Q4 2023 Norwegian Cruise Line Holdings Ltd Earnings Call

February 27, 2024

And instructions for the session will follow at that time.

If anyone should require operator assistance during the conference. Please press Star then zero on your Touchtone phone.

As a reminder to all participants this conference call is being recorded I would now like to turn the conference over to your host Sara Inman Ms. Inman. Please proceed.

Thank you Donna and good morning, everyone. Thank you for joining us for our fourth quarter 2023 earnings and business update call I'm joined today by Harry Sommer, President and CEO of Norwegian Cruise line Holdings, and Mark Kempa Executive Vice President and Chief Financial Officer. As a reminder, this conference call is being simultaneously webcast on the company's investor.

Relations website at Www Dot and C. L. H L. T D Dot com backslash investors. We will also make reference to a slide presentation. During this call, which may also be found on our Investor Relations website.

The conference call and the presentation will be available for replay for 30 days. Following today's call before we begin I would like to cover a few items our press release with fourth quarter and full year 2023 results was issued this morning and is available on our Investor Relations website. This call includes forward looking statements that involve risks and uncertainties that could cause our actual results.

To differ materially from such statements. These statements should be considered in conjunction with the cautionary statement contained in our earnings release. Our comments May also reference non-GAAP financial measures a reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release and presentation with that I'd like to call. It.

Turn the call over to Harry Sommer Harry.

Well, thank you Sarah and good morning, everyone. Thank you all for joining US today I want to welcome everyone to our fourth quarter earnings call. It's such a great time to be in the cruise industry with wonderful new product available across all three of our award winning brands the demand for cruise vacations as certainly as robust.

Good morning, and welcome to the Norwegian Cruise line Holdings fourth quarter and full year 2023 earnings Conference call. My name is Donna and I will be your operator at this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions for the session will follow at that time.

We have ever seen it and the continued innovation onboard is leading to outstanding financial performance and exceptional guest satisfaction scores and guest repeat rates.

Donna: If anyone should require operator assistance during the conference. Please press Star then zero on your Touchtone phone.

Donna: As a reminder to all participants this conference call is being recorded I would now like to turn the conference over to your host Sara Inman. Mr. Edman. Please proceed.

Today, it's my pleasure to discuss some of our key milestones in 2023, our progress on our near term priorities recent booking trends and our outlook for 2024.

Sara Inman: Thank you Donna and good morning, everyone. Thank you for joining us for our fourth quarter 2023 earnings and business update call.

Later in the call I'll turn it over to Mark who will provide more color on our 2023 performance and guidance for 2024.

Sara Inman: And today by Harry Sommer, President and CEO of Norwegian Cruise line Holdings, and Mark Kempa Executive Vice President and Chief Financial Officer. As a reminder, this conference call is being simultaneously webcast on the company's Investor Relations website at Www Dot and C. L. H L. T D Dot com backslash investors, we will also make reference with flight.

Now 2023 can best be described as a landmark year for Norwegian cruise line Holdings.

Started the year on the heels of the last of the impacts from Covid and the last of the cruise ports reopening in the Asia Pacific region throughout Q1.

Sara Inman: And patients during this call, which may also be found on our Investor Relations website, both the conference call and the presentation will be available for replay for 30 days. Following today's call before we begin I would like to cover a few items our press release with fourth quarter and full year 2020 results was issued this morning and is available on our Investor Relations website. This call includes forward.

But as you can see on slide five consumer demand was quick to rebound in full and we were pleased to return to full shifts and full year profitability. It is so incredibly rewarding for our staff and crew to be able to operate full shifts and deliver vacation experiences of a lifetime to our happy.

Sara Inman: Looking statements involve risks and uncertainties that could cause our actual results to differ materially from such statements. These statements should be considered in conjunction with the cautionary statements contained in our earnings release. Our comments May also reference non-GAAP financial measures a reconciliation to the most directly comparable GAAP financial measure and other associated disclosure.

Yes.

That in and of itself would have made for a spectacular 2023, we were further Boeing by the introduction of three new World class ships into our fleet one for each of our three award winning brands. This was an unprecedented achievement and a burst in the 57 year history of our company we.

Sara Inman: These are contained in our earnings release and presentation with that I'd like to call turn the call over to Harry Sommer Harry.

Welcome to Oceana cruises and made Norwegian VEBA in August and most recently the highly anticipated regent seven seas grandeur in November.

Harry Curtis: Well, thank you Sarah and good morning, everyone. Thank you all for joining US today I want to welcome everyone to our fourth quarter earnings call. It's such a great time to be in the cruise industry with wonderful new product available across all three of our award winning brands.

The successful launch of three vessels in one year would not have been possible without the hard work and unwavering commitment of crew and team members across the globe. Thanks to their dedication and passion for providing an unmatched guest experience. The reception for these new ships continues to be over.

Harry Curtis: Men for cruise vacations, as certainly as robust as we've ever seen it and the continued innovation onboard is leading to outstanding financial performance and exceptional guest satisfaction scores and guest repeat rates.

Well, mainly positive across the board.

This reception combined with the strong demand environment, we continue to experience across all three of our brands has enabled us to successfully absorb an 18% increase in capacity in 2023 versus 2019 levels at record pricing levels. As a result, we have driven Rev.

Speaker Change: Today, it's my pleasure to discuss some of our key milestones in 2023, our progress on our near term priorities recent booking trends and our outlook for 2024.

Speaker Change: Later in the call I'll turn it over to Mark who will provide more color on our 2023.

New per passenger cruise day up 17%, allowing us to finish the year with year end advanced ticket sales of $3.2 billion up an incredible 56% compared to 2019 at the same time, we continue to maximize onboard revenue.

Generation as shown by gross onboard revenue per passenger cruise days, which is up 27% over 2019, a main driver of this large improvement is through enhanced pre salt onboard revenue. So our guests come on board with a fresh wallet.

But none of this is new news as we have been and continue to be the industry leader in net yields. We are proud of the work our teams do day in and day out to drive the highest yields in the industry, but today I also want to emphasize that we are equally passionate about the club side of the business.

Our relentless focus on cost optimization has produced four sequential quarters of year over year adjusted new.

Year over year, adjusted net cruise cost per capacity day reduction with full year 2023, coming in 21% lower than the prior year.

We achieved this by focusing our efforts on optimizing spend and investments across all areas of the business from fuel to food and consumables and marketing we are committed to continuing to optimize our margins by balancing product revenue and cost considerations through better leveraging data and.

In analytics to drive decision, making and accountability.

The net result of these healthy revenue and cost metrics allowed us to get back to driving results as we generated $1 $9 billion in adjusted EBITDA in 2023, allowing us to generate the adjusted free cash flow to further strengthen our balance sheet with the repayment of nearly two <unk>.

And death.

On the product front, we are strategically enhancing the guest experience by identifying smart ROI, driven investments and decisions to profitably maximize guest satisfaction.

Our recent success has been the rollout of Starlink high speed Internet, we moved quickly and had been able to rollout this cutting edge technology across half of our fleet since the spring of 2023 and expected finished the full fleet by year end this year.

In addition to significantly elevating the guest experience aboard our ships, we've been focusing on improving the pre cruise guest experience and better leveraging digital tools across all three of our brands for.

For example, we've been making improvements to our pre cruise planning functionality at Norwegian to allow guests to book, even more before they leave their homes and we rolled out a flexible air program at Oceana sharing innovation, which began at Norwegian earlier in the year.

This innovation gives guests a few day window to deviate there are at the beginning and end of their crews. So they can have more time to explore and enjoy destinations before and after the sale with us while at the same time, allowing us to spread air demand over multiple days and save costs.

True win win for us and our guests.

On the digital side, we recently launched the regions onboard mobile App on seven seas grandeur, and we continued to see strong adoption of the NCL mobile App, which reached record high guest usage in January.

These improvements are not only resonating with our guests, giving them a better and more frictionless experience before during and after their crews but are also generating positive returns.

Finally, we announced important interim sustainability commitments announcing our target to reduce greenhouse gas intensity on the capacity of databases by 10% by 2026 and by 25% by 2030 versus 2019 levels. The company is truly <unk>.

Firing on all cylinders these solid operational and financial results have laid the foundation for a strong 2024 and position us to deliver sustained profitable growth in the future and incredible vacation experiences to the millions of guests who sail with us every year.

In addition to these priorities a key cornerstone of our long term strategy is delivering measured capacity growth and optimizing our fleet to drive strong financial results. Our newbuild pipeline of five ships, which you can see on slide seven represents a capacity growth of 28% from 2020.

Three of 2028 with a 5% CAGR over the period historically capacity growth has led to outsized revenue and EBITDA growth and we expect this capacity growth to be no different and deliver meaningful top and bottomline growth.

We believe that these measured capacity additions will enable us to further enhance our long term profitability.

And continue to significantly strengthen our balance sheet, while providing guests new and innovative experiences.

Shifting our discussion to the current booking environment shown on slide eight we continue to experience strong and resilient customer demand across all three of our brands. The strong momentum. We saw in 2023 has continued into 2024 with an all time high booked position in pricing Boyd.

Strong wave season demand.

This has led to some of the best booking weeks in the company history, which began with successful Black Friday and cyber Monday promotions in general we continue to see healthy demand across all markets brands and products. Let me walk you through some recent trends.

Close in demand for Caribbean sailing is particularly strong, prompting the redeployment of Norwegian epic and Norwegian getaway from offering shoulder season for 2024 voyages in the med to offering Caribbean sailings from Port Canaveral, and New Orleans, respectively. Beginning in October.

We're really firing on all cylinders. These solid operational and financial results have laid the foundation for strong 2024 and positioned us to deliver sustained profitable growth in the future and incredible vacation experiences to the millions of guests who sail with us every year.

