0001564590-20-039691.txt : 20200812 0001564590-20-039691.hdr.sgml : 20200812 20200812161440 ACCESSION NUMBER: 0001564590-20-039691 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 82 CONFORMED PERIOD OF REPORT: 20200630 FILED AS OF DATE: 20200812 DATE AS OF CHANGE: 20200812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ONESPAWORLD HOLDINGS Ltd CENTRAL INDEX KEY: 0001758488 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEMBERSHIP SPORTS & RECREATION CLUBS [7997] IRS NUMBER: 000000000 STATE OF INCORPORATION: C5 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-38843 FILM NUMBER: 201095618 BUSINESS ADDRESS: STREET 1: SHIRLEY HOUSE STREET 2: 253 SHIRLEY STREET CITY: NASSAU STATE: C5 ZIP: N-624 BUSINESS PHONE: 3053589002 MAIL ADDRESS: STREET 1: SHIRLEY HOUSE STREET 2: 253 SHIRLEY STREET CITY: NASSAU STATE: C5 ZIP: N-624 10-Q 1 osw-10q_20200630.htm 10-Q2 osw-10q_20200630.htm

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 June 30, 2020

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

City of Nassau, Island of New Providence, Commonwealth of The Bahamas

 

Not Applicable

(Address of principal executive offices)

 

(Zip Code)

(242) 356-0006

(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 June 30, 2020, 67,782,651 common voting shares and 17,185,500 common non-voting shares were 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

 

22

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

33

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

33

 

 

 

 

 

PART II - OTHER INFORMATION

 

34

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

34

 

 

 

 

 

Item 1A.

 

Risk Factors

 

34

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

41

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

41

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

41

 

 

 

 

 

Item 5.

 

Other Information

 

41

 

 

 

 

 

Item 6.

 

Exhibits

 

42

 

 

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

 

 

 

June 30,

2020

 

 

December 31,

2019

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

64,728

 

 

$

13,863

 

Restricted cash

 

 

1,896

 

 

 

 

Accounts receivable, net

 

 

3,369

 

 

 

30,513

 

Inventories

 

 

34,368

 

 

 

36,066

 

Prepaid expenses

 

 

8,653

 

 

 

7,655

 

Other current assets

 

 

1,871

 

 

 

2,565

 

Total current assets

 

 

114,885

 

 

 

90,662

 

Property and equipment, net

 

 

20,347

 

 

 

22,741

 

Intangible assets, net

 

 

607,526

 

 

 

616,637

 

Goodwill

 

 

 

 

 

190,077

 

OTHER ASSETS:

 

 

 

 

 

 

 

 

Deferred tax assets

 

 

 

 

 

2,046

 

Other non-current assets

 

 

1,075

 

 

 

1,506

 

Total other assets

 

 

1,075

 

 

 

3,552

 

Total assets

 

$

743,833

 

 

$

923,669

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

$

17,442

 

 

$

23,437

 

Accrued expenses

 

 

22,686

 

 

 

23,575

 

Income taxes payable

 

 

927

 

 

 

897

 

Other current liabilities

 

 

2,719

 

 

 

3,501

 

Total current liabilities

 

 

43,774

 

 

 

51,410

 

Deferred rent

 

 

227

 

 

 

160

 

Income tax contingency

 

 

3,987

 

 

 

3,949

 

Other long-term liabilities

 

 

6,311

 

 

 

 

Deferred tax liability

 

 

 

 

 

375

 

Long-term debt, net

 

 

228,920

 

 

 

221,407

 

Total liabilities

 

$

283,219

 

 

$

277,301

 

Commitments and contingencies (Note 15)

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Common stock:

 

 

 

 

 

 

 

 

Voting common stock, $0.0001 par value; 225,000,000 shares authorized, 67,782,651 issued and outstanding at June 30, 2020 and 61,119,398 shares issued and outstanding at December 31, 2019

