OneSpaWorld(OSW) - 2025 Q2 - Quarterly Results

Executive Summary & Business Highlights This section covers Q2 2025 financial performance, operational network, liquidity, and management's strategic commentary Second Quarter Fiscal 2025 Performance Overview OneSpaWorld reported strong second-quarter fiscal 2025 results, exceeding guidance with total revenues of $240.7 million, net income of $19.9 million, and adjusted EBITDA of $30.5 million. The company reaffirmed its annual total revenues guidance and increased its annual adjusted EBITDA guidance, while also introducing positive third-quarter guidance and declaring a quarterly dividend Second Quarter Fiscal 2025 Key Financial Results | Metric | Q2 2025 (Millions) | Change YoY | Source | | :------------------- | :----------------- | :--------- | :----- | | Total Revenues | $240.7 | +7% | [2, 6] | | Net Income | $19.9 | +27% | [2, 6] | | Adjusted EBITDA | $30.5 | +13% | [2, 6] | Fiscal 2025 Guidance Updates | Metric | Q3 2025 Guidance (Millions) | FY 2025 Guidance (Millions) | Source | | :-------------------- | :-------------------------- | :-------------------------- | :----- | | Total Revenues | $255 - $260 | $950 - $970 (Reaffirmed) | [2, 11] | | Adjusted EBITDA | $33 - $35 | $117 - $127 (Increased) | [2, 11] | - The Board declared a quarterly dividend of $0.04 per share[2] Operational Network and Liquidity Update The company maintained a robust operational network, ending Q2 2025 with 200 cruise ships and 51 destination resorts, supported by 4,365 cruise ship personnel. Liquidity remained strong with $36.2 million in cash and $86.2 million total liquidity, including an undrawn credit facility Q2 2025 Operating Network Statistics | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------------- | :------ | :------ | :----- | | Period End Cruise Ship Count | 200 | 197 | +3 | | Average Cruise Ship Count | 191 | 188 | +3 | | Period End Resort Count | 51 | 52 | -1 | | Average Resort Count | 50 | 52 | -2 | | Period End Cruise Ship Personnel | 4,365 | 4,300 | +65 | Q2 2025 Liquidity Position | Metric | Amount (Millions) | | :-------------------- | :---------------- | | Cash at June 30, 2025 | $36.2 | | Undrawn Credit Facility | $50.0 | | Total Liquidity | $86.2 | Management Commentary Executive Chairman and CEO, Leonard Fluxman, highlighted exceeding guidance, solidifying market leadership with new partnerships, and leveraging AI technologies for enhanced guest experiences. President, CFO, and COO, Stephen Lazarus, emphasized strong financial performance, capital-efficient business model, and increased Adjusted EBITDA guidance reflecting profitability enhancement strategies - CEO Leonard Fluxman noted exceeding guidance, solidifying market leadership through renewing partnership with Windstar Cruises and initiating operations aboard the newly launched Oceania Allura, and developing initiatives with emerging AI technologies to enhance guest experiences[3] - CFO Stephen Lazarus highlighted strong financial and operating metrics, producing increases of 7% in Total revenues and 13% in Adjusted EBITDA, driven by a capital-efficient, asset-light business model generating strong free cash flow[3] - The company returned $4.1 million to shareholders through quarterly dividends and ended the quarter with a strong balance sheet and $86 million of total liquidity, with $75 million share repurchase availability[3] - Management expects fiscal 2025 Total revenues within guidance, reflecting high-single digit growth, and increased Adjusted EBITDA guidance to reflect mid-teens growth, benefiting from strategies to enhance profitability[3] Detailed Financial Performance This section provides a comparative analysis of the company's financial results for the second quarter and year-to-date periods of fiscal 2025 versus 2024 Second Quarter Ended June 30, 2025 Compared to June 30, 2024 In Q2 2025, total revenues grew 7% to $240.7 million, primarily driven by a 4% increase in average guest spend, increased revenue days, and fleet expansion. Net income rose 27% to $19.9 million, and