As a result, our Caribbean capacity for the NCL brands is expected to increase by approximately 300 basis points in 2024 versus the prior year.

Our industry's advantage lies in our ability to redeploy our ships and adapt to changes in consumer demand and preferences. These changes demonstrate our team's responsiveness to our guest preferences.

<unk> 2028, with a 5% CAGR over the period historically capacity growth has led to outsized revenue and EBITDA growth and we expect this capacity growth to be no different and deliver meaningful top and bottom line growth.

We have also seen demand return for ceilings in Hawaii.

While only accounting for approximately 4% of capacity in this period. These feelings are performing exceptionally well in 2024.

We believe that these measures capacity additions will enable us to further enhance our long term profitability.

Our Norwegian cruise line brand continues to see exceptionally strong demand and our book position and pricing are higher than last year for all four quarters of 2024.

And continue to significantly strengthen our balance sheet, while providing guests new and innovative experiences.

Oceanic region also continued to see strong demand across all geographies with the exception of redeployed voyages due to cancellations in the middle East and Red Sea.

Turning to the Middle East last quarter, we made the preemptive decision to cancel all course, Israel in 2024, and recently, we've announced the rerouting of our cruises ceiling through the Red Sea for the rest of the year as a reminder, just 1% and 4% of our capacity in Q1 and.

By strong wave season demand.

Full year 'twenty four respectively was expected to visit the broader middle East region.

However, the middle East represents a larger percentage of our capacity for our Oceania and regent brands, making up 12% and 8% respectively.

First close in demand for Caribbean sailing is particularly strong, prompting the redeployment of Norwegian epic and Norwegian getaway from offering shoulder season for 2024 voyages in the med to offering Caribbean sailings from Port Canaveral, and New Orleans, respectively, beginning in.

We now have no pools in the region in 2024 and over replacement cruises have been or are in the process of being put on sale.

Overall, we are encouraged by the strength in our book position for 2024, which remains at all time highs with commensurate higher pricing.

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As a result, our Caribbean capacity for the NCL brands is expected to increase by approximately 300 basis points in 2024 versus the prior year.

As a result, 2024 is shaping up to be a solid year, we expect healthy full year net yield growth of approximately five 4%. This year on a constant currency basis, driven primarily by improved occupancy and pricing strength.

Onboard revenue continues to be a bright spot with strength seen across the board in encouraging indicators that our target consumer remains healthy and resilient.

We have also seen demand returns with ceilings in Hawaii.

While only accounting for approximately 4% of capacity in this period. These sailings are performing exceptionally well in 2024.

We are continuing to see strong demand for pre cruise purchases, which typically result in higher overall spend throughout a guest's cruise journey.

Next our Norwegian cruise line brand continues to see exceptionally strong demand and our book position and pricing are higher than last year for all four quarters of 2024.

And while we have talked about our strong cost focus during 2023, we want to emphasize that this was not just a one year exercise for our team.

Oceanic region also continued to see strong demand across all geographies with the exception of redeployed voyages due to cancellations in the middle East and Red Sea.

Rather it is a cultural shift in the way our entire company looks at cost to ensure that we are operating as efficiently as possible, while delivering experiences our guests truly value.

This companywide focus should allow us to not only continue to reduce cost, but even more importantly, create operating leverage to enhance profitability, which will be foundational for our long term success.

Our recently established transformation office is allowing us to monitor and track these changes holding each area accountable for their initiatives.

<unk> full year 'twenty four respectively was expected to visit the broader middle East region.

The middle East represents a larger percentage of our capacity for our Oceania and regent brands, making up 12% and 8% respectively.

We believe this is apparent in our guidance, where we expect our core cost to be flat in 2024 versus 2023 and.

We now have no pools in the region in 2024, and all replacement cruises have been or are in the process of being put on sale.

In conclusion, our strong topline growth combined with our continued focus on cost and margin enhancements are expected to drive 2020 for adjusted EBITDA and adjusted EPS.

Overall, we are encouraged by the strength in our book position for 2024, which remains at all time highs with commensurate higher pricing.

To grow by 18, and 76% respectfully over last year.

We are very excited about the future and we plan to discuss our multiyear targets with investment community in mid May we look forward to meeting with you all that.

With that I'll turn it over to Mark to walk you through our financial results and outlook Mark.

On board revenue continues to be a bright spot with strength seen across the board in encouraging indicators that our target consumer remains healthy and resilient.

Harry and good morning, everyone. My commentary today will focus on our fourth quarter 2023 financial results 2020 for guidance and our financial position.

We are continuing to see strong demand for pre cruise purchases, which typically result in higher overall spend throughout a guest's cruise journey.

Yes, otherwise noted my commentary on 2023, and 2024 net per diem net yield and adjusted net cruise cost excluding fuel per capacity day metrics are on a constant currency basis and comparisons are to the same period in 2019 and 2023, respectively.

And while we have talked about our strong cost focus during 2023, we want to emphasize that this was not just a one year exercise for our team.

Let's begin with our fourth quarter results, which are highlighted on slide 11.

Rather it is a cultural shift in the way our entire company looks at cost to ensure.

Starting with the top line results were strong with net per Dms, increasing approximately 14, 5% and net yields increasing approximately eight 6%.

Experiences our guests truly value.

As discussed last quarter several factors contributed to the exceptionally strong growth, we saw including the favorable comp from the rapid exit of Cuba in 2019, as well as a very strong close in demand for Caribbean sailings look.

Sara Inman: Our recently established transformation office is allowing us to monitor and track these changes holding each area accountable for their initiatives.

Looking at costs adjusted net cruise cost excluding fuel per capacity day was in line with guidance at $151 in the quarter, marking our fourth consecutive quarter of improvement on this important metric.

Speaker Change: We believe this is apparent in our guidance, where we expect our core cost to be flat in 2024 versus 2023.

Sara Inman: In conclusion, our strong topline growth combined with our continued focus on cost and margin enhancements are expected to drive 2020 for adjusted EBITDA and adjusted EPS.

As expected. This included approximately one dollar of certain nonrecurring net benefits realized in the quarter.

We have made significant progress streamlining streamlining our cost base during 2023 demonstrating.

Sara Inman: To grow by 18, and 76% respectively over last year.

Demonstrating our focus and commitment to our margin enhancement initiatives and expect to continue this focus in 2024 and beyond.

Sara Inman: We are very excited about the future and we plan to discuss our multiyear targets with investment community in mid May we look forward to meeting with you all that.

Adjusted EBITDA was approximately $360 million in line with guidance, while adjusted EPS was a loss of negative <unk> <unk>.

Sara Inman: With that I'll turn it over to Mark to walk you through our financial results and outlook Mark.

Slightly below guidance due to a 6% impact from FX below the line.

Mark A. Kempa: Thank you Harry and good morning, everyone. My commentary today will focus on our fourth quarter 2023 financial results 2020 for guidance and our financial position.

Overall, we were very pleased with the results we generated in the fourth quarter and full year.

Strong top line growth combined with continued progress on reducing costs enabled us to generate full year. Adjusted EBITDA, just short of $1 9 billion and adjusted EPS of <unk> 70.

Sara Inman: Yes, otherwise noted my commentary on 2023, and 2024 net per diem net yield and adjusted net cruise cost excluding fuel per capacity day metrics are on a constant currency basis and comparisons are to the same period in 2019 and 2023, respectively.

All of which drove strong adjusted free cash flow of $1 1 billion.

Harry Curtis: Let's begin with our fourth quarter results, which are highlighted on slide 11.

I am confident that our improved financial performance in 2023 has set the foundation for a solid 2024 and beyond.

Harry Curtis: Starting with the topline results were strong with net per Dms, increasing approximately 14, 5% and net yields increasing approximately eight 6%.

Moving on to expectations for 'twenty for our outlook for the first quarter and full year can be found on slide 12.

Harry Curtis: As discussed last quarter several factors contributed to the exceptionally strong growth we saw <unk>.

Starting with the full year adjusted EBITDA is expected to be approximately $2 2 billion, an 18% improvement versus 2023 with adjusted EBITDA margins expected to improve by almost 250 basis points.

Harry Curtis: Including the favorable comp from the rapid exit of Cuba in 2019, as well as a very strong close in demand for Caribbean sailings.

Adjusted net income is expected to be approximately 635 million with adjusted EPS expected at approximately $1 23.

Speaker Change: Looking at costs adjusted net cruise cost excluding fuel per capacity day was in line with guidance at $151 in the quarter, marking our fourth consecutive quarter of improvement on this important metric.

A 76% increase versus 2023 b.

Before I get into our top line expectations. There are a couple of important points to keep in mind for your models.

Speaker Change: As expected. This included approximately one dollar of certain nonrecurring net benefits realized in the quarter.

First given our strong expected net income growth for the year shares related to our exchangeable notes are expected to be dilutive and are included in our share count for 2024.

Speaker Change: We have made significant progress streamlining streamlining our cost base during 2023 demonstrating.

Mark A. Kempa: Demonstrating our focus and commitment to our margin enhancement initiatives and expect to continue this focus in 2024 and beyond.

As a reminder, we must subtle the exchangeable notes due in 2024, and 2025 and shares while both of our exchangeable notes due 2027 can be settled in cash or shares at our sole election.

Mark A. Kempa: Adjusted EBITDA was approximately $360 million in line with guidance, while adjusted EPS was a loss of negative 18.

Mark A. Kempa: Slightly below guidance due to a 6% impact from FX below the line.

However, the accounting treatment requires we consider all notes as if they were settled in shares as a result, we assume our full year 2024 average share count to be approximately $516 million.

Mark A. Kempa: Overall, we were very pleased with the results we generated in the fourth quarter and full year.

