Steiner Leisure Limited (Nasdaq:STNR) today announced financial
results for the fourth quarter and year ended December 31, 2014.
During the fourth quarter of 2014, as a result of current
conditions, circumstances, and in connection with Accounting
Standards Codification No. 350, Intangibles – Goodwill and Other,
and No. 360, Property, Plant, and Equipment, we recorded non-cash
impairment charges of $212.4 million and associated income tax
benefit of $14.5 million, related to the impairment of goodwill,
other indefinite lived intangible assets and certain long-lived
assets, primarily leasehold improvements, at our Ideal Image and
Schools reporting units. In regards to our Ideal Image reporting
unit, there has been a modification in strategy in terms of
services offered and marketing forums utilized in the current year.
We changed our advertising agency and worked closely with the new
agency to refine our message in various forms of digital and
alternative media formats to drive consistent and predictable lead
flow. We also began to offer new services (including BOTOX®
Cosmetic, tattoo removal, skin tightening and body contouring) in
order to diversify our business and remain competitive. Despite our
efforts, during the fourth quarter of 2014, the Ideal Image
reporting unit's overall financial performance continued to
decline, including having negative cash flows and a decline in
actual revenues as compared to our plan. This recent performance
has also adversely affected our forecasts of the returns for this
business. In regards to our Schools reporting unit, during 2014, we
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
fourth quarter of 2014, 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 both reporting units, during the fourth
quarter of 2014, we have reduced our carrying values in certain of
our assets as described 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.
Leonard Fluxman, President and Chief Executive Officer of
Steiner Leisure, said, "These impairment charges do not change our
perspective about the long-term value inherent to Ideal Image
or our Schools, nor does it diminish our long-term enthusiasm for
these businesses."
Steiner Leisure's revenues for the fourth quarter ended December
31, 2014 decreased 1.4% to $217.8 million from $221.0 million
during the comparable quarter in 2013. The net loss for the fourth
quarter of 2014 was ($185.8) million compared with net income of
$13.0 million for the same quarter in 2013. Excluding the
impairment charges and related tax benefit discussed above, net
income for the fourth quarter of 2014 was $12.0 million.
(Loss) earnings per share for the fourth quarter ended December
31, 2014 was ($14.01) per share compared with $0.88 per share for
the comparable quarter of 2013. Excluding the impairment charges
and related tax benefit discussed above, earnings per share for the
fourth quarter of 2014 was $0.90 per share. The earnings per share
data are presented on a diluted basis.
Revenues for the year ended December 31, 2014 increased 1.0% to
$863.5 million from $855.5 million in 2013. Net loss for the year
ended December 31, 2014 was ($158.1) million compared with net
income of $49.4 million in 2013. Excluding the impairment charges
and related tax benefit discussed above, net income for the year
ended December 31, 2014 was $39.7 million.
(Loss) earnings per share for the year ended December 31, 2014
was ($11.26) per share, compared with $3.34 per share in 2013.
Excluding the impairment charges and related tax benefit discussed
above, earnings per share for the year ended December 31, 2014 was
$2.81 per share. The above earnings per share data are presented on
a diluted basis.
Forward Looking Statement
The statement with respect to the long-term value of Ideal
Image and our Schools may be deemed to be a forward-looking
statement for purposes of the federal securities laws. That
statement is not intended to be a guarantee of the future success
of Ideal Image or our Schools and represents the Company's current
view regarding future events and is subject to known and unknown
risks, uncertainties and other factors which may cause actual
results for these divisions to differ materially from those
expressed or implied by the aforementioned statement. Among other
things, the future results of these divisions are subject to
substantial competition and regulatory obligations and
considerations, general economic conditions, changes in the
respective sectors in which these divisions operate and the ability
of those divisions' management teams to effectively execute the
business plan for these divisions. Other risks that may affect the
future results of these divisions are set forth in our Annual
Report on Form 10-K for 2013 and in our Quarterly Reports on Forms
10-Q for the first three quarters of 2014.
New Share Repurchase Plan
Steiner Leisure also today announced the approval by its Board
of Directors of a new share repurchase plan under which up to
$100,000,000 of Steiner Leisure common shares can be purchased. In
connection with this new repurchase authorization, the repurchase
plan approved by the Board in February 2013 was terminated. A total
of approximately $21 million remained available for share
repurchases under that plan at the time it was terminated.
