About OneSpaWorld: Headquartered in Nassau, Bahamas, OneSpaWorld is one of the largest health and wellness services companies in the world. OneSpaWorld's distinguished health and wellness centers offer guests a comprehensive suite of premium health, wellness, fitness and beauty services, treatments, and products, currently onboard 207 cruise ships and at 46 destination resorts around the world. OneSpaWorld holds the leading market position within the cruise industry segment of the international leisure mark ...

Core Insights - Ariel Investments reported a strong performance for its Small Cap Concentrated Value Strategy in Q3 2025, with a gross return of +15.08% and a net return of +14.93%, outperforming the Russell 2000 Value Index and the Russell 2000 Index [1] Company Performance - OneSpaWorld Holdings Limited (NASDAQ:OSW) operates health and wellness centers on cruise ships and at destination resorts, with a market capitalization of $2.094 billion as of November 27, 2025 [2] - In Q3 2025, OneSpaWorld's revenue increased by 7% to $258.5 million, despite a one-month return of -12.56% and a 52-week gain of 7.32% [4] Investment Analysis - OneSpaWorld's stock performance detracted from the overall strategy's performance, even though the company beat earnings estimates and raised full-year guidance [3] - The company is focusing on AI-driven initiatives to improve yields and expand margins, while also managing debt and returning capital to shareholders through buybacks and dividends [3] - Despite acknowledging OneSpaWorld's potential, the analysis suggests that certain AI stocks may offer greater upside potential with less downside risk [4]

Core Insights - OneSpaWorld has published its second annual Sustainability and Social Responsibility Report, emphasizing its commitment to responsible business practices and transparency in ESG matters across global operations [2][3]. Group 1: ESG Commitment - The report outlines ongoing efforts to support people, partners, and the planet, highlighting the company's scale and responsibility as a steward for its workforce and the environment [3]. - OneSpaWorld's approach to ESG is grounded in core practices such as investing in employees, prioritizing safety and sustainability, and strengthening global partnerships [3]. Group 2: Key Focus Areas - **Our Talent**: The company prioritizes employee development and inclusion, with a workforce representing 88 nationalities and a shipboard personnel retention rate above 70% [4]. - **Our Care**: Health and safety are core responsibilities, with over 750 site visits completed in 2024 to ensure structured training and proactive reporting [4]. - **Our Planet**: Collaborations with cruise line and resort partners aim to integrate sustainability into facility design and reduce environmental footprints by limiting single-use plastics and adopting paperless practices [4]. - **Our Supply Chain**: OneSpaWorld partners with over 90 suppliers to source safe and high-quality products, ensuring safety and care for guests and the planet [5]. - **Our Integrity**: The company emphasizes strong corporate governance and cybersecurity practices, focusing on ethical operations and secure information handling [5]. Group 3: Company Overview - OneSpaWorld, headquartered in Nassau, Bahamas, is one of the largest health and wellness services companies globally, operating on 205 cruise ships and at 48 destination resorts [7]. - The company has established a leading market position within the cruise industry segment of the international leisure market, built over six decades through exceptional service and product innovation [7].

