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February 28, 2007 05:15 PM Eastern Time

Steiner Leisure Limited Announces Fourth Quarter and 2006 Financial Results

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NASSAU, The Bahamas--(BUSINESS WIRE)--Steiner Leisure Limited (NASDAQ:STNR) today announced financial results for the fourth quarter and year ended December 31, 2006.

Financial Results

Steiner Leisure's revenues for the fourth quarter ended December 31, 2006 rose 20.7% to $122.1 million from $101.1 million during the comparable quarter in 2005. Income from continuing operations, before discontinued operations for the fourth quarter, was $13.2 million compared with $10.8 million for the same quarter in 2005. In the fourth quarter of 2006, the Company adopted Staff Accounting Bulletin 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (SAB 108). The effect of adopting SAB 108 was an income tax benefit of $1.8 million during the fourth quarter of 2006 and had no impact on our results of operations for the year ended December 31, 2006.

Earnings per share before discontinued operations for the fourth quarter ended December 31, 2006 was $0.75 per share, compared with $0.61 per share for the comparable quarter in 2005. The earnings per share data are presented on a diluted basis.

Revenues for the year ended December 31, 2006, rose 18.4% to $470.1 million from $397.2 million in 2005. Income from continuing operations, before discontinued operations for the year ended December 31, 2006, was $45.9 million, compared with $40.4 million in 2005.

Earnings per share before discontinued operations for the year ended December 31, 2006 was $2.60 per share compared with $2.23 per share in 2005. The above earnings per share data are presented on a diluted basis.

Leonard I. Fluxman, President and Chief Executive Officer of Steiner Leisure, commented "We are pleased with our fourth quarter and annual financial results. The strong execution by our personnel allowed us to generate strong earnings growth and cash flow in 2006.

Corporate Overview

Steiner Leisure Limited is a worldwide provider of spa services. The Companys operations include spas and salons on 126 cruise ships, and in 53 resort spas and two luxury day spas. Our cruise line and land-based resort customers include Carnival Cruise Lines, Caesars Entertainment, Celebrity Cruises, Crystal Cruises, Cunard/Seabourn Cruise Lines, Hilton Hotels, Holland America Line, Kerzner International, Marriott Hotels, Norwegian Cruise Lines, Princess Cruises and Royal Caribbean Cruises. Our Elemis Limited subsidiary manufactures its Elemis® brand products for use in our cruise ship and land-based spas. This top quality European line of beauty products is also distributed worldwide to exclusive hotels, salons, health clubs and destination spas. Elemis®, as well as other Steiner products, including La Therapie®, Ionithermie, and Steiner Hair Care, are available at www.timetospa.com.

Steiner Leisure owns and operates four post secondary schools (comprised of a total of 14 campuses) located in Miami, Orlando, Pompano Beach and Sarasota, Florida; Baltimore, Maryland; Charlottesville, Virginia; York, Pennsylvania; Salt Lake City and Lindon, Utah; Las Vegas, Nevada; Tempe and Phoenix, Arizona; and Westminster and Aurora, Colorado. Offering degree and non-degree programs in massage therapy and, in some cases, skin care, these schools train and qualify spa professionals for health and beauty positions within the Steiner family of companies or other industry entities.

Conference Call

The Company will be holding a conference call at 11:00 am (EST) on Thursday, March 1, 2007. 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 five minutes before the scheduled time. The password is Steiner. This call is available for replay from Thursday, March 1, 2007 (approximately 3 hours after the call takes place) until Wednesday, March 7, 2007 at 11:00 pm. You may reach it by dialing 402-998-1330 for both domestic and international calls.