Adjusted EBITDA increased 13% to $30.5 million, benefiting from higher operating income and lower interest expense, despite increases in cost of services and products Q2 2025 vs. Q2 2024 Financial Performance | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | % Change | | :-------------------------- | :----------------- | :----------------- | :---------------- | :------- | | Total Revenues | $240.7 | $224.9 | $15.8 | 7% | | Income from Operations | $22.1 | $18.8 | $3.3 | 17% | | Net Income | $19.9 | $15.8 | $4.2 | 27% | | Net Income per Diluted Share | $0.19 | $0.15 | $0.04 | 27% | | Adjusted Net Income | $25.8 | $21.7 | $4.1 | 19% | | Adjusted Net Income per Diluted Share | $0.25 | $0.20 | $0.05 | 25% | | Adjusted EBITDA | $30.5 | $27.1 | $3.4 | 13% | - Revenue growth was driven by a 4% increase in average guest spend (+$8.5 million), 1% increase in revenue days (+$4.5 million), and fleet expansion (+$3.5 million), along with $2.7 million in increased pre-booked revenues. This was partially offset by a $0.9 million decrease in land-based spa business due to hotel closures[9] - Cost of services increased by $10.4 million, and cost of products increased by $2.8 million, attributable to corresponding increases in service and product revenues[9] - Salaries, benefits, and payroll taxes decreased by $0.4 million, primarily due to a $0.7 million lower incentive-based compensation expense. Interest expense, net, decreased by $0.8 million due to lower debt balances and effective interest rates[9] Year-to-Date June 30, 2025 Compared to June 30, 2024 For the first six months of fiscal 2025, total revenues increased 6% to $460.4 million, driven by a 3% increase in average guest spend and a 2% increase in revenue days. Net income saw a slight decrease of 5% to $35.2 million, primarily due to a prior year benefit from warrant liabilities, while Adjusted EBITDA grew 9% to $57.1 million YTD June 30, 2025 vs. YTD June 30, 2024 Financial Performance | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | Change (Millions) | % Change | | :-------------------------- | :------------------ | :------------------ | :---------------- | :------- | | Total Revenues | $460.4 | $436.1 | $24.2 | 6% | | Income from Operations | $39.0 | $35.8 | $3.1 | 9% | | Net Income | $35.2 | $36.9 | $(1.7) | (5)% | | Net Income per Diluted Share | $0.34 | $0.35 | $(0.01) | (3)% | | Adjusted Net Income | $48.4 | $41.0 | $7.4 | 18% | | Adjusted Net Income per Diluted Share | $0.46 | $0.39 | $0.07 | 18% | | Adjusted EBITDA | $57.1 | $52.4 | $4.7 | 9% | - Revenue growth was driven by a 3% increase in average guest spend (+$13.2 million), 2% increase in revenue days (+$9.6 million), and fleet expansion (+$3.8 million), along with $5.0 million in increased pre-booked revenues. This was partially offset by a $2.4 million decrease in land-based spa business[9] - Salaries, benefits, and payroll taxes increased by $2.1 million, primarily due to $1.1 million severance expense and $1.4 million related to vesting treatment for the former Chief Commercial Officer's termination[9] - Net income decreased primarily due to a $7.7 million benefit from the change in fair value of warrant liabilities in the prior year, partially offset by a $3.1 million increase in Income from operations and a $2.6 million decrease in Interest expense, net, in the current period[9] Financial Position & Capital Allocation This section details the company's balance sheet highlights, including cash and debt, and announces the quarterly dividend declaration Balance Sheet Highlights As of June 30, 2025, OneSpaWorld reported a cash balance of $36.2 million and total debt, net of deferred financing costs, of $96.2 million. The reduction in cash from year-end 2024 was primarily due to common share repurchases Balance Sheet Highlights (June 30, 2025) | Metric | Amount (Millions) | | :-------------------------------- | :---------------- | | Cash | $36.2 | | Total Debt, net of financing costs | $96.2 | - The cash balance decreased from $58.6 million at December 31, 2024, primarily due to $37.9 million