OneSpaWorld Q4 2023 Earnings Call Transcript

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Provided by Quartr
February 28, 2024

There are 10 speakers on the call.

Operator

Good morning, and welcome to the 1Spa World 4th Quarter 2023 Earnings Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Alison Malkin, Investor Relations at ICR. Please go ahead.

Speaker 1

Thank you. Good morning, and welcome to OneSpa World's 4th quarter fiscal year 2023 earnings call and webcast. Before we begin, I'd like to remind you that certain statements and information made available on today's call and webcast may be deemed to constitute forward looking statements. These forward looking statements reflect our judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting our business. Accordingly, you should not place undue reliance on these forward looking statements.

Speaker 1

For a more thorough discussion of the risks and uncertainties associated with the forward looking statements to be made in this conference call and webcast, we refer you to the disclaimer regarding forward looking statements that is included in our Q4 2023 earnings release, which was furnished to the SEC today on Form 8 ks. We do not undertake any obligation to update or alter any forward looking statements whether as a result of new information, future events or otherwise. In addition, the company may refer to certain adjusted non GAAP metrics on this call. An explanation of these metrics can be found in our earnings release issued earlier this morning. Joining me today are Leonard Fluxman, Executive Chairman, Chief Executive Officer and President and Steven Lazarus, Chief Financial Officer and Chief Operating Officer.

Speaker 1

Leonard will begin with a review of our Q4 fiscal year 2023 performance and provide an update on our key priorities as we begin fiscal 2024. Then Stephen will provide more details on the financials and fiscal year 2024 guidance. I would now like to turn the call over to Leonard.

Speaker 2

Thank you, Alison. Good morning, and welcome to 1 Spaw World's 4th quarter and full year fiscal 2023 results conference call. The Q4 concluded an outstanding year of financial and operating performances for our company and continued to demonstrate the increasingly powerful impact of our strategies, innovation and scale across our complex business. The quarter was highlighted by records across revenue, income from operations and adjusted EBITDA, each of which grew at a double digit pace versus the prior year Q4. The period also marked our 4th consecutive record quarter, resulting in our best ever performance in fiscal 2023.

Speaker 2

Our team continues to enhance our industry leading business model, constantly innovating our unique value to our cruise line and destination resort partners and our delivery of outstanding experiences to their passengers and guests. We continue to vet and introduce new and enhanced services, product and facilities, while utilizing our strong cash flow to further invest in our powerful business model. We begin fiscal 2024 with strong momentum and expect to deliver another year of record performance and increasing value to our shareholders. Our confidence is further buoyed by favorable trends in the cruise line industry across our top banners. In fact, our positive momentum has continued in the Q1 as reflected in our guidance.

Speaker 2

Touching on performance highlights of the 4th quarter. Total revenue was 194,800,000 15% from $168,900,000 in the Q4 of 2022. Income from operations increased 18 percent to $12,600,000 even as we incurred a 2,100,000 asset impairment charge for the expected closure of a health and wellness center compared to $10,700,000 in the Q4 of 2022 and adjusted EBITDA rose 13 percent to $23,400,000 from adjusted EBITDA of $20,700,000 in the Q4 of 2022. For the full year, total revenue increased 45% to a record $794,000,000 compared to $546,300,000 in fiscal year 2022. Income from operations increased $39,000,000 or 2 58 percent to a record $54,200,000 including the $2,100,000 assets impairment charge as compared to $15,100,000 in fiscal year 2022.

Speaker 2

Adjusted EBITDA increased 77 percent to a record $89,200,000 compared to a $50,400,000 in the fiscal year 2022. And unlevered after tax free cash flow increased 75 percent to $79,100,000 from 45,100,000 dollars reported in fiscal year 2022 with after tax free cash flow conversion rate of 89%. We continue to remain highly focused on supporting our operations at sea. At year end, we had 4,120 cruise ship personnel on vessels, increasing from 3,927,536 cruise ship personnel on vessels at the end of the third quarter of 2023 and the Q4 of 2022 respectively. Our ongoing initiatives to retain onboard staff for additional contracts is exhibiting success.