Revenue Performance - Total revenues increased by 7% to $258.5 million for the three months ended September 30, 2025, compared to $241.7 million in the same period of 2024[102]. - Service revenues accounted for 80% of total revenues at $208.0 million, while product revenues made up 20% at $50.5 million for the three months ended September 30, 2025[101]. - Total revenues increased 6% to $718.9 million for the nine months ended September 30, 2025, compared to $677.8 million for the same period in 2024[113]. - Service revenues for the nine months ended September 30, 2025 were $579.9 million, an increase of $32.5 million, or 6%, compared to $547.5 million for the same period in 2024[116]. - Product revenues for the nine months ended September 30, 2025 were $139.0 million, an increase of $8.6 million, or 7%, compared to $130.4 million for the same period in 2024[116]. - The increase in total revenues was driven by a 4% rise in average guest spend and a 1% increase in revenue days[102]. Income and Expenses - Net income for Q3 2025 was $24.3 million, compared to $21.6 million in Q3 2024, representing a 13% increase[101]. - Net income for the nine months ended September 30, 2025 was $59.6 million, an increase of $1.1 million, or 2%, compared to $58.5 million for the same period in 2024[122]. - Interest expense, net for the nine months ended September 30, 2025 was $3.9 million, a decrease of $3.8 million, or 49%, compared to $7.7 million for the same period in 2024[120]. - Administrative expenses for the nine months ended September 30, 2025 were $13.2 million, a decrease of $0.2 million, or 1%, compared to $13.0 million for the same period in 2024[117]. Operational Metrics - Average ship count increased to 199 in Q3 2025 from 195 in Q3 2024, while period end ship count rose to 204 from 196[90]. - Average weekly revenue per ship increased to $95,675 in Q3 2025 from $91,019 in Q3 2024, reflecting improved productivity[90]. - Average revenue per shipboard staff per day rose to $622 in Q3 2025, up from $602 in Q3 2024, indicating enhanced staff productivity[90]. - Revenue days increased to 18,338 in Q3 2025 from 17,908 in Q3 2024, contributing to higher revenue generation[90]. - Average weekly revenue per destination resort decreased to $10,794 in Q3 2025 from $11,860 in Q3 2024, impacted by renovations and closures[90]. Cash Flow and Financing - Cash flow from operating activities for the nine months ended September 30, 2025 was $63.6 million, compared to $62.2 million for the same period in 2024[126]. - Net cash provided by operating activities increased to $63.6 million for the nine months ended September 30, 2025, compared to $62.2 million in 2024, driven by a $10.1 million increase in net income, net of non-cash items[128]. - Cash outflows from working capital for the nine months ended September 30, 2025, were $23.1 million, primarily due to a $16.5 million increase in inventories and a $3.7 million increase in other non-current assets[129]. - Net cash used in investing activities rose to $10.0 million for the nine months ended September 30, 2025, compared to $3.4 million in 2024, with investments in leasehold improvements and technology enhancements[131]. - Net cash used in financing activities increased to ($81.7) million for the nine months ended September 30, 2025, including $55.5 million for share repurchases and $13.7 million repayment on the Term Loan Facility[132]. - The company repaid a total of $73.3 million in debt instruments since the year ended December 31, 2023[108]. - The company plans to continue funding operations through cash flow from operations and has sufficient liquidity to meet capital requirements over the next twelve months[124]. - The company purchased 2,094,000 common shares under its 2024 Share Repurchase Program and 816,028 common shares under its 2025 Share Repurchase Program[123]. Market and Economic Conditions - The company experienced significant seasonality, with higher revenue yields typically occurring in the third quarter and holiday periods due to increased cruise demand[133]. - The company does not believe inflation has materially affected revenues, but acknowledges that economic conditions could adversely impact the cruise and hospitality industries[137]. - There have been no material changes to the company's exposure to market risks since the 2024 Form 10-K[140]. - The company made strategic purchases to increase inventories in anticipation of supplier price increases and to support new health and wellness centers[129]. Future Obligations and Accounting Policies - As of September 30, 2025, future contractual obligations remained consistent with amounts disclosed in the 2024 Form 10-K[134]. - The company’s critical accounting policies have not significantly changed during the nine months ended September 30, 2025, compared to those disclosed in the 2024 Form 10-K[136].