used for common share repurchases during the first quarter[16] - Total debt, net of deferred financing costs, was $96.2 million after repaying $1.3 million in debt during the second quarter[16] Dividend Announcement The Board of Directors declared a quarterly dividend of $0.04 per common share, payable on September 3, 2025, to shareholders of record as of August 20, 2025 Quarterly Dividend Details | Detail | Value | | :------------------ | :------ | | Dividend Per Share | $0.04 | | Payment Date | Sep 3, 2025 | | Record Date | Aug 20, 2025 | Outlook and Guidance This section outlines the company's financial projections for the third quarter and full fiscal year 2025, including revenue and Adjusted EBITDA guidance, along with forecasted operating network statistics Third Quarter and Fiscal Year 2025 Guidance OneSpaWorld provided guidance for Q3 2025, projecting total revenues between $255-$260 million and Adjusted EBITDA between $33-$35 million. For the full fiscal year 2025, the company reaffirmed total revenues guidance of $950-$970 million and increased Adjusted EBITDA guidance to $117-$127 million, reflecting mid-teens growth at the midpoint Q3 2025 and Fiscal Year 2025 Guidance | Metric | Q3 2025 (Millions) | FY 2025 (Millions) | | :---------------- | :----------------- | :----------------- | | Total Revenues | $255 - $260 | $950 - $970 | | Adjusted EBITDA | $33 - $35 | $117 - $127 | Forecasted Operating Network | Metric | Q3 2025 Forecast | FY 2025 Forecast | | :-------------------- | :--------------- | :--------------- | | Period End Ship Count | 205 | 207 | | Average Ship Count | 198 | 195 | | Period End Resort Count | 50 | 50 | | Average Resort Count | 51 | 50 | Company Information & Disclosures This section provides an overview of OneSpaWorld's business, market position, and headquarters, along with standard disclosures regarding forward-looking statements and associated risks About OneSpaWorld OneSpaWorld Holdings Limited is a leading global provider of health and wellness services and products on cruise ships and in destination resorts. Headquartered in Nassau, Bahamas, the company operates on 202 cruise ships and at 51 destination resorts, holding a dominant market position in the cruise industry segment due to its extensive service, global platforms, and operating infrastructure - OneSpaWorld is a pre-eminent global provider of health and wellness services and products on-board cruise ships and in destination resorts, headquartered in Nassau, Bahamas[2][13] - The company currently operates health and wellness centers on 202 cruise ships and at 51 destination resorts worldwide[13] - OneSpaWorld holds the leading market position within the cruise industry segment, earned over six decades through exceptional service, expansive global recruitment, training and logistics platforms, and irreplicable operating infrastructure[13] - On March 19, 2019, OneSpaWorld completed a series of mergers, including with Haymaker Acquisition Corp., making OSW Predecessor an indirect wholly owned subsidiary[14] Forward-Looking Statements This section contains standard forward-looking statements disclosure, cautioning investors that expectations, estimates, and projections may differ from actual results due to various risks and uncertainties, including economic factors, changes in consumer preferences, regulatory changes, and the impact of illnesses. The company disclaims any obligation to update these statements - The press release includes 'forward-looking statements' regarding future performance, projected financial information, and operational plans, which are based on current management expectations and involve significant risks and uncertainties[15] - Factors that may cause actual results to differ materially include the impact of outbreaks of illnesses, demand for services, economic/business/competitive factors, changes in consumer preferences, regulatory changes, and difficulties of managing growth[15] - The company cautions against undue reliance on these statements and does not undertake any obligation to publicly