Under the new share repurchase plan, Steiner Leisure may
purchase shares from time to time, at prevailing prices in open
market, and possibly other, transactions, subject to market
conditions and compliance with certain financial parameters. The
amounts to be repurchased shall not exceed the limitations on share
repurchases set forth in the Company's credit facility. We cannot
provide assurance as to the exact number of shares that will be
repurchased under the plan.
About Steiner Leisure
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 148
ships, including Azamara Club Cruises, Carnival Australia, Carnival
Cruise Line, Costa Cruises, Crystal Cruises, Cunard Cruise Line,
Holland America Line, Norwegian Cruise Line, 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, Nikko Hotels, Planet Hollywood, Sofitel Luxury Hotels, St.
Regis Hotels, W Hotels and Resorts and Westin 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 location
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 32 campuses) located in Phoenix,
Scottsdale, Tempe and Tucson, Arizona; Westminster and Aurora,
Colorado; Groton, Newington and Westport, Connecticut; Miami,
Orlando, Pompano Beach, Sarasota 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; Salt Lake City and Lindon, 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, the Philippines,
Canada, the Caribbean and continental Europe.
Conference Call
The Company will be holding a conference call at 11:00 am (EST)
on Thursday, February 19, 2015. Clive E. Warshaw, Chairman of the
Board, and Leonard I. Fluxman, President and Chief Executive
Officer, will discuss the contents of this press release.
If you wish to participate in this conference call, please call
(517) 308-9020 for domestic and international calls approximately
ten minutes before the scheduled time. The password is "Steiner".
The call is available for replay from Thursday, February 19th
(approximately 3 hours after the call takes place) through
Thursday, February 26, 2015 at approximately 5:00 pm (EST). You may
reach it by dialing (203) 369-3019 for both domestic and
international calls. The password is "33146".
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SELECTED FINANCIAL
DATA |
($ and shares in
thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
Fourth Quarter
Ended |
Year
Ended |
|
December
31, |
December
31, |
|
2014 |
2013 |
2014 |
2013 |
Revenues: |
|
|
|
|
Services |
$ 146,952 |
$ 149,082 |
$ 598,051 |
$ 593,717 |
Products |
70,825 |
71,882 |
265,403 |
261,745 |
Total revenues |
217,777 |
220,964 |
863,454 |
855,462 |
|
|
|
|
|
Cost of Sales: |
|
|
|
|
Cost of services |
122,990 |
127,310 |
501,536 |
495,249 |
Cost of products |
46,963 |
47,525 |
175,814 |
173,992 |
Total cost of sales |
169,953 |
174,835 |
677,350 |
669,241 |
Gross profit |
47,824 |
46,129 |
186,104 |
186,221 |
|
|
|
|
|
Operating Expenses: |
|
|
|
|
Administrative |
18,095 |
14,994 |
64,945 |
53,661 |
Salary and payroll taxes |
15,096 |
16,516 |
71,858 |
72,971 |
Impairment of goodwill, other
intangibles and long-lived assets |
212,350 |
-- |
212,350 |
-- |
Total operating expenses |
245,541 |
31,510 |
349,153 |
126,632 |
(Loss) income from
operations |
(197,717) |
14,619 |
(163,049) |
59,589 |
|
|
|
|
|
Other Income (Expense): |
|
|
|
|
Interest expense |
(765) |
(772) |
(2,930) |
(4,227) |
Other income |
383 |
459 |
1,053 |
894 |
Total other income
(expense) |
(382) |
(313) |
(1,877) |
(3,333) |
|
|
|
|
|
(Loss) income before (benefit) provision for
income taxes |
(198,099) |
14,306 |
(164,926) |
56,256 |
|
|
|
|
|
(Benefit) provision for income taxes |
(12,252) |
1,352 |
(6,829) |
6,817 |
|
|
|
|
|
Net (loss) income |
$ (185,847) |
$ 12,954 |
$ (158,097) |
