UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to |
Commission File Number:
(Exact name of Registrant as Specified in its Charter)
Commonwealth of The |
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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Harry B. Sands, Lobosky Management Co. Ltd.
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(Address of principal executive offices) |
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(Zip Code) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
$0.0001 per share |
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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.
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).
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.
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Accelerated filer |
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Non-Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
As of June 30, 2024, the registrant had
OneSpaWorld Holdings Limited
Table of Contents
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Item 1. |
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1 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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20 |
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Item 3. |
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29 |
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Item 4. |
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29 |
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30 |
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Item 1. |
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30 |
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Item 1A. |
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30 |
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Item 2. |
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30 |
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Item 4. |
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Item 5. |
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30 |
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Item 6. |
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30 |
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i
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)
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As of |
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June 30, |
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December 31, |
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ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Accounts receivable, net |
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Inventories, net |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets, net |
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Intangible assets, net |
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OTHER ASSETS: |
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Deferred tax asset |
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Other non-current assets |
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Total other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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LIABILITIES: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Current portion of operating leases |
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Other current liabilities |
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Total current liabilities |
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Warrant liabilities |
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— |
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Other long-term liabilities |
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Long-term operating leases |
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Long-term debt, net |
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Total liabilities |
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SHAREHOLDERS' EQUITY: |
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Common stock: |
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Voting common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Accumulated other comprehensive (loss) income |
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Total shareholders' equity |
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Total liabilities and shareholders' equity |
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$ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
1
ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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REVENUES: |
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Service revenues |
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$ |
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$ |
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$ |
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$ |
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Product revenues |
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Total revenues |
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COST OF REVENUES AND OPERATING EXPENSES: |
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Cost of services |
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Cost of products |
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Administrative |
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Salary, benefits and payroll taxes |
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Amortization of intangible assets |
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Total cost of revenues and operating expenses |
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Income from operations |
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OTHER (EXPENSE) INCOME |
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Interest expense, net |
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Change in fair value of warrant liabilities |
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Total other (expense) income |
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Income (loss) before income tax expense |
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INCOME TAX EXPENSE |
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NET INCOME (LOSS) |
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$ |
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$ |
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$ |
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$ |
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NET INCOME (LOSS) PER SHARE |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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WEIGHTED-AVERAGE SHARES OUTSTANDING |
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Basic |
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Diluted |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
2
ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(in thousands)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Net income (loss) |
$ |
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$ |
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$ |
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$ |
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Other comprehensive (loss) income, net of tax: |
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Foreign currency translation adjustments |
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Cash flows hedges: |
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Net unrealized gain on derivative |
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Amount realized and reclassified into earnings |
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Total other comprehensive (loss) income, net of tax |
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Total comprehensive income (loss) |
$ |
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$ |
( |
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$ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
3
ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(in thousands)
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Three Months Ended June 30, 2024 |
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Issued Common Shares |
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Common Stock |
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Additional Paid-in Capital |
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Accumulated Other Comprehensive Income (Loss) |
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Accumulated Deficit |
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Total Shareholders’ equity |
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BALANCE, March 31, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Foreign currency translation adjustment |
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— |
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— |
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— |
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( |
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— |
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Unrecognized loss on derivatives |
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— |
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— |
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— |
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( |
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— |
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( |
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Cashless exercise of warrants |
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— |
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— |
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— |
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— |
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BALANCE, June 30, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Six Months Ended June 30, 2024 |
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Issued Common Shares |
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Common Stock |
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Additional Paid-in Capital |
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Accumulated Other Comprehensive Income (Loss) |
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Accumulated Deficit |
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Total Shareholders’ equity |
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BALANCE, December 31, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Foreign currency translation adjustment |
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— |
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— |
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— |
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( |
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— |
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( |
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Repurchase and retirement of common shares |
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( |
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— |
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( |
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— |
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( |
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Unrecognized loss on derivatives |
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— |
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— |
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— |
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( |
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— |
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Accrued dividends cancelled on common stock (1) |
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— |
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— |
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— |
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— |
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Exercise of Sponsor and Public Warrants (2) |
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— |
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— |
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— |
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Cashless exercise of 2020 PIPE Warrants (3) |
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— |
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— |
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— |
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Common shares issued under equity incentive plan |
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— |
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— |
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— |
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— |
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— |
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BALANCE, June 30, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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(1) See Note 5 – “Warrants Liabilities and Equity” for further details. |
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(2) The exercise of Sponsor and Public Warrants includes $ |
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(3) As a result of the 2020 PIPE Warrants exercised on a cashless basis, the Warrant liability of $ |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
4
ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(in thousands)
(CONTINUED)
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Three Months Ended June 30, 2023 |
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Issued Common Voting Shares |
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Issued Common Non-Voting Shares |
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Voting and Non-Voting Common Stock |
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Additional Paid-in Capital |
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Accumulated Other Comprehensive Income |
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Accumulated Deficit |
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Total Shareholders’ equity |
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BALANCE, March 31, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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Foreign currency translation adjustment |
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— |
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— |
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— |
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— |
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— |
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Unrecognized gain on derivatives |
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— |
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— |
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— |
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— |
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— |
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Exchange of warrants into common shares |
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— |
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— |
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— |
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Exercise of warrants (1) |
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— |
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— |
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— |
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— |
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Cashless exercise of warrants |
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— |
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— |
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— |
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Common shares issued under equity incentive plan |
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— |
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— |
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— |
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— |
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— |
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— |
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Conversion of non-voting common shares into voting shares |
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( |
) |
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— |
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— |
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— |
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— |
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— |
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|
BALANCE, June 30, 2023 |
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— |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Six Months Ended June 30, 2023 |
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Issued Common Voting Shares |
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Issued Common Non-Voting Shares |
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Voting and Non-Voting Common Stock |
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Additional Paid-in Capital |
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Accumulated Other Comprehensive Income |
|
|
Accumulated Deficit |
|
|
Total Shareholders’ equity |
|
|||||||
BALANCE, December 31, 2022 |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Unrecognized loss on derivatives |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Exchange of warrants into common shares |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Exercise of warrants (1) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Cashless exercise of warrants |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Common shares issued under equity incentive plan |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Conversion of non-voting common shares into voting shares |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
BALANCE, June 30, 2023 |
|
|
|
|
|
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
(1) The exercise of Warrants includes $
The accompanying notes are an integral part of the condensed consolidated financial statements.