update or revise them, except as required by law[15][17] Non-GAAP Financial Measures & Reconciliations This section defines non-GAAP financial measures like Adjusted Net Income and Adjusted EBITDA, explains their purpose and limitations, and provides detailed reconciliations to GAAP figures Note Regarding Non-GAAP Financial Information This section defines non-GAAP financial measures, including Adjusted Net Income and Adjusted EBITDA, and explains their utility to investors for performance comparison. It also highlights their limitations, such as not including total interest expense, income taxes, capital expenditures, or non-cash stock-based compensation, emphasizing that the company primarily relies on GAAP results - Adjusted net income is defined as Net income, adjusted for items including Change in fair value of warrant liabilities; increase in Depreciation and amortization resulting from the Business Combination; Long-lived assets impairment; and Stock-based compensation[24] - Adjusted EBITDA is defined as Net income adjusted for items including Income tax expense; Interest expense, net; Change in fair value of warrant liabilities; Depreciation and amortization; and Stock-based compensation[25] - These non-GAAP measures are useful for investors to gain insight into profitability and compare performance, but they have limitations as they do not include total amounts for interest expense, income taxes, capital assets expenditures, and non-cash stock-based compensation[26] - The company relies primarily on its GAAP results and cautions that future results may still be affected by extraordinary, unusual, or nonrecurring items[26][27] Reconciliation of GAAP to Non-GAAP Financial Information This section provides detailed tables reconciling GAAP Net Income to Adjusted Net Income and Adjusted EBITDA for both the second quarter and year-to-date periods ended June 30, 2025 and 2024, outlining specific adjustments made for each non-GAAP measure Reconciliation of Net Income to Adjusted Net Income | Metric | Three Months Ended June 30, 2025 (Thousands) | Three Months Ended June 30, 2024 (Thousands) | Six Months Ended June 30, 2025 (Thousands) | Six Months Ended June 30, 2024 (Thousands) | | :------------------------------------ | :------------------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net income | $19,940 | $15,759 | $35,211 | $36,925 | | Change in fair value of warrant liabilities | — | 46 | — | (7,677) | | Depreciation and amortization (a) | 3,761 | 3,761 | 7,522 | 7,522 | | Stock-based compensation | 2,112 | 2,094 | 5,672 | 4,188 | | Adjusted net income | $25,813 | $21,660 | $48,405 | $40,958 | | Adjusted net income per diluted share | $0.25 | $0.20 | $0.46 | $0.39 | | Diluted weighted average shares outstanding | 103,620 | 105,767 | 104,345 | 104,346 | Reconciliation of Net Income to Adjusted EBITDA | Metric | Three Months Ended June 30, 2025 (Thousands) | Three Months Ended June 30, 2024 (Thousands) | Six Months Ended June 30, 2025 (Thousands) | Six Months Ended June 30, 2024 (Thousands) | | :------------------------------------ | :------------------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net income | $19,940 | $15,759 | $35,211 | $36,925 | | Income tax expense | 792 | 813 | 1,211 | 1,392 | | Interest expense | 1,395 | 2,221 | 2,542 | 5,176 | | Change in fair value of warrant liabilities | — | 46 | — | (7,677) | | Depreciation and amortization | 6,251 | 5,870 | 12,430 | 12,079 | | Stock-based compensation | 2,112 | 2,094 | 5,672 | 4,188 | | Business combination costs (b) | — | 293 | — | 293 | | Adjusted EBITDA | $30,490 | $27,096 | $57,066 | $52,376 | Condensed Consolidated Financial Statements & Operating Statistics This section presents the company's condensed consolidated statements of operations and key operating statistics for the reported periods Condensed Consolidated Statements of Operations The condensed consolidated statements of operations present the company's revenues, costs, and expenses, leading to income from operations, other income/expense, and ultimately net income