Earnings call transcript: OneSpaWorld Q4 2024 sees stock dip despite revenue growth

OneSpaWorld Holdings Ltd. (NASDAQ:OSW) reported its fourth-quarter earnings for 2024, revealing a slight miss on earnings per share (EPS) expectations but a notable revenue beat. The company posted an EPS of $0.20, falling short of the forecasted $0.21. However, revenues reached $217.2 million, surpassing the anticipated $212.66 million. Despite this, the company’s stock dropped by 8.58%, closing at $22.84, following the announcement. According to InvestingPro analysis, OSW currently trades near its Fair Value, with a market capitalization of $2.17 billion and maintains a "GREAT" overall financial health score of 3.57 out of 5.

Key Takeaways

• Revenue growth of 11% in Q4 2024 to $217.2 million.
• EPS slightly below expectations at $0.20 versus $0.21 forecast.
• Stock declined by 8.58% post-earnings announcement.
• Expanded health and wellness services, including new maritime centers.
• Strong cruise industry booking trends and minimal discounting.

Company Performance

OneSpaWorld’s financial performance in Q4 2024 highlighted significant revenue growth, increasing by 11% year-over-year to $217.2 million. The full-year revenue also marked a record at $895 million, up 13% from the previous year. The company’s expansion efforts in health and wellness services, particularly on cruise ships, contributed to this growth. InvestingPro data shows the company operates with moderate debt levels and strong liquidity, with a current ratio of 1.84. While the gross profit margin remains modest at 12.56%, InvestingPro subscribers can access 12 additional key metrics and insights about OSW’s financial health.

Financial Highlights

• Revenue: $217.2 million, up 11% year-over-year.
• Full-year revenue: $895 million, up 13% year-over-year.
• EPS: $0.20, below the forecast of $0.21.
• Net income: $14.4 million or $0.14 per diluted share in Q4.
• Adjusted EBITDA: $26.7 million, up 14% in Q4.

Earnings vs. Forecast

OneSpaWorld’s EPS of $0.20 fell short of the $0.21 forecast, marking a minor miss. However, the company exceeded revenue expectations with $217.2 million compared to the projected $212.66 million, resulting in a 2.1% revenue beat.

Market Reaction

The market reacted negatively to the earnings announcement, with OneSpaWorld’s stock declining by 8.58%, closing at $22.84. This drop suggests that investors may have been concerned about the EPS miss or broader market conditions affecting the stock. Despite the recent decline, InvestingPro analysis indicates the stock has delivered impressive returns, with a 57% gain over the past year and a 50% increase in the last six months. The stock’s RSI suggests it remains in overbought territory, one of several technical insights available through InvestingPro’s comprehensive research reports.

Outlook & Guidance

Looking forward, OneSpaWorld expects total revenue for 2025 to range between $950 million and $970 million, with projected adjusted EBITDA of $115 million to $125 million. The company plans to open health centers on nine new ship builds and anticipates high single-digit growth in both revenue and adjusted EBITDA for the upcoming year. InvestingPro forecasts support this optimistic outlook, with net income expected to grow this year. For deeper insights into OSW’s growth prospects and detailed financial analysis, investors can access the comprehensive Pro Research Report, part of the extensive coverage available for over 1,400 US stocks.

Executive Commentary

Stephen Lazarus, CFO, stated, "We are entering 2025 strongly positioned and with favorable momentum." CEO Leonard Fluxman added, "Our team delivered a strong finish to an outstanding year of growth," emphasizing the company’s strategic focus on pre-booking and service innovation.

Risks and Challenges

• Potential economic downturns affecting discretionary spending on cruise services.
• Increased competition in the health and wellness sector.
• Operational challenges related to staffing and service delivery on cruise ships.
• Currency fluctuations impacting international revenue streams.
• Regulatory changes affecting maritime operations.

Q&A

During the earnings call, analysts focused on the growth of MediSpa services, driven by increased passenger numbers and staffing enhancements. The company’s pricing transformation and SKU rationalization were also discussed as key strategies for future revenue growth. Pre-booking was highlighted as a significant focus area, with expectations of continued strong performance in this segment.

