Q1 2024 Norwegian Cruise Line Holdings Ltd Earnings Call

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Joe: Good morning, and welcome to the Norwegian Cruise line Holdings first quarter 2024 earnings Conference call. My name is Joe and I will be your operator at.

Operator: Good morning, and welcome to the Norwegian Cruise Line Holdings first quarter 2024 earnings conference call. My name is Joe, 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. If anyone should require operator assistance during the conference, please press star then zero on your touchtone telephone. As a reminder to all participants, this conference call is being recorded. I would now like to turn the conference over to your host, Sarah Inman. Ms. Inman, please proceed.

Joe: At this time all participants are in a listen only mode.

Joe: Later, we will conduct a question and answer session and instructions for the session will follow at that time.

Joe: If anyone should require operator assistance during the conference. Please press Star then zero on you touched on the telephone.

Joe: As a reminder to all participants this conference call is being recorded.

Joe: I'd now like to turn the conference over to your host Sara and then they send me. Please proceed.

Sarah Inman: Thank you, Joe, and good morning everyone. Thanks for joining us for our first quarter 2024 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 CFO.

Sara: Thank you Joe and good morning, everyone. Thanks for joining us for our first quarter 2024 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 CFO.

Sarah Inman: As a reminder, this conference call is being simultaneously webcast on the company's Investor Relations website at www.nclhltd.com for investors. Throughout the call, we will refer to a slide presentation that can be found on our Investor Relations website. Both the conference call and presentation will be available for replay for 30 days following today's call. Before we begin, I would like to cover a few items.

Sara: As a reminder, this conference call is being simultaneously webcast on the company's Investor Relations website at Www Dot M. C. L. H L. T D dot com backslash investors.

Joe: Throughout the call we will refer to a slide presentation that can be found on our investor Relations website.

Joe: The conference call and presentation will be available for replay for 30 days following today's call.

Sarah Inman: Our press release with first quarter 2024 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 those statements. These statements should be considered in conjunction with the cautionary statement contained in our earnings release. Our comments may also refer to 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.

Speaker Change: Before we begin I would like to cover a few items. Our press release with first quarter 2024 results was issued this morning and is available on our Investor Relations website.

Joe: I'll include forward looking statements that involve risks and uncertainties that could cause our actual results to differ materially from such statements.

Joe: These statements should be considered in conjunction with the cautionary statements contained in our earnings release.

Joe: Our comments May also refer to 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.

Sarah Inman: With that, I'd like to turn the call over to Harry Sommer. Harry?

Joe: That I would like to turn the call over to Harry Sommer Harry.

Harry J. Sommer: Thank you, Sarah, and good morning, everyone. Thank you all for joining us today for our first quarter 2024 earnings call. It's such an exciting time for our company with wonderful new products available across all three of our award-winning brands, strong demand, and some recent noteworthy announcements that have solidified our trajectory for years to come. Demand for cruise vacations continues to be at all-time highs, as evidenced by record booking, record book position, and record advance ticket sales, as the continued innovation and service delivery on board our ships lead to exceptional guest satisfaction. The combined effect is strong financial performance in the quarter and an even brighter outlook for the year ahead.

Harry J. Sommer: Thank you Sarah and good morning, everyone.

Harry J. Sommer: Thank you all for joining us today for our first quarter 2024 earnings call.

Harry J. Sommer: It's such an exciting time for our company with wonderful new product available across all three of our award winning brands strong demand and some recent noteworthy announcements that have solidified our trajectory for years to come the.

Harry J. Sommer: The demand for cruise vacations continues to be at all time high as evidenced by record bookings record booked position and record advanced ticket sales as the continued innovation and service delivery on board our ships lead to exceptional guest satisfaction scores.

Harry J. Sommer: Combined effect is strong financial performance in the quarter and an even brighter outlook for the year ahead.

Harry J. Sommer: Today, it's my pleasure to discuss some of our Q1 milestones, including the recent Newbilt ship announcement and pier development, our strong performance in the quarter, and the exciting booking trends that are driving our improved guidance for the remainder of 2024. I'll also be diving into the significant progress we've made on our global sustainability program, SAIL & SUSTAIN. Later in the call, I'll turn it over to Mark, who will provide more color on our first quarter performance and updated guidance for 2024.

Harry J. Sommer: It's my pleasure to discuss some of our Q1 milestones, including the recent Newbuild ship announcement and peer development, our strong performance in the quarter and the exciting booking trends that are driving our improved guidance for the remainder of 2024.

Harry J. Sommer: I'll also be diving into the significant progress we've made on our global sustainability program selling sustain later in the call I'll turn it over to Mark who will provide more color on our first quarter performance and updated guidance for 2024.

Harry J. Sommer: We kicked off the year with impressive momentum, carrying forward several positive trends from the end of 2020-23. As you can see on slide 4, we sustained strong demand throughout the quarter, achieving record bookings in this period, which led to our most successful wave season ever. As a result, our 12-month forward book position remains at an all-time high. In terms of financial results, Adjusted EBITDA nearly doubled during the first quarter compared to last year on the back of stronger pricing and higher occupancy levels.

Mark A. Kempa: We kicked off the year with impressive momentum carrying forward several positive trends from the end of 2020 'twenty three.

Mark A. Kempa: As you can see on slide four we sustained strong demand throughout the quarter achieving record bookings in this period, which led to our most successful wave season ever.

Mark A. Kempa: As a result, our 12 month forward book position remains at all time high.

Mark A. Kempa: In terms of financial results adjusted EBITDA nearly doubled during the first quarter compared to last year on the back of stronger pricing and higher occupancy levels. Our margins also noticeably improved during the period with our core costs essentially flat year over year, leading to a robust growth in adjusted operational.

Harry J. Sommer: Our margins also noticeably improved during the period, with our core costs essentially flat year over year, leading to a robust growth in Adjusted Operational EBITDA Margin, which is Adjusted EBITDA divided by Adjusted Gross Margin, now approaching 33% for the trailing 12 months. As a result, we reduced our leverage by a full turn during the quarter when compared to the end of 2023, ending the first quarter at 6.3 times net leverage, marking an important milestone in our journey to strengthen our balance sheet and well on our path for the one and a half turn improvement in net leverage we guided for the year.

Joe: <unk> EBITDA margin, which has adjusted EBITDA divided by adjusted gross margin now approaching 33% for the trailing 12 months.

Joe: As a result, we reduced our leverage by a full turn during the quarter were compared to the end of 2023, ending the first quarter at six three times net leverage marking an important milestone in our journey to strengthen our balance sheet and well on our path to the one and a half turn improvement in net leverage we guided for the year.

Harry J. Sommer: These strides were recognized by S&P, which upgraded both our issuer credit rating and issue level ratings during the quarter. While we will give more details later in the call, I can't help but share that we have exceeded essentially all of our guidance metrics for the first quarter of 2024 and consequently raised guidance on our key metrics for the full year, including net yield, adjusted EBITDA, adjusted net income, and adjusted EPS. Another key milestone during the first quarter was our historic new build order, which we shared on our last conference call during SeaChase Cruise Global.

Joe: These strides were recognized by S&P, which upgraded both our issuer credit rating and issue level ratings during the quarter.

Joe: What we will give more details later in the call I can't help but sure that we have exceeded essentially all of our guidance metrics for the first quarter of 2024, and consequently raise guidance on our key metrics for the full year, including net yield adjusted EBITDA adjusted net income and adjusted EPS.

Joe: Another key milestone during the first quarter was our historic Newbuild order, which we shared on our last conference call during CJ group cruise global.

Harry J. Sommer: Encompassing eight new ships across all three of our award-winning brands, this is the most transformative new build program in our company's history. We have also announced the construction of a two-ship pier at Great Sturrockay, which will enhance our existing infrastructure on the private island, making it an even more attractive destination for our guests.

Joe: Encompassing eight new shifts across all three of our award winning brands. This is the most transformative Newbuild program in our company's history. We also announced the construction of the two ship here at Great Stirrup, Cay, which will enhance our existing infrastructure on the private island, making it even more attractive destination for our guests.

Harry J. Sommer: I am thrilled about our future, as I know we're paving the way for our continued growth in the next decade and beyond. Our first quarter successes are due to our continued focus on our near-term priorities, which are detailed on slide 5. We successfully grew capacity 8% compared to 2023, while achieving a record 12-month forward book position, all while increasing prices and reducing our net leverage by a full turn, and we're seeing strong results across the board.

Joe: Im thrilled about our future as I know, we're paving the way for our continued growth in the next decade and beyond.

Joe: Our first quarter successes are due to our continued focus on our near term priorities, which are detailed on slide five we successfully grew capacity, 8% compared to 2023, while achieving a record 12 month forward book position, all while increasing price and reducing our net leverage by a full turn and we're seeing strong.

Joe: <unk> across the board.

Harry J. Sommer: Turning to slide 6, as I have shown you frequently in the past, I want to once again emphasize our long-term strategy of delivering measured capacity growth and optimizing our fleet to drive strong financial returns. Our new built pipeline increased from 5 to 13 shifts in the quarter, representing a capacity CAGR of 6% from 2023 to 2028 and 4% from 2023 to 2036.

Joe: Turning to slide six we have shown you frequently in the past I want to once again emphasize our long term strategy of delivering measured capacity growth and optimizing our fleet to drive strong financial returns are.

Joe: Our newbuild pipeline increased from five to 13 ships in the quarter, representing a capacity CAGR of 6% from 2023, and 2028 and 4% from 2023 to 2036, historically capacity growth has driven outsized revenue and adjusted EBITDA growth and we.

Harry J. Sommer: Historically, capacity growth has driven outsized revenue and adjusted EBITDA growth, and we expect this trend to continue with the incorporation of larger and more efficient state-of-the-art vessels into our fleet. Turning our attention to the current booking environment, shown on slide 7, we are witnessing robust and resilient consumer demand across all three of our brands in all of our markets. As a result, during the first quarter of this year, we noted record bookings, culminating a record wave season, leading to a continued record booking position for the next 12 months, extending into 2025.

Joe: This trend to continue with the incorporation of larger and more efficient state of the art vessels to our fleet.

Joe: Turning our attention to the current booking environment shown on slide seven we are witnessing robust and resilient consumer demand across all three of our brands in all of our markets. As a result during the first quarter of this year, we noted record bookings, culminating a record wave season, leading to continued record book position for the next two.

Joe: Months extending into 2025, we continue to see healthy demand across all markets brands and products, including Europe, and Alaska, which continued to perform very well and make up the majority of our deployment over the summer.

Harry J. Sommer: We continue to see healthy demand across all markets, brands, and products, including Europe and Alaska, which continue to perform very well and make up the majority of our deployment over the summer. All of this strength is despite the cancellation and rerouting of our itineraries that we announced in the Middle East and Red Sea earlier this year. We have also recently announced the cancellation of all Red Sea sailings across all three of our brands for the spring of 2025, and replacement sailings are already on sale.

Joe: All of this strength is despite the cancellation and rerouting of very temporary that we announced in the middle Eastern Red Sea earlier this year.

Joe: We also recently announced the cancellation of all Red Sea sailings across all three of our brands for the spring of 2025 and replacement sailings are already on sale by adjusting these sailings well in advance we can assure our full sales cycle for the replacement itineraries and no impact to our 2025 yields.

