Good day, and welcome to the OneSpaWorld third quarter 2022 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 Allison Malkin with ICR. Please go ahead. Thank you. Good morning, and welcome to OneSpaWorld third 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. 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 2022 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 Stephen Lazarus, Chief Financial Officer and Chief Operating Officer. Leonard will begin with a review of our third quarter performance and provide an update on our operations and our 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, Allison. Good morning and welcome to OneSpaWorld's third quarter 2022 results conference call. I'm very pleased to report quarterly net revenues which were the highest in the company's history with our third quarter results. Our record-breaking performance was highlighted by net revenues rising 12% above the 2019 third quarter, positive net income and positive cash flow. We achieved these impressive results despite passenger load levels remaining below historical levels and as ships continued to return to service. I'm proud of our team's hard work and dedication since returning to service, including our outstanding innovation and implementation of enhanced services and product offerings and operating capabilities. This drove high sales productivity from growing strengths across virtually all of our key operating metrics. Our third quarter results coming out of an unprecedented adverse impact on our business during the pandemic period attest to our company's unique positioning as the preeminent operator of health and wellness centers at sea and on land to drive extraordinary value for our cruise line and resort partners, sustained long-term growth, and increasing value for OneSpaWorld stakeholders. As we look ahead, we expect our business model and strategy to generate sustained long-term profitable growth. Now turning to the highlights of our quarter. Total revenues were $162.3 million as compared to $43.6 million in the third quarter of 2021. This growth reflects contributions from health and wellness centers that reopened on 172 ships that resumed operation and the contribution from 48 destination resort spas. Adjusted EBITDA was positive $18.3 million, an increase of $22.9 million from a loss of $4.6 million in the third quarter of 2021. We ended the quarter with total liquidity of $57.1 million, including $17 million of unlevered after-tax free cash flow. Our flawless return to service continued in the quarter. The third quarter saw us commence service on board three new ship builds and two ships returned to service by cruise line partners. At quarter end, we had health and wellness centers on board 176 ships, of which 172 had resumed voyages as of quarter end. This compares to 167 ships that resumed voyages at the end of the second quarter of 2022 and versus 78 ships that resumed voyages by the end of Q3 2021. We expect to be operating on 179 ships by the end of the year. During the fourth quarter, we anticipate operating health and wellness centers on two 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 third quarter of 2022 compared favorably with our third quarter 2019 performance, the most recent comparable period for normalized operations. Average guest spend and revenue per staff per day were up double digits compared to Q3 2019. In addition, pre-booking as a percentage of service revenue and guest penetration also compared favorably to the third 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, and we are eager for load factors to return to a more normalized level to showcase our even more attractive business model. 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, and we are experiencing robust demand for our services on board. Our London Wellness Academy continues to experience very strong demand from applicants. The London Wellness Academy website generated a record number of applicants, up 273% from Q3 of 2019. Since the London Wellness Academy reopened in October 2021, we have trained 2,128 health and wellness personnel at our other global training facilities. This is a further confirmation of OneSpaWorld's leadership in training and certification. By the end of the third quarter, we had 3,087 cruise ship personnel on vessels for actual and expected voyages, and we expect 3,400 employees to be on vessels by the end of December 2022. Overall, we believe our third quarter performance continues to demonstrate the strength and resilience of our dedicated team and operating model. We begin the fourth quarter with even more confidence that our actions have made OneSpaWorld 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 2022 and beyond to increase value for all our OneSpaWorld stakeholders. With that, I will turn the call over to Stephen, who will comment on further third quarter results and our liquidity position. Stephen. Thank you, Leonard. Good morning, everybody. In the third quarter, our focused execution of return-to-service efforts led to record revenues and a positive operating performance, as well as a further strengthened balance sheet. Some of the highlights of the third quarter include total revenues at $162.3 million as compared to $43.6 million in the third quarter of 2021. The revenues generated in the three months ended