Full transcript - OneSpaWorld Holdings Ltd (OSW) Q4 2024:

Conference Operator: Good day, and welcome to the OneSpa World Fourth Quarter twenty twenty four Earnings Call. All participants will be in listen only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Alison Malkin of ICR.

Please go ahead.

Alison Malkin, Investor Relations, ICR: Thank you. Good morning, and welcome to OneSpa World’s fourth quarter and fiscal twenty twenty four earnings call and webcast. Before we begin, I’d like to remind you that certain statements and information made available on today’s call and webcast may be deemed to constitute forward looking statements. These forward looking statements reflect our judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting our business. Accordingly, you should not place undue reliance on these forward looking statements.

For a more thorough discussion of the risks and uncertainties associated with the forward looking statements to mediate on this conference call and webcast, we refer you to the disclaimer regarding forward looking statements that is included in our fourth quarter twenty twenty four earnings release, which was furnished to the SEC today on Form eight K. We do not undertake any obligation to update or alter any forward looking statements, whether as a result of new information, future events or otherwise. In addition, the company may refer to certain adjusted non GAAP metrics on this call. An explanation of these metrics can be found in our earnings release issued earlier this morning. Joining me today are Leonard Fluxman, Executive Chairman, Chief Executive Officer and President and Stephen Lazarus, Chief Financial Officer and Chief Operating Officer.

Leonard will begin with a review of our fourth quarter and fiscal twenty twenty four performance and provide an update on our key priorities as we begin fiscal twenty twenty five. Then Stephen will provide more details on the financials and fiscal twenty twenty five guidance. Following our prepared remarks, we will turn the call over to the operator to begin the question and answer portion of the call. I would now like to turn the call over to Leonard.

Leonard Fluxman, Executive Chairman, CEO and President, OneSpa World: Thank you, Allison. Good morning, and welcome to OneSpa World’s fourth quarter and fiscal year twenty twenty four earnings conference call. It’s a pleasure to speak with you today and share our fourth quarter results, which concluded another excellent year of financial and operational accomplishments. Our team delivered a strong finish to an outstanding year of growth with fiscal twenty twenty four marking our second consecutive year of record performance, which continues to evidence the combined power of our global operations, innovation across our business, outstanding team and a strong financial position. All of which are focused on delivering extraordinary experiences for our health and wellness center guests and invaluable service to our cruise line and destination resort partners.

I want to especially recognize our dedicated, passionate and enormously capable team whose steadfast commitment and contributions every day produced our robust results. We begin fiscal twenty twenty five strongly positioned and expect to deliver another year of record performance. And as outlined in our press release issued earlier this morning, given our strong fiscal twenty twenty four performance and our positive outlook for 2025, we are affirming our recently provided full fiscal year 2025 guidance. Touching on highlights of the quarter, total revenues increased 11% to $217,200,000 compared to $194,800,000 in the fourth quarter of twenty twenty three. For the full year, total revenues increased 13% to a record $895,000,000 compared to $794,000,000 in fiscal year twenty twenty three.

Income from operations increased 37% to $17,200,000 compared to $12,600,000 in the fourth quarter of twenty twenty three. For the full year, income from operations increased 44% to $78,100,000 compared to $54,200,000 in fiscal year twenty twenty three. And finally, adjusted EBITDA increased 14% to $26,700,000 compared to $23,400,000 in the fourth quarter of twenty twenty three. For the full year, adjusted EBITDA increased 26% to a record $112,100,000 compared to $89,200,000 in fiscal year twenty twenty three. At year end, we operated health and wellness facilities on 199 ships with an average ship count of 188 ships.

This compares with a total of 193 ships and an average ship count of 184 ships at year end fiscal twenty twenty three. Also at year end, we had 4,352 cruise ship personnel on vessels compared with 4,120 cruise ship personnel on vessels at year end fiscal twenty twenty three. Along with our strong financial results, the year included noteworthy progress towards our key strategic priorities. Let me share these highlights with you. First, we captured highly visible new ship growth with current cruise line partners and added new cruise line partnerships to our fold.