Harry J. Sommer: By adjusting these sailings well in advance, we can assure a full sale cycle for the replacement itineraries and no impact on our 2025 yield. Overall, we are encouraged by the strength in our book position for the next 12 months, which remains at all-time highs with commensurate higher prices. As a result, yield growth is strong. During the first quarter, yield growth exceeded guidance, coming in at 16.2% on a constant currency basis, up 70 basis points from the guidance we provided just two months ago in late February.

Joe: Overall, we are encouraged by the strength in our book position for the next 12 months, which remains at all time highs with commensurate higher pricing as a result yield growth as strong during the first quarter yield growth exceeded guidance coming in at 16, 2% on a constant currency basis.

Joe: Up 70 basis points from the guidance, we provided just two months ago in late February.

Harry J. Sommer: 2024 is shaping up to be a strong year, and as a result, we are raising our full-year yield guidance by 100 basis points from 5.4% to approximately 6.4% on a constant currency basis on the back of a strong first quarter and strong demand for the remainder of 2024. Please note that our occupancy guidance remains unchanged as we are essentially already guiding to full ships, so the entire increase in our guidance is on the back of stronger pricing.

Joe: 2024, it is shaping up to be a strong year and as a result, we are raising our full year yield guidance 100 basis points from five 4% to approximately six 4% on a constant currency basis on the back of a strong first quarter and strong demand for the remainder of 2024. Please.

Joe: Please note that our occupancy guidance remains unchanged as we are essentially already guiding to full shifts so the entire increase in our guidance is on the back of stronger pricing.

Harry J. Sommer: Onboard revenue also remains a highlight, with strengths seen across the board. This is a positive sign that our target consumer remains healthy and resilient. We continue to absorb strong demand from pre-cruise purchases, which were up 16% compared to 2023. Pre-selling packages before a cruise typically leads to higher overall spending during a guest's cruise journey. Turning to slide 8.

Joe: On Board revenue also remains a highlight with strength seen across the board.

Joe: This is a positive sign that our target consumer remains healthy and resilient.

Joe: We continue to absorb strong demand from pre cruise purchases, which were up 16% compared to 2023. Please.

Joe: Pre selling of packages of four crews typically leads to a higher overall spending during the guests through strength.

Joe: Turning to slide eight.

Harry J. Sommer: To continue cementing our leading industry position beyond 2024, I'm excited to announce that this first quarter reached an all-time high in advanced ticket sales. This success was driven by robust pricing, a dynamic deployment mix, coupled with increased pre-sale packages and capacity growth. Our advance ticket sales balance rose 13% year-on-year, reaching a record $3.8 billion.

Joe: To continue cementing our leading industry position beyond 2024, I'm excited to announce that this first quarter reached an all time high in advance ticket sales.

Joe: This success was driven by robust pricing.

Joe: Dynamic deployment mix, coupled with increased pre sell packages and capacity growth our advanced ticket sales balance rose, 13% year on year, reaching a record $3 8 billion.

Harry J. Sommer: Over the past quarter, we have taken considerable strides in our sustainability efforts through our SAIL and SUSTAIN programs, which you can see on slide 9. We kicked off the year seeking out government grants to support our green initiatives by applying to the EU Innovation Fund with the goal of accelerating the transition of our sixth FEMA-class vessel from being methanol-ready to being fully methanol-capable. We continue to be committed to our short and long-term decarbonization goals.

Joe: Over the past quarter, we have taken considerable strides in our sustainability efforts through our sales sustain program, which you can see on slide nine we kicked off the year seeking out government grants to support our green initiatives by applying to the EU innovation fund with the goal of accelerating the transition of our sixth freedom class vessels from being ethanol ready to.

Joe: Fully methanol capable we continue to be committed to our short and long term decarbonization goals.

Harry J. Sommer: We're also proud to announce that 50% of our company-wide fleet is now equipped with Shoreside technology, achieving our year-end 2024 target well ahead of schedule. This is key to our journey to minimizing emissions during port stays and contributing to cleaner air in the port communities we visit. Our proactive approach to environmental impacts didn't go unnoticed. CBP gave us a notable B rating in recognition of the steps we've taken to measure and manage our risks and opportunities related to climate change.

Joe: We're also proud to announce that 50% of our company wide fleet is now split with short sight technology, achieving our year end 2020 for Todd.

Joe: Target well ahead of schedule. This is key to our journey to minimizing emissions or imports days and contributing to cleaner air in the port community communities, we visit.

Joe: Our proactive approach to environmental impacts didn't go I notice CDP climate gave us a notable D rating in recognition of the steps, we've taken to measure and manage our risks and opportunities related to climate change. This acknowledgment of voices, our efforts and pushes us to continue enhancing our sustainability initiatives.

Harry J. Sommer: This acknowledgment fuels our efforts and pushes us to continue enhancing our sustainability initiatives. Our commitment to operating ethically and with integrity has also gained us recognition in the equity market. Just Capital, in their Restaurant and Leisure category of America's Most Just Companies Index, named us as a Top 5 company. This recognition is a testament to our dedication to fair and equitable operation and the prioritization of our stakeholders' well-being. In addition, we completed the purchase of 3 million carbon offsets invested in renewable energy products.

Joe: Our commitment to operating ethically and with integrity also gained this recognition in the equity markets just capital in their restaurants and leisure category of America's Most just companies index named Us as a top five company. This recognition is a testament to our dedication to fair and equitable operation.

Joe: And the prioritization of our stakeholders wellbeing.

Joe: Also we completed the purchase of 3 million carbon offset invested in renewable energy products. These also it's not only support our decarbonization journey, but invest in cleaner energy sources and local job creation in the communities where these projects are located.

Harry J. Sommer: These offsets not only support our decarbonization journey but invest in cleaner energy sources and local job creation in the communities where these projects are located. Finally, we were recently honored as one of Forbes Best Employers for Diversity in 2024. This award is a testament to our dedicated efforts in fostering an inclusive workforce, where diverse backgrounds are represented, engaged, and empowered to generate and execute on innovative ideas. I want to express my gratitude to our entire team for their efforts in making our company a welcoming place for all of our talented teammates.

Joe: Finally, we were recently honored with being one of Forbes best employers for diversity in 2020 for this award is a testament to our dedicated efforts and fostering an inclusive workforce. We're diverse backgrounds are represented in our representatives engaged and empowered to generate and execute on innovative ideas.

Joe: I wanted to express my gratitude to our entire team for their efforts in making our company a welcoming place for all of our talented team members. This recognition motivates us to continue creating a workplace where every individual feel valued and empowered.

Harry J. Sommer: This recognition motivates us to continue creating a workplace where every individual feels valued and empowered. This progress underscores our unwavering commitment to environmental sustainability, ethical business practices, and the well-being of all of our stakeholders. These accomplishments serve as building blocks in our ongoing journey towards a more sustainable and responsible future. I couldn't be more proud of our entire team for all of these impressive accomplishments. With that, I'll turn it over to Mark to walk you through our financial results.

Joe: This progress underscores our unwavering commitment to environmental sustainability ethical business practices and the wellbeing of all of our stakeholders.

Joe: These accomplishments serve as building blocks and our ongoing journey towards a more sustainable and responsible future.

Joe: I couldnt be more proud of our entire team for all of these impressive accomplishments.

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

Mark A. Kempa: Mr. Kempa. Thank you, Harry, and good morning, everyone. I'm a little under the weather today, so if my voice cracks, I apologize in advance. My commentary today will focus on our strong first quarter 2020 financial results, our improved full year 2024 guidance, and our increasingly solid financial position. Unless otherwise noted, my commentary on 2024 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 2023. Let's begin with our first quarter results, which are highlighted on slide 10.

Mark A. Kempa: Mr. Campo.

Mark A. Kempa: Harry and good morning, everyone.

Mark A. Kempa: Little under the weather today, so if my voice cracks I apologize in advance.

Mark A. Kempa: My commentary today will focus on our strong first quarter 2020 for financial results. Our improved full year 2024 guidance and are increasingly solid financial position.

Mark A. Kempa: Unless otherwise noted my commentary on 2024 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 2023.

Mark A. Kempa: Let's begin with our first quarter results, which are highlighted on slide 10.

Mark A. Kempa: We had an exceptional start to the year, and we exceeded guidance across the board, beating our already ambitious targets for the first quarter, which we only announced two months ago. Starting with the top line, results were impressive, with net yields increasing 16.2%, materially exceeding our guidance of 15.5%. As discussed last quarter, several factors contributed to the exceptionally strong top-line growth we saw this quarter, including the lapping of lower load factors and a less than optimized itinerary mix in the first quarter of 2023.

Mark A. Kempa: We had an exceptional start to the year and we exceeded guidance across the board, beating our already ambitious targets for the first quarter, which we only announced two months ago.

Mark A. Kempa: Starting with the topline results were impressive with net yields increasing 16, 2% materially exceeding our guidance of 15, 5% as.

Mark A. Kempa: As discussed last quarter several factors contributed to the exceptionally strong top line growth, we saw this quarter, including the lapping of lower load factors and a less than optimized itinerary mix in the first quarter of 2023, but more importantly, we experienced unprecedented unprecedented demand for Caribbean sale.

Mark A. Kempa: But more importantly, we experienced unprecedented demand for Caribbean sailings in the first quarter of 2024, which represented approximately 58% of our total deployment in the quarter. Looking at costs, adjusted net cruise cost excluding fuel per capacity day came in slightly below guidance at $164.

Mark A. Kempa: <unk> in the first quarter of 2024, which represented approximately 58% of our total deployment in the quarter.

Mark A. Kempa: Looking at cost adjusted net cruise cost excluding fuel per capacity day came in slightly below guidance at $164. As expected. This number includes approximately $5 from the increased dry dock days and related costs in the quarter compared to 2023 <unk>.

Mark A. Kempa: As expected, this number includes approximately $5 from the increased dry dock days and related costs in the quarter compared to 2023. Excluding the impact of dry docks, our adjusted net cruise cost excluding fuel would have been essentially flat year over year, demonstrating our ability to offset the impacts of inflation with our disciplined cost savings initiatives across the organization. Adjusted EBITDA was approximately $464 million, exceeding guidance of $450 million and almost doubling the prior year's results.

Mark A. Kempa: Excluding the impact of dry docks are adjusted net cruise cost excluding fuel would have been essentially flat year over year, demonstrating our ability to offset the impacts of inflation with our disciplined cost savings initiatives across the organization.

Mark A. Kempa: Adjusted EBITDA was approximately 464 million exceeding guidance of $450 million and almost doubling the prior year's results.

Mark A. Kempa: We return to first-quarter profitability with adjusted EPS of $0.16, exceeding guidance of $0.12 in the quarter and well above the loss of $0.30 in the prior year. Overall, we are incredibly pleased with the results we generated in the first quarter.

Mark A. Kempa: We returned to first quarter profitability with adjusted EPS of <unk> 16 cents exceeding guidance of <unk> 12 cents in the quarter and well above the loss of 30 in the prior year.

Mark A. Kempa: Overall, we are incredibly pleased with the results we generated in the first quarter.

Mark A. Kempa: Strong top-line growth, combined with continued progress in reducing costs, allowed us to essentially beat all of our guidance metrics in the quarter. We are building on this momentum and, with our revised expectations for 2024, are raising our full-year guidance on several metrics, which can be seen on slide 11. We raised our full-year net yield growth a full percentage point from 5.4% to approximately 6.5%. This 100-basis point increase reflects the strength we experienced in the first quarter but, more importantly, our higher expectations through the rest of the year as a result of strong demand and record bookings that we have experienced for the remainder of 2024. Last quarter, we mentioned the impact on our business due to cancellations and redeployments of itineraries in the Middle East and Red Sea.