$ 49,439 |
|
|
|
|
|
(Loss) income per share: |
|
|
|
|
Basic |
$ (14.01) |
$ 0.88 |
$ (11.26) |
$ 3.37 |
Diluted |
$ (14.01) |
$ 0.88 |
$ (11.26) |
$ 3.34 |
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
Basic |
13,267 |
14,654 |
14,039 |
14,649 |
Diluted |
13,267 |
14,793 |
14,039 |
14,818 |
|
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STATISTICS |
|
|
|
|
|
|
Fourth Quarter
Ended |
Year
Ended |
|
December
31, |
December
31, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
Average number of ships served1: |
144 |
152 |
147 |
154 |
Spa |
108 |
115 |
110 |
114 |
Non-Spa |
36 |
37 |
37 |
40 |
|
|
|
|
|
Average total number of staff on ships
served: |
2,587 |
2,757 |
2,621 |
2,707 |
Spa |
2,245 |
2,401 |
2,267 |
2,338 |
Non-Spa |
342 |
356 |
354 |
369 |
|
|
|
|
|
Revenue per staff per day2: |
$ 398 |
$ 386 |
$ 406 |
$ 407 |
Spa |
$ 418 |
$ 404 |
$ 425 |
$ 426 |
Non-Spa |
$ 267 |
$ 268 |
$ 289 |
$ 283 |
|
|
|
|
|
Average weekly revenues: |
$ 50,147 |
$ 49,018 |
$ 50,548 |
$ 49,953 |
Spa |
$ 60,872 |
$ 59,128 |
$ 61,281 |
$ 61,089 |
Non-Spa |
$ 17,837 |
$ 17,915 |
$ 19,094 |
$ 18,218 |
|
|
|
|
|
Average number of land-based spas
operated3 |
|
|
|
|
|
63 |
67 |
64 |
67 |
|
|
|
|
|
Average weekly land-based spas revenues |
$ 26,060 |
$ 27,864 |
$ 27,060 |
$ 28,666 |
|
|
|
|
|
Total schools revenues |
$ 20,217,000 |
$ 20,635,000 |
$ 78,837,000 |
$ 80,018,000 |
|
|
|
|
|
Total wholesale and retail product
revenues |
$ 43,637,000 |
$ 41,692,000 |
$ 152,476,000 |
$ 141,006,000 |
|
|
|
|
|
Average number of Ideal Image locations3,
4 |
110 |
103 |
110 |
91 |
|
|
|
|
|
Average weekly Ideal Image revenues4 |
$ 25,996 |
$ 26,805 |
$ 26,702 |
$ 27,897 |
|
|
|
|
|
Ideal Image revenues |
$ 37,583,000 |
$ 36,213,000 |
$ 152,457,000 |
$ 132,536,000 |
|
|
|
|
|
Ideal Image cash revenues5 |
$ 34,679,000 |
$ 42,867,000 |
$ 140,799,000 |
$ 163,692,000 |
|
|
|
|
|
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
year 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
spas and Ideal Image locations 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. |
|
|
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|
|
|
|
|
|
|
|
Reconciliation of
Non-GAAP Measures |
|
($ in thousands,
except per share data) |
|
Fourth Quarter
Ended |
Year
Ended |
|
December
31, |
December
31, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
Ideal Image revenues |
$ 37,583 |
$ 36,213 |
$ 152,457 |
$ 132,536 |
Accrual to cash adjustments |
(2,904) |
6,654 |
(11,658) |
31,156 |
Ideal Image cash revenues |
$ 34,679 |
$ 42,867 |
$ 140,799 |
$ 163,692 |
|
|
|
|
|
|
|
|
|
Fourth Quarter Ended, |
Year Ended |
|
December 31,
2014 |
December 31,
2014 |
|
|
|
Net loss |
$ (185,847) |
$ (158,097) |
Impairment charges (a) |
212,350 |
212,350 |
Tax effect of impairment charges |
(14,526) |
(14,526) |
Adjusted net income (b) |
$ 11,977 |
$ 39,727 |
Adjusted diluted earnings per share (b) |
$ 0.90 |
$ 2.81 |
Weighted average shares outstanding used in
the calculation |
13,314 |
14,121 |
|
|
|
(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 and No. 360
Property, Plant and Equipment. |
(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
non-cash impairment charges. Adjusted net income and adjusted
earnings per diluted share should not be considered a measure of
financial performance under general accepted accounting principles
and has been provided for consistency and comparability of the 2014
results with net income and earning per diluted share in the prior
periods. |
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CONTACT: Leonard I. Fluxman, President and Chief Executive Officer
(305) 358-9002, ext. 1215
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