Thank you. Good morning, and welcome to OneSpaWorld's second quarter 2026 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 second quarter 2026 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.

Explanations of these metrics can be found in our earnings release issued earlier this morning. Joining me today are Leonard Fluxman, Executive Chairman and Chief Executive Officer, and Stephen Lazarus, President, Chief Operating Officer, and Chief Financial Officer.

Leonard will begin with review of our second quarter 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, Allison. Good morning, and welcome to OneSpaWorld's second quarter 2026 earnings conference call.

It's a pleasure to speak with you all this morning and share another strong performance that delivered our 21st consecutive quarter of record total revenues and adjusted EBITDA to cap an exceptional first half of the year. Our sustained positive performance continues to reflect our team's innovation mindset and the increasing power of our global operating platform, which combined creates remarkable experiences for our guests, outstanding value for our cruise line and destination resort partners, and strong operating and financial performance.

This further reinforces our leadership position as a trusted global provider of health and wellness services at sea. I remain proud of our exceptional team members around the world whose dedication and commitment continue to drive our success.

We began the second half of the year with positive momentum and expect to generate double-digit growth in total revenue and adjusted EBITDA at the midpoint of our fiscal year 2026 guidance ranges. Our confidence is buoyed by the impact of increasing innovations across our business, including the emerging impact of AI and growth from new partnerships and new ship introductions.

Turning to the highlights of the second quarter: total revenues increased 9%, and adjusted EBITDA increased 13%. At quarter end, we operated health and wellness centers on 208 ships, with an average ship count of 202 for the quarter.

This compares with a total of 200 ships and an average ship count of 191 ships at the end of the second quarter of fiscal 2025. Also at quarter end, our cruise ship health and wellness centers were staffed by 4,664 personnel, compared with 4,365 personnel on vessels at the end of the second quarter of fiscal 2025.

The quarter marked meaningful progress in our key priorities, and while I'm going to address my favorite four, I'm going to leave probably one with much curiosity, is AI, will be covered by Stephen in his remarks. Firstly, we captured high visible ship growth with current cruise line partners.

During the quarter, we launched our state-of-the-art health and wellness center on board Royal Caribbean's Legend of the Seas and expanded our partnership with Azamara Cruises. We remain on track to introduce health and wellness centers on three additional new ship builds later this year.

Second, we continue to expand higher-value services and products. These services, including our innovative offerings of Thermage, truSculpt and CoolSculpting, IV therapy, acupuncture, LED therapy, continue to drive strong double-digit growth in the second quarter.

We will continue expanding these services across our fleet while introducing new offerings that address travelers' growing focus on longevity and wellness. At quarter end, medi-spa services were available on 156 ships, up from 147 ships at the end of the second quarter of 2025.

We expect to have medi-spa offerings on 159 ships by year-end 2026. Third, we focused on enhancing health and wellness center productivity.

This is best reflected in continued growth in key operating metrics, including revenue per passenger per day, weekly revenue, and revenue per staff per day. Additionally, pre-booked revenue grew 14% in total, and grew as a percentage of total service revenue, with forward bookings looking strong, up 20% as compared to last year.

Staff retention continues to deliver impressive gains. At quarter end, staff retention was 81%, rising 4 percentage points over last year.

As we have stated in the past, having experienced staff is a key contributor to our consistent gains in operating metrics, as these members continue to drive incremental revenue through more effective guest recommendations, cross-selling, and upselling. We remain committed to investing in best-in-class training to support productivity and long-term growth in our operating metrics.

Fourth and finally, we maintained a strong and durable balance sheet and generated robust free cash flow. During the quarter, we returned $5.1 million to shareholders through our quarterly dividend, and reduced debt by $1.3 million under our term loan facility.

We ended the quarter with a strong balance sheet, including $41.6 million in cash and $91.6 million of total liquidity, providing continued flexibility to invest in our business while returning capital to shareholders. During the quarter, we opportunistically purchased 16,134 shares of our common stock, and at quarter end, had $37.1 million available under our share repurchase authorization.