September 30, 2022, were derived primarily from our 172 health and wellness centers on board ships having resumed voyages and our health and wellness centers at 48 open and operating destination resort spas. The three months ended September 30, 2021 revenues were primarily related to the 78 cruise ships and 45 destination resort spas that were open during the quarter and e-commerce product sales through the company's timetospa.com website. Cost of services were $110.6 million compared to $33.2 million in the third quarter of 2021. The increase was primarily attributable to costs associated with increased service revenues of $97.9 million in the quarter from our operating health and wellness centers at sea and on land, compared with service revenue of $34.8 million in the third quarter of 2021. Increased costs related to the resumption of operations at our health and wellness centers at sea during the quarter. Cost of products were $25.3 million compared to $8.4 million in the third quarter of 2021. The increase was primarily attributable to costs associated with increased product revenues of $20.7 million in the quarter from our operating health and wellness centers at sea and on land, compared to product revenue of $8.8 million in the third quarter of 2021. Net income was $5.9 million compared to a net loss of $12.3 million in the third quarter of 2021. The improvement in the third quarter of 2022 was primarily a result of the $22 million change in income from operations derived from our 172 health and wellness centers on board ships having resumed voyages. Adjusted net income was $12.5 million or adjusted net income per share of $0.13, as compared to adjusted net loss of $9.6 million or adjusted net loss per diluted share of $0.11 in the third quarter of 2021. Adjusted EBITDA was $18.3 million compared to an adjusted EBITDA loss of $4.6 million in the third quarter of last year. This represents the fourth quarterly period that the company recorded positive EBITDA since the onset of the COVID-19 pandemic. We ended the quarter with total liquidity of $57.1 million. During the quarter, we had repaid the remaining $7 million drawn under our line of credit, ending the period with a full $20 million available on this facility. In October, we repaid $5 million on our second lien term loan, leaving $20 million remaining under that loan, which carries interest at a rate of LIBOR + 7.5%. We expect to continue to utilize cash generated from operations to extinguish this debt facility. In the third quarter, unlevered after-tax free cash flow was $17 million compared to a - $5.2 million in the third quarter of 2021. As it relates to our outlook for 2022, at this time, we continue to refrain from providing guidance pending the establishment of normalized operations of substantially all of our health and wellness centers on board our contracted cruise ships following the adverse impact of the COVID-19 pandemic on our business. Notwithstanding the foregoing, for fiscal 2022 and 2023, we expect to report GAAP net income and generate positive adjusted EBITDA and positive adjusted net income. Overall, our strengthened balance sheet, the continued ramp of our operations, and no material debt maturities until March of 2026 has us well positioned to continue innovating our highly complex business model to deliver annual year-over-year growth in revenue, earnings, and cash flow. With that, we will open up the call for questions. Visha, if you could do that, please. Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question for today comes from Steven Wieczynski with Stifel. Please go ahead. Yeah. Hey, guys. Good morning. So, you know, look, I understand you're not prepared to give detailed guidance for the next 12 months or so. You know, from a high level perspective, I mean, if we think about this, you know, the business did, let's say, $60 million of EBITDA back in 2019. You know, is there any reason not to believe that as we start to think about 2023, I mean, assuming that consumer spend patterns remain pretty stable, that EBITDA shouldn't easily exceed that threshold given a larger and a more profitable capacity base at this point? Steve, morning. Thanks for the congrats on a good quarter. Anyhow, let's jump into your question. Fantastic quarter. Okay, thanks. Look, I hear you, and as much as Stephen and I would like to give the guidance because we do believe we are settling into a much more normalized environment, and we do see, you know, a lot more predictability as we used to see in our model. However, having said that, let's not forget that there are many, many banners that are still below their load factors, and those will impact us in a positive manner once they come back to 100% or legacy type levels. Some of them may not get there before the second quarter of next year. We have two large banners already at the 100%. Ships are moving now into the Caribbean, so we expect load factors to continue to move upwards. I think with that said, just, you know, not quite sure what, if anything, or what compression there may be on spend, if any. Although we've been through those kind of, you know, recessions before in 2008, 2009. We know what they look like. You know, we're of the opinion it's going to be mild-ish. That being said, you know, we have to still continue to see if the very, very strong demand