PART I - FINANCIAL INFORMATION [Item 1. Unaudited Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Financial%20Statements) Presents OneSpaWorld's unaudited Q1 2025 condensed consolidated financial statements, including balance sheets, operations, comprehensive income, equity, cash flows, and notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | :-------------------- | | Cash and cash equivalents | $22,605 | $57,439 | $(34,834) | | Total current assets | $129,439 | $161,505 | $(32,066) | | Intangible assets, net | $525,899 | $530,032 | $(4,133) | | Total assets | $708,715 | $746,423 | $(37,708) | | Total current liabilities | $74,668 | $79,405 | $(4,737) | | Long-term debt, net | $92,376 | $93,557 | $(1,181) | | Total liabilities | $178,151 | $191,926 | $(13,775) | | Total shareholders' equity | $530,564 | $554,497 | $(23,933) | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------------- | | Service revenues | $178,519 | $172,209 | $6,310 | 3.66% | | Product revenues | $41,111 | $39,017 | $2,094 | 5.37% | | Total revenues | $219,630 | $211,226 | $8,404 | 3.98% | | Income from operations | $16,837 | $16,977 | $(140) | -0.82% | | Interest expense, net | $(1,147) | $(2,955) | $1,808 | -61.18% | | Change in fair value of warrant liabilities | $0 | $7,723 | $(7,723) | -100.00% | | Net income | $15,271 | $21,166 | $(5,895) | -27.85% | | Basic EPS | $0.15 | $0.21 | $(0.06) | -28.57% | | Diluted EPS | $0.15 | $0.21 | $(0.06) | -28.57% | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | | Net Income | $15,271 | $21,166 | $(5,895) | | Foreign currency translation adjustments | $111 | $(38) | $149 | | Net unrealized (loss) gain on derivative | $(559) | $267 | $(826) | | Amount realized and reclassified into earnings | $(228) | $(947) | $719 | | Total other comprehensive loss, net of tax | $(676) | $(718) | $42 | | Total comprehensive income | $14,595 | $20,448 | $(5,853) | [Condensed Consolidated Statements of Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Balance, December 31 | $554,497 | $434,069 | | Net income | $15,271 | $21,166 | | Stock-based compensation | $3,560 | $2,094 | | Repurchase and retirement of common shares | $(37,901) | $(7,736) | | Dividends | $(4,187) | $0 | | Exercise of Sponsor and Public Warrants | $0 | $57,628 | | Balance, March 31 | $530,564 | $515,536 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | | Net cash provided by operating activities | $10,107 | $14,954 | $(4,847) | | Net cash used in investing activities | $(1,697) | $(1,206) | $(491) | | Net cash (used in) provided by financing activities | $(43,347) | $23,962 | $(67,309) | | Net (decrease) increase in cash and cash equivalents and restricted cash | $(34,834) | $37,686 | $(72,520) | | Cash and cash equivalents and restricted cash, End of period | $23,803 | $66,588 | $(42,785) | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes provide context for financial statements, covering business, accounting policies, intangible assets, debt, equity, stock-based compensation, revenue recognition, and other financial instruments - OneSpaWorld is a global provider of health, wellness, fitness, and beauty services and products on cruise ships and in land-based destination resorts, with its predominant business based on cruise ship and resort operations[25](index=25&type=chunk) - The company's net intangible assets were **$525.9 million** as of March 31, 2025, primarily consisting of retail concession agreements, with amortization expense of **$4.1 million** for the quarter[36](index=36&type=chunk) - Long-term debt, net, decreased slightly to **$92.4 million** as of March 31, 2025, following a new credit agreement in September 2024 including a **$100 million** term loan and a **$50 million** undrawn revolving facility, with quarterly amortization payments of **1.25%** on the term loan[37](index=37&type=chunk)[38](index=38&type=chunk)[41](index=41&type=chunk) - A quarterly dividend of **$0.04 per share** was paid on March 26, 2025, and the company repurchased **2,094,498 common shares** for **$37.9 million** during Q1 2025, approving a new **$75.0 million** share repurchase program on April 30, 2025[45](index=45&type=chunk)[47](index=47&type=chunk)[77](index=77&type=chunk) - Stock-based compensation expense increased to **$3.6 million** in Q1 2025 from **$2.1 million** in Q1 2024, primarily due to **$1.4 million** in incremental expense from accelerated vesting related to an executive