Steiner Leisure Limited (NASDAQ:STNR) today announced financial
results for the third quarter and nine months ended September 30,
2015. During the third quarter of 2015, as a result of current
conditions, circumstances, and in connection with Accounting
Standards Codification No. 350, Intangibles – Goodwill and Other,
we recorded a non-cash impairment charge of $29.5 million and
associated income tax benefit of $3.5 million, related to the
impairment of goodwill and other indefinite lived intangible assets
at our Schools reporting unit. During 2015, our Schools reporting
unit continued to operate in an environment with increased
regulatory compliance obligations that continued to adversely
affect our enrollments and our overall financial
performance. During the third quarter of 2015, our actual
enrollments and overall financial performance at the Schools
reporting unit were below our plan, which also adversely affected
our projections of future results for this business. As a
result of the decline in recent and forecasted performance of this
reporting unit, during the third quarter of 2015, we have reduced
our carrying values in certain of our assets as reflected in the
impairment charge discussed above. These charges are not
expected to have any impact on the Company's cash position or
liquidity under its Credit Facility.
In addition, during the third quarter of 2015, we incurred $2.9
million of transaction costs related to the previously announced
merger agreement with Catterton and we recorded a loss related to a
proposed settlement amount of $0.8 million related to employee
litigation.
Steiner Leisure's revenues for the third quarter ended September
30, 2015 increased 3.5% to $227.4 million from $219.7 million
during the comparable quarter in 2014. The net loss for the
third quarter of 2015 was ($17.5) million compared with net income
of $12.1 million for the same quarter in 2014. Excluding the
impairment charge, related tax benefit, merger costs and legal
settlement discussed above, net income for the third quarter of
2015 was $12.2 million.
(Loss) earnings per share for the third quarter ended September
30, 2015 was ($1.36) per share compared with $0.87 per share for
the comparable quarter in 2014. Excluding the impairment
charge, related tax benefit, merger costs and legal settlement
discussed above, earnings per share for the third quarter of 2015
was $0.94 per share. The earnings per share data are presented
on a diluted basis.
Revenues for the nine months ended September 30, 2015 increased
2.4% to $660.9 million from $645.7 million during the comparable
nine months in 2014. Net loss for the nine months ended
September 30, 2015 was ($0.4) million compared with net income of
$27.8 million for the same nine months in 2014. Excluding the
impairment charge, related tax benefit, merger costs and legal
settlement discussed above, net income for the nine months ended
September 30, 2015 was $29.5 million.
(Loss) earnings per share for the nine months ended September
30, 2015 was ($0.03) per share compared with $1.93 per share for
the comparable nine months in 2014. Excluding the impairment
charge, related tax benefit, merger costs and legal settlement
discussed above, earnings per share for the nine months ended
September 30, 2015 was $2.26 per share. The above earnings per
share data are presented on a diluted basis.
Steiner Leisure Limited is a worldwide provider and innovator in
the fields of beauty, wellness and education. We are dedicated
to maintaining the highest quality standards and continually
evolving to include and anticipate new developments within our
industry. We aim to maintain and expand our existing diverse
portfolio of services, products and brands, as well as to seek out
new opportunities to complement our business.
Our services include traditional and alternative massage, body
and skin treatment options, fitness, acupuncture, herbal medicine,
medi-spa treatments and laser hair removal. We are committed
to providing our customers with a wide-ranging assortment of beauty
products, including premium quality options developed by us under
our own brands, as well as those purchased from third parties.
Our distribution channels include our shipboard and land-based
spas and salons, destination spas, health clubs, department stores
and third party retail outlets and distributors. We also sell
our products on certain British Airways flights, on QVC, by
catalog, and online through our websites, including
www.timetospa.com and www.blissworld.com.
Our post-secondary schools offer programs in massage therapy and
skin care, among others, and, along with our recruiting and
training operations, prepare spa professionals for careers in the
health and wellness industry, including within the Steiner family
of companies.
Our cruise line operations are conducted in spas onboard 151
ships, including Azamara Club Cruises, Carnival Australia, Carnival
Cruise Line, Costa Cruises, Crystal Cruises, Cunard Cruise Line,
Holland America Line, Norwegian Cruise Lines, P&O Cruises,
Princess Cruises, Pullmantur Cruises, Royal Caribbean Cruises,
Seabourn Cruise Lines, Silversea Cruises and Windstar Cruises.
Our land-based spa operations are carried out under our Elemis®,
Mandara®, Chavana®, Bliss® and Remède® brands and take place in 63
locations, including resort spas, urban hotel spas and day
spas. In addition, a total of 26 resort and hotel spas are
operated under our brands by third parties pursuant to license
agreements with the Company. Our land-based customers include
Caesar's Entertainment, Hilton Hotels, Kerzner International, Loews
Hotels, Marriott Hotels, Mauna Kea Beach Hotel, Planet Hollywood,
St. Regis Hotels and Resorts, W Hotels and Resorts, Westin Hotels
and Resorts and Wyndham Hotels and Resorts.