Financial Data and Key Metrics Changes - Total revenues increased by 7% to $258.5 million compared to $241.7 million in Q3 2024 [5][15] - Income from operations rose by 5% to $26.3 million compared to $25 million in Q3 2024 [5] - Net income increased by 13% to $24.3 million compared to $21.6 million in Q3 2024 [5][16] - Adjusted EBITDA grew by 6% to $35 million compared to $33 million in Q3 2024 [5][17] - Service margin was 17.3%, slightly below the previous year but higher than the first and second quarters of 2025 [16][30] Business Line Data and Key Metrics Changes - Health and wellness centers operated on 204 ships, up from 196 ships in Q3 2024 [5][6] - Medi-Spa services were available on 150 ships, an increase from 144 ships in the previous year [7][8] - Higher value services such as Medi-Spa, IV Therapy, and acupuncture saw strong double-digit sales growth [7] Market Data and Key Metrics Changes - The average ship count for the quarter was 199, compared to 195 in Q3 2024 [5] - The company reported a 4% increase in average guest spend, contributing to revenue growth [15] Company Strategy and Development Direction - The company continues to execute an asset-light business model, generating strong free cash flow and returning value to shareholders through dividends and share repurchases [4][10] - Plans to introduce two additional health and wellness centers on new ship builds in Q4 2025, totaling eight new centers for the year [6][10] - The company is focusing on enhancing productivity through AI initiatives aimed at revenue enhancement and operational efficiency [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's favorable momentum and positive outlook for Q4 2025 [10][20] - The board approved a 25% increase in the quarterly dividend payment, reflecting strong cash flow generation [10][12] - Management noted no material changes in guest spending patterns, maintaining strong attachment rates and pre-cruise revenue [26] Other Important Information - The company repurchased $17.6 million worth of common shares during the quarter and paid down $11.3 million in debt [12][19] - Total cash at quarter end was $30.8 million, with total debt reduced to $85.2 million [18][19] Q&A Session Summary Question: Benefits from AI technology implementation - Management indicated that it is too early to commit to specific improvements from AI initiatives, with expectations for more clarity by Q2 next year [22][23] Question: Guest spending patterns - Management reported positive trends in revenue per passenger per day and consistent pre-cruise revenue, with no material reduction in guest spending observed [26] Question: Service margin mix - The slight decrease in service margin was attributed to the mix of cruise lines rather than a shift in passenger spending behavior [30][32] Question: Global minimum tax impact - Management expects no impact from the global minimum income tax due to ongoing organizational changes [34] Question: Increase in guest count and average spend - The increase in guest count and spending was attributed to new ships entering service and improved facility utilization [38] Question: Cash management strategy - The company aims to maintain around $25 million in cash while prioritizing share repurchases and dividends in its capital allocation strategy [40] Question: Staffing and talent management changes - The company is redesigning its talent management process to enhance staff utilization across different service modalities [44][45] Question: Impact of hurricane season - Management reported no tangible or material impact from the hurricane season on operations [50] Question: CapEx related to AI initiatives - The increase in CapEx was primarily related to investments in AI projects [51]

Financial Data and Key Metrics Changes - Total revenues increased by 7% to $258.5 million compared to $241.7 million in Q3 2024 [6][17] - Income from operations rose by 5% to $26.3 million from $25 million in Q3 2024 [6] - Net income increased by 13% to $24.3 million compared to $21.6 million in Q3 2024 [6][19] - Adjusted EBITDA grew by 6% to $35 million from $33 million in Q3 2024 [6][19] - Service margin was 17.3%, slightly down from the previous year but higher than the first and second quarters of 2025 [18] Business Line Data and Key Metrics Changes - The company operated health and wellness centers on 204 ships, up from 196 ships in Q3 2024 [6][7] - Medi-Spa services were available on 150 ships, an increase from 144 ships in the previous year [9][10] - Higher value services, including Medi-Spa, IV Therapy, and acupuncture, saw strong double-digit sales increases [9] Market Data and Key Metrics Changes - The average ship count for the quarter was 199, compared to 195 in Q3 2024 [6] - The company had 4,466 cruise ship personnel, up from 4,204 in Q3 2024 [7] Company Strategy and Development Direction - The company continues to execute an asset-light business model, generating strong free cash flow and returning value to shareholders through dividends and share repurchases [5][12] - The board approved a 25% increase in the quarterly dividend to $0.05 per share, reflecting consistent cash flow generation [12][14] - The company is focused on enhancing health and wellness center productivity and expanding higher value services [10][11] - AI initiatives are being implemented to enhance revenue and operational efficiencies [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's favorable momentum and outlook for Q4 2025, expecting continued growth [12][21] - The company anticipates total revenue for fiscal 2025 to increase in the high single-digit range, with adjusted EBITDA expected to rise by 10% [22] Other Important Information - The company repurchased $17.6 million worth of common shares during the quarter and an additional $15 million post-quarter [14][20] - Total cash at quarter end was $30.8 million, with total debt reduced to $85.2 million [19][20] Q&A Session Summary Question: Benefits from AI technology implementation - Management indicated that it is too early to commit to specific improvements from AI initiatives, with expectations for more clarity by Q2 next year [25][26] Question: Guest spending patterns - Management reported positive trends in revenue per passenger per day and consistent spending, with no material changes observed [28][30] Question: Service margin mix - The slight decrease in service margin was attributed to ship mix rather than a shift to lower-priced services [34][36] Question: Global minimum tax impact - Management expects no impact from the global minimum tax due to ongoing organizational changes [39] Question: Increase in guest count and average spend - The increase in guest count and average spend was attributed to new ships coming into service and improved facility utilization [44] Question: Cash management strategy - The company aims to maintain around $25 million in cash while prioritizing share repurchases and dividends [46] Question: Staffing and talent management changes - The company is redesigning its talent management process to enhance staff utilization across different service modalities [51][52] Question: CapEx related to AI initiatives - The increase in CapEx was primarily related to investments in AI projects [60]