for the three and six months ended June 30, 2025 and 2024, along with per share data Condensed Consolidated Statements of Operations (Unaudited, in thousands, except per share data) | | | | | Three Months Ended June 30, | | | | Six Months Ended June 30, | | | :------------------------------------ | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | | 2025 | | 2024 | Inc/(Dec) | % Inc/(Dec) | 2025 | | 2024 | Inc/(Dec) | % Inc/(Dec) | | REVENUES: | | | | | | | | | | | | Service revenues | $193,358 | | $180,846 | $12,512 | 7% | $371,877 | | $353,055 | $18,822 | 5% | | Product revenues | 47,368 | | 44,045 | 3,323 | 8% | 88,479 | | 83,062 | 5,417 | 7% | | Total revenues | 240,726 | | 224,891 | 15,835 | 7% | 460,356 | | 436,117 | 24,239 | 6% | | COST OF REVENUES AND OPERATING EXPENSES: | | | | | | | | | | | | Cost of services | 161,250 | | 150,801 | 10,449 | 7% | 309,404 | | 294,826 | 14,578 | 5% | | Cost of products | 39,984 | | 37,138 | 2,846 | 8% | 75,281 | | 70,668 | 4,613 | 7% | | Administrative | 4,410 | | 4,740 | (330) | (7)% | 8,623 | | 8,797 | (174) | (2)% | | Salaries, benefits and payroll taxes | 8,821 | | 9,230 | (409) | (4)% | 19,816 | | 17,723 | 2,093 | 12% | | Amortization of intangible assets | 4,134 | | 4,143 | (9) | (0)% | 8,268 | | 8,287 | (19) | (0)% | | Total cost of revenues and operating expenses | 218,599 | | 206,052 | 12,547 | 6% | 421,392 | | 400,301 | 21,091 | 5% | | Income from operations | 22,127 | | 18,839 | 3,288 | 17% | 38,964 | | 35,816 | 3,148 | 9% | | OTHER (EXPENSE), INCOME, NET: | | | | | | | | | | | | Interest expense, net | (1,395) | | (2,221) | 826 | 37% | (2,542) | | (5,176) | 2,634 | 51% | | Change in fair value of warrant liabilities | — | | (46) | 46 | 100% | — | | 7,677 | (7,677) | (100)% | | Total other (expense) income, net | (1,395) | | (2,267) | 872 | 38% | (2,542) | | 2,501 | (5,043) | (202)% | | Income before income tax expense | 20,732 | | 16,572 | 4,160 | 25% | 36,422 | | 38,317 | (1,895) | (5)% | | INCOME TAX EXPENSE | 792 | | 813 | (21) | (3)% | 1,211 | | 1,392 | (181) | (13)% | | Net income | $19,940 | | $15,759 | $4,181 | 27% | $35,211 | | $36,925 | $(1,714) | (5)% | | Net income per share: | | | | | | | | | | | | Basic | $0.19 | | $0.15 | | | $0.34 | | $0.36 | | | | Diluted | $0.19 | | $0.15 | | | $0.34 | | $0.35 | | | | Weighted average shares outstanding: | | | | | | | | | | | | Basic | 103,211 | | 105,123 | | | 103,903 | | 103,292 | | | | Diluted | 103,620 | | 105,767 | | | 104,345 | | 104,346 | | | Selected Operating Statistics This section provides key operational metrics, including period-end and average ship and resort counts, average weekly revenue per ship and resort, average revenue per shipboard staff per day, revenue days, and capital expenditures for the second quarter and year-to-date periods Selected Operating Statistics | Selected Statistics | June 30, 2025 (Q2) | June 30, 2024 (Q2) | June 30, 2025 (YTD) | June 30, 2024 (YTD) | | :-------------------------------- | :------------------- | :------------------- | :------------------ | :------------------ | | Period End Ship Count | 200 | 197 | 200 | 197 | | Average Ship Count (1) | 191 | 188 | 192 | 188 | | Average Weekly Revenue Per Ship | $92,936 | $88,034 | $88,560 | $84,859 | | Average Revenue Per Shipboard Staff Per Day | $608 | $586 | $585 | $567 | | Revenue Days (2) | 17,426 | 17,074 | 34,827 | 34,150 | | Period End Resort Count | 51 | 52 | 51 | 52 | | Average Resort Count (3) | 50 | 52 | 50 | 52 | | Average Weekly Revenue Per Resort | $13,019 | $14,028 | $14,116 | $15,405 | | Capital Expenditures (in thousands) | $2,729 | $1,116 | $4,426 | $2,322 | - Average Ship Count reflects the total number of days each ship generated revenue during the period, divided by the number of calendar days[21] - Revenue Days reflect a day on which health and wellness centers are open onboard a revenue-generating cruise with passengers[22] - Average Resort Count reflects the total number of days each destination resort health and wellness center generated revenue, divided by the number of calendar days[22]