OneSpaWorld Holdings Limited (OSW) Q3 Earnings call transcript Oct 30, 2024

In a recent earnings call, OneSpaWorld, a leading player in the cruise line and destination resort spa market, showcased its exceptional financial performance for the third quarter of 2024. With record-breaking revenue, income, and adjusted EBITDA, the company's executives expressed optimism for the future and outlined key strategic priorities.

Financial Highlights and Future Outlook

The third quarter of 2024 saw OneSpaWorld achieve all-time highs in total revenues, income from operations, adjusted EBITDA, and unlevered after-tax free cash flow. This remarkable performance was attributed to the team's ability to leverage the complex operating model and competitive strengths to deliver outstanding guest experiences for their cruise line and resort partners. With a clear path for growth, OneSpaWorld expects to end the fiscal year 2024 operating on 198 vessels and 51 land-based resorts.

Growth Strategies and Innovations

OneSpaWorld has been making strategic moves to capture new growth opportunities. The addition of health and wellness centers on new ship builds, such as Utopia of the Seas, and the introduction of new cryotherapy and LED light facial services, have contributed significantly to the company's revenue growth. The company is also focusing on enhancing productivity and attracting and retaining experienced staff members to provide high-value services and products. These initiatives, combined with the simplification of service menus and treatment lengths, have led to double-digit revenue growth in same spa revenue.

Capital Allocation and Financial Strength

OneSpaWorld has been proactive in enhancing its capital structure and financial flexibility. During the third quarter, the company refinanced its first lien term loan and entered into a revolving credit facility, demonstrating its robust cash flow generation and ability to invest in future growth while returning value to shareholders. These strategic financial moves position OneSpaWorld well to continue its growth trajectory and navigate any potential challenges.

Addressing Investor Concerns

During the Q&A session, analysts probed into topics such as pricing strategies, margin expansion, and the impact of renovations on land-based spas. OneSpaWorld executives provided detailed insights into their pricing strategies, emphasizing the robust demand for onboard spend and their focus on incremental pricing increases. They also addressed concerns regarding the performance of land-based spas, attributing the softness to ongoing renovation projects and occupancy challenges in specific regions. The company is actively working to improve marketing efforts and capture rates at these resorts, anticipating better performance in 2025.

Looking Ahead

OneSpaWorld's third quarter 2024 earnings call painted a picture of a company in a strong financial position, with a clear focus on growth and innovation. The company's strategic initiatives, coupled with its robust financial health, position it well for continued success in the cruise line and destination resort spa market. As OneSpaWorld looks to the future, it remains optimistic about its ability to deliver increased value to its shareholders and partners.