OneSpaWorld Holdings Ltd. Q4 FY2024 earnings call

• Captured new ship growth with current cruise line partners and added new partnerships, including a seven-year extension with Royal Caribbean International and Celebrity Cruises.
• Expanded higher-value services like Medi-Spa IV therapy, Acupuncture, cryotherapy, and LED light facial services, with same Spa revenue up over 30% year-over-year in the quarter.
• Enhanced health and wellness center productivity through growth in maritime operating metrics such as revenue per passenger per day, weekly revenue, and revenue per staff per day, attributed to successful staff attraction, training, and retention initiatives.
• Strengthened capital structure by reducing debt to $100 million, increasing public float, initiating a quarterly cash dividend, and having $38.7 million remaining on the share repurchase program.
• Published the inaugural sustainability and social responsibility report, demonstrating commitment to employee care, partner service, and environmental/community stewardship.

Total revenues for the fourth quarter of 2024 increased 11% to $217.2 million compared to $194.8 million in the fourth quarter of 2023. For the full fiscal year 2024, total revenues reached a record $895 million, up 13% from $794 million in fiscal year 2023. Income from operations in the fourth quarter of 2024 was $17.2 million, a 37% increase from $12.6 million in the same period of 2023, and for the full year, it was $78.1 million, a 44% increase from $54.2 million in 2023. Adjusted EBITDA in the fourth quarter of 2024 was $26.7 million, a 14% increase from $23.4 million in 2023, and for the full year, it was $112.1 million, a 26% increase from $89.2 million in 2023. The company operated health and wellness facilities on 199 ships at year-end 2024, up from 193 in 2023, and added seven new maritime health and wellness centers in 2024, with plans to add nine in 2025.

• Affirmed full fiscal year 2025 guidance with total revenue expected in the range of $950 million to $970 million and adjusted EBITDA in the range of $115 million to $125 million.
• First quarter 2025 total revenue expected in the range of $215 million to $220 million, with adjusted EBITDA in the range of $25 million to $27 million.
• Noted that the first quarter of 2025 includes 1 less operating day than 2024 and a higher number of dry docks, negatively impacting first quarter revenue by approximately $4.3 million.

Q: On the Medi-Spa, asked about same spa revenue growth and drivers.

A: Medi-Spa growth is due to more passengers, adding staff, and facility utilization maximization.

Q: Question on services gross margin and normalization.

A: No fundamental issue, related to revenue level and flow-through of fixed costs.

Q: Question on margin guidance and expansion.

A: Margin profile is flat, with focus on absolute dollar generation, and potential for slight improvement with pricing.

Q: Question on capital allocation and buyback vs dividend.

A: Will evaluate buyback at the right price, have remaining authorization, and expect to grow dividend.

Q: Question on ship count by quarter and dry docks.

A: 1 ship in Q1, 2 in Q2, 1 in Q3, remainder in Q4; first quarter dry docks normal.

Q: Question on norovirus impact and dry dock cadence.

A: Norovirus not impactful; first quarter dry docks normal.

Q: Question on product architecture restructuring and prebooking.

A: Continuing product rationalization, prebooking is a focus with higher spend from prebooked passengers.

Q: Question on Medi-Spa economics and real estate.

A: Real estate not absolute limitation, more about personnel and facility utilization; looking to repurpose space and improve layout.