We expanded our health and wellness services adding seven new maritime health and wellness centers, inclusive of five new inclusive of five new ship builds and the renovated Mitsui Ocean Fuji and the Arroyo Monara to our fold. In addition, we entered into a new seven year agreement with Royal Caribbean (NYSE:RCL) International and Celebrity Cruises, extending our more than thirty year relationship with both banners. We ended fiscal twenty twenty four operating on board 199 vessels and expect to add nine new maritime health and wellness centers in 2025. Second, we continue to expand higher value services and products. In this regard, the expansion and demand for our MediSpa IV therapy and acupuncture continues to drive increased revenues to those modalities.

Our cryotherapy, mega white and LED light facial services continue to perform and we will continue our ramping of these services to our fleet in fiscal twenty twenty five. Third, we focused on enhancing health and wellness center productivity. We grew maritime operating metrics, which continued strong growth in revenue per passenger per day, weekly revenue and revenue per staff per day driven by the increase in experienced staff members that generate higher revenue per staff per day as are able to better recommend offerings as compared to a first contract staff member. We attribute the growth of experienced staff members to the success of our initiatives to attract, train and retain staff members. We continue to see staff members returning after the first contract, which we believe is a strong testament to their dedication to our company and the empowering culture we create.

Looking ahead, we have a number of initiatives in place to retain our best start, which we will continue to emphasize to further grow our operating metrics. Our operational metrics also increased reflecting the benefit of our sales training. This is fueled this fueled increases in total revenue guest utilizing the spa, service frequency, service spend and retail and average spend per guest. Pre booking revenue as a percentage of services remained strong at 22% even as we phase in new partners that are just beginning to scale. We continue to see passengers that pre book services spending more than 30% more than those that do not pre book.

And finally, we continue to expand productivity with our med spas. The quarter saw same spa revenue overall up more than 30% year over year. We continue to increase the number of doctors and nurses we have on board and add to our service offering. At year end, MediSpa services were available on 147 ships, up from 139 ships at the end of twenty twenty four fiscal year. We now expect to have MediSpa offerings increasing to 151 ships this year.

Fourth, we enhanced capital structure and strengthened our balance sheet. During the year, we reduced our debt to $100,000,000 and increased our public float as a private equity investor Steiner Leisure Limited exited. Additionally, in recognition of the confidence in our strategy and outlook this year, our Board of Directors approved the initiation of an ongoing quarterly cash dividend payment and share repurchase program. We ended the year with $58,600,000 in cash after dispersing $12,600,000 in quarterly dividends, paying down debt by $69,000,000 and investing $19,000,000 to repurchase our common shares during the year. At year end, we had $38,700,000 remaining on our $50,000,000 share repurchase program.

First, we are equally proud to have published our inaugural Sustainability and Social Responsibility Report documenting our unwavering commitment to exemplary care for our employees, outstanding service to our cruise line and destination resort partners and their guests and responsible stewardship of the environment and the communities our company impacts across the globe. Our commitment to sustainability is an integral part of our ability to drive successful near and long term financial performance. In summary, we believe our ongoing positive performance clearly demonstrates the success of our strategy and the strength of our talented team that manages our highly complex business with precision. With visible growth opportunities ahead and positive business momentum, we remain confident in our ability to deliver increasing value to our shareholders in the year ahead and longer term. With that, I’ll turn the call over to Stephen, who will provide more details on our fourth quarter and fiscal year twenty twenty four results.

Stephen?

Stephen Lazarus, Chief Financial Officer and Chief Operating Officer, OneSpa World: Thank you, Leonard. Good morning, everybody. We are extremely pleased with our performance throughout fiscal year twenty twenty four, which delivered record revenue, income from operations and adjusted EBITDA. Additionally, we continue to enhance our capital structure and ended the year with a strong balance sheet and strong cash flow generation. I’ll now share further details on our fourth quarter and year results that we reported earlier this morning.