Looking ahead, we remain confident that 2026 will be another record year for this company. Backed by our exceptional team, differentiated operating platform, and continued focus on innovation and execution, we believe we are well-positioned to extend our leadership in health and wellness services at sea while delivering exceptional value to our cruise line partners, memorable experiences for our guests, and long-term value to our shareholders.

With that, I'll turn you over to Stephen, who will provide more details of our second quarter results and guidance. Stephen?

Thank you, Leonard. Good morning, everyone.

We are indeed pleased with our second quarter performance, with total revenues increasing 9% and adjusted EBITDA increasing 13% compared to the second quarter of 2025, driven by increases across our key operating and financial metrics. Our results continue to demonstrate the strength and resilience of our business model and the successful execution by our talented teams.

We generated strong profitability and cash flow during the quarter while maintaining a healthy balance sheet, enabling us to continue investing in strategic growth initiatives, return capital to shareholders through our quarterly dividend and share repurchases, and further reduce debt. Before I review our results, I would like to take a moment to provide details on some of our AI initiatives and the positive impact that this is having across our business.

We remain confident these technologies will enhance revenue growth, operating efficiency, and longer-term profitability. AI has been introduced to substantially all of our ships and our corporate office.

We have many work streams underway at varying stages, some already in production, others still in development or at the concept stage. Today, I'd like to focus on four areas that are live and generating value.

The first relates to revenue enhancement. Amanda, previously referred to as Project Shell, our AI-powered recommendation and yield optimization platform that provides daily yield improvement recommendations to our managers onboard vessels.

This is our machine learning algorithmic engine to improve facility and staff utilization to increase revenue. Amanda was launched in March of this year and is currently deployed across 188 vessels.

Service revenue improvement as a result of these recommendations is most evident with less experienced managers, where we are seeing a 4% service revenue uplift from the implementation of the recommendations. Manager adoption has also grown, reaching nearly 99%.

Looking ahead, we'll continue enhancing the platform, incorporating manager feedback, adding new services and post-voyage recommendations. Second, we continue to expand our operational AI capabilities.

AVA, our artificial intelligence virtual assistant, which is a task-executing agentic app, supports managers with shipboard operations, and was launched in August of 2025. This has a proven ROI, autonomously resolving 96% of support tickets without human intervention.

Based on this, we've begun implementing new use cases and will extend AVA to all onboard staff. Third, as it relates to automation and streamlining work, at the end of May, we launched Serena, our guest-facing conversational assistant, a generative AI-enabled chatbot for our e-commerce platform.

A natural extension to our customer service team, with nearly half of all sessions occurring outside normal business hours utilizing Serena to date. We plan to introduce new Serena capabilities to further increase efficiency while maintaining our high customer relations standards through seamless human handoff and guest satisfaction tracking.

Finally, fourth, our enterprise-wide AI assistant continues to be adopted across the organization to improve productivity and streamline day-to-day workflows. In parallel, we completed the implementation of a modernized ERP system across the organization this quarter, bringing our teams onto a single platform that further supports our AI initiatives and positions us for continued efficiency gains.

While we remain in initial stages of these initiatives, with many others to follow, we are increasingly encouraged by the measurable benefits we are seeing, and believe our investments in AI will continue to strengthen our competitive position and create long-term value for our shareholders. I will now share further details about our second quarter results that we reported earlier this morning.

Total revenues increased 9% to $261.2 million, compared to $240.7 million for the second quarter of 2025, driven by a 4% increase in revenue days, health and wellness center expansion from 2026 new ship builds, and a 1.2% increase in average guest spend, contributing $14.5 million, $4.8 million, and $2.7 million, respectively, to the increase in total revenues, of which $4.7 million was attributable to increased guest pre-booked services. Growth in our maritime total revenues was offset by $1.3 million decrease in destination resorts total revenues, partially due to the closure of hotels where we had previously operated.