Core Viewpoint - OneSpaWorld reported quarterly earnings of $0.29 per share, matching the Zacks Consensus Estimate, and showing an increase from $0.26 per share a year ago [1]. Financial Performance - The company posted revenues of $258.52 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 0.18%, and up from $241.7 million year-over-year [2]. - Over the last four quarters, OneSpaWorld has surpassed consensus revenue estimates four times [2]. Stock Performance and Outlook - OneSpaWorld shares have increased approximately 7% since the beginning of the year, while the S&P 500 has gained 17.2% [3]. - The company's future stock performance will largely depend on management's commentary during the earnings call and the earnings outlook [4]. Earnings Estimates - The current consensus EPS estimate for the upcoming quarter is $0.26 on revenues of $241.55 million, and for the current fiscal year, it is $1.01 on revenues of $959.98 million [7]. - The estimate revisions trend for OneSpaWorld was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6]. Industry Context - The Leisure and Recreation Services industry, to which OneSpaWorld belongs, is currently in the top 30% of over 250 Zacks industries, suggesting a favorable industry outlook [8].

Financial Performance - Total revenues for Q3 2025 reached $258.5 million, a 7% increase from $241.7 million in Q3 2024[6] - Net income for Q3 2025 was $24.3 million, up 13% from $21.6 million in Q3 2024, resulting in a net income per diluted share of $0.23[6][11] - Adjusted EBITDA for Q3 2025 increased 6% to $35.0 million compared to $33.0 million in Q3 2024[6][11] - Total revenues for the three months ended September 30, 2025, increased by 7% to $258.5 million compared to $241.7 million for the same period in 2024[24] - Net income for the three months ended September 30, 2025, was $24.3 million, reflecting a 13% increase from $21.6 million in the same period of 2024[24] - Adjusted net income for the three months ended September 30, 2025, was $30.4 million, compared to $27.3 million for the same period in 2024[33] - Year-to-date net income for 2025 was $59,556,000, compared to $58,476,000 in the same period of 2024, reflecting a growth of 1.8%[34] - Year-to-date Adjusted EBITDA for 2025 was $92,037,000, an increase of 7.8% from $85,375,000 in 2024[34] Cash and Liquidity - The company ended Q3 2025 with $30.8 million in cash and total liquidity of $80.8 million[8][20] - Total debt at the end of Q3 2025 was $85.2 million after repaying $11.3 million during the quarter[20] Shareholder Returns - The board declared a quarterly dividend of $0.05 per share, marking a 25% increase from previous payments[14][15] - The company repurchased 816,028 shares for $17.6 million during Q3 2025, with an additional $15 million in share repurchases in Q4 2025[15] Revenue Growth Drivers - Average guest spend increased by 4%, contributing significantly to revenue growth[11] - Service revenues rose by 7% to $208.0 million, while product revenues also increased by 7% to $50.5 million for the three months ended September 30, 2025[24] Operational Metrics - Average weekly revenue per ship for the forecasted Q4 2025 is expected to be $95,675, up from $91,019 in Q4 2024[25] - Average revenue per shipboard staff per day increased to $622 in Q4 2025 from $602 in Q4 2024[25] - Capital expenditures for the three months ended September 30, 2025, were $5.6 million, compared to $1.1 million in the same period of 2024[25] - The period-end ship count for Q4 2025 