SELECTED FINANCIAL DATA

($ in thousands, except per share data)

(Unaudited)

 
Fourth Quarter Ended Year Ended
December 31,   December 31,

20061

2005 

20061

2005 
Revenues:
Services $ 80,972  $ 67,259  $ 317,731  $ 268,401 
Products 41,103  33,879  152,411  128,817 
Total revenues 122,075  101,138  470,142  397,218 
 
Cost of Sales:
Cost of services 65,256  54,316  253,772  214,022 
Cost of products 28,835  24,945  110,744  96,588 
Total cost of sales 94,091  79,261  364,516  310,610 
Gross profit 27,984  21,877  105,626  86,608 
 
Operating Expenses:
Administrative 7,169  5,002  26,260  20,837 
Salary and payroll taxes 8,566  5,290  32,844  22,348 
Total operating expenses 15,735  10,292  59,104  43,185 
Income from continuing operations 12,249  11,585  46,522  43,423 
 
Other Income (Expense):
Interest expense

(38)

 

(82)

 

(287)

 

(275)
Other income 324  220  1,933  553 
Total other income (expense) 286  138  1,646  278 
 
Income from continuing operations before provision for income taxes and discontinued operations

12,535 

11,723 

48,168 

43,701 

 

Provision (benefit) for income taxes2

(635)

 

885  2,248  3,302 
 
Income from continuing operations before discontinued operations

13,170 

10,838 

45,920 

40,399 

 
Income from discontinued operations, net of taxes --  788  225  769 
 
 
Net income $ 13,170  $ 11,626  $ 46,145  $ 41,168 
 
Income per share-Basic:
Income before discontinued operations $ 0.78  $ 0.63  $ 2.68  $ 2.32 
Income from discontinued operations --  0.05  0.01  0.04 
$ 0.78  $ 0.68  $ 2.69  $ 2.36 
 

Income per share-Diluted3:

Income before discontinued operations $ 0.75  $ 0.61  $ 2.60  $ 2.23 
Income from discontinued operations --  0.04  0.01  0.04 
$ 0.75  $ 0.65  $ 2.61  $ 2.27 
 
Weighted average shares outstanding:
Basic 16,890  17,174  17,134  17,401 
Diluted   17,317    17,842    17,596    18,159 
 

Notes:

1 Includes post acquisition results of Utah College of Massage Therapy (UCMT) and an affiliate which were acquired on April 3, 2006.

2 During the fourth quarter of 2006, we adopted SAB 108. The affect of adopting SAB 108 was an income tax benefit of $1.8 million during the fourth quarter of 2006 and had no impact on our results of operations for the year ended December 31, 2006. This corrected an error relating to the different treatment for book and tax purposes of the Companys tax deductible goodwill which cannot be assumed to offset deductible temporary differences which create deferred tax assets, which was recorded in the second quarter of 2006.

3 During 2006, considers the impact of stock options outstanding of a subsidiaries common stock of $143,000. During 2005, the impact was immaterial.

STATISTICS

 
Fourth Quarter Ended Year Ended
December 31,   December 31,
2006  2005  2006  2005 
 

Average number of ships served1:

122  112  120  115 
Spa 90  82  87  83 
Non-Spa 32  30  33  32 
 
Average total number of staff on ships served:

1,884 

1,656 

1,807 

1,653 

Spa 1,650  1,443  1,577  1,424 
Non-Spa 234  213  230  229 
 

Revenue per staff per day2:

$ 443  $ 450  $ 464  $ 455 
Spa $ 461  $ 470  $ 485  $ 477 
Non-Spa $ 315  $ 315  $ 318  $ 314 
 
Average weekly revenues: $ 47,835  $ 46,475  $ 48,840  $ 45,721 
Spa $ 59,259  $ 57,619  $ 61,298  $ 57,508 
Non-Spa $ 16,002  $ 15,681  $ 15,625  $ 15,571 
 

Average number of land-based spas operated3

54 

53 

55 

50 

 
Average weekly land-based spas revenues $ 24,437  $ 25,524  $ 25,881  $ 26,441 
 

Total schools revenues4,5

$ 11,928,000  $ 4,393,000  $ 39,812,000  $ 17,750,000 
 
Total wholesale and retail product revenues $ 15,917,000  $ 10,481,000  $ 49,799,000  $ 36,294,000 
 

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 day spas operated reflects the fact that during the period spas were opened or closed and, accordingly, the number of spas served during the period varied.

4 Includes $116,000 and $130,000 for the three months ended December 31, 2006 and 2005, respectively, and $537,000 and $670,000 for the year ended December 31, 2006 and 2005, respectively, relating to the Steiner training school near London, England.

5 Includes post acquisition results of UCMT which was acquired on April 3, 2006.




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