EX-99.1 2 d69164dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share data)

 

     Three Months Ended December 31,     Year Ended December 31,  
                 $     %    

 

    

 

     $     %  
     2020     2019     Inc/(Dec)     Inc/(Dec)     2020     2019 (1)     Inc/(Dec)     Inc/(Dec)  

REVENUES:

                 

Service revenues

    $ 2,787     $ 107,231     $ (104,444 )      (97 )%    $ 93,682     $ 431,073     $ (337,391 )      (78 )% 

Product revenues

      1,044       32,205       (31,161 )      (97 )%      27,243       131,160       (103,917 )      (79 )% 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

      3,831       139,436       (135,605 )      (97 )%      120,925       562,233       (441,308 )      (78 )% 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

COST OF REVENUES AND OPERATING EXPENSES:

                 

Cost of services

      6,929       95,617       (88,688 )      (93 )%      107,258       369,680       (262,422 )      (71 )% 

Cost of products

      6,750       28,179       (21,429 )      (76 )%      31,976       114,310       (82,334 )      (72 )% 

Administrative

      5,642       1,730       3,912       226 %      18,957       16,484       2,473       15 % 

Salary and payroll taxes

      5,371       3,885       1,486       38 %      20,138       61,649       (41,511 )      (67 )% 

Amortization of intangible assets

      4,205       4,061       144       4 %      16,823       13,929       2,894       21 % 

Goodwill and Tradename impairment

      —           —           —           NM       190,777       —           190,777       NM  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total cost of revenues and operating expenses

      28,897       133,472       (104,575 )      (78 )%      385,929       576,052       (190,123 )      (33 )% 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income (loss) from operations

      (25,066 )      5,964       (31,030 )      (520 )%      (265,004 )      (13,819 )      (251,185 )      (1818 )% 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

OTHER INCOME (EXPENSE), NET:

                 

Interest expense

      (3,476 )      (4,088 )      612       15 %      (14,703 )      (19,838 )      5,135       26 % 

Loss on extinguishment of debt

      —           —           —           NM       —           (3,413 )      3,413       100 % 

Interest income

      11       8       3       38 %      30       43       (13 )      (30 )% 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total other income (expense), net

      (3,465 )      (4,080 )      615       15 %      (14,673 )      (23,208 )      8,535       37 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

(Loss) Income before provision for income taxes

      (28,531 )      1,884       (30,415 )      (1614 )%      (279,677 )      (37,027 )      (242,650 )      (655 )% 

PROVISION (BENEFIT) FOR INCOME TAXES

      (556 )      (231 )      (325 )      (141 )%      814       (11 )      825       7500 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net (loss) income

      (27,975 )      2,115       (30,090 )      (1423 )%      (280,491 )      (37,016 )      (243,475 )      (658 )% 

Net income attributable to noncontrolling interest

      —           972       (972 )      (100 )%      —           4,012       (4,012 )      (100 )% 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net (loss) income attributable to OneSpaWorld

    $ (27,975 )    $ 1,143     $ (29,118 )      (2548 )%    $ (280,491 )    $ (41,028 )    $ (239,463 )      (584 )% 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net (loss) income attributable to OneSpaWorld per share:

                 

Basic

    $ (0.33 )    $ 0.02         $ (3.77 )    $ (0.25 )(2)     

Diluted

    $ (0.33 )    $ 0.02         $ (3.77 )    $ (0.25 )(2)     

Weighted average shares outstanding:

                 

Basic

      85,148       61,118           74,359       61,118      

Diluted

      85,148       75,115           74,359       61,118      

1)

The presentation of the results of operations for fiscal year ended December 31, 2019 represents the sum of the results of operations for the predecessor period from January 1, 2019 to March 19, 2019 prior to the Business Combination and successor period to the Business Combination from March 20, 2019 to December 31, 2019. The Company believes this non-GAAP presentation of its results of operations for year-to-date fiscal year 2019 provides more comparability to the same period of fiscal 2020.