Mark A. Kempa: <unk> top line growth combined with continued progress in reducing costs.

Mark A. Kempa: US to essentially beat all of our guidance metrics in the quarter.

Mark A. Kempa: We are building on this momentum and with our revised expectations for 2024 are raising our full year guidance on several metrics, which can be seen on slide 11.

Mark A. Kempa: We raised our full year net yield growth a full percentage point from five 4% to approximately six 5%.

Mark A. Kempa: This 100 basis point increase reflects the strength, we experienced in the first quarter, but more importantly, our higher expectations through the rest of the year as a result of strong demand and record bookings that we have experienced for the remainder of 2024.

Mark A. Kempa: Last quarter, we mentioned the impact on our business due to cancellations and redeployments of itineraries in the middle East and Brett C. Diff.

Mark A. Kempa: The strength we have seen in the business through wave season, however, has allowed us to almost fully offset this impact. Our full-year guidance implies net yield growth for the remainder of the year in the low to mid-single digit range and is exceeding our pre-pandemic growth rate. Adjusted EBITDA guidance for the year increased $50 million to $2.5 billion, building on the first quarter guidance of $14 million. Adjusted EPS guidance for the year increased on a net basis of $0.09 to $1.32, due to our 4 cent beat in the first quarter. A $0.10 raise for the balance of the year due to higher demand and pricing, which was partially offset by higher fuel costs and interest expense of approximately $0.04.

Mark A. Kempa: The strength, we have seen in the business through wave season, However has allowed us to almost fully offset this impact.

Mark A. Kempa: Our full year guidance implies net yield growth for the remainder of the year in the low to mid single digit range and is exceeding our pre pandemic growth rate.

Mark A. Kempa: Adjusted EBITDA guidance for the year increased 50 million to $2 5 billion building on the first quarter guidance beat a $14 million adjusted.

Mark A. Kempa: EPS guidance for the year increased on a net basis of nine <unk> to $1 32 made up of our <unk> beat in the first quarter, a 10% raise for the balance of the year due to higher demand and pricing, which was partially offset by higher fuel costs and interest expense.

Mark A. Kempa: Approximately four.

Mark A. Kempa: These strong numbers and related guidance raised would not be possible without the continued focus and efforts from our entire team, both shoreside and shipboard. Now, let's take a look at our guidance for the second quarter. We expect a strong second quarter with net yield growth expected to increase approximately 4.3%, which is slightly above our historical averages, despite the impacts of the canceled itineraries and redeployments in the Middle East and Red Sea.

Mark A. Kempa: These strong numbers and related guidance raise would not be possible without the continued focus and efforts from our entire team both shoreside and shipboard.

Mark A. Kempa: Now, let's take a look at our guidance for the second quarter.

Mark A. Kempa: We expect a strong second quarter with net yield growth expected to increase approximately four 3%, which is slightly above our historical averages. Despite the impacts of the canceled itineraries and redeployment and the middle East and Red Sea.

Mark A. Kempa: Adjusted net cruise cost excluding fuel per capacity day is expected to be approximately $165, or approximately 5.8% above the same quarter last year. As we mentioned last quarter, dry dock days in 2024 will make comparisons to the prior year more challenging. Second quarter 24 has approximately 70 more dry dock days scheduled than last year. This increase for the quarter results in a $9 or 550 basis point impact on adjusted net cruise costs x fuel in the quarter.

Mark A. Kempa: Adjusted net cruise costs, excluding fuel per capacity day.

Mark A. Kempa: <unk> is expected to be approximately $165 or approximately five 8% above the same quarter last year.

Mark A. Kempa: As we mentioned last quarter Drydock days in 2024 will make comparisons to prior year more challenging.

Mark A. Kempa: Second quarter 'twenty four has approximately 70 more drydock days scheduled than last year.

Mark A. Kempa: This increase for the quarter resulted in a $9 or 550 basis point impact on enough adjusted net cruise cost ex fuel in the quarter.

Mark A. Kempa: Excluding the dry dock impact, adjusted net cruise cost excluding fuel is expected to be approximately $156, essentially flat year over year, demonstrating once more the continued success of our cost savings initiatives across the organization. As a result, adjusted EBITDA for the second quarter is expected to be approximately $555 million.

Mark A. Kempa: Excluding the dry dock impact adjusted net cruise cost excluding fuel is expected to be approximately $156 essentially flat year over year, demonstrating once more the continued success of our cost savings initiatives across the organization.

Mark A. Kempa: As a result, adjusted EBITDA for the second quarter is expected to be approximately 555 million. Adjusted net income is expected to be about $160 million and adjusted EPS to be approximately 32.

Mark A. Kempa: Adjusted net income is expected to be about $160 million, and adjusted EPS is expected to be approximately $0.32. Moving to slide 12, I want to dive a bit deeper into our margin enhancement initiative. We remain fully committed to boosting margins and reducing costs across the organization. With a meticulous approach supported by our Transformation Office, we are continuously pinpointing opportunities, irrespective of their scale, across every facet of our business. The results of these efforts are clear in the first quarter of 2024, where adjusted net cruise cost x fuel per capacity day was 165 but was flat, essentially flat, compared to the first quarter of 2023, excluding the dry dock impact.

Mark A. Kempa: Moving to slide 12, I want to dive a bit deeper into our margin enhancement initiatives.

Mark A. Kempa: We remain fully committed to boosting margins and reducing costs across the organization with a meticulous approach supported by our transformation office, we are continuously pinpointing opportunities irrespective of their scale across every facet of our business.

Mark A. Kempa: The results of these efforts are clear in the first quarter of 2024, where adjusted net cruise cost ex fuel per capacity day was 165, but was flat essentially flat compared to the first quarter in 2023, excluding the dry dock impact.

Mark A. Kempa: Our guidance on Adjusted Net Cruise Cost Ex-Fuel remains unchanged for the full year 2024 and is expected to be $159 net of the approximately $5 impact from dry docks for the full year, which is essentially expected to be flat. For your models, I would remind you that we expect to see about two-thirds of the dry dock impact during the first half of the year, with the remainder in the fourth quarter.

Mark A. Kempa: Our guidance on adjusted net cruise cost ex fuel remains unchanged for the full year 2024, and is expected to be $159 net of the approximately $5 impact from dry docks in the full year.

Mark A. Kempa: Which are ex the drydock, which are essentially essentially expected to be flat.

Mark A. Kempa: For your models I would remind you that we expect to see about two thirds of the dry dock impact during the first half of the year with the remainder in the fourth quarter.

Mark A. Kempa: Turning over to slide 13, I want to focus on an important metric that we track internally, which is our adjusted operational EBITDA margin, which is calculated by dividing adjusted EBITDA by adjusted gross margin. Looking at the last 12 months, you can see the significant improvements we have made as we have returned the business to full operations and focused on right-sizing our cost base. In Q1, the trailing 12-month adjusted operational EBITDA margin was 32.7%, improving 200 basis points compared to the full year 2023.

Speaker Change: Turning over to slide 13, I want to focus on an important metric that we track internally, which is our adjusted operational EBITA margin, which is calculated by dividing adjusted EBITDA by adjusted gross margin.

Speaker Change: Looking at the last 12 months you can see the significant improvements we have made as we have returned the business to full operations and focus on right sizing our cost basis in.

Speaker Change: In Q1 trailing 12 month adjusted operational EBITDA margin was 32, 7%, improving 200 basis points compared to the full year 2023.

Mark A. Kempa: We expect to see this margin continue to improve throughout the year, ending 2024 at approximately 33.5% based on our updated guidance. As you know, we are striving to improve our margins, and this journey will be fueled by two main drivers. First, capitalizing on the strong demand in the market and converting this into quality and sustainable net yield growth. And second, continue to focus on net cruise costs and right-sizing our costs. Shifting to the balance sheet and debt maturity profile on slide 14, during the quarter, we completed the refinancing of our $650 million backstop commitment from a secured to an unsecured basis. In connection with this refinancing, we repaid $250,009.75 in secured notes due in 2028, which was our highest interest rate debt.

Speaker Change: We expect to see this margin continued to improve throughout the year ending 2024 at approximately 33, 5% based on our update updated guidance.

Speaker Change: As you know we are striving to improve our margins and this journey will be fueled by two main drivers first capitalizing on the strong demand in the market and converting this into quality and sustainable net yield growth and second continued focus on net cruise costs and right sizing our cost base.

Mark A. Kempa: This refinancing reduces our interest expense and improves leverage while also releasing all related collateral, another important step forward in strengthening our balance sheet. Moving to leverage on slide 15. We have a track record of delivering on net leverage reduction, as we've discussed in many previous earnings calls, and we are currently on a path to do so again. In the first quarter alone, we reduced our net leverage by a full turn from year-end and turned the quarter 6.3 times.

Mark A. Kempa: Shifting to the balance sheet and debt maturity profile on slide 14 during the quarter. We completed the refinancing of our 650 million backstop commitment from a secured to an unsecured basis in.

Mark A. Kempa: In connection with this refinancing we repaid $250 million nine and three quarter secured notes due in 2028, which was our highest interest rate debt.

Mark A. Kempa: The refinancing reduces our interest expense and improved leverage while also releasing all related kellough collateral another important step forward in strengthening our balance sheet.

Mark A. Kempa: Moving to leverage on slide 15, we have a track record of delivering on net leverage reduction as we've discussed in many previous earnings calls and we are currently on a path to do so again in the first quarter alone we reduced our net leverage by a full turn from year end and turned the quarter at six three times.

Mark A. Kempa: This is a significant reduction for one quarter, and we expect to continue to improve net leverage over time, propelled by our organic cash generation and scheduled debt amortization payments. By the end of 2024, we anticipate reducing our net leverage by approximately one and a half turns from year-end 2023, ending 2024 in the upper five times range, with sequential improvements in each quarter. We are currently refining a multi-year plan to further continue the reduction of leverage and de-risk our balance sheet to drive shareholder value.

Mark A. Kempa: This is a significant reduction for one quarter and we expect to continue to improve net leverage overtime propelled by our organic cash generation and scheduled debt amortization payments.

Mark A. Kempa: By the end of 2024, we anticipate reducing our net leverage by approximately one five turns from year end 2023, ending 2024 in the upper five times range with sequential improvements in each quarter.

Mark A. Kempa: We are currently refining a multiyear plan to further continue the reduction of leverage and Derisk, our balance sheet to drive shareholder value.

Mark A. Kempa: I plan to share more on this plan at our Investor Day on May 20. Closing out my section, I want to reiterate that this has been a fantastic quarter where we beat guidance on all key measures. The strong momentum we've seen in the quarter is carrying over to the full year, and we've been able to raise our guidance for the full year on yield, adjusted EBITDA, adjusted net income, and adjusted EPS.

Mark A. Kempa: I plan to share more on this plan at our Investor day on May 20th.

Speaker Change: Closing out my section I want to reiterate that this has been a vantassel quarter, where we beat guidance on all key metrics. The strong momentum we have seen in the quarter is carrying over to the full year and we've been able to raise our guidance for the full year on a on yield adjusted EBITDA adjusted net income and adjusted EPS. This.