Speaker 2

We continue to expect our proportion of experienced staff members in the Q1 of 2024 to surpass the level of experienced staff members in 2019. The growth in experienced staff contribute to the delivery of double digit growth across certain key operating metrics as compared to fiscal year 2022 2019. Along with the strong financial results, the year included noteworthy progress towards our key priorities. 1st, we captured highly visible new ship growth with Cove and Cruise Line Partners. In 2023, we added 10 new health and wellness centers as current partners launched new ships and we entered into new agreements with Crystal Cruises and Adora Cruises.

Speaker 2

In 2024, we expect 5 new ship builds by existing partners. 2nd, we continue to launch higher value services and products. We continue to focus on introducing exciting products and services, which are on various stages of implementation, including IV therapy and immunity protocols and facial toning devices. During the last quarter during the Q1, we have begun the rollout of cryo body services as well as introducing the new cryo and LED facial services as part of the new Elemis Biotech 2.0 offering. 3rd, we focused on enhancing health and wellness center productivity as we introduced higher value services and products, driving double digit growth in key performance metrics, including revenue per staff per day, pre booking as a percentage of service revenue and average guest spend as compared to 2019.

Speaker 2

As we have mentioned previously, guests that prebook services spend approximately 30% more on average than guests that do not prebook. The year saw prebooking available on 91% of the vessels that operate health and wellness centers and this is expected to grow to 93% in 2024. Additionally, in 2023, the percentage of service revenue from pre booked guests grew 10% year over year from 21% to 23% in 2023. Average guest spend also benefited by refinements in length of service and pricing architecture of certain services, which resulted in increases in service frequency and a mix towards higher priced services and products. We also increased our MediSpa offering.

Speaker 2

At year end, we had MediSpa services on 139 ships, up from 128 ships in 2022. And in 2024, we expect to expand our Medispa 48 ships. 4th, we expanded our market share by adding new cruise line partners. We continue to believe we have to grow our 90% -plus market share in the outsourced maritime health and wellness market as evidenced by 2023 contract wins with Crystal Cruises and Adora Cruises. 1st, we enhanced our capital structure and strengthened our already durable balance sheet while generating positive cash flow.

Speaker 2

To this end in fiscal 2023, we fully repaid our 2nd lien term loan and reduced the debt outstanding on our 1st lien term loan by $41,000,000 We simplified our capital structure through the completion of a warrant exchange and invested $9,000,000 in cash to repurchase 789,046,000,000 shares of our common stock. For the year, we invested a total of $65,100,000 for debt pay down and share repurchase activity and still ended fiscal 2023 with total liquidity of $48,900,000 In addition, on March 19, the approximately 4,700,000 warrants that were issued and outstanding as of December 31, 2023 related to the business combination are set to expire, which will further simplify our capital structure. Before I turn the call over to Steven, I would like to personally thank the entire organization at OneSpa World for their continued dedication to advancing our strategy and the guests we serve. Combined, your contributions have increased our leadership position, contributed to the ongoing strength of our business and have us poised for continued positive momentum in the near and long term. With that, I will turn the call over to Stephen, who will comment on our Q4 fiscal year 2023 results and guidance.

Speaker 2

Stephen?

Speaker 3

Thank you. Good morning, everybody. As Leonard mentioned, we were extremely pleased with our performance throughout the year. Even more impressive was our ability to deliver record 4th quarter revenue as we navigated turmoil in the Middle East and an unscheduled drydock of a large cruise ship, which impacted our results. I would like to begin by highlighting 2 unusual items that impacted our 4th quarter results.