Total (EPA:TTEF) revenues increased 11% to $217,200,000 compared to $194,800,000 for the fourth quarter of twenty twenty three. The increase in each of service revenue and product revenue were driven by fleet expansion, which contributed $11,200,000 a 5% increase in our guest spend, which positively impacted revenue by $8,600,000 and $3,500,000 of higher onboard penetration from more guests. Contributing to the increased volume and spend was $3,500,000 in increased pre booked revenue on health and wellness centers. Cost of service were $145,300,000 compared to $131,800,000 in the fourth quarter of twenty twenty three with the increase being primarily attributable to costs associated with our increased service revenue of $175,800,000 in the quarter from our operating health and wellness centers at sea and on land compared with service revenue of $139,000,000 in the fourth quarter of twenty twenty three. Similarly, cost of products were $35,000,000 compared to $30,700,000 in the fourth quarter of twenty twenty three with the increase being primarily attributable to the increased costs associated with product revenue of $41,900,000 in the quarter from our operating health and wellness centers at sea and on land compared to product revenue of $35,900,000 in the fourth quarter of twenty twenty three.

Net income was $14,400,000 or net income per diluted share of $0.14 as compared to a net loss of $7,300,000 or net loss per diluted share of $0.07 for the fourth quarter of twenty twenty three. The change was primarily attributable to a $10,000,000 positive change in the fair value of warrant liabilities reflected in other income expense in 2023, a $7,200,000 decrease in interest expense net and a 4,600,000 increase in income from operations. All warrants were exercised or canceled in 2024 with zero expense incurred during the fourth quarter of twenty twenty four. As you know, the change in February of warrant liabilities was the result of the remeasurement to fair value of the warrants exercised during the fourth quarter of twenty twenty three, reflecting changes in market prices of our common stock and other observable inputs deriving the value of those financial instruments. The $7,200,000 decrease in interest expense was primarily attributable to lower debt balances offset by a one time $5,400,000 deleveraging fee incurred during the fourth quarter of twenty twenty three.

The $4,600,000 change in income from operations primarily derived from the increase in the number of health and wellness centers onboard ships operating during the year and increased productivity of our maritime health and wellness centers. Adjusted net income was $21,400,000 or adjusted net income per diluted share of $0.28 as compared to adjusted net income of $12,500,000 or adjusted net income per diluted share of $0.12 in the fourth quarter of twenty twenty three. Adjusted EBITDA was $26,700,000 compared to adjusted EBITDA of $23,400,000 in the fourth quarter of last year. For the first full year, total revenue of $895,000,000 reflecting an increase of 13% compared to $790,000,000 for the twenty twenty three year with adjusted net income increasing 45% to $89,700,000 or $0.85 per diluted share from adjusted net income of $61,900,000 or $0.63 per diluted share in fiscal twenty twenty three. And adjusted EBITDA increased 25.7% to $112,100,000 as compared to adjusted EBITDA of $89,200,000 in fiscal twenty twenty three.

Turning to the balance sheet. The U. S. Saw us enhance our capital structure, reducing debt to $100,000,000 and increasing our public float with the exit of our private equity investor sponsors, Spine and Leisure Limited. We ended the year with total cash of $58,600,000 and full availability on our $50,000,000 revolving term facility, giving us total liquidity of $108,600,000 In the fourth quarter, we utilized $4,200,000 in cash to pay dividends.

Since returning to service in fiscal twenty twenty two, we have repaid over $133,000,000 of indebtedness, reducing our debt to the $100,000,000 mark and have repurchased 2,140,000.00 shares in total for $28,000,000 Total debt, net of deferred financing costs was $98,600,000 at 12/31/2024 compared with $158,200,000 at 12/31/2023. And as mentioned, the $50,000,000 revolving facility was undrawn at year end. We expect to continue to generate positive cash flow from operations and after tax cash flow throughout fiscal year twenty twenty five. We move forward with an efficient capital structure and robust cash flow generation that will enable us to invest in our long term growth and return value to shareholders through our quarterly dividend payment and share repurchase program. We have $38,000,000 remaining on our current share repurchase authorization and the company expects to continue to repurchase shares in 2025.