Mark A. Kempa: This quarter is a testament to our ability to use strong top-line results coupled with efficiencies to enhance margins and drive strong EBITDA and related cash flows, resulting in lower leverage and de-risking the balance sheet. We are excited to see how the rest of the year plays out after the strong start. With that, I'll turn it back to Harry for closing remarks.

Speaker Change: Quarter is a testament to our ability to use strong topline results, coupled with efficiencies to enhance margins and drive strong EBITDA and <unk> related cash flows, resulting in lower leverage and derisking. The balance sheet. We are excited to see how the rest of the year plays out after the strong start with that I will turn.

Speaker Change: On it back to Harry for closing remarks.

Harry J. Sommer: Well, thank you, Mark, and I wish you a speedy recovery. Moving forward, our entire team will be focused on our most important work, as shown on slide 16. First, we will continue to focus on execution, capitalizing on the strong demand from our target upskill demographic to drive net yield while delivering experiences that guests value. Second, we will build upon the progress already made over the last quarters from our ongoing margin enhancement efforts with further improvements in cost reduction and efficiencies throughout the organization. And finally, we will continue to improve our financial stability by further strengthening our balance sheet and continuing to reduce net leverage over time.

Harry J. Sommer: Well, thank you Mark and I wish you a speedy recovery.

Harry J. Sommer: Moving forward our entire team will be focused on our most important work as shown on slide 16 first we will continue to focus on execution capitalizing on the strong demand from our target upscale demographic to drive net yield while delivering experiences that guests value.

Harry J. Sommer: Second we will build upon the progress already made over the last quarters from our ongoing margin enhancement efforts with further improvements in cost reduction and efficiencies throughout the organization.

Speaker Change: And finally, we will continue to improve our financial stability by further strengthening our balance sheet and continuing to reduce net leverage overtime.

Harry J. Sommer: In a few weeks' time, we will be having the privilege of hosting an Investor Day. We hope you are able to attend either in person at the New York Stock Exchange or virtually through our webcast. It is an occasion that we are eagerly looking forward to as it provides us with a platform to articulate our long-term strategy and financial metrics for the business. This strategic roadmap will offer insight into our ambitions and aspirations for the future of Norwegian Cruise Line Holdings.

Speaker Change: A few weeks time, we will be having the privilege of hosting an investor day. We hope you are able to attend either in person at the New York stock exchange or virtually through our webcast.

Speaker Change: It is an occasion that we are eagerly looking forward to as it provides us a platform to articulate our long term strategy and financial metrics for the business.

Speaker Change: This strategic roadmap will offer insights into our ambitions and aspirations for the future of Norwegian cruise line holdings.

Harry J. Sommer: We will outline the key initiatives and measures that will underpin our drive towards providing our guests with the experiences they value while delivering long-term profitable growth and shareholder value. The future is certainly bright, and we are excited to share this journey with you.

Speaker Change: We will outline the key initiatives and measures that will underpin our drive towards providing our guests with the experiences they value, while delivering long term profitable growth and shareholder value. The future is certainly bright and we're excited to share. This journey with you and with that I'll hand, the call back to the operator to the.

Speaker Change: Again, our Q&A session.

Operator: Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key.

Speaker Change: Thank you Sir.

Speaker Change: Ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue.

Speaker Change: You May press Star two if you would like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: One moment, please, while we pull for questions. And our first question comes from the line of Dan Politzer with Wells Fargo. Please proceed.

Speaker Change: One moment, please while we poll for questions.

Speaker Change: And our first question comes from the line of Dan Pulitzer with.

Daniel Brian Politzer: Wells Fargo. Please proceed.

Daniel Brian Politzer: Hey, good morning everyone, and thanks for taking my question. I was hoping we could dive in a little bit more on kind of the pricing and set up for the remainder of the year. I mean, certainly, the first quarter was very strong. As we think about, you know, the tweaks to your capacity allocation for the rest of 2024, and certainly, you know, some more Europe and, you know, at least in the second quarter, but kind of falling off in the back half, how should we think about the relationship between that capacity allocation relative to pricing? And put more simply, can you maybe classify, you know, the pockets where you're seeing outside strength versus maybe a little bit more modest strength in terms of pricing?

Daniel Brian Politzer: Hey, good morning, everyone and thanks for taking my questions.

Daniel Brian Politzer: I was hoping we could dive in a little bit more on kind of the pricing and set up for the remainder of the year.

Daniel Brian Politzer: And it seems certainly first quarter was very strong as we think about the tweaks to your capacity allocation for the rest of 2024.

Daniel Brian Politzer: And certainly some more some more Europe.

Daniel Brian Politzer: And at least in the second quarter, but kind of falling off in the back half how should we think about the relationship between that capacity allocation relative to pricing and put put more simplistically can you, maybe classify pockets, where you're seeing outsized strength versus maybe a little bit more modest strength in terms of pricing.

Harry J. Sommer: You know, so good morning, Dan, and thanks for joining us today. Listen, I wouldn't say that there are any areas that are outsized or undersized. We're seeing good pricing yield strength across all three of our brands, across all the major areas that we deploy our ships. We're doing well in Europe. We're doing well in Alaska, Bermuda, Hawaii, and, of course, the Caribbean. I think the only place where we've talked before where we've had a little bit of a challenge is the voyages in Q2 and Q4 that had previously visited the Red Sea and had to redeploy to other itineraries.

Daniel Brian Politzer: Yeah.

Speaker Change: Good morning, Dan and thanks for joining us today.

Daniel Brian Politzer: I wouldn't say that there are any areas that are outsized or undersized worst three we're seeing good pricing yield strength.

Speaker Change: Across all three of our brands.

Speaker Change: Cross all of the major areas that we deploy our ships were doing well in Europe were doing well in Alaska, Bermuda, Hawaii of course of the Caribbean.

Speaker Change: I think the only place where we've talked before we've had a little bit of a challenge is the voyages in Q2 and Q4 that had previously visited the Red Sea.

Speaker Change: To redeploy to other itineraries, but outside of those where we're seeing broad based demand across the board, we're very happy with our yield growth in the back three quarters.

Harry J. Sommer: But outside of those, we're seeing broad-based demand across the board. We're very happy with our yield growth in the back three quarters. You know, as Mark and I discussed, we're increasing our yield guidance by a full point, which I think underscores the strength that we're seeing. You know, we continue to be at record book positions, and record prices. We're very happy with where we are.

Daniel Brian Politzer: Got it. Thanks.

Speaker Change: As we discussed both Mark and myself, we're increasing our yield guidance by a full point, which I think.

Speaker Change: Underscores the strength that we're seeing.

Speaker Change: Continue to be at record booked positions record pricing, we're very happy with where we are.

Daniel Brian Politzer: And then just pivoting to the cost side, can you just remind us a couple of those pockets where you really seem to be cutting, cutting the fat, right? I think food is an area where you've seen some success. Also, I think in marketing, you've talked about, you know, the expenses you've cut there. So as we think about the kind of buckets across the cost structure, where have you seen more success? And where is the kind of additional opportunity that you see looking ahead?

Speaker Change: Got it thanks, and then just pivoting to the cost side can you just remind us a couple of those pockets, where you really seem to be cutting cutting the fat right. I think food is an area where you've seen some success also I think on marketing.

Speaker Change: You've talked about the expenses you've cut there so as we think about the kind of the buckets.

Speaker Change: Across the cost structure, where have you seen more success and whereas kind of the additional opportunity that you see looking ahead.

Mark A. Kempa: Good morning, Dan. It's Mark.

Speaker Change: Morning, Dan It's Marc So first I, just want to clarify I wouldn't classify it as cutting the fat so to speak that's that's probably a little bit too generous we're really looking at how we can get much more efficient efficient across the entire organization as I mentioned in our Q1 in our in our prior earnings call. The first big piece of that was really reduced.

Mark A. Kempa: So first, I just want to clarify, you know, I wouldn't classify it as cutting the fat, so to speak. That's probably a little bit too generous. We're really looking at how we can get much more efficient across the entire organization. As I mentioned in our prior earnings call, the first big piece of that was really reducing, looking at our fuel and bunkering processes. And if I recall correctly, I said that was the double-digit million savings.

Speaker Change: Looking at our fuel and Bunkering processes, and if I recall correctly, I said that was a double digit million savings and thats actually reflected in our latest fuel guidance, where if you think about if you look at the curves the curves were up anywhere from mid <unk> mid to upper single digits yet.

Mark A. Kempa: And that's actually reflected in our latest fuel guidance, where, you know, if you think about it, if you look at the curves, the curves were up anywhere from, you know, mid to upper single digits. Yet, I think we only raised our cost by 2%. But apart from that, yes, it's across marketing. It's across, you know, the things on the vessel that the customers really don't value

Speaker Change: I think we only raised our cost up by 2%, but apart from that yes, it's across marketing it's across.

Speaker Change: The things on the vessel that the customers really don't value.

Mark A. Kempa: But more importantly, we're not just cutting to cut. We're really looking at what customers care about. Let's improve on those experiences while reducing items that the customer really doesn't care about. So there are no silver bullets here. It's just a lot of little things across the board. We are very excited with the progress we're making. That's been reiterated by the fact that we just reiterated our cost guidance, and I'm hopeful in the future that we can continue to improve on that.

Speaker Change: But more importantly, we're not just cutting to cut we're really looking at what is what do customers care about let's improve on those experiences while reducing items that the customer really doesn't care about so theres no silver bullets here, it's just a lot of little things across the board.

Speaker Change: We are very excited with the progress we're making.

Speaker Change: That's been reiterated by the fact that we just reiterated our cost guidance.

Speaker Change: And I'm hopeful in the future that we can continue to improve on that.

Harry J. Sommer: You know, Dan, I'll just add one more thing, specifically related to the food. I just want to emphasize that we have, in no way, reduced the quality of food that we serve our guests. We still serve, especially in the Oceania Region, the best quality food that we can, and in NCL, very good quality food as well, where we have seen the efficiencies, if you will, on things like buying direct, as opposed to intermediaries, and in logistics.

Speaker Change: Dan I'll, just add one more thing specifically related to the food I just want to emphasize we are in no way reduce the quality of food that we serve our guests we still serve especially at Oceana region.

Speaker Change: Thats quality food that we can in an NCL very good quality food.

Speaker Change: Well, where we had seen.

Speaker Change: <unk>, if you will on things like buying direct as opposed through intermediaries and in logistics. We have made massive improvements in logistics warehousing shipping that obviously all show up in the food, but do not reflect the lower quality food I can't emphasize that enough. We believe that our three brands in there.

Harry J. Sommer: We have made massive improvements in logistics, warehousing, and shipping that obviously all show up in the food but do not reflect the lower quality food. I can't emphasize that enough. We believe that our three brands, in their respective places in the industry, have the best food quality and the most food options, and we are committed to that, but we think we can do that and still save money through the other items that I mentioned. Thanks so much for the additional...

Speaker Change: Expected places in the industry have the most have the best food quality and the most food options and we are committed to that but we think we can do that and still save money through the other items that I mentioned.

Daniel Brian Politzer: Got it. Thanks so much for the additional detail.

Speaker Change: Got it thanks, so much for the additional detail.

Vince Charles Ciepiel: And our next question comes from the line of Vincent Ciepiel with Cleveland Research. Please proceed. Thanks so much for taking my question.

Speaker Change: And our next question comes from the line of Vincent <unk> with Cleveland Research. Please proceed.

Speaker Change: Sure.