that we have experienced thus far, particularly in the third quarter, which we expected, continues robustly into, you know, the first and second quarter of next year. Look, we are moving closer to getting ready to give the guidance you're looking for, but this is not the right time at this point. Okay. I didn't think you'd really give me a, you know, a detailed answer there, but I thought I would take a shot at it. So second question is obviously the free cash flow here has clearly inflected. You know, you've got $20 million left on your second lien term loan. I guess just wondering maybe, you know, thinking about timing about when you think you could potentially exhaust the rest of that $20 million. Then once that $20 million is gone, where do you go from there in terms of excess cash flow? I mean, obviously your stock has, you know, it's been kinda stuck in, you know, this upper single digit range. You know, wondering if at some point it makes more sense for you guys to go out and start buying back some of your own stock. Yes, I think as Stephen mentioned, our focus is gonna be immediately in getting rid and reduction of the 2L, which is at an interest rate well above 10%. That's just very accretive, probably more accretive than buying back stock. Buying back stock in and of itself, given the liquidity around the stock, probably doesn't make the most sense right now. What we wanna do is continue to extinguish the 2L as fast as possible. Then at the same time, you know, simultaneously look at what other things we can do to increase liquidity in the market, because that's the single biggest thing that's holding the stock back from moving into double digits. Okay, great. Thanks, guys. Okay. Our next question comes from Sharon Zackfia with William Blair. Please go ahead. Hi, good morning. Really nice to see the momentum in the business. I guess a couple of questions. The first, I apologize for my voice, I'm battling something here. For the services gross margin, I mean, it's been kind of nicely ahead of pre-pandemic levels the first, the last couple of quarters. Is that a function of your consumer choosing more value-added services, so you're getting better flow through on that? Just trying to figure out if there's something structural that's happening in that services gross margin that might, you know, change the dynamics of the margins of the business as we go into 2023 and 2024. Sharon, yeah, sorry to hear you're not doing so well. Look, I think, you know, a lot of pricing structural changes, the frequency of moving more demand into longer services, operating as lean as possible during the first three quarters on both land and sea, certainly has moved a lot more demand into services. We're pushing towards the longer, more expensive services and, you know, we wanna keep pace with our retail percentage. The total percentage of total revenue. Remember, we did take prices up last year. We have structurally changed our menu such that it's having a positive influence on the business, as you can see. I think, you know, we've really tried to run as lean as possible wherever possible. I think all of that has demonstrated and has flowed through, you know, the P&L in this quarter and started in the second quarter as well. I think, following on to that, you know, if I back into some metrics which, you know, you used to give, like revenue per staff per day, it just seems like that has to be above where 2019 was. Do you think there's? You know, you've had this crisis, you've learned a lot. Do you think that is something as well that you've seen something just change and shift as consumers have moved towards more pre-booking and you've been able to better optimize perhaps the occupancy and utilization of the spas? Yeah. Look, I mean, it's a combination of everything that you mentioned. Our revenue per staff per day is substantially higher than 2019. Now, that's a function of both strong demand and staffing on ships is still not at 100%, at least not all of them. Obviously, your revenue per staff is going to be at a slightly higher, or should I say, compared to 2019, it's materially higher, you know, double digits higher. I guess penetration when we started off last year was in the high double digits. It's starting to move back towards the legacy 11%. It's still above that. That continues to be very positive. Our pre-booking has grown again, despite us not adding the third large banner, which will hit in the fourth quarter, beginning of the first quarter. That's a fantastic banner. That too will have a positive impact on what we're producing because of the facilities and the types of spas and, you know, the newness of their ships and the incredible spas. I just think once we get that banner on board, which will be late fourth quarter, impacting first quarter, 'cause the bookings will be for the first quarter, that too will have a positive impact next year. Thanks for that. Last question for me. You know, you beat consensus top line by like 20% this quarter. I don't know if you beat your internal projections by as much, but I recall at the last quarterly call, you had expected kind of sequential acceleration through the second half of the year. I'm wondering if you still expect that in the fourth quarter, given load factors are still improving or if we would see a more normal seasonality, because