Mark A. Kempa: Strong topline growth combined with continued progress on reducing costs enabled us to generate full year adjusted EBITDA, just short of $1 9 billion and adjusted EPS of <unk> 70.

Secondly, we successfully migrated our tax residency from the UK to Bermuda as of December 31, 2023.

Mark A. Kempa: All of which drove strong adjusted free cash flow of $1 1 billion.

We do not expect recently enacted Bermuda corporate income tax legislation to have a significant impact on our overall tax rate as this was already assumed in our planning.

Mark A. Kempa: I am confident that our improved financial performance in 2023 has set the foundation for a solid 2024 and beyond.

Taking a closer look at the components of the outlook occupancy is expected to be approximately 105% <unk>.

Mark A. Kempa: Moving on to expectations for 'twenty for our outlook for the first quarter and full year can be found on slide 12.

Net yield is expected to increase approximately five 5% inclusive of the headwinds from the outsized impact of the middle East and Red Sea on our Oceania and regent brands, primarily in the second and fourth quarter.

Mark A. Kempa: Starting with the full year adjusted EBITDA is expected to be approximately $2 2 billion, an 18% improvement versus 2023 with adjusted EBITDA margins expected to improve by almost 250 basis points.

For modeling purpose purposes, our year yield growth will be highest in the first quarter as we are lapping lower load factors and a non optimized itinerary mix in the first quarter of 2023.

Mark A. Kempa: Adjusted net income is expected to be approximately 635 million with adjusted EPS expected at approximately $1 23.

Mark A. Kempa: A 76% increase versus 2023.

In addition, we are seeing strong demand for Caribbean sailings in the first quarter of 2024, which represents approximately 58% of our total deployment in the quarter.

Speaker Change: Before I get into our topline expectations. There are a couple of important points to keep in mind for your models.

For the remainder of the year yield growth is expect to expected to return to more normalized levels. Despite the pressure from the aforementioned middle east and read see headwinds.

Speaker Change: First given our strong expected net income growth for the year shares related to our exchangeable notes are expected to be dilutive and are included in our share count for 2024.

Moving to costs adjusted net cruise cost excluding fuel per capacity day is expected to average approximately $159 for the full year.

Speaker Change: As a reminder, we must settle the exchangeable notes due in 2024 and 2025 and shares.

Speaker Change: While both of our exchangeable notes due 2027 can be settled in cash or shares at our sole election. However.

This represents a three 4% increase versus full year 2023.

But which includes the incremental impact of more drydock days in 2024.

However, the accounting treatment requires we consider all notes as if they were settled in shares as a result, we assume are.

Excluding that impact our core costs are essentially flat on a year over year basis.

Speaker Change: $16 million.

So it puts us in perspective, this effectively represents approximately $100 million of cost savings given our expected core inflation rate of around 3% for next year.

Secondly, we successfully migrated our tax residency from the UK to Bermuda as of December 31, 2023.

Speaker Change: And we do not expect recently enacted Bermuda corporate income tax legislation to have a significant impact on our overall tax rate as this was already assumed in our planning.

For modeling purposes keep in mind that 2023 had less drydocks than normal as we took the opportunity to dry dock ships, while they were out of service.

This year, we are returning to a more normalized dry dock schedule and expect a roughly 175 drydock days in the year.

Speaker Change: Taking a closer look at the components of the outlook occupancy is expected to be approximately 105%.

This will impact adjusted net cruise cost ex fuel by approximately 325 basis points on a year over year basis or approximately $5 on a unit cost basis. This includes both the impact of dry dock costs and the related reduction of capacity days.

Speaker Change: Net yield is expected to increase approximately five 5% inclusive of the headwinds from the outsized impact of the middle East and Red seat on our Oceania and regent brands, primarily in the second and fourth quarter.

Speaker Change: For modeling purpose purposes, our year yield growth will be highest in the first quarter as we are lapping lower load factors and a non optimized itinerary mix in the first quarter of 2023.

Excluding the impact of that we expect full year adjusted net cruise cost ex fuel would be approximately $154 essentially flat on a year over year basis note that the timing of this impact is expected to be weighted more to the first half of the year with approximately two thirds of our drydock days occur.

Speaker Change: In addition, we are seeing strong demand for Caribbean sailings in the first quarter of 2024, which represents approximately 58% of our total deployment in the quarter.

<unk> in that period.

Speaker Change: For the remainder of the year yield growth is expect to expected to return to more normalized levels. Despite the pressure from the aforementioned middle east and read see headwinds.

This year, we will continue to be relentless in our efforts to enhance margins and reduce costs. We are leaving no stone unturned and are continually identifying opportunities big and small across the business.

Speaker Change: Moving to costs adjusted net cruise cost excluding fuel per capacity day is expected to average approximately $159 for the full year.

Our transformation office is running full speed ahead, and identifying operating inefficiencies and operating and opportunities for improvement across all areas of our operating platform in order to enhance the acceleration of our margin recovery and related cash generation.

Speaker Change: This represents a three 4% increase versus full year 2023.

Speaker Change: But which includes the incremental impact of more drydock days in 2024.

Speaker Change: Excluding that impact our core costs are essentially flat on a year over year basis.

One key focus area for us has been optimizing both our fuel consumption and Bunkering strategy.

Fuel costs are one of our largest expense line items and our teams have been hard at work at fostering partnerships with the likes of Dnb on de Carbonization.

Speaker Change: To put this in perspective this effectively represents approximately $100 million of cost savings given our expected core inflation rate of around 3% for next year.

And long term agreements with industry leader ABB to drive new opportunities to lower our fuel consumption per capacity day.

Speaker Change: For modeling purposes keep in mind that 2023 had less drydocks than normal as we took the opportunity to dry dock ships, while they were out of service.

In addition to the consumption side of the equation, we have made a big leap in the optimization of our fuel Bunkering strategy that allows us to maximize price leverage across the various ports and suppliers. We use during a season and in many cases, even during a single voyage. We believe this will.

Speaker Change: This year, we are returning to a more normalized dry dock schedule and expect a roughly 175 drydock days in the year.

Speaker Change: This will impact adjusted net cruise cost ex fuel by approximately 325 basis points on a year over year basis or approximately $5 on a unit cost basis. This includes both the impact of dry dock costs and the related reduction of capacity days.

Drive double digit millions in savings in the first year alone.

This is just one of the many examples that support our relentless drive to improve our unit cost and leverage our scale.

Speaker Change: Excluding the impact of that we expect full year adjusted net cruise cost ex fuel would be approximately $154 essentially flat on a year over year basis.

All without impacting the guest experience I look forward to sharing many more tangible examples at our upcoming Investor day in May.

The combination of our more efficient cost structure and strong expected topline growth for the year is expected to drive the expansion of our full year adjusted EBITDA margins up by approximately 250 basis points.

Speaker Change: Note that the timing of this impact is expected to be weighted more to the first half of the year with approximately two thirds of our drydock days occurring in that period.

Now, let's take a look at our expectations for the first quarter.

Speaker Change: This year, we will continue to be relentless in our efforts to enhance margins and reduce costs. We are leaving no stone unturned and are continually identifying opportunities big and small across the business.

As I said earlier net yield is strong in the first quarter and is expected to increase approximately 15, 5%.

Adjusted net cruise cost ex fuel per capacity day is expected to be $165 or three or approximately 3% versus the same quarter last year.

Speaker Change: Our transformation office is running full speed ahead, and identifying operating inefficiencies and operating and opportunities for improvement across all areas of our operating platform in order to enhance the acceleration of our margin recovery and related cash generation.

As mentioned, we expect an increase in dry dock days in the quarter, which will have a $6 or 350 basis point impact on adjusted net cruise cost in Q1, excluding.

Speaker Change: One key focus area for us has been optimizing both our fuel consumption and Bunkering strategy.

Excluding that impact adjusted net cruise cost would be $159 essentially flat on a year over year basis, demonstrating our ability to offset the impact of inflation with our cost savings.

Speaker Change: Fuel costs are one of our largest expense line items and our teams have been hard at work at fostering partnerships with the likes of Dnb on de Carbonization and long term agreements with industry leader ABB to drive new opportunities to lower our fuel consumption per capacity day in.

As a result, adjusted EBITDA for the first quarter is expected to be approximately $450 million. Adjusted net income is expected to be approximately $50 million and adjusted EPS is expected to be approximately 12.

Speaker Change: In addition to the consumption side of the equation, we have made a big leap in the optimization of our fuel Bunkering strategy that allows us to maximize price leverage across the various ports and suppliers. We use during a season and in many cases, even during a single voyage.

Given the quarter is essentially complete we do not expect significant outperformance on the top line versus expectations as the vast majority of our inventory is already sold.

Any limited upside would result from our on onboard revenue generating performance during the month of March.

Speaker Change: We believe this will drive double digit millions in savings in the first year alone.

Moving onto our balance sheet and debt maturity profile on slide 14.

Speaker Change: This is just one of the many examples that support our relentless drive to improve our unit cost and leverage our scale.

In 2023, we generated almost $2 billion of net cash from operating activities, which included $500 million return of cash collateral and we repaid $1 9 billion of debt, including the full paydown of our $875 million revolving loan facility.

Speaker Change: All without impacting the guest experience I look forward to sharing many more tangible examples at our upcoming Investor day in May.

Speaker Change: The combination of our more efficient cost structure and strong expected topline growth for the year is expected to drive the expansion of our full year adjusted EBITDA margins up by approximately 250 basis points.

Most recently, we successfully negotiated a refinancing of our 650 million backstop stopped commitment from a secured to an unsecured basis and in connection with this refinancing the $250 million nine and three quarter secured notes due in 2028, our highest interest rate debt.

Speaker Change: Now, let's take a look at our expectations for the first quarter.

Speaker Change: As I said earlier net yield is strong in the first quarter and is expected to increase approximately 15, 5%.