The decrease in product revenue was driven by the previously announced reorganization of operations in the United Kingdom and Italy, which accounted for $1 million of product revenue in the second quarter of 2025. Cost of services increased $15.6 million, attributable to the $21.1 million increase in service revenue compared to the second quarter of prior year.

Cost of products decreased $200,000, attributable to the $500,000 decrease in product revenue compared to the second quarter of last year. Administrative expenses were $7.2 million, compared to $4.4 million in the second quarter of 2025.

The increase was primarily due to $2 million in third-party fees for certain management and logistic services as a result of our previously announced reorganization of operations in the United Kingdom and Italy, pursuant to which services previously performed internally by company personnel and related costs have shifted from salary, benefits, and payroll taxes to administrative expenses. Salary, benefit, and payroll taxes were flat at $8.8 million.

Net income was $23.2 million, or net income per diluted share of 23 cents, as compared to net income of $19.9 million, or net income per diluted share of 19 cents, for the second quarter of 2025. The increase was attributable primarily to a $2.4 million increase in income from operations and a benefit from a $300,000 decrease in interest expense.

The $300,000 decrease in interest expense, net, was attributable primarily to lower debt balances and lower effective interest rates. Adjusted net income was $29.8 million, or adjusted net income per diluted share of 29 cents, compared to adjusted net income of $25.8 million, or adjusted net income per diluted share of 25 cents, for the second quarter of 2025.

Adjusted EBITDA was $34.4 million, compared to adjusted EBITDA of $30.5 million in the second quarter of last year. Turning to the balance sheet: we continue to possess a strong balance sheet at quarter end, with total cash of $41.6 million, after giving effect to the payments of $10.2 million in quarterly dividends and repaying $2.5 million of our term loan facility during the first six months of June of 2026.

In addition, we have full availability of our $50 million revolving loan facility, giving us total liquidity of $91.6 million as of June 30th. Total debt, net of deferred financing costs, was $81.6 million at June 30th.

Also at quarter end, we had $37.1 million remaining on our $75 million share repurchase program, which was adopted in April 2025. We intend to utilize this remaining authorization this year.

We remain focused on disciplined capital allocation, supported by our strong cash flow generation and balance sheet flexibility. We will continue to prioritize investing in the business, returning capital to shareholders through our share repurchase program, our quarterly dividend, and debt reduction, while maintaining the flexibility to pursue additional opportunities to enhance long-term shareholder value.

As it relates to guidance: based on our positive momentum and the impact of innovation across our businesses, we are increasing our full year 2026 guidance to total revenue in the range of $1.018 billion to $1.038 billion, and adjusted EBITDA in the range of $130 million to $140 million. This represents growth of 10% at the midpoint of the guidance ranges for both metrics compared with actual fiscal 2025 results, excluding exited and reorganized operations, and marks our fourth consecutive fiscal year of record performance.

Please keep in mind that fiscal 2025 reported total revenue included $23 million associated with the reorganization of operations in the United Kingdom and Italy and the exit of land-based operations in Asia. For the third quarter of 2026, we are introducing guidance of total revenue in the range of $268 million to $273 million, and adjusted EBITDA in the range of $35 million to $37 million.

This guidance reflects our confidence in our ability to deliver sustained momentum and the visibility of our growth pipeline, while acknowledging the dynamic environment. With that, we will open the call for questions.

Marie, if you could please open the call. Thank you.

Hey, guys. Good morning.

Look, it seems pretty clear that the spend levels on-board remain incredibly strong at this point, and even yesterday we heard from Royal Caribbean, they specifically called out how strong their on-board metrics have been. Guess what I'm wondering is that with only 5 months left here in the year and on-board trends still remaining pretty healthy, to us, I would say your guidance range is still probably pretty elongated.

I'm just wondering what would get you maybe more towards the low end versus the high end, or is there something in the fourth quarter that we should be watching that could skew that quarter one way or the other?

Steve, good morning. As of today, we feel good about the guidance that we've provided and the range.