Vince Charles Ciepiel: I wanted to zoom in a little bit more on the second half. I think at one point, you guys quantified the Red Sea impact. It was like one to two points for 2Q through 4Q. I think there was a view that the third quarter might be the highest yield growth quarter of 2Q through 4Q because it had the least Red Sea impact. And I was just curious if you still expected that to be the case. Yeah, I

Vincent: Thanks, So much for taking my question I wanted to zoom in a little bit more on the second half I think at one point you guys had quantified the red Sea impact it looks like one to two points through <unk> through <unk> I think there was a view that third quarter might be the highest yield growth quarter of <unk> through <unk> because it had the lease red two impact I was just curious.

Vincent: Various if you still expected that to be the case.

Harry J. Sommer: Yeah, good morning, Vince. Yeah, you are correct. We still expect the third quarter to be the highest yield growth quarter. And I will remind everybody that in Q4 of 2023, if I recall correctly, we had pricing growth of 15% and yield growth of 9%. So we are rolling over a very healthy Q4 of 2023. So that's not to be implied that Q4 of this year is not doing well, but it is just certainly rolling over a much higher comp. But we do expect the third quarter to be the highest.

Speaker Change: Yes, good morning, Vince.

Speaker Change: You are correct, we still expect third quarter to be the highest yield growth quarter, and I will remind everybody that in Q4 of 'twenty three if I recall correctly, we had pricing of.

Speaker Change: Growth of 15% and yield growth of 9%. So we are rolling over a very healthy Q4 of 2023. So that's not to be implied that Q4 of this year is not doing well, but it is just certainly rolling over a much higher comp, but we do expect third quarter to be the highest.

Vince Charles Ciepiel: Great, thanks. And then a little bit bigger picture kind of strategy question: you and peers across the industry seem to be really investing in private islands and ramping up efforts there, marketing, leaning in, just kind of curious what you're seeing out there that leads you to believe, you know, returns are there, that that's what the customer is looking for, and how you kind of went about making that decision. Yeah.

Speaker Change: Great. Thanks, and then a little bit bigger picture kind of strategy question, you and peers across the industry seem to be really investing in private islands ramping efforts their marketing leaning in just kind of curious what youre seeing out there that leads you to believe.

Speaker Change: Turns are there, but that's what the customer is looking for and how you kind of went about making that decision.

Harry J. Sommer: Yeah, so when we look at our two private islands we have today, Great Surf Cay in the Bahamas and Harvest Cay in Belize, those are our two highest-rated destinations. Now, we already had a pier at Harvest Cay, so there were no issues in that area, but at GSC, Great Surf Cay, excuse me, the lack of a pier caused us to miss much more frequently than we would have liked.

Speaker Change: So when we look at our two private islands, we at todays rates are okay. In the Bahamas and harvest came to believe those are our two highest rated destinations now we really had a key area of harvest K. So there were no issues in that area, but it's in GSE are great.

Speaker Change: <unk> excuse me.

Speaker Change: Lack of appear caused us to miss much more frequently than we would've liked.

Harry J. Sommer: So, for us, it almost pays for itself on an ROI basis just by us being able to visit there, but of course, once we have the confidence that we can visit there almost 100% of the time, we certainly believe that it will be worth making the investments to continue to improve the guest experience as long as we focus, as Mark said before, on the things that add value. I will say, listen, we've seen geopolitical uncertainty in various places of the world over time, so clearly, places like Belize and the Bahamas have an added benefit of being perhaps in a more secure zone, more close to home, which continues to give us confidence to invest.

Speaker Change: It's almost funds on an ROI basis, just by us being able to visit there but of course once we have the confidence that we can visit there almost 100% of the time.

Speaker Change: Certainly believe that it will be worth making the investments to continue to improve the guest experience as long as we focus as Mark said before on the things that that guest.

Speaker Change: They get value I will say listen.

Speaker Change: We have seen geopolitical uncertainty.

Speaker Change: Gary placement the world over time, So clearly places like believes and the Bahamas have an added benefit of being perhaps any more certain zone more close to home.

Speaker Change: Which continues to give us confidence to invest but we think what we're doing with GSE. It's fantastic, we see the peer which will be available just in a year from now so it's not like multi years in the future will be will be a great addition.

Harry J. Sommer: But, we think what we're doing with GSC is fantastic; we think the pier, which will be available just a year from now, so it's not like multi-years in the future, will be a great addition. We're committed to the area, our guests love it, I think the experience on the island is already fantastic, more of a resort-type experience, and we'll continue to improve it.

Speaker Change: We are committed to the area our guests love. It I think the experience on the island is already fantastic more of a resort type of experience and we will continue to improve it.

Vince Charles Ciepiel: Great. I'm looking forward to Investor Day.

Speaker Change: Great looking forward to Investor day.

Vince Charles Ciepiel: Please vote. Thanks, Ben.

Speaker Change: These well thanks Vince.

Steven Moyer Wieczynski: And our next question comes from Steve Wieczynski with CEPO. Please proceed.

Speaker Change: And our next question comes from the line I know, Steve <unk> with Stifel. Please.

Speaker Change: Proceed.

Steven Moyer Wieczynski: Hey guys, good morning. If we kind of stay on yields, and if we, you know, if we think about breaking down your revised yield guidance for the remainder of the year, I mean, look, it's pretty clear that demand remains extremely strong. You know, so I guess it seems to us that maybe your revised yield guidance is somewhat conservative. And I guess the question is around how you're thinking about pricing versus onboard for the rest of the year. It seems like you might be taking a pretty conservative view around onboard metrics, which makes sense, or possibly the close-in opportunity, you know, just isn't as great as what we're used to witnessing, given the strong Bush position. So any, you know, just any help there would be appreciated.

Speaker Change: Okay.

Steve: Hey, guys good morning.

Steve: So if we kind of stay on yields and if we if we think about breaking down your your revised yield guidance for the remainder of the year.

Steve: Clear the demand remains extremely strong.

Steve: So I guess it seems to US maybe your revised yield guidance is somewhat conservative in and I guess the question is around how youre thinking about pricing versus onboard for the rest of the year. It seems like you might be taking a pretty conservative view around onboard metrics, which which makes sense.

Steve: Or possibly the close in opportunity just isn't as great as what we're used to witness and given our strong book position. So any just any help there would be appreciated.

Harry J. Sommer: You know, I'll maybe take the second part of the question on on-board versus ticket, and I'll let Mark comment on the first part. You know, with the way that we package and pre-sell our on-board items, I think the distinction between on-board and ticket is much less important than it was in the past. So I would just encourage you and the other analysts, the other listeners, you know, to focus on the total revenue number because, really, the split is a little bit arbitrary.

Speaker Change: I'll, maybe take the second part of the question on onboard versus ticket and I'll, let mark comment on the first part.

Speaker Change: With the way this package and pre sell our onboard items.

Speaker Change: The distinction between onboard and ticket is much less important than it is in the past. So I would just encourage you and the other analyst the other listeners to focus on the total revenue number because really the split is a little bit arbitrary.

Mark A. Kempa: You know, that being said, obviously, we're happy with the future sales, as we've talked about in our prepared remarks and in our press release. We're happy with the on-board packages that are being sold in advance, and that's what gives us confidence for raising our yield guidance by a full point for the year. In terms of conservatism, maybe Mark can talk about that. Yeah, good morning, Steve.

Speaker Change: That being said, obviously, we're happy with the with the future sales as we've talked about in our prepared remarks and in our press release, we're happy with the onboard packages that are being sold in advance and that's what gives us confidence for raising our yield guidance by a full point for the year in terms of conservatism, maybe mark can talk to that yes.

Mark A. Kempa: So look, you know, maybe as an example, look, we continue to see the consumer very, very healthy. We continue to see very strong trends across every revenue stream on the ship, so we remain, you know, very, very optimistic on that front. And maybe a way to frame it is if you think about our prior guidance for the first quarter, we had, you know, we were already two months into the quarter when we provided that guidance, and I think when you look at where we ended up, we beat it by almost three-quarters of a point.

Mark A. Kempa: Good morning, Steve So look.

Mark A. Kempa: Maybe as an example look we continue to see the consumer very very healthy we continue to see very strong trends across every revenue stream on the ship. So we remain.

Mark A. Kempa: Very very optimistic on that front and maybe a way to frame. It is if you think about our prior guidance for the first quarter we had.

Mark A. Kempa: We're already two months into the quarter. When we had provided that guidance and I think when you look at where we ended we beat by almost three quarters of a point that's predominantly driven by onboard revenue. So while I don't want to say we are ultra conservative yes, we know we expect the consumer to spend but I think given our extended booking curve.

Mark A. Kempa: That's predominantly driven by on-board revenue. So while I don't want to say we are ultra-conservative, yes, we know what we expect the consumer to spend, but I think, you know, given our extended booking curve, most of the upside in the quarter, if we see any, will be driven by on-board revenue. And I want to reiterate that we continue to see a very, very strong consumer in that respect.

Speaker Change: Curve.

Speaker Change: Most of the upside in the quarter, if we see any what will be driven by onboard revenue and I want to reiterate that we continue to see a very very strong consumer in that respect.

Steven Moyer Wieczynski: Okay, that's great. And then, you know, Mark, if I'm looking at slide 13, you guys are projecting, you know, just about a 34% EBITDA margin, you know, towards the end of this year. And I guess if we look a little bit further out, you know, how should we think about the longer-term margin opportunity, especially as you think about where, you know, margins were pre-pandemic versus where they are now?

Speaker Change: Okay, that's great and then Mark if I if I'm looking at Slide 13, you guys are projecting just about a 34% EBITDA margin.

Mark A. Kempa: Towards the end of this year and I guess, if we look a little bit further out.

Mark A. Kempa: Should we think about the longer term margin opportunity, especially as you think about where margins were pre pandemic to versus where they are now.

Mark A. Kempa: Will the driver of kind of yield or excuse me a margin improvement.

Steven Moyer Wieczynski: You know, will the driver of kind of yield, or, excuse me, margin improvement, you know, just be more on the yield side of the equation? You know, I guess what I'm trying to get at here is the opportunity to take a significant amount of costs out of the equation, given what you guys have already done so far, and maybe this is something you'll address more on May 20. Yeah, so I

Mark A. Kempa: <unk> be more on the yield side of the equation.

Mark A. Kempa: I guess, what I'm trying to get at here is the.

Speaker Change: About the opportunity to take a significant amount of cost side of equation given what you guys have already done so far and maybe this is something you'll you'll address more on may 20th Yeah. So I think thats. Thank you for that last sentence because that was the answer I was going to provide you listen we're we're super focused on in this call talking about Q1 guidance for Q2, and 24, which I think leave.

Mark A. Kempa: Yeah, so I think that's thank you for that last sentence because that was the answer I was going to provide you. Listen. We're super focused and in this call talking about q1 and guidance for q2 and 24, which I think we've, we've laid out. I think talking about more long-term will have to wait for the 19 more days till May 20th to talk.

Speaker Change: We've laid out I think talking about more longer term, we'll have to wait the 19 more days till may 20 to talk about it.

Steven Moyer Wieczynski: Okay, I'll wait. Thank you guys. We appreciate it. And we look forward to seeing you.

Speaker Change: Okay I'll wait.

Speaker Change: Thank you guys appreciate it and we look forward to seeing you.

Speaker Change: Yeah.

Brandt Antoine Montour: Our next question comes from the line of Brandt Montour with Barclays. Please proceed.

Speaker Change: Our next question comes from the lineup Brandon <unk> with Barclays. Please proceed.

