OneSpaWorld Holdings Ltd. (OSW) Tops Q1 EPS by 3c, Revenues Beat

OneSpaWorld Holdings Ltd. (NASDAQ: OSW) reported Q1 EPS of ($0.17), $0.03 better than the analyst estimate of ($0.20). Revenue for the quarter came in at $5.6 million versus the consensus estimate of $3.8 million.

First Quarter Ended March 31, 2021 Compared to March 31, 2020

Results of operations in the first quarter of 2021 compared to the first quarter of 2020 were materially adversely impacted by the global COVID-19 pandemic that resulted in cancellation of all of the Company’s voyages and the closing of many destination resort health and wellness centers as of the end of the first quarter of 2020.

• Total revenues were $5.6 million, as compared to $114.3 million in the first quarter of 2020. Revenues generated in this year’s first quarter were primarily related to the 47 destination resort spas that were open during the quarter and e-commerce product sales through the Company’s timetospa.com website.
• Cost of services were $7.5 million compared to $80.6 million in the 2020 first quarter.
• Cost of products were $1.3 million compared to $22.1 million in the 2020 first quarter.
• Net (loss) was ($45.6) million, as compared to ($148.4) million in the first quarter of 2020. The first quarter of 2021 included a loss in change in fair value of warrant liabilities of ($23.3) million of warrant liabilities. The first quarter of 2020 included a gain in change in fair value of $50.3 million of warrants liabilities and a goodwill and a tradename impairment charge of ($190.8) million. See “Accounting for Warrants” below.
• Adjusted net (loss) was ($14.9) million, or adjusted net loss per diluted share of ($0.17), as compared to adjusted net loss of ($1.2) million, or adjusted net loss per diluted share of ($0.02) in the first quarter of 2020.
• Adjusted EBITDA was ($9.4) million, as compared to $5.1 million in the first quarter of 2020.
• Unlevered after-tax free cash flow was ($9.8) million, as compared to $3.6 million in the first quarter of 2020.

Leonard Fluxman, Executive Chairman and Chief Executive Officer of OneSpaWorld commented: “As the travel and tourism industry has begun to reopen, we are ready, we are eager and we are excited to welcome guests to our health and wellness centers and deliver our extraordinary OneSpaWorld guest experiences. We have invested aggressively for 14 months in protecting our people, sustaining our operations, enhancing our competitive position and comprehensive protocols to ensure a safe and successful return to service, while taking actions to maintain strong liquidity. The dedication of our team throughout this unprecedented pandemic positions us to flawlessly execute our resumption of operations aboard the additional 31 ships expected to resume sailing by the end of July. Our onboard operating protocols are complete and our onboard staff are fully trained.”

“We are operating health and wellness centers aboard three of our 160 cruise line vessels that have commenced voyages. We have opened our spas in 47 of our 53 destination resorts, realizing revenue and staff utilization in line with our expectations and with operating metrics increasing sequentially month over month. These initial returns confirm that we are positioned powerfully to capitalize on the strength of our team, operating platform and business model to drive long-term profitable growth as cruise ship and destination resort operations fully resume.”

Stephen Lazarus, Chief Financial Officer and Chief Operating Officer, commented, “we ended the quarter with total liquidity of $65.7 million, $9.3 million above year end, resulting from $18.5 million in net cash proceeds from our At-The-Market equity offering program and a lower than forecast cash burn rate of $9.3 million for the quarter. We expect resumption of our cruise ship and destination resort operations to accelerate commencing in the third quarter and generate increasing cash flow from operations. However, we will continue to manage our liquidity so as to sustain our operations in the event that unforeseen disruptions occur and significant cruise ship and destination resort operations do not resume and scale as currently expected. We are confident that we have the resources, balance sheet strength and current liquidity to fund our business with limited operations, if necessary, through June 2022.”

Mr. Lazarus separately commented, “as a result of unforeseen guidance issued on April 12th by the SEC applicable to accounting for warrants, we made the determination to restate the financial statements covered by the affected periods, which we have done by amending our 2020 Annual Report on Form 10-K filed on March 10, 2021, with our amended 2020 Annual Report on Form 10-K/A filed on May 10, 2021. The change to classify outstanding warrants to purchase common shares as liabilities versus equity does not impact historically reported cash and cash equivalents or adjusted EBITDA for the affected periods.”

Q2 2021 and Fiscal Year 2021 Guidance

The Company is not providing financial guidance due to the ongoing business disruption and substantial uncertainty surrounding the impact of the COVID-19 pandemic on its business. Notwithstanding the foregoing, the Company expects to sustain a GAAP and adjusted net loss for the second quarter of fiscal 2021.

For earnings history and earnings-related data on OneSpaWorld Holdings Ltd. (OSW) click here.

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