2)

The calculation of net loss per share for year-to-date December 31, 2019 excludes the net loss of ($25,459) for the predecessor period from January 1, 2019 to March 19, 2019 prior to the Business Combination. The Company believes this presentation of diluted loss per share provides more comparability for the current and year-to-date successor periods to the Business Combination.

Note Regarding Non-GAAP Financial Information

The information herein includes financial measures that are not calculated in accordance with GAAP, including Adjusted Net Income, Adjusted Net Income Per Diluted Share, Adjusted EBITDA and Unlevered After-Tax Free Cash Flow.

The Company defines Adjusted Net Income as net (loss) income, adjusted for non-controlling interest and the impact of certain other items, including normalized interest expense, related party adjustments, increase in depreciation and amortization expense resulting from the Business Combination, non-cash stock-based compensation, normalized tax expense, non-cash prepaid expenses and non-recurring expenses incurred in connection with the Business Combination. Adjusted Net Income Per Diluted Share is defined as Adjusted Net Income divided by the weighted average diluted shares outstanding during the period, as if such shares had been outstanding during the entire three-month and twelve-month periods ended December 31, 2020.

The Company defines Adjusted EBITDA as income (loss) from continuing operations before interest expense, provision (benefit) for income taxes, depreciation and amortization and non-controlling interest, adjusted for the impact of certain other items, including non-cash stock-based compensation expense, non-cash prepaid expenses, related party adjustments, and non-recurring expenses incurred in connection with the Business Combination. All of these other items are reported in administrative expenses in the condensed consolidated and combined statements of operations.

The Company defines Unlevered After-Tax Free Cash Flow as Adjusted EBITDA minus capital expenditures and cash taxes paid.

The Company believes that these non-GAAP measures, when reviewed in conjunction with GAAP financial measures, and not in isolation or as substitutes for analysis of the Company’s results of operations under GAAP, are useful to investors as they are widely used measures of performance and the adjustments the Company makes to these non-GAAP measures provide investors further insight into the Company’s profitability and additional perspectives in comparing the Company’s performance to other companies and in comparing the Company’s performance over time on a consistent basis. Adjusted Net Income, Adjusted Net Income Per Diluted Share, Adjusted EBITDA and Unlevered After-Tax Free Cash Flow have limitations as profitability measures in that they do not include total amounts for interest expense on the Company’s debt and provision for income taxes, and the effect of the Company’s expenditures for capital assets and certain intangible assets. In addition, all of these non-GAAP measures have limitations as profitability measures in that they do not include the effect of non-cash stock-based compensation expense and the impact of certain expenses related to items that are settled in cash. Because of these limitations, the Company relies primarily on its GAAP results.

In the future, the Company may incur expenses similar to those for which adjustments are made in calculating Adjusted EBITDA. The Company’s presentation of Adjusted EBITDA should not be construed as a basis to infer that the Company’s future results will be unaffected by extraordinary, unusual or non-recurring items.

Reconciliation of GAAP to Non-GAAP Financial Information

The following table reconciles Net (Loss) Income to Adjusted Net (Loss) Income attributable to OneSpaWorld for the fourth quarter and year-to-date periods ended December 31, 2020 and 2019 and Adjusted Net (Loss) Income attributable to OneSpaWorld Per Diluted Share for the fourth quarter and year-to-date periods ended December 31, 2020 and 2019 (amounts in thousands, except per share amounts):

 

     Three Months Ended     Year Ended  
     December 31,     December 31,  
     2020     2019     2020     2019 (h)  

Net (Loss) Income

    $ (27,975 )    $ 2,115     $ (280,491 )    $ (37,016 ) 

Non-controlling Interest (a)

      —         (972 )      —         (4,012 ) 

Interest Expense (b)

      —         —         —         2,947  

Loss on Extinguishment of Debt

      —         —         —         3,413  

Goodwill and trade name impairment charges

      —         —         190,777       —    

Related Party Adjustments (c)

      —         —         —         538  

Depreciation and Amortization(d)

      3,761       3,761       15,044       12,328  

Change in Control Payments (e)

      —         —         —         26,284  

Stock-Based Compensation

      2,990       187       4,950       20,683  

Business Combination Costs (f)