Brandt Antoine Montour: Brad.

Brandon: That we lost brand.

Speaker Change: Man.

Brandt Antoine Montour: Okay, maybe we should move on to the next caller.

Speaker Change: Yeah.

Speaker Change: Okay, maybe we should move on to the next well move onto next next caller.

Conor T. Cunningham: And our next question will come from the line of Conor Cunningham with Milius Research. Please proceed.

Speaker Change: And our next question will come from the line of Conor coming here and with Melius Research. Please proceed.

Conor T. Cunningham: Everyone, thank you. You know, in your prepared remarks or even the press release, I think you mentioned that you're at a record-book position over the next 12 months. I know you want to talk only about 24, but just curious about how 25 is shaping up. I assume pricing is up. Just any details or other could be helpful. Thank you.

Conor: Hi, everyone. Thank you.

Conor: You know in your prepared remarks, you are even in the press release I think you mentioned that you are at a record book position over the next 12 months.

Conor: You want to talk only about 24, but just curious on that.

Speaker Change: <unk> 25 is shaping up.

Speaker Change: I assume pricing is up just any any details around that would be helpful. Thank you.

Harry J. Sommer: So, thank you for that, Conor. So, I'll just point out that the next 12 months would include Q1 of 2025. So, I think that gives you some guidance. And, of course, that would be, at this point in the booking cycle, the best booked quarter of 2025. So, I'm not really prepared to give guidance for the last three quarters, but I think that gives you some insights into how 2025 is shaping up.

Speaker Change: So thank you for that kind of so I'll just point out that the next 12 months would include Q1 of 25, so I think that.

Speaker Change: That gives you some guidance and of course that would be at this point in the booking cycle. The best booked quarter of 2025, so not really prepared to give guidance for the last three quarters, but I think that gives you some insights into how 25 is shaping up.

Speaker Change: Okay and then.

Conor T. Cunningham: I appreciate the details on the Dry Dock kind of wins, and I realize that kind of lingers throughout 24, but does that roll off in 25, or is it more of a 26 fund? Just trying to understand your exit rate on costs is obviously going to be really good in 24, so just curious about how we should think about Dry Dock specifically next year and the year after. Thank you. Yeah, Conor.

Speaker Change: I appreciate the details.

Speaker Change: The dry dock headwinds and I realize that kind of lingers throughout 'twenty four but.

Speaker Change: Does that roll off in 'twenty, five or is it more of a 26, one I'm just trying to understand your exit rate on costs is obviously going to be really good in 2004. So just curious on.

Speaker Change: And how we should think about Drydock, specifically next year on the hereafter. Thank you yeah. Conor. So look I think we've said this before 24 is really a normalization year in terms of dry docks.

Mark A. Kempa: Yeah, Conor, so look, I think we've said this before, 24 is really a normalization year in terms of dry docks, as we took advantage during the shutdown to dry dock most of our ships. But if you look at the size of our fleet and the composition of our fleet, as you go forward, whether it's 24, 25, 26, you're going to see about the same level of dry docks, just given the size of our fleet.

Conor: We took the advantage during the shutdown to dry dock most of our ships, but if you look at the size of our fleet and the composition of our fleet as you go forward, whether it's 'twenty four 'twenty five 'twenty six youre going to see about the same level of dry docks, just given the size of our fleet. So it might go up a couple of points or I shouldn't say a couple of points it might go up or down.

Mark A. Kempa: So it might go up a couple points, or no, I shouldn't say a couple points, it might go up or down for a few days, but there's not going to be any material step up or step down going forward as we get back into a more normalized cycle for the next few years.

Conor: A few days, but theres not going to be any material step up or step down going forward as we get back into a more normalized cycle.

Conor: For the next few years.

Conor: Okay.

Conor T. Cunningham: Great, thank you. See you in a couple weeks.

Speaker Change: Great. Thank you see in a couple of weeks. Thank you.

Speaker Change: Yes.

Brandt Antoine Montour: Our next question comes from the lineup Brandt Montour with Barclays. Please proceed. I don't think Brandt likes it. Brandt, please check if your mic is...

Speaker Change: Our next question comes from the line of Brent <unk> with Barclays. Please proceed.

Speaker Change: Yeah.

Speaker Change: Brad.

Brent: Thank you Brent.

Speaker Change: Mike is muted.

Brandt Antoine Montour: Well, we'll try again on Brandt. Let's go to the next question, Joe.

Speaker Change: Well, we'll try again on brand, let's let's go to the next question. The next question Jeff.

Operator: And the next question will come from the line of Patrick Scholes with Truer Securities. Please proceed. Great. Good morning, everyone.

Jeff: And the next question will come from the line of Patrick Scholes with <unk> Securities. Please proceed.

Jeff: Great.

Patrick Scholes: Morning, everyone.

Patrick Scholes: My first question concerns commissions paid out to the trade. It looks like your ticket revenues were up 21% year-over-year, though commissions, transportation, and others were up 6%. Can you give a little more color on why the divergence is there? Increases and Book Direct, or change in mix of new to cruise that typically will book direct. More color, please, and then I'll have a follow-up question. Thank you.

Patrick Scholes: My first question concerns commissions paid out to the trade it looks like your ticket revenues were up 21% year over year commissions transportation and others were up 6% can you give a little more color on why that whats driving the divergence in there is that.

Patrick Scholes: Increases in book direct.

Jeff: Or change in mix.

Jeff: New to cruise that typically will book direct.

Speaker Change: More color, ladies and then I'll have a follow up question. Thank you.

Harry J. Sommer: Yeah, thanks, Patrick. So no, what we're seeing is not a reflection of changes in direct or significant changes in passenger mix. It's really more driven by the airline. You know that as a cruise line, we package air across all three of our brands, and as participation rates shift from year to year, and also we're buying air a little bit better this year versus last year, the air component of cost goes down.

Speaker Change: Yes, Thanks Patrick.

Jeff: So.

Speaker Change: Alright, there just market a little cost let me start again, so now what we're seeing is not a reflection of changes in direct or significant changes in passenger mix, it's really more driven by the airline.

Jeff: That is a cruise line.

Jeff: We package are across all three of our brands.

Jeff: And his participation rate shifts from year to year and also we are buying are a little bit better this year versus last year. The air component of cost goes down. So it's a combination of slightly lower participation rate for air and us buying air a little bit more efficiently than we did last year, but our general direct versus tray.

Harry J. Sommer: So it's a combination of a slightly lower participation rate for air and us buying air a little bit more efficiently than we did last year. But our general direct versus trade, new to cruise, has remained substantially the same year over year across the board.

Jeff: A new to new to cruise has remained substantially the same year over year.

Jeff: Across the brands.

Patrick Scholes: Okay, interesting. And then you talked about your book position being significantly ahead of the same time last year. Can you give a little bit more granularity on, perhaps, percentage wise, how much ahead you are for the rest of the year versus the same time last year and then also, uh, how much ahead, in fact, you are ahead for next year versus say the same time last year for the comparable period? Thank you.

Speaker Change: Okay interesting.

Speaker Change: And then you talked about.

Speaker Change: Your booked position.

Speaker Change: Up significantly.

Speaker Change: Significantly.

Speaker Change: Not year over year can you give a little bit more granularity.

Speaker Change: Perhaps percentage wise how much ahead you are for the rest of the year versus the same time last year and then also.

Speaker Change: How much ahead in fact, if you are ahead for next year versus say at the same time.

Speaker Change: Last year for the comparable period. Thank you.

Mark A. Kempa: Yeah, Patrick, look, we won't give an exact percentage. But, you know, what I can tell you is if you refer to our prior remarks on our calls, generally speaking, we had said our sweet spot is somewhere in that 60 to 65% on a forward 12-month basis or at any given time, I should say. And so if you think of it from that reference, you know, we could be up from there, but I won't give any specific percentages on that other than the fact we continue to see a very strong consumer, consumers who are willing to book further out and who are willing to pay higher prices. So I think all that lends itself to a great environment to continue to capitalize on this demand.

Speaker Change: Hey, Patrick.

Speaker Change: We won't give an exact percentage what I can tell you is if you refer to our prior remarks on our calls generally generally speaking we had set our sweet spot is somewhere in that 60% to 65% on a forward 12 month basis are at any given time I should say and so if you think of it from that reference.

Speaker Change: We could be up from there, but I won't give any specific percentages on that other than the fact, we continue to see a very strong consumer consumers, who are willing to book further out and who are willing to pay higher prices. So I think all of that lends it lends itself to a great environment to continue to capitalize on this demand.

Patrick Scholes: Are you, can you say for your without giving a percentage, can you say if you're 20? A five book position is ahead versus where you were a year ago.

Speaker Change: Are you can you say for your without giving a percentage can you say your 'twenty.

Speaker Change: Five booked position is ahead versus comparable where you were a year ago.

Speaker Change: This year.

Mark A. Kempa: Well, I think if you think about, as Harry said, our forward 12 months, which would include Q1, would imply that Q1 is ahead. But we won't comment on the rest of the year other than bookings are in line with our expectations, where we believe they should be. You know, the only additional point of color that I'll give is related to Europe, which is a large part of our deployment this year in Q2 and Q3, where, because we've had the benefit of a full booking cycle, we're seeing more Americans on our European deployment this year, which tends to elongate the booking curve a little bit and also tends to deliver slightly higher yields as opposed to selling those cabins a little Okay.

Speaker Change: I think if you think about as Harry said, our forward 12 months, which would include Q1 would imply that Q1 is ahead.

Speaker Change: But we won't comment on the rest of the year other than bookings are in line with our expectations, where we believe they should be so the only additional color that I'll give is related to Europe, which is a large part of our deployment. This year in Q2 and Q3.

Speaker Change: Where because we've had the benefit of a full booking cycles, we're seeing more Americans.

Speaker Change: On our European deployment, this year, which tends to LNG to booking curve, a little bit and also tends to deliver slightly higher yields as opposed to selling those cabins.

Speaker Change: A little closer into to locals in Europe.

Patrick Scholes: Okay, thank you for the color. I'm all set. Thanks, Patrick. Eric's question comes from the line between Ben Chaiken and Mizuho. Please proceed.

Speaker Change: Okay.

Speaker Change: Thank you for the color I'm all set thank.

Speaker Change: Thanks, Patrick.

Speaker Change: Okay.

Speaker Change: Our next question comes from the line of Ben Chaiken with Mizuho. Please proceed.

Benjamin Nicolas Chaiken: Hey, good morning, Thanks for taking my questions.

Benjamin Nicolas Chaiken: Your comments on an <unk> yields.

Benjamin Nicolas Chaiken: Onboard forward booking trends are all very helpful; just attacking this a little differently. Curious how you're thinking about 2Q yields on the net yield side. There are some headwinds and tailwinds.

Benjamin Nicolas Chaiken: On board booking forward looking trends are all very helpful. Just attacking this a little differently.

Benjamin Nicolas Chaiken: Just how youre thinking about <unk> yields.

Speaker Change: Youll side.

Speaker Change: There are some headwinds in tailwind would be greatest if you could help us think about the different moving parts specifically for <unk> I guess I'm asking so for example, there's less Caribbean, but as you've suggested earlier it sounds like the mix is not a factor you've got Red Sea anything else, just big picture and maybe to put a finer point on it. However, you cut it year over year versus 19 sequentially. It just seems like.

