• Total Revenue: $241.7 million, up 12% from $216.3 million in Q3 2023.
• Income from Operations: $25 million, up 48% from $17 million in Q3 2023.
• Adjusted EBITDA: $33 million, up 33% from $24.9 million in Q3 2023.
• Unlevered After-Tax Free Cash Flow: $31 million, up 28% from $24.2 million in Q3 2023.
• Net Income: $21.6 million, with net income per diluted share of $0.20.
• Adjusted Net Income: $27.3 million, with adjusted net income per diluted share of $0.26.
• Average Ship Count: 195 ships, compared to 185 ships in Q3 2023.
• Number of Cruise Ship Personnel: 4,204, compared to 3,927 in Q3 2023.
• Cash Position: $50 million at quarter end.
• Debt Reduction: Paid down $24.6 million of debt.
• Share Repurchase: $11.3 million spent to repurchase 745,000 common shares.
• Dividend Payment: $4.2 million in quarterly dividends.
• Guidance for Fiscal 2024: Revenue expected between $888 million to $893 million; Adjusted EBITDA expected between $110 million to $112 million.
• Fourth Quarter Revenue Guidance: $210 million to $215 million.
• Fourth Quarter Adjusted EBITDA Guidance: $25 million to $27 million.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• OneSpaWorld Holdings Ltd (NASDAQ:OSW) achieved record performance in Q3 2024, with total revenues increasing by 12% to $241.7 million.
• Income from operations rose by 48% to a record $25 million, and adjusted EBITDA increased by 33% to $33 million.
• The company expanded its ship count, operating health and wellness centers on 196 ships, up from 189 ships in Q3 2023.
• OneSpaWorld Holdings Ltd (NASDAQ:OSW) successfully introduced new high-value services, such as cryotherapy and LED light facial services, which saw strong double-digit growth.
• The company enhanced its capital structure by refinancing its first lien term loan with a new $100 million five-year facility at a lower interest rate, improving financial flexibility.

Negative Points

• Land-based spa revenue growth lagged behind maritime operations, partly due to renovation projects and lower occupancy in Asia and the Caribbean.
• Despite strong overall performance, net income decreased to $21.6 million from $23.4 million in Q3 2023, primarily due to changes in the fair value of warrant liabilities.
• The company faces challenges in increasing prebooking rates for services, which remain at 22%, with room for improvement.
• OneSpaWorld Holdings Ltd (NASDAQ:OSW) has not been able to secure more data sharing from cruise lines to offer personalized discounts, limiting marketing capabilities.
• The company continues to face competition from other onboard and port activities, which could impact service demand and pricing strategies.

Q & A Highlights

Q: Can you explain the significant margin expansion in the quarter, particularly the 200 basis point increase in EBITDA margin? A: Stephen Lazarus, CFO and COO, explained that the margin expansion was due to strong onboard demand, leading to minimal promotional activity. Additionally, the decrease in salary expenses was due to the timing of performance-based compensation being spread more evenly throughout the year.

Q: Why is there a difference in revenue generation between land-based and maritime operations? A: Leonard Fluxman, CEO, noted that renovations at several land-based resorts and lower occupancy in Asia and the Caribbean have impacted land-based revenue. They expect improvements as renovations conclude and are working on enhancing marketing efforts to boost performance.

Q: How are you approaching pricing for services in the fourth quarter and 2025? A: Leonard Fluxman stated that while demand remains strong, they have taken minimal pricing increases this year. They are focusing on introducing new services at higher price points and may consider further pricing adjustments if demand continues.

Q: Are there any tariff risks related to product acquisition for maritime or land-based operations? A: Stephen Lazarus clarified that most products do not enter the U.S. market directly, as they are stored in bonded warehouses before being shipped internationally. Therefore, they do not anticipate any tariff impacts.

Q: What factors influence the decision to add OSW services on cruise line private islands? A: Leonard Fluxman explained that passenger feedback and demand for additional amenities influence cruise lines' decisions to expand services on private islands. They are working with cruise lines to explore opportunities for expanding service offerings.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.