Moving on to the guidance that provided, with our strong 2024 performance and a positive outlook, we are affirming our recently provided full year fiscal year 2025 guidance, reflecting high single digit growth in revenue and adjusted EBITDA at the midpoint of our guidance range as compared to fiscal twenty twenty four results. As a reminder, for the full year of fiscal twenty twenty five, we expect total revenue in the range of $950,000,000 to $970,000,000 adjusted EBITDA is expected in the range of $115,000,000 to $125,000,000 And we expect to open health centers onboard nine new ship build introductions in 2025, the majority of which are expected to commence voyages in the fourth quarter of the year. For the first quarter of twenty twenty five, we expect total revenue in the range of $215,000,000 to $220,000,000 with adjusted EBITDA expected in the range of $25,000,000 to $27,000,000 Due to the decrease last year in 2024, the first fiscal quarter of twenty twenty five includes one less operating day. And in addition, we are expecting a higher number of dry docks in the first quarter of twenty twenty five versus 2024. The combination of both of these factors is expected to negatively impact total revenue in the first quarter by approximately $4,300,000 And in summary, we are entering 2025 strongly positioned and with favorable momentum.

We remain confident that fiscal twenty twenty five will represent another year of record performance for OneStar World and increased value for our shareholders. And with that, we will open up the call for questions. Dave, if you could go ahead, please.

Conference Operator: We will now begin the question and answer session. Our first question comes from Sharon Zackfia with William Blair. Please go ahead.

Sharon Zackfia, Analyst, William Blair: Hi, good morning. Thanks for taking the question. On the MediSpy, did you say that same spa revenue is up more than 30%? And if so, can

Laura Champine, Analyst, Loop Capital: you talk about kind of the ability of

Sharon Zackfia, Analyst, William Blair: those kinds of increase or ticket or kind of what the leading factor is there?

Leonard Fluxman, Executive Chairman, CEO and President, OneSpa World: Sorry, Sharon, you broke up at the end there. Can you just repeat the second part?

Sharon Zackfia, Analyst, William Blair: Yes, sorry. Well, I was asking about the durability

Assia Georgieva, Analyst: and same spa revenue on Metaspa.

Sharon Zackfia, Analyst, William Blair: Whether that’s primarily driven by ticket or traffic?

Leonard Fluxman, Executive Chairman, CEO and President, OneSpa World: So indeed, MediSpa, which has been a huge focus of ours to grow, obviously, it’s just an incredible part of our offering higher prices on a single ticket. Volume continues to increase and the outcome of the 30% year over year growth on same spas has been the result of major focus also adding more staff in that modality. And so to the extent that we can load up more doctors and nurses to take care of the demand and the volume that we’re seeing, we will see this continue to grow. So a large focus has been there for 2024 and will continue through 2025 to the extent we can get incremental real estate or staffing all of that contributes to better growth.

Sharon Zackfia, Analyst, William Blair: Okay. So then the primary driver is just more passengers partaking in MediSpa. So it’s not more MediSpa visits per passenger, if that makes sense?

Leonard Fluxman, Executive Chairman, CEO and President, OneSpa World: It’s a little bit of more passengers coming in. Obviously, we’re limited to the extent that on some ships we don’t have more than say a doctor or two doctors. On the ships that we have a doctor and two nurses, we definitely can extend the real estate by sharing different rooms for different modalities and that’s been a part of the utility, at least the facility utilization maximization strategy that we continue to follow across all modalities on board. So yes, it’s definitely paying off.

Sharon Zackfia, Analyst, William Blair: Okay. And then my second question was on the services gross margin. I know that there’s a lot of variable costs there, but the expansion year over year was a little bit less than what we’ve seen recently. Is there are we kind of in a more normalized run rate for that gross margin on services or is there anything that’s kind of weighing that down a little bit?