Speaker Change: Adjusted net cruise cost ex fuel per capacity day is expected to be $165 or three or approximately 3% versus the same quarter last year.

It is expected to be repaid this.

This refinancing which is expected to close in early March will reduce interest expense improved leverage while also releasing all of the related collateral another important step forward in improving our balance sheet.

Speaker Change: As mentioned, we expect an increase in dry dock days in the quarter, which will have a $6 or 350 basis point impact on adjusted net cruise cost in Q1, excluding that impact adjusted net cruise cost would be $159 essentially flat on a year over year basis.

Moving to leverage on slide 15, the company has a solid track record of Delevering. The balance sheet from 2014 to 2019, we successfully de levered by over three turns we will continue to be opportunistic and look for further ways to strengthen our balance sheet. We are.

Speaker Change: <unk>, our ability to offset the impact of inflation with our cost savings.

Speaker Change: As a result, adjusted EBITDA for the first quarter is expected to be approximately $450 million. Adjusted net income is expected to be approximately $50 million and adjusted EPS is expected to be approximately 12.

Confident we can make meaningful progress on this front going forward.

At year end 'twenty, three with reported net leverage of approximately seven three times or approximately six and three quarter times when excluding the impact of ships delivered in the second half of the year. We continue to expect significant improvement in this metric over time, driven by our organic cash generation.

Speaker Change: Given the quarter is essentially complete we do not expect significant outperformance on the top line versus expectations as the vast majority of our inventory is already sold.

Speaker Change: Any limited upside would result from our on onboard revenue generating performance during the month of March.

And scheduled debt amortization payments.

Over the course of 2024, we expect to reduce our reported leverage by almost one five turns with sequential improvements in each quarter.

Speaker Change: Moving onto our balance sheet and debt maturity profile on slide 14.

Speaker Change: In 2023, we generated almost $2 billion of net cash from operating activities, which included $500 million return of cash collateral and we repaid $1 9 billion of debt, including the full paydown of our $875 million revolving loan facility.

This improvement does not assume any prepayment of debt apart from the aforementioned take out of our $250 million notes expected in early March.

Forward, we're refining a multiyear plan to further accelerate the reduction of leverage and Derisk, our balance sheet in order to drive shareholder value with that I'll turn it back to Harry for closing remarks.

Speaker Change: Most recently, we successfully negotiated a refinancing of our $650 million backstop stopped commitment from a secured to an unsecured basis and in connection with this refinancing the $250 million nine and three quarter secured notes due in 2028, our highest interest rate debt.

Well, thank you Mark truly encouraging results moving forward our entire team will be focused on the most important work.

First we will continue to execute on our near term priorities and capitalize on the strong demand from cruising from our target upscale demographic.

Speaker Change: Is expected to be repaid this.

Speaker Change: This refinancing which is expected to close in early March will reduce interest expense improved leverage while also releasing all of the related collateral another important step forward in improving our balance sheet.

Second we will build upon the progress we've already made with our ongoing margin enhancement efforts with further improvements in costs.

And finally, we will continue to improve our balance sheet and reduce leverage over time.

Speaker Change: Moving to leverage on slide 15, the company has a solid track record of Delevering. The balance sheet from 2014 to 2019, we successfully de levered by over three turns we will continue to be opportunistic and look for further ways to strengthen our balance sheet. We are.

In closing I couldnt be more excited about the year ahead I am confident that we have the right resources in place to capitalize on the strong demand environment and deliver exceptional vacation experiences for our guests across all three of our brands execute on our operational and financial goals for 2024.

Speaker Change: Confident we can make meaningful progress on this front going forward.

Speaker Change: At year end 'twenty, three with reported net leverage of approximately seven three times or approximately six and three quarter times when excluding the impact of ships delivered in the second half of the year. We continue to expect significant improvement in this metric over time, driven by our organic cash generation.

And ultimately deliver long term profitable growth and shareholder value.

I look forward to sharing the results of our strategic assessment of our business and defining our vision for the future of the company, including long term financial targets at our Investor Day. This coming may with that I'm happy to turn it over to the operator for questions.

Speaker Change: And scheduled debt amortization payments.

Speaker Change: Over the course of 2024, we expect to reduce our reported leverage by almost one five turns with sequential improvements in each quarter.

Thank you if you have a question at this time. Please press Star then one on your Touchtone phone.

In order to get as many people through the queue. Please limit your time to one question. If your question has been answered or you wish to remove yourself from the queue. Please press star two.

Speaker Change: This improvement does not assume any prepayment of debt apart from the aforementioned take out of our $250 million notes expected in early March.

Our first question is coming from brands mature of Barclays. Please go ahead.

Speaker Change: Going forward, we are refining a multiyear plan to further accelerate the reduction of leverage and Derisk, our balance sheet in order to drive shareholder value with that I'll turn it back to Harry for closing remarks.

Okay.

Hey, good morning, everybody. Thanks for taking my question.

Grant.

Good morning, So so looking at your <unk> guidance and the full year net yield guidance.

Well, thank you Mark truly encouraging results moving forward our entire team will be focused on the most important work.

There obviously is a pretty.

Theres a pretty big.

The seller is sort of a more conservative implied growth.

Speaker Change: First we will continue to execute on our near term priorities and capitalize on the strong demand from cruising from our target upscale demographic second we will build upon the progress we've already made with our ongoing margin enhancement efforts with further improvements in costs.

Back in the sort of <unk> <unk> net yield.

But it's not out of line with your longer term algo on that <unk> I guess the question is when would you be willing to Margaret we're.

Are you willing to sort of quantify the disruption from the middle East and the repositioning of those ships.

Speaker Change: And finally, we will continue to improve our balance sheet and reduce leverage over time.

And sort of give us a sense for what the core business outside of those disruptions, how you see that sort of growing in the back half of the year.

Speaker Change: In closing I couldnt be more excited about the year ahead I am confident that we have the right resources in place to capitalize on the strong demand environment and deliver exceptional vacation experiences for our guests across all three of our brands execute on our operational and financial goals for 2024.

Yes.

Thank you Brant again for that so I do think you have the right thought pattern Q2 to Q4 are in line with our long term expressed goals, where we looked at low to mid single digit yield growth of course measured capacity growth strong cost controls all leading to outsized.

Speaker Change: And ultimately.

Speaker Change: Deliver long term profitable growth and shareholder value.

EBITDA and margin performances, which should allow us to continue to strengthen our balance sheet.

Speaker Change: I look forward to sharing the results of our strategic assessment of our business and defining our vision for the future of the company, including long term financial targets at our Investor Day. This coming may with that I'm happy to turn it over to the operator for questions.

I think you are right that that's the situation.

In the wed see Suez Canal I had had some impact on our Oceania and regent brands not an NCL NCL is extraordinarily strong in all four quarters.

Speaker Change: Thank you if you have a question at this time. Please press Star then one on your Touchtone phone.

As we see the booking patterns now, but for the Oceania and regent perspective, since it was 8% and 12% of their respective capacities. We would expect that to have an impact of about one to two points on yield in the back three quarters of the year what that means.

In order to get as many people through the queue. Please limit your time to one question.

Speaker Change: If your question has been answered or you wish to remove yourself from the queue. Please press star two.

Speaker Change: Our first question is coming from branch mature of Barclays. Please go ahead.

That's taken into consideration in the guidance, we provided so we stand by our numbers and what that means is we should have a market test.

Speaker Change: Okay.

Branch Mature: Hey, good morning, everybody. Thanks for taking my question.

A tailwind in 2025 windows.

Branch Mature: Grant.

Branch Mature: Good morning, So so looking at your <unk> guidance and the full year net yield guidance.

When we lap those items.

Okay.

Branch Mature: There obviously is a pretty.

That's super helpful. That's great and then as a follow up.

Branch Mature: That's a pretty big.

Branch Mature: The seller is sort of a more conservative implied growth in the back in the sort of two to two <unk> net yield.

Taking the middle East disruption direct disruption out of it and just thinking about core.

Europe sailings core.

Branch Mature: But it's not out of line with your longer term algo on that <unk> I guess the question is when would you be willing to Margaret.

Norwegian branded Europe, Sailings Americans traveling to Europe.

That's an area that people that some of those have been a little bit more concerned about.

Maybe you can talk about the evolution of the bookings patterns, you're seeing in that specific.

Branch Mature: Are you willing to sort of quantify the disruption from the middle East and the repositioning of those ships.

That specific segment and should we be taking that into account when we think about the cadence for the for.

Branch Mature: Give us a sense for what the core business outside of those disruptions, how you see that sort of growing in the back half of the year.

For the <unk>.

So.

We talked last year, a little bit about some of the challenges we had coming out of COVID-19 with some of our itineraries that require a slightly longer booking period like Europe, and I think that had impacted some of our results in Q3 or Q4 of last year I'm.

Branch Mature: Yes.

Margaret: Thank you Brant again for that so I do think you have the right thought pattern Q2 to Q4 are in line with our long term expressed goals, where we looked at low to mid single digit yield growth of course measured capacity growth strong cost controls all leading to outsized.

Im sorry, Q2, or Q3 of last year My apologies when we gave the that the results in our in our earnings calls.

Margaret: EBITDA and margin performances, which should allow us to continue to strengthen our balance sheet.

We learned from that and we are absolutely extended our booking curve for Europe, primarily for Americans going into the 2024 season. So we're very happy with what we're seeing across all three brands.

Margaret: You are right that the situation.

Margaret: In the Red Sea Suez Canal I had had some impact on our Oceania and regent brands not an NCL NCL is extraordinarily strong in all four quarters.

The exception of those crews as they had previously been going to Israel and the middle East on the Oceania and regent brands.

