia

want it that to I on for debt your point status. some a that, free just going debt. of the then, kind mean like set advantageous not the kind pretty tax-free the you And be on XXXX guess, I in if Stephen, a assume in balance trends realistic I you're could in just that's 'XX. that and debt very of seems because follow-up probably question given I sheet to delever at business outlook kind keeping level given is of quickly

Stephen Lazarus

portion helps benefit the doesn't the have the close a really therefore, Broadly we to that debt it But where to of allocate that, that. leverage sense, Correct. get that do, as XX% from is case. make We do speaking, particularly absolutely which interest outside rate. the of interest U.S., we

where will So deem to shareholders excess think our company, as I appropriate. continue a in a point focus like debt get for we'll avenues do the at paydown have to mutually capital be exclusive cash we will of point to returning to we flow. consider a time, it though be doesn't

Operator

Company. question Your Max comes next from with Rakhlenko & Cowen

Maksim Rakhlenko

nice quarter. job in A Great. the

be So you order called any unlocks should looking Can in for? a you And rank them initiatives number priorities. key of of magnitude? key out and we

Leonard Fluxman

on share pickups, on that. end continue out pick There's to than did the ships. one be At further we're smaller, albeit have luxury it right? more. of whether that the even that not small there, focus many the some perhaps it river what always We cruising, pick cruising, up of of there's segments the Max, for are up smaller other could more on still obviously, ships to we focusing looking, market we be maybe day, there

forthcoming. there too So and focus continue on high productivity focus our years. priority. in area. the market early share a say would be working on as wellness And to and to menus medi-spa at So a opportunity could some that's think I We it's and introductions on to where the time But board, on and But ship say want same we'll launching we be we the we're what what X same next at new to right? develop, particularly the expanding is. what the going be over focus time,

say ticket augment key of we more given focus increase medi-spa of a our going how convincing how that's definitely a can the staff would ultimately, our participation that's those we ships that I help gross is level that, XXX to have there's increase by can total ours And cruise extent that lines can we the prices. how an obviously high on on. there to that to revenue can move revenue, the higher that, expand footprint, we opportunity And we modalities X in the board, opportunities

Maksim Rakhlenko

then of you that you conservatism XQ the guidance cruisers in in level And from quite the as suggest to are modest embedded data being the can seem to speak outlook? your

Leonard Fluxman

sort I first raised just the it. be quarter We've balls that since mind, to who we've ahead quarter. have a we gosh, Look, my feel guidance, opportunity air get this, of, accurately -- happens. far popped the an There's outperform, extent to skis. lot knows out I But our guidance think, each of in I to raised don't what too want so we've softer quarter the in still of of that that in

on about of going confident a enough, you've definitely us up. is this but think, something sort in pretty quarter around, known fourth bit where does long if err conservatism wobble to I end little case we we're

Maksim Rakhlenko

called help cruise strong any early outperform on Got learnings thoughts given year your next such quickly, you it. very will And And XXXX year? partners. out just any from this just by bookings that

Leonard Fluxman

totally guidance typically receiving respect until feel. from Max, circled ICR, could do be change here give it's the wagons cetera, we've We're the still lines and the et with to cruise early there to weaker inputs We a start of some changes talking XXXX. we'll sort everything. high-level itineraries, about and that

early to second we too at week the juncture. this we'll that But have it's as think out comment typically I first or do of guidance January.

Operator

Our Champine question Laura Loop Capital. comes with from next

Laura Champine

detail sense specific you're productivity. a press on a wanted in there. deploying on, to referring about there's just little Could technologies what release more drive more you things enhanced I to types be the of

Leonard Fluxman

day It's where thing first that I most think gaps We at focus looking important. we is demand. look sale. are, vacation we the look at the look prebooked the we We scheduling demand. We we at very Obviously, the and on it's at is look scheduling. the that. do that important day at day and

to promotions, that one that's We toolkit frequent more more et lot just marketing paying have a use services bundling, to and getting more have cetera, off. and we as in for our people all more of opposed

Sharon Zackfia

bookings a -- then to line tend trends companies, the private to public you've question. booking And company looking it. cruise be a prior the mean we're I Got got from good-looking booking trends. do relative follow-up to at different public how

Stephen Lazarus

perhaps moved 'XX very factors and near-end public lockstep. seen I should industry. companies. to bookings nonpublic be the the the say imagine lines I around end, see move higher the overall, and the have you've same speaking, They in entire would year I it's level. at cruise into sometimes Look, of mean, same. similar confidence the not some this positively across generally the that But tend load move across both would

Operator

Our comes Assia Georgieva next from question Research. Infinity with

Assia Georgieva

I a couple questions. Excellent quarter. job. Great of quick had

cruise going your is a of major think more that of XXXX? given to revenue-generating higher exotic possibly is one in itineraries, partners affect shouldn't client all, you do of longer, level that into you kind have an going change more Or it First impact. structural

Leonard Fluxman

still obviously will had the this X-day cruises many that We've world year. cruises we've I last move into year, the mean. on had ships more year, longer We've spot We those XXX in is seen to sweet XXX be the of scheme the market. In last than in that know itineraries. the

I be cruises, built impact It don't if so our material next see will -- can it's into year, yes, at it just being some a impact the guidance a little all. bit. it of So

as perhaps what think had out more moving the I more to pandemic. itineraries they've into it's normalized come they companies back opposed as

I don't being this big when XXXX cruises. in we see change So what those we had from a saw

Assia Georgieva

more have XXXX, a typically I be we to will That's will a good imagine. of question, than dry I related in news. that relative docks think kind XXXX sort probably would And short-term we event, would have of

Leonard Fluxman

Yes, Yes, agree. I exactly.

Assia Georgieva

maybe, is question. Stephen, this such you debt dividend touched lastly, great repayment Are program? which Sharon's trying significant to And you on possibly shareholders. and we levels, when a answering thinking at were With get or returning capital to buybacks

Stephen Lazarus

on will Both will is, cetera. considered. depending the interest be Determination price made are, what be what rates stock et

shareholders. So and the I try will the think and decision our the make company for best Board

Assia Georgieva

Well, very Stephen, of question. me going way that was to answer I'm not telling a diplomatic this

Leonard Fluxman

all. that you cash the company. What free really flow saying can not it's from saying generation he's No, is this at see

same to return be see will now. 'XX, in on business, all. have paying point, are end the can some idea forms. right the that's whether extent either You rate Clearly, better we of he's the much cute be of at down to we'll cash it of those optimism trying the see which debt. a then our think the continue Clearly, at we're use to at at where best I debt. we don't we that of in start And to

Assia Georgieva

mean that I cute. was guess Well, and I trying way. to didn't I it be

Leonard Fluxman

say. will So diplomat, is I he very good a

Assia Georgieva

quarter, providing QX. great for much guidance thank even and so better you for a Again, Agreed.

Operator

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

Leonard Fluxman

associations I for their I and everybody staff work Right. achieving excellence to joining quarter us entire to results. leave, want leadership quarter evidenced team third But call our and on with want expected that thank the all so fourth today. for to results contributions steadfast I the commitment closely just before put the us thank just by of and should our operational

on So next to thank We look with you, quarter everybody. call. the forward you speaking

Operator

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

now You may all disconnect.

OneSpaWorld Holdings Limited (OSW) 1 Nov 232023 Q3 Earnings call transcript