 

 

7

 

 

 

6

 

Non-voting common stock, $0.0001 par value; 25,000,000 shares authorized, 17,185,500 shares issued and outstanding at June 30, 2020 and zero shares issued and outstanding at December 31, 2019

 

 

2

 

 

 

 

Additional paid-in capital

 

 

712,512

 

 

 

653,088

 

Accumulated deficit

 

 

(245,638

)

 

 

(15,569

)

Accumulated other comprehensive (loss) income

 

 

(6,269

)

 

 

719

 

Total OneSpaWorld shareholders’ equity

 

 

460,614

 

 

 

638,244

 

Noncontrolling interest

 

 

 

 

 

8,124

 

Total shareholders' equity

 

 

460,614

 

 

 

646,368

 

Total liabilities and shareholders' equity

 

$

743,833

 

 

$

923,669

 

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

1


Table of Contents

ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share data)

 

 

 

Successor

 

 

 

Predecessor

 

 

 

Consolidated

 

 

 

Combined

 

 

 

Three months ended June 30,

 

 

Six Months Ended June 30,

 

 

March 20, 2019 to June 30,

 

 

 

January 1, 2019 to March 19,

 

 

 

2020

 

 

 

 

2019

 

 

2020

 

 

2019

 

 

 

2019

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service revenues

 

$

214

 

 

 

 

$

107,285

 

 

$

89,787

 

 

$

121,998

 

 

 

$

91,280

 

Product revenues

 

 

784

 

 

 

 

 

33,145

 

 

 

25,518

 

 

 

37,446

 

 

 

 

27,172

 

Total revenues

 

 

998

 

 

 

 

 

140,430

 

 

 

115,305

 

 

 

159,444

 

 

 

 

118,452

 

COST OF REVENUES AND OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

 

12,559

 

 

 

 

 

90,642

 

 

 

93,138

 

 

 

103,028

 

 

 

 

76,836

 

Cost of products

 

 

1,623

 

 

 

 

 

28,604

 

 

 

23,759

 

 

 

32,194

 

 

 

 

23,957

 

Administrative

 

 

4,940

 

 

 

 

 

4,346

 

 

 

9,523

 

 

 

6,863

 

 

 

 

2,498

 

Salary and payroll taxes

 

 

5,091

 

 

 

 

 

4,249

 

 

 

10,263

 

 

 

25,464

 

 

 

 

29,349

 

Amortization of intangible assets

 

 

4,206

 

 

 

 

 

4,491

 

 

 

8,412

 

 

 

5,073

 

 

 

 

755

 

Goodwill and trade name impairment charges

 

 

 

 

 

 

 

 

 

 

190,777

 

 

 

 

 

 

 

 

Total cost of revenues and operating expenses

 

 

28,419

 

 

 

 

 

132,332

 

 

 

335,872

 

 

 

172,622

 

 

 

 

133,395

 

(Loss) income from operations

 

 

(27,421

)

 

 

 

 

8,098

 

 

 

(220,567

)

 

 

(13,178

)

 

 

 

(14,943

)

OTHER EXPENSE, NET:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(4,001

)

 

 

 

 

(4,271

)

 

 

(7,744

)

 

 

(4,828

)

 

 

 

(6,316

)

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,413

)

Total other expense, net

 

 

(4,001

)

 

 

 

 

(4,271

)

 

 

(7,744

)

 

 

(4,828

)

 

 

 

(9,729

)

(Loss) income before (benefit) provision for income taxes

 

 

(31,422

)

 

 

 

 

3,827

 

 

 

(228,311

)

 

 

(18,006

)

 

 

 

(24,672

)

(BENEFIT) PROVISION FOR INCOME TAXES

 

 

(15

)

 

 

 

 

(732

)

 

 

1,758

 

 

 

14

 

 

 

 

109

 

Net (loss) income

 

 

(31,407

)

 

 

 

 