is forecasted to be 206, with an average ship count of 198[25] - The company anticipates maintaining a period-end resort count of 48 for FY 2025[25] Expense Management - The company reported a 45% decrease in interest expense, net, for the three months ended September 30, 2025, amounting to $1.4 million compared to $2.5 million in the same period of 2024[24] - Depreciation and amortization expenses for Q3 2025 were $6,410,000, slightly higher than $6,011,000 in Q3 2024[34] - Stock-based compensation for Q3 2025 amounted to $2,079,000, compared to $1,974,000 in Q3 2024, indicating a rise of 5.3%[34] - Interest expense for Q3 2025 was $1,379,000, down 44.8% from $2,496,000 in Q3 2024[34] - Income tax expense for Q3 2025 was $578,000, a decrease from $966,000 in Q3 2024, reflecting a reduction of 40.2%[34] - Long-lived assets impairment for Q3 2025 was $180,000, with no impairment recorded in Q3 2024[34] - Business combination costs for the year-to-date period in 2025 were $0, compared to $293,000 in the same period of 2024[34] Strategic Initiatives - The company launched wellness centers on four new ship builds during the quarter and plans to launch on two additional ships by year-end[2]

Core Insights - OneSpaWorld reported record financial results for the third quarter of fiscal 2025, with total revenues of $258.5 million, net income of $24.3 million, and adjusted EBITDA of $35.0 million, marking the 18th consecutive quarter of year-over-year growth in these metrics [1][2][4]. Financial Performance - Total revenues increased by 7% compared to the third quarter of 2024, driven by a 4% rise in average guest spend, fleet expansion from new ship builds, and a 1% increase in revenue days [7][8]. - Net income rose by 13% to $24.3 million, with adjusted net income reaching $30.4 million, reflecting a 11% increase year-over-year [17][31]. - Adjusted EBITDA increased by 6% to $35.0 million compared to the same quarter last year [7][31]. Operational Highlights - The company ended the quarter with health and wellness centers on 204 ships, an increase from 196 ships in the previous year, and 49 destination resort health and wellness centers [7][20]. - The average ship count for the quarter was 199, up from 195 in the third quarter of 2024 [21]. - The company launched wellness centers on four new ship builds during the quarter and plans to launch additional centers on two more ships by year-end [2][3]. Capital Allocation and Shareholder Returns - OneSpaWorld returned $4.1 million to shareholders through dividends and repurchased $17.6 million worth of shares during the quarter [3][12]. - The board approved a 25% increase in the quarterly dividend to $0.05 per share, payable on December 3, 2025 [11][12]. - The company ended the quarter with $30.8 million in cash and total liquidity of $80.8 million, positioning it well for future growth [5][17]. Guidance and Outlook - The company expects total revenues for fiscal 2025 to increase by 8% and adjusted EBITDA to rise by 10% at the mid-point of guidance ranges compared to fiscal 2024 results [3][10].

Core Viewpoint - OneSpaWorld Holdings Limited is set to release its Third Quarter Fiscal 2025 earnings on October 29th before the market opens, indicating a focus on transparency and communication with investors [1] Financial Performance - The earnings release will be followed by a conference call on the same day at 10:00 am ET to discuss the quarterly results, highlighting the company's commitment to engaging with stakeholders [1]