Margaret: As we see the booking patterns now, but for the Oceania and regent perspective, since it was 8% and 12% of their respective capacities. We would expect that to have an impact of about one to two points on yield in the back three quarters of the year what that means.

Great. Thanks, everyone.

Thank you Brent.

Thank you. The next question is coming from Andrew <unk> of Bank of America. Please go ahead.

Hey, good morning, everyone.

How are you I guess I just wanted to think about the visibility.

Margaret: All of that's taken into consideration in the guidance. We provided so we stand by our numbers and what that means is we should have a market test.

First half of 'twenty for maybe for the full year, just curious how kind of your booking curve has changed over the years.

Margaret: Tailwind in 2025 Windows.

I think Marc spoke about.

<unk>, obviously being fully booked here or kind of where do you stand in terms of <unk> being booked at this point and how should we think about where you stand for full year 'twenty four based on your budgeting capacity.

Margaret: When we lap those items.

Margaret: Okay.

Speaker Change: That's super helpful. That's great and then as a follow up.

Speaker Change: Taking the middle East disruption direct disruption out of it and just thinking about core.

Well, thank you Andrew for that question.

We don't give specific guidance on our book position for each quarter, yet Mark did say we are entirely booked for Q1, because we're sitting here on February late February February 27, So we're not going to get any more meaningful bookings for Q1, but for the other three quarters, we continue to be.

Speaker Change: Europe sailings core Norwegian.

Speaker Change: Norwegian branded Europe's ceilings Americans traveling to Europe.

Speaker Change: That's an area that people that some of those have been a little bit more concerned about.

Speaker Change: Maybe talk about the evolution.

Speaker Change: The bookings patterns, you're seeing in that specific that specific segment and should we be taking that into account when we think about the cadence for that.

The exception of those Red Sea.

Middle East cruises, which I referred to before in record booked positions. We're referring to is all time high book positions across the three quarters and especially on the NCL brand.

Speaker Change: For the <unk>.

Speaker Change: So.

Speaker Change: We talked last year, a little bit about some of the challenges we had coming out of COVID-19 with some of our itineraries that require a slightly longer booking period like Europe, and I think that had impacted some of our results in Q3 or Q4 of last year.

Yeah.

Okay.

Mark just on the balance sheet.

Obviously, youre addressing the expense of 2028 maturity.

Speaker Change: Sorry, Q2, or Q3 of last year My apologies.

I thought you couldnt prepaid debt before all the deferred amateurs amortization was done wrong about that and I guess.

Speaker Change: When we gave the.

Speaker Change: The results in our in our earnings calls.

Speaker Change: We learned from that and we are absolutely extended our booking curve for Europe, primarily for Americans going into the 2024 season. So we're very happy with what we're seeing across all three brands with the exception of those cruises that had previously been going to Israel and the middle East on the Oceania and regent brands.

Is there any other debt.

Due between now and say 2028, but you can also kind of proactively pay down I know, it's not in your assumptions, but just curious if it's possible or is it just too costly to do at this point. Thanks, Good morning, Andrew Youre right.

Nicholas.

We do not have the capability to technique.

Technically prepay debt until we have all of our deferred amortization cut up however, with this particular transaction. It is a it is deemed a refinancing and as such we do have the ability to take out that portion of the debt.

Speaker Change: Great. Thanks, everyone.

Speaker Change: Thank you Brent.

Speaker Change: Thank you. The next question is coming from Andrew <unk> of Bank of America. Please go ahead.

Andrew: Hey, good morning, everyone.

As we look forward over the course of the remainder of the year of 'twenty. Four we do have some notes that are maturing in December our 565, three and five eights notes and which are very a very cost effective.

Andrew: How are you I guess I just wanted to think about the visibility into that.

Andrew: First half of 'twenty for maybe for the full year, just curious how kind of your booking curve has changed over the years.

Andrew: I think Marc spoke about.

Andrew: <unk>, obviously being fully booked here or kind of where do you stand in terms of <unk> being booked at this point and how should we think about where you stand for full year 'twenty four based on your budget in capacity.

But we will be looking to address those between now and sometime obviously well before the end of the year and then out outside of that a little bit too early for us to be thinking about or giving guidance in terms of what we may or may not take out, but I think the point to be made here really is that we are now starting to actively address the.

Speaker Change: Well, thank you Andrew for that question.

Speaker Change: We don't give specific guidance on our book position for each quarter, yet Mark did say we are entirely booked for Q1, because we are sitting here on February late February February 27, So we're not going to get any more meaningful bookings for Q1, but for the other three quarters, we continue to be with the exception of those red.

Our balance sheet and address the leverage and we've always said this will be.

A little bit of a chip away each year, and we're happy that coming out of the gate for 2024, we've been able to start that so we're we're very excited about that it's definitely.

And middle East cruises, which I referred to before in record booked positions. We're referring to is all time high book positions across the three quarters and especially on the NCL brand.

Solid path to and our journey.

Great. Thanks, Mark.

Thank you. The next question is coming from Steve Wyszynski of Stifel. Please go ahead.

Speaker Change: Okay.

Speaker Change: Just on the balance sheet.

Hey, guys good morning.

Speaker Change: Obviously, youre addressing the expense of 2028 maturity.

So how are you Mark first off congratulations on the on the cost improvement it's been pretty impressive.

Speaker Change: I thought you couldnt prepaid debt before all the deferred amateurs and modernization.

Speaker Change: <unk> was done wrong about that and I guess is.

Sure.

We move through this year, and we think about cost than for the out years.

Speaker Change: Is there any other debt due between now and say 2028.

I mean, how do you guys think about cost growth or lack of cost growth in those.

Speaker Change: Can also proactively pay down I know, it's not in your assumptions, but just curious if it's possible or is it just too costly to do at this point. Thanks, Good morning, Andrew.

As we move as we move past 2024.

Assume it's going to be tough to keep.

Costs in that flattish range. So just maybe some color around your long term cost outlook moving forward would be would be helpful. Thanks.

Speaker Change: Youre right technically we do not have the capability to.

Speaker Change: Technically prepay debt until we have all of our deferred amortization cut up however, with this particular transaction. It is a it is deemed a refinancing and as such we do have the ability to take out that portion of the debt.

So thank you see for those kind words on cost control, it's something that we're extraordinarily proud of and as Mark mentioned in his prepared comments represents over 100 million dollar improvement versus versus core inflation listen.

Speaker Change: As we look forward over the course of the remainder of the year of 'twenty. Four we do have some notes that are maturing in December our 565, three and five eights notes and which are very a very cost effective.

We're not here to give specific guidance, yet on 25% and 26, so we won't we'll do that in.

When we gave our long term financial metric outlook at our Investor day in May, but I will say that this goal of being able to grow cost at less than the rate of inflation is certainly something that we inspire to do on a long term basis. So I know thats not exactly what youre looking for but hopefully gives you some indication of our direction.

Speaker Change: But we will be looking to address those between now and sometime obviously well before the end of the year and then out outside of that a little bit too early for us to be thinking about or giving guidance in terms of what we may or may not take out, but I think the point to be made here really is that we are now starting to actively address the.

And Steve to just further highlight what Harry is saying is I want to make it very clear we've been laser focused on this.

We are looking at all different ways, how we can improve and more importantly, improve and get more efficient to leverage our scale.

Speaker Change: Our balance sheet and address the leverage and we've always said this will be a.

Speaker Change: A little bit of a chip away each year, and we're happy that coming out of the gate for 2024, we've been able to start that so we're we're very excited about that it's definitely.

We've said time and again this is not a onetime exercise. This is what we've actually established a transformation office, which I imagine will become something like a continuous improvement office, but things, we're setting up performance dashboards I talked about some of our bunkering strategies, there's a lot of ways, where we can improve the or.

Speaker Change: Solid path to and our journey.

Speaker Change: Great. Thanks, Mark.

Thank you. The next question is coming from Steve <unk> of Stifel. Please go ahead.

All under underlying fundamental cost structure, all without impacting the guest experience I talked about our fuel I talked about our bunkering strategy food waste.

Steve: Hey, guys good morning.

Steve: So heavier mark first off congratulations on the on the cost improvement it's been pretty impressive.

Food waste is just a big area that when you start really monitoring the waste side of it has significant upstream.

Steve: Sure.

Steve: We move through this year, and we think about costs than for the out years.

Steve: I mean, how do you guys think about cost growth or lack of cost growth in those.

Benefits when you think about the waste side of it. So again, we are we're focused on this we got the message we've been taking the serious and we believe there is multiyear benefits here, but we look forward to certainly sharing more details around that in our May investor day.

Steve: As we move as we move past 2024, I mean, I would assume it's going to be tough to keep.

Steve: Costs in that flattish range. So just maybe some color around your long term cost outlook moving forward would be would be helpful. Thanks.

Okay got you and then second question.

Speaker Change: So thank you see for those kind words on cost control, it's something that we're extraordinarily proud of and as Mark mentioned in his prepared comments represents over 100 million dollar improvement versus versus core inflation listen.

You mentioned in the release that pricing and bookings are.

Our higher for the Norwegian brand for all four quarters of this year, just just wonder if you can give a little more color about what youre seeing in terms of what kind of price action you can take for more second half of this year into 2025, and then maybe also a little bit of color around the the luxury brands, which obviously are being somewhat impacted by.

Speaker Change: We're not here to give specific guidance yet on 25% to 26, So we won't we'll do that in.

Speaker Change: We gave our long term financial metric outlook at our Investor day in May, but I will say that this goal of being able to grow cost at less than the rate of inflation is certainly something that we inspire to do on a long term basis. So I know thats not exactly what youre looking for but hopefully gives you some indication of our direction.

What's going on in the med, but any color there would be helpful as well thanks.