you overachieved, I guess, relative to consensus so much in the third quarter. Yeah, excellent question. Definitely, we're going to return to more normalized seasonality. October did get off to a decent start, but then you go through the very, you know, sort of shoulder period of November, Thanksgiving being obviously a good week for the most part. You get the two front weeks of December before everybody starts loading up for Christmas, New Year. This is gonna be sort of more traditional, but still, I believe it'll be, you know, decent for us just because demand has thus far remained pretty stellar. Thank you. Your next question comes from Maksim Rakhlenko with Cowen and Company. Please go ahead. Hi, this is Bradley Jameson on for Max. Leonard and Stephen, first, congrats on a great quarter. First, I'd love if you could dig into what the current average spend per guest today is, and how are you thinking about taking pricing and increasing that metric as we go forward? Yeah. We haven't really given average guest spend out. We probably will do that certainly as we start guidance next year. Average guest spend, as I mentioned in my remarks, was up double digits, so versus 2019. We continue to see very accretive guest spend and demand for our services. We will continue to look at pricing opportunity or as we're gonna call it, hallmark pricing around peak seasons, holidays, Valentine's Day, and certainly during the summer next year. I think there is opportunity for further pricing, but obviously we're gonna look at it more opportunistically as opposed to setting it in stone right now. Great. Just switching gears a little bit down to P&L. Are we at more of a normalized run rate level of payroll costs, or is there still more to come as you add staff? What's kinda the best way, you obviously had a pretty stellar EBITDA margin in the quarter. What's the best way to think about that versus 2019 as we move forward to 2023? There are some additional payroll costs that certainly will come into play here as we move forward and then into next year. As Leonard mentioned, we've been running really lean, trying not to hire ahead of demand and as ships return to service. The reality is we are gonna have to start bringing back some of the positions just to make sure the business is appropriately supported. We would expect going forward for there to be some increase in the salary and payroll costs. The EBITDA margin in the quarter, the adjusted EBITDA margin, just over 11%, was obviously really good. As some of these factors come into play, that should moderate a little bit, and back to 2019 levels, perhaps, depending on obviously demand and what happens with the economy. Our expectations overall remain good with regards to delivery. Again, you know, as we've always said, our focus is to deliver absolute total cash flow for the business, right? As demand improves, as our staffing goes up on board, it's probably better to trade slightly in terms of margin percentage, but deliver overall dollars into the company. Did that answer your question? Yes. Thank you. All right. Thank you. We'll move on to the next question from Gregory Miller with Truist Securities. Please go ahead. Thanks. Good morning. I'd like to start off with your partnership announcement with Xponential Fitness and Princess Cruises. I appreciate that it may not be terribly material to the company, but just love to hear more about the background on the partnership and if we should anticipate any material higher OpEx on the ramp of this new engagement. Yeah. Hi. This is Leonard. Princess reached out to us and, you know, they feel this is certainly something that makes sense for their guests, and they're trying to certainly elevate penetration into the database of Xponential. Xponential has a fantastic offering of a lot of different modalities. Some of the names that you're probably familiar with in terms of the fitness space. We have just commenced sort of a kickoff meeting last week in terms of rolling it out onto some or most of the ships. Not all of the ships will be able to accommodate because of spacing, studio space, et cetera, et cetera. We're in the early stages. We do not expect any OpEx increase from this. We certainly think there'll be cross-promotional opportunity from the Xponential classes. We've yet to see sort of the traction and penetration that Princess will be able to do in terms of marketing to the database, which they think is a database that's highly attractive to them. A lot, obviously, a lot of female participants in that database. As we all know, a lot of females tend to make vacation decisions for us. I think that's how it's nuanced in terms of the importance of penetrating that demographic. Clearly for us, that's opportunistic and we look forward to kicking off the program later on in the fourth quarter, early first quarter. Thanks. My follow-up. I was looking back at your 1Q call, and you spoke about a 5-step program on increasing guest spend and utilization, and perhaps you alluded to some of these elements. Within the remarks this morning. I'm just curious if you could share any particular degrees of impact related to this particular five-step initiative as it relates to your three key results. Yeah. I can't remember exactly what my remarks were. I don't have them in front of me. Look, our focus has been