Speaker 3

First, our GAAP financials include a $2,100,000 asset impairment charge related to the expected closure of a destination resort or location given the planned demolition of that hotel this year. This charge is excluded from adjusted EBITDA and adjusted net income for the Q4 and fiscal year. And secondly, our GAAP and adjusted financials include a one time $5,400,000 or $0.05 per share deleveraging payment fee that was required under the 1st lien term facility agreement due to our lower net debt leverage ratio at year end. That is included and negatively impacted adjusted net income and EPS for the Q4 fiscal year. I will now share more detail on our Q4 and fiscal year results that we reported earlier.

Speaker 3

Total revenue was $194,800,000 in the current year quarter, increasing 15% compared to $168,900,000 in Q4 of 2022. The increase was attributable to our average ship count increasing 9% to 184 health and wellness centers onboard ships operating during the quarter, compared with our average ship count of 169 health and wellness centers onboard ships operating during the Q4 of 2022. Additionally, our initiatives to drive revenue growth in each of our onboard health and wellness centers through enhanced guest engagement and experiences, service and product offering innovations and the disciplined execution of our complex operating protocols by our onboard and corporate teams. Cost of service was $131,800,000 compared to $114,900,000

Speaker 4

in the Q4 of 2022.

Speaker 3

The increase was primarily attributable to costs associated with increased service revenue of $158,900,000 in the quarter from our operating health and wellness centers at sea and on land compared with service revenue of $139,000,000 in

Speaker 4

the Q4 of 2022.

Speaker 3

Cost of products was $30,700,000 compared to $24,300,000 in the Q4 of 2022 with the increase primarily attributable to costs associated with the increased product revenues of $35,900,000 in the 4th quarter, compared to product revenues of $30,000,000 in the Q4 of 2022. Net loss was $7,300,000 or net loss per diluted share of 0 point diluted share of 0.03 in the Q4 of 2022. The $5,000,000 increase in net loss was attributable to firstly, a $3,000,000 negative change in the fair value of our warrant liabilities secondly, a $1,800,000 decrease in interest expense offset by the one time $5,400,000 deleveraging fee payable to our lenders required under the 1st lien term facility due to our lower net debt leverage ratio at year end. And thirdly, a $2,100,000 long lived asset impairment charge I referenced earlier, partially offset by the $4,000,000 positive change in income from operations prior to that long lived asset impairment. As you know, the change in fair value of the annualized loans during the 3 months was a loss of $10,800,000 compared to a loss of $7,800,000 during the 3 months ended December 31, 2022.

Speaker 3

The change in the failure of the warrant liabilities was the result of changes in market prices of our common stock and other observable inputs deriving the value of these financial instruments. Adjusted net income was $12,500,000 or adjusted net income per diluted share of 0.12p including the negative impact of a one time $5,400,000 deleveraging fee or $5,000,000 per diluted share as compared to adjusted net income of $12,800,000 or adjusted net of $0.14 in the Q4 of 2022. Adjusted EBITDA increased 13% to $23,400,000 compared to adjusted EBITDA of $20,700,000 in the Q4 of 2022. And then briefly for the fiscal year as mentioned, total revenue $794,000,000 an increase of 45% compared to $546,000,000 for the prior year ended. Adjusted net income more than doubled to $61,900,000 or adjusted net income per share of 0.63p including that negative $5,400,000 or $5 per diluted share one time deleveraging fee.

Speaker 3

This compares to adjusted net income of $26,700,000 or adjusted net income per diluted share of 0.28p in the year ended December 31, 2022. And adjusted EBITDA increased an impressive 77% to $89,200,000 compared to $50,400,000 in the year ended December 31, 2022. As it relates to the balance sheet, cash and borrowing capacity under the company's line of credit at December 31 totaled $48,900,000 In the 4th quarter, the company repaid $5,000,000 on 1st lien term loan bringing total payments for the year to $41,000,000 Since the Q2 of 2022, we have repaid a total of $74,100,000 in debt instruments, reducing ongoing interest expense. We ended the year with total debt, net of deferred financing costs of $158,200,000 and importantly a debt leverage ratio of 1.48 times at year end, which compares very favorably to our year end twenty 19 debt leverage ratio of 3.62 times. As a result of our deleveraging, we have substantially strengthened our balance sheet and reduced future interest expense.