Stephen Lazarus, Chief Financial Officer and Chief Operating Officer, OneSpa World: There is nothing weighing it down, Sharon. The fourth quarter, as you know, total revenue is less than the third quarter. And so in the third quarter, we just saw a little bit of incremental flow through covering a proportion of the fixed costs. Yes, it’s primarily variable, but there are some fixed costs. And so when the revenue levels are significantly higher, we did see some benefit from that.

There is nothing fundamental though as it relates to that decrease in the fourth quarter.

Assia Georgieva, Analyst: Okay. Thank you.

Conference Operator: And the next question comes from Steve Wazniewski with Stifel. Please go ahead.

Steve Wazniewski, Analyst, Stifel: Hey, guys. Good morning. I want to stay on the margin side of the story. So if we look at the midpoint of your guidance for the year, you’re expecting a margin. I think it’s probably right around 12.5% or somewhere in that range, which is essentially flat with kind of where you were for 2024.

So just I just want to understand a little bit better why there wouldn’t be some opportunity for margin expansion this year given the opportunity not only to take price on board, but you obviously have higher pre booking activity as well, which I think would add to spend levels once folks are on board. So just wondering what I’m missing in terms of maybe some of the headwinds that might be out there on the cost side of things?

Stephen Lazarus, Chief Financial Officer and Chief Operating Officer, OneSpa World: No, Steve, there aren’t any you’re not missing anything as it relates to headwinds on the cost side of things. We’re not experiencing anything specifically as it relates to that. I think simply put, we would say a flat margin profile in the numbers presented thus far is something that we feel very comfortable with. As you know, we have not built in any pricing into that have been provided to date. And so with our focus all the time being on absolute color generation, maintaining margin would be something that we feel comfortable with at this point in time.

To the extent there is opportunity for pricing, etcetera, we may see that improve at a slight rate. But at the end of the day, from a headwind perspective, there certainly is nothing.

Steve Wazniewski, Analyst, Stifel: Okay, got you. Thanks for that, Steve. And then second question, capital allocation, just Leonard maybe wondering how you guys are thinking about balancing dividend growth versus share repurchases and obviously a move today the market isn’t reacting well to your release. And with these types of uncharacteristic moves in your stock be the type of things where you get more aggressive on the buyback? Just trying to understand how you guys are kind of thinking about buyback versus dividend growth now?

Leonard Fluxman, Executive Chairman, CEO and President, OneSpa World: Yes. So Steve, we absolutely on a day like this, we’ll take a look at it and see if it’s the right price to go at. We have an algorithm. I think we’re getting close to that range. So to the extent it’s likely dilutive or neutral, we will continue to buy stock.

I think buying stock to the extent it’s at the right price, we will continue to pick it up. As Stephen said, we have quite a substantial amount left on the authorizations and so we’ll continue to utilize that. And then the dividend is in place right now, but we expect to grow this dividend over the next couple of years. I mean, it’s not a tremendous yield right now, but it’s a start and we will continue to look at it, evaluate it and determine how we can continue to grow this with the excess cash that we can continue to accumulate.

Steve Wazniewski, Analyst, Stifel: Okay. And one quick housekeeping, if I could, Steve. Do you have the projected ship count by quarter? Just want to kind of understand where you guys are on a quarterly basis given the nine ships look like they probably won’t be coming more into the probably more into the fourth quarter?

Stephen Lazarus, Chief Financial Officer and Chief Operating Officer, OneSpa World: Yes, I can tell you specifically. There’s only one ship that comes in Q1, ’2 ships in Q2, ’1 in Q3 and the remainder are all in Q4.

Gregory Miller, Analyst, Truist: Okay. So everything’s kind of fourth quarter loaded this year. Got it. Okay. Thanks guys.

Appreciate it.

Leonard Fluxman, Executive Chairman, CEO and President, OneSpa World: Yes. You really only get 112 Steve of most of the capacity, but you get a full year in 2026, which is great.

Steve Wazniewski, Analyst, Stifel: Okay. Appreciate it. Thanks guys.