departure[48](index=48&type=chunk)[49](index=49&type=chunk) - The company uses interest rate swap agreements with a notional amount of **$98.7 million** to hedge its exposure to changes in cash flows from its variable rate Term Loan Facility, designated as cash flow hedges[69](index=69&type=chunk) - Income tax expense decreased to **$0.4 million** in Q1 2025 from **$0.6 million** in Q1 2024, driven by a lower effective tax rate due to higher earnings in foreign jurisdictions and lower earnings in the U.S[73](index=73&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and operating results for Q1 2025, highlighting key performance indicators, revenue drivers, liquidity, and future performance factors [Overview](index=27&type=section&id=Overview) - OneSpaWorld is the leading global operator of health and wellness centers on cruise ships and a significant operator at destination resorts, holding an **18x market share advantage** over its closest maritime competitor[80](index=80&type=chunk) - The company's competitive advantage stems from its extensive global infrastructure, deep staff expertise, broad service offerings, and robust recruitment, training, and logistics platforms[81](index=81&type=chunk) [Key Performance Indicators](index=27&type=section&id=Key%20

Financial Data and Key Metrics Changes - Total revenues increased by 4% to $219.6 million compared to $211.2 million in Q1 2024 [7][14] - Income from operations was $16.8 million, including $2.5 million of nonrecurring severance expense, compared to $17 million in Q1 2024 [7][14] - Adjusted EBITDA rose by 5% to $26.6 million, which included $1.1 million of nonrecurring cash severance expense, compared to $25.3 million in Q1 2024 [8][16] - Net income was $15.3 million or $0.15 per diluted share, down from $21.2 million or $0.21 per diluted share in Q1 2024 [15][16] Business Line Data and Key Metrics Changes - Health and wellness centers operated on 199 ships, with an average ship count of 193 for the quarter, compared to 193 ships and an average of 188 ships in Q1 2024 [8][14] - Revenue per passenger per day, weekly revenue, and revenue per staff per day showed growth, driven by staff retention and enhanced sales training [11] Market Data and Key Metrics Changes - Prebooking revenue as a percentage of total revenues remained strong at 23% [12] - Increased prebooking revenues contributed $2.3 million to overall revenue growth [14] Company Strategy and Development Direction - The company aims to invest in cruise line and destination resort partnerships, innovate guest experiences, and enhance productivity [5][7] - New health and wellness centers were introduced on Norwegian Cruise Line's first PRIMA plus class ship, with plans for additional centers on eight new ships [9] - A new $75 million share repurchase program was approved, extending a previous $50 million program, reflecting a commitment to enhance shareholder value [12][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic economic environment and reaffirmed annual guidance [6][7] - Strong bookings and onboard spending from cruise line partners were noted, with consumers prioritizing experiences [7][20] - The company expects high single-digit revenue and adjusted EBITDA growth rates for fiscal 2025 compared to fiscal 2024 [20] Other Important Information - The company reported a strong balance sheet with total cash of $23.8 million after share repurchases and dividend payments [17] - The majority of operations are not impacted by tariffs, as products for cruise ships are held in a free trade zone [19] Q&A Session Summary Question: Understanding spend patterns on board - Management noted that there has been no significant increase in discounting and that spending continues to increase, with high demand for high-end services [25][26] Question: Full year guidance sensitivity - The low end of the guidance range assumes a moderation in spending on board, but there are no indicators suggesting a significant deterioration in spending [28][30] Question: Prebooking trends and cruise lines' willingness to invest - Prebooking remains stable at 23%, with no significant pullback from cruise lines in investing to reduce friction in prebooking engines [35][36] Question: MediSpa performance and potential slowdown - Demand for MediSpa services remains strong, with no early signs of deterioration even in high-end services [45][46] Question: Buyback sensitivity to business softening - The decision to buy back shares is based on stock value rather than business performance, indicating continued buybacks even if business softens [54][55] Question: Impact of tariffs on spending behavior - No changes in spending activity were observed immediately after tariffs were announced, as consumers continued to spend while on vacation [58][60]