Speaker 3

In the 4th quarter, unlevered after tax free cash flow was $16,900,000 compared to $19,000,000 in the Q4 of prior year. And for the fiscal year, unlevered after tax free cash flow increased 75% to 79 point $1,000,000 compared to $45,100,000 in the prior year. The company expects to continue to generate positive cash flow from operations in the first quarter of 2024 and throughout fiscal year 2024. Moving then on to guidance. For the Q1 of 2024, we expect total revenue in the range of $204,000,000 to $209,000,000 and adjusted EBITDA in the range of $21,500,000 to $23,500,000 Our Q1 guidance assumes operating on 193 cruise ships and to operate at 5,100 resorts.

Speaker 3

For the full fiscal 2024 year, we continue to expect total revenue in the range of $850,000,000 to $870,000,000 and adjusted EBITDA in the range of $90,000,000 to $100,000,000 We expect to end fiscal 2024 operating on 190 7 cruise ships and at 50 resorts. Overall, we feel very confident outlook as we begin 2024. Our business momentum remains strong and we expect the ongoing implementation of our strategy to deliver another year of record performance and increasing value for all of our shareholders. With that, we will open up the call to questions. Operator, please go ahead.

Operator

Thank you. We will now begin the question and answer session. The first question comes from Sharon Zackfia with William Blair. Please go ahead.

Speaker 5

Hi, good morning. I guess a quick question on the '24 guidance. I know that the cruise lines kind of have an unusual amount of dry docks this year. Can you talk about how that the impact of that on your revenue in 2024 and whether that's kind of a one time dynamic in 2024 and then we see maybe a tailwind for more normalized drydock in 2025 based on your insights with your cruise

Speaker 2

partners? Yes. Hi, Sharon, it's Leonard. Look, drydocks are part and parcel of, I would say, normalized cruising. So what we're seeing this year might be a slightly higher level of dry docks just because they've been getting ships back into service.

Speaker 2

Some of the dry docks got pushed out a little bit, but they're all scheduled now and they happen every single year. So even though this year might be slightly higher than average, 25% or back to normalized dry docks, which ships have to do, and are scheduled and we take it into account. When we receive the itineraries from the different banners that we serve. So all of the dry docks that we have been notified of clearly are scheduled and are included in our guidance. Okay.

Speaker 5

And then, Stephen, I'm sorry, my cell dropped for like a second there while you were talking. Did you quantify the dry dock impact of that large ship in the Q4? Was it material?

Speaker 3

It was approximately $1,000,000

Speaker 5

Okay. And then last question for me. The revenue per shipboard staff per day, if I'm looking at it correctly, did go down a bit year over year. Is that kind of I know there was some pricing that you were able to take advantage of last year in the holiday period on services.

Speaker 2

Are you seeing some more normalization there? Or is

Speaker 5

that reflective of the

Speaker 2

Yes. I think part of it is normalization, Sharon, to your point. Clearly, some of the unexpected nuances of dry docks in the Q4 and some of the shifts being impacted by the Middle East impacted that number. But other than that, I think we're getting into a very normalized territory.

Speaker 1

Okay, great. Thank you.

Speaker 2

Thanks, Sharon.

Operator

The next question comes from Steve Wieczynski with Stifel. Please go ahead.

Speaker 6

Hi, this is Jackson Gibb on for Steve Wieczynski. Thanks for taking my question. So we've heard recently from some of your cruise line partners and they seem to be focusing more and more on pre booking as a focus for driving onboard revenues. I'm just wondering if you could give us an update on how pre cruise booking metrics are trending as well as collaboration progress with the operators, if there are any tangible opportunities out there to push adoption even further?