Conference Operator: And the next question comes from Gregory Miller with Truist. Please go ahead.

Gregory Miller, Analyst, Truist: Thanks. Good morning. A couple of questions for you on your guidance. Start off with 1Q, I’m curious, were norovirus incidence materially impactful to your 1Q ’twenty five outlook?

Stephen Lazarus, Chief Financial Officer and Chief Operating Officer, OneSpa World: Not at all.

Leonard Fluxman, Executive Chairman, CEO and President, OneSpa World: Okay.

Gregory Miller, Analyst, Truist: And then as it relates to the drydocks, could you provide some more detail in terms of how we should be thinking about dry dock impact over the course of this year, if there is any quarterly cadence or any anticipation of above average dry docks in the second quarter as well? Thanks.

Stephen Lazarus, Chief Financial Officer and Chief Operating Officer, OneSpa World: There is no The first quarter was more than we went forward for the normalization.

Gregory Miller, Analyst, Truist: Okay. I appreciate it. That’s all for me.

Conference Operator: And the next question comes from Laura Champine with Loop Capital. Please go ahead.

Laura Champine, Analyst, Loop Capital: Thanks for taking my question. In the past few quarters, you’ve talked about restructuring your product architecture to have kind of a clear good, better, best product offering and that was resulting in trade up. Is that changing in Q1?

Leonard Fluxman, Executive Chairman, CEO and President, OneSpa World: So we continue to do pricing transformation SKU rationalization that’s been a process throughout last year to bring into focus, which of our products are not necessarily in the top 50 or 30 selling products. And so we’re starting to do that rationalization. Some of the benefits paid off last year. We will continue to focus on that, Flora. But yes, it’s when you’re moving across 199 ships, it takes a little work.

So it’s not a quick process, it’s not a flip of a switch or anything. And then banner by banner, we have to make sure that we have it right. So in some cases, we will take a look at it, we’ll test it and then determine if we’re at the right place, if we’ve over rationalized or if we’ve done pricing transformation that’s working or not working and we make subtle changes and tweak it all the time.

Laura Champine, Analyst, Loop Capital: Got it. I think that you called out in your press release a $20,000,000 increase in revenues just from pre bookings. Does your guidance imply that you continue to see increases at the same type of pace that you saw in 2024?

Leonard Fluxman, Executive Chairman, CEO and President, OneSpa World: Look, pre booking is a huge focus, not only for all the banners that we serve, some do it better than others as I mentioned before. We will continue to press them for better focus, better imagery, trying to get that attachment as quickly as possible because we see the spend at 30% more. And to the extent which we are getting more and more passengers through our doors, obviously, the attachment from a pre book is going to support better growth on the revenue. And to the extent that there’s a mix of services in there that’s helpful to margin will benefit from that too.

Sharon Zackfia, Analyst, William Blair: Got it. Thank you very much.

Stephen Lazarus, Chief Financial Officer and Chief Operating Officer, OneSpa World: You’re welcome.

Conference Operator: And the final question comes from Assia Georgieva with null Research.

Leonard Fluxman, Executive Chairman, CEO and President, OneSpa World: Please go ahead.

Assia Georgieva, Analyst: Good morning, Leonard and Stephen. A couple of quick questions. First of all, can we understand a little bit better the economics of the MediSpa setup? So if you have a doctor and two nurses, obviously, more real estate, greater utilization. But is the cost equation higher, for example, if you have two doctors and two nurses?

And in terms of newbuilds, have you are the plans, the actual infrastructure in the spa flexible enough to where you could have and expand not only from day one inaugural sailing, but further down the road, the square footage that the Medi Spa would be part of the overall spa. So that was my first question. I apologize, kind of a longest question.

Leonard Fluxman, Executive Chairman, CEO and President, OneSpa World: Okay. So look, the med spa economics have not changed. They are the same. So service margins are what they are. The increase in having for the benefit of having say two nurses and a doctor doesn’t necessarily change the requirement for a larger spa.