Financial Data and Key Metrics Changes - Total revenues increased by 4% to $219.6 million compared to $211.2 million in Q1 2024 [6][14] - Income from operations was $16.8 million, including $2.5 million of nonrecurring severance expense, compared to $17 million in Q1 2024 [6][14] - Adjusted EBITDA rose by 5% to $26.6 million, which included $1.1 million of nonrecurring cash severance expense, compared to $25.3 million in Q1 2024 [7][16] - Net income was $15.3 million or $0.15 per diluted share, down from $21.2 million or $0.21 per diluted share in Q1 2024 [15][16] - Adjusted net income was $22.6 million or $0.22 per diluted share, compared to $19.3 million or $0.19 per diluted share in Q1 2024 [16] Business Line Data and Key Metrics Changes - Health and wellness centers operated on 199 ships, with an average ship count of 193 for the quarter, compared to 188 ships in Q1 2024 [7][10] - Sales productivity increased due to the introduction of higher value services such as MediSpa, IV therapy, and acupuncture [9][10] - Revenue per passenger per day, weekly revenue, and revenue per staff per day showed growth driven by staff retention and enhanced sales training [10] Market Data and Key Metrics Changes - Cruise line partners experienced strong bookings and onboard spending, with consumers prioritizing cruising as a value alternative [6][8] - Prebooking revenue as a percentage of total revenues remained strong at 23% [10][11] Company Strategy and Development Direction - The company aims to invest in cruise line and destination resort partnerships, innovate guest experiences, and enhance productivity [5][6] - New health and wellness centers were introduced on Norwegian Cruise Line's first PRIMA plus class ship, with plans for additional centers on eight new ships [8][10] - A new $75 million share repurchase program was approved, extending a previous $50 million program, reflecting the company's commitment to enhancing shareholder value [11][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic economic environment and reaffirmed annual guidance [6][19] - The company expects high single-digit revenue and adjusted EBITDA growth rates for fiscal 2025 compared to fiscal 2024 [19][20] - Positive trends were noted at the start of Q2, with expectations for continued strong performance [12][20] Other Important Information - The company maintained a strong balance sheet with total cash of $23.8 million after share repurchases and dividend payments [17] - Total debt net of deferred financing costs was $97.4 million, down from $98.6 million at the end of 2024 [17] Q&A Session Summary Question: Understanding spend patterns on board - Management noted that there has not been a significant increase in discounting, and spending continues to increase, with high demand for high-end services [24][25] Question: Full year guidance sensitivity - The low end of the guidance range assumes a moderation in spending on board, but no significant deterioration is currently anticipated [27][29] Question: Pre-booking trends - Pre-booking remains stable at 23%, with no significant pullback from cruise lines in investing to reduce friction in pre-booking engines [33][35] Question: MediSpa performance and potential slowdown - Demand for MediSpa services remains strong, with no early signs of deterioration observed [44][45] Question: Impact of tariffs on spending - No changes in spending activity were noted immediately following tariff announcements, as consumers continued to spend while on board [56][60]

Company Performance - OneSpaWorld (OSW) reported quarterly earnings of $0.22 per share, exceeding the Zacks Consensus Estimate of $0.21 per share, and up from $0.19 per share a year ago, representing an earnings surprise of 4.76% [1] - The company posted revenues of $219.63 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.18%, and compared to revenues of $211.23 million in the same quarter last year [2] - Over the last four quarters, OneSpaWorld has surpassed consensus EPS estimates two times and topped consensus revenue estimates four times [2] Stock Outlook - OneSpaWorld shares have declined approximately 11.4% since the beginning of the year, while the S&P 500 has decreased by 5.5% [3] - The current consensus EPS estimate for the upcoming quarter is $0.22 on revenues of $236.44 million, and for the current fiscal year, it is $0.94 on revenues of $952.15 million [7] Industry Context - The Leisure and Recreation Services industry, to which OneSpaWorld belongs, is currently ranked in the bottom 39% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact OneSpaWorld's stock performance [5]

