OneSpaWorld Holdings Limited

and welcome to the One Star World Third Quarter 2023 Earnings Conference Call. All participants will be in a 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 a touch-tone 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 of ICR. Please go ahead.

Thank you. Good morning, and welcome to One Small World's third quarter 2023 Earnings Common Webcast. Before we begin, I'd like to remind you that certain statements and information made available on today's common 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. For 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 third quarter 2023 earnings release, which was furnished to the SEC today on Form 8K. We do not undertake any 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 this morning. Joining me today are Leonard Fluxman, 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 third quarter 2023 performance and provide an update on our operations and our key priorities. Then Stephen will provide more details on the financials and our fiscal year 2023 guidance. I would now like to turn the call over to Leonard.

Thank you, Alison. Good morning and welcome to One Small World's third quarter 2023 results conference call. I'm delighted to speak to you today and share another quarter of strong results, which once again exceeded our expectations. The third quarter saw us maintain our positive momentum with stellar performance across key financial and operational metrics, driven by our unwavering focus on the execution of our key priorities. To this end, we continue to introduce innovative product and offerings, empower our cruise ship staff to provide unsurpassed service levels, drive efficiencies through technology enhancements, introduce our health and wellness centers, our new shipbuilds, and win new contracts. As a result, we achieved our best ever third quarter revenue income from operations and adjusted EBITDA and raised our full year revenue and adjusted EBITDA guidance by more than the outperformance we delivered in this quarter. As we look ahead, we are very encouraged by the healthy demand environment we are seeing. Customers around the world continue to appreciate the unparalleled value proposition cruising offers and our strategies are driving strong demand. Touching on performance highlights of the third quarter, total revenues grew 33% reaching a record $216.3 million and adjusted EBITDA increased 36% to a record $24.9 million. The expansion in our ship count continued in the quarter. At the end of the third quarter, we had health and wellness centers on 189 ships compared with 176 ships at the end of the third quarter of 2022. At year end, we now expect to have in service 193 ships, including 10 new builds introduced throughout 2023. We saw strength across key operating metrics, including a 22% increase in average weekly revenue per ship as compared to the third quarter last year. High single-digit increases in average guest spend and a low single-digit increase in revenue per shipboard staff per day. Penetration of retail sales and pre-bookings also continued to improve. We continue to remain highly focused on supporting operations at sea. Our ongoing initiatives to have experienced staff return for subsequent contracts is exhibiting greater success, and we expect our proportion of experienced staff members in the first quarter of 2024 to surpass the level of experienced staff members in 2019. At quarter end, we had 3,927 cruise ship personnel on vessels, increasing from 3,813 and 3,087 cruise ship personnel and vessels at the end of the second quarter of 2023 and the third quarter of 2022, respectively. We also have 24 traveling sales and revenue staff members who year-to-date have made 492 ship visits, equating to 3,271 days of sailing, with their primary focus to enhance onboard productivity. Now I'll review and update our key priorities that we shared with you earlier this year. First, capture highly visible new ship growth with current cruise line partners. Our cruise line partners continue to introduce new ships, which adds to our growth. In the quarter, we introduced health and wellness centers on six new ships, including two Crystal cruise vessels Crystal Serenity and Crystal Symphony as part of the new agreement announced earlier this year, and one vessel as part of a new agreement with Adora Cruises, which is a new Chinese-American cruise line. We continue to expect to introduce health and wellness centers on 12 shipbuilds this year. Second, continue launching higher value services and products. We continue to focus on introducing exciting products and services which are in various stages of implementation including IV therapy, immunity protocols, and facial turning devices. Third, focusing on enhancing health and wellness center productivity. Highlights of our achievements in this regard include high single to double digit increases across average guest spend pre-booking as a percent of service revenue, revenue per staff per day, and in retail spend as compared to Q3 of 2019. And fourth, expanding market share by adding new potential cruise line partners. We have room to grow our 90 plus percent market share in the outsourced maritime health and wellness market as evidenced by recent new contract wins with Virgin Voyages, Oceana Cruises, Region 7 Sea Cruises, Celebrity Cruises, and most recently, Adora Cruises. We are very excited about our business prospects into the fourth quarter and in 2024 and beyond. Our fourth quarter 2023 performance is off to a strong start, despite it being a seasonally softer period for cruise operators as they reposition their fleets for the winter cruising season. In light of our outperformance so far in the year and current business trends, we have raised our annual guidance for the third time this year with our fiscal year outlook increased beyond the amount we surpassed third quarter expectations. As a result for fiscal year 2023, we now expect total revenues to increase by 45% and adjusted EBITDA to increase by 73% versus fiscal year 2022 at the midpoint of our guidance ranges. Finally, before I turn the call over to Stephen, I want to convey that our hearts go out to all that have been impacted by the war in the Middle East, the ongoing war in Ukraine, and the innocent lives lost. In response, the cruise lines have altered or canceled certain itineraries. However, we do not expect this to have a material impact on our results.