5
ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
|
|
Six Months Ended June 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
||
Net income (loss) |
|
$ |
|
|
$ |
( |
) |
|
Adjustments to reconcile net income (loss) to net cash provided by |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Amortization of deferred financing costs |
|
|
|
|
|
|
||
Change in fair value of warrant liabilities |
|
|
( |
) |
|
|
|
|
Stock-based compensation |
|
|
|
|
|
|
||
Provision for doubtful accounts |
|
|
|
|
|
|
||
Loss from write-offs of property and equipment |
|
|
|
|
|
|
||
Noncash lease expense |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
— |
|
|
|
|
|
Changes in: |
|
|
|
|
|
|
||
Accounts receivable, net |
|
|
( |
) |
|
|
( |
) |
Inventories, net |
|
|
|
|
|
( |
) |
|
Prepaid expenses |
|
|
( |
) |
|
|
( |
) |
Other current assets |
|
|
( |
) |
|
|
|
|
Other non-current assets |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
|
|
|
|
||
Accrued expenses |
|
|
|
|
|
( |
) |
|
Other current liabilities |
|
|
( |
) |
|
|
( |
) |
Income tax contingency |
|
|
— |
|
|
|
|
|
Other long-term liabilities |
|
|
|
|
|
— |
|
|
Net cash provided by operating activities |
|
|
|
|
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
||
Capital expenditures |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
Proceeds from exercise of warrants |
|
|
|
|
|
|
||
Repurchase of common shares |
|
|
( |
) |
|
|
— |
|
Repayment on term loan facilities |
|
|
( |
) |
|
|
( |
) |
Payment of deleveraging fee on term loan facilities |
|
|
( |
) |
|
|
— |
|
Net cash provided by (used in) financing activities |
|
|
|
|
|
( |
) |
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
|
( |
) |
|
|
|
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
|
|
|
( |
) |
|
Cash, cash equivalents and restricted cash, Beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash, End of period |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of the condensed consolidated financial statements.
6
ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(Unaudited)
(in thousands)
|
Six Months Ended June 30, |
|
|||||
|
2024 |
|
|
2023 |
|
||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
|
|
|
|
|
||
Cash paid during the period for: |
|
|
|
|
|
||
Income taxes |
$ |
|
|
$ |
|
||
Interest |
$ |
|
|
$ |
|
||
Non-cash financing transactions: |
|
|
|
|
|
||
Exchange of warrants into common shares |
$ |
— |
|
|
$ |
|
|
Cashless exercise of warrants |
$ |
|
|
$ |
|
||
Accrued dividends cancelled on common stock |
$ |
|
|
$ |
— |
|
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
7
ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2024
(Unaudited)
1. ORGANIZATION
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation, Principles of Consolidation
In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in quarterly financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been omitted or condensed pursuant to the SEC’s rules and regulations. However, management believes that the disclosures contained herein are adequate to make the information presented not misleading. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments (which are of a normal recurring nature) necessary to present fairly our unaudited financial position, results of operations and cash flows. The unaudited results of operations and cash flows of our interim periods are not necessarily indicative of the results of operations or cash flows that may be expected for the entire fiscal year. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”). The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Actual results could differ from those estimates. The accompanying unaudited condensed consolidated financial statements include the condensed consolidated balance sheet and statement of operations, comprehensive income (loss), changes in equity, and cash flows of OneSpaWorld. All significant intercompany items and transactions have been eliminated in consolidation.
Restricted Cash
These balances include amounts held in escrow accounts, as a result of a legal proceeding related to a tax assessment.
|
|
Balance as of June 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Total cash and restricted cash in the condensed consolidated statement of cash flows |
|
$ |
|
|
$ |
|
||
Inventories
Inventories, consisting principally of beauty, health and wellness products, are stated at the lower of cost, as determined on a first-in, first-out basis, or market. All inventory balances are comprised of finished goods used in beauty and health and wellness services or held for sale to customers. Inventory reserve is recorded to write down the cost of inventory to the estimated market value.
Earnings Per Share
Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income (loss) adjusted for the change in fair value of warrant liabilities, if the impact is dilutive, by the weighted average number of diluted shares, as calculated under the treasury stock method, which includes the potential effect of dilutive common stock equivalents, such as options and warrants to purchase common shares, and contingently issuable shares. If the entity reports a net loss, rather than net income for the period, the computation of diluted loss per share excludes the effect of dilutive common stock equivalents, if their effect is anti-dilutive.
8
Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted income (loss) per share is computed by dividing net income (loss) by the weighted average number of diluted common shares, as calculated under the treasury stock method, which includes the potential effect of dilutive common stock equivalents, such as options and warrants to purchase common shares. If the entity reports a net loss, rather than net income for the period, the computation of diluted loss per share excludes the effect of dilutive common stock equivalents, as their effect would be anti-dilutive.
The following table provides details underlying OneSpaWorld’s income (loss) per basic and diluted share calculation (in thousands, except per share data):
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 (a) |
|
|
2024 |
|
|
2023 (a) |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Denominator: | ||||||||||||||||