ONESPAWORLD HOLDINGS Ltd [OSW] Filings

ONESPAWORLD HOLDINGS Ltd [OSW] Filings

ONESPAWORLD HOLDINGS Ltd [OSWWF] Filings

10-Q 1 osw-20230930.htm 10-Q 10-Q

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, 2023


☐	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.

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, 2023, the registrant had 99,910,834 common shares issued and outstanding.

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

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, 2023			December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	26,802		$	32,064
Restricted cash		1,198			1,198
Accounts receivable, net		47,694			33,558
Inventories, net		43,843			39,835
Prepaid expenses		8,207			7,084
Other current assets		4,444			4,154
Total current assets		132,188			117,893
Property and equipment, net		14,038			14,517
Operating lease right-of-use assets, net		12,528			13,932
Intangible assets, net		552,849			565,467
OTHER ASSETS:
Deferred tax asset		—			227
Other non-current assets		3,148			5,399
Total other assets		3,148			5,626
Total assets	$	714,751		$	717,435
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable	$	31,614		$	24,124
Accrued expenses		46,163			39,999
Current portion of operating leases		2,232			2,239
Current portion of long-term debt		—			2,085
Other current liabilities		1,049			1,116
Total current liabilities		81,058			69,563
Income tax contingency		—			3,912
Warrant liabilities		9,600			52,900
Other long-term liabilities		2,449			2,449
Long-term operating leases		10,597			12,101
Long-term debt, net		162,970			210,701
Total liabilities		266,674			351,626
Commitments and contingencies (Note 12)
SHAREHOLDERS' EQUITY:
Common stock:
Voting common stock, $0.0001 par value; 225,000,000 shares authorized, 99,910,834 issued and outstanding at September 30, 2023 and 79,544,055 shares issued and outstanding at December 31, 2022		10			8
Non-voting common stock, $0.0001 par value; 25,000,000 shares authorized, zero shares issued and outstanding, at September 30, 2023 and 13,421,914 shares issued and outstanding at December 31, 2022		—			1
Additional paid-in capital		779,907			700,612
Accumulated deficit		(334,279	)		(338,609	)
Accumulated other comprehensive income		2,439			3,797
Total shareholders' equity		448,077			365,809
Total liabilities and shareholders' equity	$	714,751		$	717,435

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

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,
	2023			2022			2023			2022
REVENUES:
Service revenues	$	175,849		$	132,777		$	489,204		$	307,555
Product revenues		40,422			29,515			110,035			69,782
Total revenues		216,271			162,292			599,239			377,337
COST OF REVENUES AND OPERATING EXPENSES:
Cost of services		146,128			110,585			409,648			260,271
Cost of products		34,477			25,323			94,949			63,253
Administrative		4,673			3,936			12,762			11,630
Salary, benefits and payroll taxes		9,833			8,411			27,708			25,132
Amortization of intangible assets		4,206			4,206			12,618			12,618
Total cost of revenues and operating expenses		199,317			152,461			557,685			372,904
Income from operations		16,954			9,831			41,554			4,433
OTHER INCOME (EXPENSE):
Interest expense, net		(3,726	)		(3,984	)		(12,688	)		(10,935	)
Change in fair value of warrant liabilities		7,365			300			(26,736	)		62,200
Total other income (expense)		3,639			(3,684	)		(39,424	)		51,265
Income before income tax (benefit) expense		20,593			6,147			2,130			55,698
INCOME TAX (BENEFIT) EXPENSE		(2,818	)		236			(2,200	)		209
NET INCOME	$	23,411		$	5,911		$	4,330		$	55,489
NET INCOME PER VOTING AND NON-VOTING SHARE
Basic	$	0.23		$	0.06		$	0.04		$	0.60
Diluted	$	0.16		$	0.06		$	0.04		$	0.49
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic		99,963			92,557			96,975			92,371
Diluted		101,369			94,432			96,975			94,745

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

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,
	2023			2022			2023			2022
Net income	$	23,411		$	5,911		$	4,330		$	55,489
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments		(126	)		(108	)		110			(722	)
Cash flows hedges:
Net unrealized gain on derivative		240			1,971			1,062			6,112
Amount realized and reclassified into earnings		(936	)		(211	)		(2,530	)		385
Total other comprehensive (loss) income, net of tax		(822	)		1,652			(1,358	)		5,775
Total comprehensive income	$	22,589		$	7,563		$	2,972		$	61,264

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

ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(in thousands)


						Three Months Ended September 30, 2023
	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, 2023		99,470		—		$	10	$	777,275	$	3,261		$	(357,690	)	$	422,856
Net income		—		—			—		—		—			23,411			23,411
Stock-based compensation		—		—			—		2,197		—			—			2,197
Foreign currency translation adjustment		—		—			—		—		(126	)		—			(126	)
Unrecognized loss on derivatives		—		—			—		—		(696	)		—			(696	)
Cashless exercise of warrants		31		—			—		435		—			—			435
Common shares issued under equity incentive plan		410		—			—		—		—			—			—
BALANCE, September 30, 2023		99,911		—		$	10	$	779,907	$	2,439		$	(334,279	)	$	448,077

						Nine Months Ended September 30, 2023
	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, December 31, 2022		79,544		13,422		$	9	$	700,612	$	3,797		$	(338,609	)	$	365,809
Net income		—		—			—		—		—			4,330			4,330
Stock-based compensation		—		—			—		7,045		—			—			7,045
Foreign currency translation adjustment		—		—			—		—		110			—			110
Unrecognized loss on derivatives		—		—			—		—		(1,468	)		—			(1,468	)
Exchange of warrants into common shares		3,854		—			1		45,260		—			—			45,261
Exercise of warrants (1)		194		—			—		2,620		—			—			2,620
Cashless exercise of warrants		84		2,123			—		24,370		—			—			24,370
Common shares issued under equity incentive plan		690		—			—		—		—			—			—
Conversion of non-voting common shares into voting shares		15,545		(15,545	)		—		—		—			—			—
BALANCE, September 30, 2023		99,911		—		$	10	$	779,907	$	2,439		$	(334,279	)	$	448,077

(1) The exercise of Warrants includes $2.2 million of cash received and a reduction of warrants liability related to the exercise of the Warrants.
						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

ONESPAWORLD HOLDINGS Ltd [OSW] Filings
ONESPAWORLD HOLDINGS Ltd [OSWWF] Filings
10-Q	[2023-11-03]
10-Q	[2023-08-04]
10-Q	[2023-05-05]
10-K	[2023-03-03]
10-Q	[2022-11-03]
10-Q	[2022-08-03]
10-Q	[2022-05-06]
10-K	[2022-03-04]
10-Q	[2021-11-05]
10-Q	[2021-08-06]
10-Q	[2021-05-10]
10-K	[2021-03-10]
10-Q	[2020-11-12]
10-Q	[2020-08-12]
10-Q	[2020-05-13]
10-K	[2020-03-30]
10-Q	[2019-11-13]
10-Q	[2019-08-15]
10-Q	[2019-05-15]
10-K	[2019-05-06]
S-1	[2019-04-18]

Large Accelerated filer

Accelerated filer

Non-Accelerated filer

Smaller reporting company

Emerging growth company