Speaker 2

Yes. So you're absolutely right. I think across the industry, we've seen an incredible amount of energy and focus around pre booking across the entire onboard revenue platform that's offered on all the ships, including us. Their focus is simply making customer choice is easier, getting their crews more organized, planning. But at the same time, we have seen as they have seen, the higher amount of pre booked revenue going into the cruise portends to a much better spend for that week.

Speaker 2

And we've seen it 30% to 35% up. I think to your point, because they're so focused on it, we are getting tremendous collaboration with them and we're going to be working on different types of campaigns, email campaigns to get them to pre book offering marketing. And I think the whole technology improvement reducing the friction around the pre booking side is starting to impact the level of pre book, which we said got up to 20 3%. We believe that will continue to grow in 2024. We now have all of NCL on board, which came on late in 2023, which I think will have a positive impact to 2024's level.

Speaker 2

So I think with the collaboration with us providing more imaging and marketing, that we'll be able to drive some additional pre booking activity. And I think with the cruise line supporting it and their focus on it, it's a real positive turn for us.

Speaker 6

Okay. That's great to hear. And just one more, if I may. So you balanced $5,000,000 of debt pay down with $9,000,000 of share repurchases

Speaker 7

in the Q4. Is this

Speaker 6

an approach that we should expect moving forward? Just wanted to get your updated thoughts on capital allocation priorities between debt reduction, buybacks and the potential interest?

Speaker 3

Yes. So as you noted appropriately, we did do 2 things in the quarter debt payback and same time share repurchases. We're in a good position now where we have reached our targeted leverage ratio as it relates to the debt and therefore have flexibility going forward as to how we proceed. So we'll see how it plays out, how interest rates change and how we build cash will determine how we proceed on a go forward basis. But certainly, I think it's appropriate to consider those items obviously as we have before not being mutually exclusive and we don't have to focus on just one or the other.

Speaker 3

We will look at both debt pay downs and returning cash to shareholders as appropriate.

Operator

Was there a follow-up, Mr. Rusinski?

Speaker 6

Nope. That's it for me. Thank you.

Operator

Thank you. The next question comes from Gregory Miller with Truist Securities. Please go ahead.

Speaker 7

Thank you. Good morning, gentlemen. I thought I'd start high level in terms of spend patterns by customer price point. Have have you seen any recent deviation and trends between contemporary banner passengers and passengers within the premium and luxury banners? Are you seeing any weak spots among the

Speaker 2

Okay, great. No, we actually haven't seen any drop off or any change or any levels of concern or any gaps across any of the different demographics. So high end and mass and contemporary are all performing well. So we've seen no sign of guest demand for our services and our ability to bring them into the spa.

Speaker 7

Excellent to hear. As for my second question, I'd like to ask you about the global minimum tax. Could you provide your current perspective on any anticipated impact to your company, if any?

Speaker 3

Yes, Greg. I think everybody is obviously very aware of the Organization For Economic Cooperation and Development, OECD issued a model for implementing a 15% global minimum tax. The application of the rules relating to these taxes continues to evolve and there are countries that are still in the process of issuing rules and regulations as it will relate to those taxes. The Bahamas included has not finalized anything in that regard. So I believe there will be any impact to 1 small world until at least 2026.

Speaker 3

We will obviously continue to monitor this arena and implement negating actions as feasible to minimize any potential future impact. At this point in time, that is where we stand.

Speaker 7

Okay. I appreciate it. That's all for

Speaker 4

me. Thank you.

Operator

The next question comes from Max Rochnick with TD Cowen. Please go ahead.

Speaker 8

Hey, guys. Thanks a lot and congrats on really nice results. So first, can you remind us, did you incorporate Hallmark pricing or any sort of pricing actions over the holiday period? If so, how successful was it? Did you see any elasticity

Speaker 7

So,

Speaker 2

So Max, hallmark pricing obviously goes in every time we go through the Christmas New Year period and it continued as we did in 2022 across most of the banners and in fact still stays in place on some banners. We've seen no resistance to the hallmark pricing. And clearly where we do, we're able to discount, but we've seen less discounting than we've ever seen before that we might have seen 2019 and prior to that. So the simple answer is it's working. Hallmark pricing has some stickiness.

