OneSpaWorld Holdings Limited

Good day and welcome to the One Spa World second quarter 2022 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Alison Malkin, partner at ICR. Please go ahead.

Thank you. Good morning and welcome to One Spout World second quarter fiscal 2022 earnings call and webcast. Before we begin, I'd like to remind you that certain statements and information made available on today's call and webcast may be deemed to constitute forward-looking statements. These forward-looking statements reflect our judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting our business. Accordingly, you should not place undue reliance on these forward-looking statements or a more thorough discussion of the risks and uncertainties associated with the forward-looking statements To be made in this conference call and webcast, we refer you to the disclaimer regarding forward-looking statements that is included in our second quarter 2022 earnings release, which was furnished to the SEC today on Form 8K. We undertake no obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. In addition, the company may refer to certain adjusted non-GAAP metrics on this call. An explanation of these metrics can be found in our earnings release issued earlier today. Joining me today are Leonard Flexman, Executive Chairman, Chief Executive Officer and President, and Stephen Lazarus, Chief Financial Officer and Chief Operating Officer. Leonard will begin with a review of our second quarter performance and provide an update on our operations and key priorities. Then Stephen will provide more details on the financials and our liquidity. I would now like to turn the call over to Leonard.

Thank you, Alison. Good morning and welcome to One Small World's second quarter 2022 results conference call. I'm pleased to speak to you today and share the significant milestones achieved in the second quarter. the period that marks the one-year anniversary of our return to service. We could not be prouder of our team and their unwavering commitment to our business, our cruise line and destination resort partners, their guests, and all of our stakeholders. Indeed, our team completed a momentous task, as at the end of June, in a period of one year, we have successfully returned 167 health and wellness centers to service at sea, training 1,498 staff, placing 4,352 staff on board cruise ships, and booking more than 9,000 flights for personnel that we have trained, staffed, and returned to service. As a result, the quarter saw us generate more than 90% of 2019 revenue. which represents the most recent period of normal operations. We accomplished this even as all of our health and wellness centers have yet to open and load factors on cruise ships remain below pre-pandemic levels. The successful execution of our return to service was further demonstrated by our achievement of positive cash flow in Q2, commemorating the first since the onset of the pandemic. We believe this accomplishment is a strong testament to our unique capabilities and our teams and partners' relentless efforts to elevate and innovate our product and service levels during an extraordinary time leading to expansion in our revenue generation capabilities across our health and wellness centers at sea and on land, which we expect to continue in the future. I'm gratified by all that we have accomplished over the last year and believe we are well positioned to comfortably absorb the additional cruise ships introduced and returning to service during the remainder of 2022. We are very pleased with our second quarter performance, which included increases across all key financial metrics, including a robust revenue recovery that represented our sixth consecutive quarter of sequential revenue growth, significant growth in adjusted EBITDA, positive adjusted net income, and as I mentioned, a first period of positive operating cash flow since the beginning of the pandemic. Operationally, we saw continued growth across key operating metrics while maintaining a flawless return to service. As we look ahead, we continue to expect our performance trends to accelerate and generate revenue growth with continuing positive operating cash flow performance and annual performance that includes positive adjusted EBITDA and positive adjusted net income. Turning now to the highlights of the quarter, total revenues were $127.4 million, up from $9.2 million in the second quarter of 2021, and improving significantly from the first quarter 2022. This growth reflects contributions from health and wellness centers that reopened on 167 ships that resumed operation and the contribution from 48 destination resort spas. Adjusted EBITDA was positive $9.1 million with positive contribution from our health and wellness centers on board cruise ships and in our destination resort spas. And thirdly, we ended the quarter with total liquidity of $47 million, including $7.8 million unlevered after-tax free cash flow. We had many accomplishments for the quarter. Most notably, our flawless return to service continued. The second quarter saw us commence service on board two new shipbuilds and 38 ships returned to service by our cruise line partners. At quarter end, we had health and wellness centers on board 172 ships, of which 167 had resumed voyages as of quarter end. This compares to 127 ships that resumed voyages at the end of the first quarter of 2022 and versus 14 ships that resumed voyages by the end of Q2 2021. We expect to be operating on 173 ships by the end of the third quarter and 177 ships by the end of the year. During the remainder of 2022, we anticipate operating health and wellness centers on three additional new ship builds that will be introduced into service by our cruise line partners. We continue to see record demand by cruise ship guests for our services. While load factors on board cruise ships remain below historical and 2019 levels, we were very pleased to see continued high demand for our services. Key operating metrics during the second quarter of 2022 compared favorably with our second quarter 2019 performance. The most recent comparable period of normalized operations. Average guest spend, average service spend per guest, And revenue per staff per day were all up double digits compared to Q2 of 2019. In addition, pre-booking percent of service revenue and guest penetration also compared favorably to the second quarter of 2019. These improved operating metrics were driven by the continued innovation in our offering and focus on staff training. In short, we have emerged from the pandemic a more productive and efficient organization despite increased health and protection costs, and we are eager for the load factors to return to a more normalized level to showcase our even more attractive asset-light business model. With that in mind, I will now update you on some of the intensification initiatives we implemented last quarter to increase guest spend and utilization, which contributed to the growth in our key operating metrics. Firstly, these included improving retail conversion with expanded offerings from brand partners, including Elemis' Active Body Trio, increasing guest utilization through cross-promotion and rebooking tracking mechanisms, and enhanced in-person staff trainings. Growing guest spend with new add-on packages and offerings, including healing enhancements, added on to acupuncture services, which increased average customer spend by 27% when selected. We also launched IV therapy on select NCL ships with modified pricing. Increasing penetration with expanded services and offerings targeting a wider audience. We introduced grown alchemists, which attracts new guests in areas underserved by our key brand Elemis, and modified capillus cells approach to include stylists and physicians. While most of the cruise lines are not yet at pre-pandemic load factors, we are accelerating our staffing efforts to be above aggregate load factors as we are experiencing robust demand for our services on board. A London Wellness Academy continues to experience very strong demand from applicants. The London Wellness Academy website generated a record number of applicants up 160% from Q2 of 2019. Since the London Wellness Academy reopened in October of 21, we have trained nearly 1,500 health and wellness personnel at our other global training facilities. This is a further confirmation of One Spa World's leadership in training and certification. By the end of the second quarter, we had 2,778 cruise ship personnel on vessels for actual and expected voyages, and we expect 3,024 employees to be on vessels by the end of September 2022. Overall, we believe our second quarter performance continues to demonstrate the strength and resilience of our dedicated team and operating model. We begin the third quarter with even more confidence that our actions have made One Spa World better positioned than ever before. With a strong business model, collaborative cruise line and destination resort partnerships, and an extraordinary team, we look forward to advancing our operational and financial performance throughout the balance of 2022 and beyond to increase value for all One Spa World stakeholders. With that, I will turn the call over to Stephen, who will commence on our second quarter results and liquidity position. Stephen.