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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the three months ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-38843

 

OneSpaWorld Holdings Limited

(Exact name of Registrant as Specified in its Charter)

 

 

Commonwealth of The Bahamas

 

Not Applicable

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

Harry B. Sands, Lobosky Management Co. Ltd.

Office Number 2

Pineapple Business Park

Airport Industrial Park

P.O Box N-624

Nassau, Island of New Providence, Commonwealth of The Bahamas

 

 

 

 

 

Not Applicable

(Address of principal executive offices)

 

(Zip Code)

(242) 322-2670

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Shares, par value (U.S.)
$0.0001 per share

 

OSW

 

The Nasdaq
Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-Accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of September 30, 2022, the registrant had 79,053,584 voting shares and 13,421,914 non-voting shares of common stock issued and outstanding.

 

 

 


Table of Contents

 

OneSpaWorld Holdings Limited

Table of Contents

 

 

 

Page

PART I - FINANCIAL INFORMATION

 

1

 

 

 

 

 

Item 1.

 

Unaudited Financial Statements

 

1

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

20

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

29

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

29

 

 

 

 

 

PART II - OTHER INFORMATION

 

30

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

30

 

 

 

 

 

Item 1A.

 

Risk Factors

 

30

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

30

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

30

 

 

 

 

 

Item 5.

 

Other Information

 

30

 

 

 

 

 

Item 6.

 

Exhibits

 

30

 

i


Table of Contents

 

PART I - FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements

ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

As of

 

 

 

September 30,
2022

 

 

December 31,
2021

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$

35,246

 

 

$

30,937

 

Restricted cash

 

 

1,896

 

 

 

1,896

 

Accounts receivable, net

 

 

28,945

 

 

 

19,480

 

Inventories, net

 

 

32,593

 

 

 

29,483

 

Prepaid expenses

 

 

7,636

 

 

 

6,574

 

Other current assets

 

 

3,510

 

 

 

577

 

  Total current assets

 

 

109,826

 

 

 

88,947

 

Property and equipment, net

 

 

13,996

 

 

 

14,107

 

Intangible assets, net

 

 

569,673

 

 

 

582,290

 

OTHER ASSETS:

 

 

 

 

 

 

  Deferred tax asset

 

 

 

 

 

70

 

  Other non-current assets

 

 

5,359

 

 

 

3,454

 

  Total other assets

 

 

5,359

 

 

 

3,524

 

  Total assets

 

$

698,854

 

 

$

688,868

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

Accounts payable

 

$

18,047

 

 

$

15,846

 

Accrued expenses

 

 

40,952

 

 

 

32,232

 

Current portion of long-term debt

 

 

2,085

 

 

 

1,776

 

Other current liabilities

 

 

804

 

 

 

2,011

 

  Total current liabilities

 

 

61,888

 

 

 

51,865

 

Deferred rent

 

 

396

 

 

 

341

 

Income tax contingency

 

 

3,609

 

 

 

4,129

 

Warrant liabilities

 

 

45,100

 

 

 

107,300

 

Other long-term liabilities

 

 

2,449

 

 

 

2,646

 

Long-term debt, net

 

 

220,889

 

 

 

228,683

 

  Total liabilities

 

 

334,331

 

 

 

394,964

 

Commitments and contingencies (Note 12)

 

 

 

 

 

 

SHAREHOLDERS' EQUITY:

 

 

 

 

 

 

Common stock:

 

 

 

 

 

 

Voting common stock, $0.0001 par value; 225,000,000 shares authorized, 79,053,584 issued and outstanding at September 30, 2022 and 78,422,887 shares issued and outstanding at December 31, 2021

 

 

8

 

 

 

8

 

Non-voting common stock, $0.0001 par value; 25,000,000 shares authorized, 13,421,914 shares issued and outstanding, at both September 30, 2022 and December 31, 2021

 

 

1

 

 

 

1

 

Additional paid-in capital

 

 

697,015

 

 

 

687,660

 

Accumulated deficit

 

 

(336,279

)

 

 

(391,768

)

Accumulated other comprehensive income (loss)

 

 

3,778

 

 

 

(1,997

)

Total shareholders' equity

 

 

364,523

 

 

 

293,904

 

Total liabilities and shareholders' equity

 

$

698,854

 

 

$

688,868

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

1


Table of Contents

 

ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share data)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

Service revenues

 

$

132,777

 

 

$

34,844

 

 

$

307,555

 

 

$

47,096

 

Product revenues

 

 

29,515

 

 

 

8,791

 

 

 

69,782

 

 

 

11,284

 

Total revenues

 

 

162,292

 

 

 

43,635

 

 

 

377,337

 

 

 

58,380

 

COST OF REVENUES AND OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

 

110,585

 

 

 

33,157

 

 

 

260,271

 

 

 

50,202

 

Cost of products

 

 

25,323

 

 

 

8,395

 

 

 

63,253

 

 

 

11,194

 

Administrative

 

 

3,936

 

 

 

3,363

 

 

 

11,630

 

 

 

12,069

 

Salary, benefits and payroll taxes

 