Speaker 2

And where it does across different services as we keep it in place for as long as we can. With respect to the second question, we just can you just repeat the second question that you had there, the back half of your question, Max? Sorry.

Speaker 8

Yes, certainly. So just curious if you're incorporating pricing actions into your

Speaker 2

No. We haven't incorporated any pricing leverage or pricing or targeted pricing increases in the guidance. However, we do have places where we believe pricing leverage can be taken, but we have not decided when to move on that. We're just going to continue as we have post year end and we'll kind of see how the year filters out. But given the good start that we've had, I don't expect that we'll have a problem in certain areas to move it up where we can and where the demand is strong.

Speaker 8

Got it. Okay. And then switching gears, where do you think your pre booking revenue mix can go in 'twenty four? I think you previously gave a range with 30% potentially at the high end. So just curious what's feasible over the next both year as well as over the medium term?

Speaker 2

We've kind of set a target long term of where we'd like it to be, which is going to take a few years. But as one of the questions was fielded earlier on in the session here, I think given that the cruise lines are so hyper focused on moving more and more people to the prebook platform, we will continue to see collaboration and continued effort to improve and get attachment into pre book. We're making certain refinements, working with them, showing best in class what's working, what's not working, where they can improve their sites. So our targeted number ultimately is in the low 30s. When we'll get there, I'm not sure.

Speaker 2

But I certainly believe given the focus and support we're getting, we'll continue to move positively toward that number.

Speaker 8

Okay. And then just last quick one for me. But unless I missed it, can you walk through sort of what drove the pressure in your adjusted service gross margin? It was a little bit, outsized this quarter. So is there anything that we should be cognizant of whether it was one time or if something should continue into 2024?

Speaker 3

No, we don't believe, Max, if there's anything that should continue. It's just seasonality in the market. As we always say, our focus is on driving total absolute dollars, and it makes absolutely no sense for us to have therapists on board that don't work, that the time that they have available, if they don't use it perishes. So as appropriate and necessary, there are many tools that managers use on board, including discounting necessary to increase utilization, which drives absolute dollars. And so we're always focused on the absolute dollars, but nothing that sticks out per se in

Speaker 7

the 4th quarter. Okay, great.

Speaker 8

Thanks a lot guys. Beth, 3 to 4th and we'll speak soon.

Speaker 2

Thanks.

Operator

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

Speaker 9

Thanks. Just a little housekeeping. With the warrants

Speaker 4

set to expire, Mark, do you expect any change in your share count that we should know about?

Speaker 3

Laura, good morning. On a treasury basis, the warrants are included each quarter as we do the diluted share count calculation. The interesting part that will play out here for us is to what extent these warrants are exercised on a cash basis, cashless basis. As you know, they have an $11.50 strike price. And so to the extent they're exercised on a cash basis, some of which don't have the optionality, by the way, they do have to exercise on a cash basis.

Speaker 3

That will determine how much cash comes into the company. And then it may impact it would impact the diluted share count because it's not on a cashless basis. So right now, we have to wait and see exactly how that plays out. And it's literally 2 weeks 2 or 3 weeks away March 19 is when it so we'll have more visibility then. But remember just from a pure cashless treasury basis, it's already included in the share count number.

Speaker 4

Understood. If this does generate meaningful cash, would the company use that to pay down debt or is it not an expected win for all that magnitude?

Speaker 3

I think it's too early to make that determination. It really is a matter of cash comes in and then we'll see how to move forward. But again, I would reiterate as we exhibited in the Q4 that we don't have to be mutually exclusive in our decision making as it relates to holders.

Speaker 4

Understood. Thank you.

Operator

The next question comes from Alsia Georgieva with Infinity Research. Please go ahead.