Our Ideal Image customized laser hair removal services are
provided by highly trained, experienced practitioners through a
nationwide network of 127 treatment centers (17 of which are
operated by franchisees) across 31 states, as well as two locations
in Canada.
We develop and sell a variety of high quality beauty products
under our Elemis, La Thérapie™, Bliss, Remède, Laboratoire
Remède® and Jou® brands.
Our schools operations consist of 12 post-secondary schools
(comprised of a total of 31 campuses) located in Phoenix,
Scottsdale, Tempe and Tucson, Arizona; Westminster and Aurora,
Colorado; Groton, Newington and Westport, Connecticut; Miami,
Orlando, Pompano Beach and Tampa/St. Pete, Florida; Chicago,
Crystal Lake and Joliet, Illinois; Baltimore, Maryland; Boston,
Massachusetts; Las Vegas, Nevada; Hoboken and Wall, New Jersey;
King of Prussia and York, Pennsylvania; Arlington, Houston and
Richardson, Texas; Orem and Salt Lake City, Utah; Charlottesville,
Virginia; and Federal Way and Seattle, Washington. Offering
programs in massage therapy and, in some cases, skin care, these
schools train and qualify spa professionals for health and beauty
positions within the industry, including our own operations.
As part of our employee recruitment operations for our shipboard
spas, we provide education to our shipboard employees through our
rigorous training programs, at our primary training facilities near
London, England or one of our satellite training centers in South
Africa and the Philippines. These employees are sourced
primarily from the British Isles, Australia, South Africa,
Southeast Asia, Canada, the Caribbean and continental Europe.
The Company will not be holding a conference call this quarter
due to the pending merger agreement with Catterton, which was
previously announced.
SELECTED FINANCIAL
DATA |
($ and shares in
thousands, except per share data) |
(Unaudited) |
|
|
|
|
Third Quarter
Ended September 30, |
Nine Months Ended
September 30, |
|
|
|
|
|
|
2015 |
2014 |
2015 |
2014 |
Revenues: |
|
|
|
|
Services |
$ 160,787 |
$ 149,389 |
$ 467,033 |
$ 451,098 |
Products |
66,618 |
70,288 |
193,837 |
194,578 |
Total revenues |
227,405 |
219,677 |
660,870 |
645,676 |
|
|
|
|
|
Cost of Sales: |
|
|
|
|
Cost of services |
135,392 |
126,452 |
390,705 |
378,546 |
Cost of products |
43,985 |
44,561 |
127,857 |
128,851 |
Total cost of sales |
179,377 |
171,013 |
518,562 |
507,397 |
Gross profit |
48,028 |
48,664 |
142,308 |
138,279 |
|
|
|
|
|
Operating Expenses: |
|
|
|
|
Administrative |
20,321 |
17,472 |
53,809 |
46,850 |
Salary and payroll taxes |
16,863 |
16,419 |
56,573 |
56,762 |
Impairment of goodwill and other
intangibles |
29,507 |
-- |
29,507 |
-- |
Total operating expenses |
66,691 |
33,891 |
139,889 |
103,612 |
(Loss) income from operations |
(18,663) |
14,773 |
2,419 |
34,667 |
|
|
|
|
|
Other Income (Expense): |
|
|
|
|
Interest expense |
(757) |
(712) |
(2,361) |
(2,165) |
Other income |
246 |
202 |
741 |
671 |
Total other income (expense) |
(511) |
(510) |
(1,620) |
(1,494) |
|
|
|
|
|
(Loss) income before (benefit) provision for
income taxes |
(19,174) |
14,263 |
799 |
33,173 |
|
|
|
|
|
(Benefit) provision for income taxes |
(1,685) |
2,157 |
1,224 |
5,423 |
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
$ (17,489) |
$ 12,106 |
$ (425) |
$ 27,750 |
|
|
|
|
|
(Loss) income per share: |
|
|
|
|
Basic |
$ (1.36) |
$ 0.88 |
$ (0.03) |
$ 1.94 |
Diluted |
$ (1.36) |
$ 0.87 |
$ (0.03) |
$ 1.93 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
Basic |
12,833 |
13,771 |
12,888 |
14,299 |
Diluted |
12,833 |
13,883 |
12,888 |
14,393 |
|
|
|
|
|
|
|
|
|
|
STATISTICS |
|
|
|
|
|
|
Third Quarter
Ended September 30, |
Nine Months Ended
September 30, |
|
2015 |
2014 |
2015 |
2014 |
|
|
|
|
|
Average number of ships served1: |
149 |
147 |
147 |
149 |
Spa |
112 |
108 |
111 |
111 |
Non-Spa |
37 |
39 |
36 |
38 |
|
|
|
|
|
Average total number of staff on ships
served: |
2,619 |
2,582 |
2,596 |
2,633 |
Spa |
2,264 |
2,217 |
2,247 |
2,275 |
Non-Spa |
355 |
365 |
349 |
358 |
|
|
|
|
|