      —         1,559       1,619       7,160  

Addback for Non-Cash Prepaid Expenses (g)

      457       —         457       —    

Tax expense (i)

      52       —         1,798       276  
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Net (Loss) Income attributable to OneSpaWorld

    $ (20,715 )    $ 6,650     $ (65,846 )    $ 32,601  
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Net (Loss) Income attributable to OneSpaWorld Per Diluted Share

    $ (0.24 )    $ 0.09     $ (0.89 )    $ 0.44  
  

 

 

    

 

 

    

 

 

    

 

 

  

Diluted Weighted Average Shares Outstanding

      85,148       75,115       74,359       74,001  
  

 

 

    

 

 

    

 

 

    

 

 

  

The following table reconciles Net (Loss) Income to Adjusted EBITDA and Unlevered After-Tax Free Cash Flow for the fourth quarter and year-to-date periods ended December 31, 2020 and 2019 (amounts in thousands):

 

     Three Months Ended     Year Ended  
     December 31,     December 31,  
     2020     2019     2020     2019 (h)  

Net (Loss) Income

    $ (27,975 )    $ 2,115     $ (280,491 )    $ (37,016 ) 

(Benefit) Provision for Income Taxes

      (556 )      (231 )      814       (11 ) 

Interest Income

      (11 )      (8 )      (30 )      (43 ) 

Non-controlling Interest (a)

      —         (972 )      —         (4,012 ) 

Interest Expense

      3,476       4,088       14,703       19,838  

Loss on Extinguishment of Debt

      —         —         —         3,413  

Related Party Adjustments (c)

      —         —         —         538  

Goodwill and trade name impairment charges

      —         —         190,777       —    

Depreciation and Amortization

      6,182       6,281       24,453       21,595  

Change in Control Payments (e)

      —         —         —         26,284  

Stock-based Compensation

      2,990       187       4,950       20,683  

Business Combination Costs (f)

      —         1,559       1,619       7,160  

Addback for Non-Cash Prepaid Expenses (g)

      457       —         457       276  
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted EBITDA

    $ (15,437 )    $ 13,019     $ (42,748 )    $ 58,705  
  

 

 

    

 

 

    

 

 

    

 

 

  

Capital Expenditures

      (338 )      (539 )      (2,132 )      (3,426 ) 

Cash Taxes

      (78 )      —         (136 )      (244 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Unlevered After-Tax Free Cash Flow

    $ (15,853 )    $ 12,480     $ (45,016 )    $ 55,035  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

a)

Non-controlling interest refers to net income attributable to a non-controlling interest in a consolidated subsidiary of OneSpaWorld. On February 14, 2020, the Company purchased the 40% non-controlling interest for $12.3 million in a combination of $10.8 million in cash and 98,753 shares of the Company’s common stock at a share price of $15.26.

b)

Interest expense refers to addback to adjust interest expense as if only the new debt financing resulting from the Business Combination was outstanding as of the beginning of the first quarter of fiscal 2018.

c)

Related party adjustments refers to adjustments to reflect the impact of agreements with related parties, primarily OSW Predecessor supply agreements with a wholly-owned subsidiary of Steiner Leisure.

d)

Depreciation and amortization refers to addback of purchase price adjustments to tangible and intangible assets resulting from the Business Combination.

e)

Change in control payments relates to amounts paid to OSW Predecessor executives upon consummation of the Business Combination.

f)

Business combination costs refers primarily to legal and advisory fees incurred by OneSpaWorld in connection with the Business Combination.

g)

Addback for non-cash prepaid expenses refers to non-cash expenses incurred in connection with certain contracts.

h)

The presentation of the results of operations for the fiscal year 2019 represents the sum of the results of operations for the predecessor period from January 1, 2019 to March 19, 2019 prior to the Business Combination and successor period to the Business Combination from March 20, 2019 to December 31, 2019. The Company believes this non-GAAP presentation of its results of operations for year-to-date fiscal year 2019 provides more comparability to the same period of fiscal 2020.

i)

Valuation allowance related to the Company’s 2020 beginning-of-year deferred tax assets that are not realizable.