4,559

 

 

 

(230,069

)

 

 

(18,020

)

 

 

 

(24,781

)

Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

950

 

 

 

 

 

 

1,054

 

 

 

 

678

 

Net (loss) income attributable to common shareholders and Parent, respectively

 

$

(31,407

)

 

 

 

$

3,609

 

 

$

(230,069

)

 

$

(19,074

)

 

 

$

(25,459

)

NET (LOSS) INCOME PER VOTING AND NON-VOTING SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.48

)

 

 

 

$

0.06

 

 

$

(3.62

)

 

$

(0.31

)

 

 

 

 

 

Diluted

 

$

(0.48

)

 

 

 

$

0.05

 

 

$

(3.62

)

 

$

(0.31

)

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

65,916

 

 

 

 

 

61,118

 

 

 

63,543

 

 

 

61,118

 

 

 

 

 

 

Diluted

 

 

65,916

 

 

 

 

 

72,047

 

 

 

63,543

 

 

 

61,118

 

 

 

 

 

 

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

2


Table of Contents

ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)

(in thousands)

 

 

Successor

 

 

 

Predecessor

 

 

Consolidated

 

 

 

Combined

 

 

Three months ended June 30,

 

 

Six Months Ended June 30,

 

 

March 20, 2019 to June 30,

 

 

 

January 1, 2019 to March 19,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

2019

 

Net(loss) income

$

(31,407

)

 

$

4,559

 

 

$

(230,069

)

 

$

(18,020

)

 

 

$

(24,781

)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

188

 

 

 

(130

)

 

 

(304

)

 

 

(955

)

 

 

 

(165

)

Cash flows hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized loss on derivative

 

(1,098

)

 

 

 

 

 

(7,054

)

 

 

 

 

 

 

 

Amount realized and reclassified into earnings

 

408

 

 

 

 

 

 

370

 

 

 

 

 

 

 

 

Total other comprehensive loss, net of tax

 

(502

)

 

 

(130

)

 

 

(6,988

)

 

 

(955

)

 

 

 

(165

)

Comprehensive (loss) income

 

(31,909

)

 

 

4,429

 

 

 

(237,057

)

 

 

(18,975

)

 

 

 

(24,946

)

Comprehensive income attributable to noncontrolling interest

 

 

 

 

950

 

 

 

 

 

 

1,054

 

 

 

 

678

 

Comprehensive (loss) income attributable to common shareholders and Parent, respectively

$

(31,909

)

 

$

3,479

 

 

$

(237,057

)

 

$

(20,029

)

 

 

$

(25,624

)

 

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

 

3


Table of Contents

ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY

(DEFICIT)

(Unaudited)

(in thousands)

 

 

Combined

 

Predecessor:

 

Net Parent Investment

 

 

Accumulated Other Comprehensive Loss

 

 

Total Parent's Equity (Deficit)

 

 

Noncontrolling Interest

 

 

Total

 

BALANCE, December 31, 2018

 

$

(130,520

)

 

$

(649

)

 

$

(131,169

)

 

$

3,586

 

 

$

(127,583

)

Net loss

 

 

(25,459

)

 

 

 

 

 

(25,459

)

 

 

678

 

 

 

(24,781

)

Distributions to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

(267

)

 

 

(267

)

Net contributions from the parent and affiliates

 

 

351,802

 

 

 

 

 

 

351,802

 

 

 

 

 

 

351,802

 

Foreign currency translation adjustment

 

 

 

 

 

(165

)

 

 

(165

)

 

 

 

 

 

(165

)

BALANCE, March 19, 2019

 

$

195,823

 

 

$

(814

)

 

$

195,009

 

 

$

3,997

 

 

$

199,006

 

 

Successor:

 

 

 

 

 

 

 

 

Consolidated

 

 

 

Issued Common Voting Shares

 

 

Issued Common Non-Voting Shares

 

 