We could operate a massage room that’s not maximized under our facility utilization algorithm and decide that it’s better utilized by two nurses doing IV infusions or other similar types of services. So to the extent we need to go outside of the MedSpa where space is limited, we have the ability to look at that, look at our facility utilization algorithm and change up where we’re offering the MedSpa. So I think all of that and the focus on better utilization across all of our facilities will continue to assist not only MedSpa, but certainly the services that are higher priced, the acupuncture, other services where we definitely see the demand continue.

Assia Georgieva, Analyst: So real estate is not really a limiting factor at this point. It’s more attracting the right doctors and nurses, the personnel aspect.

Leonard Fluxman, Executive Chairman, CEO and President, OneSpa World: Look, I’m not going to say it’s not a limitation. I’d like to see bigger med spas on board. I think we can certainly push the demand through that. I think there’s an opportunity. We’re starting to see areas that we can perhaps repurpose in a drydock.

I mean, that’s not to say it’s enough. But on the newbuilds going forward, obviously, our focus is going to be on the flow, the mix of different rooms and the med spa and sort of the areas where the relaxation areas. So all of that contributes to the overall experience. But no, it’s not an absolute limitation what we have today. It’s more us utilizing our spa layout and the rooms at a maximum use and demand.

So we continue to look at that across every banner. We’d love to have more space, but always that’s a challenge.

Assia Georgieva, Analyst: Yes. I know you would love to have more space. And my second question is more in terms of the tone of the industry. As you know, I track about 35,000 voyages each week. And so far, wave season seems to be very strong.

And I believe that some of the cruise banners have said that they’ve had record bookings, including P and L out of The UK. Because you’re almost like a simultaneous indicator, because you’re seeing what’s going on board for about one point five months now, I imagine you’re probably seeing sort of what people were planning on doing about three months ago or six months ago, and now the money is actually being spent. Do you expect that the current spending would bode well for the rest of the year? Because it seems that way for advanced bookings. And I just wanted to compare what’s happening in real time versus the advanced ticket bookings.

Leonard Fluxman, Executive Chairman, CEO and President, OneSpa World: Yes. Look, I mean, if you look at all the analyst reports that we’ve been reading lately, I mean, it still supports strong ticket deals from geographies, maybe more so than others. And clearly, when you’ve got ticket strength and demand and less discounting, you’ve got a better passenger on board. So we continue to see demand for our services. So it’s very early on in the year, but it’s no different than every year.

We sit here in January, February and we start developing our view of the quality of the passenger. But so far, if we take a look at where the discounting in of itself has materially changed, it hasn’t, which is a clear indicator of softness. And so that hasn’t materially changed.

Assia Georgieva, Analyst: Okay. Well, thank you for that. And just one comment. I have been following you guys since November of ’ninety seven, a year after the IPO. And I think today is the first time where we have discussed a leap year having an extra day.

I am fully aware of the dry docks because again I track each voyage, each ship, each cruise company so I can pinpoint those. But the one date less in 2025, would that be 5% of the overall figure that you quoted for Q1? Even I guess that’s a question for you more.

Stephen Lazarus, Chief Financial Officer and Chief Operating Officer, OneSpa World: Yes. The information you provided us is the combination of the dry docks and the day was $4,300,000

Assia Georgieva, Analyst: Right. And the day is $300,000

Stephen Lazarus, Chief Financial Officer and Chief Operating Officer, OneSpa World: dollars We didn’t provide the breakout. We did not provide the breakout between the day and the dry docks.

Assia Georgieva, Analyst: I know. I was trying. Thank you so much.

Stephen Lazarus, Chief Financial Officer and Chief Operating Officer, OneSpa World: Thank you.

Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Leonard Fluxman for any closing remarks.

Leonard Fluxman, Executive Chairman, CEO and President, OneSpa World: Thank you, Dave. And thank you everybody for joining our first quarter call and we appreciate everybody’s attention and enthusiasm about the story. And we look forward to seeing you in our upcoming investor conferences and when we report our first quarter results in May. Thank you very much everybody.

Conference Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.

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