Yeah, so listen on the NCL brand, we have very robust and sophisticated revenue management systems and when we see demand as it is today, we take price action or promotional action, which is sort of an opaque way to take price action in order to generate the highest yields for the company.

Speaker Change: And Steve to just further highlight what Harry is saying is I want to make it very clear we've been laser focused on this.

Steve: We are looking at all different ways, how we can improve and more importantly, improve and get more efficient to leverage our scale.

And we're doing that so nothing has changed in our pork velocity from that perspective, when demand is good and we take advantage of it and I think it's reflected in our oversized gains for Q1 and in a reasonably strong gains for Q2 to Q4, especially in the <unk> brand.

Steve: We've said time and again this is not a onetime exercise. This is what we've actually established a transformation office, which I imagine will become something like a continuous improvement office, but things, we're setting up performance dashboards I talked about some of our bunkering strategies, there's a lot of ways, where we can improve.

Oceana region.

Wanted to be clear there is nothing fundamentally wrong with the model that the luxury space, we see demand for luxury being very high but when you have to take 60 or 70 days out of service on two ships out of our regularly small fleet for two brand. It does have an outsized impact on the ability to grow yields.

Steve: Overall under underlying fundamental cost structure, all without impacting the guest experience I talked about our fuel I talked about our bunkering strategy food waste.

Steve: Food waste is just a big area that when you start really monitoring the waste side of it has significant upstream burner.

That those two brands, we hope that to be a one time thing.

All the new voyages for Oceania and regent.

Steve: Benefits when you think about the waste side of it. So again, we are we're focused on this we got the message we've been taking the serious and we believe theres multiyear benefits here, but we look forward to certainly sharing more details around that in our May investor day.

With the new deployment already on sale and starting to fill will hold yet because we are filling them closer in at lower pricing than we normally would've gotten but it's just limited to those areas. We are very happy with their performance on Oceania and regent in the other regions of the world.

Speaker Change: Okay got you and then second question.

And Steve in terms of the Norwegian brand not apart from our sophisticated revenue management systems.

Speaker Change: You mentioned in the release that pricing and bookings are.

Speaker Change: Our higher for the Norwegian brand for all four quarters of this year, just just wonder if you can give a little more color about what youre seeing in terms of what kind of price action you can take for more second half of this year into 2025, and then maybe also a little bit of color around the the luxury brands, which obviously are being somewhat impacted by.

Not forget our models around onboard revenue we are in a continuous improvement mode in terms of.

Expanding our presale of onboard revenue and getting more share of the wallet over a longer period of time from the point of customer enters our ecosystem.

We continue to refine that we continue to look at that and that plays a key part as we going forward as we look at our revenue opportunity. So thats something we are we are very very focused on.

Speaker Change: What's going on in the med, but any color there would be helpful as well thanks.

Speaker Change: Yeah, so listen on.

Speaker Change: The NCL brand, we have very robust and sophisticated revenue management systems and when we see demand as it is today, we take price action or promotional action, which is sort of an opaque way to take price action in order to generate the highest yields for the company.

Okay, great. Thanks, guys appreciate it.

Thank you. The next question is coming from Dan Pulitzer of Wells Fargo. Please go ahead.

Hey, good morning, everyone and thanks for taking my question.

I just wanted to dive a little bit deeper just make sure I'm understanding your comments in terms of how youre thinking about the yield growth for this year, so the middle East.

Speaker Change: And we're doing that so nothing has changed in our pork velocity from that perspective when demand is good we take advantage of it and I think it's reflected in our oversights gains for Q1, and a reasonably strong gains for Q2 to Q4, especially in the NCL brand.

Sounds like the impact of the largest in the second quarter and fourth quarter. So is it fair to assume the third quarter in terms of the yield growth first quarter third quarter, and then <unk> <unk> about the same in terms of greatest policed.

Speaker Change: Oceana region.

Speaker Change: Wanted to be clear, there's nothing fundamentally wrong with the model that the luxury space, we see demand for luxury being very high but when you have to take 60 or 70 days out of service on two ships out of our regularly small fleet for two brand. It does have an outsized impact on the ability to grow yield.

Yes, Dan certainly.

When you look at the impact of the Middle East on the on the ONR brands.

It's definitely impacting us more in the second and fourth quarter as mentioned in our results. So I think as you look across the three quarters as we said in our prepared remarks, youre going to see more of a normalized consistent yield growth. There's always some puts and takes within each quarter, but I wouldn't expect any significant lumpiness necessarily so to speak.

Speaker Change: That those two brands, we hope that to be a one time thing.

Speaker Change: All the new voyages for Oceania and regent.

Speaker Change: With the new deployment already on sale and starting to fill will hold yet because we are filling them closer in at lower pricing than we normally would've gotten but it's just limited to those areas. We are very happy with their performance on Oceania and regent in the other regions of the world.

Across the remaining three quarters.

Got it and then just for my follow up.

Maybe an add on to Brad's question, but as we think about that second quarter to fourth quarter and kind of getting back to a more normal Aldo I think Harry you mentioned geopolitical was maybe one or two points.

Speaker Change: And study in terms of the Norwegian brand not apart from our our sophisticated revenue management systems.

Of a headwind, but I think <unk> also been pretty adamant that you guys were going to guide a fairly conservative outlook for the year. So I guess as we think about that that the <unk> through fourth quarter outlook to what degree are you baking in conservatism in any impact from itinerary mix shifts.

Speaker Change: Not forget our models around onboard revenue we are in a continuous improvement mode in terms of <unk>.

Speaker Change: Expanding our presale of onboard revenue and getting more share of the wallet over a longer period of time from the point of customer enters our ecosystem and we continue to refine that we continue to look at that and that plays a key part as we going forward as we look at our revenue opportunity. So thats something we are we are very.

I think if we told you what level of conservatism, you're baking into our guidance. We can give you a new guidance.

So.

But suffice to say that we are providing the numbers that we're confident in.

We have.

Speaker Change: Very focused on.

Of course incredible visibility.

Speaker Change: Okay, great. Thanks, guys appreciate it.

Future book positions so.

Speaker Change: Thank you. The next question is coming from Dan <unk> of Wells Fargo. Please go ahead.

I'm not saying, there's no upside there, but I certainly wouldn't expect huge upside to the numbers that we provided we're going to manage our business to the best of our abilities and we're providing the numbers that we are confident that we can hit.

Dan: Hey, good morning, everyone and thanks for taking my question.

Dan: I just wanted to dive a little bit deeper just make sure I'm understanding your comments in terms of how youre thinking about the yield growth for this year. So the middle east it sounds like the impact of the largest in the second quarter and fourth quarter. So is it fair to assume the third quarter.

Understood. Thank you so much.

Thank you. The next question is coming from James Hardiman of Citi. Please go ahead.

Dan: The yield growth first quarter third quarter, and then <unk> <unk> about the same in terms of greatest leased.

Hey, good morning, Thanks for taking my call. So.

Speaker Change: Yes, Dan certainly when.

I don't want to belabor the point, but.

Speaker Change: When you look at the impact of the Middle East on the on the ONR brands.

Sort of built probably in between.

Do it anyway.

Okay.

Speaker Change: It's definitely impacting us more in the second and fourth quarter as mentioned in our results. So I think as you look across the three quarters as we said in our prepared remarks, youre going to see more of a normalized consistent yield growth. There is always some puts and takes within each quarter, but I wouldn't expect any significant lumpiness necessarily so to speak.

The economy between <unk> and the rest of the year on the yield front, obviously some of that is the occupancy rate.

But.

If I think about.

I guess maybe.

800 to 900 basis point detail from <unk> to the rest of the year, how much can be explained by mix right I mean, you've got the slide.

Speaker Change: Across the remaining three quarters.

Europe going from.

Speaker Change: Got it and then just for my follow up.

Zero percent to 34, and <unk> 51, while the Caribbean is coming down.

Speaker Change: Maybe an add on to Brad's question, but as we think about that second quarter to fourth quarter and kind of getting back to a more normal Aldo I think Harry you mentioned geopolitical was maybe one or two points.

58 to two.

<unk>.

Obviously Caribbean pricing as a lot more robust than what we're seeing out of Europe is there any way to quantify.

Speaker Change: Of a headwind, but I think you've also been pretty adamant that you guys were going to guide a fairly conservative outlook for the year. So I guess as we think about that that the <unk> through fourth quarter outlook to what degree you're baking in conservatism in any impact from itinerary mix shifts.

How much of that detail just them from that.

Is there a way to think about sort of.

How youre seeing like for like pricing in North America and Europe.

We get past, the first quarter and into the rest of the year.

James.

I. Appreciate the question is always listen I don't think there's really much of a mix issue here from the perspective that our deployment in 2024 is not that much different than our deployment in 2023 with the exception of a couple of dig NCL ships that we moved out of Europe, a month or two early.

Speaker Change: I think if we told you what level of conservatism, you're baking into our guidance I would be giving you a new guidance.

Speaker Change: So.

Speaker Change: Suffice to say that we are providing the numbers that we're confident in.

Speaker Change: We have.

Speaker Change: Of course incredible visibility.

And in early Q4, so I wouldn't necessarily say, it's a Q4 issue I think there is two primary issues that we've discussed which I'm happy to articulate.

Speaker Change: Future book positions so.

Speaker Change: I'm not saying there is no upside there, but I certainly wouldn't expect huge upside to the numbers that we provided we're going to manage our business to the best of our abilities and we're providing the numbers that we are confident that we can hit.

Q1 of 'twenty, three was particularly weak coming out of Covid. There was short booking curve there were disruptions, especially on the Oceania and regent brand with our itineraries that visited.

Understood. Thank you so much.

Asia, Australia, both of those brands have a world cruise, which was very difficult to sell given the time commitment to get tapped to make and the fact that they wouldn't have to make those decisions in early 'twenty two.

