OneSpaWorld Holdings Limited

Good day, and welcome to the One Spa World Third Quarter 2024 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 Spout World's third quarter 2024 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 judgments 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 2024 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 Steven Lazarus, Chief Financial Officer and Chief Operating Officer. Leonard will begin with a review of our third quarter 2024 performance and provide an update on our key priorities. Then Stephen will provide more details on the financials and guidance. Following our prepared remarks, we will turn the call over to the operator to begin the question and answer portion of the call. I would now like to turn the call over to Leonard.

Thank you, Alison. Good morning and welcome to OneSpot World's Third Quarter 2024 Earnings Conference Call. It's a pleasure to speak to you today and share another period of record performance. Our team delivered exceptional third quarter results, achieving all-time records for total revenues, income from operations, and adjusted EBITDA that once again surpassed our expectations. Our sustained strong performance continues to evidence the talent of our team to leverage our complex operating model and competitive strengths to deliver outstanding guest experiences for our cruise line and destination resort partners. This positions us well to continue to achieve outstanding results for our company and our partners. As outlined in our earnings release issued earlier this morning, based on our performance, our continued momentum and positive outlook across the business we have increased our annual guidance for the third time this year. Turning to the highlights of the quarter. Total revenues increased 12% to a record $241.7 million compared to $216.3 million in the third quarter of 2023. Income from operations increased 48% to a record $25 million compared to 17 million in the third quarter of 2023. Adjusted EBITDA increased 33% to a record 33 million compared to 24.9 million in the third quarter of 2023. And unlevered after-tax free cash flow increased 28% to a record 31 million compared to 24.2 million in the third quarter of 2023. The unlevered off the tax free cash flow conversion rate was 94% in the third quarter of 2024. We continue to grow our ship count year over year. At quarter end, we operated health and wellness centers on 196 ships with an average ship count of 195 for the quarter. This compares with a total of 189 ships and an average ship count of 185 ships for the third quarter of 2023. At quarter end, we had 4,204 cruise ship personnel on vessels compared with 3,927 cruise ship personnel on vessels at the end of the third quarter of 2023. The quarter included continued progress towards our key strategic priorities. Let me share some of those highlights with you. First, we captured highly visible new ship growth with cousin cruise line partners and added new cruise line partners to our fold. To this end, during the third quarter, we opened a health and wellness center on the new shipbuild, Utopia of the Seas. With this opening for the first nine months of the year, we have introduced health and wellness centers on five new shipbuilds. Looking ahead, we continue to expect to end fiscal 2024 operating on board 198 vessels. Second, as it relates to our higher value services and products. As you recall, we introduced new cryotherapy body services, which saw strong double-digit growth in revenue in Q3 as compared to Q2. Additionally, our new cryotherapy and LED light facial services that complement the new technology-driven Elemis Biotech 2.0 facial and light stem therapy continues to be a very successful addition to our facial and acupuncture revenues. We will continue to ramp these new services to the entire fleet over the next few quarters. Third, we focused on enhancing health and wellness center productivity. We grew key maritime operating metrics with continued strong growth in revenue passenger per day, weekly revenue, and revenue per staff per day. This was driven by growth in total cruise guests utilizing the SPAR and an increase in the number of treatments for guests both of which benefit from the success of our technology enhancements, our expertise in staff training, and the simplification of our service menu options and treatment lengths. Additionally, we continue to attract and retain staff, which has led to an increasing percentage of experienced staff members working on board. We continue to see more of our staff members sign on for additional contracts, reflecting the compelling workplace environment we provide and their affinity toward our company. These more experienced staff members are also skilled at recommending product and service options, which combined with the simplification of our service menu and treatment leads led to growth in higher-priced products and services. We remain focused on initiatives that retain our best staff. Pre-booking revenue as a percentage of service revenue remains strong at 22%. even as we phase in new partners that are just beginning to scale. We continue to see passengers that pre-book services spend 30% more than those who do not pre-book. And finally, we continue to expand productivity within our med spas. The quarter saw same spa revenue overall up double digit year over year. We continue to increase the number of doctors and nurses we have on board and add to the service offering. At quarter end, MediSpar services were available on 144 ships and up from 135 ships at the end of the third quarter of 2023. We now expect to have MediSpar services offerings to 144 ships this year. Fourth, as it relates to capital allocation, we further enhanced our capital structure and financial flexibility. During the quarter, we refinanced our first lean term loan with a new $100 million five-year facility at a lower interest rate and entered into a five-year revolving credit facility up to $50 million, which was undrawn at quarter end. Our efficient capital structure, asset-like business model, and robust cash flow generation allows us to invest in support of our future growth while paying and ongoing quarterly dividend and evaluating opportunities to optimize our capital structure. With this in mind, the quarter saw us deliver on each of these activities. We ended the quarter with $50 million in cash after paying down debt of $24.6 million and investing $11.3 million to repurchase our common shares in the quarter, as well as dispersing $4.2 million in quarterly dividends. We believe we will remain well-positioned to continue to invest in support of our growth and return value to shareholders. First, earlier this month, we issued our inaugural Sustainability and Social Responsibility Report, which highlights our commitment to exemplary care for employees, outstanding service to our partners and their guests, and responsible stewardship of the environment and communities of our community impact across the globe. This commitment and our ongoing ability to leverage our industry leading operating platform integrated growth initiatives and asset life business model to generate consistently increasing off the tax key cash flow positions as well as to deliver continued strong near term and long term financial performance. In summary, we are pleased with the ongoing strength of our business and excited about our business prospects. With a clear path for growth, a highly talented team, and successful strategies in place, we continue to expect fiscal 2024 to represent another year of record growth and increased value to our shareholders. With that, I'll turn you over to Stephen, who will provide more details on our third quarter results and guidance. Stephen.