Revenue per staff per day2: |
$ 431 |
$ 418 |
$ 418 |
$ 409 |
Spa |
$ 452 |
$ 434 |
$ 441 |
$ 427 |
Non-Spa |
$ 298 |
$ 319 |
$ 272 |
$ 297 |
|
|
|
|
|
Average weekly revenues: |
$ 53,032 |
$ 51,285 |
$ 51,802 |
$ 50,679 |
Spa |
$ 63,731 |
$ 62,180 |
$ 62,818 |
$ 61,416 |
Non-Spa |
$ 20,212 |
$ 20,959 |
$ 18,317 |
$ 19,493 |
|
|
|
|
|
Average number of land-based spas served
3 |
63 |
63 |
62 |
65 |
|
|
|
|
|
Average weekly land-based spas revenues |
$ 24,823 |
$ 25,998 |
$ 26,756 |
$ 27,386 |
|
|
|
|
|
Total schools revenues |
$ 18,073,000 |
$ 19,907,000 |
$ 56,584,000 |
$ 58,620,000 |
|
|
|
|
|
Total wholesale and retail product
revenues |
$ 36,949,000 |
$ 41,775,000 |
$ 107,955,000 |
$ 108,838,000 |
|
|
|
|
|
Average number of Ideal Image locations
3,4 |
110 |
110 |
110 |
109 |
|
|
|
|
|
Average weekly Ideal Image revenues |
$ 33,169 |
$ 25,583 |
$ 31,590 |
$ 27,023 |
|
|
|
|
|
Ideal Image revenues |
$ 47,952,000 |
$ 36,986,000 |
$ 135,520,000 |
$ 114,874,000 |
|
|
|
|
|
Ideal Image cash revenues 5 |
$ 49,226,000 |
$ 34,423,000 |
$ 150,555,000 |
$ 106,099,000 |
____________________ |
|
|
|
|
|
|
|
|
|
1 Average number of ships served
reflects the fact that during the period ships were in and out of
service and, accordingly, the number of ships served during the
period varied. |
2 Revenue includes all sales of
services and products on ships. Staff includes all shipboard
employees. Per day refers to each day that a cruise ship is in
service. |
3 Average number of land-based
day spas and Ideal Image locations ("centers") operated reflects
the fact that during the period spas and centers were opened or
closed and, accordingly, the number of spas and centers served
during the period varied. |
4 Excludes 17 centers which are
operated by franchisees. |
5 "Cash revenues" are
non-generally accepted accounting principles ("non-GAAP") as
defined by the Securities and Exchange Commission. Management
believes that the presentation of cash revenues serves to enhance
the understanding of Ideal Image's performance. This non-GAAP
measure should be considered in addition to and not as a substitute
for, or superior to, measures of financial performance prepared in
accordance with generally accepted accounting principles
("GAAP"). See below for a reconciliation of GAAP results to
the non-GAAP measures. |
|
|
|
Reconciliation of
Non-GAAP Measures ($ and shares in thousands, except per share
data) |
|
Third Quarter
Ended September 30, |
Nine Months Ended
September 30, |
|
|
|
|
|
|
2015 |
2014 |
2015 |
2014 |
|
|
|
|
|
Ideal Image revenues |
$ 47,952 |
$ 36,986 |
$ 135,520 |
$ 114,874 |
Accrual to cash adjustments |
1,274 |
(2,563) |
15,035 |
(8,775) |
Ideal Image cash
revenues |
$ 49,226 |
$ 34,423 |
$ 150,555 |
$ 106,099 |
|
|
|
|
Third Quarter Ended September
30, 2015 |
Nine Months Ended September
30, 2015 |
|
|
|
Net loss |
$ (17,489) |
$ (425) |
Impairment charge (a) |
29,507 |
29,507 |
Tax effect of impairment charge |
(3,519) |
(3,519) |
Merger related costs |
2,942 |
3,156 |
Loss related to proposed legal
settlement |
780 |
780 |
Adjusted net income (b) |
$ 12,221 |
$ 29,499 |
Adjusted diluted earnings per share
(b) |
$ 0.94 |
$ 2.26 |
Weighted average shares outstanding used
in the calculation |
13,053 |
13,038 |
|
|
|
(a) Impairment charges
include goodwill, other indefinite lived intangible assets and
certain long-lived assets pursuant to Accounting Standards
Codification No. 350 Intangibles – Goodwill and Other. |
(b) Adjusted net income
and adjusted earnings per diluted share, non-GAAP financial
measures, are defined as net income and earnings per diluted share
before the charges discussed above. Adjusted net income and
adjusted earnings per diluted share should not be considered a
measure of financial performance under GAAP and have been provided
for consistency and comparability of the 2015 results with net
income and earning per diluted share in the prior periods. |
CONTACT: Leonard I. Fluxman,
President and Chief Executive Officer
(305) 358-9002, ext. 1215
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