Speaker 9

Good morning, guys. Stephen, maybe the first question is for you. Given this 5,400,000 dollars one time charge, I think you said specifically, shouldn't we exclude it from adjusted EBITDA and then arrive at Q4 EBITDA of close to €29,000,000 And related to this, do you expect as you continue to pay down the 1st lien term loan that you may be incurring other such charges going forward?

Speaker 3

As it relates to the second part of your question, Asiya, no, this is indeed just a one time payment for the reduction in our leverage ratio will not generate any additional charges. So there will be no additional charges similar to this. It is technically already excluded from EBITDA because it's recorded as an interest payment. So it is outside of the EBITDA calculation.

Speaker 9

Okay. Thank you for that clarification. And just kind of comparing Q4 to the Q1 cadence in adjusted EBITDA guidance. And I understand that Q1 is the weakest quarter out of the year. And again, we probably have slightly more dry docks versus Q4.

Speaker 9

Shouldn't we expect EBITDA to be at the top end of your range, the $23,500,000 as opposed to sort of a reduction versus Q4?

Speaker 3

We obviously provide a range of EBITDA that encompasses what our expectation would be. I don't think it would be appropriate for me to say we should you expect it to be at the high end of the range or not. Our expectation is that it will fall as of right now, our expectation is that it will fall within that range.

Speaker 9

I have sorry. Thank you, Steven. And Just a question on the warrants to kind of follow-up on what Laura was asking. Can you give us just a rough percentage of what part of the warrants are cash only exercised?

Speaker 3

I will tell you that it's not a simple calculation because depending on whether or not sponsor warrants were subsequently transacted, they lose that capability. So there is a nuance to how much will be cashless and how much will be non cashless. I honestly don't know yet. That's why I keep saying we have to wait and see what happens between now March 19 in order to determine exactly how much cash might come in or in fact if any of the warrants may not get exercised. I wouldn't be surprised if there's some that just fall away and nothing happens with them.

Speaker 3

So I don't know just yet. I see that's because of the nuance around whether they were traded or not. And once they get traded, they lose the right of the cashless exercise. So don't know at this point in time.

Speaker 9

I can't wait for these 3 weeks to be over because as you can imagine for us on the outside looking in, it's even more complicated and sometimes confusing to figure out exactly what would happen with those warrants. So I'm hoping for the best outcome on March 19.

Speaker 3

Yes. Look, it's 5 years, right? Believe it or not, 5 years since the leaseback.

Speaker 9

Yes, we've been waiting. Well, thank you very much for answering my questions.

Operator

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

Speaker 2

Right. Thank you all for joining us today. We look forward to speaking with you when we report our Q1 results in May. Thanks for joining today. Talk soon.

Speaker 2

Bye bye.

Operator

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

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Key Takeaways

  • OneSpa World delivered a record Q4 with revenue of $194.8 million (+15%), income from operations of $12.6 million (+18%) and adjusted EBITDA of $23.4 million (+13%), capping a record FY 2023 with $794 million in revenue (+45%) and $89.2 million in adjusted EBITDA (+77%).
  • The company’s fiscal 2024 guidance anticipates Q1 revenue of $204–209 million and adjusted EBITDA of $21.5–23.5 million, with full-year revenue of $850–870 million and adjusted EBITDA of $90–100 million, reflecting ongoing momentum.
  • Operational enhancements drove productivity: pre-booked services rose to 23% of service revenue with availability on 91% of vessels, while revenue per staff per day, pre-booking rates and average guest spend all grew double digits versus 2019.
  • OneSpa World expanded its footprint by adding 10 new health and wellness centers in 2023, securing partnerships with Crystal and Adora Cruises, and expects five new ship builds plus 48 MediSpa deployments in 2024.
  • The company strengthened its balance sheet by repaying $74.1 million of debt since mid-2022, repurchasing $9 million of stock, fully repaying its second lien loan and ending FY 2023 with $48.9 million in liquidity and a leverage ratio of 1.48×.
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Earnings Conference Call
OneSpaWorld Q4 2023
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