from the get-go of our return to service is flawless return to service, number one, and that means making sure that everybody who we put on board was adequately trained. Remember, in the beginning, we had to do a tremendous amount of virtual training, not hands-on training, and with a lot of new first staffers. As our new first-timers became more and more experienced, we're starting to see, you know, delivery and performance improve. We're focusing on intensification of training where we're certainly putting more sales and revenue managers out into the field now that we're beyond a lot of the COVID restrictions that were in place last year. We're starting to focus obviously on the areas of improving guest spend, participation, service frequency. As we drove a lot of new innovation on our IT platform, and we actually call this product PULSE, it enables us to really take a look at the things that can help us drive upside performance. You know, increasing guest utilization, you know, through cross-promotion, improving retail conversion was a thing that I mentioned, and growing guest spend. I think we've done all of the above. These remain the important areas of focus for our team. Where we start to see any ship perhaps not performing against our key metrics, you know, we deploy staff to either go and do, you know, in one port, a lot of additional training, or we'll board a certain ship and focus on certain people on board where we think we can improve some of the elements that I spoke about in the first quarter. I highlighted those for you right now. Terrific. I appreciate the color. Thank you. The next question comes from Assia Georgieva with Infinity Research. Please go ahead. Good morning, Leonard and Stephen. Fantastic quarter. Great job. I was very happy to see the results. If I could ask sort of a question in terms of maybe some of the key drivers on a sequential basis about $35 million increase in revenue. I understand that we have almost 10% more ships in service, but the revenue increase is closer to 25%. Would you be able to identify the key drivers of- Of the ships. Yeah. Thanks, Assia. I think a lot of it has to do with certainly in this quarter, which is typically our strongest quarter, right, being, you know, the summer. There are more revenue days. There are more ships in service. A lot of our intensifications around things that we can do to improve guest spend certainly started to impact the business very positively. You know, load factors did move up sequentially, and so that certainly helped. I got to tell you, I think I mentioned this on the second quarter, that, you know, we expected to see many more ships in the Alaska area operating versus 2019, and Alaska performed very well for us. Despite Europe being slightly softer, as we all know, the offset in Alaska was much better. Great. I hadn't thought about the Alaska ship count being up, which has been significant versus three years ago. If we look at the trajectory going into the seasonally, you know, weaker quarters, Q4 and Q1, it seems that it might be quite doable to repay the remainder of the L2 by the end of Q1. Is that estimation on my part reasonable? As we've talked about before, having a goal of repaying the 2L by the summer, and we're about a quarter ahead of where we've talked previously. I think at this stage, we're most comfortable continuing to say by the summer. If we can do it sooner than that, we certainly will. Okay. That sounded like a slight yes, Stephen. One last question. As we are cycling out of all of the basically incentives that people received over the last three years, would that affect possibly some of the pre-bookings and some of the wallets that would be coming into the 2023 sailings? I'm talking about FCC. Assia, sorry. Yeah. I think it's the onboard credits. Yep. She's referring to Leonard. Yep. Yep. Yeah. Look, I mean, there's still I mean, look, the free onboard credits have dwindled down substantially, being, you know, having had a full 2020, 2021, 2022 of usage. To the extent anybody hasn't perhaps taken that cruise, I can't imagine, you know, the free onboard credits are going to have a material impact. Now, if there is, as you know, Assia, any form of recession, we have seen the cruise lines introduce, you know, free onboard credits in addition to perhaps yield modifications in order to drive continued demand. Obviously, all of that inures positively towards us. You know, I would say they're probably at a much lower level than they were a year ago. To the extent they need to use that as an assist in terms of motivating people to at least try certain amenities and then spend more is obviously that's something that will help us. Okay. Fair enough. I'm hoping that whatever is ahead of us is a mild-ish recession, as you put it. Again, congratulations, guys. Great job. All right. Thank you, Assia. This concludes the question and answer session. I would like to turn the conference back over to Leonard Fluxman for any closing remarks. Right. Thanks again, everybody, for joining us today. I wanna take this opportunity to wish you all a happy and healthy holiday season. We look forward to speaking with you when we report fourth quarter results in February and seeing you all at the ICR conference in January 2023. Thank you very much. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.