Benjamin Nicolas Chaiken: It'd be great if you could help us think about the different moving parts specifically for 2Q. So, for example, there's less Caribbean, but as you've suggested, it sounds like the mix is not a factor. You've got Red Sea, anything else just the big picture. And maybe to put a finer point on it, however you cut it year over year versus 19 sequentially, it just seems like optically there's a step down. And I guess I'm trying to open this up and understand the moving parts. Thanks.

Benjamin Nicolas Chaiken: Optically, there's a there's a step down and I guess I'm trying to open this up and understand the moving parts. Thanks.

Mark A. Kempa: Well, good morning, Ben. I think there is a step down from Q1, but that's purely as a result of, you know, the comparison to the same quarter of 2023. So, as we said on our last call and this call, we are not, and I will repeat this, we are not seeing deceleration. I don't know how many more times I can say that across different calls and conferences, but it would be somewhere in the low to mid-single digits.

Speaker Change: Good Guy good morning, Ben.

Speaker Change: There is a step down from Q1, but thats purely as a result of.

Speaker Change: As a comparison in the same quarter of 2023, so as we said on our last call and this call. We are not and I will repeat this we are not seeing deceleration.

Speaker Change: I don't know how many more times I can say that across different calls and conferences.

Speaker Change: We're getting back to what we call a more normalized yield growth in terms of our business, which we have always said would be somewhere in the low to mid single digits and obviously, we continue to pursue much better than that so yeah.

Mark A. Kempa: And obviously, we continue to pursue much better than that. So yes, there is an impact in both Q2 and Q4 as a result of the Mideast and Red Sea. We've been very specific about that. But even absent that, we still continue to see very healthy pricing and yield growth. So I just want to make it clear: it's not a deceleration issue.

Speaker Change: Yes, there is a there is a impact in Q, both Q2 and Q4 as a result of the mid eastern Red Sea, we've been very specific about that.

Speaker Change: But even absent that we we still continue to see very healthy pricing and yield growth. So I just want to make make it clear it's not a deceleration issue. It really is a comparison issue from from quarter to quarter.

Benjamin Nicolas Chaiken: The premise of the question was actually not a deceleration; it was that you've said that in the past, so I'm trying to understand the moving parts that might kind of... Help us explain the nuances, but that's helpful. Ben, the moving parts in Q2 are really the Mideast and Red Sea for the most part, and that also impacts Q4, as well as Q4 having a significant rollover versus the same quarter in

Speaker Change: Sure. The premise of the question was actually not a deceleration or was that you've said that in the past I'm trying to understand the moving parts that might kind of.

Speaker Change:

Speaker Change: Help us explain the nuances, but that's that's helpful. And then the moving parts in Q2 are really the mid eastern Red Sea for the most part and that also impacts Q4, as well as Q4, having a significant.

Speaker Change: <unk> versus the same quarter in 2023.

Benjamin Nicolas Chaiken: Okay. And then, as you think about Great Serp K, you announced the pier construction, which makes a lot of sense. But were you suggesting earlier in the call that you'd wait for the pier to be built and then wait a year or so to get kind of the demand picture under your belt before you start to invest in the island? Or is that not the correct interpretation? I wouldn't interpret it that way.

Speaker Change: Okay, and then as you think about great Stirrup Cay, you announced the pure construction, which makes a lot of sense, where you suggest is that what you're suggesting earlier in the call that you had.

Speaker Change: Wait for the peer to be built and then wait a year or so to get kind of the demand picture under your belt before you start to invest in the island or is that.

Speaker Change: Not the correct interpretation.

Harry J. Sommer: I wouldn't interpret it that way. I'm not prepared here to discuss our full long-term plan to raise our pay. We'll talk a little bit more about that in three weeks. My comment was meant to say that the pier was the gating item, that before we committed to and had a schedule for the pier, it would not have been prudent for us to make substantial additional investments on the island, which, for the record, is already a great experience.

Speaker Change: I wouldn't interpret it that way.

Speaker Change: Not prepared here to discuss our full long term plans for rates or it came with a little bit more about that in three weeks I'm. Just my comment was meant to say that the peer was the gating item that before we committed and had a scheduled for the peer it would not have been prudent for us to make substantial additional investments to the island, which for the record is already a great experience.

Speaker Change: But now that we have the period allows us to have a slightly more long term view towards that but I don't want to give any of it.

Harry J. Sommer: But now that we have the pier, it allows us to have a slightly more long-term view of that. But I don't want to give any indication of whether it's happening imminently or later. We'll talk a little bit more about that in three weeks.

Speaker Change: Indication of whether it's happening imminently or later, we'll talk about a little bit more about that in three weeks.

Speaker Change: Okay.

Elizabeth Dove: And our next question, our next question comes from the line of Lizzie Dove with Goldman Sachs. Please proceed.

Speaker Change: Okay. Next question. Our next question. Our next question comes from the line of Lizzie Dove with Goldman Sachs. Please proceed.

Elizabeth Dove: Hi there, good morning. Thanks so much for taking the time to answer the question. Sorry to kind of belabor this net yield point, but I just want to understand the moving pieces in terms of the kind of quarterly cadence, like as we think of your 2Q guidance of 4.3% growth and 3Q being higher, I would have thought that means quite a steep step down in 4Q, especially I would have thought you maybe get some occupancy recovery from the Hawaii comp last year. Anything you can say that can kind of help me think about that kind of quarterly

Elizabeth Dove: Hi, there good morning. Thanks, so much for taking the question. Good morning, you're kind of belabored. This net yield point I just wanted to understand the moving pieces in terms of the kind of quarterly cadence I guess, we think of your <unk> guidance of four 3% greater than <unk> being higher I would've thought that means quite a steep step down in <unk>, especially I would've thought you maybe got some occupancy.

Speaker Change: Lindsay recovery from the Hawaii called last year anything you can say that can kind of help me think about that kind of quarterly cadence.

Mark A. Kempa: Hi Lizzie. As we said, we believe in the back half of the year, the third quarter will be the highest yielding quarter. Fourth quarter, there was, if you think about fourth quarter 2023, yes, there was a small impact on occupancy as a result of Hawaii. But I think as we look at the comp rolling over, again, if I recall correctly, somewhere in the zone of 14% pricing growth and maybe 9% to 10% yield last year, that's a very quality comp to roll over. So I think you should stay tuned. I think fourth quarter, there's still time, and we're still building there. But everything we see today, the environment remains healthy, and we expect strong results across all our quarters.

Speaker Change: Hi, Lindsay I think as we said we believe in the back half of the year.

Lindsay: Our third quarter will be the highest yielding quarter.

Speaker Change: Fourth quarter. There was if you think about fourth quarter of 2023, yes, there was a small impact on occupancy as a result of Hawaii, but I think as we look at the comp rolling over.

Speaker Change: Again, if I recall correctly somewhere in the zone of 14% pricing growth and maybe 9% to 10% yield last year, that's a very quality comp to rollover. So.

Speaker Change: I think stay tuned I think.

Speaker Change: Quarters.

Speaker Change: There's still time and we're still building there, but we everything we see today the environment remains healthy and we expect we expect strong results across all our quarters, yes, I mean, the only additional color I'll add which mark talked about in an earlier question and not this one is a slight headwind related to Red Sea calculus cancellations in Q4.

Harry J. Sommer: Yeah, I mean, the only additional color I'll add, which Mark talked about in an earlier question and not this one, is a slight headwind related to Red Sea cancellations in Q4, which would be a little bit more, a little bit less, excuse me, than the headwind in Q2, because we had a little more time to have the replacement voyages on sail. And that's why it was so critical for us to get well ahead of this by 2025.

Speaker Change: It should be a little bit more a little bit less excuse me than the headwind in Q2, because we had a little more time to have the replacement voyages on sale and Thats why it was so critical for us to get well ahead of this for 2025. So we've already canceled all of our wages that had previously gone to Israel for 2025, and all of the Red Sea crossing in the first half of 'twenty five.

Harry J. Sommer: So we've already canceled all of our voyages that had previously gone to Israel for 2025 and all of the Red Sea crossings in the first half of 2025 so that we wouldn't have the same headwind challenges to our 2025 growth.

Speaker Change: So that we wouldn't have the same headwind challenges to our 2025.

Elizabeth Dove: And it feels like, you know, the very premium, luxury market is more in focus, especially with, you know, the capital markets activity, anything you can share there in terms of pricing on your more premium brands versus the Norwegian brands, and also any steps you might take to protect share as this competitor has some pretty aggressive supply growth targets. So, uh...

Speaker Change: Okay. That's really helpful. Thank you and it feels like the very premium luxury market.

Speaker Change: Especially with the capital markets activity anything you can share there in terms of pricing on Yamal premium Brian. Thank you for the Norwegian brands that also.

Speaker Change: I think to protect your arrows. This competitor has some pretty aggressive supply growth targets.

Harry J. Sommer: So, I'm trying to distill that question down into some thoughts in my mind. Obviously, we're excited to see new entrants into the market. We think anything that draws more focus, if you will, to this market and the public market and the excellent opportunity that cruising represents is positive for all of us. So, I sent Tor an email congratulating him this morning on a successful IPO, and we obviously wish him the best of luck. We see the growth that Viking has, and we have nice growth on the Oceania region brand that's measured, that we can absorb, and that we're happy for.

Speaker Change: So.

Speaker Change: I'm trying to I'm trying to just fill that question down into some flux in my mind. So obviously, we're excited to see new entrants into the market. We think anything that that has that draws more focus if you will to this market in the public markets and the excellent opportunity that cruising represent is positive for all of us.

Speaker Change: I spend toward email congratulating him. This morning on a successful IPO and we obviously wish him the best of luck.

Speaker Change: We see the growth at Viking House, and we have nice growth on the Oceania and regent brand Thats measured that we can absorb and that we are happy for.

Speaker Change: Okay. Thank you.

Frederick Charles Wightman: Our next question comes from the line of Fred Wightman with Wolf Research. Please proceed.

Speaker Change: Our next question comes from the line of Fred Wightman with Wolfe Research. Please proceed.

Frederick Charles Wightman: Hey guys, I just wanted to come back to the Red Sea impact for next year. Are you expecting to fully offset the yield impact from this year?

Frederick Charles Wightman: Hey, guys I just wanted to come back to the Red Sea impact for next year are you expecting to fully offset the <unk>.

Frederick Charles Wightman: Yield impact from this year was that a comment is that a comment on costs I just want to understand if its yield dilutive from a if you do have to do repositioning plus two <unk>.

Frederick Charles Wightman: Was that a comment? Is that a comment on costs? I just want to understand if it's yield dilutive from a, you know, if you do have to do repositioning and it's a less desirable itinerary.

Frederick Charles Wightman: Arable itineraries.

Mark A. Kempa: Hi Fred. So, we have announced all cancellations of our Red Sea and Mid-East itineraries for 2025, with the exception, I believe, we may have one sailing still on sale in the back half of 2025 for the Oceana brand. Apart from that, we have canceled all those sailings. And the thinking there is, obviously, the earlier you reroute those and create better itineraries, the better sales cycle you have. So, certainly, the improved yield and economics that you can garner from that should improve.

Speaker Change: Hi, Fred So we have we have announced all cancellations of our Red Sea and mid East itineraries for 2025 with the exception I believe we may have one sailings still on sale in the back half of 'twenty five for the Oceana brand apart from that we have canceled all those sailings.

Speaker Change: And the thinking there is obviously the earlier you reroute those and create better itineraries the better sales cycle you have so the.