Speaker Change: Thank you. The next question is coming from James Hardiman of Citi. Please go ahead.

James Hardiman: Hey, good morning, Thanks for taking my call. So.

James Hardiman: I don't want to belabor the point, but.

When cobalt was still alive and well so we're coming off a reasonably weak comp in Q1 that being said, we're still very very happy that we were able to get Q1 of 'twenty four back to where it is with a 60% growth year over year. So obviously there is some cement in Q1 of this year not just the weakness of last year I think the other three quarters. The only issue that we are.

James Hardiman: Sort of better product mix between all.

Speaker Change: Do it anyway.

Speaker Change: Okay.

Speaker Change: The economy between <unk> and the rest of the year on the yield front, obviously some of that is if occupancy right.

Speaker Change: But if I think about.

Speaker Change: I guess, maybe 800 to 900 basis point detail from <unk> to the rest of the year how much can be explained by mix right. I mean, you've got the slide that so Europe going from.

Seen when we look across the brands across the quarters across the geographic areas.

It is simply this issue with the Redskins, Suez, which I won't elaborate because I've talked to it before we believe we have the right mix of Caribbean product.

Speaker Change: Zero percent to 34, and <unk> 51, while the Caribbean coming down from 58.

Speaker Change: 2018.

For our guests set over the summer we do have ships in the Caribbean. We don't go to zero percent capacity, but we have seen higher returns.

Speaker Change: Obviously Caribbean pricing as a lot more robust than what we're seeing out of Europe is there any way to quantify.

Speaker Change: How much of that detail just stems from that.

Out of Europe, and Alaska, and Bermuda than we do out of the Caribbean, which is why we positioned our ships. There. So it is possible that the growth in the Caribbean could have been more but the end result would have been less.

Speaker Change: Is there a way to think about sort of.

Speaker Change: How youre seeing like for like pricing in North America and Europe.

Speaker Change: We get past, the first quarter and into the rest of the year.

Pete what I said in my prepared remarks, we still have the highest net yields within the competitive set so maybe we would have grown more on a like for like basis, but it would have resulted in a lower overall number if we positioned more of our capacity in the Caribbean.

Speaker Change: Games.

Speaker Change: I. Appreciate the question is always listen I don't think there's really much of a mix issue here from the perspective that our deployment in 2024 is not that much different than our deployment in 2023 with the exception of a couple of dig NCL ships that we moved out of Europe, a month or two early.

And James just keep in mind when you think about 2024, obviously, we're getting the benefit in Q1 versus Q1 of 'twenty three.

Speaker Change: And in early Q4, so I wouldn't necessarily say, it's a Q4 issue I think there is two primary issues that we've discussed which I'm happy to articulate.

And outsized growth algo because of the aforementioned factors, but then you roll that forward and you look at Q4 of 2023.

Speaker Change: Q1 of 'twenty, three was particularly weak coming out of Covid. There was short booking curve there were disruptions, especially on the Oceania and regent brand with our itineraries that visited.

<unk>, three where we had roughly 859% yield growth, we're going to be lapping over that in the fourth quarter of this year. So there is a little bit of.

Of lapping issues going on but I think as Harry said, the underlying strength and pricing of the business is looking good across all sectors and all geopolitical areas or I'm, sorry, all geographical areas apart from the middle C and the Red Sea area.

Speaker Change: Asia, Australia, both of those brands have a world cruise, which was very difficult to sell given the the time commitment that get passed to make and the fact that they wouldn't have to make those decisions in early 'twenty two.

Speaker Change: When Covid was still alive and well so we're coming off a reasonably weak comp in Q1 that being said, we're still very very happy that we were able to get Q1 of 'twenty four back to where it is with a 60% growth year over year. So obviously theres. Some cement in Q1 of this year not just the weakness of last year I think the other three quarters. The only issue that we are.

Got it and maybe just to follow up there to that geographical point. So if I just think about.

Five and a half call it.

Yield growth for the year.

I guess, that's probably if we just thought about pricing right.

Occupancy maybe for <unk> call it.

Speaker Change: Seen when we look across the brands across the quarters across the geographic areas is simply this issue with the Redskins, Suez, which I won't elaborate because I've talked to it before we believe we have the right mix of Caribbean product.

Is there ex the Red sea in the Middle East impact is there a meaningful difference in terms of how we're thinking we should be thinking about.

Pricing growth for Europe versus pricing growth for the Caribbean.

Yes, I would think but maybe not.

Speaker Change: For our guests set over the summer we do have ships in the Caribbean. We don't go to zero percent capacity, but we have seen higher returns.

Don't think theres any meaningful difference between the markets.

James I think again, we're seeing strong price pricing at all of the all of those markets and other other markets. So obviously you have a total.

Speaker Change: Out of Europe, and Alaska, and Bermuda than we do out of the Caribbean, which is why we positioned our ships. There. So it's possible that the growth in the Caribbean could have been more but the end result would have been less I repeat what I said in my prepared remarks, we still have the highest net yields within the competitive set so maybe we would've grown.

Difference in net per diem, depending on the area of operation, but in terms of growth, we're not seeing any sort of significant differences between markets.

Got it very helpful. Thanks, guys and good luck. Thank.

Thank you thanks James.

Speaker Change: More on a like for like basis, but it would have resulted in a lower overall number if we positioned more of our capacity in the Caribbean.

Thank you. The next question is coming from Vince <unk> of Cleveland Research. Please go ahead.

Thanks for taking my question.

Speaker Change: And James just keep in mind when you think about 2024, obviously, we're getting the benefit in Q1 versus Q1 of 'twenty three.

Wanted to dig into the margin a little bit helpful color on I think close to two five points of improvement that gets you back to about the mid twenties, but there's still a handful of points behind where you were pre COVID-19 and maybe you could help walk through some of those moving pieces I think selling more air is probably just headwinds.

Speaker Change: And outsize growth algo because of the aforementioned factors, but then you roll that forward and you look at Q4 of 2023.

Speaker Change: <unk>, three where we had roughly 859% yield growth, we're going to be lapping over that in the fourth quarter of this year. So there is a little bit of.

It's more of a pass through I think fuel and there's probably a point or so.

Speaker Change: Of lapping issues going on but I think as Harry said, the underlying strength and pricing of the business is looking good across all sectors and all geopolitical areas I'm, sorry, all geographical areas apart from the middle C and the Red Sea area.

Headwind, but just help us kind of understand and bridge.

Margin differential versus pre Covid times, and maybe your confidence on the path back to getting close to something near 30% overtime.

Yes, Thanks, Vince I, while I don't want to give too many details because I think we're going to give us some significant <unk>.

Speaker Change: Got it and maybe just to follow up there to that geographical point. So if I just think about.

Speaker Change: Five and a half call it.

Visibility at our May Investor day, but look the bottom line is really that we have to continue to improve on our pricing. That's key number one but it all it all comes down to leveraging our cost base and our unit cost and leveraging that scale.

Speaker Change: Yield growth for the year.

Speaker Change: I guess, that's probably if we just thought about pricing right.

Speaker Change: Occupancy maybe for <unk> call it.

Speaker Change: Is there ex the Red sea in the Middle East impact is there a meaningful difference in terms of how we're thinking we should be thinking about.

We've made significant progress what I would say in the last 18 months to 20 months. When we really first started addressing this back in the.

Speaker Change: Pricing growth for Europe versus pricing growth for the Caribbean.

Second half of 2022.

Speaker Change: Yes.

So we're going to continue to look at that.

Speaker Change: Okay.

Speaker Change: I don't think theres any meaningful difference between the markets.

We have to improve when you think about overall costs from 2019, when we look at it I think we were somewhere about a 3% CAGR over 2019 through 2020 for guidance.

Speaker Change: <unk> I think we're again, we're seeing strong price pricing at all of the all of those markets and other other markets. So obviously you have a total.

Speaker Change: Different said net per diem, depending on the area of operation, but in terms of growth, we're not seeing any sort of significant deep differences between markets.

We think we can definitely improve on that.

Obviously, there is some incremental drag from fuel given new regulations versus 19% and 24 and so on but we have to do a better job of leveraging our scale. We're doing that as I've said, we've been able to confidently mitigate over $100 million of expected inflation in 2024, it's no.

Speaker Change: Got it very helpful. Thanks, guys and good luck. Thanks.

Speaker Change: Thank you thanks James.

Speaker Change: Thank you. The next question is coming from Vince <unk> of Cleveland Research. Please go ahead.

Vince: Thanks for taking my question.

Small feat that I want to reiterate when we look at our cost base, excluding the dry dock and the reduced capacity days, our cost base is flat expected to be flat for 2024, So I want to make sure everybody understands that it doesn't end here.

Vince: Wanted to dig into the margin a little bit helpful color on I think close to two five points of improvement that gets you back to about the mid twenties, but you are still a handful of points behind where you were pre COVID-19 and maybe you could help walk through some of those moving pieces I think selling more air is probably just headwind.

We're looking at everything and we think theres continuous opportunity there. So we're going to chip away at that and I think in a combination between against strong topline growth.

Vince: It's more of a pass through.

There's probably a point or so headwind, but just help us kind of understand and bridge.

And moderate cost growth or improvement, we think definitely there is opportunity for significant margin expansion over time.

Vince: Margin differential versus pre Covid times.

Vince: Confidence on our path back to getting close to something near 30% overtime, yes.

Just to add to that I know, we talk a lot about metrics mtc, excluding fuel our NCC, excluding fuel in drydock, but I want to emphasize that fuel expense is not something we ignore mark talked about it extensively in his prepared remarks, and our goal is to find ways to reduce consumption.

Speaker Change: Thanks, Spence I, while I don't want to give too many details because I think we're going to give us some significant.