Obviously, as you're aware, revenues, our second quarter beat was $300,000, we've taken the full year up by $4 million. On EBITDA, the beat was $400,000, and we've taken the full year up by $1 million.

We feel comfortable with where we're guiding, to the extent that there are improvements in the environment, or innovations or activities that we're working on that accelerate at a faster pace, then you could see the numbers skew towards the upside.

Gotcha. Stephen, thanks for all the color around the AI initiatives.

Maybe I'm reading into this wrong, but it seems like for now, the AI benefits are at least for now kind of coming more on the revenue side, and then the expense benefits will follow later on. I just want to make sure I'm kind of thinking about that the right way, and I doubt you're ready to provide this, but at this point do you have any idea what all this AI technology could eventually do to your margin profile, or is it still just a total work in progress?

The response to the first question is correct, and as it relates to the second part of the question, and by the way, for the first part, obviously, as Steve, after all these years, we run a very, very lean organization, and so further reducing costs, etc., will happen, but the impact we feel ultimately is more on the revenue side than on the cost side. It is indeed still too early to quantify exactly what that means and what it does to margins.

I would also frankly say this, there is so much happening and so much innovation and continued innovation in this arena, that I hope we always have projects in the pipeline, and therefore continue to see small incremental benefits coming through, as opposed to getting to a point in time where we're done and we can quantify really what it means. Too soon to tell.

We're working on it. Some of these things have literally only been in play for a month or two, maybe six.

When we get there, we will, but we're happy to continue to report whatever we know.

Gotcha. Thanks, guys.

Really appreciate it.

Thanks, Steve.

Hi, thanks for taking the question. I wanted to ask about product revenue, because even if I adjust for the reorg, it looks like it did kind of decelerate quite a bit in the growth rate, and I'm wondering kind of what you're seeing with product attach on the ships or if there's something else that would help explain that decel.

Yes. When you take into account the amount due to the reorg, it was in fact positive, but you're correct, at a slower rate than previously.

One of the things to bear in mind is that we continue to see our medi-spa modalities growing at a faster rate than you're seeing overall revenue growth. In the second quarter, for example, our medi-spa functionalities grew at a 17% clip, which is exceeding what other things are growing at, although recognizing it's still a small proportion, less than 10% of our service revenue.

Those today have virtually no retail attachment to them, and so, as you see those portions continue to grow, it does weigh in on the numbers. We're not concerned at this point in time, to be honest, about any sort of attachment or takeaway issues on board.

It does remain a focus for us. We did have significantly more retail promotional activity in the prior year, as we were moving out some older inventory at significantly discounted prices.

Having said that, we will continue to focus on it, have been focusing on it, but are not calling it out as an issue at this point.

Thanks for that. Then a second question: on the third quarter itself, we've heard a lot of companies talk about, particularly for Med deployment, that they're going to have maybe a higher mix than normal of European customers, which I know tend to kind of spend less at the spa than American passengers.

Is that something that you've already contemplated in the third quarter guide, particularly just given the seasonality of Med?

Yes, we've taken all of that into what we've guided. Yes.

Thank you.

hey, guys. Good morning.

You talked about early days, I think 1 month or a couple months of AI deployment. Have you kind of done this from a perspective of implementing some of the strategies in an experimental versus control setting, where you were able to kind of discern what your uplift is in the portion of your business or areas where you've kind of put in these processes?

Just curious, because if we're early days and you're starting to see progress, yet still early days, it feels like the revenue upside could accelerate and uplift from here. Curious on your thoughts there.

From a process standpoint, Randy, the way you're describing it is the way we're doing, have done, and continue to do all of these projects, i.e., we roll them out in a smaller group. We make sure that they're working, okay?

There's still a human in the loop, etc., etc., and then ultimately roll them out further. As literally these engines or learning algorithms learn from themselves, we actually do expect that they will get better over time.

The recommendations that are implemented onboard, for example, are literally at the end of every week, the machine goes back and looks at, and says, "Okay, we made these recommendations. How successful were they?"