Speaker Change: Certainly the improved yields and economics that you can garner from that should improve that said.

Mark A. Kempa: That said, if I had a choice of doing other areas in the world versus those select Mid-East and Red Sea areas, those are always a premium. But certainly, it won't be a significant tailwind, but at the same point, it won't be a significant drag.

Frederick Charles Wightman: If I had a choice of doing other areas in the world versus those select mid eastern Red C. Those are always a premium but certainly it certainly it won't be a significant tailwind, but at the same point it wont be a significant drag.

Frederick Charles Wightman: Okay, that's fair. And then just trying to understand where there could potentially be some upside for yields throughout the year. It sounded like in the response to an earlier question that you were saying the potential upside would come largely from onboard. I think that was in response to 2Q specifically, but just thinking about the back half of the year, especially in 4Q when that Caribbean exposure increases again, I mean, you guys still feel like you have the ability to take price and grow yields from a ticket perspective later in the year. Yeah, so Fred, that's the job of

Frederick Charles Wightman: Okay. That's fair and then just trying to understand where there could potentially be some upside for yields throughout the year. It sounded like in response to an earlier question that you were saying the potential upside would come largely from onboard I think that was in response to <unk>, specifically, but just thinking about the back half of the year, especially in <unk> when that Caribbean <unk>.

Frederick Charles Wightman: <unk> increases again, I mean, you guys still feel like you have the ability to take price and grow yields from a ticket perspective later of the year.

Harry J. Sommer: Yeah, so Fred, that's the job of our brands. We look at the booking curve and consumer demand, and we do everything we can to raise prices any time that we can. I think, as Mark mentioned, Q2 and most of Q3 are pretty big, you know, given where we are on the booking curve. Is there potential in Q4? Absolutely, and we'll do everything that we can to optimize that potential.

Frederick Charles Wightman: Yes, so Fred that's the job of our brands when we look at the booking curve and consumer demand. We do everything we can to raise prices any time that we can I think it's Marc mentioned Q2, and most of Q3 is pretty day, given where we are in the booking curve is there potential in Q4, absolutely and we will do everything that we can to optum.

Frederick Charles Wightman: <unk>.

Speaker Change: Perfect. Thanks, a lot.

Frederick Charles Wightman: Yes.

Robin Margaret Farley: Our next question comes from the line of Robin Farley with UBS. Please proceed.

Frederick Charles Wightman: And our next question comes from the line of Robin Farley with UBS. Please proceed.

Robin Margaret Farley: Great, thank you. I have two questions.

Robin Margaret Farley: Great. Thank you I have two questions. One is in your release you show that a percent change in net yield would add about $67 million to EBITDA.

Robin Margaret Farley: You raised by a point.

Robin Margaret Farley: We're raising EBITDA by $50 million, maybe half of that looks like it's from higher fuel.

Robin Margaret Farley: Kind of looking for that other $17 million.

Frederick Charles Wightman: That was not in your EBITDA raise maybe half of that due to higher fuel is the other half just sort of conservatism and leaving a little powder dry which is fine or just or is there another factor there.

Frederick Charles Wightman: Not getting it down to the EBITDA line and then my second question just there.

Frederick Charles Wightman: Is there any color you can give us on your new ship orders in terms of the cost per berth.

Frederick Charles Wightman: Relative to previous ship orders that fully understanding that there would be.

Speaker Change: At the yards and all of that but just trying to quantify that in some way. Thanks, yeah. Thanks. Thanks for your <unk> calculations Robyn.

Robin Margaret Farley: One is in your release, you show that a percent change in net yield would add about 67 million to EBITDA. You raised by a point and are raising EBITDA by 50 million. Maybe half of that looks like it's from higher fuel, well, of the sort of kind of like looking for that other 17 million that was not in your EBITDA raise. Maybe half of that was due to higher fuel. Is the other half just sort of conservatism and leaving a little powder dry, which you would be a little bit of?

Speaker Change: Obviously, there are some slight rounding in there when you when you look at the at the yield and the sensitivity so east.

Mark A. Kempa: is fine, or is there another factor there that's not getting it down to the EBITDA line. And then my second question, just to put up there as well, is there any color you can give us on your new ship orders in terms of the cost per birth, you know, kind of relative to previous ship orders. I fully understand that there would be inflation at the yards and all of that, but just trying to, you know, quantify that in some way.

Robin Margaret Farley: Thanks.

Speaker Change: Essentially yes, we did carryover about 100 basis point.

Speaker Change: Increase and I think if you look at my prepared remarks.

Mark A. Kempa: Yeah, thanks. Thanks for your exacting calculations, Robin. You know, obviously, there's some slight rounding off in there when you look at the yield and the sensitivity. So essentially, yes, we did carry over about 100 basis points of increase. And I think if you look at my prepared remarks, most of that was, you know, some of that was partially offset by higher fuel and then higher interest expense for two reasons. Number one, you know, the portion of our debt portfolio that is not fixed, which is about five, 6%.

Speaker Change: Most of that was.

Frederick Charles Wightman: Some of that was partially offset by higher fuel and then higher interest expense.

Frederick Charles Wightman: For two reasons number one.

Frederick Charles Wightman: The on the portion of our debt portfolio that is not fixed which is about five 6%. But then also commitment fees related to some of our newbuild announcements.

Mark A. Kempa: But then also commitment fees related to some of our new build announcements that went into effect as well. So all in all, I think when you look at the back half of the year, you know, as I said, we're raising yield guidance, and that's about 10 cents, 10, 11 cents, offset by four or five cents of interest in fuel. And I didn't catch the back end of your question. I apologize.

Mark A. Kempa: [inaudible]

Frederick Charles Wightman: Went into when effective as well so all in all I think when you look at the back half of the year.

Frederick Charles Wightman: As I said, we're raising our yield guidance and that's about 10 10 11.

Frederick Charles Wightman: <unk> offset by $4 <unk>.

Frederick Charles Wightman: Interest in fuel.

Speaker Change: I didn't catch the back end of your question I apologize.

Frederick Charles Wightman: And color there inflation, just the cost per berth or getting a sense of that.

Robin Margaret Farley: Yeah, just the cost per birth or, you know, kind of getting a sense of the change in building costs at the yards, you know, understanding that there would be inflation there, but just trying to get a ballpark for it.

Frederick Charles Wightman: <unk> and building costs at the yards understanding that there will be inflation, there, but just trying to get a ballpark for it.

Frederick Charles Wightman: Yes.

Frederick Charles Wightman: And in the prior questions have been about the EBITDA fully understand the interest expense impact on EPS I was looking for the extra extra $10 million EBITDA.

Frederick Charles Wightman: But anything on the anything on their cost curve.

Harry J. Sommer: Just to be really clear on the EBIT aside, we calculated the 1% raise that we had at just over $60 million. So it wasn't exactly a full point; it was more like 97 basis points or something like that. So the 60 minus the fuel should get you to almost exactly the $50 million EBIT raise. So we apologize for that confusion between the 60 and 67 million, two factors offsetting each other. I think the inflation on new builds is similar to the inflation you see in the general population, at least when we do our calculations.

Frederick Charles Wightman: Just just to be really clear on the EBITDA side.

Frederick Charles Wightman: We calculated the 1% rate that we had at just over $60 million. So it wasn't exactly a full point it was more like 97 basis points or something like that so that 60 minus that fuels should get you to almost exactly that $50 million EBITDA array. So we apologize for that confusion between the $60 $67 million.

Frederick Charles Wightman: In terms of inflation on a newbuild.

Frederick Charles Wightman: I think what Youll see is sort of.

Frederick Charles Wightman: Two factors offset each other.

Frederick Charles Wightman: The inflation on Newbuild is similar to the inflation you see in the general population at least when we do our calculations I think what we can do to help offset that inflation is the same as what youre seeing in our general cost structure, where the same transformation office processed it looks to doing things more efficiently and effectively.

Harry J. Sommer: I think what we can do to help offset that inflation is the same as what you're seeing in our general cost structure, where the same transformation office process that looks to do things more efficiently and effectively will allow us to offset part of the impact of inflation, certainly not all of it.

Frederick Charles Wightman: It will allow us to offset part of the impact of inflation certainly not all of it so that would be our guide if you will going forward and then I think we have.

Harry J. Sommer: So that would be our guide, if you will, going forward. And then I think we have time for one last question. And our last question will come from the line of James Hardiman with Citi. Please proceed. Hey, good morning. And thanks for fitting me in here. So just quickly wanted to circle back to the cost conversation.

Speaker Change: Time for one last question operator.

James Lloyd Hardiman: And our last question will come from the line of James Hardiman with Citi. Please proceed.

Speaker Change: And our last question will come from the line of James Hardiman with Citi. Please proceed.

James Lloyd Hardiman: Hey, good morning, and thanks for fitting me in here so just.

James Lloyd Hardiman: Just quickly wanted to circle back to the cost conversation, obviously, a lot of noise around dry dock.

James Lloyd Hardiman: Pretty flattish so ex the drydock step up for the for the first half.

James Lloyd Hardiman: Is that the assumption for the second half, but the dry dock movement that costs are going to be pretty flattish year over year and if so how long can that last particularly dry dock flatten out in 2025.

Mark A. Kempa: So the quick answer is yes. We believe that the cost will be essentially flat, excluding dry dock, as you mentioned for the back half of the year. We're very proud of the efforts that the team is making. We're not really prepared to comment on 25 and beyond at this point.

Speaker Change: So the quick answer is yes.

Speaker Change: We believe that the cost will be essentially flat.

Speaker Change: Alluding Drydock as you mentioned for the back half of the year, we're very proud of the efforts that the team are making not really prepared to comment on 25 and beyond at this point.

Mark A. Kempa: James, all I would add to that is, again, we have talked about having a laser focus on right-sizing and leveraging our scale. We will continue to do that. This is a permanent activity for us, not a one-time exercise. So while obviously it gets harder, you know, further down the stream you go, we are just re-looking at every facet of our business, and we continue to believe that there's opportunity out there, all without impacting the guest experience and actually delivering a better product than what we have today. What a wonderful set of insights!

Speaker Change: James I'll I would all I would add to that is again, we have talked about we have a laser focus on right sizing and leveraging our scale we continue to.

Frederick Charles Wightman: To do that this is a.

Frederick Charles Wightman: A permanent activity for us not a onetime exercise.

Frederick Charles Wightman: So while obviously it gets harder.

Frederick Charles Wightman: Further down the stream yugo.

Frederick Charles Wightman: Or just re looking at every facet of our business and we continue to believe that there's opportunity out there all without impacting the guest experience and actually delivering a better product than what we than what we've had today.

Harry J. Sommer: Well, what a wonderful set of comments to end the call. I share Mark's passion for continuing to improve our operating margins while delivering a fantastic guest experience. I want to thank all of you for your time today, and I really am looking forward to talking about our long-term targets and strategy when we meet on May 20th. Thank you all very much. This concludes today's webinar.

Frederick Charles Wightman: A wonderful set of comments in the call I share marks fashion for continuing to improve our operating margins, while delivering a fantastic guest experience.

Speaker Change: I want to thank all of you for your time today and I really am looking forward to talking about our long term targets.

Speaker Change: <unk> strategy when we meet on May 20th Thank you all very much.

Operator: Thank you. This concludes today's conference. You may now disconnect your line at this time. Enjoy the rest of your day.

Speaker Change: Thank you. This concludes today's conference you may now disconnect your lines at this time and enjoy the rest of your day.

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