Financial Performance - Total revenues for Q1 2025 were $219.6 million, a 4% increase from $211.2 million in Q1 2024[6] - Net income for Q1 2025 was $15.3 million, down from $21.2 million in Q1 2024, primarily due to a $7.7 million benefit from fair value changes in warrant liabilities in the prior year[6] - Adjusted EBITDA increased by 5% to $26.6 million compared to $25.3 million in Q1 2024[6] - Service revenues increased by 4% to $178,519, while product revenues rose by 5% to $41,111 compared to the same period last year[25] - Net income decreased by 28% to $15,271 from $21,166 in Q1 2024, with net income per share at $0.15[25][34] - Adjusted net income for Q1 2025 was $22,592, up from $19,298 in Q1 2024, resulting in adjusted net income per diluted share of $0.22[34] - Adjusted EBITDA for Q1 2025 was $26,576, compared to $25,280 in Q1 2024, reflecting a year-over-year increase[35] Future Projections - The company expects Q2 2025 total revenues to be between $235 million and $240 million, and adjusted EBITDA to be between $28 million and $30 million[17] - The company anticipates high-single digit growth in total revenues and adjusted EBITDA for fiscal 2025[3] - The company forecasts a period-end ship count of 200 and an average ship count of 192 for Q2 2025[25] Shareholder Returns - The board declared a quarterly dividend of $0.04 per share and authorized a new $75 million share repurchase program[2] - The company repurchased 2.1 million shares for $37.9 million during Q1 2025, with a total of 2.8 million shares repurchased for $49.1 million since the program's initiation[15] Operational Metrics - The average ship count for Q1 2025 was 193, consistent with the previous year, while the company operates health and wellness centers on 199 ships[5] - The company operates 50 destination resort health and wellness centers, down from 51 in Q1 2024[10] - Average weekly revenue per ship increased to $84,177, up from $81,708 in the previous year[26] - Average revenue per shipboard staff per day rose to $562, compared to $549 in Q1 2024[26] - Capital expenditures for Q1 2025 were $1,697, an increase from $1,206 in Q1 2024[26] - The period-end resort count remained stable at 50, with an average resort count also at 50 for the forecasted year[25]

Core Viewpoint - OneSpaWorld Holdings Limited (OSW) is positioned for growth due to new ship additions, strong service demand, and strategic partnerships, while facing concerns over fluctuations in fuel and commodity prices [1][6]. Growth Drivers - The company is benefiting from expanding cruise line partnerships, robust demand for wellness services, a diversified service portfolio, and disciplined execution [2]. - OneSpaWorld's fleet presence has increased to 199 ships by the end of 2024, up from 193 the previous year, with further expansion planned for fiscal 2025, showcasing operational agility and scalability [3]. - Strong demand for premium wellness services such as Medi-Spa, IV therapy, cryotherapy, and LED facial treatments has led to a 30% year-over-year increase in same-spa revenues during Q4 2024 [4]. Competitive Advantages - A data-driven approach enhances the guest experience, with customers who prebook services spending over 30% more than those who do not, and prebooked revenues accounting for 22% of total services [5]. - The company expects continued momentum in fiscal 2025, supported by new ship additions and strong service demand, while focusing on wellness innovation and operational efficiency [6]. Concerns - OneSpaWorld's operations are vulnerable to fluctuations in fuel and commodity prices, which can significantly impact its cost structure and financial performance [7][10]. - Rising fuel prices can increase transportation costs for shipboard employees and shipping products, potentially affecting consumer travel expenses and discretionary spending on wellness services [9][10].