Then if they were good, is re-recommending them. If they weren't, might be calling our off-team back into the loop to say what other sorts of things could we be providing.

Hopefully over time, there is continued improvement. We definitely think that some of the other projects, we wouldn't talk about them again today because they are still in early, early stages, like dynamic pricing, will have the ability to help us continue to improve our revenue.

Got it. You gave a metric of a little over 1%, I believe it was, increase in average guest spend.

How should we be thinking about that in the go-forward guidance for the balance of the year? What's that metric looking like, from your standpoint, for the balance of 2026?

Thanks.

I think it's going to be about that, Randy. It's run about 1%, 2% growth.

That's kind of what we're expecting through the back half. We might be able to do a little better in the fourth quarter, but that's kind of where we're settling in.

Great. Thanks, guys.

Yep.

Hey, thanks a lot and nice job, guys. With the AI progress that is still in the earlier innings, how are you thinking about the evolution of your growth algorithm?

Historically you spoke to high single-digit revenue growth and a bit of margin expansion. What do you think that the go-forward could be as we think about the next couple years given all the progress that you've already made and will continue to make on the AI front?

We'd like to give you that specificity, Max, but the reality is it just is too soon. We are seeing revenue grow at a slightly higher rate than that high single-digit rate, and we have and do see margin improvements at the EBITDA level.

We're just not ready, and frankly, we don't have enough conviction around sample sizes, etc., to be able to talk specifically to answer your question. It's not that we're trying to avoid it, but for now, we will continue with our long-term algo as it has been in the past.

High single-digit revenue

growth, slightly better EBITDA growth, yeah.

Oh, sorry. Keep going.

No, no. Go ahead, Max.

I'm done.

Okay. Then separately, it's great to hear about the pickup in pre-booking.

Obviously, that's something that we've all been focused on for quite a while here. Given the acceleration, do you think your prior targets that we've spoken to in the past are achievable?

Where do you think that mix can go in both the near as well as the medium term? Then just lastly, is the bigger spend continuing to hold at a similar rate, or has there been any evolution to that?

As it relates to the spend, it generally continues to hold at a +30 or above, we have seen no degradation in the incremental spend from those guests who pre-book. We do continue to think that there is still the opportunity for that number to drive significantly higher.

Obviously, we see that in some cruise lines, and that gives us that confidence. Frankly, in order to spend the money on the yield optimization AI activities or tools that we're looking at, we would have to have that conviction.

Otherwise, it is why put the money into the project? We do think that there's still upside in that number.

Yeah. Max, one other thing that's going to start kicking in, that we just started now sort of at the end of the second quarter, is we started offering medi-spa and acupuncture on the pre-book platform, which we didn't have before.

That was a missing opportunity. We think that's going to also start to elevate that pre-book percentage.

Got it. That's great to hear.

Super helpful and best regards.

Thank you.

Thank you. Good morning, Leonard and Stephen.

Thought I'd start off with asking about how your progress is on expanding your resort operations portfolio in the US and Caribbean. I'm curious if you can provide an update in terms of how the pipeline is looking and progress therein.

Thanks.

No, it's a good question, Greg. Thanks for asking.

As we brought this person on a little over 90 days or so ago. The pipeline is really looking strong.

There are a lot of opportunities that have been indicated that have interest. We've sent out two or three answers to an RFP.

Inbounds are still continuing to grow. I got to tell you, for the first time, we're in a proactive, looking for opportunities, getting our name out there, building the brand and recognition.

I'm very excited that we've been able to cultivate this interest in a very short period of time. Now we've just got to convert them, and I'm confident we will.

Terrific. We'll look forward to hearing the news when it happens.

Separately, I wanted to ask about GLP-1s. Just given consumers that are using the products, and I'm curious what you're seeing in terms of any change in trends in terms of service or products, different types of usage of the spa menu, as consumers are adapting to using the GLP-1s.