Voting and Non-Voting Common Stock

 

 

Additional Paid-in Capital

 

 

Accumulated Other Comprehensive Loss

 

 

Accumulated Deficit

 

 

Total OneSpaWorld Shareholders’ equity

 

 

Noncontrolling Interest

 

 

Total

 

BALANCE, March 20, 2019 (1)

 

 

61,118

 

 

 

 

 

$

6

 

 

$

634,839

 

 

$

 

 

$

 

 

$

634,845

 

 

$

5,624

 

 

$

640,469

 

Net (loss) income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,074

)

 

 

(19,074

)

 

 

1,054

 

 

 

(18,020

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

20,371

 

 

 

 

 

 

 

 

 

20,371

 

 

 

 

 

 

20,371

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(391

)

 

 

 

 

 

(391

)

 

 

 

 

 

(391

)

BALANCE, June 30, 2019

 

 

61,118

 

 

 

 

 

$

6

 

 

$

655,210

 

 

$

(391

)

 

$

(19,074

)

 

$

635,751

 

 

$

6,678

 

 

$

642,429

 

BALANCE, March 31, 2019

 

 

61,118

 

 

 

 

 

$

6

 

 

$

655,210

 

 

$

(261

)

 

$

(22,683

)

 

$

632,272

 

 

$

5,728

 

 

$

638,000

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,609

 

 

 

3,609

 

 

 

950

 

 

 

4,559

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(130

)

 

 

 

 

 

(130

)

 

 

 

 

 

(130

)

BALANCE, June 30, 2019

 

 

61,118

 

 

 

 

 

$

6

 

 

$

655,210

 

 

$

(391

)

 

$

(19,074

)

 

$

635,751

 

 

$

6,678

 

 

$

642,429

 

BALANCE, March 31, 2020

 

 

61,218

 

 

 

 

 

$

6

 

 

$

643,489

 

 

$

(5,767

)

 

$

(214,231

)

 

$

423,497

 

 

$

 

 

$

423,497

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31,407

)

 

 

(31,407

)

 

 

 

 

 

(31,407

)

2020 Private Placement, net of issuance costs

 

 

6,564

 

 

 

17,186

 

 

 

3

 

 

 

68,599

 

 

 

 

 

 

 

 

 

68,602

 

 

 

 

 

 

68,602

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

424

 

 

 

 

 

 

 

 

 

424

 

 

 

 

 

 

424

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

188

 

 

 

 

 

 

188

 

 

 

 

 

 

188

 

Unrecognized loss on derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(690

)

 

 

 

 

 

(690

)

 

 

 

 

 

(690

)

BALANCE, June 30, 2020

 

 

67,782

 

 

 

17,186

 

 

$

9

 

 

$

712,512

 

 

$

(6,269

)

 

$

(245,638

)

 

$

460,614

 

 

$

 

 

$

460,614

 

BALANCE, December 31, 2019

 

 

61,119

 

 

 

 

 

$

6

 

 

$

653,088

 

 

$

719

 

 

$

(15,569

)

 

$

638,244

 

 

$

8,124

 

 

$

646,368

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(230,069

)

 

 

(230,069

)

 

 

 

 

 

(230,069

)

2020 Private Placement, net of issuance costs

 

 

6,564

 

 

 

17,186

 

 

 

3

 

 

 

68,599

 

 

 

 

 

 

 

 

 

68,602

 

 

 

 

 

 

68,602

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

850

 

 

 

 

 

 

 

 

 

850

 

 

 

 

 

 

850

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(304

)

 

 

 

 

 

(304

)

 

 

 

 

 

(304

)

Unrecognized loss on interest rate swap

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,684

)

 

 

 

 

 

(6,684

)

 

 

 

 

 

(6,684

)

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

(2,449

)

 

 

 

 

 

 

 

 

(2,449

)

 

 

 

 

 

(2,449

)

Distributions to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,011

)