Group 1: OneSpaWorld (OSW) - OneSpaWorld shares increased by 17.6% to close at $17.64, following a 13.5% loss over the past four weeks, indicating a significant recovery in investor sentiment [1] - The surge in OneSpaWorld's stock price was attributed to President Trump's announcement to suspend U.S. tariffs on most countries for 90 days, which renewed investor optimism [1] - The company is expected to report quarterly earnings of $0.21 per share, reflecting a year-over-year increase of 10.5%, with revenues projected at $219.23 million, up 3.8% from the previous year [2] Group 2: Earnings Estimates and Trends - The consensus EPS estimate for OneSpaWorld has been revised 4.7% lower over the last 30 days, which typically does not correlate with price appreciation [3] - Despite the recent stock price increase, the negative trend in earnings estimate revisions suggests caution for future price movements [3] - OneSpaWorld is ranked 3 (Hold) by Zacks, indicating a neutral outlook compared to other stocks in the same industry [3] Group 3: Industry Comparison - OneSpaWorld operates within the Zacks Leisure and Recreation Services industry, which includes other companies like Xponential Fitness [3] - Xponential Fitness experienced a significant decline of 37.9% over the past month, closing at $7.75, while its EPS estimate has been revised down by 56.9% to $0.15, representing a 6.3% decrease from the previous year [4] - Xponential Fitness currently holds a Zacks Rank of 5 (Strong Sell), contrasting with OneSpaWorld's neutral position [4]

Core Insights - The investment approach focuses on fundamental analysis, emphasizing companies with a strong competitive moat, consistent growth in free cash flow, and robust financial performance [1] - The philosophy is rooted in long-term investing, avoiding short-term trading tactics and options, which is believed to unlock value over time [1] - The aim is to provide insightful, actionable advice by uncovering undervalued stocks poised for growth and identifying overvalued stocks to be cautious of [1] Company and Industry Analysis - The analyst has a background in business and economics, providing a solid foundation for investment analysis [1] - The current role is within a local brokerage firm, contributing to the investment community through articles that offer deep analytical insights [1] - The writing for Seeking Alpha is seen as a way to contribute to collective investor wisdom and refine investment strategies in a dynamic market [1]

Financial Performance - The company achieved revenues of $895.0 million, net income of $72.9 million, and adjusted EBITDA of $112.1 million for the year ended December 31, 2024[21]. - Total revenues for 2024 reached $895.0 million, a 12.7% increase from $794.0 million in 2023[204]. - Service revenues increased to $723.3 million in 2024, up from $648.1 million in 2023, representing an 11.6% growth[204]. - Product revenues rose to $171.7 million in 2024, compared to $146.0 million in 2023, marking a 17.7% increase[204]. - Net income for 2024 was $72.9 million, a significant recovery from a net loss of $2.97 million in 2023[204]. - Adjusted EBITDA for 2024 was $112.1 million, up from $89.2 million in 2023, reflecting a 25.7% increase[207]. - Total assets increased to $746.4 million in 2024, compared to $706.1 million in 2023[204]. - Total liabilities decreased to $191.9 million in 2024, down from $272.1 million in 2023, indicating improved financial health[204]. - Working capital improved to $23.5 million in 2024, up from $17.0 million in 2023[204]. - The company reported a significant reduction in interest expense, from $21.4 million in 2023 to $10.0 million in 2024[207]. - The change in fair value of warrant liabilities showed a positive shift, with a gain of $7.7 million in 2024 compared to a loss of $37.6 million in 2023[207]. Market Position and Growth - The health and wellness centers served over 26 million guests in 2024, with guests spending approximately $297 per visit on average[17][19]. - Approximately 19% of the company's revenues were derived from the sale of retail products during the year ended December 31, 2024[19]. - The global wellness tourism market was valued at $830.2 billion in 2023, with a projected market size of $1.35 trillion by 2028, reflecting a compound annual growth rate of 10.2%[28]. - The cruise industry is forecasted to grow at least 10% from 2024 to 2028, with global passenger volume reaching nearly 40 million by 2027[23]. - The company operates 199 health and wellness centers onboard cruise ships and 50 destination resort centers, addressing a captive audience of over 26 million passengers annually[26]. - OneSpaWorld operates health and wellness centers on 199 ships, with expectations to grow as 19 new ships are introduced by existing partners by the end of 2026[39]. - OneSpaWorld is the market leader in the health and wellness industry, with a size more than 18 times that of its closest maritime competitor[212]. - Over the last 50 years, OneSpaWorld has developed strong relationships with cruise line and destination resort partners, enhancing its market position[212]. Operational Efficiency - The company maintains a contract renewal rate of approximately 