 

8,411

 

 

 

6,676

 

 

 

25,132

 

 

 

20,316

 

Amortization of intangible assets

 

 

4,206

 

 

 

4,206

 

 

 

12,618

 

 

 

12,618

 

Total cost of revenues and operating expenses

 

 

152,461

 

 

 

55,797

 

 

 

372,904

 

 

 

106,399

 

Income (loss) from operations

 

 

9,831

 

 

 

(12,162

)

 

 

4,433

 

 

 

(48,019

)

OTHER (EXPENSE) INCOME, NET:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(3,984

)

 

 

(3,151

)

 

 

(10,935

)

 

 

(9,914

)

Change in fair value of warrant liabilities

 

 

300

 

 

 

3,100

 

 

 

62,200

 

 

 

500

 

Total other (expense) income, net

 

 

(3,684

)

 

 

(51

)

 

 

51,265

 

 

 

(9,414

)

Income (loss) before income tax expense

 

 

6,147

 

 

 

(12,213

)

 

 

55,698

 

 

 

(57,433

)

INCOME TAX EXPENSE

 

 

236

 

 

 

129

 

 

 

209

 

 

 

172

 

NET INCOME (LOSS)

 

$

5,911

 

 

$

(12,342

)

 

$

55,489

 

 

$

(57,605

)

NET INCOME (LOSS) PER VOTING AND NON-VOTING SHARE

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.06

 

 

$

(0.14

)

 

$

0.60

 

 

$

(0.64

)

Diluted

 

$

0.06

 

 

$

(0.14

)

 

$

0.49

 

 

$

(0.64

)

WEIGHTED-AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

92,557

 

 

 

90,852

 

 

 

92,371

 

 

 

89,559

 

Diluted

 

 

94,432

 

 

 

90,852

 

 

 

94,745

 

 

 

89,559

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

2


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ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(in thousands)

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income (loss)

$

5,911

 

 

$

(12,342

)

 

$

55,489

 

 

$

(57,605

)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

(108

)

 

 

(204

)

 

 

(722

)

 

 

(90

)

Cash flows hedges:

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gain (loss) on derivative

 

1,971

 

 

 

(75

)

 

 

6,112

 

 

 

629

 

Amount realized and reclassified into earnings

 

(211

)

 

 

475

 

 

 

385

 

 

 

1,456

 

Total other comprehensive income net of tax

 

1,652

 

 

 

196

 

 

 

5,775

 

 

 

1,995

 

Total comprehensive income (loss)

$

7,563

 

 

$

(12,146

)

 

$

61,264

 

 

$

(55,610

)

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

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Table of Contents

 

ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2022

 

 

 

Issued Common Voting Shares

 

 

Issued Common Non-Voting Shares

 

 

Voting and Non-Voting Common Stock

 

 

Additional Paid-in Capital

 

 

Accumulated Other Comprehensive Income

 

 

Accumulated Deficit

 

 

Total Shareholders’ Equity

 

BALANCE, June 30, 2022

 

 

78,709

 

 

 

13,422

 

 

$

9

 

 

$

693,840

 

 

$

2,126

 

 

$

(342,190

)

 

$

353,785

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,911

 

 

 

5,911

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

3,175

 

 

 

 

 

 

 

 

 

3,175

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(108

)

 

 

 

 

 

(108

)

Unrecognized gain on derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,760

 

 

 

 

 

 

1,760

 

Common shares issued under equity incentive plan

 

 

345

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, September 30, 2022

 

 

79,054

 

 

 

13,422

 

 

$

9

 

 

$

697,015

 

 

$

3,778

 

 

$

(336,279

)

 

$

364,523

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2022

 

 

 

Issued Common Voting Shares

 

 

Issued Common Non-Voting Shares

 

 

Voting and Non-Voting Common Stock

 

 

Additional Paid-in Capital

 

 

Accumulated Other Comprehensive (Loss) Income

 

 

Accumulated Deficit

 

 

Total Shareholders’ Equity

 

BALANCE, December 31, 2021

 

 

78,423

 

 

 

13,422

 

 

$

9

 

 

$

687,660

 

 

$

(1,997

)

 

$

(391,768

)

 

$

293,904

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

55,489

 

 

 

55,489

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

9,296

 

 

 

 

 

 

 

 

 

9,296

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(722

)

 

 

 

 

 

(722

)

Unrecognized gain on derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,497

 

 

 

 

 

 

6,497

 

Proceeds from 2021 exercise of public warrants

 

 

 

 

 

 

 

 

 

 

 

59

 

 

 

 

 

 

 

 

 

59

 

Common shares issued under equity incentive plan

 

 

631

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, September 30, 2022

 

 

79,054

 

 

 

13,422

 

 

$

9

 

 

$

697,015

 

 

$

3,778

 

 

$

(336,279

)

 

$

364,523

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 

 

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Table of Contents

 

ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

CONTINUED

(Unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2021

 

 

 

Issued Common Voting Shares

 

 

Issued Common Non-Voting Shares

 

 

Voting and Non-Voting Common Stock