Soho House & Co Inc

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Soho House & Company Incorporated first quarter 2023 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. I would now like to turn the conference over to Thomas Allen, Chief Financial Officer. Please go ahead.

Thank you for joining us today to discuss Soho House & Co.' 's first quarter financial results. My name is Thomas Allen, and I'm the Chief Financial Officer. I'm here this morning with Andrew Carney, our CEO. Today's discussion contains forward-looking statements that represent our beliefs or expectations about future events. All forward-looking statements involve risks and uncertainties that could cause the actual results to differ materially from the forward-looking statements. Some of the factors that may cause such differences are described in our SEC filings. Any forward-looking statements represent our views only as of today, and we assume no obligation to update any forward-looking statements if our views change. By now, you should have access to our Q1 earnings release. which can be found at sohouseco.com in the news and events section. Additionally, we have posted our Q1 presentation, which can also be found in the news and events section on our site. During the call, we also referred to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Reconciliation to the most comparable GAAP measures are available in today's earnings press release. Now let me hand it over to Andrew.

Thanks Thomas and hello everyone. I'm going to start by talking through our Q1 highlights, then provide an update on our progress we've made against our two strategic priorities. I'll then hand over to Thomas to talk through the financial performance, give an update on our 23 guidance and progress we've made on our balance sheet, before finishing with our ESG initiatives. We've had a strong start to the year. In the first quarter, Surhaus membership hit a new high of 169,000 members. a year-on-year increase of 29% and a 4% rise quarter-on-quarter, leaving us on track to hit our full-year target of more than 190,000 members. Total Soho House & Co. memberships grew 38% year-on-year and 5% quarter-on-quarter, which shows we continue to resonate well with all our members. In line with membership growth, membership demand remains strong. Our waitlist hit an all-time high of over 89,000, a nice growth quarter-on-quarter of approximately 3,000. We continue our focus on operational excellences, which led to profits beating expectations, delivering adjusted EBITDA for the first quarter of £20 million, up £18 million year-on-year. Today, we are raising our full-year EBITDA guidance to reflect the results of the initiatives we have implemented across the company. Total revenues grew 33% year-on-year to £255 million, underpinned by continued growth in recurring membership revenues up 42% year-on-year and 8% quarter-on-quarter. You'll remember we said last quarter that Q1 is typically the slowest quarter seasonally, so our Q1 performance leaves us firmly on track to deliver our total revenue guidance of the year of £1.1 to £1.2 billion. Now let me give you an update on the progress we're making against those two strategic priorities. First, growing and enhancing the value of membership. And second, delivering operational excellence to drive profitability and free cash flow. Creating unique clubs with great atmospheres and members is at the heart of everything we do. Based off member feedback, we are focused on improving our food offerings, service standards and house events. We've introduced seasonal menus across all our houses. Our house regulars are now updated every three months with approximately five to six new dishes based on high quality seasonal ingredients. Our houses have become more local with their food offerings to provide increased choice for our Every House members who visit multiple times. We've added more healthy offerings at breakfast, including new yoghurt pots, superfood bowls, smoothies and pressed juice shots. And we've introduced pop-ups and more themed dining nights, such as one-night-only foodie events and regular slots such as Taco Tuesdays. Our service standards are being improved through increased training, and all our management within the houses are incentivised to improve service for members, which is leading to improved staff retention. Finally, to make it easier for members to discover all of this, We'll communicate changes more regularly and have added new menus on the app and improved the UX experience. The teams are highly engaged and are clearly starting to deliver better results. We continue to focus on improving food service throughout the rest of this year. Outside our core Soho House proposition, we continue to see strong growth in our Friends membership, which helped grow our other memberships by 69% year-on-year to more than 69,000 members. And finally, our new house opening programme continued with the new So House in Bangkok this February. Located in the vibrant Sukhumvit neighbourhood, the house features a 12-metre pool and outdoor terrace in a really lovely tropical setting. We have seen great demand for this new house and it's outperforming our initial membership intake goals. We continue to target five to seven houses this year with the remaining openings to take place in the second half of the year. Turning to our second strategic priority, operational excellence. Our strategy is centered around three key areas. First, leveraging data and member insights to operate and scale efficiently. Second, expanding our in-house margins, and third, having operational discipline as we grow. In the first quarter, our teams controlled wages well. Wages as a percent of revenues improved by 400 basis points versus Q1 2022 and 300 basis points versus Q1 2019. F&B margins continued to be strong, increasing by 190 basis points versus Q1 2019, despite us rolling out a lot of new menu items, which I referenced earlier. Our G&A expenses came in better than expected through the changes that we made in how we operate the business. We've continued to focus on driving high occupancy in ADR, leading to Rev Power increasing 25% year over year at our like-for-like properties and 28% versus the first quarter of 2019. We have a long runway in front of us and we're making good progress. We're confident that this will help us generate stronger, more consistent earnings going forward. Now let me pass you to Thomas to give you more detail on the numbers and our guidance. Thanks, Andrew.