We have not introduced GLP-1s on board yet. That's not to say we won't, or let's just say, I think the emerging regulatory control around peptides will change favorably, such that we'll be able to start offering peptides, hopefully in 2027 if the regulations are such that we can support it, then we'll do it.

In that respect, there's a very good competitive advantage in tirzepatide and some of the other exciting peptides out there, that we're looking to roll out as soon as we have the approval to do so. If it's not GLP-1, it'll be in another format, or could be GLP-1.

I think there's sufficient confidence out there that these fat-reducing peptides, GLP-1s, which is a form of a peptide, will effectively be mainstream in the next couple of years, we will follow suit.

Great. Thank you very much.

Yep.

Hey, good morning, guys. I wanted to ask the Europe question a little bit differently.

I think historically Europe has been a little lower-yielding for you guys versus the bread-and-butter Caribbean. One of the cruise operators had mentioned, maybe a little lower occupancy for Europe this year.

I wanted to see how you guys kind of think about that. Does lower occupancy on these lower-yielding itineraries kind of hurt you more, is it kind of net out to a neutral?

I'm sure that this was spoken about yesterday on the call with respect to Royal. Maybe there's some softness there due to geopolitical pressures, people being scared to maybe fly into the Mediterranean with the war going on.

We certainly didn't see load factors dip significantly enough to impact any of our revenues. That being said, there's Alaska as well as the Caribbean that are happening at the same time, and those continue to be executed very well.

Got it. Okay.

Then separately wanted to ask, there was a recent announcement from the Norwegian banner, the Jade and Gem ship got some thermal suite upgrades. I wanted to see if is there any way to quantify what these dry dock upgrades can do for you guys, or any additional color you can give about what a dry dock refurb typically represents for you?

It's a couple of things, right? Because they're always scheduled to do it.

We try and prepare as much in advance with the business folks, the dry dock new build folks. Firstly, we want to make sure that the facilities in and of itself, wherever there's required maintenance or improvements, we get that in to the requisition.

At the same time, as we've mentioned before, we look at any areas, not just including our areas, but any area ship-wide, though on the promenade or anything else, underutilized space which we can use for any of the purposes or some of the new modalities. Where we can get that moved, and we have done that in the past, we focus on that heavily.

It's an opportunity not just to repurpose underutilized space, but also perhaps to improve the existing.

Great. Thanks so much.

Welcome.

Good morning, guys. Great job on Q2.

Basically my question is now sort of a follow-up to what was just discussed. Throughout sort of weekly pricing surveys, we're seeing a lot of strength in the Caribbean and Alaska, just as you mentioned, Leonard.

It's not just Europe during the summer. It seems that especially some of the destinations, the shorter cruises that are sort of new to cruise, which I think are probably the better passenger for you, are really strong in price, obviously demand is there.

Is that also something that you're already seeing in Q2 and building into the Q3 part of the model, or do you expect just a more regular Caribbean and Alaska season than we're thinking? Thank you.

Look, there's significant capacity still in the Caribbean, and as Assia, the Caribbean we love. It's always good, short cruises, long cruises, 7-day being the sweet spot.

Yes, you're right. 3- and 4-day always introduces that new passenger who might just want to try a cruise for the first time.

While it doesn't give us the breadth of time to do as well as we do in the 7-day, the 3-, 4-day combined typically comes close, but obviously a 3-day gives us a shorter period of time to penetrate the guest spend. We love it all, and we won't say no to any more Caribbean because it doesn't impact us adversely, perhaps from a capacity perspective that it does others.

For us, it's always good because it brings along a lot of North American focus and spend, which is always healthy.

We might get another 6% or 7% capacity increase there next year, more to come, I think, Leonard. [chuckle] Thank you very much.

You're welcome. Thanks, Assia.

Great. Thank you again for joining us today, and we look forward to speaking with many of you at the upcoming investor conferences that we'll be attending and presenting, and we'll report our third quarter results in October.

Thanks for joining today. Bye-bye.