97% based on ship count over the last 15 years, including 100% for ships larger than 3,500 berths[16]. - The company has entered into agreements with new cruise line partners, including Adora Cruises and Crystal Cruises, while renewing contracts with existing partners[16]. - The company employs up to 83 highly trained professionals in its health and wellness centers, which can range in size up to over 30,000 square feet[18]. - The average remaining term per ship for cruise line agreements is approximately four years as of December 31, 2024[53]. - The company has implemented a dynamic pricing model across its full cruise fleet to optimize demand and maximize utilization[56]. - The company focuses on maximizing profitability through effective management of health and wellness center operations[213]. Marketing and Customer Engagement - Medi-spa services have been highly successful, with guests spending on average up to 5x more than those purchasing traditional services[41]. - Product sales accounted for approximately 19% of revenues in 2024, with over 1,100 branded product SKUs offered[45]. - Onboard spend for the two largest cruise operators increased by $7.7 billion from $5.8 billion to $13.5 billion between 2013 and 2024[42]. - OneSpaWorld's principal cruise line partners accounted for 41.2% (Carnival), 27.9% (Royal Caribbean), and 16.8% (Norwegian) of total revenues in 2024[50]. - Pre-booked guests spend approximately 30% more than those who book services onboard[56]. - The company’s marketing strategies include targeted promotions through various channels, resulting in increased service spend and booking frequency[55]. Sustainability and Compliance - The company is committed to sustainability practices, including reducing paper and plastic usage and sourcing products from environmentally responsible brands[64]. - The company is obligated to make minimum annual payments regardless of revenue, which could exceed collected amounts[97]. - Potential changes in tax laws, including the OECD's BEPS project, could increase the company's tax liabilities and adversely affect financial results[123]. - The Bahamas is implementing an International Business Income Tax in compliance with the OECD's Pillar Two, which could impact the company's effective tax rate starting January 1, 2026[123]. - The company may incur costs related to compliance with environmental regulations, which could affect profitability[141]. Risks and Challenges - The company faces risks from potential bankruptcies of cruise lines, which could terminate agreements and eliminate anticipated income[86]. - The company relies on key officers and qualified employees, with potential adverse effects from their unexpected loss[103]. - The company’s agreements with cruise lines allow for termination with limited notice, posing risks to revenue stability[84]. - Increased fuel costs could adversely impact financial results, affecting transportation and delivery costs[100]. - Economic slowdowns can lead to reduced occupancy rates at destination resorts, directly impacting the sales of health and wellness services[126]. - The company faces competition from various passenger activity alternatives on cruise ships, which could affect its market share[128]. - International operations expose the company to various risks, including currency fluctuations and compliance with local laws, which could adversely affect financial performance[130]. - Political unrest in regions where the company operates health and wellness centers has negatively impacted operations, particularly in the Middle East[133]. - Compliance with evolving data privacy regulations, such as the EU GDPR, poses significant legal and financial risks, including potential fines and reputational damage[143]. - The company is subject to examination of income tax returns, which could adversely affect profitability if findings are unfavorable[144]. Corporate Governance and Shareholder Relations - The company declared a quarterly dividend of $0.04 per common share on July 23, 2024, and another $0.04 on October 24, 2024[195]. - The declaration and payment of future dividends depend on various factors including financial condition and capital requirements[196]. - The company’s common shares are traded on The Nasdaq Capital Market under the symbol "OSW" with 16 registered holders as of February 20, 2025[194]. - The company has a classified Board serving staggered terms of three years, which may delay or prevent a change in control[179]. - The market price and trading volume of the company's common shares have been volatile and may continue to fluctuate significantly due to various risk factors[172]. Cybersecurity and Technology - Cybersecurity remains a top priority, as the company faces threats from cyberattacks that could disrupt operations and lead to increased costs[164]. - The company has a comprehensive cybersecurity program aimed at managing risks and enhancing resilience against threats[181]. - The use of artificial intelligence presents security risks and potential operational inefficiencies, impacting business performance[149]. - The company may face competitive risks if unable to adopt AI technologies while peers leverage these advancements[150].

