OneSpaWorld Holdings Limited

Good morning and welcome to the One Spa World fourth quarter 2023 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. 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 Allison Malkin, Investor Relations at ICR. Please go ahead.

Thank you. Good morning and welcome to One Spell World's fourth quarter and fiscal year 2023 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. 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 fourth quarter 2023 earnings release, which was furnished to the SEC today on Form 8-K. 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 Steven Lazarus, Chief Financial Officer and Chief Operating Officer. Leonard will begin with a review of our fourth quarter and fiscal year 2023 performance and provide an update on our key priorities as we begin fiscal 2024. Then Stephen will provide more details on the financials and fiscal year 2024 guidance. I would now like to turn the call over to Leonard.

Thank you, Alison. Good morning and welcome to One Small World's fourth quarter and full year fiscal 2023 results conference call. The fourth quarter concluded an outstanding year of financial and operating performances for our company and continued to demonstrate the increasingly powerful impact of our strategies. innovation and scale across our complex business. The quarter was highlighted by records across revenue, income from operations and adjusted EBITDA, each of which grew at a double digit pace versus the prior year fourth quarter. The period also marked our fourth consecutive record quarter, resulting in our best ever performance in fiscal 2023. Our team continues to enhance our industry leading business model constantly innovating our unique value to our cruise line and destination resort partners and our delivery of outstanding experiences to their passengers and guests. We continue to vet and introduce new and enhanced services, product and facilities while utilizing our strong cash flow to further invest in our powerful business model. We begin fiscal 2024 with strong momentum and expect to deliver another year of record performance and increasing value to our shareholders. Our confidence is further buoyed by favorable trends in the cruise line industry across our top banners. In fact, our positive momentum has continued in the first quarter as reflected in our guidance. Touching on performance highlights of the fourth quarter, total revenue was $194.8 million, increasing 15% from $168.9 million in the fourth quarter of 2022. Income from operations increased 18% to $12.6 million, even as we incurred a $2.1 million asset impairment charge for the expected closure of a health and wellness center compared to $10.7 million in the fourth quarter of 2022. and adjusted EBITDA rose 13 percent to $23.4 million from adjusted EBITDA of $20.7 million in the fourth quarter of 2022. For the full year, revenue, total revenue increased 45 percent to a record $794 million compared to $546.3 million in fiscal year 2022. Income from operations increased $39 million, or 258 percent, to a record $54.2 million, including the $2.1 million asset impairment charge, as compared to $15.1 million in fiscal year 2022. Adjusted EBITDA increased 77 percent, to a record $89.2 million, compared to a $50.4 million in the fiscal year 2022, and unlevered after-tax free cash flow increased 75 percent to $79.1 million from $45.1 million reported in fiscal year 22, with after-tax free cash flow conversion rate of 89 percent. We continue to remain highly focused on supporting our operations at sea, At year end, we had 4,120 cruise ship personnel on vessels, increasing from 3,927 and 3,566 cruise ship personnel on vessels at the end of the third quarter of 2023 and the fourth quarter of 2022, respectively. Our ongoing initiative to retain onboard staff for additional contracts is exhibiting success. We continue to expect our proportion of experienced staff members in the first quarter of 2024 to surpass the level of experienced staff members in 2019. The growth in experienced staff contribute to the delivery of double digit growth across certain key operating metrics as compared to fiscal year 2022 and 2019. Along with the strong financial results, the year included noteworthy progress towards our key priorities. First, we captured highly visible new ship growth with Coven Cruise Line partners. In 2023, we added 10 new health and wellness centers as current partners launched new ships, and we entered into new agreements with Crystal Cruises and Adora Cruises. In 2024, we expect five new ship builds by existing partners. we continue to launch 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 and immunity protocols and facial toning devices. During the first quarter, we have begun the rollout of cryo body services, as well as introducing the new cryo and LED facial services as part of the new Elemis Biotech 2.0 offering. Third, we focused on enhancing health and wellness center productivity as we introduced high-value services and products, driving double-digit growth in key performance metrics, including revenue per staff per day, pre-booking as a percentage of service revenue, and average guest spend as compared to 2019. As we have mentioned previously, guests that pre-book services spend approximately 30% more on average than guests that do not pre-book. The year saw pre-booking available on 91% of the vessels that operate health and wellness centers, and this is expected to grow to 93% in 2024. Additionally, in 2023, the percentage of service revenue from pre-booked guests grew 10% year over year from 21 to 23% in 2023. Average guest spend also benefited by refinements in length of service and pricing architecture of certain services, which resulted in increases in service frequency and a mix towards higher-priced services and products. We also increased our MediSpar offering. At year end, we had MediSpar services on 139 ships, up from 128 ships in 2022. And in 2024, we expect to expand our MediSpar offering to 148 ships. Fourth, we expanded our market share by adding new cruise line partners. We continue to believe we have to grow our 90-plus percent market share in the outsourced maritime health and wellness market, as evidenced by 2023 contract wins with Crystal Cruises and Adora Cruises. Fifth, we enhanced our capital structure and strengthened our already durable balance sheet while generating positive cash flow. To this end, in fiscal 2023, we fully repaid our second lean term loan and reduced the debt outstanding on our first lean term loan by $41 million. We simplified our capital structure through the completion of a warrant exchange and invested $9 million in cash to repurchase 789,046 million shares of our common stock. For the year, we invested a total of $65.1 million for debt pay down and share repurchase activity and still ended fiscal 2023 with total liquidity of $48.9 million. In addition, on March 19th, the approximately 4.7 million warrants that were issued and outstanding as of December 31, 2023 related to the business combination are set to expire, which will further simplify our capital structure. Before I turn the call over to Stephen, I would like to personally thank the entire organization at One Spark World for their continued dedication to advancing our strategy and the guests we serve. Combined, your contributions have increased our leadership position, contributed to the ongoing strength of our business, and have us poised for continued positive momentum in the near and long term. With that, I will turn the call over to Stephen, who will comment on our fourth quarter and fiscal year 2023 results and guidance. Stephen.