Spence: Visibility at our May Investor day, but look the bottom line is really that we have to continue to improve on our pricing. That's key number one but it all it all comes down to leveraging our cost base and our unit cost and leveraging that scale.

Ultimately obviously, that's that's that's great for our sustainability goals, but it's also great for our overall profitability. So I don't want to despite the fact that we don't necessarily report on that metric extensively I want to assure everyone that that is one of the main focus is I mean, we spend something like $700 million a year on fuel and Mark talked about the <unk>.

Spence: We've made significant progress what I would say in the last 18 months to 20 months. When we really first started addressing this back in the.

Spence: Second half of 2022.

Spence: So we're going to continue to look at that.

<unk> multi multimillion dollar things that we're going to do to improve flow from bump bunkering to better monitoring and things like that and those numbers are real and of course are reflected in our EBITDA numbers.

Spence: We have to improve when you think about overall cost from 2019, when we look at it I think we were somewhere about a 3% CAGR over 2019 through 2024 guidance. So we think we can definitely improve on that.

Thanks, and then maybe one more for thinking about this kind of a normalized yield growth to Q3 of <unk>, maybe walk us through how you envision onboard versus ticket versus occupancy gains kind of contributing to that growth benefits equal. If one is a bigger driver and any additional color there.

Spence: Obviously, there is some incremental drag from fuel given new regulations versus <unk> 19 in 2004, and so on but we have to do a better job of leveraging our scale. We're doing that as I've said, we've been able to confidently mitigate over $100 million of expected inflation in 2024, it's no.

Be helpful. Yeah look I onboard revenue is as always a significant generator of our over our overall revenue profile. When you look at the <unk>.

Spence: Small feat that I want to reiterate when we look at our cost base, excluding the dry dock and the reduced capacity days, our cost basis flat expected to be flat for 2024, So I want to make sure everybody understands that it doesn't end here.

Quarters, two through four yes, I think we're getting probably what about a point and a half of occupancy benefit in those three quarters and the rest is really coming on the back on the back of pricing so onboard as an important component.

Spence: We're looking at everything and we think theres continuous opportunity there. So we're going to chip away at that and I think in a combination between against strong topline growth.

It always is and it always has been will continue to improve on that our goal again is to get more of that wallet share well prior to the customer ever stepping on foot any one of our vessels and we continue to improve on that end.

Spence: And moderate cost growth or improvement, we think definitely there's opportunity for significant margin expansion over time.

But I don't think theres going to I don't think were expecting any meaningful outsized growth from that particular revenue stream versus necessarily our core ticket price across the three brands. Don I think we have time for one more question. Please.

Speaker Change: Just to add to that I know, we talk a lot about metrics mtc, excluding fuel our NCC, excluding fuel in drydock, but I want to emphasize that fuel expense is not something we ignore mark talked about it extensively in his prepared remarks, and our goal is to find ways to reduce consumption.

Thank you. Our final question today is coming from Connor Cunningham of Melius Research. Please go ahead.

Speaker Change: Ultimately obviously, that's that's that's great for sustainability goals, but it's also great for our overall profitability. So I don't want to despite the fact that we don't necessarily report on that metric extensively I want to assure everyone that that is one of the main focuses I mean, we spend something like $700 million a year on fuel and Mark talked about the <unk>.

Hi, everyone. Thank you maybe if I could just sneak two in just on the cost trajectory in 2020 for trying to understand a little bit more I understand the drydocks and inflation, but it's.

What's the offset that's happening there.

Marketing spend kind of trending down.

Maybe secondly to stick with mark on that as well.

Speaker Change: <unk> multi multimillion dollar things that we're going to do to improve flow from bump bunkering to better monitoring and things like that and those numbers are real and of course are reflected in our EBITDA numbers.

Comments around the balance sheet improvement the tone is definitely changing signs positive simple math since youre going to six times leverage.

Are we going to get back on this three to four times that you did pre COVID-19 just any thoughts there would be helpful. Thank you.

Speaker Change: Thanks, and then maybe one more for thinking about this kind of more normalized yield growth to Q3, <unk>, maybe walk us through how you envision onboard versus ticket versus occupancy gains kind of contributing to that growth.

You bet.

Go ahead Harry.

I'll, let mark talk about our balance sheet number because we are very proud of that I'll, let him finish up the commentary on that but on the cost side. Now. This isn't this isn't specifically related to marketing. We obviously will look at improvements in efficiencies in marketing in the same way, we look at efficiencies everywhere else, but any improvement we find in marketing.

Equal if one is the bigger driver any additional color there would be helpful. Yeah look onboard revenue is as always a significant generator of our over our overall revenue profile when you look at the.

Will be strictly around efficiency the the volume if you will.

Speaker Change: Quarters, two through four yes, I think we're getting probably what about a point and a half of occupancy benefit in those three quarters and the rest is really coming on the back on the back of pricing so onboard as an important component.

Marketing will remain the same we're very happy with the demand we drive we carefully track it through web visits lead generation and all the other type of metrics that are necessary in order to keep both top and mid funnel.

Our marketing alive, and well and that volume will continue any any benefit we have will be on efficiency not on volume, but really that the cost is everywhere. I mean, we talked about fuel we talked about food waste, but I mean, we could go through every line item of the P&L. There is nothing off the table I mean, we've made improvements in aircrafts, we made improvements in.

Speaker Change: It always is and it always has been will continue to improve on that our goal again is to get more of that wallet share well prior to the customer ever of stepping on foot any one of our vessels and we continue to improve on that end.

Speaker Change: But I don't think theres going to I don't think were expecting any meaningful outsized growth from that particular revenue stream versus necessarily our core ticket price across the three brands.

Our consumables and maintenance really across the way in SG&A expenses. So I really want you to think about it as a whole P&L.

Speaker Change: And I think we have time for one more question. Please.

And not that we're going to in any way focus on marketing in order to reduce those important demand metrics in March 2nd hand corner on leverage.

Speaker Change: Thank you. Our final question today is coming from Connor Cunningham of Melius Research. Please go ahead.

Said, we are very focused on it and we've said that this will improve significantly over time, we're very excited that we expect our leverage current leverage levels at year end, we expect to at least decreased by one five turns and again, that's going to read that slowly, but surely restoring our.

Connor Cunningham: Hi, everyone. Thank you maybe if I could just sneak two in just on the cost trajectory in 2020 for trying to understand a little bit more I understand the drydocks and inflation, but it's what's.

Connor Cunningham: What's the offset that's happening there is it is.

Connor Cunningham: Marketing spend kind of trending down.

Connor Cunningham: Maybe secondly to stick with mark on that as well.

Balance sheet back to pre Covid levels. So obviously that three to four range is something we're focused on.

Connor Cunningham: Comments around the balance sheet improvement the tone is definitely changing science positive simple math says youre going to six times leverage or.

It would not certainly would not expect that to happen in 2024, but we are starting the sequential improvement quarter. After quarter. This year, you will see significant improvements in leverage.

Connor Cunningham: Or are we going to get back to this three to four times that you did pre COVID-19 just any thoughts there would be helpful. Thank you.

Speaker Change: You bet.

Harry: Go ahead Harry.

Harry: I'll, let mark talk about our balance sheet number because we're we're very proud of that I'll, let him finish up the commentary on that but on the cost side I know this isn't this isn't specifically related to marketing. We obviously will look at improvements in efficiencies in marketing in the same way, we look at efficiencies everywhere else, but any improvement we find in marketing.

And we're excited to see that same thing happening over the course of $25 26. So we're on the right path. The only thing I'll add to Mark's comment is just a simple math one if we were at seven three and we plan to reduce it by one and a half I think the number would be in the $5 something range not the six something range.

Mark A. Kempa: It will be strictly around efficiency the the volume if you will.

Just to keep them in the back of your mind.

That being said I want to thank everyone for joining us today will be around to answer any questions. You may have we look forward to seeing you. All in May we wish you a great day and all the best.

Thank you.

Mark A. Kempa: Our marketing alive, and well and that volume will continue any any benefit we have will be on efficiency not on volume, but really that the cost is everywhere. I mean, we talked about fuel we talked about food waste, but I mean, we could go through every line item of the P&L. There is nothing off the table I mean, we've made improvements in aircrafts, we made improvements in.

Ladies and gentlemen. This concludes today's conference you may disconnect. Your lines have a log off the webcast at this time and enjoy the rest of your day.

Mark A. Kempa: Our consumables and maintenance really across the way in SG&A expenses. So I really want you to think about it as a whole P&L.

Mark A. Kempa: And not that we're going to in any way focus on marketing in order to reduce those important demand metrics in March 2nd Conor on leverage.

Mark A. Kempa: We've said we are very focused on it.

Mark A. Kempa: And we've said that this will improve significantly over time, we're very excited that we expect our leverage current leverage levels at year end, we expect to at least decreased by one five turns and again thats going to read that slowly but surely.

Mark A. Kempa: Storing our balance sheet back to pre COVID-19 levels. So obviously that three to four range is something we're focused on I would not certainly would not expect that to happen in 2024, but we are starting the sequential improvement quarter. After quarter. This year, you will see significant improvements in <unk>.

Mark A. Kempa: Leverage and we're excited to see that same thing happening over the course of $25 26. So.

Speaker Change: We're on the right path the only thing I'll add to Mark's comment is just a simple math one if we were at seven three and we plan to reduce it by one and a half I think the number would be in the five something range not the six something range just.

Speaker Change: Just to keep them in the back of your mind.

Speaker Change: That being said I want to thank everyone for joining us today, we will be around to answer any questions. You may have we look forward to seeing you. All in May we wish you a great day and all the best.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen. This concludes today's conference you may disconnect. Your lines have a log off the webcast at this time and enjoy the rest of your day.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Q4 2023 Norwegian Cruise Line Holdings Ltd Earnings Call

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