Financial Data and Key Metrics Changes - Total revenues increased 11% to $217.2 million compared to $194.8 million in Q4 2023 [11] - For the full year, total revenues increased 13% to a record $895 million compared to $794 million in fiscal year 2023 [11] - Income from operations increased 37% to $17.2 million compared to $12.6 million in Q4 2023 [11] - Adjusted EBITDA increased 14% to $26.7 million compared to $23.4 million in Q4 2023 [12] - Net income was $14.4 million or $0.14 per diluted share compared to a net loss of $7.3 million or $0.07 per diluted share in Q4 2023 [28] Business Line Data and Key Metrics Changes - Same Spa revenue overall was up more than 30% year-over-year, driven by increased participation in Medi-Spa services [20][43] - Medi-Spa services were available on 147 ships, up from 139 ships at the end of fiscal year 2023 [20] - The company expects to have Medi-Spa offerings increasing to 151 ships this year [21] Market Data and Key Metrics Changes - The company operated health and wellness facilities on 199 ships at year-end, compared to 193 ships at the end of fiscal 2023 [13] - The average ship count increased from 184 ships to 188 ships [13] Company Strategy and Development Direction - The company is focused on expanding higher-value services and products, including Medi-Spa IV therapy and Acupuncture [16] - A new seven-year agreement was entered into with Royal Caribbean International and Celebrity Cruises, extending a long-term relationship [15] - The company aims to enhance health and wellness center productivity through increased staff training and retention [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering another year of record performance in fiscal 2025, supported by strong financial results and operational accomplishments [10][24] - The company affirmed its fiscal 2025 guidance, expecting total revenue in the range of $950 million to $970 million [35] Other Important Information - The company reduced its debt to $100 million and ended the year with $58.6 million in cash [22][32] - An ongoing quarterly cash dividend payment and share repurchase program were initiated [22] Q&A Session Summary Question: What drove the 30% increase in same spa revenue for Medi-Spa? - The increase was primarily due to more passengers participating in Medi-Spa services, with a focus on adding more staff to meet demand [43][44] Question: Is the services gross margin at a normalized run rate? - There is nothing fundamentally weighing down the gross margin; the decrease in the fourth quarter was due to revenue levels and fixed costs [48][49] Question: Why is there no expected margin expansion despite higher prebooking activity? - There are no headwinds on the cost side, and the company is comfortable with a flat margin profile for the upcoming year [55] Question: How is the company balancing dividend growth versus share repurchases? - The company will evaluate stock buybacks based on market conditions and expects to grow dividends over the next couple of years [59] Question: Were norovirus incidents impactful to the Q1 '25 outlook? - No, norovirus incidents did not materially impact the outlook for Q1 [67] Question: Can you provide details on the dry dock impact for the year? - The first quarter was normal, and there is no anticipation of above-average dry docks in the second quarter [69] Question: Is the restructuring of product architecture still ongoing? - Yes, the company continues to rationalize its product offerings and focus on pricing transformation [73] Question: How does the current spending trend look for the rest of the year? - Current spending trends appear strong, with demand for services remaining high and no significant changes in discounting [95]